As filed May 14, 1999 File No. 333-________
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WORKFIRE.COM
(Exact name of small business issuer in its charter)
NEVADA 4899 APPLIED FOR
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation Code Number)
or organization)
1708 DOLPHIN AVENUE, SUITE 400, KELOWNA, BRITISH COLUMBIA V1Y 9S4 CANADA
(250) 717-8966
(Address and telephone number of principal executive offices)
1708 DOLPHIN AVENUE, SUITE 400, KELOWNA, BRITISH COLUMBIA V1Y 9S4 CANADA
(Address of principal place of business or intended principal place of business)
TOM TAYLOR, PRESIDENT
WORKFIRE.COM
1708 DOLPHIN AVENUE, SUITE 400
KELOWNA, BRITISH COLUMBIA V1Y 9S4 CANADA
(250) 717-8966
(Name, address and telephone number of agent for service)
Copies of all communications to:
Fay M. Matsukage, Esq.
Dill Dill Carr Stonbraker & Hutchings, P.C.
455 Sherman Street, Suite 300
Denver, Colorado 80203
(303) 777-3737; (303) 777-3823 fax
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of the Registration Statement.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]_____
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]_____
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]_____
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box.[ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED
TITLE OF EACH PROPOSED MAXIMUM
CLASS OF AMOUNT TO BE MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO REGISTERED OFFERING PRICE OFFERING PRICE REGISTRATION
BE REGISTERED PER UNIT FEE
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Common Stock 1,000,000 $ 1.50 $ 1,500,000 $ 417.00
shares
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The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 14, 1999
WORKFIRE.COM
1,000,000 SHARES OF COMMON STOCK
The Company is offering 1,000,000 shares of Common Stock (the "Shares")
for sale to the public on a "best efforts" basis. The offering of the Shares
will terminate on the earlier of the date all of the Shares offered hereby are
subscribed for or _____________________.
There is no minimum offering and no escrow. Therefore any funds received
from a purchaser will be available to the Company as received and need not be
refunded to the purchaser.
Shares of Workfire common stock are privately held. There is no public
market for the Common Stock.
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This Investment Involves a High Degree of Risk. You Should Purchase
Shares Only If You Can Afford a Complete Loss. See "Risk Factors"
Beginning on Page 5 of This Prospectus.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The information in this Prospectus is not complete and may be changed. The
Company may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This Prospectus is not
an offer to sell these securities and it is not an offer to buy these securities
in any state where the offer or sale is not permitted.
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UNDERWRITING
SHARES OFFERED BY DISCOUNTS AND PROCEEDS TO THE
THE COMPANY PRICE TO PUBLIC COMMISSIONS (1) COMPANY (2)
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Per Share
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Total Offering
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(1) The Company is acting as the general selling agent. If broker-dealers are
used to sell the Shares, they will be paid a 10% commission by the
Company. See "Plan of Distribution."
(2) Before deducting expenses of this offering, estimated at $75,000. See
"Use of Proceeds."
The date of this Prospectus is _____________, 1999
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TABLE OF CONTENTS
Page
Prospectus Summary...........................................................3
Special Note Regarding Forward-Looking Statements............................4
Risk Factors.................................................................5
Dilution....................................................................10
Use of Proceeds.............................................................11
Dividend Policy.............................................................11
Selected Financial Data.....................................................12
Management's Discussion and Analysis of Financial Condition and Results of
Operations..................................................................12
Business....................................................................15
Management..................................................................20
Principal Shareholders......................................................21
Description of Securities...................................................22
Plan of Distribution........................................................23
Legal Matters...............................................................24
Experts.....................................................................24
Available Information.......................................................24
Reports to Stockholders.....................................................25
Consolidated Financial Statements..........................................F-1
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Workfire's principal executive offices are located at 1708 Dolphin Avenue, Suite
400, Kelowna, British Columbia V1Y 9S4 Canada. Its telephone number is (250)
717-8966.
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
Prospectus. This summary is not complete and may not contain all of the
information that you should consider before investing in the common stock.
WORKFIRE.COM
Workfire.com ("Workfire" or the Company") is a development stage company
which develops high performance solutions for the Internet that improves the
speed, efficiency, and usability of the Internet for the end user. Workfire's
core technologies are developed using the leading edge protocols developed by
open standards committees to ensure all Workfire solutions not only improve
performance, but also integrate seamlessly with other quality engineered systems
on the Internet. Using proprietary technology, Workfire is pursuing a
multi-staged business strategy to make Workfire systems a critical
infrastructure component of how the Internet will function in the future.
Management of Workfire has designed its business strategy and core
technologies around the following beliefs:
o The most acute problem facing the Internet today is performance.
o The prevailing opinion that increasing the speed of the end user's
connection will solve this performance problem is simply wrong. This would
be like suggesting that the best way to solve gridlock on the California's
highways is to give everyone a Ferrari.
o The problem lies deeper: in the manner that data is passed from a serving
site to the end user.
o The solution lies in improving the infrastructure of the Internet.
o This is the area where Workfire can become crucial to the Internet's
growth over the years to come.
Workfire uses a client-server infrastructure to streamline communication
of data and eliminate unnecessary delays currently incurred by most popular
software programs. The technology is based on Workfire's proprietary transparent
proxy design. This design uses both standard Internet protocols and Workfire's
proprietary communication protocols. The system taps into the yet to be realized
potential of distributed systems. The Internet was originally designed to take
advantage of distributed system concepts. (For a description of transparent
proxies and distributed systems, see the Technology section.)
Workfire's business strategy involves the use of an already proven and
effective Internet strategy. Workfire's products will initially be offered to
end users for no charge. The services will be marketed and offered through a
Performance Portal. By accessing the Internet through this Performance Portal,
users will see a speed improvement in their connection of at least 50%. This
Performance Portal will incorporate a number of different revenue generating
tools to support the portal costs. As the number of Workfire users continues to
grow, the system will be expanded to take full advantage of the distributed
nature of the Internet.
The expansion of the Workfire distributed network will involve deployment
of the server systems to Internet Service Providers, corporations, and
web-hosting companies. The quality efficient design of Workfire servers creates
the ability for a number of smaller distributed computers to deliver the
benefits normally associated with large centralized multi-million dollar
systems. This lower cost solution provides Workfire with a tremendous
competitive advantage over other companies in the Internet performance-enhancing
business.
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THE OFFERING
Securities offered......1,000,000 shares of Common Stock (1)
Securities outstanding..12,722,755 shares of Common Stock (2)
Use of Proceeds.........Estimated at $1,275,000. To be used for
marketing, product development, working
capital, and patent and trademark work. See
"Use of Proceeds."
RISK FACTORS
Investing in our securities involves a high degree of risk. You should
consider carefully the information under the caption "Risk Factors" beginning on
page 5 of this Prospectus in deciding whether to purchase the securities offered
under this Prospectus.
SUMMARY FINANCIAL INFORMATION
The following summary financial data is based upon our consolidated
financial statements included elsewhere in this Prospectus. We have prepared our
consolidated financial statements in accordance with generally accepted
accounting principles. Our results of operations for any interim period do not
necessarily indicate our results of operations for the full year. You should
read this summary financial data in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations," "Business," and
our consolidated financial statements.
BALANCE SHEET DATA: DECEMBER 31, 1998
Current Assets $ 325,281
Total Assets $ 378,876
Current Liabilities $ 16,016
Long-Term Liabilities $ 0
Stockholders' Equity $ 352,127
Working Capital $ 299,642
STATEMENT OF LOSS DATA: PERIOD FROM JULY 7,
1998 TO DECEMBER 31, 1998
Revenues $ 1,575
Net Loss $ 328,086
Net Loss per Share $ 0.04
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus are not historical facts but are
forward-looking statements. Such forward-looking statements may be identified by
the use of terminology such as "anticipate," "believe," "estimate," "expect,"
"intend," "may," "plans," "project," and similar expressions. Such statements
involve risks and uncertainties including, but not limited to, those relating to
the development stage in which Workfire is operating; the lack of revenues; the
ability of the Company to continue as a going concern; the need for additional
financing; Year 2000 compliance; uncertainty of market acceptance of Workfire's
product once introduced; competition; technological obsolescence; ability to not
violate others' rights; dependence on key personnel as well as other factors
detailed in "Risk Factors" below and elsewhere in this Prospectus and in the
Company's other filings with the Securities and Exchange Commission. Should one
or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual outcomes may vary materially from those
indicated.
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RISK FACTORS
Investing in Workfire involves a high degree of risk. You should be able
to bear a complete loss of your investment. You should carefully consider the
following risk factors and other information in this Prospectus before deciding
to invest in shares of common stock.
IMMEDIATE AND FUTURE CAPITAL NEEDS
We do not have sufficient funds to complete commercial development or
commence production and sales of our system. Our ability to complete our product
development, market our product, and commence sales will depend upon the
continued availability of investment capital, funding made by strategic
partner(s), or licensing revenues, until we obtain revenues from sale of the
premium services, advertising revenue, and complete Workfire systems which are
sufficient to maintain operations. There can be no assurance that any such
additional financing can be obtained on favorable terms, if at all. Such
additional financing will result in dilution to Company shareholders. If funding
is not available when needed, we may be forced to cease operations and abandon
our business. In such event, Company shareholders could lose their entire
investment.
NO HISTORY OF OPERATIONS; DEVELOPMENT STAGE COMPANY; GOING CONCERN UNCERTAINTY
To date, we do not have a product ready to be brought to market.
Accordingly, Workfire has a limited operating history and its proposed
operations are subject to all of the risks inherent in a new business
enterprise, including commercial development of its products, lack of marketing
experience and lack of production history.
The likelihood of our success must be considered in light of the expenses,
difficulties and delays frequently encountered in connection with the start-up
of new businesses, those historically encountered by us, and the competitive
environment in which we will operate. We have not had any significant revenues
to date. As of December 31, 1998, we had a deficit accumulated during our
development stage of $328,086. The report of the independent auditors on the
Company's financial statements for the period from incorporation on July 7, 1998
to December 31, 1998, includes an explanatory paragraph relating to the
uncertainty of the Company's ability to continue as a going concern. We are a
development stage company, which has suffered losses from operations, requires
additional financing, needs to continue development of our product, and
ultimately needs to generate revenues and successfully attain profitable
operations. These factors raise substantial doubt about our ability to continue
as a going concern. There can be no assurance that we will be able to develop a
commercially viable product or marketing system or attain profitable operations.
NO ASSURANCE OF SUCCESSFUL AND TIMELY DEVELOPMENT OF WORKFIRE'S PRODUCTS
Our Workfire system, consisting of a client server software architecture,
is under various stages of development. We are conducting such development using
both internal and external resources. Further development and testing will be
required to prove additional performance capability beyond our current tests and
commercial viability of our system. Additionally, the final cost of our
performance portal and maintenance thereof cannot be finalized until system
completion. Our success, if any, will depend on our ability to timely complete
our system within estimated cost parameters and efficiently deploy the system in
a cost effective manner.
UNCERTAINTY OF MARKET ACCEPTANCE
The commercial success of the Workfire system will depend upon its
acceptance by the Internet community as a valuable and useful product. Market
acceptance will depend upon several factors, including the establishment of
performance metrics, endorsement by industry "gurus", and our ability to get
mindshare among Internet users. The market for Internet extended service
products is in its infancy, and we are not certain that our target customers
will widely adopt an extended service system. Even if
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they do so, they may not choose the Workfire system for technical, cost, support
or other reasons. Although we will have tested the product prior to making it
available to customers, we cannot be certain that we will have found and fixed
all significant performance errors. If our target customers do not widely adopt
and purchase our product, our business, financial condition and results of
operations will be adversely affected.
LACK OF MARKETING EXPERIENCE
We have had no experience in marketing the Workfire system. We intend to
market our system on the Internet, with specific marketing focus in North
America. This marketing will be done through strategic partners, Internet
advertising campaigns, and traditional media advertising campaigns. No assurance
can be given that these marketing techniques will be successful. If these
marketing techniques are not successful our business, financial condition and
results of operations will be adversely affected.
COMPETITION
We compete in markets that are new, intensely competitive, highly
fragmented and rapidly changing. We face competition in the overall Internet
market as well as the Internet performance enhancement market. We expect to
experience increasing competition from potential competitors, many of which will
have significantly greater financial, technical, marketing and other resources.
Our competitors may be able to respond more quickly to new or emerging
technologies and changes in customer requirements than we can. In addition, our
current and potential competitors may bundle their products/services with other
software or hardware, including operating systems and browsers, in a manner that
may discourage users from purchasing products/services offered by us. Also,
current potential competitors have greater name recognition, more extensive
customer bases that could be leveraged. Increased competition could result in
price reductions, fewer customers, fewer services provided, reduced gross
margins and loss of market share.
TECHNOLOGICAL OBSOLESCENCE/SINGLE TECHNOLOGY BASIS
Our Workfire server and extended service modules, all of which are based
upon a single set of core technologies, are currently our only proposed products
and are expected to account for substantially all of our revenues, if any, for
the foreseeable future. We operate in a market characterized by rapid and
significant technological change. While we are not aware of any developments in
the Internet industry, which would render our current or planned products less
competitive or obsolete, there can be no assurance that future technological
changes or the development of new or competitive products by others will not do
so. To remain competitive, we must continually make substantial expenditures for
development of additional services and advances in our core technology. Because
our system represents our sole product focus, lack of market acceptance or
obsolescence of our system would have a significant adverse effect.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
Laws and regulations directly applicable to communications or commerce
over the Internet are becoming more prevalent. The most recent session of the
United States Congress resulted in Internet laws regarding children's privacy,
copyrights, taxation and the transmission of sexually explicit material. The
European Union recently enacted its own privacy regulations. The law of the
Internet, however, remains largely unsettle, even in areas where there has been
some legislative action. It may take years to determine whether and how existing
laws such as those governing intellectual property, privacy, libel and taxation
apply to the Internet. In addition, the growth and development of the market for
online commerce may prompt calls for more stringent consumer protection laws,
both in the United States and abroad that may impose additional burdens on
companies conducting business online. The adoption or modification of laws or
regulations relating to the Internet could adversely affect our business.
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RAPID TECHNOLOGICAL CHANGE
Rapid technological change, frequent new product introductions, changes in
customer requirements and evolving industry standards characterize the Internet
market. The introduction of products embodying new technologies and the
emergence of new industry standards could render our existing products obsolete.
Our future success will depend upon our ability to develop and introduce a
variety of new products and product enhancements to address the increasingly
sophisticated needs of our customers. We have experienced delays in releasing
new products and product enhancements and may experience similar delays in the
future. Material delays in introducing new products and enhancements may cause
customers to forego purchases of our products and purchase those of our
competitors.
DEPENDENCE ON STRATEGIC RELATIONSHIPS
We believe that our success in penetrating our target markets depends in
part on our ability to develop and maintain strategic relationships with key
hardware and software vendors, distribution partners and customers. We believe
these relationships are important in order to validate our technology,
facilitate broad market acceptance of our products, and enhance our sales,
marketing and distribution capabilities. We have no such relationships at this
time. If we are unable to develop key relationships or maintain and enhance
existing relationships, we may have difficulty selling our products and
services.
NEED TO MANAGE CHANGING OPERATIONS
Our ability to successfully offer products and services and implement our
business plan in a rapidly evolving market requires an effective planning and
management process. We continue to increase the scope of our operations and will
need to grow our personnel levels substantially. This growth will place a
significant strain on our management systems and resources. We expect that we
will need to continue to improve our financial and managerial controls and
reporting systems and procedures, and will need to continue to expand, train and
manage our work force worldwide. Furthermore, we expect that we will be required
to manage multiple relationships with various customers and other third parties.
RISKS OF INFRINGEMENT AND PROPRIETARY RIGHTS
Our products and services operate in part by making copies of material
available on the Internet and other networks and making this material available
to end users from a central location. This creates the potential for claims to
be made against us (either directly or through contractual indemnification
provisions with customers) for defamation, negligence, copyright or trademark
infringement, personal injury, invasion of privacy or other legal theories based
on the nature, content or copying of these materials. These claims have been
brought, and sometimes successfully pressed, against online service providers in
the past. Although we carry general liability insurance, our insurance may not
cover potential claims of this type or may not be adequate to protect us from
all liability that may be imposed.
Our success and ability to compete are substantially dependent upon our
internally developed technology, which we are currently in the process of
planning a strategy of protection through a combination of patent, copyright,
trade secret and trademark law. We generally enter into confidentiality or
license agreements with our employees, consultants and corporate partners, and
generally control access to and distribution of our software, documentation and
other proprietary information. Despite our efforts to protect our proprietary
rights, unauthorized parties may attempt to copy or otherwise obtain and use our
products or technology. Policing unauthorized use of our products is difficult,
and we cannot be certain that the steps we have taken will prevent
misappropriation of our technology, particularly in foreign countries where the
laws may not protect our proprietary rights as fully as in the United States.
Substantial litigation regarding intellectual property rights exists in
the software industry. We expect that software products may be increasingly
subject to third-party infringement claims as the number of competitors in our
industry segments grows and the functionality of products in different
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industry segments overlaps. A successful claim of product infringement against
us and our failure or inability to license the infringed or similar technology
could adversely affect our business.
DEPENDENCE ON PERSONNEL
We have a small number of employees. Although we believe we maintain a
core group sufficient for us to effectively conduct our operations, the loss any
of our personnel could, to varying degrees, have an adverse effect on our
operations and system development. The loss of any one of Tom Taylor, Chief
Technology Officer, Jennifer Nyland, Vice President Engineering, or Paul
Archard, Lead Software Engineer, would have a material adverse affect on the
Company.
LACK OF PUBLIC MARKET FOR THE SECURITIES
There is currently no public market for the Shares and there can be no
assurance that a market for the Company's stock will develop. There can be no
assurance that an active public market for the Common Stock will develop or be
sustained after the offering or that, if a market develops, the market price of
the Common Stock will not decline below the initial public offering price. Sale
of few Shares of Common Stock in the offering to investors and/or such Shares
being sold to a small number of holders, could result in few Shares of Common
Stock being available for public trading. In such circumstances, it would be
very difficult for an active trading market to develop in the Shares.
POSSIBLE VOLATILITY OF STOCK PRICE
The stock market has from time to time experienced significant price and
volume fluctuations that may be related or unrelated to the operating
performance of particular companies. These broad market fluctuations may
adversely affect the market price of the Company's Common Stock, if a market
develops. In addition, the market price of the shares of Common Stock of the
Company may be highly volatile. Factors such as a small market float,
fluctuations in the Company's operating results, failure to meet analysts'
expectations, announcements of major developments by the Company or its
competitors, developments with respect to the Company's markets, changes in
stock market analyst recommendations regarding the Company, its competitors or
the industry generally, and general market conditions may have a significant
effect on the market price of the Company's Common Stock.
IMMEDIATE AND SUBSTANTIAL DILUTION
The initial public offering price of the Shares does not necessarily bear
any relationship to assets, book value or net worth of the Company, or any other
generally recognized criteria of value. The price for the Common Stock was
established arbitrarily by the Company. Purchasers in the offering will suffer
immediate and substantial dilution of $1.35 per share or approximately 90% of
the offering price of the Shares. See "Dilution."
SHARES ELIGIBLE FOR FUTURE SALE
As a result of this Registration Statement, all shares of the Company's
outstanding Common Stock are eligible to be sold in the public market along with
all shares that may be obtained upon exercise of outstanding options. The sale
of a substantial number of the shares available for sale or shares underlying
options could adversely affect the market price and liquidity of the Company's
securities.
LIMITED MARKET FOR SECURITIES
There is currently no market for the Company's Common Stock. The Company
hopes to establish a market.
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VOLATILITY OF STOCK PRICE
We believe that factors such as announcements of developments by our
competitors, or us general conditions in the Internet market and conditions in
the financial markets could cause the price of our Common Stock to fluctuate
substantially, once a market for our stock develops. In addition, the stock
market has recently experienced extreme price and volume fluctuations which have
affected the market prices for many emerging growth companies and which have
often been unrelated to the operating performance of the specific companies.
These market fluctuations may adversely affect the price of the Company's Common
Stock when and if traded publicly.
YEAR 2000 COMPLIANCE
Many existing computer systems and applications, and other control devices
use only two digits to identify a year in the date field, without considering
the impact of the upcoming change in the century. Others do not correctly
process "leap year" dates. As a result, such systems and applications could fail
or create erroneous results unless corrected so that they can correctly process
data related to the year 2000 and beyond, but there can be no assurance that
such upgrades will be completed on a timely basis or without incurring
substantial costs. While the Company has evaluated its products for year 2000
compliance and believes that each is substantially year 2000 compliant, there
can be no assurance that the Company's products are or will ultimately be year
2000 compliant. In addition, the Company believes that it is not possible to
determine whether all of its customers' products into which the Company's
products are incorporated will be year 2000 compliant because the Company has
little or no control over the design production and testing of its customers'
products. The Company relies on its systems, applications and devices in
operating and monitoring all major aspects of its business, including financial
systems (such as general ledger, accounts payable and payroll modules), customer
services, infrastructure, embedded computer chips, networks and
telecommunications equipment and end products. Although the Company is in the
process of upgrading its software to address the year 2000 issue, there can be
no assurance that such upgrades will be completed on a timely basis at
reasonable costs, or that such upgrades will be able to anticipate all of the
problems triggered by the actual impact of the year 2000. The Company also
relies, directly and indirectly on external systems for the testing of
substantially all of the Company's products and business enterprises such as
customer, suppliers, creditors, financial organizations, and of governmental
entities, both domestic and international, for accurate exchange of data. The
Company could be affected through disruptions in the operation of the
enterprises with which the Company interacts or from general widespread problems
or an economic crisis resulting from non-compliant year 2000 systems. Despite
the Company's efforts to address the year 2000 impact on its internal systems
and business operations, there can be no assurance that such impact will not
result in a material disruption of its business or have a material adverse
effect on the Company's business, financial condition or results of operations.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Year 2000."
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DILUTION
After giving effect to the actual sale of 350,222 shares of Common Stock
for net proceeds of $262,667, the Company had a net tangible book value of
$615,584 or $0.05 per share of Common Stock. Net tangible book value per share
of Common Stock represents total tangible assets reduced by total liabilities,
divided by the number of outstanding shares of Common Stock. Without taking into
account any changes in net tangible book value after December 31, 1998, other
than the sale of 350,222 shares, the pro forma net tangible book value of the
Company's Common Stock at December 31, 1998 would have been $1,890,584 or $0.15
per share after giving effect to the sale by the Company of the 1,000,000 Shares
offered hereby for estimated net proceeds of $1,275,000. Accordingly, after the
offering, the net tangible book value of the shares of Common Stock held by the
present shareholders would have increased $0.09 per share. Concurrently, new
investors purchasing Shares in this offering would suffer substantial immediate
dilution of $1.35 per share.
The following table illustrates the foregoing dilution of a new investor's
equity in a share of Common Stock:
Offering price per share of Common Stock.........................$ 1.50
Net tangible book value per common share before offering.. $ 0.05
Increase per share attributable to new investors.......... $ 0.10
------
Pro forma net tangible book value per common
share after offering...........................................$ 0.15
------
Dilution per common share to new investors.......................$ 1.35
Percentage Dilution................................................ 90%
The following table sets forth, as of December 31, 1998, after giving
effect to the sale of 350,222 shares for net proceeds of $262,667, a comparison
of the respective investment and equity of the current shareholders and
investors purchasing Shares in this offering.
SHARES PURCHASED TOTAL CONSIDERATION Average
---------------- ------------------- Price per
NUMBER PERCENT AMOUNT PERCENT SHARE
------ ------- ------ ------- -----
Existing shareholders 12,722,755 92.7% $ 942,880 42.5% $0.07
New investors 1,000,000 7.3% 1,275,000 57.5% $1.28
---------- ----- ---------- -----
Total 13,722,755 100.0% $2,217,880 100.0%
========== ====== ========== ======
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USE OF PROCEEDS
The net proceeds to the Company are estimated to be $1,275,000 after
deducting legal, accounting, and other offering expenses estimated at $75,000
and a 10% selling commission on all of the Shares. To the extent that more
Shares are sold by the Company without using the services of a placement agent,
the net proceeds will be increased. We intend to use the net proceeds, along
with any other financing sources that may become available to us, to support our
anticipated growth over the next twelve months. We expect to experience negative
cash flow from operations for at least the next 12 months. We expect that our
cash requirements will exist principally in the following areas:
APPROXIMATE AMOUNT BUDGETED
FOR USE IN THE 12 MONTHS
USE OF CAPITAL FOLLOWING THE OFFERING
Developing and rapidly expanding sales,
marketing and advertising activities,
including the hiring of additional employees
and consultants...................................................$ 480,000
Continuing and expanding our internal research and development
program........................................................... 400,000
Expansion of our management team.................................. 100,000
Other uses not now expressly contemplated, such as the purchase
of complementary technology or businesses; legal costs relating to
patents and trademarks; funding unanticipated negative cash flow
from operations................................................... 295,000
----------
Total.............................................................$1,275,000
==========
The amount and timing of any of the above expenses will depend on various
factors, including rates of business growth, specific technology, capital
equipment and other requirements imposed by our customers and opportunities
presented to us. While we have prepared internal forecasts to assist management
in planning, we believe that these forecasts, as they apply to periods extending
beyond the next few months, are inherently unreliable and that our actual cash
requirements will differ materially from those we presently forecast.
Our current business plan has identified total capital requirements over
the next several years that are substantially more than the anticipated offering
proceeds. However, we believe the net proceeds of this offering will be
sufficient to fund our operations for at least the next twelve months.
Any changes in proposed expenditures will be made at the discretion of the
Board of Directors of the Company.
Pending such uses, the Company intends to invest the proceeds from this
offering in short term, investment-grade, interest bearing securities.
DIVIDEND POLICY
Workfire has never paid a cash dividend on its Common Stock. Payment of
dividends is at the discretion of the Board of Directors. The Board of Directors
plan to retain earnings, if any, for operations and does not intend to pay
dividends in the foreseeable future.
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SELECTED FINANCIAL DATA
The following selected financial data of the Company for the period from
incorporation on July 7, 1998 to December 31, 1998 is derived from the financial
statements that have been audited by KPMG LLP, independent auditors. Interim
results may not be indicative of the results of operations to be expected for a
full fiscal year. This financial data should be read in conjunction with the
Company's financial statements and the notes thereto included elsewhere in this
Registration Statement and to the Management's Discussion and Analysis of
Results of Operations and Financial Condition which follows.
BALANCE SHEET DATA: DECEMBER 31, 1998
Current Assets $ 325,281
Total Assets $ 378,876
Current Liabilities $ 16,016
Long-Term Liabilities $ 0
Stockholders' Equity $ 352,127
Working Capital $ 299,642
STATEMENT OF LOSS DATA: PERIOD FROM JULY 7,
1998 TO DECEMBER 31, 1998
Revenues $ 1,575
Net Loss $ 328,086
Net Loss per Share $ 0.04
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements of the Company. This Prospectus includes
certain forward-looking statements, which reflect the Company's plans, estimates
and beliefs. The Company's actual results could differ materially from those
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences are discussed in the Risk Factors section and
elsewhere in this Prospectus. In evaluating an investment in the securities,
prospective investors should carefully consider the Risk Factors and other
information contained in this Prospectus.
HISTORY
The Company was originally incorporated in the State of Colorado on
October 31, 1989, under the name "Tantallon Capital, Inc." It acquired Workfire
Technologies International Inc., a Nevada corporation, effective August 26,
1998. Effective September 15, 1998, the Company changed its name and domicile by
merging into Workfire Technologies Inc., a Nevada corporation. The Company
changed its name to "Workfire.com" on February 4, 1999.
Workfire is completing a distributed Internet extended services system.
Workfire's proprietary and robust extended services system provides Internet
users with services which will improve the performance and usability of the
Internet. Workfire's extended services system will have the ability to provide
multiple extended services to end-users and track the billing requirements for
each user's individual needs. The system will be marketed to users who are
accessing the Internet via analog modem as they are best able to recognize the
immediate positive impact Workfire's system will have on the performance of
their Internet experience.
Workfire's system will consist of an easy to install client application,
which will run in the background. The client will process the user's Internet
requests without intruding on the user's activities. It will display advertising
information to the user about the Company, its partners, and third party
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advertisers. The client software will be distributed through alpha and beta
programs to investors and screened beta testers before it is released. The
product is currently entering the development phase, as the initial design phase
has just finished. Prototype versions of the product for demonstration only have
been fully developed. Alpha versions of the product are expected in early May of
1999.
Workfire is a development stage company which has suffered losses from
operations, requires additional financing, and ultimately needs to complete
development of its product, generate revenues, and successfully attain
profitable operations to realize the value of its software product and remain a
going concern.
RESULTS OF OPERATIONS FOR THE PERIOD JULY 7, 1998 (INCEPTION) TO DECEMBER 31,
1998:
The Company has incurred a net loss of $328,086 from July 7, 1998 (date of
inception) through December 31, 1998 due to continuing costs of raising capital,
normal expenses of operating over an extended period of time, and due to funds
applied to research and development . In addition, an investment of $100,000 was
made when Workfire purchased the exclusive rights to its proprietary technology.
General and administration expenses from date of inception to December 31,
1998 were $129,904. General and administrative spending consisted primarily of
costs associated with salaries for marketing and administrative staff, expenses
incurred to attend COMDEX in Las Vegas in November, and additional expenses
related to Company expansion. The Company anticipates that these expenses will
continue to increase as the Company completes development of its software and
begins to distribute its products.
Research and development costs were $199,757 from date of inception to
December 31, 1998. Research and development costs primarily were made up of
expenses related to engineering design work and testing on the Workfire
Technology, bandwidth requirements relating to that testing, and the cost of the
purchase of the initial Workfire Technology. The Company expects research and
development spending to increase significantly as the Company completes the
commercial development of its Technology, and begins to market its product.
The introduction of Workfire's technology to the market will be influenced
by the Company's ability to obtain further funding, enter into strategic
relationships, and complete commercial development of its technology and develop
further tests. There can be no assurance that the Company will be able to obtain
the required funding, enter into any strategic agreements or ultimately complete
its commercial technology.
LIQUIDITY AND CAPITAL RESOURCES
From July 7, 1998 to December 31, 1998, Workfire has raised approximately
$680,203 through private sales of stock. The Company requires additional funding
to continue operations. Funds to continue operations will be applied to
development of the Workfire Technology, establishing sales and marketing
capabilities, and sales of the Company's product once development is completed.
Workfire is currently reviewing multiple avenues of future funding including a
secondary offering of securities, private sale of equity or arrangements with
strategic partners. The Company does not have any commitments for any such
financing and there can be no assurance that the Company will obtain additional
capital when needed or that additional capital will not have a dilutive effect
on current shareholders. The Company does not anticipate receiving significant
funding from lenders.
Workfire incurred capital expenditures of approximately $43,000 in the
period from inception to December 31, 1998. The Company anticipates
significantly higher capital expenditures in the near future for computer
equipment and office expansion as the Company nears product introduction. The
timing and amount of such expenditures will be governed by the Company's
development and market introduction schedules, which are subject to change due
to a number of factors including development delays and availability of future
financing.
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YEAR 2000 COMPLIANCE
Many existing computer systems and applications, and other control devices
use only two digits to identify a year in the date field, without considering
the impact of the upcoming change in the century. Others do not correctly
process "leap year" dates. As a result, such systems and applications could fail
or create erroneous results unless corrected so that they can correctly process
data related to the year 2000 and beyond, but there can be no assurance that
such upgrades will be completed on a timely basis or without incurring
substantial costs. While the Company has evaluated its products for year 2000
compliance and believes that each is substantially year 2000 compliant, there
can be no assurance that the Company's products are or will ultimately be year
2000 compliant. In addition, the Company believes that it is not possible to
determine whether all of its customers' products into which the Company's
products are incorporated will be year 2000 compliant because the Company has
little or no control over the design production and testing of its customers'
products. The Company relies on its systems, applications and devices in
operating and monitoring all major aspects of its business, including financial
systems (such as general ledger, accounts payable and payroll modules), customer
services, infrastructure, embedded computer chips, networks and
telecommunications equipment and end products. Although the Company is in the
process of upgrading its software to address the year 2000 issue, there can be
no assurance that such upgrades will be completed on a timely basis at
reasonable costs, or that such upgrades will be able to anticipate all of the
problems triggered by the actual impact of the year 2000. The Company also
relies, directly and indirectly on external systems for the testing of
substantially all of the Company's products and business enterprises such as
customer, suppliers, creditors, financial organizations, and of governmental
entities, both domestic and international, for accurate exchange of data. The
Company could be affected through disruptions in the operation of the
enterprises with which the Company interacts or from general widespread problems
or an economic crisis resulting from non-compliant year 2000 systems. Despite
the Company's efforts to address the year 2000 impact on its internal systems
and business operations, there can be no assurance that such impact will not
result in a material disruption of its business or have a material adverse
effect on the Company's business, financial condition or results of operations.
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BUSINESS
BACKGROUND
The Company was originally incorporated in the State of Colorado on
October 31, 1989, under the name "Tantallon Capital, Inc." It acquired Workfire
Technologies International Inc., a Nevada corporation, effective August 26,
1998. Effective September 15, 1998, the Company changed its name and domicile by
merging into Workfire Technologies Inc., a Nevada corporation. The Company
changed its name to "Workfire.com" on February 4, 1999.
Workfire Technologies International Inc. has a wholly-owned
subsidiary called Workfire Development Corporation, a British Columbia
corporation.
THE TECHNOLOGY
The power of the Internet lies in distributed computing. Workfire's entire
technology is designed to take advantage of distributed computing concepts.
Years of research and design work have resulted in a distributed computing
system that promises to revolutionize the way data is transmitted on the
Internet.
The Workfire system is the foundation for delivery of extended services or
modules. The first of those modules, called netOCTANE, is a performance
enhancing service. The core technology provides the essential network
connectivity and cross platform functionality for all Workfire services. It
provides operating system independence, TCP/IP, HTTP and high-speed proxy
capability to Workfire software modules. The architecture is implemented in high
performance, cross platform C and runs under Unix, WindowsNT, and Windows95. It
is uniquely designed to enable the ongoing rollout of a broad range of
high-value Internet based services developed by both Workfire and other
developers.
DISTRIBUTED SYSTEMS. Distributed Systems are made of two or more computers
sharing the load of a specific task. By using more than one computer, the system
is able to harness more computing power than a single computer would have. This
means the required tasks are completed faster than they would otherwise be.
There are several different advantages to using a distributed type of
system. The first is cost. Second is location/proximity. Third is maximizing use
of available resources. It is essentially a decentralized system.
By distributing the workload, the system can be composed of a number of
smaller machines. Each machine operates at peak efficiency. This eliminates the
need for high capital expenditures by allowing incremental, low cost upgrades of
the system. Larger centralized systems require very high original capital
investment, as well as very high upgrade costs.
The second major benefit of distributed systems has to do with location
and proximity. When a user is making a request to a server, or performance
portal, the closer that server is to the user (from an Internet geographical
perspective), the more responsive the connection will be. By distributing
Workfire's servers throughout the Internet, Workfire will be reducing the
distance between its clients and the servers. This will result in greater
performance gains.
The last benefit of a distributed system lies in each node's ability to
communicate with the other. This communication means that a single system is
able to access all of the data and power contained in the other systems on the
network. It can also share large tasks with other systems on the network. As a
result, a "small" system can do the work that a large system would normally be
required for.
PERFORMANCE PORTAL. The Performance Portal has similarities with media
portals and proxy servers. By intercepting and redirecting requests made by
users, the Performance Portal is able to ensure more efficient communication,
and thus better performance for the end user. The Performance Portal also has
the benefit of capturing eyeballs. Workfire is able to deliver content and
advertising
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messages to the end users that use the Workfire portal. Unlike other portals on
the Internet, the user does not need to point their browser at Workfire's URL
intentionally, Workfire's client application does that work in the background.
The Performance Portal handles and redirects all user web page requests.
It also delivers content and advertising to the end user in a non-intrusive way.
EXTENDED SERVICE MODULES. Extended Service Modules are the core products
that Workfire will be offering. Workfire will regularly release new modules with
the extended features our market research indicates are in demand.
Each module is implemented with three key components:
o a PC-based application running on the users' PC, which is downloaded
free,
o compression and caching software running on the Workfire servers, and
o proprietary central dispatch server, situated on a high capacity
Internet connection, enabling Workfire to coordinate, control and
charge for the extended service.
PRODUCT DESCRIPTION
NETOCTANE(TM) - FASTER ACCESS TO THE WORLD WIDE Web. Workfire's first
module, netOCTANE(TM) is designed to lower costs by increasing the throughput of
existing bandwidth, saving time and ensuring more reliable file transfers.
netOCTANE(TM) enhances performance by exploiting the unique nature of
distributed systems in combination with the proven compression and caching
techniques. In addition, netOCTANE(TM) improves performance by harnessing
underutilized processing and communication capacity on the Internet. This
results in improved Web download speed, reliability, and usability, without
compromising compatibility with new and existing modems, firewalls, routers, and
overall Internet infrastructure. netOCTANE(TM) also incorporates a high
performance distributed caching system that eliminates unnecessary data
transfers by caching data that will be accessed more than once.
The netOCTANE(TM) prototype was demonstrated in Intel Corporation's booth
at COMDEX Las Vegas in November 1997, and Workfire's booth at Fall Comdex 1998.
PREMIUM NETOCTANE(TM). While Workfire will make netOCTANE(TM) available to
anyone for free, all users will have the option of upgrading to Premium
netOCTANE(TM). This product has all the features of netOCTANE(TM), plus faulT
tolerant file transfer and link rot removal.
Currently, if a problem occurs during a file transfer, Internet users have
no choice but to start the file transfer again. The vast majority of Internet
users have experienced a connection failure several hours into a lengthy file
transfer. Premium netOCTANE(TM) allows disrupted transfers to be resumed from
the point at which they were broken.
One of the most serious problems with the Internet is broken links. A
broken link is caused by a web page that has been removed by the author or by
systems that are no longer working. Premium netOCTANE(TM) filters broken links
before the user receives them. This eliminates the annoyance of waiting for a
link to load, only to find that it is broken. Premium netOCTANE(TM) dynamically
"pings" the requested pages, upstream at the Workfire server. If the page is not
available the link will be dynamically "grayed out".
FUTURE PRODUCTS
NETMAIL(TM) - INTERNET ENHANCED EMAIL. The Internet has made information
available from multiple computers around the world. However, email services have
not yet caught up. It is difficult to send, receive, and check old emails from
another person's computer. netMail(TM) will be designed to give users access to
important email messages and address book contents no matter what computer they
are using to access the Internet.
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NETOCULATE(TM) - UPSTREAM VIRUS CHECKING. Virus check is difficult to
manage at the individual personal computer level because anti-virus software can
not block newly created viruses with out constant updating. netOculate(TM) will
be designed to perform a virus check at the Internet Service Provider, resulting
in a much simpler and more reliable system for the consumer and the enterprise.
NETFILTER(TM) - CUSTOMIZED CONTENT SCREENING. Schools, libraries,
churches, and parents require simple, tamper-proof filtering of inappropriate
content. netFilter(TM) will be designed to perform this task upstream, at the
Internet Service Provider before the objectionable material even enters the
building. While motivated individuals can easily defeat current client-side
filter solutions, Workfire believes they will not be able to breach filtering
screens at the Internet Service Provider.
THE INTERNET MARKET
At $648 billion, information technology now represents more than 8% of the
$8.2 trillion American economy, up 35% from its 6.1% proportion in 1990.
(Source: US Dept of Commerce, "Information Technology Industries--Of Growing
Importance to the Economy and Jobs, 1998"). Software represents about 33 percent
of information technology. Packaged software alone is a $133 billion market.
Despite its extraordinary size, software continues to outpace the growth of the
rest of the economy, at 12% annually (IDC, quoted in Business Week, January 12,
1998).
The fastest growing significant segment of the software market is Internet
software, primarily in the form of applications and utilities for the 147
million PCs connected to the Internet, and in server and network enabling
applications for the 45 million host computers that deliver connection and
content to Internet users. (Source: Network Wizards, WWW.NW.COM, Jan 1999.)
The worldwide Internet user population now stands at 147 million,
according to Computer Industry Almanac Inc., February, 1999. Despite this
explosive growth, such statistics only serve to underplay the massive increase
in demand for communications bandwidth. In addition to the steep linear
increases driven by the expanding user population, the use of the Internet is
changing, with increasing use of larger data elements, such as graphics, video
and audio elements. As a consequence, even in the 16 months from August 1995 to
December 1996, data transmission over the Internet's primary backbone grew 900%.
(More recent data is expected to show similar results, Forbes magazine Oct 9,
1997).
Communications-related hardware, software, and service accounts for more
than the 50% of the estimated $100 billion to be expended on Internet
infrastructure in the year 2000. Although the "cost-per-bit" of data
transmission is decreasing, the demand for capacity is driving extensive effort
and capital expenditures aimed at addressing total cost, usability, and sheer
capacity.
Today, the Internet is primarily a medium for communication, research and
entertainment. While the Internet is accessed primarily from home, the content
is largely offered by businesses for commercial purposes. Although free to the
user, most of this content is intended, directly or indirectly, to influence
buyer behavior through associated on-line advertising. In 1998, the Internet
attracted $1.3 billion in advertising revenue in the first 3 quarters. That
number is expected to top $2 billion for the full 1998 year (Internet
Advertising Bureau, Feb.
1999).
As the Internet matures, it is transforming from a medium into a
marketplace. This future is only beginning to be realized. In 1998, consumer
spending was projected to exceed US$13 billion on purchases via the Internet
(Shop.org, Nov. 1998). By 2002, consumer and business spending is expected to
grow by more than 100% compounded per annum to nearly $300 billion, 90% of which
will be business-to-business transactions(eMarketer eCommerce report, 1998).
In addition to the substantial penetration of Internet email and Web
connections into business organizations, firms are beginning to rely on
Intranets, which are internal corporate computer networks based on
communications and server technologies that were originally developed for the
Internet. Spending on Intranet infrastructure is expected to more than quadruple
from US$6 billion in 1996 to $28
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billion in 1999. Intranets are favored because, in addition to delivering a
familiar experience to users, they are inherently inexpensive, as they work with
widely available hardware and software.
SALES AND MARKETING
GENERAL. The Workfire marketing strategy consists of a multi-staged
multi-media effort. The bulk of the marketing efforts will be conducted in the
online community. This is where Workfire's primary market is most easily
reached. For the purposes of reaching the investment community and branding the
product, some offline marketing techniques will be used also. This section is a
description of the tools that will be used in both environments.
ONLINE PUBLICATIONS. There are a myriad of online publications (web sites
and newsletters) which are targeted at both our customers and investors. These
publications include AnchorDesk, BYTE Online, CNET, PC Magazine, CMP Techweb,
ZDNet, etc. Experience has shown that it can be very difficult to rise above the
noise level and get your product recognized by the reviewers at these
publications. To solve this challenge, Workfire plans to engage the services of
a top quality public relations firm who can get our product in the front door
and on the desks of these critical reviewers.
As the anticipated positive reviews of netOCTANE begin to come out, they
will be promoted on Workfire's web site, included in press releases, sent to
prospective customers and investors, and incorporated in traditional media
advertising including Investor and media kits. Workfire plans to use positive
reviews to get recognition from a wider base of reviewers. Workfire also plans
to get a continual stream of press coverage. Workfire's web site will include a
repository of reviews, with the best reviews highlighted.
SOFTWARE REVIEW/DOWNLOAD SITES. Numerous sites exist on the Web which
provide Internet users with download access to the latest tools and
applications. These sites are useful to Workfire because they serve to off-load
some of the bandwidth requirements for downloading software. These types of
sites include Download.com, Shareware.com, Tucows, etc. Once the product is
ready for release, these sites will be notified, netOCTANE will be added to
their lists of available software.
PARTNERING PROGRAMS. Workfire plans to develop programs with large
corporations to improve the credibility of Workfire and our products. Some
examples of companies which would improve Workfire's image are Cisco, IBM,
Intel, 3Com, etc. By partnering with these `trusted' companies, Workfire
benefits through association. Negotiations with these types of companies are
ongoing.
WEB ADVERTISING. Many forms of web advertising are available to Workfire.
The most obvious is banner advertising. Workfire has engaged a high profile
marketing firm to develop a cohesive theme for the advertising campaign. This
includes an engaging set of banner advertisements which are designed to deliver
not only hits, but to also support the company's image and brand.
SELF PROMOTION. Until the client application (netOCTANE) is widely
distributed, it will not be feasible to sell advertising to external companies.
Instead, all advertising and promotion done with the client's advertising
abilities will be self-promoting. This technique has been highly effective for
companies such as MTV, Yahoo, etc. By increasing the customer's awareness of our
products and company we will be encouraging word of mouth advertising and
re-enforcing our position as a leader in the extended service marketplace.
STANDARDS COMMITTEE PARTICIPATION. Our engineers will be very active in
discussions of new and proposed standards for Internet communications. This
activity ensures that the profile of Workfire in the technical community is one
of very high quality. By ensuring that Workfire is involved with standards
development, we will be regarded as a cornerstone company in the future
development of the Internet.
TRADITIONAL MEDIA ADVERTISING. Workfire will actively pursue magazine
reviews of our products as well as company reviews for investor purposes. A high
quality PR firm will be engaged to generate these opportunities for the Company.
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In addition, Workfire will position full-page advertisements in key
Internet related magazines and trade publications. These advertisements will be
designed to drive traffic to the performance portal and brand the Workfire and
netOCTANE names.
TRADE SHOWS. There are a few trade shows that will be important for
Workfire to attend. Among these are Fall Comdex, Spring Internet World, and
Networld Interop. As the product is refined and marketed to ISPs, the company's
schedule will be expanded to include ISP focussed trade shows such as ISPCon.
The focus of these shows will be product awareness and branding. New product
releases will most likely be timed to coincide with a large trade show.
COMPETITION
Because the technology that the company is developing is new, Workfire
knows of only one company developing a product that competes directly with
netOCTANE (see next paragraph). However, there are other companies who would be
in a position to establish themselves as competitors if they leveraged their
existing products. These companies are primarily caching companies such as
CacheFlow Inc., Cisco Systems, Inc., Inktomi Corporation, Microsoft Corporation,
Mirror Image Internet, Inc., Netscape Communications Corp.m Network Appliance,
Inc., Novell, Inc., and Spyglass, Inc. Freeware caching solutions also exist
which could be modified or adapted to offer similar services. These products
include CERN, Harvest and Squid.
A product similar to netOCTANE was developed and marketed by Intel
Corporation under the name QuickWeb. The company is aware that Intel has
discontinued the marketing of QuickWeb, but is seeking agreements to license the
QuickWeb technology to other companies. These companies could become direct
competition to the netOCTANE product in the future.
It is realistic to expect that if the netOCTANE product is successful in
the marketplace that large networking hardware and software manufacturers would
develop competing products. These companies include Ascend Communications, Inc.,
Bay Networks, Inc., Ciena Corporation, Digital Equipment Corporation, Hewlett
Packard Company, IBM Corporation , Intel Corporation, Motorola, Inc. and Sun
Microsystems, Inc. Telecommunications providers such as AT&T Inc., MCI Worldcom,
Inc., and regional Bell operating companies; cable TV/communications providers
such as Continental Cablevision, Inc., TimeWarner, Inc. and regional cable
operators.
Our competitors may be able to respond more quickly to new or emerging
technologies and changes in customer requirements than we can. In addition, our
current and potential competitors may bundle their products with other software
or hardware, including operating systems and browsers, in a manner that may
discourage users from purchasing products offered by us. Also, current and
potential competitors have greater name recognition, more extensive customer
bases that could be leveraged and access to proprietary content. Increased
competition could result in price reductions, fewer customer orders, reduced
gross margins and loss of market share.
No assurance can be given that other companies will not develop
technologies substantially equivalent to those we own or that we may acquire or
develop. No assurance can be given that we will be able to protect our
proprietary technology. We are not aware of any issued patents that would
prohibit the use of any technology we currently have under development. However,
patents may exist or be issued in the future to other companies covering
elements of our systems. The existence or issuance of such patents may require
us to make significant changes in the design of our systems or operational
plans. Although we believe that our proposed products will not infringe patent
rights of others, there can be no assurance that such infringement does not, or
will not, exist with respect to the completed product. We have not conducted an
independent patent search or evaluation with respect to Workfire's technology
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EMPLOYEES AND PROPERTY
As of March 31, 1999, the Company employed nine persons on a full-time and
one person on a part-time basis. Workfire engages consultants and independent
contractors to provide services related to the development of the Workfire
system and marketing. The Company expects to hire other personnel as necessary
for product development, quality assurance, sales and marketing, and
administration.
The Company's Canadian operating subsidiary, Workfire Development
Corporation, leases offices (comprised of 3,523 square feet) at Suite 400, 1708
Dolphin Avenue, Kelowna, British Columbia at a base monthly rent of
approximately $3,240 Cdn pursuant to a lease arrangement which expires January,
2004. This lease arrangement can be renewed for an additional five years at
Workfire's discretion.
LEGAL PROCEEDINGS
The Company is not a party to any litigation that would have a material
adverse effect on its financial condition or results of operations.
MANAGEMENT
DIRECTORS AND OFFICERS
The sole director and officer of the Company is as follows:
NAME AGE POSITION
Tom Taylor 35 Chief Technical Officer,
President, Secretary and Director
The term of office of each director of the Company ends at the next annual
meeting of the Company's stockholders or when such director's successor is
elected and qualifies. No date for the next annual meeting of stockholders is
specified in the Company's Bylaws or has been fixed by the Board of Directors.
The term of office of each officer of the Company ends at the next annual
meeting of the Company's Board of Directors, expected to take place immediately
after the next annual meeting of stockholders, or when such officer's successor
is elected and qualifies.
TOM TAYLOR has been the Chief Technical Officer, President, and a director
since August, 1998. He has been involved in the design and development of
complex technologies within the computer software and communications industries.
From 1985 to 1991, Mr. Taylor was a consulting micro-electronic and software
engineer for several companies including Ferranti PLC of Edinburgh, United
Kingdom; Sierra Semiconductor, San Jose, California; and MPR Teltech, Burnaby,
British Columbia. From 1992 to 1994, he designed computer-pointing devices and
systems designed to improve the ease of using computers for Timespan
Communications of Richmond, British Columbia. He was the chief engineer for
Chameleon Bridge Technologies of Lions Bay, British Columbia, from 1994 to 1996.
This company, which was acquired by Peak Technologies Inc. in March 1996, was a
leader in Internet technology. From 1996 to 1997, Mr. Taylor was the chief
technology officer for Peak Technologies Inc. of Bellingham, Washington, where
he was responsible for the development of Peak's technology objectives. These
objectives focused on Internet communications protocols and the use of Java
technology. Peak was the first company to deliver a commercial Java application
to the retail channel.
EXECUTIVE COMPENSATION
The following table set forth the remuneration for the fiscal year ended
December 31, 1998 of the Company's chief executive officer and all other
executive officers whose compensation exceeded $100,000:
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<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
--------------------------------------------------------------------------------------------
OTHER RESTRICTE Securities All Other
NAME AND ANNUAL STOCK Underlying LTIP Compen-
PRINCIPAL COMPEN- AWARD(S) Options/ Payouts sation
POSITION Year SALARY($) BONUS ($) SATION ($) ($) SARS(#) ($) ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tom 1998 $32,000(C$) -0- -0- -0- 300,000(1)<F1> -0- -0-
Taylor,
President
- ---------------------------------------------------------------------------------------------------------------
<FN>
<F1>
(1) Includes 150,000 options granted to his wife, Allison Taylor.
</FN>
</TABLE>
The following table sets forth all individual grants of stock options and
freestanding Stock Appreciation Rights (SARs) made during the last completed
fiscal year to each of the named executive officer:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------
Securities % of Total
Underlying Number of Options/
Options/ SARs Granted Exercise or
SARs Granted to Employees Base Price
Name (#) in Fiscal Year ($/Sh) Expiration Date
- --------------------------------------------------------------------------------
Tom Taylor 300,000 (1) 25% $1.00 Cdn. 07/31/2000
- --------------------------------------------------------------------------------
(1) Includes 150,000 options granted to his wife, Allison Taylor.
No stock options were exercised during the last fiscal year.
All officers and directors are reimbursed for actual out-of-pocket
expenses incurred on behalf of the Company.
The Company has no retirement, pension, profit sharing or medical
reimbursement plans exclusively covering its officers and directors, and does
not contemplate implementing any such plans at this time.
PRINCIPAL SHAREHOLDERS
The following table provides information as of May 12, 1999 concerning the
beneficial ownership of Workfire's Common Stock by (i) each director, (ii) each
Named Executive Officer, (iii) each shareholder known by Workfire to be the
beneficial owner of more than 5% of its outstanding Common Stock, and (iv) the
directors and officers as a group. Except as otherwise indicated, the persons
named in the table have sole voting and investing power with respect to all
shares of Common Stock owned by them.
PERCENT OF CLASS (1)
------------------------
NUMBER OF SHARES BEFORE AFTER
NAME AND ADDRESS OF OWNER OWNED OFFERING OFFERING
Tom Taylor (2) 3,271,348 25.12% 23.33%
Allison Taylor
3985 Gallaghers Circle
Kelowna, B.C. V1W 3Z9 Canada
Silhouette Investments Ltd. (3) 2,585,797 19.86% 18.44%
P.O. Box 22009, Capri Centre
Kelowna, B.C.V1Y 9N9 Canada
Eastlane Trading Limited (4) 2,262,209 16.65% 15.51%
28 Harcourt Street
Dublin, 2 Ireland
21
<PAGE>
PERCENT OF CLASS (1)
------------------------
NUMBER OF SHARES BEFORE AFTER
NAME AND ADDRESS OF OWNER OWNED OFFERING OFFERING
Karen Redekop (3) 1,178,904 9.05% 8.41%
#700 - 1207 11th Avenue S.W.
Calgary, Alberta T3C 0M5
Canada
Kevin O'Neill 1,000,000 7.86% 7.29%
3740 Southridge Avenue
West Vancouver, B.C. V7V 3H8
Canada
Walsall Trading Ltd. 762,458 5.99% 5.56%
C/o United House
14/16 Nelson Street
Douglas, Isle of Man
1M1 2AL British Isle
Byron McLean 762,458 5.99% 5.56%
5448 LaSalle Crescent S.W.
Calgary, Alberta T3E 5Y5
Officers and Directors as a 3,271,348 25.12% 23.33%
group (1 person) (1)
- ------------
(1) Where persons listed on this table have the right to obtain additional
shares of Common Stock through the exercise of outstanding options or
warrants or the conversion of convertible securities within 60 days from
May 12, 1999, these additional shares are deemed to be outstanding for the
purpose of computing the percentage of Common Stock owned by such persons,
but are not deemed to be outstanding for the purpose of computing the
percentage owned by any other person. Percentages are based on 12,722,755
shares outstanding before the offering and 13,722,755 shares after the
offering.
(2) Tom Taylor owns 1,485,675 shares of record and Allison Taylor owns
1,485,673 shares of record. Includes options to purchase 300,000 shares at
$1.00 Cdn. per share through July 31, 2000.
(3) Includes options to purchase 300,000 shares at $1.00 Cdn. per share
through July 31, 2000.
(4) Includes options to purchase 560,631 shares at $0.20 Cdn. per share
through April 30, 1999 and options to purchase 300,000 shares at $1.00
Cdn. per share through July 31, 2000.
DESCRIPTION OF SECURITIES
GENERAL
The Company's Articles of Incorporation authorize the issuance of up to
100,000,000 common shares, par value of $.0001 per share, and 1,000,000
non-voting preferred shares with a par value of $.01 per share. None of the
holders of any class or series of the Company's capital stock has preemptive
rights or a right to cumulative voting.
PREFERRED STOCK
The Articles of Incorporation authorize the Board of Directors to issue,
by resolution, 1,000,000 shares of preferred stock, in classes or series, having
such designations, powers, preferences, rights, and limitations as the Board of
Directors may from time to time determine. See "Risk Factors - Authorization of
Preferred Stock." As of the date of this Prospectus, no classes of preferred
stock have been designated and no shares have been issued.
22
<PAGE>
COMMON STOCK
As of the date of this Prospectus, there were 12,722,755 shares of the
Company's Common Stock issued and outstanding. The Board of Directors may issue
additional shares of Common Stock without the consent of the holders of Common
Stock
VOTING RIGHTS. Each outstanding share of Common Stock is entitled to one
vote. The holders of Common Stock do not have cumulative voting rights, which
means that the holders of more than 50% of such outstanding shares voting for
the election of directors can elect all of the directors of the Company to be
elected, if they so choose.
NO PREEMPTIVE RIGHTS. Holders of Common Stock are not entitled to
any preemptive rights.
DIVIDENDS AND DISTRIBUTIONS. Holders of Common Stock are entitled to
receive such dividends as may be declared by the directors out of funds legally
available therefor and to share pro rata in any distributions to holders of
Common Stock upon liquidation or otherwise. However, the Company has not paid
cash dividends on its Common Stock, and does not expect to pay such dividends in
the foreseeable future.
TRANSFER AGENT
Standard Registrar & Transfer Agency, P.O. Box 14411, Albuquerque, New
Mexico, is the transfer agent for the Common Stock.
PLAN OF DISTRIBUTION
GENERAL
The Company is acting as the general selling agent with respect to the
securities offered pursuant to this Prospectus and said securities will be sold
to the public at a price of $____ per Share. The Company intends to enter into
agreements with securities broker-dealers, who are members of the National
Association of Securities Dealers, Inc. ("NASD"), whereby these broker-dealers
will be involved in the sale of these Shares to the public and will be paid a
commission of ten percent (10%) by the Company. No broker-dealer has agreed to
participate in this offering as of the date of this Prospectus. The NASD must
first approve the arrangements with any broker-dealers that will participate in
the distribution of this offering. In addition, the sole officer and director of
the Company may also be involved in the sale of the Shares but will not receive
any sales commission or other remuneration. This distribution will not involve
any reallocations between NASD members and non-members.
Management of the Company may provide any sales agent or broker-dealer
with a list of persons whom management believes may be interested in purchasing
Shares in this offering. The sales agent or broker-dealer may sell a portion of
the Shares to any such person if he resides in a state where the Shares can be
sold and where the sales agent or broker-dealer can sell the Shares. No sales
agent or broker-dealer is obligated to sell any Shares to any such person and
will do so only to the extent that such sales would not be inconsistent with the
public distribution of the Shares. The Company is unaware of any person,
including any affiliate, who intends to finance any portion of the purchase
price of the Shares to be acquired in this offering. It is not intended that the
proceeds from this offering will be used, directly or indirectly, to enable
anyone to purchase Shares.
METHOD OF SUBSCRIBING
Persons may subscribe by completing the form of Subscription Agreement
prescribed by the Company and furnish the same to the Company. The subscription
price of $_____ per Share must be paid by check, bank draft, or postal or
express money order payable in United States dollars to the order
23
<PAGE>
of Workfire.com. Certificates for shares of Common Stock subscribed for will be
issued as soon as practicable after termination of the offering.
EXPIRATION DATE
The subscription offer will expire ___________________________ which
period may be extended for an additional ____________, or on such earlier date
as the Company shall determine in its discretion (the "Expiration Date").
RIGHT TO REJECT
The Company reserves the right to reject any subscription in its sole
discretion and to withdraw this offer at any time prior to acceptance by the
Company of the subscriptions received, if acceptance of a subscription would
result in the violation of any laws to which the Company is subject.
LEGAL MATTERS
Dill Dill Carr Stonbraker & Hutchings, P.C., Denver, Colorado will pass
upon the validity of the Shares offered hereby for Workfire.
EXPERTS
The financial statements of Workfire as of December 31, 1998 included in
this Prospectus have been audited by KPMG LLP, independent chartered
accountants, as set forth in their report on such financial statements, and are
included in this Prospectus in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has not previously been subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Company has filed with the Securities and Exchange Commission (the "Commission")
a Registration Statement on Form SB-1 (including amendments thereto, the
"Registration Statement") under the Securities Act with respect to the
Securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
Securities, you should review the Registration Statement and the exhibits and
schedules thereto. Statements made in this Prospectus regarding the contents of
any contract or document filed as an exhibit to the Registration Statement are
not necessarily complete. You should review the copy of such contract or
document so filed.
You can inspect the Registration Statement and the exhibits and the
schedules thereto filed with the Commission, without charge, at the office of
the Commission at Judiciary Plaza, 450 Fifth Street, NW, Washington, D.C. 20549.
You can also obtain copies of these materials from the Public Reference Section
of the Commission at 450 Fifth Street, NW, Washington, D.C. 20549, at prescribed
rates. You can obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The Commission maintains a web site on the
Internet that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the Commission at
HTTP://WWW.SEC.GOV.
The Company has a web site on the Internet at www.workfire.com.
24
<PAGE>
REPORTS TO STOCKHOLDERS
As a result of filing the Registration Statement, the Company will become
subject to the reporting requirements of the Exchange Act, and will be required
to file periodic reports, proxy statements, and other information with the
Commission. The Company will furnish its shareholders with annual reports
containing audited financial statements certified by independent public
accountants following the end of each fiscal year, proxy statements, and
quarterly reports containing unaudited financial information for the first three
quarters of each fiscal year following the end of such fiscal quarter.
25
<PAGE>
Consolidated Financial Statements of
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
From incorporation on July 7, 1998 to December 31, 1998
<PAGE>
AUDITORS' REPORT TO THE SHAREHOLDERS
We have audited the consolidated balance sheet of Workfire Technologies Inc. as
at December 31, 1998 and the consolidated statements of loss and deficit and
cash flows for the period from incorporation on July 7, 1998 to 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 an audit to obtain reasonable
assurance 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.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at December 31, 1998
and the results of its operations and the changes in its cash flows for the
period from incorporation on July 7, 1998 to December 31, 1998 in accordance
with generally accepted accounting principles in The United States of America.
Kelowna, Canada
January 27, 1999
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Consolidated Balance Sheet
$ United States
December 31, 1998
- --------------------------------------------------------------------------------
Assets
Current assets
Cash (note 3) $ 315,658
Accounts receivable 4,297
Prepaid expenses 5,326
- --------------------------------------------------------------------------------
325,281
Due from related parties (note 4) 10,521
Capital assets (note 5) 43,074
- --------------------------------------------------------------------------------
$ 378,876
- --------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 16,016
Due to related party (note 6) 9,943
Stockholders' Equity
Share capital (note 7) 680,213
Deficit accumulated during the development stage (328,086)
Foreign currency translation adjustment 790
- --------------------------------------------------------------------------------
352,917
- --------------------------------------------------------------------------------
$ 378,876
- --------------------------------------------------------------------------------
Related party transactions (note 8)
Subsequent events (note 9)
See accompanying notes to consolidated financial statements.
Approved by the Board:
______________________________ Director
______________________________ Director
F-3
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Consolidated Statement of Loss and Deficit
$ United States
Period from incorporation on July 7, 1998 to December 31, 1998
- --------------------------------------------------------------------------------
Revenue
Interest $ 1,575
Expenses
Research and development
Consultants 559
Internet access charges 2,118
Purchased research and development (note 8) 100,000
Salaries and benefits 97,080
- --------------------------------------------------------------------------------
199,757
General and administrative
Amortization 3,944
Marketing and promotion 15,335
Office and administration 12,585
Professional fees 10,973
Rent and utilities 11,798
Salaries and benefits 59,194
Travel 16,075
- --------------------------------------------------------------------------------
129,904
- --------------------------------------------------------------------------------
Loss, being deficit at end of period $(328,086)
- --------------------------------------------------------------------------------
Weighted average number of shares outstanding during the period 8,975,384
Loss per share (note 1(g)) $ (0.04)
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Consolidated Statement of Cash Flows
$ United States
Period from incorporation on July 7, 1998 to December 31, 1998
- --------------------------------------------------------------------------------
Cash provided by (used in):
Operations
Net loss for period $(328,086) Items not involving cash:
Amortization 3,944
Changes in non-cash working capital:
Accounts receivable (4,297)
Prepaid expenses (5,326)
Accounts payable and accrued liabilities 16,016
- --------------------------------------------------------------------------------
(317,749)
Financing
Advances to related parties (10,521)
Advances from related parties 9,943
Issue of common shares 680,213
- --------------------------------------------------------------------------------
679,635
Investments
Expenditures on capital assets (47,018)
Foreign currency translation adjustment 790
- --------------------------------------------------------------------------------
Increase in cash, being cash at end of period $ 315,658
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
$ United States
Period from incorporation on July 7, 1998 to December 31, 1998
- --------------------------------------------------------------------------------
Workfire Technologies Inc. ("WTI" or the "Company") is a development stage
company and was incorporated on September 15, 1998 under the General
Incorporation Laws of the state of Nevada. The Company's principal business
activity is the development of software to deliver extended Internet services
to Internet users (the "Workfire" technology).
1. SIGNIFICANT ACCOUNTING POLICIES:
a) Translation of Financial Statements
The Company's subsidiary, Workfire Development Corporation, operates in
Canada and its operations are conducted in Canadian currency.
Except as otherwise noted, these statements are presented in United States
currency for the convenience of readers accustomed to United States
currency. The method of translation applied is as follows:
i) Assets and liabilities are translated at the rate of exchange in
effect at the balance sheet date, being US $1.00 per Cdn $1.5333.
ii) Revenues and expenses are translated at the exchange rate in effect
at the transaction date.
iii) The net adjustment arising from the translation is recorded as a
separate component of stockholders' equity called "foreign currency
translation adjustment".
b) Basis of consolidation
The consolidated financial statements include the accounts of the Company
and it wholly-owned subsidiaries, Workfire Technologies International Inc.
("WTII") and Workfire Development Corporation ("WDC").
Effective August 26, 1998 Tantallon Capital Inc. ("Tantallon") acquired
100% of the outstanding common shares of WTII. As WTII shareholders
obtained control of Tantallon through the exchange of their shares of WTII
for shares of Tantallon, the acquisition of WTII has been accounted for in
these consolidated financial statements as a reverse acquisition.
Effective September 15, 1998, Tantallon merged with WTI with the
continuing company using the name Workfire Technologies Inc. Consequently,
the consolidated statements of loss and deficit and cash flows reflect the
results of operations and changes in financial position of WTII, and its
wholly-owned subsidiary, WDC, for the period from incorporation of WTII on
July 7, 1998 to December 31, 1998, combined with those of the legal
parent, Tantallon and subsequently WTI, from acquisition on August 26,
1998, in accordance with generally accepted accounting principles for
reverse acquisitions.
In these notes to the consolidated financial statements, the Company,
prior to the business combination with Tantallon, is referred to as
"Tantallon", and after completion of the business combination, is referred
to as "WTI".
F-6
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period from incorporation on July 7, 1998 to December 31, 1998
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
c) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates. d) Financial instruments
The fair values of cash, accounts receivable and accounts payable and
accrued liabilities approximate their carrying values due to the
relatively short periods to maturity of these instruments. It is not
possible to determine the fair value of amounts due from/to related
parties as a maturity date is not determinable. The maximum credit risk
exposure for all financial assets is the carrying amount of that asset. e)
Capital assets
Capital assets are stated at cost. Amortization is provided using the
following methods and annual rates:
--------------------------------------------------------------------------
Asset Method Rate
--------------------------------------------------------------------------
Office equipment Declining balance 20%
Computer equipment Declining balance 30%
Computer software Declining balance 100%
Incorporation costs Straight line 20%
--------------------------------------------------------------------------
Amortization is provided at one-half the annual rates in the year of
acquisition.
f) Technology
Software development costs have been accounted for in accordance with
Statement of Financial Accounting Standards No. 86, ACCOUNTING FOR THE
COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED OR OTHERWISE MARKETED. Under
the standard, capitalization of software development costs begins upon the
establishment of technological feasibility, subject to net realizable
value considerations. Technological feasibility has not been established
at December 31, 1998 and therefore all costs of acquiring, developing and
enhancing the Workfire technology are charged to earnings as incurred.
F-7
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period from incorporation on July 7, 1998 to December 31, 1998
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
g) Loss per share
Loss per share has been calculated using the weighted average number of
common shares outstanding during the period. The full exercise of the
stock options referred to in note 7 is anti-dilutive and consequently loss
per share on a fully diluted basis has not been presented.
2. BUSINESS COMBINATION:
Effective August 26, 1998, WTII and Tantallon executed a business combination
agreement. Tantallon issued 10,800,000 common shares to the shareholders of
WTII in consideration for all of the issued and outstanding common shares of
WTII on the basis of 1.12 common shares of Tantallon for every common share
of WTII. As the former shareholders of WTII obtained control of Tantallon
through the share exchange, this transaction has been accounted for in these
financial statements as a reverse acquisition and the purchase method of
accounting has been applied. Under reverse acquisition accounting, WTII is
considered to have acquired Tantallon with the results of Tantallon's
operations included in the consolidated financial statements from the date of
acquisition. The acquisition has been recorded at the net asset value of
Tantallon at the date of acquisition. The acquisition details are as follows:
Net assets acquired
Cash 10
-----------------------------------------------------------------------------
Consideration given for net assets acquired
10,800,000 Common shares issued 10
-----------------------------------------------------------------------------
As WTII is deemed to be the continuing entity, share capital of WTI has been
increased by $375,948 as a result of accounting for this combination as a
reverse takeover.
The consolidated statements of loss and deficit and cash flows reflect the
results of operations and changes in financial position of WTII, the legal
subsidiary, for the period from incorporation of WTII on July 7, 1998 to
December 31, 1998, combined with those of WTI (formerly Tantallon) the legal
parent, from August 26, 1998, being the effective date of the acquisition, to
December 31, 1998.
Under reverse takeover accounting principles and the purchase method of
accounting, the results of operations of Tantallon are included in the
consolidated financial statements only from the effective date of the
acquisition. Accordingly, supplementary financial information presenting the
results of operations and changes in financial position of Tantallon for the
period from January 1, 1998, being the date following the most recent
financial statements, to August 26, 1998, being immediately prior to the
effective date of the combination, is presented below.
F-8
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period from incorporation on July 7, 1998 to December 31, 1998
- --------------------------------------------------------------------------------
2. BUSINESS COMBINATION (CONTINUED):
- --------------------------------------------------------------------------------
-----------------------------------------------------------------------------
Tantallon Capital Inc.
Statement of Loss and Deficit
Period from January 1, 1998 to August 26, 1998
General and administrative expense, representing
net loss for the period $ 18,578
Deficit, beginning of period 6,267
-----------------------------------------------------------------------------
Deficit, end of period $ 24,845
-----------------------------------------------------------------------------
Tantallon Capital Inc.
Statement of Cash Flows
Period from January 1, 1998 to August 26, 1998
Operations
Net loss for period $ (18,578)
Net change in working capital
Accounts payable and accrued liabilities (6,642)
-----------------------------------------------------------------------------
(25,220)
Financing
Redemption of common shares (25,000)
Issue of common shares 1,750
-----------------------------------------------------------------------------
(23,250)
-----------------------------------------------------------------------------
Decrease in cash for the period (48,470)
Cash, beginning of period 48,480
-----------------------------------------------------------------------------
Cash, end of period $ 10
3. CASH:
Included in cash is $15,650 restricted for credit purposes on corporate
credit cards. The funds will be released upon the company completing one year
of operations.
4. DUE FROM RELATED PARTIES:
Amounts due from related parties are unsecured with no stated terms of repayment
and do not bear interest.
F-9
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period from incorporation on July 7, 1998 to December 31, 1998
- --------------------------------------------------------------------------------
5. CAPITAL ASSETS:
-----------------------------------------------------------------------------
Accumulated Net book
Cost amortization value
-----------------------------------------------------------------------------
Office equipment $ 6,194 $ 310 $ 5,884
Computer equipment 36,748 2,756 33,992
Computer software 3,138 784 2,354
Incorporation costs 938 94 844
-----------------------------------------------------------------------------
$ 47,018 $ 3,944 $ 43,074
6. DUE TO RELATED PARTY:
The amount due to a related party is unsecured with no stated terms of
repayment and does not bear interest.
7. STOCKHOLDERS' EQUITY:
a) Authorized:
100,000,000 common voting shares with a par value of $0.0001 per share
1,000,000 non-voting preferred shares with a par value of $0.01 per
share
b) Common Shares Issued and Outstanding
The continuity of the Company's issued and outstanding share capital,
commencing with WTII on July 7, 1998 to August 26, 1998, being the
effective date of the reverse takeover, is as follows:
Number
of
WTII Shares Amount
---------------------------------------------------------------------------
Issued July 7, 1998 for cash at $0.0001 per share 8,032,000 $ 803
Issued August 19, 1998 for cash at Cdn $0.20 (US
$0.13) 1,250,000 166,667
Issued August 20, 1998 for cash at Cdn $1.00
(US $ 0.67) 350,000 233,333
--------------------------------------------------------------------------
WTII balance, August 26, 1998 9,632,000 400,803
Exchanged into Tantallon common shares at 1.12
Tantallon shares for each WTII share 1,168,000 -
--------------------------------------------------------------------------
Common shares of Tantallon issued to WTII
shareholders, at time of business combination 10,800,000 $ 400,803
on August 26, 1998
--------------------------------------------------------------------------
F-10
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(continued)
$ United States
Period from incorporation on July 7, 1998 to
December 31, 1998
------------------------------------------------
WTI
---------------------------------------------------------------------------
Tantallon balance, July 7, 1998 1,450,000 $ 49,855
Shares redeemed July 20, 1998 (250,000) (25,000)
---------------------------------------------------------------------------
1,200,000 24,855
Adjustment to record business combination
Increase in the book value of Tantallon's
share capital to that of WTII - 375,948
---------------------------------------------------------------------------
Tantallon balance, August 26, 1998, prior to
the business combination with WTII 1,200,000 400,803
Shares of Tantallon issued to acquire shares of
WTII (above), recorded at the carrying value 10,800,000 10
of Tantallon net assets (note 2)
---------------------------------------------------------------------------
Tantallon balance, August 26, 1998, after
business combination with WTII 12,000,000 400,813
Share subscriptions received pursuant to
Offering Disclosure Document dated November 372,533 279,400
23, 1998 at $0.75 per share
---------------------------------------------------------------------------
WTI balance, December 31, 1998 12,372,533 $ 680,213
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. STOCKHOLDERS' EQUITY (CONTINUED):
c) Stock option plan:
The Company has reserved 1,760,631 common shares for issuance to
directors, officers and key employees pursuant to stock options granted
during the period as follows:
----------------------------------------------------------------------
Stock options issued
during period and
outstanding Exercise price Expiry
at December 31, 1998 per share date
----------------------------------------------------------------------
560,631 Cdn $0.20 April 30, 1999
1,200,000 Cdn $1.00 July 31, 2000
----------------------------------------------------------------------
1,760,631
----------------------------------------------------------------------
F-11
<PAGE>
7. STOCKHOLDERS' EQUITY (CONTINUED):
The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its stock options
in the financial statements. Had the Company determined compensation costs
based on the fair value at the grant date for its stock options under SFAS
No. 123, the Company's net income would have been reduced to the pro forma
amounts below:
Net loss
As reported $328,086
Pro forma $362,757
Loss per share
As reported $0.04
Pro forma $0.04
8. RELATED PARTY TRANSACTIONS:
During the period, the Company purchased capital assets from a company under
common control for $26,589. The Company also acquired the rights to the
Workfire software from this company in return for the issuance of a note
payable for Cdn $150,000. The note was subsequently repaid in full.
These transactions are in the normal course of operations and are measured at
the vendor's cost, which is the amount of consideration agreed to by the
related party.
9. SUBSEQUENT EVENTS:
a) Commitment: Premises lease
Subsequent to December 31, 1998, the company signed a new triple net lease
agreement with base rent payments in each of the next five years as
follows:
1999 $ 23,240
2000 $ 25,350
2001 $ 25,350
2002 $ 25,350
2003 $ 25,350
F-12
<PAGE>
WORKFIRE TECHNOLOGIES INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (continued)
$ United States
Period from incorporation on July 7, 1998 to December 31, 1998
- --------------------------------------------------------------------------------
9. SUBSEQUENT EVENTS (CONTINUED):
b) Share capital:
On January 8, 1999, the company received $45,000 as consideration for a
subscription of 60,000 common shares at $0.75 per share pursuant to its
Offering Disclosure Document dated November 23, 1998.
10. THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information
using year 2000 dates is processed. In addition, similar problems may arise
in some systems that use certain dates in 1999 to represent something other
than a date. The effects of the Year 2000 Issue may be experienced before,
on, or after January 1, 2000, and, if not addressed, the impact on operations
and financial reporting may range from minor errors to significant systems
failure which could effect an entity's ability to conduct normal business
operations. It is not possible to be certain that all aspects of the Year
2000 Issue effecting the entity, including those related to the efforts of
customers, suppliers, or other third parties, will be fully resolved.
F-13
<PAGE>
[BACK COVER OF PROSPECTUS]
DEALER PROSPECTUS DELIVERY OBLIGATION
Until _________, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Nevada Business Corporation Act and Article VI of the Registrant's
Articles of Incorporation permit the Registrant to indemnify its officers and
directors and certain other persons against expenses in defense of a suit to
which they are parties by reason of such office, so long as the persons
conducted themselves in good faith and the persons reasonably believed that
their conduct was in the corporation's best interests, not opposed to the
corporation's best interests, or unlawful. Indemnification is not permitted in
connection with a proceeding by or in the right of the corporation in which the
officer or director was adjudged liable to the corporation or in connection with
any other proceeding charging that the officer or director derived an improper
personal benefit, whether or not involving action in an official capacity, in
which proceeding the officer or director was adjudged liable on the basis that
he or she derived an improper personal benefit.
ITEM 2. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid by the registrant in connection with the securities
being registered are as follows:
Securities and Exchange Commission filing fee...$ 417
NASD filing fee................................. 650
Accounting fees and expenses....................
Blue sky fees and expenses......................
Legal fees and expenses.........................
Transfer agent fees and expenses................
Printing expenses...............................
Miscellaneous expenses..........................
Total...........................................$75,000
All amounts are estimates except the SEC filing fee and NASD filing fee. The
Selling Stockholders will be bearing the cost of their own brokerage fees and
commissions and their own legal and accounting fees.
ITEM 3. UNDERTAKINGS
(A) The small business issuer will:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3)
of the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information in the registration
statement; and notwithstanding the foregoing, any
increase or decrease in volume of securities offered
(if the total dollar value of securities offered (if
the total dollar value of securities offered would
not exceed that which was registered) and any
deviation from the low or high end of the estimated
maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to
Rule 424(b) ) if, in the aggregate, the changes in
the volume and price represent
II-1
<PAGE>
no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement.
(iii) Include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
(B) The small business issuer will provide to the underwriter at the
closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
(C) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
ITEM 4. UNREGISTERED SECURITIES ISSUED OR SOLD WITHIN ONE YEAR
On February 26, 1999, the registrant issued 722,755 shares of common stock
priced at $.75 per share, for a total amount of $542,066.75. These shares of
common stock were issued in reliance on the exemption from registration provided
by Rule 504 under Section 3(b) of the Securities Act.
ITEM 5. INDEX TO EXHIBITS
- --------------------------------------------------------------------------------
EXHIBIT SEQUENTIAL
NO. EXHIBIT PAGE NUMBER
- --------------------------------------------------------------------------------
1.1 Form of Selling Agent Agreement
- --------------------------------------------------------------------------------
2.1 Articles of Incorporation
- --------------------------------------------------------------------------------
2.2 Bylaws
- --------------------------------------------------------------------------------
4.1 Form of Subscription Agreement
- --------------------------------------------------------------------------------
6.1 Purchase and Sale Agreement dated August 1, 1998 between
Workfire Technologies Corporation and Workfire
Technologies International Inc.
- --------------------------------------------------------------------------------
8.1 Agreement and Plan of Reincorporation and Merger between
Tantallon Capital, Inc. and Workfire Technologies Inc.
dated August 31, 1998
- --------------------------------------------------------------------------------
8.2 Agreement Concerning the Exchange of Stock between
Tantallon Capital, Inc. and Workfire Technologies
International Inc. dated August 26, 1998
- --------------------------------------------------------------------------------
10.1 Consent of KPMG LLP
- --------------------------------------------------------------------------------
10.2 Consent of Dill Dill Carr Stonbraker & Hutchings, P.C.
(incorporated by reference to exhibit 11.1)
II-2
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT SEQUENTIAL
NO. EXHIBIT PAGE NUMBER
- --------------------------------------------------------------------------------
11.1 Opinion re legality
- --------------------------------------------------------------------------------
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-1 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Kelowna,
Province of British Columbia, on May 12, 1999.
WORKFIRE.COM
(Registrant)
By:/S/TOM TAYLOR
Tom Taylor, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
SIGNATURE TITLE DATE
President (Principal
/s/Tom Taylor Executive and Financial May 12, 1999
- --------------------------- Officer) and Director -------------------------
Tom Taylor
Exhibit 1.1
Form of Selling Agent Agreement
<PAGE>
WORKFIRE.COM
1708 Dolphin Avenue, Suite 400
Kelowna, British Columbia V1Y 9S4 Canada
(250) 717-8966
SELLING AGENT AGREEMENT
_______________, 1999
Gentlemen:
We are offering for sale 1,000,000 Shares of common stock of
Workfire.com, a Nevada corporation (the "Company"), on a "best efforts, all or
none" basis. The Shares and the terms upon which they are to be offered for sale
are more particularly described in the enclosed Prospectus. We invite your
participation, as Selling Agent, on the terms and conditions stated herein.
1. OFFERING PRICE. The Shares are to be offered to the public at the
price of $______ per Share (hereinafter called the "Public Offering Price") and
shall not be directly or indirectly offered or sold to the public by Selling
Agents at any other price during the period this Agreement is in effect.
2. SELLING AGENTS. Members of the National Association of Securities
Dealers, Inc. (the "NASD") who shall agree to offer Shares hereunder (herein
referred to as "Selling Agents") will be allowed a commission of ten percent
(10%) of the total sales price (i.e., $_____ per Share) and payable as
hereinafter provided. No commission shall be earned or paid unless the Shares
are sold on or before _______________________, which date may be extended for an
additional _____________ by the Company.
3. SUBSCRIPTIONS. We reserve the right to reject all subscriptions, in
whole or in part, to make allotments, and to close the subscription books at any
time without notice. The Shares allotted to you will be confirmed, subject to
the terms and conditions of this Agreement. Payments for Shares sold by you are
to be made by check or money order only and shall be made payable to
Workfire.com. In respect to all Shares sold by you pursuant hereto, you will
promptly transmit (by noon of the next business day following receipt) to us all
checks and money orders received in payment in the full amount of the Public
Offering Price for the number of Shares purchased, without deduction for any
commission, in compliance with Rule 15c2-4 under the Securities Exchange Act of
1934 (the "1934 Act"). YOUR TRANSMITTAL LETTER ACCOMPANYING CHECKS OR MONEY
ORDERS TO US SHALL SET FORTH THE NAMES AND ADDRESSES, TOGETHER WITH SOCIAL
SECURITY OR APPROPRIATE TAX I.D. NUMBERS, OF THE PURCHASERS WITH THE NUMBER OF
SHARES PURCHASED.
NO COMMISSIONS SHALL BE PAYABLE, AND ALL SUBSCRIPTIONS ARE SUBJECT TO
REJECTION, UNLESS AND UNTIL THE SELLING AGENT HAS COMPLIED WITH THE ABOVE
UNDERLINED PROVISION.
Each sale shall be contingent upon the sale of the Shares being sold on
or before _________________ (which date may be extended for ___________ by the
Company), and upon the acceptance of such sale by the undersigned. In the event
any order submitted by you is not accepted, we will return all funds paid by the
subscriber. Payment of the selling commissions in respect of each such sale will
be made to the Selling Agent by us when and only upon the acceptance of such
sale by us. The offering is made subject to the issuance and delivery of the
Shares, to the approval of legal matters by counsel, and to the terms and
conditions herein set forth.
<PAGE>
If an order is rejected or if a payment is received which proves
insufficient or worthless, any compensation paid to the Selling Agent shall be
returned by the Selling Agent's remittances in cash.
4. OFFERING TO PUBLIC. Shares sold to the public by dealers shall be
sold by the Selling Agents as agents for the Company. Neither you nor any other
person is, or has been, authorized to give any information or to make any
representations in connection with the sale of the Shares other than as
contained in the Prospectus. The Selling Agent will not sell the Shares pursuant
to this Agreement unless the Prospectus is furnished to the purchaser at least
forty-eight (48) hours prior to the mailing of the confirmation of sale, or is
sent to such person under such circumstances that it would be received by him
forty-eight (48) hours prior to his receipt of a confirmation of the sale. The
Selling Agent understands that during the ninety (90)-day period after the first
date upon which the Shares of the Company are bona fide offered to the public,
all Selling Agents effecting transactions in the Company's securities shall be
required to deliver the Company's current Prospectus to any purchasers thereof
prior to or concurrent with the receipt of the confirmation of sale. Additional
copies of the then current Prospectus will be supplied by the Company in
reasonable quantities upon request. No Selling Agent is authorized to act as an
agent for the Company except in offering the Shares to the public pursuant to
this Agreement.
5. COMPLIANCE WITH SECURITIES LAWS. Upon becoming a Selling Agent, and
in offering and selling the Shares, you agree to comply with all applicable
requirements of the Securities Act of 1933, as amended (the "1933 Act"), the
1934 Act, any applicable state securities or "Blue Sky" laws, and the Conduct
Rules of the NASD, including, but not limited to, IM-2110-1 "Free-Riding and
Withholding". Upon application, you will be informed as to the states in which
we have been advised by counsel to the Company that the Shares have been
qualified for sale under the respective securities or Blue Sky laws of such
states, but we assume no obligation or responsibility as to the right of any
Selling Agent to sell the Shares in any state, or as to any sale therein.
By acceptance of this Agreement, you represent that you are a member in
good standing of the NASD.
By acceptance of this Agreement, each Selling Agent has assumed full
responsibility for thorough and prior training of its representatives concerning
the selling methods to be used in connection with the offer and sale of the
Shares, giving special emphasis to the NASD's principles of full and fair
disclosure to prospective investors, suitability standards, and the prohibitions
against "Free-Riding and Withholding."
Each Selling Agent agrees to indemnify and hold harmless the Company
and the other Selling Agents against and from any liability, loss, damage, or
expense arising out of any failure by the Selling Agent to comply with the 1933
Act, the 1934 Act, applicable securities laws of any state, the rules and
regulations of the Securities and Exchange Commission, or the Rules of Fair
Practice of the NASD, due to any act or omission by the Selling Agent.
6. PROSPECTUS AND OFFERING. The Registration Statement on Form SB-1
(File No. 333- _______) with respect to the subject Shares was declared
effective on __________, 1999. By signing this Agreement, each Selling Agent
acknowledges receipt of a copy of the Prospectus included in said Registration
Statement. Additional copies of the Prospectus will be supplied to you in
reasonable quantities upon request.
7. LIABILITY. Nothing will constitute the Selling Agent an association
or other separate entity or partners with us or with each other, but you will be
responsible for your share of any liability or expense based on any claim to the
contrary. We will not be under any liability for or in respect of any matter
connected with this Agreement, except for lack of good faith obligations
expressly assumed by us in this Agreement, and any liability due to our act or
omission arising under the 1933 Act.
2
<PAGE>
8. TERMINATION. This Agreement shall terminate ___________________
(which date may be extended for ____________ by the Company), or by either party
giving notice of termination to the other at any time, but such termination
shall not affect your obligation to comply with the requirements of this
Agreement or your right to commissions on orders confirmed by us prior thereto.
9. NUMBER OF SHARES PURCHASED. You agree, upon our request, at any time
prior to the termination of this Agreement, to report to us the number of Shares
purchased by your customers. Your Share allocation is subject to reduction at
any time prior to sale confirmations and funds therefor being received by us.
10. NOTICES. Notice to us should be addressed to us at our office: 1708
Dolphin Avenue, Suite 400, Kelowna, British Columbia V1Y 9S4 Canada, with a copy
to Fay M. Matsukage, Esq., Dill Dill Carr Stonbraker & Hutchings, P.C., 455
Sherman Street, Suite 300, Denver, Colorado 80203. Notices to you shall be
deemed to have been duly given if telegraphed, mailed, or delivered to you at
the address set forth by you in this Agreement, or if given verbally and
confirmed in writing.
11. CONFIRMATION. If you desire to participate in the offering of the
Shares as hereinbefore set forth, please sign the acceptance below and provide
the pertinent information requested.
Very truly yours,
WORKFIRE.COM
By:__________________________________________
Tom Taylor, President
3
<PAGE>
Accepted on: __________________________________________
Firm Name: __________________________________________
By: __________________________________________
Position: __________________________________________
Address: __________________________________________
__________________________________________
Telephone Number: __________________________________________
IRS I.D. Number: __________________________________________
Share Allocation: __________________________________________
4
<PAGE>
Exhibit 2.1
Articles of Incorporation
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
OF
WORKFIRE TECHNOLOGIES INC.
We, the undersigned President and Secretary of Workfire Technologies Inc., do
hereby certify:
That the Board of Directors of said corporation at a meeting duly convened, held
on the 7th day of January, 1999, adopted a resolution to amend the original
articles as follows:
Article I is hereby amended to read as follows:
ARTICLE I
The name of the corporation is Workfire.com (the "Corporation").
The number of shares of the corporation outstanding and entitled to vote on an
amendment to the Articles of Incorporation is 12,000,000; that the said change
and amendment have been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding and
entitled to vote thereon.
/S/ TOM TAYLOR
Tom Taylor, President
/S/ VICTOR REDEKOP
Victor Redekop, Secretary
CITY OF KELOWNA )
)
PROVINCE OF BRITISH COLUMBIA )
On January 7, 1999, personally appeared before me, a Notary Public, TOM TAYLOR,
who acknowledged that he executed the above instrument.
/S/ ROSS LANGFORD
Notary Public
(NOTARY STAMP OR SEAL)
[Notary Stamp]
<PAGE>
ARTICLES OF INCORPORATION
OF
WORKFIRE TECHNOLOGIES INC.
ARTICLE I
The name of the corporation is Workfire Technologies Inc. (the "Corporation").
ARTICLE II
The amount of total authorized capital stock which the Corporation shall have
authority to issue is 100,000,000 shares of common stock, each with $0.0001 par
value, and 1,000,000 shares of preferred stock, each with $0.01 par value. To
the fullest extent permitted by the laws of the State of Nevada (currently set
forth in NRS 78.195), as the same now exists or may hereafter be amended or
supplemented, the Board of Directors may fix and determine the designations,
rights, preferences or other variations of each class or series within each
class of capital stock of the Corporation.
ARTICLE III
The business and affairs of the Corporation shall be managed by a Board of
Directors which shall exercise all the powers of the Corporation except as
otherwise provided in the Bylaws, these Articles of Incorporation or by the laws
of the State of Nevada. The number of members of the Board of Directors shall be
set in accordance with the Company's Bylaws; however, the initial Board of
Directors shall consist of two members. The name and address of the persons who
shall serve as the directors until the first annual meeting of stockholders and
until their successors are duly elected and qualified is as follows:
NAME ADDRESS
Thomas Taylor 3985 Gallaghers Circle
Kelowna, BC V1W 3Z9 Canada
Victor Redekop #700 - 1207 11th Avenue S.W.
Calgary, Alberta T3C 0M5 Canada
ARTICLE IV
The name and address of the incorporator of the Corporation is Fay M. Matsukage,
455 Sherman Street, Suite 300, Denver, Colorado 80203.
2
<PAGE>
ARTICLE V
To the fullest extent permitted by the laws of the State of Nevada (currently
set forth in NRS 78.037), as the same now exists or may hereafter be amended or
supplemented, no director or officer of the Corporation shall be liable to the
Corporation or to its stockholders for damages for breach of fiduciary duty as a
director or officer.
ARTICLE VI
The Corporation shall indemnify, to the fullest extent permitted by applicable
law in effect from time to time, any person against all liability and expense
(including attorneys' fees) incurred by reason of the fact that he is or was a
director or officer of the Corporation, he is or was serving at the request of
the Corporation as a director, officer, employee, or agent of, or in any similar
managerial or fiduciary position of, another corporation, partnership, joint
venture, trust or other enterprise. The Corporation shall also indemnify any
person who is serving or has served the Corporation as a director, officer,
employee, or agent of the Corporation to the extent and in the manner provided
in any bylaw, resolution of the shareholders or directors, contract, or
otherwise, so long as such provision is legally permissible.
ARTICLE VII
The owners of shares of stock of the Corporation shall not have a preemptive
right to acquire unissued shares, treasury shares or securities convertible into
such shares.
ARTICLE VIII
Only the shares of capital stock of the Corporation designated at issuance as
having voting rights shall be entitled to vote at meetings of stockholders of
the Corporation, and only stockholders of record of shares having voting rights
shall be entitled to notice of and to vote at meetings of stockholders of the
Corporation.
ARTICLE IX
The initial resident agent of the Corporation shall be the Corporation Trust
Company of Nevada, whose street address is 1 East 1st Street, Reno, Nevada
89501.
ARTICLE X
The provisions of NRS 78.378 to 78.3793 inclusive, shall not apply to the
Corporation.
3
<PAGE>
ARTICLE XI
The purposes for which the Corporation is organized and its powers are as
follows:
To engage in all lawful business; and
To have, enjoy, and exercise all of the rights, powers, and privileges
conferred upon corporations incorporated pursuant to Nevada law,
whether now or hereafter in effect, and whether or not herein
specifically mentioned.
ARTICLE XII
One-third of the votes entitled to be cast on any matter by each shareholder
voting group entitled to vote on a matter shall constitute a quorum of that
voting group for action on that matter by shareholders.
ARTICLE XIII
The holder of a bond, debenture or other obligation of the Corporation may have
any of the rights of a stockholder in the Corporation to the extent determined
appropriate by the Board of Directors at the time of issuance of such bond,
debenture or other obligation.
IN WITNESS WHEREOF, the undersigned incorporator has executed these Articles of
Incorporation this 3rd day of September, 1998.
By /S/ FAY M. MATSUKAGE
Fay M. Matsukage, Incorporator
STATE OF COLORADO )
CITY AND ) ss.
COUNTY OF DENVER )
Personally appeared before me this 3rd day of September, 1998, Fay M. Matsukage
who, being first duly sworn, declared that she executed the foregoing Articles
of Incorporation and that the statements therein are true and correct to the
best of her knowledge and belief.
Witness my hand and official seal.
[Notary Seal] /S/ NANCY J. PARKS
Notary Public
My commission expires: 10/26/98 Address:
455 Sherman Street, Suite 300
Denver, CO 80237
4
<PAGE>
Exhibit 2.2
Bylaws
<PAGE>
WORKFIRE TECHNOLOGIES INC.
BYLAWS
- -----------------------------
Adopted as of September 15, 1998
<PAGE>
WORKFIRE TECHNOLOGIES INC.
BYLAWS
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I OFFICES
1.1 Registered Office............................................ 1
1.2 Principal Office............................................. 1
ARTICLE II STOCKHOLDERS
2.1 Annual Meeting .............................................. 1
2.2 Special Meetings............................................. 1
2.3 Place of Meeting............................................. 2
2.4 Notice of Meeting............................................ 2
2.5 Adjournment.................................................. 2
2.6 Organization................................................. 2
2.7 Closing of Transfer Books or Fixing of Record Date........... 3
2.8 Quorum....................................................... 3
2.9 Proxies...................................................... 3
2.10 Voting of Shares............................................. 4
2.11 Action Taken Without a Meeting............................... 4
2.12 Meetings by Telephone........................................ 4
ARTICLE III DIRECTORS
3.1 Board of Directors; Number; Qualifications; Election......... 5
3.2 Powers of the Board of Directors: Generally.................. 5
3.3 Committees of the Board of Directors......................... 5
3.4 Resignation.................................................. 5
3.5 Removal...................................................... 6
3.6 Vacancies.................................................... 6
3.7 Regular Meetings............................................. 6
3.8 Special Meetings............................................. 6
3.9 Notice....................................................... 6
3.10 Quorum....................................................... 6
3.11 Manner of Acting............................................. 7
3.12 Compensation................................................. 7
3.13 Action Taken Without a Meeting............................... 7
3.14 Meetings by Telephone........................................ 7
i
<PAGE>
ARTICLE IV OFFICERS AND AGENTS
4.1 Officers of the Corporation.................................. 7
4.2 Election and Term of Office.................................. 8
4.3 Removal...................................................... 8
4.4 Vacancies.................................................... 8
4.5 President.................................................... 8
4.6 Vice Presidents.............................................. 9
4.7 Secretary.................................................... 9
4.8 Treasurer.................................................... 9
4.9 Salaries..................................................... 10
4.10 Bonds .................................................... 10
ARTICLE V STOCK
5.1 Certificates................................................. 10
5.2 Record....................................................... 11
5.3 Consideration for Shares..................................... 11
5.4 Cancellation of Certificates................................. 11
5.5 Lost Certificates............................................ 12
5.6 Transfer of Shares........................................... 12
5.7 Transfer Agents, Registrars, and Paying Agents............... 12
ARTICLE VI INDEMNIFICATION OF OFFICERS AND DIRECTORS
6.1 Indemnification; Advancement of Expenses..................... 12
6.2 Insurance and Other Financial Arrangements Against Liability
of Directors, Officers, Employees, and Agents................ 13
ARTICLE VII ACQUISITION OF CONTROLLING INTEREST
7.1 Acquisition of Controlling Interest.......................... 13
ARTICLE VIII EXECUTION OF INSTRUMENTS; LOANS, CHECKS AND ENDORSEMENTS;
DEPOSITS; PROXIES
8.1 Execution of Instruments..................................... 13
8.2 Loans .................................................... 14
8.3 Checks and Endorsements...................................... 14
8.4 Deposits..................................................... 14
ii
<PAGE>
8.5 Proxies...................................................... 14
8.6 Contracts.................................................... 15
ARTICLE IX MISCELLANEOUS
9.1 Waivers of Notice............................................ 15
9.2 Corporate Seal............................................... 15
9.3 Fiscal Year.................................................. 15
9.4 Amendment of Bylaws.......................................... 15
9.5 Uniformity of Interpretation and Severability................ 15
9.6 Emergency Bylaws............................................. 16
Secretary's Certification............................................. 16
BYLAWS
OF
WORKFIRE TECHNOLOGIES INC.
1
<PAGE>
ARTICLE I
OFFICES
1.1 REGISTERED OFFICE. The registered office of the Corporation
required by the General Corporation Law of Nevada, Nevada Revised Statutes, 1957
("N.R.S."), Chapter 78, to be maintained in Nevada may be, but need not be,
identical with the principal office if in Nevada, and the address of the
registered office may be changed from time to time by the Board of Directors.
1.2 PRINCIPAL OFFICE. The Corporation may have such other office or
offices either within or outside of the State of Nevada as the business of the
Corporation may require from time to time if so designated by the Board of
Directors.
ARTICLE II
STOCKHOLDERS
2.1 ANNUAL MEETING. Unless otherwise designated by the Board of
Directors, the annual meeting shall be held on the date and at the time and
place fixed by the Board of Directors; provided, however, that the first annual
meeting shall be held on a date that is within 18 months after the date on which
the Corporation first has stockholders, and each successive annual meeting shall
be held on a date that is within 18 months after the preceding annual meeting.
2.2 SPECIAL MEETINGS. Special meetings of stockholders of the
Corporation, for any purpose, may be called by the Chairman of the Board, the
president, any vice president, any two members of the Board of Directors, or the
holders of at least 10% of all of the shares entitled to vote at such meeting.
Any holder or holders of not less than 10% of all the outstanding shares of the
Corporation who desire to call a special meeting pursuant to this Section 2 of
Article II shall notify the president that a special meeting of the stockholders
shall be called. Within 30 days after notice to the president, the president
shall set the date, time, and location of a stockholders' meeting. The date set
by the president shall be not less than 30 nor more than 120 days after the date
of notice to the president. If the president fails to set the date, time, and
location of special meeting within the 30-day time period described above, the
stockholder or stockholders calling the meeting shall set the date, time, and
location of the special meeting. At a special meeting no business shall be
transacted and no corporate action shall be taken other than that stated in the
notice of the meeting.
2.3 PLACE OF MEETING. The Board of Directors may designate any place,
either within or outside the State of Nevada, as the place for any annual
meeting or special meeting called by the Board of Directors. If no designation
is made, or if a meeting shall be called
2
<PAGE>
otherwise than by the Board, the place of meeting shall be the Company's
principal offices, whether within or outside the State of Nevada.
2.4 NOTICE OF MEETING. Written notice signed by an officer designated
by the Board of Directors, stating the place, day, and hour of the meeting and
the purpose for which the meeting is called, shall be delivered personally or
mailed postage prepaid to each stockholder of record entitled to vote at the
meeting not less than 10 nor more than 60 days before the meeting. If mailed,
such notice shall be directed to the stockholder at his address as it appears
upon the records of the Corporation, and notice shall be deemed to have been
given upon the mailing of any such notice, and the time of the notice shall
begin to run from the date upon which the notice is deposited in the mail for
transmission to the stockholder. Personal delivery of any such notice to any
officer of a corporation or association, or to any member of a partnership,
constitutes delivery of the notice to the corporation, association or
partnership. Any stockholder may waive notice of any meeting by a writing signed
by him, or his duly authorized attorney, either before or after the meeting.
2.5 ADJOURNMENT. When a meeting is for any reason adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
2.6 ORGANIZATION. The president or any vice president shall call
meetings of stockholders to order and act as chairman of such meetings. In the
absence of said officers, any stockholder entitled to vote at that meeting, or
any proxy of any such stockholder, may call the meeting to order and a chairman
shall be elected by a majority of the stockholders entitled to vote at that
meeting. In the absence of the secretary or any assistant secretary of the
Corporation, any person appointed by the chairman shall act as secretary of such
meeting. An appropriate number of inspectors for any meeting of stockholders may
be appointed by the chairman of such meeting. Inspectors so appointed will open
and close the polls, will receive and take charge of proxies and ballots, and
will decide all questions as to the qualifications of voters, validity of
proxies and ballots, and the number of votes properly cast.
2.7 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The directors
may prescribe a period not exceeding 60 days before any meeting of the
stockholders during which no transfer of stock on the books of the Corporation
may be made, or may fix a day not more than 60 days before the holding of any
such meeting as the day as of which stockholders entitled to notice of and to
vote at such meetings must be determined. Only stockholders of record on that
day are entitled to notice or to vote at such meeting.
2.8 QUORUM. Unless otherwise provided by the Articles of Incorporation,
one-third of the outstanding shares of the Corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
stockholders. If fewer than one-third of the outstanding shares are represented
at a meeting, a majority of the shares so represented may
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adjourn the meeting without further notice for a period not to exceed 60 days at
any one adjournment. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified. The stockholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of stockholders so that less than a quorum
remains.
If a quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders, unless the vote of a greater number or
voting by classes is required by law or the Articles of Incorporation.
2.9 PROXIES. At all meetings of stockholders, a stockholder may vote by
proxy, as prescribed by law. Such proxy shall be filed with the secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid after
6 months from the date of its creation, unless it is coupled with an interest,
or unless the stockholder specifies in it the length of time for which it is to
continue in force, which may not exceed 7 years from the date of its creation.
2.10 VOTING OF SHARES. Each outstanding share, regardless of class,
shall be entitled to one vote, and each fractional share shall be entitled to a
corresponding fractional vote on each matter submitted to a vote at a meeting of
stockholders, except as may be otherwise provided in the Articles of
Incorporation or in the resolution providing for the issuance of the stock
adopted by the Board of Directors pursuant to authority expressly vested in it
by the provisions of the Articles of Incorporation. If the Articles of
Incorporation or any such resolution provide for more or less than one vote per
share for any class or series of shares on any matter, every reference in the
Articles of Incorporation, these Bylaws and the General Corporation Law of
Nevada to a majority or other proportion or number of shares shall be deemed to
refer to a majority or other proportion of the voting power of all of the shares
or those classes or series of shares, as may be required by the Articles of
Incorporation, or in the resolution providing for the issuance of the stock
adopted by the Board of Directors pursuant to authority expressly vested in it
by the Articles of Incorporation, or the General Corporation Law of Nevada.
Cumulative voting shall not be allowed. Unless the General Corporation Law of
Nevada, the Articles of Incorporation, or these Bylaws provide for different
proportions, an act of stockholders who hold at least a majority of the voting
power and are present at a meeting at which a quorum is present is the act of
the stockholders.
2.11 ACTION TAKEN WITHOUT A MEETING. Unless otherwise provided in the
Articles of Incorporation or these Bylaws, any action required or permitted to
be taken at a meeting of the stockholders may be taken without a meeting if a
written consent thereto is signed by stockholders holding at least a majority of
the voting power, except that if a different proportion of voting power is
required for such an action at a meeting, then that proportion of written
consents is required. In no instance where action is authorized by written
consent
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need a meeting of stockholders be called or notice given. The written consent
must be filed with the minutes of the proceedings of the stockholders.
2.12 MEETINGS BY TELEPHONE. Unless other restricted by the Articles of
Incorporation or these Bylaws, stockholders may participate in a meeting of
stockholders by means of a telephone conference or similar method of
communication by which all persons participating in the meeting can hear each
other. Participation in a meeting pursuant to this Section constitutes presence
in person at the meeting.
ARTICLE III
DIRECTORS
3.1 BOARD OF DIRECTORS; NUMBER; QUALIFICATIONS; ELECTION. The
Corporation shall be managed by a Board of Directors, all of whom must be
natural persons at least 18 years of age. Directors need not be residents of the
State of Nevada or stockholders of the Corpora tion. The number of directors of
the Corporation shall be not less than one nor more than twelve. Subject to such
limitations, the number of directors may be increased or decreased by resolution
of the Board of Directors, but no decrease shall have the effect of shortening
the term of any incumbent director. Subject to the provisions of Article III of
the Corporation's Articles of Incorporation, each director shall hold office
until the next annual meeting of shareholders or until his successor has been
elected and qualified.
3.2 POWERS OF THE BOARD OF DIRECTORS: GENERALLY. Subject only to such
limitations as may be provided by the General Corporation Law of Nevada or the
Articles of Incorpora tion, the Board of Directors shall have full control over
the affairs of the Corporation.
3.3 COMMITTEES OF THE BOARD OF DIRECTORS. The Board of Directors may,
by resolution or resolutions passed by a majority of the whole Board, designate
one or more committees, each committee to consist of one or more directors,
which, to the extent provided in the resolution or resolutions or in these
Bylaws, shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and may have power to
authorize the seal of the Corporation to be affixed to all papers on which the
Corporation desires to place on a seal. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Directors. Unless the Articles of Incorporation or these Bylaws
provide otherwise, the Board of Directors may appoint natural persons who are
not directors to serve on committees.
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3.4 RESIGNATION. Any director of the Corporation may resign at any time
by giving written notice of his resignation to the Board of Directors, the
president, any vice president, or the secretary of the Corporation. Such
resignation shall take effect at the date of receipt of such notice or at any
later time specified therein and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. When
one or more directors shall resign from the Board, effective at a future date, a
majority of the directors then in office.
3.5 REMOVAL. Except as otherwise provided in the Articles of
Incorporation, any director may be removed, either with or without cause, at any
time by the vote of the stockholders representing not less than two-thirds of
the voting power of the issued and outstanding stock entitled to voting power.
3.6 VACANCIES. All vacancies, including those caused by an increase in
the number of directors, may be filled by a majority of the remaining directors,
though less than a quorum, unless it is otherwise provided in the Articles of
Incorporation. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office. A director elected to fill a
vacancy caused by an increase in the number of directors shall hold office until
the next annual meeting of stockholders and until his successor has been elected
and has qualified.
3.7 REGULAR MEETINGS. A regular meeting of the Board of Directors shall
be held without other notice than this Bylaw immediately after and at the same
place as the annual meeting of stockholders. The Board of Directors may provide
by resolution the time and place, either within or outside the State of Nevada,
for the holding of additional regular meetings without other notice than such
resolution.
3.8 SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by or at the request of the president or a one-third of the directors
then in office. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or outside Nevada, as the
place for holding any special meeting of the Board of Directors called by them.
3.9 NOTICE. Notice of any special meeting shall be given at least two
days previously thereto by written notice delivered personally or mailed to each
director at his business address. Any director may waive notice of any meeting.
A director's presence at a meeting shall constitute a waiver of notice of such
meeting if the director's oral consent is entered on the minutes or by taking
part in the deliberations at such meeting without objecting. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of notice of
such meeting.
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3.10 QUORUM. A majority of the number of directors elected and
qualified at the time of the meeting shall constitute a quorum for the
transaction of business at any such meeting of the Board of Directors, but if
less than such majority is present at a meeting, a majority of the directors
present may adjourn the meeting from time to time without further notice.
3.11 MANNER OF ACTING. If a quorum is present, the affirmative vote of
a majority of the directors present at the meeting and entitled to vote on that
particular matter shall be the act of the Board, unless the vote of a greater
number is required by law or the Articles of Incorporation.
3.12 COMPENSATION. By resolution of the Board of Directors, any
director may be paid any one or more of the following: his expenses, if any, of
attendance at meetings; a fixed sum for attendance at such meeting; or a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
3.13 ACTION TAKEN WITHOUT A MEETING. Unless otherwise provided in the
Articles of Incorporation or these Bylaws, any action required or permitted to
be taken at a meeting of the Board of Directors or a committee thereof may be
taken without a meeting if, before or after the action, a written consent
thereto is signed by all the members of the Board or of the committee. The
written consent must be filed with the minutes of the proceedings of the Board
or committee.
3.14 MEETINGS BY TELEPHONE. Unless other restricted by the Articles of
Incorporation or these Bylaws, members of the Board of Directors or of any
committee designated by the Board, may participate in a meeting of the Board or
committee by means of a telephone conference or similar method of communication
by which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section constitutes presence in
person at the meeting.
ARTICLE IV
OFFICERS AND AGENTS
4.1 OFFICERS OF THE CORPORATION. The Corporation shall have a
president, a secretary, and a treasurer, each of whom shall be elected by the
Board of Directors. The Board of Directors may appoint one or more vice
presidents and such other officers, assistant officers, committees, and agents,
including a chairman of the board, assistant secretaries, and assistant
treasurers, as they may consider necessary, who shall be chosen in such manner
and hold their offices for such terms and have such authority and duties as from
time to time may be determined by the Board of Directors. One person may hold
any two or more offices. The officers of the Corporation shall be natural
persons 18 years of age or older. In all cases where
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the duties of any officer, agent, or employee are not prescribed by the Bylaws
or by the Board of Directors, such officer, agent, or employee shall follow the
orders and instructions of (a) the president, and if a chairman of the board has
been elected, then (b) the chairman of the board.
4.2 ELECTION AND TERM OF OFFICE. The officers of the Corporation shall
be elected by the Board of Directors annually at the first meeting of the Board
held after each annual meeting of the stockholders. If the election of officers
shall not be held at such meeting, such election shall be held as soon
thereafter as may be convenient. Each officer shall hold office until the first
of the following occurs: until his successor shall have been duly elected and
shall have qualified; or until his death; or until he shall resign; or until he
shall have been removed in the manner hereinafter provided.
4.3 REMOVAL. Any officer or agent may be removed by the Board of
Directors or by the executive committee, if any, whenever in its judgment the
best interests of the Corporation will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
4.4 VACANCIES. A vacancy in any office, however occurring, may be
filled by the Board of Directors for the unexpired portion of the term.
4.5 PRESIDENT. The president shall, subject to the direction and
supervision of the Board of Directors, be the chief executive officer of the
Corporation and shall have general and active control of its affairs and
business and general supervision of its officers, agents, and employees. He
shall, unless otherwise directed by the Board of Directors, attend in person or
by substitute appointed by him, or shall execute, on behalf of the Corporation,
written instruments appointing a proxy or proxies to represent the Corporation,
at all meetings of the stockholders of any other corporation in which the
Corporation shall hold any stock. He may, on behalf of the Corporation, in
person or by substitute or by proxy, execute written waivers of notice and
consents with respect to any such meetings. At all such meetings and otherwise,
the president, in person or by substitute or proxy as aforesaid, may vote the
stock so held by the Corporation and may execute written consents and other
instruments with respect to such stock and may exercise any and all rights and
powers incident to the ownership of said stock, subject however to the
instructions, if any, of the Board of Directors. The president shall have
custody of the treasurer's bond, if any. If a chairman of the board has been
elected, the chairman of the board shall have, subject to the direction and
modification of the Board of Directors, all the same responsibilities, rights,
and obligations as described in these Bylaws for the president.
4.6 VICE PRESIDENTS. The vice presidents, if any, shall assist the
president and shall perform such duties as may be assigned to them by the
president or by the Board of Directors. In the absence of the president, the
vice president designated by the Board of Directors or (if there be no such
designation) the vice president designated in writing by the president shall
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have the powers and perform the duties of the president. If no such designation
shall be made, all vice presidents may exercise such powers and perform such
duties.
4.7 SECRETARY. The secretary shall perform the following: (a) keep the
minutes of the proceedings of the stockholders, executive committee, and the
Board of Directors; (b) see that all notices are duly given in accordance with
the provisions of these Bylaws or as required by law; (c) be custodian of the
corporate records and of the seal of the Corporation and affix the seal to all
documents when authorized by the Board of Directors; (d) keep, at the
Corporation's registered office or principal place of business within or outside
Nevada, a record containing the names and addresses of all stockholders and the
number and class of shares held by each, unless such a record shall be kept at
the office of the Corporation's transfer agent or registrar; (e) sign with the
president or a vice president, certificates for shares of the Corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
Corporation, unless the Corporation has a transfer agent; and (g) in general,
perform all duties incident to the office of secretary and such other duties as
from time to time may be assigned to him by the president or by the Board of
Directors. Assistant secretaries, if any, shall have the same duties and powers,
subject to supervision by the secretary.
4.8 TREASURER. The treasurer shall be the principal financial officer
of the Corporation and shall have the care and custody of all funds, securities,
evidences of indebtedness, and other personal property of the Corporation, and
shall deposit the same in accordance with the instructions of the Board of
Directors. He shall receive and give receipts and acquittances for monies paid
in or on account of the Corporation, and shall pay out of the funds on hand all
bills, payrolls, and other just debts of the Corporation of whatever nature upon
maturity. He shall perform all other duties incident to the office of the
treasurer and, upon request of the Board, shall make such reports to it as may
be required at any time. He shall, if required by the Board, give the
Corporation a bond in such sums and with such sureties as shall be satisfactory
to the Board, conditioned upon the faithful performance of his duties and for
the restoration to the Corporation of all books, papers, vouchers, money, and
other property of whatever kind in his possession or under his control belonging
to the Corporation. He shall have such other powers and perform such other
duties as may be from time to time prescribed by the Board of Directors or the
president. The assistant treasurers, if any, shall have the same powers and
duties, subject to the supervision of the treasurer.
The treasurer shall also be the principal accounting officer of the
Corporation. He shall prescribe and maintain the methods and systems of
accounting to be followed, keep complete books and records of account, prepare
and file all local, state, and federal tax returns, prescribe and maintain an
adequate system of internal audit, and prepare and furnish to the president and
the Board of Directors statements of account showing the financial position of
the Corporation and the results of its operations.
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4.9 SALARIES. Officers of the Corporation shall be entitled to such
salaries, emoluments, compensation, or reimbursement as shall be fixed or
allowed from time to time by the Board of Directors.
4.10 BONDS. If the Board of Directors by resolution shall so require,
any officer or agent of the Corporation shall give bond to the Corporation in
such amount and with such surety as the Board of Directors may deem sufficient,
conditioned upon the faithful performance of that officer's or agent's duties
and offices.
ARTICLE V
STOCK
5.1 CERTIFICATES. The shares of stock shall be represented by
consecutively numbered certificates signed in the name of the Corporation by its
president or a vice president and by the treasurer or an assistant treasurer or
by the secretary or an assistant secretary, and shall be sealed with the seal of
the Corporation, or with a facsimile thereof. Whenever any certificate is
countersigned or otherwise authenticated by a transfer agent or transfer clerk,
and by a registrar, then a facsimile of the signatures of the officers or
agents, the transfer agent or transfer clerk or the registrar of the Corporation
may be printed or lithographed upon the certificate in lieu of the actual
signatures. If the Corporation uses facsimile signatures of its officers and
agents on its stock certificates, it cannot act as the registrar of its own
stock, but its transfer agent and registrar may be identical if the institution
acting in those dual capacities countersigns or otherwise authenticates any
stock certificates in both capacities. In case any officer who has signed or
whose facsimile signature has been placed upon such certificate shall have
ceased to be such officer before such certificate is delivered by the
Corporation, the certificate or certificates may nevertheless be adopted by the
Corporation and be issued and delivered as though the person or persons who
signed the certificates, or whose facsimile signature has been used thereon, had
not ceased to be an officer of the Corporation. If the Corporation is authorized
to issue shares of more than one class or more than one series of any class,
each certificate shall set forth upon the face or back of the certificate or
shall state that the Corporation will furnish to any stockholder upon request
and without charge a full statement of the designations, preferences,
limitations, and relative rights of the shares of each class authorized to be
issued and, if the Corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences between
the shares of each such series, so far as the same have been fixed and
determined, and the authority of the Board of Directors to fix and determine the
relative rights and preferences of subsequent series.
Each certificate representing shares shall state the following upon the
face thereof: the name of the state of the Corporation's organization; the name
of the person to whom issued; the number and class of shares and the designation
of the series, if any, which such certificate
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represents; the par value of each share represented by such certificate or a
statement that the shares are without par value. Certificates of stock shall be
in such form consistent with law as shall be prescribed by the Board of
Directors. No certificate shall be issued until the shares represented thereby
are fully paid.
5.2 RECORD. A record shall be kept of the name of each person or other
entity holding the stock represented by each certificate for shares of the
Corporation issued, the number of shares represented by each such certificate,
the date thereof and, in the case of cancellation, the date of cancellation. The
person or other entity in whose name shares of stock stand on the books of the
Corporation shall be deemed the owner thereof, and thus a holder of record of
such shares of stock, for all purposes as regards the Corporation.
5.3 CONSIDERATION FOR SHARES. Shares shall be issued for such
consideration, expressed in dollars (but not less than the par value thereof) as
shall be fixed from time to time by the Board of Directors. That part of the
surplus of the Corporation which is transferred to stated capital upon the
issuance of shares as a share dividend shall be deemed the consideration for the
issuance of such dividend shares. Such consideration may consist, in whole or in
part, of money, promissory notes, other property, tangible or intangible, or in
labor or services actually performed for the Corporation, contracts for services
to be performed or other securities of the Corporation.
5.4 CANCELLATION OF CERTIFICATES. All certificates surrendered to the
Corporation for transfer shall be canceled and no new certificates shall be
issued in lieu thereof until the former certificate for a like number of shares
shall have been surrendered and canceled, except as herein provided with respect
to lost, stolen, or destroyed certificates.
5.5 LOST CERTIFICATES. In case of the alleged loss, destruction, or
mutilation of a certificate of stock, the Board of Directors may direct the
issuance of a new certificate in lieu thereof upon such terms and conditions in
conformity with law as it may prescribe. The Board of Directors may in its
discretion require a bond, in such form and amount and with such surety as it
may determine, before issuing a new certificate.
5.6 TRANSFER OF SHARES. Upon surrender to the Corporation or to a
transfer agent of the Corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, and such documentary stamps as may be required by law, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate. Every such transfer of stock shall be
entered on the stock book of the Corporation which shall be kept at its
principal office or by its registrar duly appointed.
The Corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof, and accordingly shall not be bound
to recognize any equitable or
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other claim to or interest in such share on the part of any other person whether
or not it shall have express or other notice thereof, except as may be required
by the laws of Nevada.
5.7 TRANSFER AGENTS, REGISTRARS, AND PAYING AGENTS. The Board may at
its discretion appoint one or more transfer agents, registrars, and agents for
making payment upon any class of stock, bond, debenture, or other security of
the Corporation. Such agents and registrars may be located either within or
outside Nevada. They shall have such rights and duties and shall be entitled to
such compensation as may be agreed.
ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
6.1 INDEMNIFICATION; ADVANCEMENT OF EXPENSES. To the fullest extent
permitted by the laws of the State of Nevada (currently set forth in NRS
78.751), as the same now exists or may hereafter be amended or supplemented, the
Corporation shall indemnify its directors and officers, including payment of
expenses as they are incurred and in advance of the final disposition of any
action, suit, or proceeding. Employees, agents, and other persons may be
similarly indemnified by the Corporation, including advancement of expenses, in
such case or cases and to the extent set forth in a resolution or resolutions
adopted by the Board of Directors. No amendment of this Section shall have any
effect on indemnification or advance ment of expenses relating to any event
arising prior to the date of such amendment.
6.2 INSURANCE AND OTHER FINANCIAL ARRANGEMENTS AGAINST LIABILITY OF
DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS. To the fullest extent permitted by
the laws of the State of Nevada (currently set forth in NRS 78.752), as the same
now exists or may hereafter be amended or supplemented, the Corporation may
purchase and maintain insurance and make other financial arrangements on behalf
of any person who is or was a director, officer, employee, or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, for any liability asserted against such
person and liability and expense incurred by such person in its capacity as a
director, officer, employee, or agent, or arising out of such person's status as
such, whether or not the Corporation has the authority to indemnify such person
against such liability and expenses.
ARTICLE VII
ACQUISITION OF CONTROLLING INTEREST
7.1 ACQUISITION OF CONTROLLING INTEREST. The provisions of the General
Corporation Law of Nevada pertaining to the acquisition of a controlling
interest (currently set forth NRS
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78.378 to 78.3793, inclusive), as the same now exists or may hereafter be
amended or supplemented, shall not apply to the Corporation.
ARTICLE VIII
EXECUTION OF INSTRUMENTS; LOANS, CHECKS AND ENDORSEMENTS;
DEPOSITS; PROXIES
8.1 EXECUTION OF INSTRUMENTS. The president or any vice president shall
have the power to execute and deliver on behalf of and in the name of the
Corporation any instrument requiring the signature of an officer of the
Corporation, except as otherwise provided in these Bylaws or where the execution
and delivery thereof shall be expressly delegated by the Board of Directors to
some other officer or agent of the Corporation. Unless authorized to do so by
these Bylaws or by the Board of Directors, no officer, agent, or employee shall
have any power or authority to bind the Corporation in any way, to pledge its
credit, or to render it liable pecuniarily for any purpose or in any amount.
8.2 LOANS. The Corporation may lend money to, guarantee the obligations
of, and otherwise assist directors, officers, and employees of the Corporation,
or directors of another corporation of which the Corporation owns a majority of
the voting stock, only upon compliance with the requirements of the General
Corporation Law of Nevada.
No loans shall be contracted on behalf of the Corporation and no
evidence of indebtedness shall be issued in its name unless authorized by a
resolution of the Board of Directors. Such authority may be general or confined
to specific instances.
8.3 CHECKS AND ENDORSEMENTS. All checks, drafts, or other orders for
the payment of money, obligations, notes, or other evidences of indebtedness,
bills of lading, warehouse receipts, trade acceptances, and other such
instruments shall be signed or endorsed by such officers or agents of the
Corporation as shall from time to time be determined by resolution of the Board
of Directors, which resolution may provide for the use of facsimile signatures.
8.4 DEPOSITS. All funds of the Corporation not otherwise employed shall
be deposited from time to time to the Corporation's credit in such banks or
other depositories as shall from time to time be determined by resolution of the
Board of Directors, which resolution may specify the officers or agents of the
Corporation who shall have the power, and the manner in which such power shall
be exercised, to make such deposits and to endorse, assign, and deliver for
collection and deposit checks, drafts, and other orders for the payment of money
payable to the Corporation or its order.
8.5 PROXIES. Unless otherwise provided by resolution adopted by the
Board of Directors, the president or any vice president may from time to time
appoint one or more
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agents or attorneys-in-fact of the Corporation, in the name and on behalf of the
Corporation, to cast the votes which the Corporation may be entitled to cast as
the holder of stock or other securities in any other corporation, association,
or other entity any of whose stock or other securities may be held by the
Corporation, at meetings of the holders of the stock or other securities of such
other corporation, association, or other entity or to consent in writing, in the
name of the Corporation as such holder, to any action by such other corporation,
association, or other entity, and may instruct the person or persons so
appointed as to the manner of casting such votes or giving such consent, and may
execute or cause to be executed in the name and on behalf of the Corporation and
under its corporate seal, or otherwise, all such written proxies or other
instruments as he may deem necessary or proper in the premises.
8.6 CONTRACTS. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances.
ARTICLE IX
MISCELLANEOUS
9.1 WAIVERS OF NOTICE. Whenever notice is required by the General
Corporation Law of Nevada, by the Articles of Incorporation, or by these Bylaws,
a waiver thereof in writing signed by the director, stockholder, or other person
entitled to said notice, whether before, at, or after the time stated therein,
or his appearance at such meeting in person or (in the case of a stockholders'
meeting) by proxy, shall be equivalent to such notice.
9.2 CORPORATE SEAL. The Board of Directors may adopt a seal circular in
form and bearing the name of the Corporation, the state of its incorporation,
and the word "Seal" which, when adopted, shall constitute the seal of the
Corporation. The seal may be used by causing it or a facsimile of it to be
impressed, affixed, manually reproduced, or rubber stamped with indelible ink.
9.3 FISCAL YEAR. The Board of Directors may, by resolution, adopt
a fiscal year for the Corporation.
9.4 AMENDMENT OF BYLAWS. The provisions of these Bylaws may at any
time, and from time to time, be amended, supplemented or repealed by the Board
of Directors.
9.5 UNIFORMITY OF INTERPRETATION AND SEVERABILITY. These Bylaws shall
be so interpreted and construed as to conform to the Articles of Incorporation
and the laws of the State of Nevada or of any other state in which conformity
may become necessary by reason of the qualification of the Corporation to do
business in such state, and where conflict
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between these Bylaws, the Articles of Incorporation or the laws of such a state
has arisen or shall arise, these Bylaws shall be considered to be modified to
the extent, but only to the extent, conformity shall require. If any provision
hereof or the application thereof shall be deemed to be invalid by reason of the
foregoing sentence, such invalidity shall not affect the validity of the
remainder of these Bylaws without the invalid provision or the application
thereof, and the provisions of these Bylaws are declared to be severable.
9.6 EMERGENCY BYLAWS. Subject to repeal or change by action of the
stockholders, the Board of Directors may adopt emergency bylaws in accordance
with and pursuant to the provisions of the laws of the State of Nevada.
SECRETARY'S CERTIFICATION
The undersigned Secretary of Workfire Technologies Inc. (the
"Corporation") hereby certifies that the foregoing Bylaws are the Bylaws of the
Corporation adopted by the Board of Directors as of the 15th day of September,
1998.
By /S/ VICTOR REDEKOP
Victor Redekop
Secretary
K:\FMM\TANTALLO\WORKFIRE\BYLAWS.WPD
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Exhibit 4.1
Form of Subscription Agreement
<PAGE>
SUBSCRIPTION FORM
To: WORKFIRE.COM
The undersigned hereby acknowledges receipt of the Prospectus, dated
___________, 1999, of Workfire.com (the "Company") and subscribes for the
following number of Shares of the Company upon the terms and conditions set
forth therein:
Number of Shares: All subscriptions are subject to
---------------- acceptance by the Company, to
Price Per Share: $ availability, and to certain other
---------------- conditions, and any subscription
Payment Enclosed: $ may be declined in whole or in
---------------- part by return of the subscription
Make checks payable to "Workfire.com" monies without interest.
Date:_________________, 1999 Accepted by Company:
- ------------------------------------- -----------------------------------
Authorized officer
- ------------------------------------- for _________________ Shares
(Signature(s) of Subcriber(s)
- -------------------------------------
Social Security or Tax I.D.
The certificates for such stock are to Check one if more than one owner:
be issued as follows:
_
|_| Joint tenants WRS
- ------------------------------------- _
Name(s) |_| Tenants in Common
- ------------------------------------- _
|_| Custodian under UGMA
- -------------------------------------
Address Other:_____________________
- -------------------------------------
- -------------------------------------
- -------------------------------------
<PAGE>
Exhibit 6.1
Purchase and Sale Agreement dated August 1, 1998
Between Workfire Technologies Corporation and
Workfire Technologies International Inc.
<PAGE>
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT DATED AUGUST 1ST, 1998.
BETWEEN:
WORKFIRE TECHNOLOGIES CORPORATION, of 300, 1634 Harvey Avenue, Kelowna,
B.C V1Y 6G2 (the "Vendor")
AND:
WORKFIRE TECHNOLOGIES INTERNATIONAL INC., a Nevada company having its
registered office at P.O. Box 27740, Las Vegas, Nevada 89126 ;
(the "Purchaser")
WHEREAS:
A. The Vendor is the owner of those certain technology described in
Schedule "A" attached (the "Technology").
B. The Purchaser has agreed to purchase the Technology for the
consideration described herein.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements contained in this Agreement and subject to the terms
and conditions described herein, the parties agree as follows:
1. The Vendor hereby sells, transfers and assigns to the Purchaser all of its
right, title and interest in and to the Technology.
2. The Vendor hereby represents and warrants to the Purchaser that it is the
BENEFICIAL and legal owner of the Technology and has full power and
authority to enter into this Agreement, and warrants that the Technology is
free of all charges, liens and encumbrances.
3. In consideration for the sale, transfer and assignment contemplated herein,
the Purchaser agrees that the Vendor should be issued a non-interest
bearing promissory note having the deemed fair market value of $150,000.00
CDN. The note shall be payable on demand.
4. The parties acknowledge and agree that the sale, transfer and assignment of
the Technology, the issue of the promissory note as consideration therefor,
is made in accordance with the fair market value of the Technology.
<PAGE>
5. This Agreement constitutes the legal transfer by the Vendor to the
Purchaser of all its right, title and interest in and to the Technology.
The parties covenant and agree:
5.1 to do, execute and cause to be made, done and executed, all such
further documents, assignments and assurances that may be necessary
and that may be reasonably required to give full effect to this
Agreement; and
5.2 perform such further acts and supply to the Minister or any provincial
taxing authority such information as may be necessary from time to
time to carry out the terms and intent of this Agreement.
6. Time shall be of the essence of this Agreement.
7. This Agreement shall be governed by and be construed in accordance with the
laws of the Province of British Columbia.
8. This Agreement may be executed in one or more counterparts, each of which
when so executed shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
9. This Agreement shall be binding upon and shall enure to the benefit of the
parties hereto and their respective heirs, executors, administrators or
other legal persons or representatives, successors and assigns.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date above written.
Executed and delivered by Executed and delivered by
WORKFIRE TECHNOLOGIES WORKFIRE TECHNOLGIES
INTERNATIONAL INC. CORPORATION
Per: Per:
/S/ TOM TAYLOR /S/ TIM WERRY
Authorized Signatory Authorized Signatory
<PAGE>
SCHEDULE "A"
TECHNOLOGY AND ASSET DESCRIPTION
The assets consist of technology developed to address performance, security and
ease of use problems facing Internet users. It includes all intellectual
property rights associated with such technology, including copyright and
industrial design elements. The technology is currently packaged as a product
known as "Workfire Steam", which improves Internet and Intranet performance
through the use of new software programs and servicing of the software and
hardware of a user. It is an architected open system designed to enable the
ongoing rollout of a broad range of high-value Internet-based services.
The technology allows communications capacity to increase by increasing the
efficiency of existing communications capacity. On a commercial and an
individual consumer basis, benefits are derived from decreasing the time for
information transfer, increasing the reliability of file transfer integrity and
additional user friendly benefits to the end user.
The same architected open system that would enhance performance can be used to
improve security and improve ease of use.
Workfire Steam uses the unique nature of distributed systems in combination with
proven software. It harnesses underutilized processing and communications
capacity on the Internet without compromising compatibility with new and
existing modems, fire walls, routers and over all Internet infrastructure.
The architected open system is used to implement Workfire Steam with three (3)
components:
10. A computer program known as Steam PC, which is an application running
on the user's personal computer;
11. Compression and caching software running on multiple servers located
at key points on the Internet or corporate Intranet; and
12. A central Steam dispatch server, which is situated on a high capacity
Internet connection, enabling Workfire to coordinate, control and
charge for the Steam service.
The technology was demonstrated in Las Vegas at the Comdex Las Vegas convention
in November of 1997 at the Intel Corporation's trade booth. The technology can
be implemented on inexpensive and easily scaleable Intel servers, delivering
speed improvements, while maintaining compatibility with existing content and
networks.
Three (3) key components of Workfire Steam enable it to increase performance:
A. Real time compression/decompression reduces the amount of date that
needs to be transferred on the network;
B. Intelligent prefetching will download relevant date from the key sites
of interest when system/networks is idle; and
C. Socket consolidation allows the networks to avoid the costly
"Slow-start" phenomenon which is associated with opening a transfer
socket for one piece of data on a webpage; Since all the data is
compressed and sent as one package, there only needs to be one socket
opened rather than tens or even hundred as with a standard HTTP
server.
<PAGE>
Exhibit 8.1
Agreement and Plan of Reincorporation and Merger
Between Tantallon Capital, Inc. and
Workfire Technologies, Inc. dated August 31, 1998
<PAGE>
AGREEMENT AND PLAN OF REINCORPORATION AND MERGER
This Agreement and Plan of Reorganization and Merger ("Reincorporation
Agreement") is made as of August 31, 1998, by and between TANTALLON CAPITAL,
INC., a Colorado corporation ("Tantallon"), and WORKFIRE TECHNOLOGIES INC., a
Nevada corporation ("Workfire"), (collectively, the "Constituent Corporations").
The parties adopt the plan of merger encompassed by this Reincorporation
Agreement and agree that Tantallon shall merge into Workfire on the following
terms and conditions:
1. REINCORPORATION; SURVIVING CORPORATION; AND EFFECTIVE TIME.
1.1 REINCORPORATION. As soon as practicable following the fulfilment (or
waiver, to the extent permitted) of conditions specified in this
Reincorporation Agreement, Tantallon shall be merged with and into
Workfire (the "Reincorporation"), and Workfire shall survive the
Reincorporation.
1.2 EFFECTIVE TIME. The Reincorporation shall be effective as of the latest
of the date and time when (i) Articles of Merger are duly filed with
the Secretary of State of the State of Colorado as provided by the
Colorado Business Corporation Act; (ii) Articles of Merger are duly
filed with the Secretary of State of the State of Nevada as provided in
the Nevada General Corporation Law; and (iii) September 30, 1998
("Effective Time").
1.3 SURVIVING CORPORATION. At the Effective Time, Workfire as the surviving
corporation ("Surviving Corporation"), shall continue its corporate
existence under the laws of the State of Nevada in the manner and with
the effect provided by the Nevada General Corporation Law, and the
separate existence of Tantallon shall be terminated and shall cease.
2. TREATMENT OF SECURITIES.
2.1 COMMON STOCK OF TANTALLON AND WORKFIRE. At the Effective Time, by
virtue of the Reincorporation and without any further action on the
part of the Constituent Corporations or their shareholders, (i) each
share of Common Stock of Tantallon issued and outstanding immediately
prior to the Effective Time shall be changed and converted into one
fully paid and nonassessable share of the Common Stock of Workfire;
(ii) each option to buy a share of Common Stock of Tantallon granted
and outstanding immediately prior to the Effective Time shall be
changed and converted into an option to buy a share of Common Stock of
Workfire on the same terms and conditions; and (iii) each share of
Common Stock of Workfire issued and outstanding immediately prior to
the Effective Time shall be cancelled.
2.2 STOCK CERTIFICATES. At and after the Effective Time, all of the
outstanding certificates that, prior to that time, represented shares
of the common Stock of Tantallon shall be deemed for all purposes to
evidence ownership of and to represent an equal number of shares of the
same class and series of Common Stock of Workfire and shall be so
registered on the books and records of Workfire or its transfer agent.
The registered owner of any outstanding stock
<PAGE>
certificate shall, until such certificate shall have been surrendered
for transfer or conversion or otherwise accounted for to Workfire or
its transfer agent, have and be entitled to exercise any voting and
other rights with respect to and to receive any dividend and other
distributions upon, the shares of Workfire evidenced by such
outstanding certificate as above provided. After the Effective Time,
whenever certificates which formerly represented shares of Tantallon
are presented for exchange or registration of transfer, the Surviving
Corporation will cause to be issued in respect thereof certificates
representing the shares of Workfire into which the shares of Tantallon
were converted.
3. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS.
3.1 ARTICLES OF INCORPORATION. At the Effective Time, the articles of
incorporation of Workfire then in effect shall be the articles of
incorporation of the Surviving Corporation until further amended or
repealed in the manner provided by law.
3.2 BYLAWS. At the Effective Time, the Bylaws of the Surviving Corporation
then in effect shall be the bylaws of the Surviving Corporation until
further amended in accordance with the provisions thereof and
applicable law.
3.3 DIRECTORS. The directors of Tantallon immediately preceding the
Effective Time shall be the directors of the Surviving Corporation on
and after the Effective Time and shall serve until the expiration of
their terms and until their successors are elected and qualified.
3.4 OFFICERS. The officers of Tantallon immediately preceding the Effective
Time shall be the officers of the Surviving Corporation on and after
the Effective Time and shall serve at the pleasure of its Board of
Directors.
4. MISCELLANEOUS.
4.1 AMENDMENT. This Reincorporation Agreement may be amended by the Boards
of Directors of the Constituent Corporations at any time prior to the
filing of this Reincorporation Agreement with the Colorado Secretary of
State or the Nevada Secretary of State, provided that an amendment made
subsequent to the adoption of the Reincorporation Agreement by the
shareholders of either Constituent Corporation, unless approved by such
shareholders, shall not (i) alter or change the amount or kind of
shares to be received upon conversion of the outstanding Common Stock
of Tantallon, or (ii) alter or change any of the terms and conditions
of the Reincorporation Agreement if such alteration or change would
adversely affect the holders of the outstanding Common Stock of
Tantallon.
4.2 CONDITIONS TO REINCORPORATION. The obligation of the Constituent
Corporations to effect the transactions contemplated hereby is subject
to satisfaction of the following conditions (any or all of which may be
waived to the extent permitted by law in the sole discretion of the
Boards of Directors of the Constituent Corporations): (i) the
Reincorporation shall have been
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<PAGE>
approved by the shareholders of Tantallon in accordance with the
Colorado Business Corporation Act; (ii) Tantallon, as sole shareholder
of Workfire, shall have approved the Reincorporation in accordance with
the Nevada General Corporation Law; and (iii) the parties shall have
made all filings and received all approvals of any governmental or
regulatory agency of competent jurisdiction necessary in order to
consummate the Reincorporation, and each of such approvals shall be in
full force and effect.
4.3 ABANDONMENT OR DEFERRAL. At any time before the Effective Time, this
Reincorporation Agreement may be terminated and the Reincorporation may
be abandoned by the Board of Directors of either or both of the
Constituent Corporations, notwithstanding the approval of this
Reincorporation Agreement by the shareholders of Tantallon, or the
consummation of the Reincorporation may be deferred for a reasonable
period of time if, in the opinion of the Board of Directors of the
Constituent Corporations, such action would be in the best interests of
such corporations. In the event of termination of this Reincorporation
Agreement, this Reincorporation Agreement shall become void and of no
effect and there shall be no liability on the part of either
Constituent Corporation or its Board of Directors or shareholders with
respect thereto.
IN WITNESS WHEREOF, this Reincorporation Agreement, having first been fully
approved by the Boards of Directors of Tantallon and Workfire, is hereby
executed on behalf of each Constituent Corporation.
TANTALLON CAPITAL, INC.
A Colorado corporation
By:/S/ KEVIN O'NEILL
Kevin O'Neill, President
WORKFIRE TECHNOLOGIES INC.
A Nevada corporation
By:/S/ TOM TAYLOR
Tom Taylor, President
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<PAGE>
Exhibit 8.2
Agreement Concerning the Exchange of Stock between
Tantallon Capital, Inc. and Workfire Technologies International Inc.
Dated August 26, 1998
<PAGE>
AGREEMENT
CONCERNING THE EXCHANGE OF STOCK
BETWEEN
TANTALLON CAPITAL, INC.
AND
WORKFIRE TECHNOLOGIES INTERNATIONAL, INC.
THIS AGREEMENT, made this 26th day of August, 1998, by and between
Tantallon Capital, Inc., a Colorado corporation ("TANTALLON"), and Workfire
Technologies International, Inc., a Nevada corporation ("WORKFIRE").
WHEREAS, TANTALLON wishes to acquire all of the issued and outstanding
shares of stock of WORKFIRE in exchange for an aggregate of 10,800,000
authorized but unissued shares of the common stock, no par value, of TANTALLON;
and
WHEREAS, WORKFIRE and TANTALLON wish to enter into a business
combination which will result in the shareholders of WORKFIRE owning together
90% of the then issued and outstanding shares of TANTALLON's common stock and
TANTALLON owning 100% of the issued and outstanding shares of WORKFIRE's capital
stock;
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
representations contained herein, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE I
1.1 ISSUANCE OF SHARES AND OPTIONS. Subject to all of the terms and conditions
of this Agreement, TANTALLON agrees to offer 10,800,000 shares of its common
stock in exchange for all of the shares of WORKFIRE capital stock issued and
outstanding. The TANTALLON common stock will be issued directly to the
shareholders of WORKFIRE which accept the Exchange Offer. Concurrent with the
share exchange, all of the WORKFIRE options currently outstanding will be
exchanged for options issued by TANTALLON on the same terms and conditions.
1.2 EXEMPTION FROM REGISTRATION. The parties hereto intend that the common stock
to be issued by TANTALLON to the shareholders of WORKFIRE shall be exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"Act"), pursuant to Section 4(2) and/or 3(b) of the Act and the rules and
regulations promulgated thereunder.
1
<PAGE>
1.3 INVESTMENT INTENT. Prior to the consummation of the Exchange Offer, the
shareholders of WORKFIRE shall execute letters of acceptance and such other
documents containing, among other things, representations and warranties
relating to investment intent and investor status, restrictions on
transferability and restrictive legends such that the counsel for both TANTALLON
and WORKFIRE shall be satisfied that the exchange of shares as contemplated by
this Agreement will be exempt from the registration requirements of the Act.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF WORKFIRE
WORKFIRE hereby represents and warrants to TANTALLON that:
2.1 ORGANIZATION. WORKFIRE is a corporation duly organized, validly existing and
in good standing under the laws of Nevada, and has all necessary corporate
powers to own its properties and to carry on its business as now owned and
operated by it, and is duly qualified to do business and is in good standing in
each of the jurisdictions where its business requires qualification.
2.2 CAPITAL. The authorized capital stock of WORKFIRE consists of 100,000,000
shares of common stock, no par value of which 9,632,000 shares are currently
issued and outstanding. All of the issued and outstanding shares of WORKFIRE are
duly and validly issued, fully paid, and non-assessable. With the exception of
the existing WORKFIRE option currently outstanding, there are no other
outstanding subscriptions, options, rights, warrants, convertible securities, or
other agreements or commitments obligating WORKFIRE to issue or to transfer from
treasury any additional shares of its capital stock of any class.
2.3 SUBSIDIARIES. As of the date hereof, WORKFIRE does not have any
subsidiaries, other than Workfire Development Corp., or own any interest in any
other enterprise (whether or not such enterprise is a corporation) except as
disclosed herein.
2.4 DIRECTORS AND OFFICERS. Exhibit 2.4 to this Agreement, the text of which is
hereby incorporated herein by reference, contains the names and titles of all
directors and officers of WORKFIRE as of the date of this Agreement.
2.5 FINANCIAL STATEMENT. Exhibit 2.5 to this Agreement, the text of which is
hereby incorporated herein by reference, consists of the unaudited balance sheet
of WORKFIRE as of August 26, 1998. The balance sheet has been prepared in
accordance with generally accepted accounting principles and practices and
fairly presents the financial position of WORKFIRE as of the date of the balance
sheet.
2.6 ABSENCE OF CHANGES. Since the date of the balance sheet included in Exhibit
2.5,
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there has not been any change in the financial condition or operations of
WORKFIRE, except for changes in the ordinary course of business, which changes
have not in the aggregate been materially adverse.
2.7 ABSENCE OF UNDISCLOSED LIABILITIES. As of the date of the balance sheet
included in Exhibit 2.5, WORKFIRE did not have any material debt, liability, or
obligation of any nature, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, that is not reflected in such balance sheet.
2.8 INVESTIGATION OF FINANCIAL CONDITION. Without in any manner reducing or
otherwise mitigating the representations contained herein, TANTALLON and/or its
attorneys shall have the opportunity to meet with accountants and attorneys to
discuss the financial condition of WORKFIRE . WORKFIRE shall make available to
TANTALLON and or its attorneys all books and records of WORKFIRE once reasonable
notice of such request has been given.
2.9 COMPLIANCE WITH LAWS. WORKFIRE has complied with, and is not in violation
of, applicable federal, state or local statutes, laws and regulations
(including, without limitation) any applicable building, zoning or other law,
ordinance regulation) affecting its properties or the operation of its business.
2.10 LITIGATION. WORKFIRE is not a party to any legal action, arbitration,
administrative or other proceeding, or governmental investigation pending or, to
the best knowledge of WORKFIRE, threatened against or affecting WORKFIRE or its
business, assets or financial condition. WORKFIRE is not in default with respect
to any order, writ, injunction or decree of any federal, state, local or foreign
court, department, agency or instrumentality. WORKFIRE is not engaged in any
legal action to recover monies due to it.
2.11 AUTHORITY. The Board of Directors of WORKFIRE has authorized the execution
of this Agreement and the consummation of transactions contemplated herein, and
WORKFIRE has full power and authority to execute, deliver and perform this
Agreement and this Agreement is a legal, valid and binding obligation of
WORKFIRE, and is enforceable in accordance with its terms and conditions.
2.12 ABILITY TO CARRY OUT OBLIGATIONS. The execution and delivery of this
Agreement by WORKFIRE and the performance by WORKFIRE of its obligations
hereunder in the time and manner contemplated will not cause, constitute or
conflict with or result in (a) any breach or violation of any of the provisions
of or constitute a default under any license, indenture, mortgage, charter,
instruments, articles of incorporation, bylaws, or other agreement or instrument
to which WORKFIRE is a party or by which it may be bound, nor waive any consents
or authorizations of any party other than those to be required, (b) an event
that would permit any party to any agreement or instrument to terminate it or to
accelerate the maturity of any indebtedness or other obligation of WORKFIRE, or
(c) any event that would result in the creation or imposition of any lien,
charge, or encumbrance on any asset of WORKFIRE.
3
<PAGE>
2.13 FULL DISCLOSURE. None of the representations and warranties made by
WORKFIRE herein, or in any exhibit, certificate furnished or to be furnished by
WORKFIRE, or on its behalf, contains or will contain any untrue statement of
material fact, or omit any material fact the omission of which would be
misleading.
2.14 ASSETS. WORKFIRE has good and marketable title to all of its property free
and clear of any and all liens, claims and encumbrances of any nature, form or
description.
2.15 INDEMNIFICATION. WORKFIRE agrees to defend and hold TANTALLON harmless
against and in respect of any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries and deficiencies, including
interest, penalties, and reasonable attorney fees, that it shall incur or
suffer, which arise out of, result from or relate to any breach of, or failure
by WORKFIRE to perform any of its respective representations, warranties,
covenants and agreements in this Agreement or in any exhibit or other instrument
furnished or to be furnished by WORKFIRE under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TANTALLON
TANTALLON hereby represents and warrants to WORKFIRE that:
3.1 ORGANIZATION. TANTALLON is a corporation duly organized, validly existing,
and in good standing under the laws of the state of Colorado, has all necessary
corporate powers to own its properties and to carry on its business as now owned
and operated by it, and is duly qualified to do business and is in good standing
in each of the jurisdictions where its business requires qualification.
3.2 CAPITAL. The authorized capital stock of TANTALLON consists of 700,000,000
shares of common stock of which 1,200,000 shares of common stock are currently
issued and outstanding, and 10,000,000 shares of preferred stock of which no
shares are issued or outstanding. All of the issued and outstanding shares are
duly and validly issued, fully paid and non assessable. There are no outstanding
subscriptions, options, rights, warrants, convertible securities, or other
agreements or commitments obligating TANTALLON to issue or to transfer from
treasury any additional shares of its capital stock of any class.
3.3 SUBSIDIARIES. TANTALLON does not have any subsidiaries or own any interest
in any other enterprise (whether or not such enterprise is a corporation).
3.4 DIRECTORS AND OFFICERS. Exhibit 3.4, annexed hereto and hereby incorporated
herein by reference, contains the names and titles of all directors and officers
of TANTALLON as of the date of this Agreement.
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<PAGE>
3.5 FINANCIAL STATEMENT. Exhibit 3.5, annexed hereto and hereby incorporated
herein by reference, consists of the unaudited balance sheet of TANTALLON as of
August 26, 1998. The balance sheet has been prepared in accordance with
generally accepted accounting principles and practices and fairly presents the
financial position of TANTALLON as of the date of the balance sheet.
3.6 ABSENCE OF CHANGES. Since the date of the balance sheet included in Exhibit
3.5, there has not been any change in the financial condition or operations of
TANTALLON, except for changes in the ordinary course of business, which changes
have not in the aggregate been materially adverse.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. As of the date of the balance sheet
included in Exhibit 3.5, TANTALLON did not have any material debt, liability, or
obligation of any nature, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, that is not reflected in such balance sheet.
3.8 INVESTIGATION OF FINANCIAL CONDITION. Without in any manner reducing or
otherwise mitigating the representations contained herein, WORKFIRE shall have
the opportunity to meet with TANTALLON's accountants and attorneys to discuss
the financial condition of TANTALLON. TANTALLON shall make available to WORKFIRE
all books and records of TANTALLON once reasonable notice of such request has
been given.
3.9 COMPLIANCE WITH LAWS. TANTALLON has complied with, and is not in violation
of, applicable federal, state or local statutes, laws and regulations
(including, without limitation, any applicable building, zoning, or other law,
ordinance, or regulation) affecting its properties or the operation of its
business.
3.10 LITIGATION. TANTALLON is not a party to any legal action, arbitration,
administrative, or other proceeding, or governmental investigation pending or,
to the best knowledge of TANTALLON, threatened against or affecting TANTALLON or
its business, assets, or financial condition. TANTALLON is not in default with
respect to any order, writ, injunction, or decree of any federal, state, local,
or foreign court, department agency, or instrumentality. TANTALLON is not
engaged in any legal action to recover monies due to it.
3.11 AUTHORITY. The Board of Directors of TANTALLON has authorized the execution
of this Agreement and the transactions contemplated herein, and TANTALLON has
full power and authority to execute, deliver and perform this Agreement and this
Agreement is the legal, valid and binding obligation of TANTALLON, and is
enforceable in accordance with its terms and conditions.
3.12 ABILITY TO CARRY OUT OBLIGATIONS. The execution and delivery of this
Agreement by TANTALLON and the performance by TANTALLON of its obligations
hereunder will not cause, constitute, or conflict with or result in (a) any
breach or violation of any of the provisions of or constitute a default under
any license, indenture, mortgage, charge, instrument, certificate of
incorporation, bylaw, or other agreement or instrument to which
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<PAGE>
TANTALLON is a party, or by which it may be bound, nor waive any consents or
authorizations of any party other than those to be required, (b) an event that
would permit any party to any agreement or instrument to terminate it or to
accelerate the maturity of any indebtedness or other obligation of TANTALLON, or
(c) an event that would result in the creation or imposition of any lien,
charge, or encumbrance on any asset of TANTALLON.
3.13 FULL DISCLOSURE. None of the representations and warranties made by
TANTALLON herein, or in any exhibit, certificate or memorandum furnished or to
be furnished by TANTALLON, or on its behalf, contains or will contain any untrue
statement of material fact, or omit any material fact the omission of which
would be misleading.
3.14 ASSETS. TANTALLON has good and marketable title to all of its property free
and clear of any and all liens, claims and encumbrances.
3.15 INDEMNIFICATION. TANTALLON agrees to indemnify, defend and hold WORKFIRE
harmless against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties, and reasonable attorney fees, that they shall
incur and suffer, which arise out of, result from or relate to any breach of, or
failure by TANTALLON to perform any of its representations, warranties'
covenants or agreements in this Agreement or in any schedule, certificate,
exhibit or other instrument furnished or to be furnished by TANTALLON under this
Agreement.
ARTICLE IV
COVENANTS
4.1 INVESTIGATIVE RIGHTS. From the date of this Agreement until the Closing
Date, each party shall provide to the other party, and such other party's
counsels, accountants, auditors, and other authorized representatives, access
during normal business hours and upon reasonable advance written notice to all
of each party's properties, books, contracts, commitments, and records for the
purpose of examining the same. Each party shall provide the other party with all
information concerning each party's affairs as the other party may reasonably
request.
4.2 CONDUCT OF BUSINESS. Prior to the Closing, TANTALLON and WORKFIRE shall each
conduct its business in the normal course, and shall not sell, pledge, or assign
any assets, without the prior approval of the other party, except in the regular
course of business. Neither TANTALLON or WORKFIRE shall amend its Articles of
Incorporation (except as described herein) or Bylaws, declare dividends, redeem
or sell stock or other securities, incur additonal liabilities, acquire or
dispose of fixed assets, change employment terms, enter into any material or
long-term contract, guarantee obligations of any third party, settle or
discharge any balance sheet receivable for less
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<PAGE>
than its stated amount, pay more on any liability than its stated amount, or
enter into any other transaction other than in the regular course of business.
4.3 REQUIRED CORPORATE ACTION BY TANTALLON AND WORKFIRE. TANTALLON and WORKFIRE
shall cause a meeting of their directors to be duly called and held as soon as
practicable for the purpose of voting on the approval, subject to due diligence,
of this Agreement.
4.4 OFFICERS. Effective on the Closing Date, the officers of TANTALLON will
consist of the following:
Tom Taylor- President, Director
Victor Redekop - Secretary, Director
ARTICLE V
CONDITIONS PRECEDENT TO TANTALLON'S PERFORMANCE
5.1 CONDITIONS. TANTALLON's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in this
Article V. TANTALLON may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by TANTALLON of any other condition of or any of
TANTALLON's other rights or remedies, at law or in equity, if WORKFIRE shall be
in default of any of its representations, warranties, or covenants under this
Agreement.
5.2 ACCURACY OF REPRESENTATIONS. Except as otherwise permitted by this
Agreement, all representations and warranties by WORKFIRE in this Agreement or
in any written statement that shall be delivered to TANTALLON by WORKFIRE under
this Agreement shall be true and accurate on and as of the Closing Date as
though made at that time.
5.3 PERFORMANCE. WORKFIRE shall have performed, satisfied, and complied with all
covenants, agreements, and conditions required by this Agreement to be performed
or complied with by it, on or before the Closing Date.
5.4 ABSENCE OF LITIGATION. No action, suit, or proceeding before any court or
any governmental body or authority, pertaining to the transaction contemplated
by this Agreement or to its consummation, shall have been instituted or
threatened against TANTALLON on or before the Closing Date.
5.5 ACCEPTANCE BY TANTALLON DIRECTORS. The Board of Directors of TANTALLON shall
have voted to approve this Agreement.
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5.6 FINANCIAL CONDITION OF WORKFIRE. On the Closing Date, the assets and
liabilities of WORKFIRE shall not be significantly different than the amounts
shown on its balance sheet included in Exhibit 2.5 hereto except for changes in
the ordinary course of business.
ARTICLE VI
CONDITIONS PRECEDENT TO WORKFIRE'S PERFORMANCE
6.1 CONDITIONS. WORKFIRE's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in this
Article VI. WORKFIRE may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by WORKFIRE of any other condition of or any of
WORKFIRE's rights or remedies, at law or in equity, if TANTALLON shall be in
default of any of its representations, warranties, or covenants under this
Agreement.
6.2 ACCURACY OF REPRESENTATIONS. Except as otherwise permitted by this
Agreement, all representations and warranties by TANTALLON in this Agreement or
in any written statement that shall be delivered to WORKFIRE by TANTALLON under
this Agreement shall be true and accurate on and as of the Closing Date as
though made at that time.
6.3 PERFORMANCE. TANTALLON shall have performed, satisfied, and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it, on or before the Closing Date.
6.4 ABSENCE OF LITIGATION. No action, suit or proceeding before any court or any
governmental body or authority pertaining to the transaction contemplated by
this Agreement or to its consummation, shall have been instituted or threatened
against WORKFIRE on or before the Closing date.
6.5 APPROVAL BY WORKFIRE SHAREHOLDERS. The approvals of the directors and
shareholders of WORKFIRE of the matters set forth in this Agreement shall have
been obtained.
6.7 FINANCIAL CONDITION OF TANTALLON. On the Closing Date, the assets and
liabilities of TANTALLON shall not be significantly different than the amounts
shown on its balance sheet included in Exhibit 3.5 hereto except for changes in
the ordinary course of business.
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ARTICLE VII
CLOSING
7.1 CLOSING. The Closing of this transaction shall be held at the offices of
Dill Dill Carr Stonbraker & Hutchings, P.C. or such other place as shall be
mutually agreed upon, on such date as shall be mutually agreed upon by the
parties. At the Closing, the following documents, in form reasonably acceptable
to counsel to the parties or as set forth hereby shall be delivered:
By TANTALLON:
A. An officer's certificate, dated the Closing Date, that all representations,
warranties, covenants, and conditions set forth in this Agreement on behalf of
TANTALLON are true and correct as of, or have been fully performed and complied
with by the Closing date.
B. A signed Consent and/or Minutes of the Directors of TANTALLON approving this
Agreement and each matter to be approved by the Directors of TANTALLON under
this Agreement.
By WORKFIRE:
A. An officer's certificate, dated the Closing Date, that all representations,
warranties, covenants, and conditions set forth in this Agreement on behalf of
WORKFIRE are true and correct as of, or have been fully performed and complied
with by the Closing Date.
B. A signed Consent or Minutes of the Directors of WORKFIRE approving this
Agreement and each matter to be approved by the Directors of WORKFIRE under this
Agreement.
C. Signed letters of acceptance from the shareholders of WORKFIRE accepting the
offer to exchange their shares for shares of TANTALLON and acknowledging that
the TANTALLON shares have not been registered under the applicable securities
laws.
7.2 ISSUANCE OF TANTALLON STOCK. As promptly as practicable after the Closing
Date, each holder of an outstanding certificate or certificates representing
shares of WORKFIRE common stock shall surrender the same to TANTALLON, and shall
receive, in exchange, a certificate or certificates representing the number of
shares of TANTALLON common stock for which the shares of WORKFIRE common stock
represented by the certificate or certificates shall have been exchanged.
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ARTICLE VIII
REMEDIES
8.1 DISPUTES. Any dispute that might arise over the enforcement, interpretation
or execution of this Agreement and which is not amicably settled will be
submitted to arbitration in Denver, Colorado, before a panel of arbitrators
selected as follows:
Within ten (10) days of demand by either party for arbitration, each party will
select one (1) arbitrator and those two arbitrators will select a third
arbitrator and those three (3) persons shall constitute the panel of
arbitrators. The arbitrators will conduct the hearings on continuous business
days, and their decisions may be by majority vote. All costs of the arbitrators
will be shared equally, but the arbitrators are authorized to award costs and
counsel fees to the prevailing party, if necessary. All documents to be brought
into evidence will be produced within 10 days of notice of request for
arbitration.
8.2 COSTS. If any legal action or any arbitration or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party or parties shall be entitled to
recover reasonable attorney's fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
8.3 TERMINATION. In addition to any other remedies, any of the parties hereto
may on the Closing Date terminate this Agreement, without liability:
(i) If the respective Boards of Directors of TANTALLON and WORKFIRE shall
consent to the termination of this Agreement; or
(ii) If any bona fide action or proceeding shall be pending against any of the
parties hereto on the Closing Date that could result in an unfavorable judgment,
decree, or order that would prevent or make unlawful the carrying out of this
Agreement or if any agency of the federal or of any state government shall have
objected at or before the Closing Date to this acquisition or to any other
action required by or in connection with the Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 CAPTIONS AND HEADINGS. The Article and paragraph headings throughout this
Agreement are for convenience and reference only, and shall in no way be deemed
to define, limit, or add to the meaning of any provision of this Agreement.
9.2 NON-WAIVER. Except as otherwise expressly provided herein, no waiver of any
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covenant, condition, or provision of this Agreement shall be deemed to have been
made unless expressly in writing and signed by the party against whom such
waiver is charged; and (i) the failure of any party to insist in any one or more
cases upon the performance of any of the provisions, covenants, or conditions of
this Agreement or to exercise any option herein contained shall not be construed
as a waiver or relinquishment for the fixture of any such provisions, covenants,
or conditions, (ii) the acceptance of performance of anything required by this
Agreement to be performed with knowledge of the breach or failure of a covenant,
condition, or provisions hereof shall not be deemed a waiver of such breach or
failure, and (iii) no waiver by any party of one breach by another party shall
be construed as a waiver with respect to any other or subsequent breach.
9.3 TIME OF ESSENCE. Time is of the essence of this Agreement and of each and
every provision hereof.
9.4 CHOICE OF LAW. This Agreement and its application shall be governed by the
laws of the State of Colorado.
9.5 COUNTERPARTS. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.6 NOTICES. All notices, requests, demands, and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given on the
date of delivery if served personally on the party to whom notice is to be
given, or on the third day after mailing if mailed to the party to whom notice
is to be given by first class mail, registered or certified, postage prepaid,
and properly addressed as follows:
For TANTALLON:
Kevin O'Neill
Tantallon Capital, Inc.
3100 S. Monroe St
Denver, CO. 80210
For WORKFIRE:
Tom Taylor
Workfire Technologies International Inc.
5300 W. Sahara Ste. 101
Las Vegas, NV 89146
9.7 BINDING EFFECT. This Agreement shall inure to and be binding upon the heirs,
executors, personal representatives, successors and assigns of each of the
parties to this Agreement.
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9.8 EFFECT OF CLOSING. All representations, warranties, covenants, and
agreements of the parties contained in this Agreement, or in any instrument,
certificate, opinion, or other writing provided for in it, shall survive the
Closing of this Agreement.
9.9 MUTUAL COOPERATION. The parties hereto shall cooperate with each other to
achieve the purpose of this Agreement, and shall execute such other and further
actions as may be necessary or convenient to effect the transaction described
herein.
9.10 ANNOUNCEMENTS. TANTALLON and WORKFIRE will consult and cooperate with each
other as to the timing and content of any announcements of the transactions
contemplated hereby to the general public or to employees, customers or
suppliers.
9.11 EXPENSES. WORKFIRE will pay all legal, accounting and any other
out-of-pocket expenses reasonably incurred in connection with this transaction,
whether or not the transaction contemplated hereby is consummated.
9.12 EXHIBITS. As of the execution hereof, the parties hereto have provided each
other with the Exhibits provided for herein above, including any items
referenced therein or required to be attached thereto. Any material changes to
the Exhibits shall be immediately disclosed to the other party.
9.13 This Agreement is to be deemed effective on August 26, 1998.
AGREED TO AND ACCEPTED as of the date first above written:
/S/ TOM TAYLOR /S/ KEVIN O'NEILL
Tom Taylor Kevin O'Neill
WORKFIRE TECHNOLOGIES TANTALLON CAPITAL, INC.
INTERNATIONAL INC.
President President
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Exhibit 10.1
Consent of KPMG LLP
<PAGE>
[Letterhead of KPMG LLP]
The Board of Directors
Workfire.com
Suite 400, 1708 Dolphin Avenue
Kelowna, B.C.
V1Y 9S4
Dear Sirs:
We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the prospectus.
/s/KPMG LLP
Kelowna, Canada
May 13, 1999
<PAGE>
Exhibit 11.1
Opinion re Legality
<PAGE>
May 13, 1999
Workfire.com
1708 Dolphin Avenue, Suite 400
Kelowna, BC V1Y 9S4 Canada
Gentlemen:
As counsel for your company, we have reviewed your Articles of Incorporation,
Bylaws, and such other corporate records, documents, and proceedings and such
questions of law as we have deemed relevant for the purpose of this opinion.
We have also examined the Registration Statement of your company on Form SB-1
which is to be transmitted for filing with the Securities and Exchange
Commission (the "Commission") on May 13, 1999, covering the registration under
the Securities Act of 1933, as amended, of 1,000,000 shares of Common Stock to
be sold to the public, including the exhibits and form of prospectus (the
"Prospectus") filed therewith.
On the basis of such examination, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Nevada with all requisite
corporate power and authority to own, lease, license, and use its
properties and assets and to carry on the businesses in which it is now
engaged.
2. The Company has an authorized capitalization as set forth in the
Prospectus.
3. The shares of Common Stock of the Company to be issued are validly
authorized and, when (a) the pertinent provisions of the Securities Act
of 1933 and such "blue sky" and securities laws as may be applicable
have been complied with and (b) such shares have been duly delivered
against payment therefor as contemplated by the Prospectus, such shares
will be validly issued, fully paid, and nonassessable.
We hereby consent to the use of our name in the Registration Statement and
Prospectus in the section captioned "Legal Matters," and we also consent to the
filing of this opinion as an exhibit thereto. In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the rules and
regulations of the Commission thereunder.
Very truly yours,
/s/DILL DILL CARR STONBRAKER
& HUTCHINGS, P.C.
DILL DILL CARR STONBRAKER
& HUTCHINGS, P.C.
<PAGE>
