SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F Amendment 2
[ X ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
or
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number _______________
LEON TOURS LIMITED
(Exact name of Registrant as specified in its charter)
Commonwealth of the Bahamas
(Jurisdiction of incorporation or organization)
Saffrey Square
Bay Street and Bank Lane
Suite 1 04A
Box N-3927
Nassau, Bahamas
(Address of Principal Offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
NONE
Securities registered or to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: NONE
Indicate the number of outstanding shares of each of the Issuer's classes of
capital or common stock as of the close of the period covered by the annual
report: NONE
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Indicate by check mark whether the Registrant: (i) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (ii) has been subject to such
filing requirements for the past 90 days.
Yes[ ] No[X]
Indicate by check mark which financial statement item the Registrant has elected
to follow:
Item l7[ ] Item l8[X]
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TABLE OF CONTENTS
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Page
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Item 1. Description of Business 4
Item 2. Description of Property 17
Item 3. Legal Proceedings 17
Item 4. Control of Registrant 17
Item 5. Nature of Trading Market 18
Item 6. Exchange Controls and Other Limitations Affecting
Security Holders 19
Item 7. Taxation 19
Item 8. Selected Financial Data 20
Item 9A. Quantitative and Qualitative Disclosure of Market Risk 20
Item 9B. Management's Discussion and Analysis of Financial Condition
and Results of Operations 21
Item 10. Directors and Officers of Registrant 21
Item 11. Compensation of Directors and Officers 22
Item 12. Options to Purchase Securities from Registrant or Subsidiaries 23
Item 13. Interest of Management in Certain Transactions 23
Item 14. Description of Securities to be Registered 23
Item 15. Defaults Upon Senior Securities 24
Item 16. Changes in Securities and Changes in Security for Registered
Securities 24
Item 17. Financial Statements 24
Item 18. Financial Statements 24
Item 19. Financial Statements and Exhibits 24
3
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PART 1.
As used in this Registration Statement, the "Bahamas" refers to The
Commonwealth of the Bahamas. The term "Company" refers to Leon Tours Limited
This Registration Statement on Form 20-F contains forward-looking
statements. These statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those anticipated in the
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, those discussed in the section entitled Risk Factors
under Item 1 - Description of Business.
Readers should not place undue reliance on forward-looking statements,
which reflect management's view only as of the date of this Registration
Statement. The Company undertakes no obligation to publicly revise these
forward-looking statements to reflect subsequent events or circumstances.
Item 1. Description of Business.
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Overview
Leon Tours Limited was incorporated on June 16, 1992 as a corporation
pursuant to the International Business Companies Act of the Bahamas. The Company
was incorporated in the Bahamas principally to facilitate trading in its
securities. The Company is not subject to any income tax in the Bahamas. The
Company's corporate administrative matters are conducted through its registered
agent located at 284 Bay Street, #5, Nassau, Bahamas. The Company's principal
office is located at Saffrey Square, Bay Street and Bank Lane, Suite 104A, Box
N-3 927, Nassau, Bahamas. Its telephone number is (242) 356-6940.
The Company is in the developmental stage and has been inactive since its
inception. The Company has no current operations nor any significant assets or
liabilities. Management of the Company intends to participate in one or more
unidentified business ventures, which will be selected by management after
reviewing business opportunities. The Company anticipates no operations until
such time.
The Company does not have any subsidiaries and management does not
contemplate establishing any subsidiaries of the Company.
Business Strategy
Management believes that certain companies (both in the United States and
abroad) may have a significant interest in obtaining a controlling interest in
an United States public company and thereby become publicly held without having
to offer their own securities directly to the public. The Company intends to
seek and identify such business companies to offer these companies the
opportunity to obtain a controlling interest in the Company. The Company may
accomplish such business transactions by acquiring such business companies
pursuant to either a purchase, merger, joint venture, exchange of stock or
otherwise, and may include business entities such as a corporation, partnership,
or limited liability company. The Company has limited available capital,
therefore, it is unlikely that the Company will be able to acquire more than one
or two such businesses. There can be no assurance that the Company will identify
any such business opportunities and that such acquisitions will be successfully
completed.
4
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As of the date of this Registration Statement, management of the Company
has not identified any business opportunities that it plans to pursue nor has
the Company reached any agreement or definitive understanding concerning such an
acquisition. Management intends to search for business opportunities in any
geographical area, industry or business within an industry, and may engage in
any line of business including, but not limited to, service, finance, mining,
manufacturing, real estate, oil and gas, distribution, transportation, medical,
communication, and high technology. Management may later determine, however, to
concentrate its search for business opportunities to a particular industry,
segment of an industry, or line of business, or to a defined geographical area.
To date, no such determination has been discussed or made.
The Company intends to seek business opportunities demonstrating the
potential for long-term growth as opposed to short-term earnings. The Company's
search generally will be directed towards small to medium-sized companies with
established earnings and revenues. Management of the Company will consider
substantial and detailed information in connection with its decision of whether
or not to acquire a business available for acquisition. Such information may
include financial analysis and review of the proposed business and industry,
market surveys, and consultations with industry experts.
Analysis and Investigation of Opportunities
Management of the Company intends to seek and identify privately held
businesses (both in the United States and abroad) which have a significant
interest in obtaining a controlling interest in a U.S. publicly held company
and, thereby, becoming publicly held without having to offer their own
securities directly to the public. In some circumstances, the potential venture
may involve an acquisition of or combination with an operating business which
does not need substantial additional capital but desires to establish a public
trading market for its shares. A business which seeks to enter into a merger,
consolidation or other combination with the Company may desire to do so in order
to avoid the expenses and consequences of undertaking a public offering in the
United States. Factors considered may include time delays, significant expenses
and loss of voting control. Management believes that the Company will offer
potential merger and acquisition candidates the opportunity to obtain a
controlling interest in a public company at substantially less cost and
involving a shorter time frame than is involved in conducting an initial public
offering. The Company cannot, however, empirically demonstrate that any real
time or cost savings will actually result to a private company from a business
combination with the Company. Moreover, any private company acquired by the
Company will not receive any capital from the Company in the transaction, which
may be a discouragement for some private companies to consider being acquired by
or combining with the Company.
5
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Management of the Company will exercise its own judgment as to, and will be
solely responsible for, the ultimate selection of businesses for acquisition.
Management will consider substantial and detailed information in connection with
its decisions of whether or not to acquire a business opportunity available for
acquisition. Such information may include financial analysis and review of the
proposed business and industry, market surveys and consultations with industry
experts. Management also anticipates that it will consider the following
factors: (i) total and net assets and shareholders' equity; (ii) current and
long-term liabilities; (iii) gross revenues and earnings for the prior three
fiscal years; (iv) potential for revenue and earnings growth; (v) existing and
potential competition; (vi) proprietary and state-of-the-art technology, patents
and trademarks; (vii) capabilities and experience of current management and
potential for recruitments; (viii) capital requirements; (ix) availability of
new capital, debt financing sources and relationships with existing lenders; (x)
cost and form of participation by the Company; (xi) special risks associated
with the business and its industry; and (xii) perceived desirability of the
business to investors in the capital markets.
Participation by the Company in a proposed transaction may also be based in
large part on the perceived quality of the private company's management and
personnel, properties or proprietary rights, products and/or services, marketing
concepts, level of technology or other factors which may be difficult to analyze
with complete objectivity.
Management of the Company will generally request that it be provided with
written materials from the principals of the business containing disclosures and
descriptions regarding the business' products and/or services, history,
management resumes, audited financial statements and financial projections,
proprietary products and services, present and proposed remuneration to
management, facilities and properties, analysis of risks and competitive
conditions, financial plan of operation and estimated capital requirements, and
other relevant information.
In applying the factors set forth above, no specific factor will be
controlling. Management will attempt to analyze all factors appropriate to the
specific business opportunity and make a determination based upon reasonable
investigative measures and available data. Potentially available business
opportunities may occur in many different industries and at various stages of
development, which may make comparative investigation and analysis of such
business opportunities difficult and complex for management. Historical
operations of a specific business may not necessarily be indicative of its
fixture potential because of the possible need to substantially shift marketing
strategies, expand significantly, change product emphasis, change or augment
management or make other changes. Moreover, although management does not intend
to do so, its decisions may be made without the benefit of detailed feasibility
studies, independent analysis, market surveys or professional studies. Thus,
management may be dependent upon the principals of a business to identify such
problems and to implement or be primarily responsible for implementing change.
Management may not, therefore, discover or adequately evaluate adverse facts
about any potential business opportunity.
6
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Management intends to concentrate its search efforts for businesses that
qualify either for quotation on the NASDAQ system, an over-the-counter
securities market in the United States in which securities are listed for
trading, or an automated interdealer quotation system maintained by the National
Association of Securities Dealers, Inc. To qualify for NASDAQ quotation, a
business must meet stringent criteria. Such criteria generally include, but are
not limited to, the following: (i) at least 300,000 publicly held shares; (ii)
300 shareholders; (iii) $4,000,000 in total assets; and (iv) at least $2,000,000
in capital and surplus. Additionally, the business' shares would have to be
publicly quoted for sale at a minimum bid price of $3.00 and have at least four
market makers in its common stock at the time of listing. Therefore, even if a
business which qualifies for such listing is found and acquired, the Company may
not have a sufficient number of shareholders for a NASDAQ quotation until the
Company's shareholders total 300. Furthermore, even if all of the NASDAQ listing
criteria are met, NASDAQ would have wide discretion in determining whether it
would admit the Company to quotation. There is no assurance when or if the
Company will qualify for NASDAQ quotation.
The likelihood of finding a business suitable for NASDAQ quotation cannot
be determined by management at this time. To the extent that the Company seeks
potential businesses which qualify for quotation on the NASDAQ system, the range
of business opportunities that may be available for acquisition by the Company
may be significantly limited. Therefore, management will not restrict its search
solely to businesses which qualify for quotation on the NASDAQ system. If
management cannot locate or successfully conclude an acquisition of a private
business which meets the NASDAQ listing requirements, then the Company may
attempt an acquisition of a smaller business. In this event, although not
anticipated by management, acquisition of businesses in the development stage or
which have experienced financial or operating difficulties and are in need of
additional capital may be considered. Thus, the Company may incur additional
risks because the market for such business's products and/or services may not be
fully established and such business may not be operating at a profit.
As of the date of this Registration Statement, management has not
identified any business opportunity for acquisition or which it has any interest
in acquiring. Management has not solicited, received or considered any proposals
regarding the Company's acquisition of or combination with another business. The
Company does not plan to advertise or publish notices seeking business
opportunities. Moreover, the Company does not intend to acquire a business which
is owned or controlled by an affiliate of the Company.
7
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The Company does not plan to create subsidiaries for any purpose, including
the making of distributions of securities of any such subsidiaries to the
Company's shareholders (known as "spin offs").
Forms of Acquisition
Management of the Company generally will consider substantial and detailed
information in connection with its decision of whether or not to acquire a
business. Based upon such an analysis and review, management will determine the
suitable legal structure or method to be selected. As of the date of this
Registration Statement, it is impossible to predict the manner in which the
Company may participate in a business opportunity.
An acquisition or business combination may occur in one of several methods,
such as a statutory merger or consolidation, asset purchase, or "reverse merger"
in which the Company acquires all of the private company's outstanding common
stock in exchange for the issuance of unregistered shares of the Company's
common stock. Management of the Company does not anticipate that such
acquisitions by the Company will involve a cash purchase of the assets or the
outstanding voting stock of a viable business due to the lack of liquid assets
or cash. In the event that the Company engages in an acquisition of a private
company's outstanding common stock by issuing additional shares of its common
stock, such a transaction would be made in reliance upon one or more exemptions
from the registration provisions of federal securities laws, including the
exemptions provided for non-public or limited offerings, and analogous
exemptions under applicable state securities laws. Shares of the Company's
common stock issued in such an exempt transaction would be considered
"restricted securities" under the Securities Act of 1933, as amended (the "1933
Act"), and Rule 144 thereunder, would be subject to certain restrictions, and
generally could not be resold for a period of one year. In some circumstances,
management anticipates that an agreement with the private company to register
such securities either at the time the transaction is consummated, under certain
conditions or at specified times thereafter, may be a viable negotiating
element. The issuance of substantial additional securities and their potential
sale into any trading market which may develop in the Company's securities may
have an adverse effect upon such market.
Management intends to structure any such acquisitions so as to avoid
creating a taxable event under the United States tax laws and anticipates that
such an acquisition will be structured as a tax-free reorganization under
Sections 351 or 368(a) of the Internal Revenue Code of 1986, as amended ("the
Code"). Moreover, the value of any private company acquired may exceed the value
of the Company, therefore, under generally accepted accounting principles, such
an acquisition will be generally be treated as if the private company had
acquired the Company.
8
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Prior to any merger or consolidation, or other corporate transaction for
which management may voluntarily seek the approval of the Company's
shareholders, management intends to provide its shareholders with complete
disclosure and documentation regarding the business opportunity and business
proposed to be acquired. Such disclosure and documentation will be in the form
of a proxy statement in compliance with the rules and regulations of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and will be
distributed to the shareholders of the Company at least twenty (20) days prior
to any shareholder's meeting. The International Business Companies Act of the
Bahamas (the "IBCA") provides for approval by a majority of shareholders or
classes of shareholders entitled to vote at a meeting called for that purpose
after due notice, accompanied by a plan or merger, consolidation or reverse
merger, has been given. Moreover, such an acquisition or business combination
may require compliance with the laws of another country or state within the
United States if such acquisition or business combination involves a business
entity organized under the laws of a country or state different than the
Company's.
In the event that the Company acquires a business pursuant to a statutory
merger or consolidation or other corporate transaction, management believes that
neither it nor the current shareholders of the Company will have any control of
a majority of the voting shares of such business following the acquisition
transaction. In the event that the Company acquires a business pursuant to a
reverse merger, management believes that the shareholders of the Company will
subsequently own twenty percent (20%) or less of the Company's common stock
following the acquisition transaction.
Acquisition Agreements. The Company will participate in a business
opportunity only after the negotiation and execution of a definite written
agreement. Although the terms and provisions of such an agreement cannot be
predicted, the general terms and provisions will be customary and standard for
the industry and will include representations and warranties provided by the
parties thereto, conditions of closing, post-closing covenants and restrictions,
reciprocal indemnities and remedies upon default. Management anticipates that
the Company will enter into a letter of intent with the principals of the
prospective business entity. Such a letter of intent will set forth the terms of
the proposed acquisition, but will not bind the Company to consummate the
transaction nor indicate that consummation is probable. Management believes that
the use of a letter of intent will alleviate substantial costs that may be
incurred by the Company in the process of drafting and negotiating a definitive
agreement.
The investigation of specific opportunities and the negotiation, drafting
and execution of agreements and other documents will involve substantial costs
for attorneys, accountants and others. The Company does not have and may not be
able to obtain the required funds to finance such costs. If a decision is made
not to participate in a specific business venture or if a negotiated agreement
is not consummated, the costs to the Company may not be recoverable. Management,
therefore, will rely heavily on the use of a letter of intent and has adopted
the policy that it will not proceed with a definitive agreement until the
business to be acquired (i) has or can obtain the financial statements required
by the accounting regulations of the Securities and Exchange Commission, and
(ii) has posted a deposit with the Company to be used for paying certain
expenses and/or the Company's attorneys and accountants involved with the
drafting and negotiating of the definitive agreement.
9
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Any attempted acquisition can be expected to involve a substantial amount
of time. Moreover, any acquisition may involve substantial delays involving
compliance with federal or state laws or the laws of a foreign country.
In connection with the acquisition of a business, management believes that
a possible condition of a prospective agreement may require the officers,
directors and/or affiliates of the Company to sell all or a part of their
shares of common stock in the Company in a private transaction, which may result
in a substantial profit to such officers, directors and/or affiliates. In the
event such sales of common stock were made, management believes that such
officers, directors, and/or affiliates would not be defined as "underwriters"
within the meaning of Section 2(11) of the 1933 Act. Moreover, management
currently believes that such individuals have no intention to engage in such
sales, and that such individuals will sell their shares of common stock in the
Company in open market transactions in any market that arises in the Company's
stock.
Competition
The Company will be in direct competition with many entities in its efforts
to locate suitable business opportunities. The Company's major competitors
include business development companies, venture capital partnerships and
corporations, small business investment companies, venture capital affiliates of
industrial and financial companies, broker-dealers and investment bankers,
management and management consultant firms, and private individual investors.
Moreover, the Company will also be competing with numerous small public
companies for such opportunities. Most of these entities may posses greater
financial resources and will be able to assume greater risks than those which
the Company, with its limited capital, could consider. Many of these competing
entities may also posses significantly greater experience and contacts than the
management of the Company.
Employees and Consultants
The Company currently does not have any employees other than its officers
and directors. Management of the Company does not anticipate a need to engage
any full-time employees during the process of seeking, identifying and
evaluating prospective business opportunities; however, it may engage the
services of attorneys and accountants as necessary.
10
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The Company may engage the services of consultants or finders to assist in
locating or acquiring a business opportunity. However, the Company does not
currently have any agreement, understanding or arrangement of any kind with any
consultant, finder or other person engaged in arranging acquisitions for
companies such as the Company. The Company does not currently have any funds
with which to pay a finder or consultant and has no means of raising such funds.
It is possible that a consultant, finder or other person will present a business
opportunity to the Company for consideration and, in such event, management
anticipates that such business or its principals will pay any consulting or
finder's fee.
Capital Resources
The Company currently does not have any commitments for capital
expenditures. Management does not anticipate any significant operating costs
other than professional fees payable to attorneys and accountants associated
with the acquisition of a business. The Company will also incur fees and
expenses relating to the identification, investigation, negotiation and
subsequent acquisition of companies. In the event the Company enters into
negotiations with a target business regarding acquisition, management intends to
require such business to deposit with the Company funds which the Company can
use to defray such professional fees and costs. Management anticipates that this
would allow the Company to avoid raising funds for such expenses or becoming
indebted to such professionals.
Other routine expenses relating to the Company's organization and reporting
requirements under the 1934 Act will be incurred. In order to pay these
expenses, management anticipates that the Company may be required to borrow
money, sell securities or prevail upon existing officers, directors and
shareholders of the Company to contribute additional funds to the Company,
whether as a loan or investment. The Company has not received any definitive
commitment from such persons regarding any future loans. Moreover, the Company
currently does not have intentions of offering any of its securities for sale
and, in such event, is expected to find little demand for the Company's
securities in the marketplace.
Government Regulation
The Company does not intend to engage in the business of investing or
reinvesting in, or owning, holding or trading in securities, or otherwise
engaging in activities which would cause the Company to be classified as an
"investment company" under the Investment Company Act of 1940, as amended (the
"Investment Act"). To avoid being deemed an investment company, not more than
forty percent (40%) of the value of the Company's assets (excluding government
securities and cash and cash items such as time deposits or certificate of
deposit) may consist of "investment securities", which term is defined to
include all securities other than U.S. governmental securities and securities of
majority-owned subsidiaries.
11
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Management does not believe that the Company will become subject to
regulation under the Investment Act because the Company does not intend to own
less than a majority of any assets or business acquired. Management will
regularly review the Company's activities to determine its status under the
Investment Act. The Company could be expected to incur substantial registration
and compliance costs if required to register or if it elects to register as an
investment company under the Investment Act. Therefore, to ensure that the
Company does not become subject to regulation under the Investment Act, the
Company does not intend to pursue acquisition of any business company unless it
will result in the Company owning at least a majority interest in such company.
The Company will not engage in preliminary negotiations concerning acquisition
of another business company unless management is assured that the Company will
hold at least a majority interest in such company after acquisition.
Any securities which the Company acquires in exchange for its common stock
will be "restricted securities" within the meaning of the 1933 Act. Although
management does not contemplate the resale of such acquired securities, in the
event it elected to do so, the sale could not be consummated unless a
registration statement covering the sale is declared effective by the Securities
and Exchange Commission or an exemption from registration is available.
Moreover, Rule 145C under the 1933 Act would require the Company to register
with the Securities and Exchange Commission as an underwriter if it elected to
publicly offer or resell such securities acquired in exchange for its common
stock.
Any business company acquired by or combined with the Company may operate
in an industry which is regulated or licensed by federal, state or local
authorities or foreign governments. Compliance with any such regulations could
be expected to be a time-consuming and expensive process.
Certain Foreign Issuer Considerations
Enforceability of Civil Liabilities. The Company is a Bahamas corporation.
The Company has appointed Diane D. Dalmy, 8965 W. Cornell Place, Lakewood,
Colorado 80227 as its agent upon whom process may be served in any action
brought against it under the securities laws of the United States. Outside the
United States, it may be difficult for investors to enforce judgments against
the Company obtained in the United States in any such actions, including actions
predicated upon the civil liability provisions of the United States securities
laws. The Company has been advised by E.P. Toothe & Associates ("E.P. Toothe"),
its Bahamas counsel, that there is substantial doubt as to the enforceability
against the Company in original actions or in actions for enforcement of
judgments of United States courts of liabilities predicated solely on the civil
liability provisions of the United States securities laws. The Company's
officers and directors, however, reside within the United States and the assets
of these persons are primarily located within the United States. It may be
possible for an investor to enforce a judgment against the personal assets of
the Company's officers and directors if named as a party in such action.
12
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The Company has been further advised by E.P. Toothe that no treaty exists
between the Bahamas and the United States providing for the reciprocal
enforcement of foreign judgments arising out of civil proceedings. A foreign
judgment that is contrary to public policy or that is founded on a cause of
action not recognized in the Commonwealth of the Bahamas will not be enforced,
the general principal being that only judgments that rest upon principles of
universal acceptance will be enforced. A action may be commenced in the Bahamas
for recovery in such a proceeding. Enforcement of a foreign judgment against the
Company in the Bahamas may also be limited or affected by applicable bankruptcy,
insolvency, liquidation, arrangement, moratorium or similar laws relating to or
affecting creditors' rights generally and will be subject to a statutory
limitation of time within which proceedings may be brought.
Under United States law, majority and controlling shareholders generally
have certain "fiduciary" responsibilities to the minority shareholders.
Shareholder action must be taken in good faith and actions by controlling
shareholders that are obviously unreasonable may be declared null and void. The
Bahamas law protecting the interests of minority shareholders may not be as
protective in all circumstances as the law protecting minority shareholders in
United States jurisdictions. While the Bahamas law does permit a shareholder of
a Bahamas company to sue its directors derivatively, i.e. in the name of and for
the benefit of the company and to sue the company and its directors for his
benefit and the benefit of others similarly situated, the circumstances in which
any such action may be brought and the procedures and defenses that may be
available regarding any such action may result in the rights of shareholders in
a Bahamas company being more limited than those rights of shareholders in an
United States company.
Risk Factors Relating to the Business of the Company
The shares of the Company are highly speculative and involve an extremely
high degree of risk. Shareholders of the Company should consider the following
risk factors.
Lack of Substantial Operating History and Revenues. The Company is in the
developmental stage, and has no substantial history of operations. Therefore,
the Company does not have any prior financial results upon which an assessment
of the Company's potential for success may be based, until the Company combines
with an operating business company which itself has revenues. Accordingly, the
success of the Company is dependent on management's ability to seek and identify
potential business opportunities, and to successfully negotiate and consummate a
merger, consolidation or other combination with a business company. The Company
faces all of the risks specifically inherent in the type of business in which
the Company proposes to engage. There can be no assurance that the Company will
be able to operate successfully or profitably.
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Dependence on Key Personnel. The Company's success and future performance
will depend to a significant extent upon the efforts and abilities of the
Company's officers and directors to implement the Company's plan of operation
and strategy. The Company's officers and directors have had limited experience
in the business activities contemplated by the Company. Additionally, the loss
of any of the Company's officers or directors could be detrimental to the
operations of the Company. The Company has not entered into any written
employment agreements with nor has it purchased "key man" life insurance for any
of its officers and directors. Moreover, management does not currently
contemplate engaging the services of additional professional advisors, managers
or consultants due to lack of funds.
The Company's officers and directors may engage in other businesses for
their own account. They will devote such time to the affairs of the Company as
they deem necessary.
Unspecified Business Opportunities. Management has not identified any
potential business opportunities for acquisition by the Company nor has it
identified any particular industry, specific business within an industry, or
geographical area of operation for evaluation of potential business
opportunities. The Company does not have any current arrangements, agreements,
or understandings with respect to acquiring or engaging in a combination with
any privately held company or other business venture. Shareholders of the
Company will be entirely dependent upon management to select suitable business
opportunities. Management believes that the Company will be an attractive
combination candidate to certain business companies which desire to become
publicly held without offering their own securities to the public. The Company
proposes to acquire or combine with an existing, privately held business which
management believes is profitable and/or presents growth potential. However,
management believes it is possible that a potential business company to be
acquired by the Company may present viable risks in that conventional public or
private funding or bank financing would not be available to such company. There
can be no assurance that the Company will be successful in identifying and
evaluating suitable combination candidates or in consummating any acquisition.
Moreover, management has adopted the policy that the Company will not acquire or
otherwise combine with any business which is unable to obtain and/or does not
have audited financial statements as required by the 1934 Act.
Limited Investigative Resources The Company's lack of funds may present a
detrimental effect on management's ability to conduct thorough investigations
and analyses of individual business opportunities prior to consummating an
acquisition. Management intends to rely on financial reports and records, market
studies and analysis, feasibility studies, independent analysis, and similar
professional studies. However, in the event that management does not have access
to such documentation due to lack of financial funds, management's decision
regarding the acquisition of a business opportunity may be made without the
benefit of one or more of such studies, records or analysis.
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Competition. The Company will be indirect competition with many entities in
its efforts to locate suitable business opportunities. Such competition includes
business development companies, venture capital partnerships and corporations,
small business investment companies, venture capital affiliates of industrial
and financial companies, broker-dealers and investment bankers, management
consultant firms, and private individual investors. Moreover, the Company may
also be competing with numerous small public companies for such opportunities.
Most of these entities may posses greater financial resources and be able to
assume greater risks than those which the Company, with its limited capital,
could consider. Many of these competing entities may also posses significantly
greater experience and contacts than the Company's management.
Need for Additional Financing. The Company may not have sufficient funds to
cover all of its estimated general and administrative expenses for the first
year following the effective date of this Registration Statement. The Company
may also not have sufficient funds to cover the estimated expenses of
investigating and evaluating a prospective business opportunity. Under these
circumstances, it is anticipated that the Company will seek to obtain loans from
its officers, directors and shareholders to cover the deficits. These potential
sources of funds, however, have not made any commitment to make such loans to
the Company. While management believes that the Company's current directors and
officers may be willing to make such loans to permit the Company to meets its
cash requirements until it is able to consummate an acquisition, there is no
assurance that such loans will be made to the Company or that the Company will
be able to obtain all of the funds necessary for its continued operation. In the
event the Company is unsuccessful in meeting its need for additional capital by
obtaining loans from its officers and directors or by issuing stock in payment
for services, the Company's ability to perform adequate investigations of
prospective business opportunities and to complete an acquisition of a business
opportunity without substantial delay is likely to be significantly impaired.
Issuance of Common Shares in a Combination. The Company's Memorandum and
Articles of Association, as amended, authorize the issuance of 50,000,000 shares
of common stock, no par value. In the event that any acquisition or other
combination effected by the Company results in the issuance by the Company of a
substantial number of additional common shares, such issuance may result in a
significant diminution of a shareholder's equity ownership and voting power
either in the Company or in the acquired business company. It is anticipated
that in the aggregate the Company's shareholders will own substantially less
than a majority of such securities. Such diminution is likely to occur since it
is highly probable that any business company which satisfies the Company's
suitability standards for acquisition will posses assets substantially greater
than that of the Company.
15
<PAGE>
Change in Management of the Company. Management anticipates that any
acquisition or combination effected by the Company will require the Company's
existing management to resign. Shareholders of the Company will not be able to
ascertain with any certainty who will effectively control the Company after such
acquisition or combination, and may not have the voting power to elect such
persons.
Risk of Failure of Acquired Business. The success of the Company's
participation with a proposed business venture will depend in large part on the
operations, current financial condition and management, and other factors of the
business company. Moreover, management believes that any business opportunity in
which the Company participates will face strong competition within its industry.
There can be no assurance that the acquired or combined business company will be
profitable or continue to operate profitably.
General Conflicts of Interest. The Company's officers and directors engage
in other employment or business interests for their own account in which they,
respectively, devote their attention, and will continue to do so. As a result,
there may be potential conflicts of interest including, among other things,
time, effort and corporate opportunity, which may result from participation by
such officers and directors in potentially competing business ventures. Such
conflicts can be resolved through the exercise by these individuals of judgment
consistent with their respective fiduciary duties to the Company. The officers
and directors of the Company intend to resolve such conflicts in the best
interests of the Company. Moreover, the officers and directors of the Company
will devote their time to the Company as they deem necessary.
Broker-Dealer Sales of the Company's Shares. It is likely that the common
shares of the Company will be defined as "penny stocks" under the 1934 Act until
the Company's common shares are quoted on the NASDAQ system operated by the
National Association of Securities Dealers, Inc. or listed on a national
securities exchange. The 1934 Act and such penny stock rules and regulations
promulgated thereunder generally impose additional sales practice and disclosure
requirements upon broker-dealers who sell the Company's common shares to persons
other than "accredited investors" (generally, defined as institutions with
assets in excess of $5,000,000 or individuals with net worth in excess of
$1,000,000 or an annual income exceeding $200,000 ($300,000 jointly with a
spouse)) or in transactions not recommended by the broker-dealer. For
transactions covered by the penny stock rules, the broker-dealer must make a
suitability determination for each purchaser and receive the purchaser's written
agreement prior to the sale. In addition, the broker-dealer must make certain
mandated disclosures in penny stock transactions, including the actual sale or
purchase price and actual bid and offer quotations, the compensation to be
received by the broker-dealer and certain associated persons, and deliver
certain disclosures required by the Securities and Exchange Commission.
Consequently, the penny stock rules may affect the willingness of broker-dealers
to make a market in or trade the common shares of the Company and thus may also
affect the ability of shareholders of the Company's common stock to resell those
shares in the public markets.
16
<PAGE>
Legal Consequences of Incorporation in the Bahamas. The Company is
organized under the laws of the Bahamas. Principles of law relating to matters
affecting the validity of corporate procedures, the fiduciary duties of the
Company's management, directors and controlling shareholders and the rights of
the Company's shareholders differ from and may not be as protective of
shareholders as those that would apply if the Company were incorporated in a
jurisdiction within the United States. Directors of the Company have the power
to take certain actions without shareholder approval, including an amendment of
the Company's Memorandum and Articles of Association and certain fundamental
corporate transactions, including reorganizations, certain mergers or
consolidations and the sale or transfer of assets. There may also be doubt that
the courts of the Bahamas would enforce liabilities predicated upon U.S.
securities laws. In general, Bahama courts will not enforce an award of treble
damages or award large monetary damages as occurs in the courts of the United
States. It is, however, correctly assumed that causes of action such as insider
trading, frauds, fraudulent trading, breach of director's fiduciary duties,
which are generally the subject of judgments based on U.S. securities laws, will
most probably be enforced by the Supreme Court of the Bahamas.
Item 2. Description of Property.
- --------------------------------
The Company does not own nor lease any real estate or other properties. The
Company's offices are located at Saffrey Square, Bay Street and Bank Lane, Suite
104k Nassau, Bahamas. Management believes that the Company's offices are
adequate for its reasonable foreseeable needs. The Company does not intend to
acquire any properties. Moreover, management does not anticipate that the
Company will lease office space unless and until it has acquired a business
opportunity, in which event management anticipates that such offices of the
Company will be those offices of the acquired business.
Item 3. Legal Proceedings.
- --------------------------
Management is not aware of any legal proceedings contemplated by any
governmental authority involving the Company. No director, officer or affiliate
of the Company is (i) a party adverse to the Company in any legal proceedings,
or (ii) has an adverse interest to the Company in any legal proceeding.
Management is not aware of any other legal proceedings pending or that have been
threatened against the Company.
Item 4. Control of Registrant.
- ------------------------------
The Company is not directly or indirectly owned or controlled by any
foreign government or by another corporation. The following table sets forth as
of January 15, 1999 the beneficial ownership of the Company's common stock by
each person known by the Company to own beneficially more than five percent (5%)
of the Company outstanding as of such date and by the officers and directors of
the Company as a group. Each person listed below is the sole beneficial owner of
the shares and has sole investment and voting power of such shares. No person
listed below has any option, warrant or other right to acquire additional
securities of the Company.
17
<PAGE>
Title of Class Identify of Person or Group Amount Owned Percentage
- -------------- --------------------------- ------------ ----------
Common Stock Luther Jeffries 2,000 40%
Common Stock Ruth Teichert 500 10%
Common Stock officers and directors 2,500 50%
(as a group)
Change in Control
There are no arrangements known to the Company the operation of which may
at a subsequent date result in a change in control of the Company. A change in
control of the Company, however, will in all probability occur when and if the
Company acquires a business opportunity. Although the extent of the control
cannot be predicted at this time, it is unlikely that the existing shareholders
of the Company will own more than twenty percent (20%) of the combined entity
following an acquisition. There are no plans at this time to issue common shares
or other securities of the Company to any officer or director of the Company.
Item 5. Nature of Trading Market.
- ---------------------------------
The Company's common stock is not currently being quoted or publicly traded
in the over-the-counter market or otherwise. Any such quotation in the immediate
future would only be possible on the OTC Electronic Bulletin Board maintained
for over-the-counter stocks not listed on the NASDAQ system. Quotation on the
NASDAQ system or listing on a national securities exchange would be possible
only after the Company has successfully acquired a business opportunity which
would enable the Company to qualify for such listing. Management has not yet
determined whether it will seek listing for the Company's stock in the OTC
markets prior to identifying business opportunities for possible acquisition. No
assurance exists that a public trading market will ever develop for the
Company's common stock, and no market is expected to arise unless the Company
successfully consummates an acquisition.
Transfer Agent
The transfer agent and registrar for the common stock is American
Securities Transfer, 1825 Lawrence Street, Suite 444, Denver, Colorado
80202-1817, telephone number (303) 298-5380.
18
<PAGE>
Item 6. Exchange Controls and Other Limitations Affecting Security Holders.
- ---------------------------------------------------------------------------
There are no exchange control restrictions on payment of dividends on the
Company's common stock or on the conduct of the Company's operations in the
Bahamas. Taxation and repatriation of profits regarding the Company's operations
are regulated by the Bahamas' laws and regulations. To date, these controls have
not had and are not expected to have a material impact on the Company. The laws
of the Bahamas and the Company's Memorandum and Articles of Association impose
no limitations on the rights of nonresident or foreign owners to hold or vote
the Company's securities.
Item 7. Taxation.
- -----------------
Under current laws of the Bahamas, the Company is not subject to tax on its
income. Moreover, no reciprocal tax treaty regarding withholding exists between
the United States and the Bahamas. Under current laws of the Bahamas, dividends,
interest or royalties paid by the Company to individuals are not subject to tax.
Persons who are residents of the Bahamas may not be considered residents for any
exchange control purposes. Generally, shareholders in a company incorporated
pursuant to the IBCA are exempt from exchange controls and are not (for twenty
years from the date of incorporation) subject to any tax on income, gift, estate
or corporate tax. If the Company were to pay a dividend, the Company would not
be liable to withhold any tax, but shareholders would receive gross dividends,
if any, irrespective of their residential or national status.
Dividends, if any, paid to any United States resident or citizen
shareholder would be treated as dividend income for United States federal income
tax purposes. Such dividends would not be eligible for the 70%
dividends-received deduction allowed to United States corporations on dividends
from a domestic corporation under Section 243 of the United States Internal
Revenue Code of 1986 (the "Internal Revenue Code"). Various Internal Revenue
Code provisions impose special taxes in certain circumstances on non-United
States corporations and their shareholders. Shareholders of the Company are
urged to consult their tax advisors with regard to such possibilities and their
own tax situation.
In addition to United States federal income taxation, shareholders may be
subject to state and local taxes upon their receipt of dividends.
Dividend Policy
The Company has never paid any dividends on its common stock and does not
anticipate paying any dividends in the future. The Board of Directors has not
adopted a policy with respect to the payment of dividends. Management
anticipates that any future earnings will be retained as working capital and
used for business purposes. Accordingly, it is unlikely that the Board of
Directors will declare or pay any such dividends in the foreseeable future.
19
<PAGE>
Item 8. Selected Financial Data.
- --------------------------------
The selected financial data set forth below is as of December 31, 1998 and
1997, respectively, and for each of the three fiscal years in the period ended
December 31, 1998, 1997 and 1996, and are derived from the audited Financial
Statements and notes thereto, which are prepared in accordance with generally
accepted accounting principles in the United States of America in United States
dollars, and which are incorporated herein. The selected financial data are
qualified in their entirety by reference to, and should be read in conjunction
with, the Financial Statements and related notes and Item - "Management's
Discussion and Analysis of Financial Condition and Results of Operations".
Balance Sheet Data As of 12/31/98 As of 12/31/97
------------------ -------------- --------------
(audited) (audited)
Current assets $ 5,000 $ 5,000
Total assets $ 5,000 $ 5,000
Current liabilities $ 5,000 -0-
Total liabilities $ 5,000 -0-
Shareholders' Equity (Deficit) $ -0- $ 5,000
Income Statement Data
---------------------
Revenues -0- -0-
Expenses $ 5,000 $ -0-
Net Income (Loss) $(5,000) $ -0-
Loss Per Share(1) $ (1.00) $ -0-
- ----------
(1) Based on the weighted average of 5,000 shares of Common Stock issued
and outstanding for fiscal year ended December 31, 1998 and December 31, 1997,
respectively.
Item 9A. Quantitative and Qualitative Disclosures about Market Risk.
- --------------------------------------------------------------------
The Financial Statements of the Company are prepared in United States
dollars. The Bahamian Dollar is the national currency of the Commonwealth of the
Bahamas. The Bahamian Dollar is comprised of 100 cents. It was decimalized in
1966 from a Sterling Pound to a Bahamian Dollar at a rate of one Sterling Pound
equal to 2.86 Bahamian Dollars. The Bahamian Dollar is equivalent to and
interchangeable with the United States dollar at freely floating rates. There
are currently no restrictions on the flow of such currencies between the Bahamas
and the United States.
20
<PAGE>
In general, fluctuations in the value of foreign currencies may cause
United States dollar translated amounts to change in comparison with previous
periods and, accordingly, the Company cannot quantify in any meaningful way, the
effect of such fluctuations upon future income. This is due to the constantly
changing exposures to these currencies, and the fact that all foreign currencies
do not react in the same manner against the United States dollar.
The Company may be subject to a variety of risks associated with changes
between the relative value of the United States dollar and the Bahamian dollar.
Management believes, however, that these risks are minimized due to its focus
primarily on acquisition of business companies organized under the laws of a
respective state within the United States. As of the date of this Registration
Statement, the exchange rate of the Bahamian dollar to the United States dollar
is approximately 1.225 to 1, respectively.
Item 9B. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
- --------------------------------------------------------------------------------
The Company is in the developmental state, has conducted no operations nor
generated any revenues. From its inception to the date of this Registration
Statement, the Company's operations have been limited to the development,
analysis and potential successfulness of its business strategy. As of the date
of this Registration Statement, the Company has no working capital.
Capital Resources
The Company may not have sufficient funds to cover all of its estimated
general and administrative expenses for the first year following the effective
date of this Registration Statement. It is anticipated that the Company may not
have sufficient funds to cover the estimated expenses associated with the
acquisition of a business opportunity. Under these circumstances, management
intends to obtain loans from its current directors, officers and shareholders to
cover such deficits. These potential sources of funds, however, have not made
definitive commitments to make such loans to the Company. With respect to any
proposed acquisitions of a business opportunity, management intends to require
such business company to deposit funds with the Company to defray the
professional fees and expenses associated with the acquisition of the business
company.
Item 10. Directors and Officers of Registrant.
- ----------------------------------------------
The directors and officers of the Company are as follows:
21
<PAGE>
Name Age Position with the Company
---- --- -------------------------
Luther Jeffries 65 President and Director
Ruth Teichert 52 Secretary
LUTHER JEFFRIES is the founder of the Company. Mr. Jeffries has been the
President and a director of the Company since its inception. Mr. Jeffries
studied at Ohio State university, the Army Engineers School at Fort Belvoir,
Virginia, and the University of Alaska, receiving degrees in engineering and
finance. Over the past thirty years, Mr. Jeffries served as chief executive
officer of many companies, most notably the General Nuclear Corp, Houston,
Texas; Cumberland Research Corp., Port Norris, New Jersey; and Eastern Testing
Laboratories, Pennsauken, New Jersey. Mr. Jeffries also served as a consultant
to many governmental entities and companies, including the U.S. Department of
Commerce, the U.S. Atomic Energy Commission, the Commonwealth of the Bahamas,
the British American Tobacco Company, and to three successive governors of the
State of New Jersey. Mr. Jeffries developed and patented a device for
determining the exact location of kilcuries and gamma sources. He is a member of
several Societies, including the Society of Naval Architects & Marine Engineers,
the American Society for Metals, the American Society for Quality Control and
the American Society for Technology. Mr. Jeffries has authored several papers,
including Interaction of Politics and the Seafood Industry for the American
Society of Quality Control, and A Reconciliation of the Results of Radiographic
and Ultrasonic Inspection of High Yield Steels for the U.S. Bureau of Ships.
RUTH TEICHERT has been the Secretary of the Company since inception. Ms.
Teichert was born in New York on April 18, 1947. Ms. Teichert currently lives in
Nassau, and acts as secretary for other corporations organized under the laws of
the Commonwealth of the Bahamas.
The directors of the Company are elected annually and serve until their
successors take office or until their death, resignation or removal. The
officers of the Company serve at the pleasure of the Board of Directors of the
Company.
Item 11. Compensation of Directors and Officers,
- ------------------------------------------------
The Company does not have any agreement or understanding, express or
implied, with any officer or director concerning employment or cash compensation
for services. No compensation has been paid or accrued to any officers or
director to date, and none is expected to be paid or accrued following
completion of this Registration Statement, except for the reimbursement for
out-of-pocket expenses. No salary or similar remuneration is anticipated to be
paid to such persons by the Company. No officer or director will receive any
finder's fee to be paid by the Company for finding or arranging any business
transaction in which the Company participates.
22
<PAGE>
The Company does not have any pension plan, profit sharing plan or stock
option plan, although such plans may be adopted in the future at the discretion
of the Board of Directors. No other incentive plans are in existence or are
contemplated.
Item 12. Options to Purchase Securities from Registrant.
- --------------------------------------------------------
There are no options issued to any officer, director or shareholder of the
Company or to any other person, directly or indirectly, to purchase any
securities from the Company.
Item 13. Interest of Management in Certain Transactions.
- --------------------------------------------------------
The Company currently does not have any understandings, agreements or
arrangements with its officers or directors in which such persons have agreed to
contribute capital to the Company or the Company has agreed to loan such persons
capital. The Company does not intend to issue any additional securities to such
persons prior to consummation of any acquisition.
PART II
-------
Item 14. Description of Securities to he Registered.
- ----------------------------------------------------
The authorized capital stock of the Company consists of 50,000,000 shares
of common stock, no par value per share. There are no classes of preferred stock
authorized at this time.
Common Stock
As of the date of this Registration Statement, there were 5,000 shares of
common stock outstanding held of record by fifteen (15) shareholders. The shares
of common stock were issued to the existing shareholders in reliance upon the
exemption from registration provided by Section 4(2) of the Securities Act of
1933, as amended. The shareholders represented to the Company that they acquired
the shares for their own respective account and not with a view to distribution
and that the Company made available to them all material information concerning
the Company. The certificates bear a restrictive legend. No underwriter was
involved in the transaction, and no commissions or other remuneration was
involved in the offer and sale of the securities.
The holders of common stock are entitled to one vote for each share held.
The Company's Memorandum and Articles of Association provide that the
affirmative vote of at least twenty-five percent (25%) of the votes cast at a
shareholder meeting is sufficient to effect any corporate action upon which
shareholders may or must vote. Common shares do not carry any cumulative voting
rights, thus holders of more than twenty-five percent (25%) of the common stock
have the power to elect all directors and to control the Company. Moreover,
directors may also have the power to elect the directors and in effect control
the Company. Holders of common stock are not entitled to pre-emptive rights.
23
<PAGE>
The Company's Memorandum and Articles of Association provide for a minimum
of one director and any other number of directors as established by the board of
directors. Directors are elected for one-year terms by either the vote of the
shareholders as their annual meeting or the vote of the existing board of
directors.
PART III
--------
Item 15. Defaults Upon Senior Securities.
- -----------------------------------------
Not applicable.
Item 16. Changes in Securities. Changes in Security for Registered Securities
and Use of Proceeds.
- --------------------------------------------------------------------------------
The Company sold its shares of common stock, par value $1.00, to fifteen
(15) individuals in June 1992. On March 10, 1999, the Board of Directors and
shareholders authorized an amendment to the Company's Articles of Association
increasing the authorized capital structure to 50,000,000 shares of common
stock, no par value. No shares of Common Stock or any other securities of the
Company have been sold or issued by the Company since June 1992.
PART IV
-------
Item 17. Financial Statements.
- ------------------------------
Not applicable.
Item 18. Financial Statements.
- ------------------------------
Reference is made to Item 19(a) for a list of all financial statements
filed as part of this Registration Statement on Form 20-F.
Item 19. Financial Statements and Exhibits.
- -------------------------------------------
(a) The following Financial Statements are filed as part of this
Registration Statement:
24
<PAGE>
1. Independent Auditors' Report dated March 28, 1999;
2. Balance Sheets for fiscal Year ending December 31, 1998 and December
31, 1997;
3. Income Statements for Years Ended December 31, 1998, 1997 and 1996 and
Cumulative for the Period from June 12, 1992 (date of organization)
through December 31, 1998;
4. Statement of Shareholders' Equity from June 12, 1992 (date of
organization) through December 31, 1998;
5. Statements of Cash Flows for Years Ended December 31, 1998, 1997 and
1996 and Cumulative for the Period from June 12, 1992 (date of
organization) through December 31, 1998;
6. Notes to Financial Statements December 31, 1998 and 1997;
7. Independent Auditors' Report on Supplementary Information; and
(b) The following Exhibits are filed as part of this Registration
Statement:
1. Company's Articles of Association dated June 13, 1992;
2. Company's Memorandum of Association dated June 16, 1992;
3. Certified Copy of Amendment to Company's Memorandum of Association
dated March 23, 1999; and
4. Opinion Letter from E.P. Toothe & Associates, Bahamas counsel to
Company, regarding tax treatment.
23. Independent Auditors' Consent.
27. Schedule Containing Summary Information Extracted from Financial
Statements for Year Ended December 31, 1998 and Qualified in Entirety
by Reference to such Financial Statements.
25
<PAGE>
LEON TOURS LTD.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
AND STATEMENTS OF INCOME, SHAREHOLDERS' EQUITY,
AND CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 1998, 1997 AND 1996 AND
CUMULATIVE SINCE JUNE 16, 1992
(DATE OF ORGANIZATION) THROUGH DECEMBER 31, 1998
AND INDEPENDENT AUDITORS' REPORT
<PAGE>
LEON TOURS LTD.
FINANCIAL STATEMENTS
(A DEVELOPMENT STAGE COMPANY)
DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
Independent Auditors' Report F1
Financial Statements:
Balance Sheets F2
Income Statements F3
Statement of Shareholders' Equity F4
Statements of Cash Flows F5
Notes to Financial Statements F6
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors
Leon Tours Ltd.
Englewood, Colorado
We have audited the accompanying balance sheets of Leon Tours Ltd., (a
development stage company operating in the Bahamas) as of December 31, 1998 and
1997, and the related statements of income, shareholders' equity, and cash flows
for the years ended December 31, 1998, 1997 and 1996, and cumulative for the
period from June 12, 1992 (date of organization) through December 31, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Leon Tours Ltd. as of December
31, 1998 and 1997, and the results of its operations and its cash flows for the
years ended December 31, 1998, 1997 and 1996, in conformity with generally
accepted accounting principles.
The Company is in the development stage at December 31, 1998. Recovery of the
Company's assets is dependent upon future events, the outcome of which is
indeterminable. In addition, successful completion of the Company's development
program and its transition, ultimately, to the attainment of profitable
operations is dependent upon obtaining adequate financing to fulfill its
development activities and achieving a level of sales adequate to support the
Company's cost structure.
/s/ KARSH & COMPANY, P.C.
- -------------------------
KARSH & COMPANY, P.C.
Denver, Colorado
March 28, 1999
F1
<PAGE>
LEON TOURS, LTD.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
1998 1997
---- ----
ASSETS
Current Assets -
Cash and equivalents $ 5,000 $ 5,000
======= =======
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities -
Accrued professional fees $ 5,000 $ --
SHAREHOLDERS' EQUITY:
Common stock, $1.00 par value -
5,000 shares authorized, issued
and outstanding 5,000 5,000
Paid in capital 1,000 1,000
Retained earnings (deficit) accumulated
during development stage (6,000) (1,000)
------- -------
Total Shareholders' Equity -- 5,000
------- -------
$ 5,000 $ 5,000
======= =======
See notes to the financial statements.
F2
<PAGE>
<TABLE>
<CAPTION>
LEON TOURS, LTD.
(A DEVELOPMENT STAGE COMPANY)
INCOME STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
AND CUMULATIVE FOR THE PERIOD FROM JUNE 12,1992
(DATE OF ORGANIZATION) THROUGH DECEMBER 31, 1998
- --------------------------------------------------------------------------------
Cumulative
During
Development
Stage 1998 1997 1996
----- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES - $ -- $ -- $-- $ --
OPERATING EXPENSES -
Professional fees (6,000) (5,000) -- --
------- ------- ----- -------
NET INCOME (LOSS) $(6,000) $(5,000) $-- $ --
======= ======= ===== =======
INCOME (LOSS) PER
COMMON SHARE $ (1.20) $ (1.00) $-- $ --
======= ======= ===== =======
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 5,000 5,000 5,000 5,000
======= ======= ===== =======
See notes to the financial statements.
F3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LEON TOURS, LTD.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
FROM JUNE 12, 1992 (DATE OF ORGANIZATION)
THROUGH DECEMBER 31, 1998
- -----------------------------------------------------------------------------------------------------------
RETAINED
COMMON STOCK PAID IN EARNINGS
SHARES AMOUNT CAPITAL (DEFICIT) TOTAL
------ ------ ------- --------- -----
<S> <C> <C> <C> <C> <C>
June 12, 1992- Issuance of common
stock at $1.00 per share 5,000 $ 5,000 $ -- $ -- $ 5,000
Addition to paid in capital -- -- 1,000 -- 1,000
Net income (loss) -- -- -- (1,000) (1,000)
------- ------- ------- ------- -------
Balance, December 31, 1992 5,000 5,000 1,000 (1,000) 5,000
Net income -- -- -- -- --
------- ------- ------- ------- -------
Balance, December 31, 1993 5,000 5,000 1,000 (1,000) 5,000
Net income -- -- -- -- --
------- ------- ------- ------- -------
Balance, December 31, 1994 5,000 5,000 1,000 (1,000) 5,000
Net income -- -- -- -- --
------- ------- ------- ------- -------
Balance, December 31, 1995 5,000 5,000 1,000 (1,000) 5,000
Net income -- -- -- -- --
------- ------- ------- ------- -------
Balance, December 31, 1996 5,000 5,000 1,000 (1,000) 5,000
Net income -- -- -- -- --
------- ------- ------- ------- -------
Balance, December 31, 1997 5,000 5,000 1,000 (1,000) 5,000
Net income (loss) -- -- -- (5,000) (5,000)
------- ------- ------- ------- -------
Balance, December 31, 1998 5,000 $ 5,000 $ 1,000 $(6,000) $ --
------- ------- ------- ------- -------
See notes to the financial statements.
F4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LEON TOURS, LTD.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
AND CUMULAT1VE FOR THE PERIOD FROM JUNE 12, 1992
(DATE OF ORGANIZATION) THROUGH DECEMBER 31, 1998
- ------------------------------------------------------------------------------------
Cumulative
During
Development
Stage 1998 1997 1996
----- ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C> <C>
Net income (loss) $(6,000) $(5,000) $ -- $ --
Changes in assets and liabilities -
Accrued professional fees 5,000 5,000 -- --
------- ------- ------- -------
Net cash provided by (used for) operating
activities (1,000) -- -- --
------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to paid in capital 1,000 -- -- --
Sale of common stock 5,000 -- -- --
------- ------- ------- -------
Net cash provided by financing activities 6,000 -- -- --
------- ------- ------- -------
NET INCREASE IN CASH AND EQUIVALENTS 5,000 -- -- --
CASH AND EQUIVALENTS:
Beginning of the period -- 5,000 5,000 5,000
------- ------- ------- -------
End of the period $ 5,000 $ 5,000 $ 5,000 $ 5,000
======= ======= ======= =======
See notes to the financial statements.
F5
</TABLE>
<PAGE>
LEON TOURS LTD.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
- ------------
Leon Tours Ltd. (the "Company") was organized in the Commonwealth of the Bahamas
on June 16, 1992.
The Company is in the development stage and has been inactive since its
inception. The Company has no current operations nor any significant assets or
liabilities. Management intends to participate in one or more unidentified
business ventures, which will be selected by management after reviewing business
opportunities. The Company anticipates no operations until such time. The
accompanying financial statements should not be considered as typical for normal
operating periods.
Cash Equivalents
- ----------------
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with an original maturity of three months or
less to be cash equivalents.
Income Taxes
- ------------
The Commonwealth of the Bahamas has no income tax. Accordingly, no income tax
provision has been included in the accompanying financial statements.
Estimates
- ---------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
can affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Comprehensive Income
- --------------------
SFAS No. 130, "Reporting Comprehensive Income," requires the display of
comprehensive income, if applicable, in all financial statements with fiscal
years beginning after December 15, 1997. The statement does not apply to
enterprises that have no items of comprehensive income for any period presented.
The Company has no items of comprehensive income and is not subject to SFAS No.
130.
F6
<PAGE>
LEON TOURS LTD.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
NOTE B - SHAREHOLDERS' EQUITY
On March 10, 1999, the Company increased the member of shares authorized from
5,000 to 50,000,000 and changed the par value from $1.00 to no par.
NOTE C - FAIR VALUES OF FINANCIAL INSTRUMENTS
The Company's financial instruments, none of which are held for trading
purposes, include cash and payables. The Company estimates that the fair value
of all financial instruments at December 31, 1998, 1997 and 1996 does not differ
materially from the aggregate carrying values of its financial instruments
recorded in the accompanying balance sheets. The estimated fair value amounts
have been determined by the Company using available market information and
appropriate valuation methodologies. Considerable judgment is necessarily
required in interpreting market data to develop the estimates of fair value, and
accordingly, the estimates are not necessarily indicative of the amounts that
the Company could realize in a current market exchange.
NOTE D - YEAR 2000
Like most entities, the Company may be exposed to risks associated with
Year-2000 dating problems. This problem affects computer software and hardware;
transactions with customers, vendors and other entities; and equipment dependent
on microchips. The Company has begun but not yet completed the process of
identifying and remediating potential Year-2000 problems. It is not possible for
any entity to guarantee the results of its own remediation efforts or to
accurately predict the impact of Year-2000 dating problems on third parties with
which the Company does business. If remediation efforts of the Company or third
parties with which it does business are not successful, it is possible the
Year-2000 dating problem could negatively impact the Company's financial
condition and results of operations.
F7
<PAGE>
INDEPENDENT AUDITORS' REPORT
ON SUPPLEMENTARY INFORMATION
----------------------------
Board of Directors
Leon Tours Ltd.
Nassau, Bahamas
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedule to the financial statements referred
to in the table of contents is presented for the purposes of additional
information for the year ended December 31, 1998, and has been subjected to the
auditing procedures applied in the audit of the basic financial statements. In
our opinion, such information for the year ended December 31, 1998, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ KARSH & COMPANY, P.C.
- -------------------------
KARSH & COMPANY, P.C.
Denver, Colorado
March 28, 1999
F8
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
LEON TOURS LIMITED
By: /s/ Luther Jeffries
-------------------------------
Luther Jeffries, President
DATE: November 15, 1999
26
COMMONWEALTH OF OF THE BAHAMAS
(NO. OF )
ARTICLES OF ASSOCIATION
OF
LEON TOURS LTD.
1. Reference in these Articles of Association to the Act shall mean the
International Business Companies Act 1989. The following Regulations shall
constitute the Regulations of the Company. In these Articles, words and
expressions defined in the Act shall have the same meaning, unless otherwise
required by the context, the singular shall include the plural and vice versa,
the masculine shall include the feminine and nueter, and references to persons
shall include corporations and all entities capable of having a legal existence.
SHARES
2. The authorized capital of the Company is US$5,000.00 divided into 5,000
shares with a par value of US$1.00 each. The directors are duly empowered to
issue shares as registered shares or to the bearer as they may at their
discretion determine by resolution.
3. Every person whose name is entered as a member in the share register being
the holder of registered shares, and every person who subscribes for shares
issued to bearer, shall, without payment, be entitled to a certificate signed by
two directors or two officers or one director and one officer of the Company or
under the common seal of the Company with the signature of any director or
officer of the Company specifying the share or shares held and the par value
thereof, provided that in respect of a registered share, or shares, held jointly
by several persons, the Company shall not be bound to issue more than one
certificate, and delivery of a certificate for a share to one of several joint
holders shall be sufficient delivery to all.
4. In the case of the bearer shares, each certificate for shares issued to
bearer shall carry an identifying number, and the Company shall maintain a
register of the name and address of an agent or attorney which may be given to
the Company by the bearer, identified for this purpose by such identifying
number, for service of any notice, information or written statement required to
be given to members.
5. If a certificate is worn out or lost, it may be renewed on production of the
worn-out certificate, or on satisfactory proof of its loss together with such
indemnity as the directors may reasonably require. Any member receiving a share
certificate shall indemnify and hold the Company and its officers harmless from
any loss or liability which it or they may incur by reason of wrongful or
fraudulent use or representation made by any person by virtue of the possession
of such certificate.
<PAGE>
SHARE CERTIFICATE OR VARIATION OF RIGHTS
6. Subject to the provisions of these Articles, the unissued shares of the
Company (whether forming part of the original or any increased capital) shall be
at the disposal of the directors who may offer, allot, grant options over or
otherwise dispose of them to such persons at such times and for such
consideration, being not less than the par value of the shares being disposed
of, and upon such terms and conditions as the directors may determine.
7. Without prejudice to any special rights previously conferred on the holders
of any existing shares or class of shares, any share in the company may be
issued with such restrictions, whether in regard to dividend, voting, return of
capital or otherwise as the directors may from time to time determine.
8. Subject to the provisions of the Act, shares may be issued on the terms that
they are redeemable, or, at the option of the Company, liable to be redeemed on
such terms and in such manner as the directors before or at such time of the
issue of the shares may determine.
9. The directors may redeem any share issued at a premium.
10. If at any time the share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided by the terms
of issue of the shares of that class) may, whether or not the company is being
wound up, be varied with the consent in writing of the holders of not less than
fifty-one percent of the issued shares of that class and of the holders of not
less fifty-one percent of the issued shares of any other class of shares which
may be affected by such variation.
11. The rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided by the
terms of issue of the shares of that class, be deemed to be varied by the
creation or issue of further shares ranking pari passu therewith.
12. Except as required by law, no person shall be recognized by the Company as
holding any share upon any trust, and the Company shall not be bound by or be
compelled in any way to recognize (even when having notice thereof) any
equitable, contingent, future or partial interest in any fractional part of a
shares or (except only as by these Regulations or by law otherwise provided) any
other rights in respect or any share except an absolute right to the entirety
thereof by the registered holder.
TRANSFER OF SHARES
13. Registered shares in the company may be transferred by a written instrument
signed by the transfer and containing the name and address of the transferee or
in such other manner or form and subject to such evidence as the directors shall
consider appropriate as the directors shall consider appropriate.
14. Shares issued to the bearer shall be transferred by delivery of the
certificate evidencing the same.
15. The holder of the registered shares may request that such shares be
exchanged for shares issued to bearer and the directors shall cancel the
certificate evidencing registered shares and the entry in the share register and
instead issue a certificate evidencing shares issued to bearer with and subject
to such evidence of intent as the directors may consider appropriate.
<PAGE>
16. The holder of a certificate evidencing shares issued to bearer may request
that such shares be exchanged for registered shares and the directors shall
cancel the certificate evidencing shares issued to bearer and instead issue a
certificate evidencing registered shares and enter the name and address of the
holder thereof in the share register subject to such evidence of intent as the
directors may consider appropriate.
17. Upon receipt of notification of any change of name and address of any agent
or attorney given to the Company for the purpose of service of any notice,
information or written statement required to be given to members, identified by
reference to the number of the certificate to bearer, the directors shall
forthwith amend the register maintained for this purpose.
TRANSMISSION OF SHARES
18. The personal representative, guardian or trustee as the case may be of
deceased, incompetent or bankrupt sole holder of a registered share shall be the
only persons recognized by the Company as having any title to the share. In the
case of a share registered in the names of two or more holders, the survivor or
survivors, and the personal representatives, guardian or trustee as the case may
be of the deceased, incompetent or bankrupt, shall be the only persons
recognized by the Company as having any title to the shares, but they shall not
be entitled to exercise any rights as a member of the Company until they have
proceeded as set forth in the following two Regulations.
19. Any person becoming entitled by operation of law or otherwise to a share or
shares in consequence of the death, incompetence or bankruptcy of any member may
be registered as a member upon such evidence being produced as may be registered
as a member upon such evidence being produced as may reasonably be required by
the directors. An application by any such person to be registered as a member
for all purposes shall be deemed to be a transfer of shares of the deceased,
incompetent or bankrupt member and the directors shall treat it as such.
20. Any person who has become entitled to a share or shares in consequence of
the death, incompetence or bankruptcy of any member may, instead of being
registered himself, request in writing that some person to be named by him be
registered as a transferee of such share or shares and such request shall
likewise be treated as if it were a transfer.
21. The holder of a bearer share shall be for all purposes under this heading be
recognized as the absolute owner thereof.
ACQUISITION OF OWN SHARES
22. Subject to the provisions of the Act in this regard, the directors may, on
behalf of the Company, purchase, redeem or otherwise acquire any of the
Company's own share but only out of surplus or in exchange for newly issued
shares of equal value or for such consideration as they consider fit, and either
cancel or hold such shares as Treasury shares. The directors may dispose of any
shares held as Treasury shares on such terms and conditions as they may from
time to time determine. Shares may be purchased or otherwise acquired in
exchange for newly issued shares in the Company.
<PAGE>
ALTERATION IN CAPITAL
23. Subject to the terms of any resolution passed by the directors for the
purpose of increasing the authorized capital of the Company, such increased
capital may be divided into shares of such respective amounts, and with such
rights or privileges (if any) as the directors think expedient.
24. Any capital raised by the creation of new shares shall be considered as part
of the original capital, and shall be subject to the same provisions as if it
had been part of the original capital.
25. The directors may by resolution:
(a) consolidate and divide all or any of the share capital of the company
into shares of larger amount than the existing shares;
(b) Cancel any shares which, at the date of the passing of the resolution,
have not been taken or agreed to be taken by any person and diminish
the amount of the authorized share capital of the company by the
amount of the shares so canceled;
(c) sub-divide the shares of the company or any of them, into shares of
smaller amount than is fixed by the Memorandum of Association to the
provisions of Regulation 10 the resolution whereby any share is
subdivided may determine that as between the holders of the shares
resulting from subdivision one or more of the shares may have such
preferred or other special rights or be subject to any such
restrictions as the Company has power to attach to unissued or new
shares;
(d) subject to any confirmation or consent required by law, reduce its
authorized and issued share capital or any capital redemption reserve
fund or any share premium account in any manner.
26. Where any difficulty arises in regard to any consolidation and division
under this Regulation, the directors may settle the same as they think
expedient.
MEETING OF MEMBERS
27. The directors may convene meeting of the members of the Company at such
times and in such manner and places as the directors consider necessary or
desirable, and they shall convene such a meeting upon the written request of
members holding more than fifty percent of the votes of the outstanding voting
shares in the Company.
28. Seven days' notice at the least specifying the place, the day and hour of
the meeting and general nature of the business to be conducted shall be given in
the manner hereinafter mentioned to such persons whose names on the date the
notice is given appear as members in the share register of the Company and to
the agent or attorney of record of the holders of bearer shares the right to
vote at such meeting.
29. A meeting of the members shall be deemed to have been validly held,
notwithstanding that it is held in contravention of the requirement to give
notice in Regulation 26, if notice of the meeting is waived by ninety percent of
the holders of bearer shares having a right to attend and vote at the meeting.
<PAGE>
30. The inadvertent failure of the directors to give of a meeting to a member or
to the agent or attorney as the case may be, or the fact that a member or such
agent or attorney has not received the notice, shall not invalidate the meeting.
PROCEEDINGS AT MEETINGS OF MEMBERS
31. No business shall be transacted at any meeting unless a quorum of members is
present at the time when the meeting proceeds to business. A quorum shall
consist of the holder or holders present in person or by proxy of not less than
twenty-five per centum of the shares of each class or series of shares entitled
to vote as a class or series thereon and the same proportion of the holders of
the remaining shares entitled to vote thereon.
32. If within thirty minutes from the time appointed for the meeting a quorum is
not presented, the meeting shall be adjourned to the same time and place 10 days
hence. At an adjourned meeting not less than 10 per centum of each class shall
constitute a quorum. If within 30 minutes of the time appointed for the meeting
a quorum is not present the meeting shall be deemed to be dissolved.
33. At every meeting the members present shall choose someone of their number to
be Chairman. If the members are unable to choose a number for any reason, then
the person representing the greatest number of voting shares present at the
meeting shall preside as Chairman, failing which the eldest (in years) person
shall take the chair.
34. The Chairman may, with the consent of the meeting, adjourn any meeting from
time to time, and from place to place, but no business shall be transacted at
any adjourned meeting other than the business left unfinished at the meeting
from which the adjournment took place.
35. At any meeting a resolution put to the vote of the meeting shall be decided
by a show of hands by simple majority unless a poll is (before or on the
declaration of the result of a show of hands) demanded:
(a) by the chairman; or
(b) by any member or members present in person or by proxy and
representing not less than one-tenth of the total voting rights of all
the members having the right to vote at the meeting.
36. Unless a poll be so demanded, a declaration by the chairman that a
resolution has, on a show of hands, been carried, and an entry to that effect in
the book containing the minutes of the proceedings of the Company, shall be
sufficient evidence of the fact, without proof of the number or proportion of
the votes recorded in favour of or against such resolution.
37. If a poll is duly demanded it shall be taken in such a manner as the
chairman directs, and the result of the poll shall be deemed to be the
resolution of the meeting at which the poll was demanded. A demand for a poll
may be withdrawn.
38. In the case of an equality of votes, whether on show of hands, or on a poll,
the chairman of the meeting at which the show of hands takes place, or at which
the poll is demanded, shall be entitled to a second or casting vote.
<PAGE>
VOTES OF MEMBERS
39. At any meeting of members whether on show of hands or on poll every holder
of a voting share present in person or by proxy shall have one vote for every
voting share of which he is the holder.
40. A resolution which has been notified to all members for the time being
entitled to vote and which has been approved by a majority of the votes of those
members in the form of one or more documents in writing or by telex, telegram,
cable or other written electronic communication shall forthwith, without the
need for any notice, become effectual as a resolution of the members.
41. If a committee be appointed for any member who is of unsound mind he may
vote by his committee.
42 If two or more persons are jointly entitled to a registered share or shares
and if more than one of such persons shall vote in person or by proxy at any
meeting of members or in accordance with the terms of Regulation 37, the vote of
that person whose name appears first among such voting joint holders in the
share register shall alone be counted.
43. Votes may be given either personally or by proxy.
44. The instrument appointing a proxy shall be produced at the place appointed
for the meeting before the time for holding the meeting at which the person
named in such instrument proposes to vote.
45. An instrument appointing a proxy shall be in such form as the Chairman of
the meeting shall accept as properly evidencing the wishes of the member
appointing the proxy.
46. The instrument appointing a proxy shall be in writing under the hand of the
appointor unless the appoint is a corporation or other form of legal entity
other than one or more individuals holdings as joint owners in which case the
instrument appointing a proxy shall be in writing under the hand of an
individual duly authorized by such corporation or legal entity to execute the
same. The Chairman if any meeting at which a vote is cast by proxy so authorized
may call for a notarially certified copy of such authority which shall be
produced within seven days of being so requested or the vote cast by such proxy
shall be disregarded. In the case of a proxy being given by the holder of a
share issued to bearer, it shall be sufficient for the appointor to identify
himself by writing the identifying number of the certificate evidencing the
shares issued to bearer.
CORPORATIONS ACTING BY REPRESENTATION AT MEETINGS
47. Any corporation or other form of corporate legal entity which is a member of
the Company may by resolution of its directors or other governing body authorize
such person as it thinks fit to act as its representative at any meeting of the
members or of any class of members of the Company, and the person so authorized
shall be entitled to exercise the same powers on behalf of the corporation which
he represents as that corporation could exercise if it were an individual member
of the Company.
DIRECTORS
48. Subject to resolution of the company to change the number if directors the
number of the directors shall be not less than one and may be a body corporate
or a partnership.
<PAGE>
49. The first director or directors shall be elected by the subscribers
directors, the Memorandum. Thereafter, the director(s) shall be ejected by the
members or the director (if there is only one) or directors for such term as the
members or the director (if there is only one) or directors may determine.
50. The director(s) shall hold office until his (their) successor(s) shall take
office his (their) earlier death, resignation or removable.
51. Every vacancy in the board of directors may be filled by a resolution of the
members or of the directors (if there is only one) or of the members or of the
directors if applicable.
52. A director shall not be require a share qualification, but nevertheless
shall be entitled to attend and speak at any meeting of the members and at any
separate meeting of the holders of any class of shares in the Company.
53. A director by writing under his hand deposited at the Registered Office of
the Company may from time to time appoint another director or any other person
to be his alternate. Every such alternate shall be entitled to be given notice
of meetings of the directors and to attend and vote as a director at any such
meeting at which the director appointing him is not personally present and
generally at such meeting to have and exercise all the powers, rights, duties
and authorities of the director appointing him. Every such alternate shall be
deemed to be an officer of the Company and shall not be deemed to be an agent of
the director appointing him. Every such alternate shall be deemed to be an
officer of the Company and shall not be deemed to be an agent of the director
appointing him. If undue delay or difficulty would be occasioned by giving
notice to a director of the resolution of which his approval is sought in
accordance with Regulation 77, his alternate (if any) shall be entitled to
signify approval of the same on behalf of that director. The remuneration of an
alternate shall be payable out of the remuneration payable to the director
appointing him, and shall consist of such portion of the last-mentioned
remuneration as shall be agreed between such alternate and the director
appointing him. A director by writing under his hand deposited at the Registered
Office of the Company may at any time revoke the appointment of any alternate
appointed by him. If a director shall die or cease to hold office of director,
the appointment of his alternate shall thereupon cease and terminate.
54. The directors may, by resolution, fix the emoluments of directors in respect
of services rendered or to rendered in any capacity to the Company. The
directors may also be paid such travelling, hotel and other expenses properly
incurred by them in attending and returning from meetings of the directors, or
any committee of the directors or meetings of the members, or in connection with
the business of the Company as shall be approved by resolution of the directors.
55. Any director who, request, goes or resides abroad for any purposes of the
Company or who performs services which in the opinion of the director go beyond
the ordinary duties of a director, may be paid such extra remuneration (whether
by way of salary, commission, participation in profits or otherwise) as shall be
approved by resolution of the directors.
<PAGE>
56. The Company may pay to a director who at the request of the Company holds
any office (including a directorship) in, or renders services to any company in
which the Company may be interested, such remuneration (whether by way of
salary, commission, participation in profits or otherwise) in respect of such
office or services as shall be a approved by resolution of the director.
57. The office of director shall be vacated if the director:
(a) is removed from office by a resolution of commission or by a
resolution of directors, or
(b) becomes bankrupt or makes any arrangement or composition with his
creditors generally, or
(c) becomes of unsound mind, or of such infirm health as to be incapable
of managing his affairs, or
(d) resigns his office by notice in writing to the Company.
58. (a) A director may hold any other office or position of profit under the
Company (except that of auditor) in conjunction with his office of director, and
may act in a professional capacity to the Company, on such terms as to
remuneration and otherwise as the directors shall arrange.
(b) A director may be or become a director or other officer of, or
otherwise interested in any company promoted by the Company, or in which the
Company may be interested as a member or otherwise, and no such director shall
be accountable for any remuneration or other benefits received by him as
director or officer of from his interest in such other company. The directors
may also exercise the voting powers conferred by the shares in any other
company held or owned by the Company in such manner in all, respects as they
think fit, including the exercise thereof in favour of any resolutions
appointing them, or any of their number, directors or officers of such other
company. A director may vote in favour of the exercise of such voting rights in
manner aforesaid, notwithstanding that he may be, or be about to become, a
director or officer of such other company, and as such in any other manner is,
or may be, interested in the exercise of such voting rights in manner aforesaid.
(c) No director shall be disqualified by his office from contracting with
the Company, either as vendor, purchaser or otherwise, nor shall any such
contract or arrangement entered into or on behalf of the Company in which any
director shall in any way interested be voided, nor shall any director so
contracting or being so interested be liable to account to the Company for any
profit realized by any such contract or arrangement, by reason of such director
holding that office or of the fiduciary relationship thereby established. The
nature of a director's interest must be declared by him at the meeting of the
directors at which the question of entering into the contract or arrangement is
first taken into consideration, and if the director was not at the date of that
meeting interested in the proposed contract or arrangement, or shall become
interested in a contract or arrangement after it is made, he shall forthwith
after becoming so interested advise the Company in writing of the fact and
nature of his interest. A general notice to the directors by a director that he
is a member of a specified firm or company, and is to be regarded as interested
in any transaction which may, after the date of notice, be made with such firm
or company shall (if such director shall give the same at a meeting of
directors, or shall take reasonable steps to secure that the same is brought up
and read at the next meeting of directors after it is given) be a sufficient
declaration of interest in relation to such contract of transaction with such
firm or company. A director may be counted as one of a quorum upon a motion in
respect of any contract or arrangement which he shall make with the Company, or
in which he is so interested as aforesaid, and may vote upon such motion.
<PAGE>
OFFICERS
59. The directors of the Company may, by a resolution of directors, appoint
officers of the Company at such times as shall be considered necessary or
expedient, and such officers may consist of a President, one or more
Vice-President, a Secretary and a Treasurer and such other officers as may from
time to time be deemed desirable. The officers shall perform such duties as may
be prescribed at the time of their appointment subject to any modification in
such duties as may be prescribed by the directors thereafter, but in the absence
of any specific allocation of duties it shall be the responsibility of the
President to manage the day to day affairs of the Company, Vice Presidents to
act in order of seniority in the absence of the President but otherwise to
perform such duties as may be delegated to term by the President, the Secretary
to maintain the registers, minute books and records (other than financial
records) of the Company and to ensure compliance with all procedural
requirements imposed on the Company by applicable law, and the Treasurer to be
responsible for the financial affairs of the Company.
60. Any person may hold more than one office and no officer need be a director
or member of the Company. The officers shall remain in office until removed from
office by the directors whether or not a successor is appointed.
61. Any officer who is a body corporate may appoint any person its duly
authorized representing it and of transacting any of the business of the
officers.
POWERS OF DIRECTORS
62. The business of the Company shall be managed by the directors who may pay
all expenses incurred preliminary to and in connection with the formation and
registration of the Company and exercise all such powers of the Company as are
not by the Act or by the Regulations required to be exercised by the members
subject to an delegation of such powers as may be authorized by these
Regulations and to such requirements as may be prescribed by resolution of the
members; but no requirement made by resolution of the members shall prevail if
it be inconsistent with these Regulations nor shall such requirements invalidate
any prior act of the directors which would have been valid if such requirement
had not been made.
63. The directors may entrust to and confer upon any director or officer any of
the powers exercisable by them upon such terms and conditions and with such
restrictions as they think fit, and either colaterally with or to the exclusion
of their own powers, and may from time to time revoke, withdraw, alter or vary
all or any or such powers. The directors may delegate any of their powers to
committees consisting of such member or members of their body as they think fit;
any committee so formed shall in the exercise of the powers so delegated conform
to any regulations that may be imposed on it by the directors.
<PAGE>
64. The directors may from time to time and at any time by power of attorney
appoint any company, firm or person or body of persons, whether nominated
directly or indirectly by the directors, to be the attorney or attorneys of the
Company for such purposes and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the directors under these
Regulations) and for such period and subject to such conditions as they may
think fit, and any such powers of attorney may contain such provisions for the
protection and convenience of persons dealing with any such attorney as the
directors may think fit and may also authorize any such attorney to delegate all
or any of the powers, authorities and discretions vested in him.
65. Any director which is a body corporate may appoint any person its duly
authorized representative for the purposes of representing it at Directors
Meetings and of transacting any of the business of the directors.
66. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the company shall be
signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in
such manner as the directors shall from time to time by resolution determine.
67. The directors may exercise all the power of the Company to borrow money and
to mortgage or charge its undertakings, property and uncalled capital or any
part thereof, to issue debentures, debenture stock and other securities whenever
money is borrowed or as security for any debt, liability or obligation of the
Company or of any third party.
68. The continuing directors may act notwithstanding any vacancy in their body,
save that if the number of directors shall have been fixed at two or more
persons and by reason of vacancies having occurred among the directors there
shall be only one continuing director he shall be authorized to act alone only
for purpose of appointing another director.
PROCEEDINGS OF DIRECTORS
69. The meetings of the directors and any committee thereof shall be held at
such place or places as the directors shall decide.
70. The directors may elect a chairman of their meeting and determine the period
for which he is to hold office; but if no such chairman is elected, or if at any
meeting the chairman is not present at the time appointed for holding the same,
the directors present may choose one of their number to be chairman of the
meeting.
71. The directors may meet together for the dispatch of business, adjourn and
otherwise regulate their meeting as they think fit. Questions arising at any
meeting shall be decided by a majority of gates; in case of any equality of
votes the chairman shall have second or casting vote. A director may at any time
summon a meeting of the directors. If the Company shall have only one director,
the provisions hereinafter contained for meetings of the directors shall not
apply but such sole director shall have full power to represent and act for the
Company in all matters and in lieu of minutes of a meeting shall record in
writing and sign a note or memorandum of all matter requiring a resolution for
all purposes.
<PAGE>
72. A director shall be given not less than seventy days' notice of a meeting of
the directors.
73. Notwithstanding Regulation 72 above, a meeting of directors held in
contravention of that Regulation shall be valid if majority of the directors
entitled to vote at the notice, does not invalidate the meeting.
74. The inadvertent failure to give notice of a meeting to a director, or the
fact that a director has not received the notice, does not invalidate the
meeting.
75. A meeting of directors is duly constituted for all purposes if at the
commencement of the meeting there are present in person or by alternate at least
the majority of the total number of directors.
76. If within half an hour from the time appointed for the meeting a quorum is
not present the meeting shall be dissolved.
77. Any one or more of the directors or any committee thereof may participate in
a meeting of directors or of a committee of directors by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
78. A resolution approved by a majority of the directors for the time being
entitled to receive notice of a meeting of the directors or of a committee of
the directors and taking form of one or more documents in writing or by telefax,
telegram, cable or other written electronic communication shall be as valid and
effectual as if it has been passed at a meeting of the directors or of such
committee duly convened and held, without the need for any notice.
INDEMNITY
79. Subject to the provisions of the Act and of any other statue for the time
being in force, every director or other officer of the Company shall be entitled
to be indemnified out of the assets of the Company against all losses or
liabilities which he may sustain or incur in or about the execution of the
duties of his office or otherwise relation thereto, and no director or other
office shall be liable for any loss, damage or misfortune which may happen to,
or be incurred, by the Company in the execution of the duties of his office, or
in relation thereto.
SEAL
80. The directors shall provide for the safe custody of the common seal of the
Company. The common seal when affixed to any instrument shall be witnessed by a
director or any other person so authorized from time to time by the directors.
The directors may provide for a facsimile of the common seal and approve the
signature of any director or authorized person which may be reproduced by
printing or other means on any instrument and it shall have the same force and
validity as if the seal had been affixed to such instrument and the same had
been signed as hereinbefore described.
<PAGE>
DIVIDENDS AND RESERVES
81. The directors may by resolution declare a dividend but no dividend shall be
declared and paid unless the directors determine that immediately after the
payment of the dividend.
(a) the Company will be able to satisfy its liabilities as they become due
in the ordinary course of its business; and
(b) the realizable value of the assets of the Company will not be less
than the sum of its total liabilities, other than deferred taxes, as
shown in the books of account, and its capital.
82. Dividends may be declared and paid in money, share or other property.
83. In computing the surplus for the purposes of resolving to declare and pay
dividend, the directors may include in their computation the net unrealized
appreciation of the assets of the Company.
84. The directors may from time to time pay to the members such interim
dividends as appear to the directors to be justified by the surplus of the
Company.
85. Subject to the rights of holders of shares entitled to special rights as to
dividends, all dividends shall be declared and paid according to the amounts
paid up on the shares in issue, excluding those shares which are held by the
Company as Treasury shares at the date of declaration of the dividend.
36. The directors may, before recommending any dividend, set aside out of the
profits of the Company such sums as they think proper as a reserve or reserves
which shall, at the discretions of the directors, be applicable for meeting
contingencies, or for any other purpose to which the profits of the Company may
be properly applied, and pending such application may, at the like discretion,
either be employed in the business of the Company or be invested in such
investments as the directors may from time to time think fit.
87. If several persons are registered as joint holders of any share, any of them
may give an effectual receipt for any dividend or other monies payable on or in
respect of the share.
88. In the case of shares issued to bearer, the directors may provide for the
payment of dividend by reference to counterfoils or warrants issued with the
certificate for such shares, and the production of such dividends, counterfoil
or warrant shall evidence entitlement to receipt of such dividend in the same
way and to the same extent as production of the certificate itself. At the time
of presentation of the counterfoil or warrant, the directors may issue such
further counter foils or warrants as may be required to permit receipt by the
holder thereof of subsequent dividends.
89. Notice if any dividend that may have been declared shall be given to each
member in manner hereinafter mentioned and all dividends unclaimed for three
years after having been declared may be forfeited by the directors for the
benefit of the Company.
<PAGE>
90. No dividend shall bear interest against the Company.
BOOKS AND RECORDS
91. The Company shall keep such accounts and records as the directors consider
necessary or desirable in order to reflect the financial position of the
Company.
92. The Company shall keep minutes of all meetings of directors, members,
committees of directors, committees of officers and committees of members, and
copies of all resolutions consented to by directors, members, committees of
directors, committees of officers and committees of member.
93. The books, records and minutes required by Regulation 90 and 91 shall be
kept at the Registered Office of the Company or at such other place as the
directors determine, and shall be open to the inspection of the directors at all
times.
94. The directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions or regulations the books,
records and minutes of the Company or any of them shall be open to the
inspection of members not being directors, and no member (not being a director)
shall have any right of inspecting any book, record, minute or document of the
Company except as conferred by Law or authorized by resolution of the directors.
AUDIT
95. The directors may by resolution call for accounts of the Company to be
examined by an auditor or auditors to be appointed by their at such
remuneration as may from time to time be agreed.
96. The auditor may be a member of the Company, but no director or officer shall
be eligible during his continuance in office.
97. Every auditor of the Company shall have a right of access at all times to
the books of accounts and vouchers of the Company, and shall be entitled to
require from officers of the Company such information and explanations as he
thinks necessary for the performance of his duties.
98. The report of the auditor shall be annexed to the accounts upon which he
reports, and the auditor shall be entitled to receive notice of, and to attend,
any meeting at which the company's audited profit and loss account and balance
sheet is to be presented.
NOTICES
99. Any notice, information or written statement required to be given to members
a shall be served:
(a) in the case of members holding registered shares, by mail (airmail
service in available) addressed to each member at the address shown in
the share register; and
(b) in the case of members holding shares issued to bearer;
(i) by mail (airmail service if available) addressed to the agent or
attorney whose name and address has been given for service of
notice by the bearer of the share (identified for this purpose of
the number of the share certificate), or
<PAGE>
(ii) in the absence of an address for service being given, or if the
notice, information or written statement cannot be served for any
other reason, by publishing the notice, information or written
statement in a newspaper circulated in the Commonwealth of the
Bahamas and in a newspaper in the place where the Company has its
principal office.
100. All notices directed to be given to the members shall, with respect to any
registered share to which persons are jointly entitled, be given to whichever of
such persons is named first in the share register, and notice so given shall be
sufficient notice to all the holders of such share.
101. Any notice, if served by post, shall be deemed to have been served with in
ten days of posting, and in proving such service it shall be sufficient to prove
that the letter containing the notice was properly addressed, stamped and put
into the post office.
PENSION AND SUPERANNUATION FUNDS
102. The directors may establish and maintain or procure the establishment and
maintenance of any non-contributory or contributory pension or superannuation
funds for the benefit of, and give or procure the giving of donations,
gratuities, pensions, allowances or emoluments to any persons who are or were at
any time in the employment or service of the company or any company which is a
subsidiary of the Company or is allied to or associated with the Company or with
any such subsidiary, or who are or were at any time directors or officers of the
Company or of any such other company as aforesaid or who hold or held any
salaried employment or office in the Company or such other company, or any
person in whose welfare the Company or such other company as aforesaid is or has
been at any time interested, and to the wives, widows, families and dependents
of any such person, and may make payments for or towards the insurance of any
such persons as aforesaid, and may do any of any such persons as aforesaid
either alone or in conjunction with any such other company as aforesaid. A
director holding any such employment or office shall be entitled to participate
in and retain for his own benefit any such donation, gratuity, pension,
allowance or emolument.
WINDING UP
103. If the Company shall wound up, the Liquidator may, in accordance with a
resolution of members, divide amongst the members in specie or in kind the whole
or any part of the assets of the Company (whether they shall consist of property
of the same kind or not) and may for such purposes set such value as he deems
fair upon any property to be divided as aforesaid and may determine how such
division shall be carried out as between the members or different classes of
members. The Liquidator may vest the whole or any part of such assets in
trustees upon such trusts for the benefit of the contributories as the
Liquidator shall think fit, but so that no member shall be compelled to accept
any shares or other securities whereon there is any liability.
<PAGE>
ARBITRATION
104. Whenever any difference arises between the Company on the one hand and any
of the members, their executors, administrators or assigns on the other hand
touching the true intent and construction or the incidence or consequences of
these presents or of the Act touching anything done or executed omitted or
suffered in pursuance of the Act or touching any breach or alleged breach or
otherwise relating to the premises or to these presents or to any Act affecting
the Company or to any of the affairs of the Company such difference shall unless
the parties agree to refer the same to a single arbitrator be referred to two
arbitrators one to be chosen by each of the parties to the difference and the
arbitrators shall before entering on the reference appoint an umpire.
105. If either party to the reference makes default in appointing an arbitrator
either originally or by way of substitution (in the event that any appointed
arbitrator shall die, be incapable of acting or refuses to act) for ten days
after the other party has given him notice to appoint the same such other party
may appoint an arbitrator to act in the place of the arbitrator to act in the
place of the arbitrator of the defaulty party.
AMENDMENT TO ARTICLES
106. The Company may alter or modify the conditions contained in these
Regulations as originally drafted or as amended from time to time by a
resolution of the directors.
- --------------------------------------------------------------------------------
NAME, ADDRESS AND DESCRIPTION OF SUBSCRIBERS
- --------------------------------------------------------------------------------
/s/ E.P. Toothe /s/ Signature on File
- --------------- --------------------------------
Secretary
Portago (Nominees) Limited
Nassau, Bahamas
/s/ E.P. Toothe /s/ Signature of File
- --------------- --------------------------------
Secretary
East (Nominees) Limited
Nassau, Bahamas
DATED this 16th day of June, 1992.
WITNESS to the above signatures: /s/ A.McPhee
COMMONWEALTH OF THE BAHAMAS
(NO. OF )
MEMORANDUM OF ASSOCIATION
OF
SEAL
LEON TOURS LTD.
1. The Name of the Company is Leon Tours Ltd.
2. The registered office of the Company will be situated at such place within
The Bahamas as the directors may from time to time determine.
3. The registered agent of the company will be The Management Limited Nassau,
Bahamas or such other person or company being a person or company entitled
to act as a registered agent as the directors may from time to time
determine.
4. The Objects for which the Company is established are:
(a) To buy, own hold, subdivide, lease, sell, rent, prepare building
sites, construct, reconstruct, alter, improve, decorate, furnish,
operate, maintain, reclaim, or otherwise deal with and/or develop land
and buildings and otherwise deal in real estate in all its branches,
to make advances upon the security of land or buildings or other
property or any interest therein, and whether or erected or in course
of erection and whether on first mortgage or mortgages or charge or
charges, and to develop land and buildings as may seem expedient but
without prejudice to the generality of the foregoing.
<PAGE>
(b) To buy, sell, underwrite, invest in, exchange or otherwise acquire,
and to hold, manage, develop, deal with and turn to account any bonds,
debentures, shares (whether fully paid or not), stocks, options.
commodities, futures forward contracts, notes, or securities of
governments, states, municipalities, public authorities or public or
private limited or unlimited companies in any part of the world,
precious metals, gems, works of art and other articles of value, and
whether on a cash or margin basis and including short sales, and to
lend money against the security of any of the aforementioned property.
(c) To borrow or raise money by the issue of debentures, debenture stock
(perpetual or terminable), bonds mortgages, or any other securities
founded or based upon all or any of the assets or property of the
Company or without any such security and upon such terms as to
priority or otherwise as the Company shall think fit.
(d) To engage in any other business or businesses whatsoever, or in any
act or activity which may be undertaken by a person or persons as
individuals or by one or more individuals acting together which are
not prohibited by law for the time being in force in the Bahamas.
(e) To do all such other things as are incidental to or which the Company
may believe to be conducive to the attainment of all or any of the
above objects.
And it is hereby declared that the intention is that each of the
objects specified in each paragraph of this clause shall except where
otherwise expressed in such paragraph be an independent main object
and shall not be in any way limited or restricted by reference to or
inference from the terms of any other paragraph or the name of the
Company and particularly, the above objects may be carried out in any
part of the world.
<PAGE>
5. The Company has no power to:
(a) carry on business with persons resident in the Bahamas;
(b) own an interest in real property situated in The Bahamas, other than a
lease of property for use as an office which to communicate with
members or where books and records of the Company are prepared or
maintained;
(c) carry on banking business;
(d) carry on business as an insurance or reinsurance company; or
(e) carry on the business of providing the registered office for
companies.
6. The shares in the company shall be issued in the currency of the United
States of America.
7. The authorized capital of the Company is US$5,000.00 divided into 5,000
shares with a par value of US$1.00 each. The directors are duly empowered
to issue shares as registered shares or to the bearer a they may at their
discretion determine by resolution.
8. The shares shall be divided into such number of classes and series as the
directors shall by resolution from time to time determine and until so
divided shall comprise one class and series.
9. The directors shall by resolution have the power to issue a class or series
of shares that the Company is authorized to issue in its capital, original
or increased, with or subject to a designations powers, preferences,
rights, qualification limitations and restrictions as the directors shall
decide.
10. Shares issued as registered shares may be exchanged for shares issued to
bearer, and shares issued to bearer may be exchanged for registered shares.
11. Where shares are issued to bearer, the bearer, identified for this purpose
by the number of the share certificate, may be requested to give to the
company the name and address of an agent or attorney for service of any
notice, information or written statement required to be given to members,
and service upon such agent or attorney shall constitute service upon the
bearer of such shares. In the absence of such name and address being given,
it shall be sufficient for the purpose of service for the Company to
publish the notice, information or written statement in a newspaper
circulated in the Bahamas and in a newspaper in place where the Company has
its principal office.
12. The Company shall by resolution of the directors have the power to amend or
modify any of the conditions contained in the Memorandum of Association and
to increase or reduce the authorized capital of the Company in any way
which may be permitted by law.
<PAGE>
We, the undersigned Subscribers, are desirous of being formed into a Company in
pursuance of this Memorandum of Association.
- --------------------------------------------------------------------------------
NAME, ADDRESS AND DESCRIPTION OF SUBSCRIBERS
- --------------------------------------------------------------------------------
/s/ E.P. Toothe /s/ Signature on File
- --------------- --------------------------------
Secretary
Portago (Nominees) Limited
Nassau, Bahamas
/s/ E.P. Toothe /s/ Signature of File
- --------------- --------------------------------
Secretary
East (Nominees) Limited
Nassau, Bahamas
DATED this 16th day of June, 1992.
WITNESS to the above signatures: /s/ A. McPhee
LEON TOURS LTD.
---------------
RESOLUTION OF THE DIRECTOR
IN TERMS OF ARTICLE 69 OF THE ARTICLES
OF ASSOCIATION OF THE COMPANY
Minutes of the Meeting of the Board of Directors of the above-named Company
duly convened and held by teleconference on the 10th day of March, 1999 at 3:00
o'clock in the afternoon.
Present:
Luther Jeffries
On motion the Chair was taken by Mr. Luther Jeffries and the Minutes of the
Meeting were kept by Mr. P.W.F. Toothe.
Upon the motion duly proposed, seconded and carried, IT WAS RESOLVED:
That the Memorandum of Association of the Company be and is hereby
amended by deleting clause 7 thereof and substituting therefor the
following clause numbered as indicated, to effect a change in the par
value and classes of shares.
7. "Resolved that the capital of the company shall by US$5,000.00 and
that the directors be and are hereby authorized to issue 50 Million
shares of no par value upon such terms and conditions as the directors
shall from time to time think fit PROVIDED that the said 50 Million
shares shall rank pari passu in all respects as to dividends or other
distribution of the profits of the company. The directors are duly
empowered to issue shares as registered shares or to the bearer as
they may at their discretion determine by resolution."
There being no further business to come before the meeting, on motion the
meeting concluded.
CHAIRMAN
/s/ Luther Jeffries
SECRETARY
/s/ William Toothe
COMMONWEALTH OF THE BAHAMAS
Registrar General's Department
I certify the foregoing to be
in true copy of the original document.
/s/ Signature on File
--------------------------------------
Registrar General
March 23, 1999
Subj: Re: Leon Tours Limited (The Company)
Date: 99-01-21 14:49:50 EST
From: [email protected] (EP Toothe and Associates)
To: [email protected] (Diane D. Dalmy)
Dear Sirs,
We refer to your letter dated the 11th January, 1999 with respect to the
above-captioned company. We have reviewed the status of The Company at the
Company's Registry in the City of Nassau on the Island of New Providence, one of
the islands of the Commonwealth of the Bahamas and we are of the opinion that
The Company is validly incorporated and subsisting in good standing in accord
with the International Business Company Act of the Commonwealth of the Bahamas.
We have perused the Articles of Association of The Company, the International
Business Company Act and such other statutory and administrative laws of the
Commonwealth of the Bahamas which we have though desirable and we are of the
opinion limited to the laws of the Commonwealth of the Bahamas) that:
A. The International Business Companies Act provides for approval by a majority
of shareholders or classes of shareholders entitled to vote at a meeting called
for that purpose after due notice, accompanied by a plan of merger consolidation
or reverse merger, has been given.
B. Shareholders approval is not required for the purchase of assets by a company
and sales or dispositions of assets are covered by section 74 of the
International Business Companies Act the effect of which we describe in
paragraph (a).
Note: It is not usual to refer to "Shares" as "Stock." Stock is generally used
to refer to Capital held in irregular amounts.
C. It is strictly accurate to say that there are certain combinations which may
not require shareholder approval and section 81 provides that a shareholder must
request the redemption of his shares upon dissenting from a merger in accord
with the Act. Upon dissenting a member pursuant to Sub-section (7) looses his
status as a member we would omit your first paragraph on page 9 and replace it
with the second paragraph. We would insert our paragraph (a) and conclude it
with the last sentence of your paragraph one.
We refer to page 15 of the Registration Statement. No treaty exists between the
United States and the Commonwealth of the Bahamas for the reciprocal enforcement
of Judgements arising out of Civil Proceedings. A foreign Judgement that is
contrary to Public Policy or that is founded on a cause of action not recognized
in the Commonwealth of the Bahamas will not be enforced, the general principal
being that only Judgements that rest upon principles of universal acceptance
will be enforced. Enforcement of a judgement against the company etc. as in
paragraph 2 on page 13.
Note: OMIT your second paragraph and replace it with the paragraph proposed by
us set out below.
<PAGE>
Note: A shareholder may sue derivatively on behalf of the company. A shareholder
may sue in his own right eg. for breach of contract. A shareholder will not be
permitted to sue in derivative proceedings otherwise than on behalf of the
company.
We refer to page 17 of the Registration Statement. In our opinion, with the
exception of the last sentence of the paragraph headed "legal consequences of
incorporating in the Bahamas" the statements are accurate.
We believe that it is wrong to over emphasize the fact that all Judgements based
on securities laws in the United States will not be enforced in the Bahamas. It
is true that Bahamian Courts will not enforce an award of treble damages or
grant the very large sums allowed by Courts in the United States. It is,
however, equally true that insider trading, frauds, fraudulent trading, breach
of Directors fiduciary duties etc. which are the subject of Judgements based on
United States Securities will most probably be enforced by the Supreme Court of
the Bahamas.
We do not believe the last sentence materially assists and we would omit it.
We refer to page 19 of the Registration Statement, we prefer the words "Common
Shares" to "Common Stock."
In our opinion item 6 is accurate. In our opinion item 7 ought to be amended to
read "Under current laws of the Bahamas, dividends, interest or royalties paid
by the company to individuals are not subject to tax."
Persons who are residents of the Bahamas may not be resident for Exchange
Control purposes. In fact shareholders in a company incorporated pursuant to the
International Business Company Act are exempt from Exchange Control and are not
(for 20 years from the date of Incorporation) subject to any tax on income,
gift, estate or corporate tax etc.
We have noticed that the address of the company is incorrect. It ought to be
Suite 104A, Saffrey Square, Bank Lane, Nassau, Bahamas.
Other than our comments set out above there is only one matter ought to be
mentioned. We are unsure how much information you have on the International
Business Company's Act of the Bahamas. Our legislation is similar in most
material respects to legislation in countries like the Cayman Islands, B.V.I
etc. A number of Bahamian incorporated International Business Companies have
been taken Public in the United States and listed on NASDAQ.
In the event we can be of further assistance, please let us know.
Yours faithfully,
Patrick Toothe
Karsh & Company P.C.
Certified Public Accountants/Litigation Consultants
One Tabor Center * 1200 17th Street, Suite 880
Denver, Colorado 80202-5808
(303) 825-1000 FAX (303) 825-8800
INDEPENDENT AUDITORS' CONSENT
-----------------------------
We consent to the incorporation by reference in the Registration Statement
pursuant to Section 12 (g) of the Securities Exchange Act of 1934 of Leon Tours
Ltd., Inc. of our report dated March 28, 1999, on our audits of the financial
statements and the financial statement schedule of Leon Tours Ltd. as of
December 31, 1998 and 1997, and for the years ended December 31, 1998, 1997 and
1996, which report is incorporated by reference in this Registration Statement
Form 20-F.
/s/ KARSH & COMPANY, P.C.
- -------------------------
KARSH & COMPANY, P.C.
Denver, Colorado
April 23, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-01-1998
<CASH> 5,000
<SECURITIES> 0<F1>
<RECEIVABLES> 0<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 0<F1>
<CURRENT-ASSETS> 5,000
<PP&E> 0<F1>
<DEPRECIATION> 0<F1>
<TOTAL-ASSETS> 5,000
<CURRENT-LIABILITIES> 5,000
<BONDS> 0<F1>
0<F1>
0<F1>
<COMMON> 5,000
<OTHER-SE> (5,000)
<TOTAL-LIABILITY-AND-EQUITY> 5,000
<SALES> 0<F1>
<TOTAL-REVENUES> 0<F1>
<CGS> 0<F1>
<TOTAL-COSTS> 0<F1>
<OTHER-EXPENSES> 5,000
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 0<F1>
<INCOME-PRETAX> (5,000)
<INCOME-TAX> 0<F1>
<INCOME-CONTINUING> (5,000)
<DISCONTINUED> 0<F1>
<EXTRAORDINARY> 0<F1>
<CHANGES> 0<F1>
<NET-INCOME> (5,000)
<EPS-BASIC> (1.00)
<EPS-DILUTED> (1.00)
<FN>
<F1>Amounts inapplicable or not disclosed as a separate line in the Balance
Sheet or Income Statement are reported as "0" herein.
</FN>
</TABLE>
