<PAGE>
As filed with the Securities and Exchange Commission on August 10, 1999.
Registration No. -
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
SIBUN RIVER GROUP, INC.
(Exact name of registrant as specified in its charter)
---------------
<TABLE>
<S> <C> <C>
Nevada 4959 76-0602958
(State or other jurisdiction
of (Primary Standard Industrial (I.R.S. Employer
incorporation or Classification Code Number) Identification No.)
organization)
</TABLE>
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580 Hornby Street, Suite 210
Vancouver, British Columbia V6C 3B6, CANADA
(604) 687-6991
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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<TABLE>
<S> <C>
Agent for Service: With a Copy to:
Suzanne Wood, President James L. Vandeberg
Sibun River Group, Inc. Vandeberg Johnson & Gandara
580 Hornby Street, Suite 210 600 University Street, Suite 2424
Vancouver, British Columbia V6C 3B6, CANADA Seattle, Washington 98101
(604) 687-6991 (206) 386-8080
</TABLE>
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this 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. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Proposed Proposed
Title of each class of Amount maximum maximum
securities to be to be offering price aggregate Amount of
registered registered per unit offering price registration fee
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<S> <C> <C> <C> <C>
Common stock........... 2,500,000 shares $0.05 per share(1) $125,000.00 $34.75
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
</TABLE>
(1) No exchange or over-the-counter market exists for Sibun River Group,
Inc.'s common stock. There have been no sales of Sibun River Group, Inc.
common stock. Sibun River Group, Inc. believes that the filings of
comparable companies support a bona fide estimate of $0.05 per share as
the maximum offering price solely for the purpose of calculating the
amount of the registration fee pursuant to Rule 457(a) under the
Securities Act of 1933.
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 Securities and Exchange Commission, acting
pursuant to such section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+We will amend and complete the information in this prospectus. Although we +
+are permitted by US federal securities law to offer these securities using +
+this prospectus, we may not sell them or accept your offer to buy them until +
+the documentation filed with the sec relating to these securities has been +
+declared effective by the SEC. This prospectus is not an offer to sell these +
+securities or our solicitation of your offer to buy these securities in any +
+jurisdiction where that would not be permitted or legal. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION August 10, 1999.
Prospectus
, 1999
SIBUN RIVER GROUP, INC.
580 Hornby Street, Suite 210
Vancouver, British Columbia V6C 3B6, CANADA
(604) 687-6991
2,500,000 Shares of Common Stock
to be sold by current shareholders
This is the initial public offering of common stock of Sibun River Group,
Inc., and no public market currently exists for shares of Sibun River Group,
Inc.'s common stock. None of the proceeds from the sale of stock in this
offering will be available to Sibun River Group, Inc.. This prospectus is part
of a registration statement that permits selling shareholders to sell their
shares on a continuous or delayed basis in the future. Selling shareholders may
sell their shares to the public immediately upon the effectiveness of the
registration statement, or they may elect to sell some or all of their shares
at a later date. As a result, it is impracticable to state either the number of
shares that will be available to the public or their price. The most recent
issuance of Sibun River Group, Inc.'s common stock occurred on April 28, 1999
at a price of $0.001 per share.
This is not an underwritten offering, and Sibun River Group, Inc.'s stock is
not listed on any national securities exchange or the NASDAQ Stock Market.
Sibun River Group, Inc. intends to apply to have its shares traded on the OTC
bulletin board under the symbol:
"SIBU"
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 1.
Neither the SEC nor any state securities commission has approved or
disapproved of these securities or passed upon the adequacy or accuracy of this
prospectus. Nor have they made, nor will they make, any determination as to
whether anyone should buy these securities. Any representation to the contrary
is a criminal offense.
<PAGE>
You should rely only on the information contained in this document. Sibun
River Group, Inc. has not authorized anyone to provide you with information
that is different. This document may only be used where it is legal to sell
these securities. The information in this document may only be accurate on the
date of this document.
----------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Risk Factors.............................................................. 1
Use of Proceeds........................................................... 7
Determination of Offering Price........................................... 7
Dilution.................................................................. 7
Selling Shareholders...................................................... 7
Plan of Distribution...................................................... 8
Description of Capital Stock.............................................. 8
Interests of Named Experts and Counsel.................................... 8
Description of Business................................................... 9
Description of Property................................................... 12
Legal Proceedings......................................................... 12
Market Price of and Dividends on Capital Stock and Related Stockholder
Matters.................................................................. 12
Selected Financial Data................................................... 13
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 14
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure............................................................... 15
Directors and Executive Officers.......................................... 15
Executive Compensation.................................................... 15
Security Ownership of Certain Beneficial Owners and Management............ 16
Certain Relationships and Related Transactions............................ 16
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities.............................................................. 16
Index to Financial Statements............................................. F-1
</TABLE>
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors and all other
information contained in this prospectus before purchasing the common stock of
Sibun River Group, Inc. Investing in Sibun River Group, Inc.'s common stock
involves a high degree of risk. Any of the following risks could adversely
affect Sibun River Group, Inc.'s business, financial condition and results of
operations and could result in a complete loss of your investment. The risks
and uncertainties described below are not the only ones Sibun River Group, Inc.
may face. Additional risks and uncertainties not presently known or that are
currently deemed immaterial may also impair Sibun River Group, Inc.'s business
operations.
You Should Not Rely on Forward-Looking Statements Because They Are Inherently
Uncertain
You should not rely on forward-looking statements in this prospectus. This
prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates", "believes", "plans",
"expects", "future", "intends" and similar expressions to identify these
forward-looking statements. This prospectus also contains forward-looking
statements attributed to certain third parties relating to their estimates
regarding the potential uses of Biocatalyst and markets for it. Prospective
investors should not place undue reliance on these forward-looking statements,
which apply only as of the date of this prospectus. Sibun River Group, Inc.'s
actual results could differ materially from those anticipated in these forward-
looking statements for many reasons, including the risks faced by Sibun River
Group, Inc. described in "Risk Factors" and elsewhere in this prospectus.
Risks Related to Sibun River Group, Inc.'s Business
Sibun River Group, Inc.'s success is dependent on a number of factors that
should be considered by prospective investors. Sibun River Group, Inc. has only
recently acquired its principal asset. It is a relatively young company and has
no history of earnings or profit and there is no assurance that it will operate
profitably in the future. As such, there is no assurance that Sibun River
Group, Inc. will provide a return on investment in the future.
Application of Biocatalyst Technology to Sewage and Waste Water Remediation
May Not Be Feasible
Sibun River Group, Inc. was formed in April of 1999 for the purpose of
exploiting a new technology into a practical and viable business in the field
of waste treatment. In a license agreement with David R. Mortenson &
Associates, Sibun River Group, Inc. acquired the rights to distribute and
produce Biocatalyst, an oxygen-enriched water product, for remediation of
sewage and waste water, whether in septic tanks or waste water treatment
facilities. Sibun River Group, Inc. believes that Biocatalyst can be used in
the remediation of sewage and waste water. A constant supply of oxygen-enriched
water to a treatment system can theoretically supply enough oxygen to sustain
aerobic microbe/bacterial growth. By using an aerobic process, as opposed to an
anaerobic process, the noxious odor sometimes associated with sewage processing
should be substantially reduced. No Biocatalyst generator has been successfully
installed and operated at any waste treatment facility, even on a test basis.
The initial step that Sibun River Group, Inc. plans to take, in conjunction
with David R. Mortenson & Associates and other licensees, is to identify a
waste treatment facility interested in participating in a trial. Sibun River
Group, Inc. may not be successful in locating a waste treatment facility
willing to test the technology. Sibun River Group, Inc. may be unable to reach
an agreement with other licensees regarding collaboration and sharing of
expenses. Even if a trial is conducted, the Biocatalyst sewage and waste water
remediation application may not prove to be either technically or economically
feasible. Any failure to establish the technical and economic feasibility of
the Biocatalyst sewage and waste water remediation application would adversely
affect Sibun River Group, Inc.'s financial condition and its prospects.
Sibun River Group, Inc. May Lose Its Biocatalyst License If It Fails to Meet
Its Minimum Purchase Requirements
Sibun River Group, Inc. has the exclusive right to distribute and market
Biocatalyst under a private label in New Jersey for a period of three years,
expiring April 5, 2002. To retain this right, Sibun River Group, Inc.
1
<PAGE>
must purchase a minimum amount of product during each of the first two years of
its license. At current prices, Sibun River Group, Inc. would have to purchase
approximately 62,500 gallons of Biocatalyst by April 5, 2000, and a further
87,500 gallons by April 5, 2001, to retain its license. Sibun River Group, Inc.
currently has no prospective purchasers lined up, and does not yet know if the
Biocatalyst sewage and waste water remediation application will even be
feasible. Sibun River Group, Inc. does not intend to meet its minimum purchase
requirement simply by stockpiling an inventory of Biocatalyst. If Sibun River
Group, Inc. does not meet its minimum purchase requirement and does not
exercise its right to become a producer of Biocatalyst, Sibun River Group, Inc.
may be deemed to be in default under its License Agreement with David R.
Mortenson & Associates. David R. Mortenson & Associates would then be able to
terminate Sibun River Group, Inc.'s license rights to Biocatalyst, which would
adversely affect Sibun River Group, Inc.'s financial condition and its
prospects.
Sibun River Group, Inc. May Lose Its Biocatalyst License If It Does Not
Exercise Its Right to Become a Producer
If Sibun River Group, Inc. meets certain requirements, it has the right to
become a producer of Biocatalyst. To become a producer, Sibun River Group, Inc.
either would have to purchase a minimum of 5,000 gallons of Biocatalyst per
month for a minimum period of six consecutive months (which is highly
unlikely), or it would have to demonstrate its financial capability, pay David
R. Mortenson & Associates a one-time fee of $25,000, an additional one-time
payment of $10,000 to reimburse unspecified expenses, and pay minimum annual
royalties of $20,000. Sibun River Group, Inc.'s business plan will likely
require it to become a producer, because any waste-treatment client would
probably need a Biocatalyst generator installed on its premises. There is no
guarantee that sewage and waste water treatment facilities, the primary target
market, will conclude that reduced noxious odors are worth the price Sibun
River Group, Inc. would have to charge to make money producing and selling
Biocatalyst. Even if Sibun River Group, Inc. obtains a producer license, it may
be unable make the minimum royalty payments. Although the final terms of the
right to produce are subject to future negotiation, presumably the failure to
pay minimum royalties would be a default that would allow David R. Mortenson &
Associates to terminate the production license. Any termination of a producer
license would adversely affect Sibun River Group, Inc.'s financial condition
and its prospects.
Sibun River Group, Inc. May Lose Its Biocatalyst License If David R.
Mortenson & Associates Defaults Under Its Agreement with N.W. Technologies
David R. Mortenson & Associates granted the Biocatalyst license to Sibun
River Group, Inc. based on an agreement David R. Mortenson & Associates has
with N.W. Technologies, Inc., the owner of the Biocatalyst technology. If a
David R. Mortenson & Associates default under its agreement with N.W.
Technologies results in David R. Mortenson & Associates losing its Biocatalyst
rights, the rights David R. Mortenson & Associates has granted Sibun River
Group, Inc. would become meaningless. Similarly, any dispute between
David R. Mortenson & Associates and N.W. Technologies (or their successors)
could impair Sibun River Group, Inc.'s ability to fully exploit its license
rights. Any termination or impairment of Sibun River Group, Inc.'s license
rights due to circumstances under the control of David R. Mortenson &
Associates, N.W. Technologies or others with an interest in the Biocatalyst
technology could adversely affect Sibun River Group, Inc.'s financial condition
and its prospects.
Increases in Biocatalyst Prices Could Destroy Sibun River Group, Inc.'s
Profitability
There can be no guarantee that Sibun River Group, Inc. ever will be
profitable. If Sibun River Group, Inc. does become profitable, however, David
R. Mortenson & Associates has the right to increase Biocatalyst prices on 10
days notice by revising its published pricing schedule. If Sibun River Group,
Inc. becomes a producer of Biocatalyst, the final terms governing pricing of
raw materials will be subject to future negotiation. Assuming David R.
Mortenson & Associates retains the right to set prices for Biocatalyst and the
raw materials necessary to produce Biocatalyst, David R. Mortenson & Associates
could raise prices to its licensees. Any material price increases could
adversely affect Sibun River Group, Inc.'s profitability, financial condition
and its prospects.
2
<PAGE>
Sibun River Group, Inc. May Undertake Investment Risks Shareholders Might Not
Otherwise Accept
Because Sibun River Group, Inc. has a limited time to develop a highly
speculative and unproven technology, Sibun River Group, Inc.'s management will
spend a significant portion of the time it devotes to Sibun River Group, Inc.
evaluating other business opportunities that may be available to Sibun River
Group, Inc. These opportunities may be related to the Biocatalyst product, or
they may be in a completely unrelated field. Sibun River Group, Inc. has had
discussions with a number of third parties regarding business opportunities,
but none of these discussions have reached the stage where an agreement in
principle is imminent. In any business opportunity reviewed by Sibun River
Group, Inc. thus far, significant business and economic issues would have to be
resolved in order to reach an agreement. Any asset acquisition or business
combination would likely include the issuance of a significant amount of Sibun
River Group, Inc.'s common stock, which would dilute the ownership interest of
holders of existing shares of Sibun River Group, Inc.'s common stock. Depending
on the nature of the transaction, Sibun River Group, Inc.'s stockholders may
not have an opportunity to vote on whether to approve it. As a result, Sibun
River Group, Inc.'s management could enter into a transaction that an investor
would not want to invest in. In such a case, an investor could not only lose
its entire investment, but could lose its entire investment on a business
decision it did not get to evaluate at the time of investing in Sibun River
Group, Inc.
Competitors Could Develop Alternative and More Cost-Effective Products to
Solve the Sewage and Waste Water Remediation Noxious Odor Problem
It is possible that an unknown competitor may have or develop a product that
could achieve results similar to or better than Biocatalyst. Sibun River Group,
Inc. is currently unaware of any other product that holds the same potential as
Biocatalyst to mitigate the noxious odors associated with sewage and waste
water remediation. It is not unthinkable, however, that a genetic engineering
company could develop a microbe that could anaerobically process sewage and
waste water while at the same time minimizing noxious odors. In addition, it is
also possible that another company could develop a product similar to
Biocatalyst that would minimize noxious odor by injecting additional oxygen
into the sewage and waste water remediation process. Sibun River Group, Inc.
may have to compete with such companies in the future if it succeeds in
establishing the feasibility of the Biocatalyst sewage and waste water
remediation application. Any development of a competing product could adversely
affect Sibun River Group, Inc.'s profitability, financial condition and its
prospects.
Government Regulation Could Adversely Affect Viability of Biocatalyst
Application
Waste treatment processes are subject to regulation by local, state and
federal environmental agencies. There can be no assurance that further
regulation and/or licensing will not emerge in the future. Although Sibun River
Group, Inc. believes that additional regulation could possibly be favorable if
it relates to odor mitigation, such further regulation or licensing could prove
to be burdensome, and impose significant additional costs on Sibun River Group,
Inc.'s business or subject Sibun River Group, Inc. to additional liabilities.
Any new regulations or licensing could damage Sibun River Group, Inc.'s
business, affect the profitability and perhaps the viability of Sibun River
Group, Inc.'s business plan, and cause the price of its common stock to
decline.
Heavy Dependence on One Individual Who Will Not Devote His Full Time and
Attention to Sibun River Group, Inc.'s Affairs Could Result in Delays or
Business Failure
Sibun River Group, Inc. currently has two individuals who are serving as the
sole officers and directors. Sibun River Group, Inc. will be heavily dependent
upon their skills, talents and abilities to implement its business plan and
may, from time to time, find that the inability of one or both of these
individuals to devote full time and attention to Sibun River Group, Inc.'s
affairs will result in delay(s) in progress towards the implementation of its
business plan or in a failure to implement its business plan. Moreover, Sibun
River Group, Inc. does not have employment agreements with either individual
and as a result, there is no assurance that either one or both will continue to
manage Sibun River Group, Inc.'s affairs in the future. The loss of the
services of either or both of these individuals could have a significant
adverse effect on Sibun River Group, Inc.'s business and could cause the price
of its stock to decline. The services of either or both of these
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<PAGE>
individuals would be difficult to replace. Because investors will not
necessarily be able to evaluate the merits of Sibun River Group, Inc.'s
business decisions, they should carefully and critically assess the information
concerning the officers and directors of Sibun River Group, Inc. See "Directors
and Executive Officers".
Year 2000 Issues Could Result in Sales or Inventory Difficulties
There is also risk due to Year 2000 issues. These issues arise because many
computerized systems use two digits rather than four digits to identify a year.
Date-sensitive systems may recognize the year 2000 as 1900 or some other date,
resulting in errors when information using the year 2000 date is processed. In
addition, similar problems may arise in some systems which 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 affect an entity's
ability to conduct normal business operations. It is not possible to be certain
that all aspects of the Year 2000 Issue affecting Sibun River Group, Inc.,
including those related to the efforts of customers, suppliers, or other third
parties, will be fully resolved. It is possible that one of Sibun River Group,
Inc.'s suppliers, such as a utility or the producer of Biocatalyst or Biomas,
or one of Sibun River Group, Inc.'s clients may become inoperative, and cause
Sibun River Group, Inc. to incur heavy expenses or losses. At present, due to
Sibun River Group, Inc.'s developmental stage, it has no critical systems that
it must test for Year 2000 compliance. However, Sibun River Group, Inc. cannot
be certain that it will not experience unanticipated negative consequences from
Year 2000 problems, or that it will be able to make any such modifications as
may become necessary in a timely, cost-effective and successful manner, and the
failure to do so could have a material adverse effect on Sibun River Group,
Inc.'s business and operating results.
Financial Risks
Sibun River Group, Inc. Has No Operating History and Financial Results Are
Uncertain
Sibun River Group, Inc. has no operating history or revenues from operations.
Sibun River Group, Inc.'s only resources have come from the private sale of
Sibun River Group, Inc.'s stock. Sibun River Group, Inc. faces all the risks of
a new business. It must be regarded as a new or "start-up" venture with all of
the unforeseen costs, expenses, problems and difficulties to which such
ventures are subject.
Because it has not yet begun operations, it is difficult to evaluate Sibun
River Group, Inc.'s business and its prospects. Its revenue and income
potential is unproven and its business model is still emerging. An investor in
Sibun River Group, Inc.'s common stock must consider the risks and difficulties
frequently encountered by early stage companies in new and rapidly evolving
markets. Sibun River Group, Inc.'s ability to achieve and then sustain
favorable operating results will depend on a number of factors, including costs
related to:
1) identifying a waste treatment facility to test the Biocatalyst
application;
2) testing the Biocatalyst application;
3) identifying and marketing to prospective purchasers;
4) purchasing the amounts of Biocatalyst or Biomas necessary for
operation and required by the license agreement, and increases in the cost
of product;
5) licensing and royalty fees;
6) loss of licensing rights;
7) evaluation and expense of entering into a new business opportunity;
8) the expense of delays in introducing or making any necessary
improvements to the Biocatalyst application; and
9) general economic conditions, as well as those specific to the related
industries.
As a result of Sibun River Group, Inc.'s limited operating history, it is
difficult to accurately forecast its potential revenue, and there is no
meaningful historical financial data upon which to base planned operating
expenses. Sibun River Group, Inc. expects to significantly increase its
operating expenses to test, market, distribute and produce Biocatalyst. Sibun
River Group, Inc. has not achieved profitability, and expects to incur
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<PAGE>
net losses for the foreseeable future and may never become profitable. Sibun
River Group, Inc.'s limited operating history makes it difficult to forecast
its future operating results. Sibun River Group, Inc. expects to continue to
incur increasing marketing, sales, product development and general and
administrative expenses. As a result it will need to generate significant
revenue and/or raise additional funds to achieve profitability. If Sibun River
Group, Inc. does not become profitable, it may be unable to maintain its
Biocatalyst License, which would adversely affect its financial condition and
prospects. If Sibun River Group, Inc. does achieve profitability, it cannot be
certain that it will sustain or increase it.
Because of its limited financial resources, Sibun River Group, Inc. will
likely be unable to diversify its activities to provide a hedge should its
business plan prove to be impractical.
Sibun River Group, Inc. May Need Additional Financing Which May Not Be
Available, or Which May Dilute the Ownership Interests of Investors
Sibun River Group, Inc. has very limited funds, and its funds are inadequate
to implement its business plan. Sibun River Group, Inc. will require
substantial working capital to fund its business. If Sibun River Group, Inc.
raises additional funds through the issuance of equity, equity-related or
convertible debt securities, these securities may have rights, preferences or
privileges senior to those of the rights of its common stock and its
stockholders may experience additional dilution.
Sibun River Group, Inc.'s ultimate success will depend on its ability to
raise additional capital. No commitments to provide additional funds have been
made by management or other shareholders. Sibun River Group, Inc. has not
investigated the availability, source or terms that might govern the
acquisition of additional financing. When additional capital is needed, there
is no assurance that funds will be available from any source or, if available,
that they can be obtained on terms acceptable to Sibun River Group, Inc.. If
not available, Sibun River Group, Inc.'s operations would be severely limited,
and it would be unable to implement its business plan.
Potential Business Combinations Could Be Difficult To Integrate, Disrupt
Business, Dilute Stockholder Value and Adversely Affect Operating Results
Sibun River Group, Inc. may consider a future financing or business
combination that, because of the size of the related stock issuance, would
result in a majority of the voting power being transferred to the investor(s).
The result would be that the new shareholder(s) would control Sibun River
Group, Inc. and persons unknown could replace Sibun River Group, Inc.'s
management. It is uncertain whether any such replacements would continue to
implement Sibun River Group, Inc.'s current business plan. In addition, Sibun
River Group, Inc.'s significant shareholders could sell their control block to
an outside party, resulting in the same type of situation. In either case, the
ownership interests of holders of existing shares of Sibun River Group, Inc.
stock will be diluted. Irrespective of whether Sibun River Group, Inc.'s cash
assets prove to be inadequate to meet its operational needs, Sibun River
Group, Inc. might seek to compensate providers of services by issuances of
stock in lieu of cash, which again would dilute ownership interests of
shareholders.
Sibun River Group, Inc. may make investments in or acquire complementary
products, technologies and businesses, or businesses completely unrelated to
Sibun River Group, Inc.'s current business plan. These acquisitions and
investments could disrupt its ongoing business, distract management and
employees and increase its expenses. If Sibun River Group, Inc. acquires a
company, it could face difficulties in assimilating that company's personnel
and operations. In addition, the key personnel of the acquired company may
decide not to work for Sibun River Group, Inc.. Acquisitions also involve the
need for integration into existing administration, services, marketing, and
support efforts. If the acquisition is financed by issuing equity securities,
interests of existing stockholders could be diluted. Any amortization of
goodwill or other assets, or other charges resulting from the costs of these
acquisitions, could adversely affect Sibun River Group, Inc.'s operating
results.
Sibun River Group, Inc. cannot predict the extent to which its liquidity and
capital resources will be diminished prior to consummation of a business
combination or whether its capital will be further depleted by the operating
losses (if any) of the business entity which Sibun River Group, Inc. may
eventually acquire.
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Sibun River Group, Inc.'s shareholders may not have an opportunity to vote
on whether to enter into a business combination or acquisition. In the event
of a business combination, acquisition, or change in shareholder control,
Sibun River Group, Inc. may enter in to a new line of business which an
investor did not anticipate and in which that investor may not want to
participate. In such case, an investor could not only lose its entire
investment, but could lose its entire investment on a business decision it did
not get to evaluate at the time of investing in Sibun River Group, Inc..
Risks Related to the Securities Market
Sibun River Group, Inc. Common Stock Has No Prior Market, And Prices May
Decline After The Offering
There is no public market for Sibun River Group, Inc.'s common stock and no
assurance can be given that a market will develop or that any shareholder will
be able to liquidate his investment without considerable delay, if at all. The
trading market price of Sibun River Group, Inc.'s common stock may decline
below the offering price. If a market should develop, the price may be highly
volatile. In addition, an active public market for Sibun River Group, Inc.'s
common stock may not develop or be sustained. If Sibun River Group, Inc.'s
selling stockholders sell substantial amounts of common stock in the public
market, the market price of Sibun River Group, Inc.'s common stock could fall.
Factors such as those discussed in this "Risk Factors" section may have a
significant impact on the market price of Sibun River Group, Inc.'s
securities. Owing to the low price of the securities many brokerage firms may
not be willing to effect transactions in the securities. Even if a purchaser
finds a broker willing to effect a transaction in Sibun River Group, Inc.'s
common stock, the combination of brokerage commissions, state transfer taxes,
if any, and other selling costs may exceed the selling price. Further, many
lending institutions will not permit the use of such securities as collateral
for loans. Thus, a purchaser may be unable to sell or otherwise realize the
value invested in Sibun River Group, Inc. stock.
Investors May Face Significant Restrictions on the Resale of Sibun River
Group, Inc. Stock Due to State and Federal Laws and Regulations
Because Sibun River Group, Inc.'s securities have not been registered for
resale under the blue sky laws of any state, the holders of such shares and
those persons desiring to purchase them in any trading market that may develop
in the future should be aware that there may be significant state blue sky law
restrictions on the ability of investors to sell and on purchasers to buy
Sibun River Group, Inc.'s securities. Accordingly, investors should consider
the secondary market for Sibun River Group, Inc.'s securities to be a limited
one. Investors may be unable to resell their stock without the significant
expense of state registration or qualification.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-
2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities and Exchange Act
of 1934, as amended. Because Sibun River Group, Inc.'s securities may
constitute "penny stock" within the meaning of the rules, the rules would
apply to Sibun River Group, Inc. and its securities. The rules may further
affect the ability of owners of Sibun River Group, Inc.'s shares to sell their
securities in any market that may develop for them.
Shareholders should be aware that, according to the Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i)
control of the market for the security by one or a few broker-dealers that are
often related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high pressure sales tactics
and unrealistic price projections by inexperienced sales persons; (iv)
excessive and undisclosed bid-ask differentials and markups by selling broker-
dealers; and (v) the wholesale dumping of the same securities by promoters and
broker-dealers after prices have been manipulated to a desired level, along
with the inevitable collapse of those prices with consequent investor losses.
Sibun River Group, Inc.'s management is aware of the abuses that have occurred
historically in the penny stock market. Although Sibun River Group, Inc. does
not expect to be in a position to dictate the behavior of the market or of
broker-dealers who participate in the market, management will strive within
the confines of practical limitations to prevent the described patterns from
being established with respect to Sibun River Group, Inc.'s securities.
6
<PAGE>
USE OF PROCEEDS
This prospectus is part of a registration statement that permits selling
shareholders to sell their shares on a continuous or delayed basis in the
future. Because this prospectus is solely for the purpose of selling
shareholders, Sibun River Group, Inc. will not receive any proceeds from the
sale of stock being offered.
DETERMINATION OF OFFERING PRICE
This offering is solely for the purpose of allowing Sibun River Group,
Inc.'s shareholders to sell their stock. The selling shareholders may sell
their shares when the registration statement becomes effective, or they may
elect to sell some or all of their shares at a later date. As the market
develops, the selling shareholders will determine the price for the stock.
DILUTION
This offering is for sales of stock by existing Sibun River Group, Inc.
shareholders on a continuous or delayed basis in the future. Sales of common
stock by shareholders will not result in any substantial change to the net
tangible book value per share before and after the distribution of shares by
the selling shareholders. There will be no change in net tangible book value
per share attributable to cash payments made by purchasers of the shares being
offered. Prospective investors should be aware, however, that the price of
Sibun River Group, Inc.'s shares may not bear any rational relationship to net
tangible book value per share.
SELLING SHAREHOLDERS
The following are the shareholders for whose accounts the shares are being
offered; the amount of securities owned by such shareholder prior to this
offering; the amount to be offered for such shareholder's account; and the
amount to be owned by such shareholder following completion of the offering:
<TABLE>
<CAPTION>
Number Number Number of
of Shares of Shares Shares After
Name Owned Offered Sale(1)
---- --------- --------- ------------
<S> <C> <C> <C>
Laurent Barbudaux........................... 200,000 200,000 0
Jimmy P. Beehner............................ 250,000 250,000 0
Marie M. Charles............................ 200,000 200,000 0
James R. Collins, D.V.M..................... 200,000 200,000 0
Jock R. Collins, D.V.M...................... 200,000 200,000 0
Terry Fowler................................ 200,000 200,000 0
Roy Donovan Hinton, Jr...................... 200,000 200,000 0
C.E. Kaiser................................. 200,000 200,000 0
David R. Mortenson.......................... 450,000 450,000 0
Joshua J. Mortenson......................... 200,000 200,000 0
Joshua D. Smetzer........................... 200,000 200,000 0
</TABLE>
- --------
(1) This table assumes that each shareholder will sell all of its shares
available for sale during the effectiveness of the registration statement
that includes this prospectus. Shareholders are not required to sell their
shares. See "Plan of Distribution."
Mr. David Mortenson served as the president and a member of the Board of
Directors of Sibun River Group, Inc. from April, 1999, to July, 1999. Mr.
Beehner served as the secretary-treasurer and a member of the Board of
Directors of Sibun River Group, Inc. from April, 1999, to July, 1999. No other
selling shareholder has held any position or office or had any material
relationship with Sibun River Group, Inc. during the past three years.
7
<PAGE>
PLAN OF DISTRIBUTION
This is not an underwritten offering. This prospectus is part of a
registration statement that permits selling shareholders to sell their shares
on a continuous or delayed basis in the future. Selling shareholders may sell
their shares to the public when the registration statement becomes effective,
or they may elect to sell some or all of their shares at a later date. Sibun
River Group, Inc. has not committed to keep the registration statement
effective for any set period of time.
While the registration statement is effective, selling shareholders may sell
their shares directly to the public, without the aid of a broker or dealer, or
they may sell their shares through a broker or dealer if Sibun River Group,
Inc.'s stock is authorized for inclusion on the OTC bulletin board. Any
commission, fee or other compensation of a broker or dealer would depend on
the brokers or dealers involved in the transaction.
No public market currently exists for shares of Sibun River Group, Inc.'s
common stock. Sibun River Group, Inc. intends to apply to have its shares
traded on the OTC bulletin board under the symbol "SIBU".
DESCRIPTION OF CAPITAL STOCK
The following description of Sibun River Group, Inc.'s capital stock does
not purport to be complete and is subject to and qualified in its entirety by
Sibun River Group, Inc.'s articles of incorporation and bylaws, which are
included as exhibits to the registration statement of which this prospectus
forms a part, and by the applicable provisions of Nevada law.
Sibun River Group, Inc.'s authorized capital consists of 25,000,000 shares
of common stock, par value $.001 per share. Immediately prior to this
offering, 2,500,000 shares were issued and outstanding. Each record holder of
common stock is entitled to one vote for each share held on all matters
properly submitted to the shareholders for their vote. The articles of
incorporation do not permit cumulative voting for the election of directors,
and shareholders do not have any preemptive rights to purchase shares in any
future issuance of Sibun River Group, Inc.'s common stock.
Because the holders of shares of Sibun River Group, Inc.'s common stock do
not have cumulative voting rights, the holders of more than 50% of Sibun River
Group, Inc.'s outstanding shares, voting for the election of directors, can
elect all of the directors to be elected, if they so choose. In such event,
the holders of the remaining shares will not be able to elect any of Sibun
River Group, Inc.'s directors.
The holders of shares of common stock are entitled to dividends, out of
funds legally available therefor, when and as declared by the Board of
Directors. The Board of Directors has never declared a dividend and does not
anticipate declaring a dividend in the future. In the event of liquidation,
dissolution or winding up of the affairs of Sibun River Group, Inc., holders
are entitled to receive, ratably, the net assets of Sibun River Group, Inc.
available to shareholders after payment of all creditors.
All of the issued and outstanding shares of common stock are duly
authorized, validly issued, fully paid, and non-assessable. To the extent that
additional shares of Sibun River Group, Inc.'s common stock are issued, the
relative interests of existing shareholders may be diluted.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Neither Elliott Tulk Pryce Anderson nor Vandeberg Johnson & Gandara was
employed on a contingent basis in connection with the registration or offering
of Sibun River Group, Inc.'s common stock.
8
<PAGE>
DESCRIPTION OF BUSINESS
General
Sibun River Group, Inc. was incorporated under the laws of the State of
Nevada on April 5, 1999, and is in its early developmental and promotional
stages. To date, Sibun River Group, Inc.'s only activities have been
organizational, directed at acquiring its principal asset, raising its initial
capital and developing its business plan. Sibun River Group, Inc. has not
commenced commercial operations. Sibun River Group, Inc. has no full time
employees and owns no real estate.
On April 5, 1999, Sibun River Group, Inc. acquired from David R. Mortenson &
Associates the rights to distribute and produce the oxygen-enriched water
product "Biocatalyst" in the state of New Jersey for the purpose of remediating
sewage and waste water, whether in septic tanks or waste water treatment
facilities. David R. Mortenson & Associates acquired these rights from the
inventor of the product, N.W. Technologies, Inc., under a distribution
agreement. The Biocatalyst technology's purpose is to improve the effectiveness
of existing processes that include an oxygenation process that takes place in a
liquid or solid environment. N.W. Technologies' Biocatalyst technology is
proprietary and not patented.
Background to Development of Biocatalyst
The technology behind Biocatalyst was developed by a Houston, Texas based
company, N.W. Technologies, for the bioremediation of oil spills. N.W.
Technologies discovered that by breaking the oil into colloidal (microscopic)
particles using a contact emulsifier, which also acts as a host for oil-eating
microbes, it could speed up the process of bioremediating spilled oil. By
breaking the oil into colloidal (microscopic) particles, the microbes have
access to an increased surface area of spilled oil (better access to the food
source). This increased access to the food source allows the microbes to
consume spilled oil more quickly.
The microbes need a ready supply of oxygen in order to consume the spilled
oil. Below six to twelve inches of soil depth, depending on soil type, oxygen
exchange is virtually non-existent, yet many oil spills reach far below that
level. Remediation companies have historically used a process called sparging
to oxygenate soils where bioremediation is being used. Sparging utilizes
perforated pipes placed in the affected area. Air is then pumped into them and
released through the perforations. Sparging is an expensive process to
implement and may result in the release of some of the volatile compounds to be
remediated, thus causing secondary air pollution.
To counter the problems with sparging, N.W. Technologies created Biocatalyst.
This is a water product with oxygen organically bonded to the water molecule.
When the microbe's extra-cellular enzymes come in contact with the water/oxygen
molecule structure, they release this oxygen, making it available to the
microbes. This process provides a means to deliver oxygen to the microbes at
depths below six to twelve inches of soil. N.W. Technologies and their
distributors/applicators have found that the use of Biocatalyst substantially
speeds up oil spill bioremediation times. N.W. Technologies has ceased using
ordinary water in the formulation of its products. Instead it uses Biocatalyst
because N.W. Technologies feels that Biocatalyst does everything that the water
does, while also providing extra oxygen needed by the oil-eating microbes.
Production of Biocatalyst
Biocatalyst is produced through an organic process that uses any water
source. The organic process takes place in a generator, which may be built
using standard off-the-shelf tankage, pumps and plumbing supplies. The
generator uses a six-foot by ten-foot print, and the total cost of an
industrial grade generator is approximately $5,000 per unit. With proper care
and maintenance, generators should last for years. An initial culture, which is
part of N.W. Technologies' proprietary process, is introduced into the
generator to create oxygen-enriched water. The generator then requires a
regular supply of "biomas", a proprietary product of N.W. Technologies, to keep
producing Biocatalyst.
9
<PAGE>
Once a generator is set up and producing, production continues for the life
of the generator provided that water is available (minimum of 15 gallons per
hour, maximum 30 gallons per hour), that the generator is protected from
freezing, and that "biomas" is added 5 days per week. David R. Mortenson &
Associates has indicated a willingness to furnish end-users a production
package consisting of the generator, the initial culture to create the oxygen
enriched water, and a regular supply of "biomas" for the generator. The client
will supply a source of usable water, electrical power and staff to operate the
generator(s). As currently configured, each generator can produce 720 gallons
of raw undiluted product per day. Where more than this volume is needed,
multiple generators can be supplied.
Application of Biocatalyst to Sewage and Waste Water Remediation
Sibun River Group, Inc. believes that Biocatalyst can be used in the
remediation of sewage and waste water. A constant supply of oxygen-enriched
water to a treatment system can theoretically supply enough oxygen to sustain
aerobic microbe/bacterial growth. By using an aerobic process, as opposed to an
anaerobic process, the noxious odor sometimes associated with sewage processing
should be substantially reduced. As Biocatalyst is pumped into the treatment
system, select microbes that target the waste as a food source can be added to
assure optimal microbe population. Once a good colony of microbes is
established, no additional microbes should be needed unless the colony is
somehow killed.
Short-Term Plan of Operation
The license agreement with David R. Mortenson & Associates that provides the
rights to distribute and produce Biocatalyst includes a minimum purchase
requirement that must be met by April 5, 2000. Because the offering under this
prospectus is solely for selling shareholders, Sibun River Group, Inc. will
need to raise funds to develop its license rights. By raising additional funds,
the ownership interest of holders of existing shares of Sibun River Group,
Inc.'s common stock will be diluted.
Sibun River Group, Inc. plans to cooperate with David R. Mortenson &
Associates and licensees that have Biocatalyst sewage and waste water
remediation license rights in other territories to economize on the costs of
product research and development. No generator has been successfully installed
and operated at any waste treatment facility, even on a test basis. The initial
step that Sibun River Group, Inc. plans to take in conjunction with David R.
Mortenson & Associates and other licensees is to identify a waste treatment
facility interested in participating in a trial. Once the facility is
identified, Sibun River Group, Inc., David R. Mortenson & Associates and the
other licensees will develop a budget for installing the test generator and
agree on an allocation of its costs. Each participant would then raise its
required contribution, and in exchange it would have access to the trial run
results to be used in its marketing and for business planning purposes. Sibun
River Group, Inc. anticipates that it would raise its share by one or more
private offerings of its common stock. There is no written agreement to ensure
this cooperation. Sibun River Group, Inc.'s expectations concerning this
cooperation are based on informal communications with the parties and their
enlightened economic self-interests.
If the trial is successful from a technical standpoint, Sibun River Group,
Inc. would have to assess the economic feasibility of proceeding further. Under
its license agreement with David R. Mortenson & Associates, to become a
Biocatalyst producer Sibun River Group, Inc. would be required to pay David R.
Mortenson & Associates a one-time fee of $25,000, an additional one-time
payment of $10,000 to reimburse unspecified expenses, and minimum annual
royalties of $20,000. Although Sibun River Group, Inc.'s production rights are
subject to negotiation of a definitive agreement, prices for the biomas used to
produce Biocatalyst will likely be subject to change following notice from
David R. Mortenson & Associates. There is no guarantee that sewage and waste
water treatment facilities, the primary target market, will conclude that
reduced noxious odors are worth the price Sibun River Group, Inc. would have to
charge to make money producing and selling Biocatalyst.
Sibun River Group, Inc. recognizes that the Biocatalyst sewage and waste
water remediation application may turn out not to be feasible. To address this
possibility, Sibun River Group, Inc. continually evaluates other business
opportunities that may be available to it, whether in the form of asset
acquisitions or business combinations. Sibun River Group, Inc.'s management
will spend a significant portion of the time it devotes to
10
<PAGE>
Sibun River Group, Inc. evaluating other business opportunities that may be
available to Sibun River Group, Inc.. These opportunities may be related to the
Biocatalyst product, or they may be in a completely unrelated field. Sibun
River Group, Inc. has had discussions with a number of third parties regarding
business opportunities, but none of these discussions have reached the stage
where an agreement in principle is imminent. In any business opportunity
reviewed by Sibun River Group, Inc. thus far, significant business and economic
issues would have to be resolved in order to reach an agreement. Any asset
acquisition or business combination would likely include the issuance of a
significant amount of Sibun River Group, Inc.'s common stock, which would
dilute the ownership interest of holders of existing shares of Sibun River
Group, Inc.'s common stock.
Industry Conditions and Competition
Sibun River Group, Inc. does not yet know whether the Biocatalyst sewage and
waste water remediation application will be a feasible money-making venture. It
does know, however, that if the application turns out to be successful, it will
hold an exclusive license in New Jersey until April 5, 2002, as long as it
meets its minimum purchase requirements or becomes a producer. Sibun River
Group, Inc. is currently unaware of any other product that holds the potential
to mitigate the noxious odors associated with sewage and waste water
remediation. It is not unthinkable, however, that a genetic engineering company
could develop a microbe that could anaerobically process sewage and waste water
while at the same time minimizing noxious odors. In addition, it is also
possible that another company could develop a product similar to Biocatalyst
that would minimize noxious odor by injecting additional oxygen into the sewage
and waste water remediation process. Sibun River Group, Inc. may have to
compete with such companies in the future if it succeeds in establishing the
feasibility of the Biocatalyst sewage and waste water remediation application.
Employees
Sibun River Group, Inc. is a development stage company and currently has no
employees. Management plans to use consultants, attorneys and accountants as
necessary and does not plan to engage any full-time employees in the near
future. Once Sibun River Group, Inc. establishes the feasibility of the
Biocatalyst sewage and waste water remediation application, its priority will
shift to developing and implementing a plan for marketing. The marketing plan
would focus on two major goals: identifying the most likely prospects for
installing generators and retaining one or more qualified individuals to market
the Biocatalyst sewage and waste water remediation application to those
prospects. Sibun River Group, Inc. would hire marketing employees based on the
projected size of the market and the compensation necessary to retain qualified
sales employees. A portion of any employee compensation likely would include
the right to acquire stock in Sibun River Group, Inc., which would dilute the
ownership interest of holders of existing shares of Sibun River Group, Inc.'s
common stock.
Available Information
Sibun River Group, Inc. has filed with the Securities and Exchange Commission
a registration statement on Form S-1 with respect to the common stock offered
by this prospectus. This prospectus, which constitutes a part of the
registration statement, does not contain all of the information set forth in
the registration statement or the exhibits and schedules which are part of the
registration statement. For further information with respect to Sibun River
Group, Inc. and its common stock, see the registration statement and the
exhibits and schedules thereto. Any document Sibun River Group, Inc. files may
be read and copied at the Commission's Public Reference Room located at 450
Fifth Street NW, Washington, D.C. 20549, as well as the public reference rooms
in New York, New York and Chicago, Illinois. Please call the Commission at 1-
800-SEC-0330 for further information about the public reference rooms. Sibun
River Group, Inc.'s filings with the Commission are also available to the
public from the Commission's website at http://www.sec.gov.
Upon completion of this offering, Sibun River Group, Inc. will become subject
to the information and periodic reporting requirements of the Securities
Exchange Act and, accordingly, will file periodic reports, proxy statements and
other information with the Commission. Such periodic reports, proxy statements
and other information will be available for inspection and copying at the
Commission's public reference rooms, and the website of the Commission referred
to above.
11
<PAGE>
DESCRIPTION OF PROPERTY
Sibun River Group, Inc. currently maintains limited office space, occupied by
Ms. Wood, for which it pays no rent. Its address is 580 Hornby Street, Suite
210, Vancouver, British Columbia V6C 3B6, CANADA, and its phone number is (604)
687-6991. Sibun River Group, Inc. does not believe that it will need to obtain
additional office space at any time in the foreseeable future until its
business plan is more fully implemented.
LEGAL PROCEEDINGS
Sibun River Group, Inc. is not a party to any material pending legal
proceedings, and none of its property is the subject of a pending legal
proceeding. Further, the officer and director knows of no legal proceedings
against Sibun River Group, Inc. or its property contemplated by any
governmental authority.
MARKET PRICE OF AND DIVIDENDS ON CAPITAL
STOCK AND OTHER SHAREHOLDER MATTERS
No established public trading market exists for Sibun River Group, Inc.'s
securities. Sibun River Group, Inc. has no common equity subject to outstanding
purchase options or warrants. Sibun River Group, Inc. has no securities
convertible into its common equity. There is no common equity that could be
sold pursuant to Rule 144 under the Securities Act or that Sibun River Group,
Inc. has agreed to register under the Securities Act for sale by shareholders.
Except for this offering, there is no common equity that is being, or has been
publicly proposed to be, publicly offered by Sibun River Group, Inc..
As of May 31, 1999, there were 2,500,000 shares of common stock outstanding,
held by 11 shareholders of record. Upon effectiveness of the registration
statement that includes this prospectus, all of Sibun River Group, Inc.'s
outstanding shares will be eligible for sale.
To date Sibun River Group, Inc. has not paid any dividends on its common
stock and does not expect to declare or pay any dividends on its common stock
in the foreseeable future. Payment of any dividends will depend upon Sibun
River Group, Inc.'s future earnings, if any, its financial condition, and other
factors as deemed relevant by the Board of Directors.
12
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements appearing elsewhere in this
prospectus. The statement of operations data set forth below for the period
from April 5, 1999, (inception) to April 30, 1999, and the balance sheet data
at April 30, 1999, are derived from Sibun River Group, Inc.'s audited
financial statements included elsewhere in this prospectus. The historical
results are not necessarily indicative of results to be expected for any
future period.
<TABLE>
<CAPTION>
Inception to
April 30, 1999
--------------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Net sales...................................................... $ --
======
Loss from continuing operations................................ $ --
======
Loss per share from continuing operations...................... $ --
======
<CAPTION>
As of
April 30, 1999
--------------
<S> <C>
BALANCE SHEET DATA:
Total assets................................................... $2,543
======
</TABLE>
Sibun River Group, Inc. is in its early developmental and promotional
stages. To date, Sibun River Group, Inc.'s only activities have been
organizational, directed at acquiring its principal asset, raising its initial
capital and developing its business plan. Sibun River Group, Inc. has not
commenced commercial operations. As a result, the selected financial data
presented above bear no resemblance to the results that Sibun River Group,
Inc. expects when it begins operations. See "Risk Factors," "Description of
Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This prospectus contains forward-looking statements, the accuracy of which
involve risks and uncertainties. We use words such as "anticipates,"
"believes," "plans," "expects," "future," "intends" and similar expressions to
identify forward-looking statements. This prospectus also contains forward-
looking statements attributed to certain third parties relating to their
estimates regarding the potential uses of Biocatalyst and markets for it.
Prospective investors should not place undue reliance on these forward-looking
statements, which apply only as of the date of this prospectus. Sibun River
Group, Inc.'s actual results could differ materially from those anticipated in
these forward-looking statements for many reasons, including the risks faced
by Sibun River Group, Inc. described in "Risk Factors" and elsewhere in this
prospectus. The following discussion and analysis should be read in
conjunction with Sibun River Group, Inc.'s Financial Statements and Notes
thereto and other financial information included elsewhere in this prospectus.
Results of Operations
During the period from April 5, 1999 (inception) through April 30, 1999,
Sibun River Group, Inc. has engaged in no significant operations other than
organizational activities, acquisition of the rights to market Biocatalyst and
preparation for registration of its securities under the Securities Act of
1933, as amended. No revenues were received by Sibun River Group, Inc. during
this period.
For the current fiscal year, Sibun River Group, Inc. anticipates incurring a
loss as a result of organizational expenses, expenses associated with
registration under the Securities Act of 1933, and expenses associated with
setting up a company structure to begin implementing its business plan. Sibun
River Group, Inc. anticipates that until these procedures are completed, it
will not generate revenues, and may continue to operate at a loss thereafter,
depending upon the performance of the business.
Liquidity and Capital Resources
Sibun River Group, Inc. remains in the development stage and, since
inception, has experienced no significant change in liquidity or capital
resources or shareholders' equity. Consequently, Sibun River Group, Inc.'s
balance sheet as of April 30, 1999, reflects total assets of $2,543, in the
form of a license and capitalized organizational costs.
Sibun River Group, Inc. expects to carry out its plan of business as
discussed above. In addition, Sibun River Group, Inc. may engage in a
combination with another business. Sibun River Group, Inc. cannot predict the
extent to which its liquidity and capital resources will be diminished prior
to the consummation of a business combination or whether its capital will be
further depleted by the operating losses (if any) of the business entity with
which Sibun River Group, Inc. may eventually combine. Sibun River Group, Inc.
has engaged in discussions concerning potential business combinations, but has
not entered into any agreement for such a combination.
Sibun River Group, Inc. will need additional capital to carry out its
business plan or to engage in a business combination. No commitments to
provide additional funds have been made by management or other shareholders.
Accordingly, there can be no assurance that any additional funds will be
available on terms acceptable to Sibun River Group, Inc. or at all. Sibun
River Group, Inc. has no commitments for capital expenditures.
14
<PAGE>
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Elliott Tulk Pryce Anderson has served as Sibun River Group, Inc.'s
independent auditor since inception, and Sibun River Group, Inc. has not had
any dispute with Elliott Tulk Pryce Anderson over accounting or financial
disclosure.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age and position of each director
and executive officer of Sibun River Group, Inc.:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Suzanne Wood.............................. 42 President, Director
Frank Roberts............................. 66 Secretary, Treasurer, Director
</TABLE>
Ms. Wood became the President and a member of the Board of Directors of Sibun
River Group, Inc. in July, 1999. Since 1986, Ms. Wood has been the principal of
Wood & Associates, financial management consultants providing services in
corporate financing and mergers and acquisitions. Ms. Wood is an accountant
with over 15 years' in experience in the finances and corporate management of
private and public companies. After graduating from the University of British
Columbia in 1980, Ms. Wood spent several years with Revenue Canada, Taxation,
primarily with its Business Audit Division. During this period she was enrolled
in and completed four levels of the Certified General Accountants Program. She
has completed the Canadian Securities Course and remains current in the changes
relating to securities matters through continued participation in the
Professional Development Program of The Institute of Chartered Accountants of
British Columbia. Ms. Wood is a director of Genetronics Biomedical Ltd., traded
under the symbol "GEB" on the American and Toronto Stock Exchanges.
Since 1984, Mr. Roberts has been the president and sole shareholder and
director of RSM Investor Network Inc., a consulting company providing services
to existing and emerging private and public companies, assisting such companies
with raising equity capital and providing management and communication
services. Prior to that, Mr. Roberts founded Steeplejack Services Ltd. in
Calgary, with four other partners. Steeplejack specialized in manufacturing,
leasing and sale of scaffolding and many construction related products. From
its inception in 1969 until he sold his interest in 1985, Mr. Roberts and his
partners built the company to be very successful with operations throughout
Canada.
The directors named above will serve until the first annual meeting of Sibun
River Group, Inc.'s shareholders. Thereafter, directors will be elected for
one-year terms at the annual shareholders' meeting. Officers will hold their
positions at the pleasure of the board of directors, absent any employment
agreement. No employment agreements currently exist or are contemplated. There
is no arrangement or understanding between the director and officer of Sibun
River Group, Inc. and any other person pursuant to which any director or
officer was or is to be selected as a director or officer.
The directors and officers of Sibun River Group, Inc. will devote their time
to Sibun River Group, Inc.'s affairs on an "as needed" basis. As a result, the
actual amount of time which they will devote to Sibun River Group, Inc.'s
affairs is unknown and is likely to vary substantially from month to month.
EXECUTIVE COMPENSATION
No officer or director has received any remuneration from Sibun River Group,
Inc.. Although there is no current plan in existence, it is possible that Sibun
River Group, Inc. will adopt a plan to pay or accrue compensation to its
officers and directors for services related to the implementation of Sibun
River Group, Inc.'s
15
<PAGE>
business plan. Sibun River Group, Inc. has no stock option, retirement,
incentive, defined benefit, actuarial, pension or profit-sharing programs for
the benefit of directors, officers or other employees, but the Board of
Directors may recommend adoption of one or more such programs in the future.
Sibun River Group, Inc. has no employment contract or compensatory plan or
arrangement with any executive officer of Sibun River Group, Inc.. The
Director currently does not receive any cash compensation from Sibun River
Group, Inc. for his service as a member of the board of directors. There is no
compensation committee, and no compensation policies have been adopted. See
"Certain Relationships and Related Transactions."
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 31, 1999, Sibun River Group,
Inc.'s outstanding common stock owned of record or beneficially by each
executive officer and director and by each person who owned of record, or was
known by Sibun River Group, Inc. to own beneficially, more than 5% of Sibun
River Group, Inc.'s common stock, and the shareholdings of all executive
officers and directors as a group.
<TABLE>
<CAPTION>
Shares Percentage of
Name Owned Shares Owned
- ---- ------- -------------
<S> <C> <C>
Laurent Barbudaux........................................ 200,000 8%
735 International Boulevard #111
Houston, Texas 77024
Jimmy P. Beehner......................................... 250,000 10%
P.O. Box 2370
Alvin, TX 77512
Marie M. Charles......................................... 200,000 8%
P.O. Box 34830
Houston, Texas 77034
James R. Collins, D.V.M.................................. 200,000 8%
7716 Windswept Lane
Houston, Texas 77063
Jock R. Collins, D.V.M................................... 200,000 8%
7627 Skyline Drive
Houston, Texas 77063
Terry Fowler............................................. 200,000 8%
545 Teal Drive
Dickinson, Texas 77539
Roy Donovan Hinton, Jr................................... 200,000 8%
P.O. Box 4456
Pasadena, Texas 77502
C.E. Kaiser.............................................. 200,000 8%
10220 Memorial Drive #67
Houston, Texas 77024
David R. Mortenson....................................... 450,000 18%
P.O. Box 5034
Alvin, Texas 77512
Joshua J. Mortenson...................................... 200,000 8%
808 Cemetery Road
Alvin, Texas 77511
Joshua D. Smetzer........................................ 200,000 8%
2101 Mustang Road #113
Alvin, Texas 77511
ALL EXECUTIVE OFFICERS & DIRECTORS AS A GROUP
(0 Individuals)....................................... 0 0%
</TABLE>
16
<PAGE>
All shares are held of record and each record shareholder has sole voting and
investment power. Sibun River Group, Inc. knows of no one who has the right to
acquire beneficial ownership in Sibun River Group, Inc. common stock. Other
than the sale of Sibun River Group, Inc. stock contemplated by this prospectus,
there are no arrangements known to Sibun River Group, Inc. the operation of
which may at a subsequent date result in a change of control of Sibun River
Group, Inc..
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No director, executive officer or nominee for election as a director of Sibun
River Group, Inc., and no owner of five percent or more of Sibun River Group,
Inc.'s outstanding shares or any member of their immediate family has entered
into or proposed any transaction in which the amount involved exceeds $60,000,
except as discussed below. Two owners of greater than five percent of Sibun
River Group, Inc.'s stock, David R. Mortenson and Jimmy P. Beehner, are the
principal of and an investor-participant, respectively, in David R. Mortenson &
Associates, the licensor of Sibun River Group, Inc.'s right to distribute and
produce the Biocatalyst oxygen-enriched water product. Mr. Beehner and Mr.
Mortenson were previously directors of Sibun River Group, Inc., and the
president and secretary-treasurer, respectively. They are no longer directors
or officers Sibun River Group, Inc.. If Sibun River Group, Inc. succeeds in
implementing its business plan, Sibun River Group, Inc. will make payments to
David R. Mortenson & Associates in the future that will exceed $60,000,
although the resulting benefits to Mr. Beehner and Mr. Mortenson may not
individually exceed $60,000.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Sibun River Group, Inc.'s bylaws provide that Sibun River Group, Inc. will
indemnify its officers and directors for costs and expenses incurred in
connection with the defense of actions, suits, or proceedings against them on
account of their being or having been directors or officers of Sibun River
Group, Inc., absent a finding of negligence or misconduct in the performance of
duty.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling Sibun
River Group, Inc. pursuant to the forgoing provisions,
Sibun River Group, Inc. has been informed that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in that Act and is, therefore, unenforceable.
17
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Sibun River Group, Inc.
(A Development Stage Company)
<TABLE>
<S> <C>
Independent Auditor's Report....................................... F-2
Balance Sheet as of April 30, 1999................................. F-3
Statement of Operations from April 5, 1999 (Date of Inception) to
April 30, 1999.................................................... F-4
Statement of Cash Flows from April 5, 1999 (Date of Inception) to
April 30, 1999.................................................... F-5
Statement of Stockholders' Equity from April 5, 1999 (Date of
Inception) to April 30, 1999...................................... F-6
Notes to the Financial Statements.................................. F-7 to F-8
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Sibun River Group, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Sibun River Group, Inc. (A
Development Stage Company) as of April 30, 1999 and the related statements of
operations, stockholders' equity and cash flows for the period from April 5,
1999 (Date of Inception) to April 30, 1999. 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 U.S. generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of Sibun River Group, Inc. (A
Development Stage Company), as of April 30, 1999, and the results of its
operations and its cash flows for the period from April 5, 1999 (Date of
Inception) to April 30, 1999, in conformity with U.S. generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has not generated any revenues or conducted
any operations since inception. These factors raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans in
regard to these matters are also discussed in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Elliott, Tulk, Pryce, Anderson
Chartered Accountants
Vancouver, Canada
July 20, 1999
F-2
<PAGE>
SIBUN RIVER GROUP, INC.
(A Development Stage Company)
BALANCE SHEET
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
April 30,
1999
$
---------
<S> <C>
ASSETS
------
License (Note 3)..................................................... 2,000
Organizational costs................................................. 543
-----
2,543
=====
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities.................................................. --
-----
Contingent Liability (Note 1)
Stockholders' Equity
Common Stock, 25,000,000 shares authorized with a par value of
$.001; 2,500,000 shares issued and outstanding.................... 2,543
Deficit Accumulated During the Development Stage................... --
-----
2,543
-----
2,543
=====
</TABLE>
(The accompanying notes are an integral part of the financial statements)
F-3
<PAGE>
SIBUN RIVER GROUP, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
From April 5, 1999
(Date of Inception)
to April 30, 1999
-------------------
<S> <C>
Revenues.................................................... $
-----
Expenses.................................................... --
-----
Net Loss ................................................... --
=====
</TABLE>
(The accompanying notes are an integral part of the financial statements)
F-4
<PAGE>
SIBUN RIVER GROUP, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
From April 5, 1999
(Date of Inception)
to April 30, 1999
$
-------------------
<S> <C>
Cash Flows to Operating Activities
Net loss................................................. --
-----
Net Cash Used by Operating Activities...................... --
-----
Cash Flows from Financing Activities
Increase in shares issued................................ 500
-----
Net Cash Provided by Financing Activities.................. 500
-----
Cash Flows to Investing Activities
Increase in organizational costs......................... (500)
-----
Net Cash Used in Investing Activities...................... (500)
-----
Change in cash............................................. --
Cash--beginning of period.................................. --
-----
Cash--end of period........................................ --
=====
Non-Cash Financing Activities
A total of 2,000,000 shares were issued at a fair market
value of $0.001 per share for the acquisition of a
License (Note 3)........................................ 2,000
Organization costs paid for by a director for no
consideration treated as additional paid in capital..... 43
-----
2,043
=====
Supplemental Disclosures
Interest paid............................................ --
Income tax paid.......................................... --
</TABLE>
(The accompanying notes are an integral part of the financial statements)
F-5
<PAGE>
SIBUN RIVER GROUP, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
From April 5, 1999 (Date of Inception) to April 30, 1999
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock During the
---------------- Development
Shares Amount Stage
# $ $
--------- ------ -----------
<S> <C> <C> <C>
Balance--April 5, 1999 (Date of Inception)........ -- --
Stock issued for $500 of organizational
expenses....................................... 500,000 500
Additional paid in capital for organizational
expenses incurred by a director on behalf of
the Company.................................... -- 43
Stock issued for "The Biocatalyst License" at a
fair market value of $0.001 per share.......... 2,000,000 2,000
Net loss for the period......................... --
--------- ----- ----
Balance--April 30, 1999........................... 2,500,000 2,543 --
========= ===== ====
</TABLE>
(The accompanying notes are an integral part of the financial statements)
F-6
<PAGE>
SIBUN RIVER GROUP, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(expressed in U.S. dollars)
1. Development Stage Company
Sibun River Group, Inc. herein (the "Company") was incorporated in the State
of Nevada, U.S.A. on April 5, 1999. The Company has acquired a license to
market and distribute a product as discussed in Note 3.
In a development stage company, management devotes most of its activities to
establishing these new businesses. Planned principal activities have not yet
begun nor produced any revenues. The ability of the Company to emerge from the
development stage with respect to any planned principal business activity is
dependent upon its successful efforts to raise additional equity financing and
develop a market for its products.
2. Summary of Significant Accounting Policies
(a) Year end
The Company's fiscal year end is April 30.
(b) Licenses
Costs to acquire licenses are capitalized as incurred. These costs will be
amortized on a straight-line basis over their remaining estimated useful lives
upon the licenses becoming commercially viable or written-off to operations if
the licenses do not become commercially viable.
(c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three
months or less at the time of issuance to be cash equivalents.
(d) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
periods. Actual results could differ from those estimates.
3. License
On April 5, 1999 the Company acquired a license for a product called
Biocatalyst. The Company has the exclusive right to distribute and market the
product under a private label in the State of Texas for a period of three
years expiring April 5, 2002. Biocatalyst is an oxygen enriched water product
used to enhance the growth of microbes in soils, particularly at depths where
oxygen exchange is limited. The Company issued 2,000,000 shares at a fair
market value of $.001 or $2,000. The shares were issued to the licensor who
are members of a partnership and whose general partner is also a director and
officer of the Company. Once the Company purchases a minimum of 5,000 gallons
of product for a minimum period of six consecutive months, then a license will
be granted to the Company to produce the product in a location to be mutually
agreed upon. A producer license will also be granted if the Company can
demonstrate its financial capability, pay the licensor a one-time fee of
$25,000, an additional one-time payment of $10,000 to reimburse unspecified
expenses, and pay minimum annual royalties of $20,000. If no producing license
is granted then the Company is committed to purchase a minimum amount of
product during each of the first two years of its license. At current prices,
the Company would have to purchase approximately 62,500 gallons of Biocatalyst
by April 25, 2000, and a further 87,500 gallons by April 25, 2001 to retain
its license. The Company has the option to renew the license for an additional
three years.
F-7
<PAGE>
4. Related Party Transaction
The License referred to in Note 3 was sold to the Company by a partnership
whose general manager is the spouse of the Secretary/Treasurer of the Company
and a director for consideration of 2,000,000 shares for total fair market
consideration of $2,000. These shares were paid evenly to the ten partners.
5. Uncertainty Due to 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 the year 2000 dates is processed. In addition, similar problems may
arise in some systems which 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 affect an entity's ability to conduct normal
business operations. It is not possible to be certain that all aspects of the
Year 2000 Issue affecting the Company, including those related to the efforts
of customers, suppliers, or other third parties, will be fully resolved.
F-8
<PAGE>
Prospectus
, 1999
SIBUN RIVER GROUP, INC.
580 Hornby Street, Suite 210
Vancouver, British Columbia V6C 3B6, CANADA
(604) 687-6991
2,500,000 Shares of Common Stock
to be sold by current shareholders
Sibun River Group, Inc. has not authorized any dealer, salesperson or other
person to give you written information other than this prospectus or to make
representations as to matters not stated in this prospectus. You must not rely
on unauthorized information. This prospectus is not an offer to sell these
securities or a solicitation of your offer to buy the securities in any
jurisdiction where that would not be permitted or legal. Neither the delivery
of this prospectus nor any sales made hereunder after the date of this
prospectus shall create an implication that the information contained herein or
the affairs of Sibun River Group, Inc. have not changed since the date hereof.
Until , 1999 (90 days after the date of this prospectus),
all dealers that effect transactions in these shares of common stock may be
required to deliver a prospectus. This is in addition to the dealer's
obligation to deliver a prospectus when acting as an underwriter and with
respect to their unsold allotments or subscriptions.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The securities are being registered for the account of selling shareholders,
and all of the following expenses will be borne by such shareholders. The
amounts set forth are estimates except for the SEC registration fee:
<TABLE>
<S> <C>
SEC registration fee................................................ $ 35
Printing and engraving expenses..................................... 5,000
Attorneys' fees and expenses........................................ 9,000
Accountants' fees and expenses...................................... 1,500
Transfer agent's and registrar's fees and expenses.................. 500
Miscellaneous....................................................... 965
-------
Total............................................................. $17,000
=======
</TABLE>
Item 14. Indemnification of Directors and Officers.
Pursuant to Nevada law, a corporation may indemnify a person who is a party
or threatened to be made a party to an action, suit or proceeding by reason of
the fact that he or she is an officer, director, employee or agent of the
corporation, against such person's costs and expenses incurred in connection
with such action so long as he or she has acted in good faith and in a manner
which he or she reasonably believed to be in, or not opposed to, the best
interests of the corporation, and, in the case of criminal actions, had no
reasonable cause to believe his or her conduct was unlawful. Nevada law
requires a corporation to indemnify any such person who is successful on the
merits or defense of such action against costs and expenses actually and
reasonably incurred in connection with the action.
The bylaws of Sibun River Group, Inc., filed as Exhibit 3.2, provide that
Sibun River Group, Inc. will indemnify its officers and directors for costs and
expenses incurred in connection with the defense of actions, suits, or
proceedings against them on account of their being or having been directors or
officers of Sibun River Group, Inc., absent a finding of negligence or
misconduct in office. Sibun River Group, Inc.'s Bylaws also permit Sibun River
Group, Inc. to maintain insurance on behalf of its officers, directors,
employees and agents against any liability asserted against and incurred by
that person whether or not Sibun River Group, Inc. has the power to indemnify
such person against liability for any of those acts.
Item 15. Recent Sales of Unregistered Securities.
Set forth below is information regarding the issuance and sales of Sibun
River Group, Inc.'s securities without registration since its formation. No
such sales involved the use of an underwriter and no commissions were paid in
connection with the sale of any securities.
(a) On April 2, 1999, Sibun River Group, Inc. issued 500,000 shares of
common stock to two shareholders in satisfaction of certain organizational
costs (approximately $500) and activities performed by the shareholders.
The issuance of the shares was exempt from registration under Rule 506 of
Regulation D, and sections 3(b) and 4(2) of the Securities Act of 1933, as
amended, due to the shareholders being Sibun River Group, Inc.'s founders
and serving as its initial management, and the limited number of investors
(two).
(b) On April 28, 1999, Sibun River Group, Inc. issued a total of
2,000,000 shares of common stock to ten shareholders, one of whom is the
general partner of, and nine of whom are investor participants in, the
licensor of Sibun River Group, Inc.'s Biocatalyst rights. The issuance was
compensation for the license of the Biocatalyst rights. The issuance of the
common stock was exempt from registration under Rule 504 of Regulation D
and section 3(b) of the Securities Act of 1933, as amended. Sibun River
Group, Inc.'s shares
II-1
<PAGE>
were valued at $0.001 per share, and they were issued to accredited
investors according to an exemption from registration under Texas law that
permits general solicitation and general advertising so long as sales are
made only to accredited investors. If the exemption under Rule 504 of
Regulation D is not available, Sibun River Group, Inc. believes that the
issuance was also exempt under Rule 506 of Regulation D and Sections 3(b)
and 4(2) under the Securities Act of 1933, as amended, due to limiting the
manner of the offering, promptly filing notices of sales, and limiting the
issuance of shares to a small number of accredited investors (ten).
Item 16(a). Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Name
------- ----
<C> <S>
3.1 Articles of Incorporation
3.2 Bylaws
5.1 Opinion re: Legality
10.1 License Agreement
10.2 Amendment No. 1 to License Agreement
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (see Exhibit 5.1)
27.1 Financial Data Schedule
</TABLE>
Item 16(b). Financial Statement Schedules.
As of April 30, 1999, Sibun River Group, Inc.:
. has no valuation or qualifying accounts
. does not have a substantial portion of its business devoted to acquiring
and holding for investment real estate or interests therein
. has no subsidiaries
. has no investments in mortgage loans on real estate.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(a) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume 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 volume and price represent no more than 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Vancouver, Province of
British Columbia, CANADA, on August 10, 1999.
SIBUN RIVER GROUP, INC.
/s/ Suzanne Wood
By: ___________________________
Suzanne Wood
Its President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Suzanne Wood President and Director August 10, 1999
____________________________________
Suzanne Wood
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Name
------- ----
<C> <S>
3.1 Articles of Incorporation
3.2 Bylaws
5.1 Opinion re: Legality
10.1 License Agreement
10.2 Amendment No. 1 to License Agreement
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (see Exhibit 5.1)
27.1 Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
of
Sibun River Group, Inc.
The undersigned natural person of the age of eighteen years or more, acting
as incorporator of a corporation under and pursuant to the laws of the State of
Nevada, hereby adopts the following Articles of Incorporation for such
corporation:
ARTICLE I
The name of the corporation is Sibun River Group, Inc.
ARTICLE II
The principal office of this corporation is to be at 50 West Liberty
Street, Suite 880, Reno, 89501, State of Nevada. The Nevada Agency and Trust
Company is hereby named as Resident Agent of this corporation and in charge of
its said office in Nevada.
ARTICLE III
The nature of the business, objects and purposes to be transacted,
promoted, or carried on by the corporation are:
A. To conduct any lawful business, to promote any lawful purpose, and to
engage in any lawful act or activity for which corporations maybe organized
under the General Corporation Law of the State of Nevada and to act in
every kind of fiduciary capacity. and generally to do all things necessary
or convenient which are incident to or which a natural person might or
could do.
B. To purchase, receive, take by grant, gift, devise, bequest, or
otherwise. lease, or otherwise acquire, own, hold, improve, employ, use and
otherwise deal in and with real or personal property, or any interest
therein, wherever situated, and to sell, convey, lease, exchange, transfer
or otherwise dispose of, or mortgage or pledge, all or any of its property
and assets, or any interests therein, wherever situated.
C. To engage generally in the real estate business as principal, and in
any lawful capacity, and generally to take, lease, purchase, or otherwise
acquire, and to own, use, hold, sell, convey, exchange, lease, mortgage,
work, clear, improve, develop, divide, and otherwise handle, manage,
operate, deal in and dispose of mining claims, oil leases, oil and gas
wells, real estate, real property, lands, multiple-dwelling structures,
houses, buildings and other works and any interest or right therein; to
take, lease, purchase or otherwise handle or acquire, and to own, use,
hold, sell, convey, exchange, hire, lease, pledge, mortgage, and otherwise
handle, and deal in and dispose of, as principal agent or in any lawful
capacity, such
1
<PAGE>
personal property, chattels, chattels real, rights, easements, privileges,
causes in action, notes, bonds, mortgages, and securities as may lawfully
be acquired, held or disposed of and to acquire, purchase, sell, assign,
transfer, dispose of and generally deal in and with as principal, agent,
broker, and in any lawful capacity, mortgages and other interests in real,
personal, and mixed properties; to carry on a general oil exploration,
mining exploration and management business as principal, agent,
representative, contractor, subcontractor, and in any other lawful
capacity. To manufacture, purchase or acquire in any lawful manner and to
hold, own, mortgage, pledge, sell, transfer, or in any manner dispose of,
and to deal and trade in goods, wares, merchandise, and property of any and
every class and description, and in any part of the world.
D. To apply for, register, obtain, purchase, lease, take licenses in
respect of or otherwise acquire, and to hold, own, use, operate, develop,
enjoy, turn to account, grant licenses and immunities in respect of,
manufacture under and to introduce, sell, assign, mortgage, pledge or
otherwise dispose of and, in any manner deal with and contract with
reference to:
1. Inventions, devices, formulas, processes, improvements and
modifications thereof;
2. Letters patent, patent rights, patented processes, rights, designs,
and similar rights, trademarks, trade names, trade symbols and other
indications or origin and ownership granted by or recognized under the laws
of the United States of America, any state or subdivision thereof, and any
commonwealth, territory, possession, dependency, colony, possession agency
or instrumentality of the United States of America and of any foreign
country, and all rights connected therewith or appertaining thereto.
3. Franchises licenses, grants and concessions.
E. To make, enter into, perform and carry out contracts of every kind and
description with any person, firm, association, corporation or government
or agency or instrumentality thereof.
F. To lend money in furtherance of its corporate purposes and to invest
and reinvest its funds from time to time to such extent, to such persons,
firms,
2
<PAGE>
associations, corporations, governments or agencies or instrumentalities
thereof, and on such terms and on such security, if any, as the Board of
Directors of the corporation may determine and direct any officer to
complete.
G. To borrow money without limit as to amount and at such rates of
interest as it may determine; from time to time to issue and sell its own
securities, including its shares of stock, notes, bonds, debentures, and
other obligations, in such amounts, on such terms and conditions, for such
purposes and for such prices, now or hereafter permitted by the laws of the
State of Nevada and by the Board of Directors of the corporation as they
may determine; and to secure any of its obligations by mortgage, pledge or
other encumbrance of any or all of its property, franchises and income.
H. To be a promoter or manager of other corporations of any type or kind;
and to participate with others in any corporation, partnership, limited
partnership, joint venture, or other association of any kind, or in any
transaction, undertaking or arrangement which the corporation would have
power to conduct by itself, whether or not such participation involves
sharing or delegation of control with or to others.
I. To promote and exercise all or any part of the foregoing purposes and
powers in and all parts of the world, and to conduct its business in all or
any branches in any lawful capacity.
The foregoing enumeration of specific purposes and powers shall not be held
to limit or restrict in any manner the purposes and powers of the
corporation by references to or inference from the terms or provisions of
any other clause, but shall be regarded as independent purposes.
ARTICLE IV
The aggregate number of shares which the corporation shall have authority
to issue is 25,000,000 shares of common stock with $0.001 par value each.
No shareholder of the corporation shall have the right of cumulative voting
at any election of directors or upon any other matter.
No holder of securities of the corporation shall be entitled as a matter of
right, preemptive or otherwise, to subscribe for or purchase any securities of
the corporation now or hereafter authorized to be issued, or securities held in
the treasury of the corporation, whether issued or sold for cash or other
consideration or as a share dividend or otherwise. Any such securities may be
issued or disposed of by the board of directors
3
<PAGE>
to such persons and on such terms as in its discretion it shall deem advisable.
ARTICLE V
Any action required to, or that may, be taken at any annual or special
meeting of shareholders may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holder or holders of shares having not less than
the minimum number of votes that would be necessary to take such action at a
meeting at which the holders of all shares entitled to vote on the action were
present and voted.
ARTICLE VI
The members of the governing board shall be styled DIRECTORS and the number of
such Directors shall be not less than one (l), or more than five (5). The first
board of directors shall be Two Members whose names and post office addresses
are as follows:
Mortenson, David
P.O. Box 5034
Alvin, TX 77512-5034
Beehner, Jim
P.O. Box 2370
Alvin, TX 77512-2370
ARTICLE VII
The initial number of stockholders will be two (2). Additional stockholders may
be obtained. The number of directors may be changed as provided in N.R.S.
78.330.
ARTICLE VIII
A. No director of the corporation shall be liable to the corporation or
any of its shareholders for monetary damages for an act or omission in the
director's capacity as a director, except that this Article VIII shall not
authorize the elimination or limitation of liability of a director of the
corporation to the extent the director is found liable for: (i) a breach of such
director's duty of loyalty to the corporation or its shareholders; (ii) an act
or omission not in good faith that constitutes a breach of duty of such director
to the corporation or an act or omission that involves intentional misconduct or
a knowing violation of the law; (iii) a transaction from which such director
received an improper benefit, whether or not the benefit resulted from an action
taken within the scope of the
4
<PAGE>
director's office; or (iv) an act or omission for which the liability of a
director is expressly provided by an applicable statute.
B. The capital stock of this corporation after the amount of the
subscription price or par value has been paid in, shall not be subject to
assessment to pay debts of this corporation and no stock issued as fully paid up
shall ever be assessable or assessed and the Articles of Incorporation shall not
be amended in this particular.
ARTICLE IX
This corporation is to have perpetual existence.
David R. Mortenson, the undersigned, being the original incorporator for
the purpose of forming a corporation to do business both within and without the
state of Nevada, and in pursuance of the General Corporation Law of the State of
Nevada, effective March 31, 1925 and as subsequently amended do make and file
this certificate, hereby declares and certifies that the facts herein above
stated are true.
This 1st day of April, 1999.
--- ----- --
/s/ David R. Mortenson
--------------------------------------------------
Address: P.O. Box 5034
Alvin TX 77512-5034
On 1st April, 1999 before me, the undersigned, a Notary Public in and for said
State, personally appeared David R. Mortenson to me known to be the person whose
name is subscribed to the within instrument and acknowledged to me that he
executed the same.
WITNESS my hand and official seal.
/s/ Marcy Ann Ainsworth
--------------------------------------------------
Notary Public
[Notary Seal]
5
<PAGE>
EXHIBIT 3.2
================================================================================
BYLAWS OF
Sibun River Group, Inc.
================================================================================
CONTENTS OF INITIAL BYLAWS
<TABLE>
<CAPTION>
ARTICLE PAGE
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<C> <S> <C>
1.00 CORPORATE CHARTER AND BYLAWS
1.01 Corporate Charter Provisions...........................3
1.02 Registered Agent or Office--Requirement
of Filing Changes with Secretary of State..............3
1.03 Initial Business Office................................4
1.04 Amendment of Bylaws....................................4
2.00 DIRECTORS AND DIRECTORS' MEETINGS
2.01 Action Without Meeting.................................4
2.02 Telephone Meetings.....................................4
2.03 Place of Meetings......................................4
2.04 Regular Meetings.......................................5
2.05 Call of Special Meeting................................5
2.06 Quorum.................................................5
2.07 Adjournment--Notice of Adjourned Meetings..............5
2.08 Conduct of Meetings....................................6
2.09 Powers of the Board of Directors.......................6
2.10 Board Committees--Authority to Appoint.................6
2.11 Transactions with Interested Directors.................6
2.12 Number of Directors....................................6
2.13 Term of Office.........................................7
2.14 Removal of Directors...................................7
2.15 Vacancies..............................................7
2.15(a) Declaration of Vacancy........................7
2.15(b) Filling Vacancies by Directors................7
2.15(c) Filling Vacancies by Shareholders.............8
2.16 Compensation...........................................8
2.17 Indemnification of Directors and Officers..............8
2.18 Insuring Directors, Officers, and Employees............8
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARTICLE PAGE
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<C> <S> <C>
3.00 SHAREHOLDERS' MEETINGS
3.01 Action Without Meeting.................................8
3.02 Telephone Meetings.....................................8
3.03 Place of Meetings......................................8
3.04 Notice of Meetings.....................................8
3.04 Voting List............................................9
3.05 Votes per Share........................................10
3.07 Cumulative Voting......................................10
3.08 Proxies................................................10
3.09 Quorum.................................................10
3.09(a) Quorum of Shareholders........................10
3.09(b) Adjourn for Lack or Loss of Quorum............11
3.10 Voting by Voice or Ballot..............................11
3.11 Conduct of Meetings....................................11
3.12 Annual Meetings........................................11
3.13 Failure to Hold Annual Meeting.........................11
3.14 Special Meetings.......................................11
4.00 OFFICERS
4.01 Title and Appointment..................................12
4.01(a) Chairman......................................12
4.01(b) President.....................................12
4.01(c) Vice President................................12
4.01(d) Secretary.....................................12
4.01(e) Treasurer.....................................13
4.01(f) Assistant Secretary or Assistant Treasurer....14
4.02 Removal and Resignation................................14
4.03 Vacancies..............................................14
4.04 Compensation...........................................14
5.00 AUTHORITY TO EXECUTE INSTRUMENTS
5.01 No Authority Absent Specific Authorization.............14
5.02 Execution of Certain Instruments.......................14
6.0 ISSUANCE AND TRANSFER OF SHARES
6.01 Classes and Series of Shares...........................15
6.02 Certificates for Fully Paid Shares.....................15
6.03 Consideration for Shares...............................15
6.04 Replacement of Certificates............................15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARTICLE PAGE
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<C> <S> <C>
6.05 Signing Certificates--Facsimile Signatures.............15
6.06 Transfer Agents and Registrars.........................16
6.07 Conditions of Transfer.................................16
6.08 Reasonable Doubts as to Right to Transfer..............16
7.00 CORPORATE RECORDS AND ADMINISTRATION
7.01 Minutes of Corporate Meetings..........................16
7.02 Share Register.........................................16
7.03 Corporate Seal.........................................17
7.04 Books of Account.......................................17
7.05 Inspection of Corporate Records........................17
7.06 Fiscal Year............................................17
7.07 Waiver of Notice.......................................17
8.00 ADOPTION OF INITIAL BYLAWS....................................18
</TABLE>
ARTICLE ONE--CORPORATE CHARTER AND BYLAWS
1.01 CORPORATE CHARTER PROVISIONS
The Corporation's Charter authorizes ten million (10,000,000) shares to be
issued. The officers and transfer agents issuing shares of the Corporation shall
ensure that the total number of shares outstanding at any given time does not
exceed this number. Such officers and agents shall advise the Board at least
annually of the authorized shares remaining available to be issued. No shares
shall be issued for less than the par value stated in the Charter. Each Charter
provision shall be observed until amended by Restated Articles or Articles of
Amendment duly filed with the Secretary of State.
1.02 REGISTERED AGENT AND OFFICE--REQUIREMENT OF FILING CHANGES WITH SECRETARY
OF STATE
The address of the Registered Office provided in the Articles of
Incorporation, as duly filed with the Secretary of State for the State of
Nevada, is: 50 West Liberty Street, Suite 880, Reno, NV 89501.
The name of the Registered Agent of the Corporation at such address, as
set forth in its Articles of Incorporation, is: The Nevada Agency and Trust
Company.
The Registered Agent or Office may be changed by filing a Statement of
Change of Registered Agent or Office or Both with the Secretary of State, and
not otherwise. Such filing shall be made promptly with each change. Arrangements
for each change in Registered Agent or Office shall ensure that the Corporation
is not exposed to the possibility of a default judgment. Each successive
Registered Agent shall be of reliable character and well informed of the
necessity of immediately furnishing the papers of any lawsuit against the
Corporation to its attorneys.
<PAGE>
1.03 INITIAL BUSINESS OFFICE
The address of the initial principal business office of the Corporation is
hereby established as: 2400 Loop 35 #1502, Alvin, Texas 77511.
The Corporation may have additional business offices within the State of
Nevada, and where it may be duly qualified to do business outside of Nevada, as
the Board of Directors may from time to time designate or the business of the
Corporation may require.
1.04 AMENDMENT OF BYLAWS
The Shareholders or Board of Directors, subject to any limits imposed by
the Shareholders, may amend or repeal these Bylaws and adopt new Bylaws. All
amendments shall be upon advice of counsel as to legality, except in emergency.
Bylaw changes shall take effect upon adoption unless otherwise specified. Notice
of Bylaws changes shall be given in or before notice given of the first
Shareholders' meeting following their adoption.
ARTICLE TWO--DIRECTORS AND DIRECTORS' MEETINGS
2.01 ACTION BY CONSENT OF BOARD WITHOUT MEETING
Any action required or permitted to be taken by the Board of Directors may
be taken without a meeting, and shall have the same force and effect as a
unanimous vote of Directors, if all members of the Board consent in writing to
the action. Such consent may be given individually or collectively.
2.02 TELEPHONE MEETINGS
Subject to the notice provisions required by these Bylaws and by the
Business Corporation Act, Directors may participate in and hold a meeting by
means of conference call or similar communication by which all persons
participating can hear each other. Participation in such a meeting shall
constitute presence in person at such meeting, except participation for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
2.03 PLACE OF MEETINGS
Meetings of the Board of Directors shall be held at the business office of
the Corporation or at such other place within or without the State of Nevada as
may be designated by the Board.
<PAGE>
2.04 REGULAR MEETINGS
Regular meetings of the Board of Directors shall be held, without call or
notice, immediately following each annual Shareholders' meeting, and at such
other regularly repeating times as the Directors may determine.
2.05 CALL OF SPECIAL MEETING
Special meetings of the Board of Directors for any purpose may be called
at any time by the President or, if the President is absent or unable or refuses
to act, by any Vice President or any two Directors. Written notices of the
special meetings, stating the time and place of the meeting, shall be mailed ten
days before, or telegraphed or personally delivered so as to be received by each
Director not later than two days before, the day appointed for the meeting.
Notice of meetings need not indicate an agenda. Generally, a tentative agenda
will be included, but the meeting shall not be confined to any agenda included
with the notice.
Meetings provided for in these Bylaws shall not be invalid for lack of
notice if all persons entitled to notice consent to the meeting in writing or
are present at the meeting and do not object to the notice given. Consent may be
given either before or after the meeting.
Upon providing notice, the Secretary or other officer sending notice shall
sign and file in the Corporate Record Book a statement of the details of the
notice given to each Director. If such statement should later not be found in
the Corporate Record Book, due notice shall be presumed.
2.06 QUORUM
The presence throughout any Directors' meeting, or adjournment thereof, of
a majority of the authorized number of Directors shall be necessary to
constitute a quorum to transact any business, except to adjourn. If a quorum is
present, every act done or resolution passed by a majority of the Directors
present and voting shall be the act of the Board of Directors.
2.07 ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS
A quorum of the Directors may adjourn any Directors' meeting to meet again
at a stated hour on a stated day. Notice of the time and place where an
adjourned meeting will be held need not be given to absent Directors if the time
and place is fixed at the adjourned meeting. In the absence of a quorum, a
majority of the Directors present may adjourn to a set time and place if notice
is duly given to the absent members, or until the time of the next regular
meeting of the Board.
<PAGE>
2.08 CONDUCT OF MEETINGS
At every meeting of the Board of Directors, the Chairman of the Board, if
there is such an officer, and if not, the President, or in the President's
absence, a Vice President designated by the President, or in the absence of such
designation, a Chairman chosen by a majority of the Directors present, shall
preside. The Secretary of the Corporation shall act as Secretary of the Board of
Directors' meetings. When the Secretary is absent from any meeting, the Chairman
may appoint any person to act as Secretary of that meeting.
2.09 POWERS OF THE BOARD OF DIRECTORS
The business and affairs of the Corporation and all corporate powers shall
be exercised by or under authority of the Board of Directors, subject to
limitations imposed by law, the Articles of Incorporation, any applicable
Shareholders' agreement, and these Bylaws.
2.10 BOARD COMMITTEES--AUTHORITY TO APPOINT
The Board of Directors may designate an executive committee and one or
more other committees to conduct the business and affairs of the Corporation to
the extent authorized. The Board shall have the power at any time to change the
powers and membership of, fill vacancies in, and dissolve any committee. Members
of any committee shall receive such compensation as the Board of Directors may
from time to time provide. The designation of any committee and the delegation
of authority thereto shall not operate to relieve the Board of Directors, or any
member thereof, of any responsibility imposed by law.
2.11 TRANSACTIONS WITH INTERESTED DIRECTORS
Any contract or other transaction between the Corporation and any of its
Directors (or any corporation or firm in which any of its Directors are directly
or indirectly interested) shall be valid for all purposes notwithstanding the
presence of that Director at the meeting during which the contract or
transaction was authorized, and notwithstanding the Directors' participation in
that meeting. This section shall apply only if the contract or transaction is
just and reasonable to the Corporation at the time it is authorized and
ratified, the interest of each Director is known or disclosed to the Board of
Directors, and the Board nevertheless authorizes or ratifies the contract or
transaction by a majority of the disinterested Directors present. Each
interested Director is to be counted in determining whether a quorum is present,
but shall not vote and shall not be counted in calculating the majority
necessary to carry the vote. This section shall not be construed to invalidate
contracts or transactions that would be valid in its absence.
2.12 NUMBER OF DIRECTORS
The number of Directors of this Corporation shall be two. No Director need
be a resident of Nevada or a Shareholder. The number of Directors may be
increased or decreased from time to time by amendment to these Bylaws. Any
decrease in the number of Directors shall not have the effect of shortening the
tenure which any incumbent Director would otherwise enjoy.
<PAGE>
2.13 TERM OF OFFICE
Directors shall be entitled to hold office until their successors are
elected and qualified. Election for all Director positions, vacant or not
vacant, shall occur at each annual meeting of the Shareholders and may be held
at any special meeting of Shareholders called specifically for that purpose.
2.14 REMOVAL OF DIRECTORS
The entire Board of Directors or any individual Director may be removed
from office by a vote of Shareholders holding a majority of the outstanding
shares entitled to vote at an election of Directors. However, if less than the
entire Board is to be removed, no one of the Directors may be removed if the
votes cast against his removal would be sufficient to elect him if then
cumulatively voted at an election of the entire Board of Directors. No director
may be so removed except at an election of the class of Directors of which he is
a part. If any or all Directors are so removed, new Directors may be elected at
the same meeting. Whenever a class or series of shares is entitled to elect one
or more Directors under authority granted by the Articles of Incorporation, the
provisions of this Paragraph apply to the vote of that class or series and not
to the vote of the outstanding shares as a whole.
2.15 VACANCIES
Vacancies on the Board of Directors shall exist upon the occurrence of any
of the following events: (a) the death, resignation, or removal of any Director;
(b) an increase in the authorized number of Directors; or (c) the failure of the
Shareholders to elect the full authorized number of Directors to be voted for at
any annual, regular, or special Shareholders' meeting at which any Director is
to be elected.
2.15(a) DECLARATION OF VACANCY
A majority of the Board of Directors may declare vacant the office of a
Director if the Director: (a) is adjudged incompetent by a court order; (b) is
convicted of a crime involving moral turpitude; (c) or fails to accept the
office of Director, in writing or by attending a meeting of the Board of
Directors, within thirty (30) days of notice of election.
2.15(b) FILLING VACANCIES BY DIRECTORS
Vacancies other than those caused by an increase in the number of
Directors may be filled temporarily by majority vote of the remaining Directors,
though less than a quorum, or by a sole remaining Director. Each Director so
elected shall hold office until a qualified successor is elected at a
Shareholders' meeting.
<PAGE>
2.15(c) FILLING VACANCIES BY SHAREHOLDERS
Any vacancy on the Board of Directors, including those caused by an
increase in the number of Directors shall be filled by the Shareholders at the
next annual meeting or at a special meeting called for that purpose. Upon the
resignation of a Director tendered to take effect at a future time, the Board or
the Shareholders may elect a successor to take office when the resignation
becomes effective.
2.16 COMPENSATION
Directors shall receive such compensation for their services as Directors
as shall be determined from time to time by resolution of the Board. Any
Director may serve the Corporation in any other capacity as an officer, agent,
employee, or otherwise, and receive compensation therefor.
2.17 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Board of Directors shall authorize the Corporation to pay or reimburse
any present or former Director or officer of the Corporation any costs or
expenses actually and necessarily incurred by that officer in any action, suit,
or proceeding to which the officer is made a party by reason of holding that
position, provided, however, that no officer shall receive such indemnification
if finally adjudicated therein to be liable for negligence or misconduct in
office. This indemnification shall extend to good-faith expenditures incurred in
anticipation of threatened or proposed litigation. The Board of Directors may in
proper cases, extend the indemnification to cover the good-faith settlement of
any such action, suit, or proceeding, whether formally instituted or not.
2.18 INSURING DIRECTORS, OFFICERS, AND EMPLOYEES
The Corporation may purchase and maintain insurance on behalf of any
Director, officer, employee, or agent of the Corporation, or on behalf of any
person serving at the request of the Corporation as a Director, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise, against any liability asserted against that person and
incurred by that person in any such corporation, whether or not the Corporation
has the power to indemnify that person against liability for any of those acts.
ARTICLE THREE--SHAREHOLDERS' MEETINGS
3.01 ACTION WITHOUT MEETING
Any action that may be taken at a meeting of the Shareholders under any
provision of the Nevada Business Corporation Act may be taken without a meeting
if authorized by a consent or waiver filed with the Secretary of the Corporation
and signed by all persons who would be entitled to vote on that action at a
Shareholders' meeting. Each such signed consent or waiver, or a true copy
thereof, shall be placed in the Corporate Record Book.
<PAGE>
3.02 TELEPHONE MEETINGS
Subject to the notice provisions required by these Bylaws and by the
Business Corporation Act, Shareholders may participate in and hold a meeting by
means of conference call or similar communication by which all persons
participating can hear each other. Participation in such a meeting shall
constitute presence in person at such meeting, except participation for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
3.03 PLACE OF MEETINGS
Shareholders' meetings shall be held at the business office of the
Corporation, or at such other place within or without the State of Nevada as may
be designated by the Board of Directors or the Shareholders.
3.04 NOTICE OF MEETINGS
The President, the Secretary, or the officer or persons calling a
Shareholders' Meeting. shall give notice, or cause it to be given, in writing to
each Director and to each Shareholder entitled to vote at the meeting at least
ten (10) but not more than sixty (60) days before the date of the meeting. Such
notice shall state the place, day, and hour of the meeting, and, in case of a
special meeting, the purpose or purposes for which the meeting is called. Such
written notice may be given personally, by mail, or by other means. Such notice
shall be addressed to each recipient at such address as appears on the Books of
the Corporation or as the recipient has given to the Corporation for the purpose
of notice. Meetings provided for in these Bylaws shall not be invalid for lack
of notice if all persons entitled to notice consent to the meeting in writing or
are present at the meeting in person or by proxy and do not object to the notice
given, Consent may be given either before or after the meeting. Notice of the
reconvening of an adjourned meeting is not necessary unless the meeting is
adjourned more than thirty days past the date stated in the notice, in which
case notice of the adjourned meeting shall be given as in the case of any
special meeting. Notice may be waived by written waivers signed either before or
after the meeting by all persons entitled to the notice.
3.05 VOTING LIST
At least ten (10), but not more than sixty (60), days before each
Shareholders' meeting, the officer or agent having charge of the Corporation's
share transfer books shall make a complete list of the Shareholders entitled to
vote at that meeting or any adjournment thereof, arranged in alphabetical order,
with the address and the number of shares held by each. The list shall be kept
on file at the Registered Office of the Corporation for at least ten (10) days
prior to the meeting, and shall be subject to inspection by any Director,
officer, or Shareholder at any time during usual business hours. The list shall
also be produced and kept open at the time and place of the meeting and shall be
subject, during the whole time of the meeting, to the inspection of any
Shareholder. The original share transfer books shall be prima facie evidence as
to the Shareholders entitled to
<PAGE>
examine such list or transfer books or to vote at any meeting of Shareholders.
However, failure to prepare and to make the list available in the manner
provided above shall not affect the validity of any action taken at the meeting.
3.06 VOTES PER SHARE
Each outstanding share, regardless of class, shall be entitled to one (1)
vote on each matter submitted to a vote at a meeting of Shareholders, except to
the extent that the voting rights of the shares of any class or classes are
limited or denied pursuant to the Articles of Incorporation. A Shareholder may
vote in person or by proxy executed in writing by the Shareholder, or by the
Shareholder's duly authorized attorney-in-fact.
3.07 CUMULATIVE VOTING
Subject to any limitation stated in the Articles of Incorporation, every
Shareholder entitled to vote at any election of Directors may cumulate votes.
For this purpose, each Shareholder shall have a number of votes equal to the
number of Directors to be elected multiplied by the number of votes to which the
Shareholder's shares are entitled. The Shareholder may cast all these votes for
one candidate or may distribute the votes among any number of candidates. The
candidates receiving the highest number of votes are elected, up to the number
of vacancies to be filled. No Shareholder may cumulate votes unless that
Shareholder gives written notice of his or her intention to do so to the
Secretary of the Corporation on or before the day preceding the election at
which the votes will be cumulated. If any Shareholder gives written notice as
provided above, all Shareholders may cumulate their votes.
3.08 PROXIES
A Shareholder may vote either in person or by proxy executed in writing by
the Shareholder or his or her duly authorized attorney in fact. Unless otherwise
provided in the proxy or by law, each proxy shall be revocable and shall not be
valid after eleven (11) months from the date of its execution.
3.09 QUORUM
3.09(a) QUORUM OF SHAREHOLDERS
As to each item of business to be voted on, the presence (in person or by
proxy) of the persons who are entitled to vote a majority of the outstanding
voting shares on that matter shall constitute the quorum necessary for the
consideration of the matter at a Shareholders' meeting. The vote of the holders
of a majority of the shares entitled to vote on the matter and represented at a
meeting at which a quorum is present shall be the act of the Shareholders'
meeting.
<PAGE>
3.09(b) ADJOURNMENT FOR LACK OR LOSS OF QUORUM
No business may be transacted in the absence of a quorum, or upon the
withdrawal of enough Shareholders to leave less than a quorum, other than to
adjourn the meeting from time to time by the vote of a majority of the shares
represented at the meeting.
3.10 VOTING BY VOICE OR BALLOT
Elections for Directors need not be by ballot unless a Shareholder demands
election by ballot before the voting begins.
3.11 CONDUCT OF MEETINGS
Meetings of the Shareholders shall be chaired by the President, or, in the
President's absence, a Vice President designated by the President, or, in the
absence of such designation, any other person chosen by a majority of the
Shareholders of the Corporation present in person or by proxy and entitled to
vote. The Secretary of the Corporation, or, in the Secretary's absence, an
Assistant Secretary, shall act as Secretary of all meetings of the Shareholders.
In the absence of the Secretary or Assistant Secretary, the Chairman shall
appoint another person to act as Secretary of the meeting.
3.12 ANNUAL MEETINGS
The time, place, and date of the annual meeting of the Shareholders of the
Corporation, for the purpose of electing Directors and for the transaction of
any other business as may come before the meeting, shall be set from time to
time by a majority vote of the Board of Directors. If the day fixed for the
annual meeting shall be on a legal holiday in the State of Nevada, such meeting
shall be held on the next succeeding business day. If the election of Directors
is not held on the day thus designated for any annual meeting, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the Shareholders as soon thereafter as possible.
3.13 FAILURE TO HOLD ANNUAL MEETING
If, within any 13-month period, an annual Shareholders' Meeting is not
held, any Shareholder may apply to a court of competent jurisdiction in the
county in which the principal office of the Corporation is located for a summary
order that an annual meeting be held.
3.14 SPECIAL MEETINGS
A special Shareholders' meeting may be called at any time by. (a) the
President; (b) the Board of Directors; or (c) one or more Shareholders holding
in the aggregate one-tenth or more of all the shares entitled to vote at the
meeting. Such meeting may be called for any purpose. The party calling the
meeting may do so only by written request sent by registered mail or delivered
in person to the President or Secretary. The officer receiving the written
request shall within ten (10) days from the date of its receipt cause notice of
the meeting to be sent to all the Shareholders entitled to vote at such a
meeting. If the officer does not give notice of the meeting within ten (10) days
after
<PAGE>
the date of receipt of the written request, the person or persons calling the
meeting may fix the time of the meeting and give the notice. The notice shall be
sent pursuant to Section 3.04 of these Bylaws. The notice of a special
Shareholders' meeting must state the purpose or purposes of the meeting and,
absent consent of every Shareholder to the specific action taken, shall be
limited to purposes plainly stated in the notice, notwithstanding other
provisions herein.
ARTICLE FOUR--OFFICERS
4.01 TITLE AND APPOINTMENT
The officers of the Corporation shall be a President and a Secretary, as
required by law. The Corporation may also have, at the discretion of the Board
of Directors, a Chairman of the Board, one or more Vice Presidents, a Treasurer,
one or more Assistant Secretaries, and one or more Assistant Treasurers. Any
two or more offices, including President and Secretary may be held by one
person. All officers shall be elected by and hold office at the pleasure of the
Board of Directors, which shall fix the compensation and tenure of all officers.
4.01(a) CHAIRMAN OF THE BOARD
The Chairman, if there shall be such an officer, shall, if present,
preside at the meetings of the Board of Directors and exercise and perform such
other powers and duties as may from time to time be assigned to the Chairman by
the Board of Directors or prescribed by these Bylaws.
4.01(b) PRESIDENT
Subject to such supervisory powers, if any, as may be given to the
Chairman, if there is one, by the Board of Directors, the President shall be the
chief executive officer of the Corporation and shall, subject to the control of
the Board of Directors, have general supervision, direction, and control of the
business and officers of the Corporation. The President shall have the general
powers and duties of management usually vested in the office of President of a
corporation; shall have such other powers and duties as may be prescribed by the
Board of Directors or the Bylaws; and shall be ex officio a member of all
standing committees, including the executive committee, if any. In addition, the
President shall preside at all meetings of the Shareholders and in the absence
of the Chairman, or if there is no Chairman, at all meetings of the Board of
Directors.
4.01(c) VICE PRESIDENT
Any Vice President shall have such powers and perform such duties as from
time to time may be prescribed by these Bylaws, by the Board of Directors, or by
the President. In the absence or disability of the President, the senior or duly
appointed Vice President, if any, shall perform all the duties of the President,
pending action by the Board of Directors when so acting, such Vice President
shall have all the powers of, and be subject to all the restrictions on, the
President.
4.01(d) SECRETARY
The Secretary shall:
<PAGE>
(1) See that all notices are duly given in accordance with the provisions
of these Bylaws and as required by law. In case of the absence or
disability of the Secretary. or the Secretary's refusal or neglect to
act, notice may be given and served by an Assistant Secretary or by
the Chairman, the President, any Vice President, or by the Board of
Directors.
(2) Keep the minutes of corporate meetings, and the Corporate Record
Book, as set out in Section 7.01 hereof.
(3) Maintain, in the Corporate Record Book, a record of all share
certificates issued or canceled and all shares of the Corporation
canceled or transferred.
(4) Be custodian of the Corporation's records and of any seal, which the
Corporation may from time to time adopt. when the Corporation
exercises its right to use a seal, the Secretary shall see that the
seal is embossed on all share certificates prior to their issuance
and on all documents authorized to be executed under seal in
accordance with the provisions of these Bylaws.
(5) In general, perform all duties incident to the office of Secretary,
and such other duties as from time to time may be required by
Sections 7.01, 7.02, and 7.03 of these Bylaws, by these Bylaws
generally, by the Board of Directors, or by the President.
4.01(e) TREASURER
The Treasurer shall:
(1) Have charge and custody of, and be responsible for, all funds and
securities of the Corporation, and deposit all funds in the name of
the Corporation in those banks, trust companies, or other
depositories that shall be selected by the Board of Directors.
(2) Receive, and give receipt for, monies due and payable to the
Corporation.
(3) Disburse or cause to be disbursed the funds of the Corporation as may
be directed by the Board of Directors, taking proper vouchers for
those disbursements.
(4) If required by the Board of Directors or the President, give to the
Corporation a bond to assure the faithful performance of the duties
of the Treasurer's office and the restoration to the Corporation of
all corporate books, papers, vouchers, money, and other property of
whatever kind in the Treasurer's possession or control, in case of
the Treasurer's death, resignation, retirement, or removal from
office. Any such bond shall be in a sum satisfactory to the Board of
Directors, with one or more sureties or a surety company satisfactory
to the Board of Directors.
(5) In general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned
to the Treasurer by Sections 7.O4 and 7.05 of these Bylaws, by these
Bylaws generally, by the Board of Directors, or by the President.
<PAGE>
4.01(f) ASSISTANT SECRETARY AND ASSISTANT TREASURER
The Assistant Secretary or Assistant Treasurer shall have such powers and
perform such duties as the Secretary or Treasurer, respectively, or as the Board
of Directors or President may prescribe. In case of the absence of the Secretary
or Treasurer, the senior Assistant Secretary or Assistant Treasurer,
respectively, may perform all of the functions of the Secretary or Treasurer.
4.02 REMOVAL AND RESIGNATION
Any officer may be removed, either with or without cause, by vote of a
majority of the Directors at any regular or special meeting of the Board, or,
except in case of an officer chosen by the Board of Directors, by any committee
or officer upon whom that power of removal may be conferred by the Board of
Directors. Such removal shall be without prejudice to the contract rights, if
any, of the person removed. Any officer may resign at any time by giving written
notice to the Board of Directors, the President, or the Secretary of the
Corporation. Any resignation shall take effect on the date of the receipt of
that notice or at any later time specified therein, and, unless otherwise
specified therein, the acceptance of that resignation shall not be necessary to
make it effective.
4.03 VACANCIES
Upon the occasion of any vacancy occurring in any office of the
Corporation, by reason of death, resignation, removal, or otherwise, the Board
of Directors may elect an acting successor to hold office for the unexpired term
or until a permanent successor is elected.
4.04 COMPENSATION
The compensation of the officers shall be fixed from time to time by the
Board of Directors, and no officer shall be prevented from receiving a salary by
reason of the fact that the officer is also a Shareholder or a Director of the
Corporation, or both.
ARTICLE FIVE--AUTHORITY TO EXECUTE INSTRUMENTS
5.01 NO AUTHORITY ABSENT SPECIFIC AUTHORIZATION
These Bylaws provide certain authority for the execution of instruments.
The Board of Directors, except as otherwise provided in these Bylaws, may
additionally 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. Unless expressly authorized by these Bylaws or the Board of
Directors, no officer, agent, or employee shall have any power or authority to
bind the Corporation by any contract or engagement nor to pledge its credit nor
to render it pecuniarily liable for any purpose or in any amount.
5.02 EXECUTION OF CERTAIN INSTRUMENTS
Formal contracts of the Corporation, promissory notes, deeds, deeds of
trust, mortgages, pledges, and other evidences of indebtedness of the
Corporation, other corporate documents, and
<PAGE>
certificates of ownership of liquid assets held by the Corporation shall be
signed or endorsed by the President or any Vice President and by the Secretary
or the Treasurer, unless otherwise specifically determined by the Board of
Directors or otherwise required by law.
ARTICLE SIX--ISSUANCE AND TRANSFER OF SHARES
6.01 CLASSES AND SERIES OF SHARES
The Corporation may issue one or more classes or series of shares, or
both. Any of these classes or series may have full, limited, or no voting
rights, and may have such other preferences, rights, privileges, and
restrictions as are stated or authorized in the Articles of Incorporation. All
shares of any one class shall have the same voting, conversion, redemption, and
other rights, preferences, privileges, and restrictions, unless the class is
divided into series. If a class is divided into series, all the shares of any
one series shall have the same voting, conversion, redemption, and other.
rights, preferences, privileges, and restrictions. There shall always be a class
or series of shares outstanding that has complete voting rights except as
limited or restricted by voting rights conferred on some other class or series
of outstanding shares.
6.02 CERTIFICATES FOR FULLY PAID SHARES
Neither shares nor certificates representing shares may be issued by the
Corporation until the full amount of the consideration has been received when
the consideration has been paid to the Corporation, the shares shall be deemed
to have been issued and the certificate representing the shares shall be issued
to the shareholder.
6.03 CONSIDERATION FOR SHARES
Shares may be issued for such consideration as may be fixed from time to
time by the Board of Directors, but not less than the par value stated in the
Articles of Incorporation. The consideration paid for the issuance of shares
shall consist of money paid, labor done, or property actually received, and
neither promissory notes nor the promise of future services shall constitute
payment nor partial payment for shares of the Corporation.
6.04 REPLACEMENT OF CERTIFICATES
No replacement share certificate shall be issued until the former
certificate for the shares represented thereby shall have been surrendered and
canceled, except that replacements for lost or destroyed certificates may be
issued, upon such terms, conditions, and guarantees as the Board may see fit to
impose, including the filing of sufficient indemnity.
6.05 SIGNING CERTIFICATES-FACSIMILE SIGNATURES
All share certificates shall be signed by the officer(s) designated by the
Board of Directors. The signatures of the foregoing officers may be facsimiles.
If the officer who has signed or whose facsimile signature has been placed on
the certificate has ceased to be such officer before the
<PAGE>
certificate issued, the certificate may be issued by the Corporation with the
same effect as if he or she were such officer on the date of its issuance.
6.06 TRANSFER AGENTS AND REGISTRARS
The Board of Directors may appoint one or more transfer agents or transfer
clerks, and one or more registrars, at such times and places as the requirements
of the Corporation may necessitate and the Board of Directors may designate.
Each registrar appointed, if any, shall be an incorporated bank or trust
company, either domestic or foreign.
6.07 CONDITIONS OF TRANSFER
The party in whose name shares of stock stand on the books of the
Corporation shall be deemed the owner thereof as regards the Corporation,
provided that whenever any transfer of shares shall be made for collateral
security, and not absolutely, and prior written notice thereof shall be given to
the Secretary of the Corporation, or to its transfer agent, if any, such fact
shall be stated in the entry of the transfer.
6.8 REASONABLE DOUBTS AS TO RIGHT TO TRANSFER
When a transfer of shares is requested and there is reasonable doubt as to
the right of the person seeking the transfer, the Corporation or its transfer
agent, before recording the transfer of the shares on its books or issuing any
certificate therefor, may require from the person seeking the transfer
reasonable proof of that person's right to the transfer. If there remains a
reasonable doubt of the right to the transfer, the Corporation may refuse a
transfer unless the person gives adequate security or a bond of indemnity
executed by a corporate surety or by two individual sureties satisfactory to the
Corporation as to form, amount, and responsibility of sureties. The bond shall
be conditioned to protect the Corporation, its officers, transfer agents, and
registrars, or any of them, against any loss, damage, expense, or other
liability for the transfer or the issuance of a new certificate for shares.
ARTICLE SEVEN--CORPORATE RECORDS AND ADMINISTRATION
7.01 MINUTES OF CORPORATE MEETINGS
The Corporation shall keep at the principal office, or such other place as
the Board of Directors may order, a book recording the minutes of all meetings
of its Shareholders and Directors, with the time and place of each meeting,
whether such meeting was regular or special, a copy of the notice given of such
meeting, or of the written waiver thereof, and, if it is a special meeting, how
the meeting was authorized. The record book shall further show the number of
shares present or represented at Shareholders' meetings, and the names of those
present and the proceedings of all meetings.
7.02 SHARE REGISTER
The Corporation shall keep at the principal office, or at the office of
the transfer agent, a share register showing the names of the Shareholders,
their addresses, the number and class of
<PAGE>
shares issued to each, the number and date of issuance of each certificate
issued for such shares, and the number and date of cancellation of every
certificate surrendered for cancellation. The above information may be kept on
an information storage device such as a computer, provided that the device is
capable of reproducing the information in clearly legible form. If the
Corporation is taxed under Internal Revenue Code Section 1244 or Subchapter S,
the Officer issuing shares shall maintain the appropriate requirements regarding
issuance.
7.03 CORPORATE SEAL
The Board of Directors may at any time adopt, prescribe the use of, or
discontinue the use of, such corporate seal as it deems desirable, and the
appropriate officers shall cause such seal to be affixed to such certificates
and documents as the Board of Directors may direct.
7.04 BOOKS OF ACCOUNT
The Corporation shall maintain correct and adequate accounts of its
properties and business transactions, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, surplus, and
shares. The corporate bookkeeping procedures shall conform to accepted
accounting practices for the Corporation's business or businesses. subject to
the foregoing, The chart of financial accounts shall be taken from, and designed
to facilitate preparation of, current corporate tax returns. Any surplus,
including earned surplus, paid-in surplus, and surplus arising from a reduction
of stated capital, shall be classed by source and shown in a separate account.
If the Corporation is taxed under Internal Revenue Code Section 1244 or
Subchapter S, the officers and agents maintaining the books of account shall
maintain the appropriate requirements.
7.05 INSPECTION OF CORPORATE RECORDS
A Director or Shareholder demanding to examine the Corporation's books or
records may be required to first sign an affidavit that the demanding party will
not directly or indirectly participate in reselling the information and will
keep it confidential other than in use for proper purposes reasonably related to
the Director's or Shareholder's role. A Director who insists on examining the
records while refusing to sign this affidavit thereby resigns as a Director.
7.06 FISCAL YEAR
The fiscal year of the Corporation shall be as determined by the Board of
Directors and approved by the Internal Revenue Service. The Treasurer shall
forthwith arrange a consultation with the Corporation's tax advisers to
determine whether the Corporation is to have a fiscal year other than the
calendar year. If so, the Treasurer shall file an election with the Internal
Revenue Service as early as possible, and all correspondence with the IRS,
including the application for the Corporation's Employer Identification Number,
shall reflect such non-calendar year election.
7.07 WAIVER OF NOTICE
Any notice required by law or by these Bylaws may be waived by execution
of a written waiver of notice executed by the person entitled to the notice. The
waiver may be signed before or after the meeting.
<PAGE>
ARTICLE EIGHT--ADOPTION OF INITIAL BYLAWS
The foregoing bylaws were adopted by the Board of Directors on April 5,
1999.
/s/ Jimmy P. Beehner
---------------------------------
Jimmy P. Beehner
/s/ David R. Mortenson
---------------------------------
Director
Attested to, and certified by:
[Corporate Seal]
/s/ Jimmy P. Beehner
- -----------------------------
Secretary
<PAGE>
[LETTERHEAD OF VANDEBERG JOHNSON & GANDARA]
EXHIBIT 5.1
August 10, 1999
Sibun River Group, Inc.
580 Hornsby Street, Suite 210
Vancouver, British Columbia V6C 3B6
CANADA
Re: Sibun River Group, Inc. Registration Statement on Form S-1
Ladies and Gentlemen:
We have acted as counsel for Sibun River Group, Inc., a Nevada corporation (the
"Company"), in connection with the preparation of the registration statement on
Form S-1 (the "Registration Statement") filed with the Securities and Exchange
Commission(the "Commission") pursuant to the Securities Act of 1933, as amended
(the"Act"), relating to the public offering (the "Offering") of up to 2,500,000
shares (the "Shares") of the Company's common stock, $.001 par value (the
"Common Stock"), to be sold by the selling stockholders. This opinion is being
furnished pursuant to Item 601(b)(5) of Regulation S-K under the Act.
In rendering the opinion set forth below, we have reviewed (a) the
Registration Statement and the exhibits thereto; (b) the Company's Articles of
Incorporation; (c) the Company's Bylaws; (d) certain records of the Company's
corporate proceedings as reflected in its minute books; and (e) such statutes,
records and other documents as we have deemed relevant. In our examination, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, and conformity with the originals of all
documents submitted to us as copies thereof. In addition, we have made such
other examinations of law and fact as we have deemed relevant in order to form a
basis for the opinion hereinafter expressed.
Based upon the foregoing, we are of the opinion that the Shares are validly
issued, fully paid and nonassessable.
<PAGE>
Sibun River Group, Inc.
August 10, 1999
Page 2
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement and to all references to this Firm under the caption
"Interests of Named Experts and Counsel" in the Registration Statement.
Very truly yours,
VANDEBERG JOHNSON & GANDARA
/s/ James L. Vandeberg
James L. Vandeberg
VEO:lmt
<PAGE>
EXHIBIT 10.1
LICENSE AGREEMENT
This agreement ("Agreement") made and entered into effective April 5, 1999
("Effective Date") by and between David R. Mortenson & Associates, having their
principal place of business at P.O. Box 5034, Alvin, Brazoria County, Texas,
U.S.A., ("Grantor") and Sibun River Group, Inc. ("Licensee"), a Nevada
Corporation whose registered office is at 50 West Liberty Street, Suite 880,
Reno, Nevada 89501;
W I T N E S S E T H:
WHEREAS, Grantor has certain rights as evidenced by the attached
Distribution Agreement (the "Distribution Agreement") to Products developed by
NW Technologies, Inc. ("NWT"), a Texas corporation with its principal offices at
5817 Centralcrest, Houston, Texas 77092, which company has developed proprietary
know-how in the Products, including Products covered by one or more US Patents
that have been licensed to NWT, and other Products (as hereinafter defined); and
WHEREAS, NWT has proprietary rights to trade dress and trademarks for the
brand name "Natures' Way" and "The Environmental Solution", and other trademarks
and trade dress as may be revealed to Licensee from time to time, collectively
referred to as "Marks"; and
WHEREAS, Grantor is under obligation to maintain the proprietary rights of
NWT to the Marks and to protect NWT's proprietary know-how, as outlined in the
Distribution Agreement; and
WHEREAS, NWT and Grantor desire to have the Products marketed by the
Licensee, under the Licensee's own private label, in the Territory (as
hereinafter defined); and
WHEREAS, Licensee desires to market the Products in the Territory and
hereby acknowledges NWT's exclusive ownership of all of the Marks;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and other good and valuable consideration, Grantor and Licensee agree as
follows:
ARTICLE I
GRANT, TERRITORY AND PRODUCTS
1.01 Grant and Territory. (a) Grantor hereby designates Licensee as a
Private Label distributor for the marketing of the Products in the market(s) and
geographic area(s) set forth in Exhibit "A" hereto, ("Territory"). Licensee
hereby accepts the designation as a distributor on the terms and subject to the
conditions contained herein.
-1-
<PAGE>
(b) Licensee hereby agrees that it will make no use of any present
or future Marks of NWT, or of any marks that would cause confusion with the
general public, for any reason without specific written approval of NWT. Upon
termination of this Agreement for any reason Licensee agrees to cease
immediately all use and display of NWT's trademarks, service marks and trade
names (the Marks) if any permission to use the Marks has been granted.
1.02 Products. (a) The term "Product(s)" as used herein shall mean only
those Products as defined in Exhibit "B" hereto.
(b) "Affiliated Persons" shall mean officers, employees, sales
representatives, consultants or other employees or non-employees to whom
Licensee grants authority to represent the Products.
(c) Licensee's owned label, ("Private Label"), shall mean that the
Product(s) shall be packaged by Licensee utilizing a label on the packages of
the Licensee's own design and invention. Since Licensee's intended uses of the
Product are outside the scope of the expertise of Grantor or its personnel,
Grantor will not be required to furnish label detail to Licensee.
1.03 Compensation: Distributor agrees to pay Grantor the sum of $2,000 in
the form of 2,000,000 shares of Distributor's common stock having a par value of
$0.001 each, and to issue as of the date of execution of this Agreement
certificates to the members of Grantor's Association in the amounts set forth in
the schedule attached hereto as Exhibit "F".
ARTICLE II
DURATION, TERMINATION AND NATURE OF RELATIONSHIP
2.01 Duration. The term of this Agreement shall be three (3) years from
the Effective Date unless terminated earlier as herein provided. This Agreement
may be renewed by Licensee for additional three (3) year periods if no event of
default exists and all other provisions of this Agreement are in full force and
effect.
2.02 Termination. (a) This Agreement may be terminated by Grantor for
cause upon the giving of notice as herein provided.
(b) Termination for Cause. In the event that Licensee shall file a
voluntary petition in bankruptcy or for reorganization of indebtedness, or that
Licensee should, for a period of more than ninety days be the subject of an
involuntary bankruptcy proceeding or receivership over all or substantially all
of Licensee's assets, or that Licensee or any Officer or Director of Licensee
should be found guilty of a felony or a crime involving moral turpitude, or that
Licensee shall, with knowledge and deliberation, breach any provision of this
Agreement, then Company may immediately, upon delivery of written notice to
Licensee, terminate this Agreement. Cause shall also include the
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<PAGE>
violation by Licensee of any of the provisions, purchase requirements, or
monetary requirements of this Agreement ("Events of Default").
(c) Licensee will be allowed 30 days after written notification of
an Event of Default to correct the violation, except for monetary provisions
which will not be granted a grace period by Grantor.
(d) Termination of this Agreement shall not release Licensee or
Grantor from the obligations of either party contained herein.
(e) Termination of this Agreement cancels any rights granted to
Licensee herein.
2.02 Nature of Relationship. (a) This Agreement does not constitute nor
empower the Licensee as the agent or legal representative of Grantor for any
purpose whatsoever. Licensee is and will continue to be an independent
contractor.
(b) The arrangement created by this Agreement is not, and is not
intended to be, a franchise or business opportunity under the United States'
Federal Trade Commission Rule: Disclosure Requirements and Prohibitions
Concerning Franchising and Business Opportunity Ventures and is not a franchise,
business opportunity or seller assisted marketing plan or similar arrangement
under any other federal, state, local or foreign law, rule or regulation;
(c) Licensee shall not repackage or re-label Products for any
reason, except as may be allowed in any licensing agreement issued by Grantor,
without prior written authorization from Grantor. Notwithstanding the provisions
of this paragraph 2.03(c) it is understood by Company that Licensee will
repackage Product and apply Licensee's own label to the containers. The purpose
of this section is to assure that Licensee will not re-label any Product
incorrectly whereby the public would be confused with the recommended use of the
Product.
(d) Licensee declares that it will not sell or offer for sale the
product Biocatalyst for use in applications involving bioremediation of
hydrocarbons or where microbes are used, enhanced or suggested for use without
specific written authorization from Grantor. The language herein is not intended
to prohibit the Licensee's use of the Product for that purpose in remediation of
sewage or waste water, whether in septic tanks or waste water treatment
facilities and the like, nor to prohibit Licensee's use of the Product in pond
remediation, exclusive of remediation of petroleum-based hydrocarbon
contamination. Licensee acknowledges that its intended use of the product
"Biocatalyst" for remediation of sewage or waste water, exclusive of remediation
of petroleum-based hydrocarbon contamination has not been specifically tested by
Grantor and as a consequence of this is not included as a recommended use of the
product Biocatalyst by Grantor or NWT. Notwithstanding the foregoing, both
parties acknowledge that in bioremediation, Biocatalyst is specifically used to
enhance the growth of microbes in soils, particularly at depths where oxygen
exchange is limited.
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<PAGE>
ARTICLE III
CONFIDENTIALITY, INDEMNITY AND REMEDIES
3.01 Confidential Information. (a) Licensee acknowledges that in
performing its obligations hereunder it will have access to confidential
information and trade secrets of NWT and Grantor not generally known to the
public ("Confidential Information") and - Licensee is obligated to maintain the
confidentiality of the Confidential Information on its own behalf and on behalf
of its "Affiliated Persons" to whom Confidential Information is disclosed. For
the term of this Agreement and for a period of 5 years after cancellation hereof
Licensee and its Affiliated Persons will treat all Confidential Information in a
confidential manner.
(b) Licensee agrees that it will not analyze or otherwise test, or
submit to anyone else for analysis or testing (chemically or otherwise) any
Product unless approved in writing by Grantor and NWT and unless NWT and Grantor
are directly involved in the testing. NWT and Grantor grant the Licensee
hereunder the right to have the Product tested for the presence of oxygen,
pathogens or other nondesirable components. Grantor makes no warranty as to the
content of the Product.
(c) Licensee agrees to sign and to have its affiliated persons sign
confidentiality agreements in the same form as contained herein or as approved
by Grantor.
3.02 Noncompetition. Licensee agrees that the relationship between
Licensee and Grantor is of a special nature and further agrees on its own behalf
and on behalf of its Affiliated Persons that during the term of this Agreement
and for a period of twelve (12) months from and after the termination of this
Agreement that Licensee and its Affiliated Persons will not engage or hold any
interest, directly or indirectly, in any enterprise engaged in the manufacture,
sale or distribution of products of the type manufactured, sold or distributed
by Grantor as of the date this Agreement is terminated.
3.03 Remedies. Licensee agrees that Grantor shall be entitled to seek and
obtain injunctive relief from a court of competent jurisdiction for the purposes
of restraining Licensee from any actual or threatened breach of the provisions
contained herein.
3.04 Indemnity of Licensee and Grantor. Licensee and Grantor shall
indemnify the other and hold them harmless from and against any and all claims,
losses, costs, expenses and liabilities of any kind, including without
limitation court costs and reasonable attorneys' fees, suffered or incurred by
any of them on account of, related, or arising out of the conduct of the
Licensee's or Grantor's business as the case may be.
-4-
<PAGE>
ARTICLE IV
GRANTOR'S OBLIGATIONS TO LICENSEE
4.01 License to Produce. Grantor agrees to grant to Licensee a non-
exclusive license to manufacture the product "Biocatalyst" upon the following
terms and conditions:
(a) License. After the Licensee has purchased a minimum of 5,000
gallons of Product each month for a minimum period of six (6) consecutive months
a license will be granted to Licensee to produce the product in a location to be
named by Licensee and approved by Company with methods of production and
security measures as approved by Company. However, if after the effective date
hereof, Licensee, his successors or permitted assigns, can demonstrate to
Grantor's satisfaction the financial capability of Licensee, his permitted
successors or assigns, then upon a payment of a one time fee of $25,000.00 the
provisions of this section will be deemed by Company to have been fulfilled and
the referenced License to Produce will be granted by Company.
(b) The ingredient "Biomas" as used in the Product will be supplied
by Grantor upon terms, conditions and pricing that may be stated to Licensee by
Grantor at the time of issue of the subject License to Produce.
(c) Royalty and Expense. At the time of issuance of the subject
License to Produce a one-time payment of $10,000.00 will be made to Grantor by
Licensee to reimburse Grantor for unspecified expenses. A monthly royalty of [*]
of Licensee will be paid by Licensee to Grantor within 20 days of the end of
each month.
(d) Minimum Royalties. The minimum annual royalties to be paid by
Licensee hereunder, commencing with the granting of a license to Produce from
Grantor to Licensee will be $20,000.00. The minimum annual royalties to be paid
hereunder are non-accumulative.
4.02 Personnel. Grantor agrees to make available to Licensee Grantor's
trained technical personnel for consultation from time to time, if Licensee so
requests in writing. Such consultation may be by telephone or in person. If
Licensee requires the personal assistance of on site technical personnel, then
Licensee will pay actual travel and living expenses for such personnel as agreed
between Grantor and Licensee and an additional fee (per diem) of $300.00 per day
for each technical person requested.
[*] INFORMATION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 406 UNDER THE SECURITIES
ACT OF 1933, AS AMENDED.
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<PAGE>
ARTICLE V
LICENSEE'S OBLIGATIONS TO GRANTOR
5.01 Develop Territory. Licensee agrees to (i) use its best efforts to
market the Product in specified markets throughout the Territory, (ii) devote
such time and effort as may be necessary to do so, (iii) retain and train
sufficient staff that is knowledgeable in the sale and use of the Products, and
(iv) maintain facilities sufficient to market, sell, and distribute the
Products.
5.02 Business Records. Licensee agrees to maintain reasonably detailed
and accurate records relating to the use of the Products and to furnish to
Grantor a detailed copy of all sales records, invoice copies, copies of all
testimonial letters, product usage data and other records and reports relating
to the sale and use of the Products within the Territory (the "Business
Records") upon request in writing by Grantor.
5.03 Compliance with Laws. Licensee agrees, on its behalf and on behalf
of its "Affiliated Persons" not to perform any acts or transactions which would
place Grantor or Licensee in violation of domestic, foreign, or international
laws, rules or regulations.
5.04 Information Regarding Use of Product. Licensee agrees to forward to
Grantor any and all information, including written, digital, or pictorial
pertaining to the use and distribution of the Products as such information
becomes known to Licensee.
5.05 Inventories. Licensee agrees to maintain adequate inventories of
Products in the Territory to service customers needs.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF LICENSEE
6.01 Organization. Licensee represents and warrants to Grantor that
Licensee has the authority to enter into this Agreement and to perform its
obligations hereunder.
6.02 No Defaults. Licensee represents and warrants to Grantor that
neither the execution and delivery of this Agreement nor the performance of the
transactions contemplated hereby will conflict with or result in a breach or
violation of any agreement, document, instrument, judgment, decree, order,
governmental permit, certificate or license to which Licensee is a party or to
which Licensee is subject.
-6-
<PAGE>
ARTICLE VII
TERMS OF SALE
7.01 Standard Terms and Warranties. SINCE THE USE OF THE PRODUCTS ARE
BEYOND THE CONTROL OF GRANTOR THE PRODUCTS ARE SOLD "AS IS", "WHERE IS", WITH NO
WARRANTIES, EXPRESS OR IMPLIED. GRANTOR MAKES NO WARRANTIES, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PRODUCTS OR THEIR PERFORMANCE OR AS TO SERVICE, TO LICENSEE
OR ANY OTHER PERSON. IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, TO LICENSEE OR TO ANY OTHER PERSON ARE HEREBY DISCLAIMED. IN
NO EVENT SHALL GRANTOR BE LIABLE TO LICENSEE OR ANY PERSON FOR INCIDENTAL OR
CONSEQUENTIAL DAMAGES. THE LIABILITY OF GRANTOR, IF ANY, FOR DAMAGES RELATING TO
ANY ALLEGEDLY DEFECTIVE PRODUCT UNDER ANY LEGAL OR EQUITABLE THEORY SHALL BE
LIMITED TO THE ACTUAL PRICE PAID FOR SUCH PRODUCT. Grantor may change the
limited warranty contained in this Section 7.01 at any time.
7.02 Placement of Orders and Shipping Terms. All shipments of Product
shall be FOB [*], unless specifically agreed otherwise [*]. All orders shall be
placed with Grantor in writing upon forms approved by Grantor and Licensee shall
verify the accuracy of the order. Grantor has the right to accept or reject any
order, and the terms and conditions thereof, if the Licensee is in default with
any of the requirements or conditions of this Agreement.
7.03 Claims of Faulty Products. Any claims for faulty Products shall be
governed by the Uniform Commercial Code of Texas, USA unless stated otherwise in
this Agreement.
7.04 Title and Risk of Loss. Products sold to Licensee shall become the
property of Licensee and title and risk of loss shall pass to Licensee [*],
subject, however, to a security interest which Grantor hereby reserves in the
Products until payment for the Products is received by Grantor.
7.05 Payment Terms. Licensee shall make payment to Grantor in U.S.
dollars to Grantor for all materials ordered under this Agreement at the address
set forth herein, and upon the terms and manner of payment as shown on the Price
List of Grantor as amended from time to time.
[*] INFORMATION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 406 UNDER THE SECURITIES
ACT OF 1933, AS AMENDED.
-7-
<PAGE>
7.06 Credit Sales. Licensee and Grantor both acknowledge and agree that
if any sale on credit is permitted hereunder Grantor hereby retains a security
interest in and lien upon the Products so sold until payment in full is received
by Grantor.
7.07 Insurance. Licensee shall secure and maintain [*]. Such insurance
coverage shall list Grantor as an additional insured party.
7.08 Prices. Licensee's price from Grantor for Products and printed
matter shall be as set forth in Grantor's current published pricing schedule.
This pricing is subject to change from time to time upon written notice
transmitted by facsimile, or US Mail, by Grantor to Licensee not less than ten
(10) days in advance of any price changes. Prices for Product by Grantor to
Licensee shall be as shown on Exhibit "B" attached hereto.
7.09 Printed Matter. Licensee is prohibited from producing and
distributing his own literature, or from any action that would give the
impression directly or indirectly, to others that Product and/or the "Marks" are
the property of Licensee.
7.10 Biomas Supply. At the time that an Agreement allowing the Licensee
to produce the Product as allowed by the terms and conditions stated in this
Agreement [*].
ARTICLE VIII
MISCELLANEOUS CONDITIONS
8.01 Governing Law. This Agreement and any questions concerning its
validity, construction and performance shall be governed by the laws of the
State of Texas, U.S.A., with venue in Harris County, Texas. Further, the
parties to this Agreement hereby irrevocably submit to the exclusive
jurisdiction of the federal courts sitting in Harris County, Texas, for any
action or proceeding arising out of or relating hereto.
8.02 Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be sent by certified United
States mail, return receipt requested to the other party at the address
specified in the first paragraph of this Agreement. The address of either party
specified above may be changed by a notice given by such party to the other
party in accordance with this Section 8.02.
[*] INFORMATION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 406 UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
-8-
<PAGE>
8.03 Excuse of Performance. Grantor's and Licensee's performance (other
than Licensee's obligation to pay for Products or other fees or monetary
obligations in accordance herewith, which shall not be excused) hereunder shall
be excused if (but only for so long as) any of the following conditions or
events occur and are continuing: Labor conflicts, strikes, lock-outs, fires,
explosions, war, civil disturbances, unforeseen military action, governmental
action, requisitions or seizures, delays of subcontractors or vendors,
unavailability of raw materials or transport facilities, acts of God or nature,
or any other condition or event which is beyond the reasonable control of
Grantor or Licensee, as the case may be.
8.04 Entire Agreement. This Agreement, the Exhibits hereto and any
confidentiality agreement and subdistribution agreement, constitute the entire
agreement between the parties with respect to the subject matter hereof and may
not be altered or modified except by an agreement in writing referring to this
agreement and signed by the parties hereto. Grantor and the Licensee agree that
this agreement supersedes all prior agreements written or oral.
8.05 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute but one and the same instrument.
8.06 No Waiver. No failure or delay by any party hereto in exercising any
right, in whole or in part, power or privilege hereunder shall operate as a
waiver thereof.
8.07 Amendment. This Agreement may not be amended or modified except by
an instrument in writing signed on behalf of the parties thereto specifically
referencing this Agreement.
8.08 Severability. Any provisions hereof prohibited by or unlawful or
unenforceable under any applicable law of any jurisdiction shall be ineffective
as to such jurisdiction, without affecting any other provision of this
Agreement.
8.09 Binding on Successors; Assignment. This Agreement is binding on, and
shall inure to the benefit of the parties hereto and their respective
successors, heirs and permitted assigns. This Agreement and any rights or
duties hereunder may not be assigned by Licensee, whether such assignment occurs
by merger, consolidation, sale, lease, other disposition of or any other
business combination of Licensee, without the prior written consent of Grantor.
Grantor may assign its rights hereunder to any person provided that such person,
either expressly or by operation of law, assumes Grantor's obligations
hereunder. The above notwithstanding, Grantor understands that Licensee is, as
of the effective date hereof, negotiating with several companies for the purpose
of entering into a merger, joint venture, or marketing arrangement specifically
for the purpose of marketing or financing Licensee's efforts in marketing of the
Product. Grantor agrees that as long as the requirements of this Agreement are
fulfilled that
-9-
<PAGE>
Grantor will not unreasonably deny a request to allow Licensee to enter into the
contemplated agreement.
8.10 Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs, and necessary disbursements in
addition to any other relief to which such party may be entitled.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives on the dates set forth beneath their
respective signatures below, to be effective for all purposes as of the date
first above written.
TEXMONT, INC. DAVID R. MORTENSON & ASSOCIATES
BY: /s/ Jimmy P. Beehner BY: /s/ David R. Mortenson
-------------------- ---------------------------------
TITLE: Secretary
DATE: 4/5/99 DATE: 4/5/99
---------- ------------
-10-
<PAGE>
EXHIBIT "A"
TERRITORY
(AMENDED)
[*]
[*] INFORMATION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 406 UNDER THE SECURITIES
ACT OF 1933, AS AMENDED.
-11-
<PAGE>
EXHIBIT "B"
Products Included in This Agreement
[*]
[*] INFORMATION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 406 UNDER THE SECURITIES
ACT OF 1933, AS AMENDED.
-12-
<PAGE>
EXHIBIT "C"
PURCHASE OBLIGATIONS
[*]
[*] INFORMATION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 406 UNDER THE SECURITIES
ACT OF 1933, AS AMENDED.
-13-
<PAGE>
EXHIBIT "D"
PAYMENT TERMS
[*]
[*] INFORMATION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 406 UNDER THE SECURITIES
ACT OF 1933, AS AMENDED.
-14-
<PAGE>
EXHIBIT "E"
CONFIDENTIALITY AGREEMENT
[*]
[*] INFORMATION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 406 UNDER THE SECURITIES
ACT OF 1933, AS AMENDED.
-15-
<PAGE>
EXHIBIT F
SHARE DISTRIBUTION SCHEDULE
[*]
[*] INFORMATION OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO
REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 406 UNDER THE SECURITIES
ACT OF 1933, AS AMENDED.
-16-
<PAGE>
EXHIBIT 10.2
AMENDMENT NO. 1
TO
LICENSE AGREEMENT
This AMENDMENT NO. 1 TO LICENSE AGREEMENT ("Amendment No. 1") dated May 20,
1999 is by and between David R. Mortenson & Associates, a Texas general
partnership ("Grantor"), and Sibun River Group, Inc., a Nevada corporation
("Licensee").
WHEREAS, Grantor and Licensee are parties to that certain License Agreement
(the "Preexisting Agreement") dated as of April 5, 1999 and attached to the
minutes of the April 5, 1999 meeting of the Company's Board of Directors,
granting Licensee an exclusive private label license for the Biocatalyst and
Biomas products in Texas; and
WHEREAS, Grantor and Licensee wish to confirm, clarify and modify certain
terms of the License Agreement;
NOW THEREFORE, the parties hereto agree as follows:
1. Definitions; References.
-----------------------
Capitalized terms not defined in this Amendment No. 1 shall have the
meanings given them in the Preexisting Agreement. References in the Preexisting
Agreement and this Amendment No. 1 to the "Agreement" shall refer to the
Preexisting Agreement as amended by this Amendment No. 1, and words such as
"herein", "hereinafter" or other words of similar import shall likewise be
construed as referring to the Preexisting Agreement as amended by this Amendment
No. 1 .
2. Confirmation of Agreement.
-------------------------
This Amendment No. 1 amends the Preexisting Agreement. Terms of the
Preexisting Agreement not amended by this Amendment No. 1 continue in full force
and effect, and are hereby ratified and confirmed by the parties.
3. Preexisting Agreement.
---------------------
The Preexisting Agreement supersedes and replaces in its entirety any prior
License Agreement (a "Superseded Agreement"), by and between Grantor and
Licensee. Any
Amendment No. 1 to License Agreement
Page 1 of 3
<PAGE>
Superseded Agreement is null, void, of no force or effect, and each party hereby
releases, if any, its rights, or any obligations of the other, thereunder.
4. Termination for Convenience.
---------------------------
At the end of paragraph (a) of the first Section 2.02 of the Preexisting
Agreement, the following sentence is added: "This Agreement may be terminated by
Licensee upon the giving of notice as herein provided."
5. Licensee's Control Over Business.
--------------------------------
A new Section 5.06 is added: "5.06 Licensee's Control Over Business.
Licensee shall establish the means by which it satisfies its obligations under
Sections 5.01 and 5.05. Grantor shall have no right to enforce, and no action
shall accrue under, such provisions until this Agreement shall have been in
force for more than one year and Licensee shall have failed to meet its minimum
purchase requirements set forth in Exhibits A and C."
6. Minimum Purchase Requirements.
-----------------------------
The Purchase Obligations set forth on Exhibit C are hereby modified so that
Licensee's minimum purchase requirement shall be [*]. In addition, the following
sentence is hereby added after the last sentence on Exhibit C: "Grantor shall
have no right to enforce, and no action shall accrue in respect of, Licensee's
Purchase Obligations until this Agreement shall have been in force for more than
one year."
* Information omitted and filed separately with the SEC pursuant to
request for confidential treatment under Rule 406 under the Securities
Act of 1933, as amended.
Amendment No. 1 to License Agreement
Page 2 of 3
<PAGE>
7. Territory.
---------
Exhibit A is hereby modified to provide as follows:
[*]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
GRANTOR: LICENSEE:
DAVID R. MORTENSON & ASSOCIATES SIBUN RIVER GROUP, INC.
/s/ David R. Mortenson /s/ David R. Mortenson
- --------------------------------- ----------------------------------
By David R. Mortenson By David R. Mortenson
Its General Partner Its President
* Information omitted and filed separately with the SEC pursuant to
request for confidential treatment under Rule 406 under the Securities
Act of 1933, as amended.
Amendment No. 1 to License Agreement
Page 3 of 3
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Accountants On
Accounting And Financial Disclosure" and "Interests Of Named Experts And
Counsel" and to the use of our reports dated July 20, 1999, in the Registration
Statement (Form S-1 No. ___-_____) and related Prospectus of Sibun River Group,
Inc. for the registration of shares of its common stock.
Our audit also included the financial statement schedule of Sibun River
Group, Inc. This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion, the
financial statement schedule referred to above, when considered in relation to
the basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
Vancouver, Canada
August 10, 1999
Elliott, Tulk, Pryce, Anderson
CHARTERED ACCOUNTANTS
/s/ Elliott, Tulk, Pryce, Anderson
- ----------------------------------
Elliott, Tulk, Pryce, Anderson
<TABLE> <S> <C>
<PAGE>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE FISCAL PERIOD ENDED 4/30/99 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> APR-05-1999
<PERIOD-END> APR-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,543
<CURRENT-LIABILITIES> 0
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0
0
<COMMON> 2,543
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,543
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<CGS> 0
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<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
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