<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
Registration Statement on Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
COMPUTER AUTOMATION SYSTEMS, INC.
---------------------------------
(Name of Small Business Issuer as specified in its charter)
NEVADA 75-2749166
------ ----------
(State or other jurisdiction of (I.R.S. incorporation or
organization) Employer I.D. No.)
1825 East Plano Parkway, Suite #200
Plano, TX 75074
-----------------------------------
(Address of Principal Executive Office)
Issuer's Telephone Number, including Area Code: (972) 578-3128
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
$0.001 par value common stock
-----------------------------
Title of Class
DOCUMENTS INCORPORATED BY REFERENCE: None.
<PAGE>
PART I
Item 1. Description of Business.
- ---------------------------------
Business Development.
- ---------------------
Computer Automation Systems, Inc. ("CASI" or the "Company") was
organized under the laws of the State of Utah on July 16, 1981, under the name
"Intercontinental Strategic Minerals, Inc." The Company was formed to acquire
and invest in mining properties. The endeavors were unsuccessful, and the
Company ceased operations in 1983.
The Company was dormant until it changed its domicile to the State
of Nevada by merging with a newly formed Nevada subsidiary under the same
name, "Intercontinental Strategic Minerals, Inc.," in March, 1998. In
connection with this change of domicile, the Company effected a one for 20
reverse split of its outstanding securities, while retaining the authorized
capital and par value, with appropriate adjustments to the capital accounts of
the Company. This reverse split is reflected in all computations below,
unless indicated otherwise.
On July 24, 1998, the Articles of Incorporation were amended to
change the name of the Company to "Computer Automation Systems, Inc."
Effective July 28, 1998, the Company acquired all of the outstanding
common stock of Computer Automation Systems, Inc., a Texas corporation ("CASI
Texas"), pursuant to an Agreement and Plan of Reorganization (the "CASI Texas
Plan")in exchange for 6,400,000 shares of $0.001 par value "restricted
securities" (common stock)of the Company. Michael E. Cherry, the Company's
President and one of its directors, was the principal stockholder and the
President of CASI Texas, owning approximately 67% of the outstanding pre-CASI
Texas Plan securities, and received 4,256,000 shares of the "restricted
securities" issued under the CASI Texas Plan. Mr. Cherry currently owns
approximately 51% of the Company's outstanding voting securities. Sylvia
McCollum and Sandra Cobb were the other two stockholders of CASI Texas, and
each received 912,000 shares of the "restricted securities" issued under the
CASI Texas Plan; each presently owns approximately 11% of the Company's
outstanding voting securities. See Part I, Item 4.
CASI Texas was incorporated under the laws of the State of Texas on
February 13, 1998, for the purpose of designing and manufacturing custom rack
mount and industrial computer applications for the telecommunications and
other high technology industries. "Rack mount" literally means installation
or mounting in a rack or metal frame of standard dimension numerous pieces of
diverse equipment which are interconnected to make a systems perform any
variety of functions. The Company succeeded to these business operations,
which are described in detail under the heading "Business" of this Item, Part
I, Item 1.
Copies of the initial Articles of Incorporation of the Company filed
in the State of Utah; the Articles of Incorporation of the Nevada subsidiary
into which the Company merged to change its domicile to Nevada; the Articles
of Merger respecting the change of domicile; the Articles of Amendment to
change the name of the Company to "Computer Automated Systems, Inc."; the
Bylaws of the Company; and the CASI Texas Plan are attached hereto and
incorporated herein by reference. See Part III, Item 1.
This Registration Statement is being filed on a voluntary basis in
an attempt to maintain the Company's quotations on the OTC Bulletin Board of
the National Association of Securities Dealers, Inc. (the "NASD"). See the
heading "Effects of Existing or Probable Governmental Regulations," Part I,
Item 1.
Business.
- ---------
General
-------
The Company designs and manufactures Sun Microsystems, Inc.
("Sun")and Intel Corp. ("Intel") based custom rack mount and industrial
computer applications for the telecommunications and other industries. The
Company has in-house engineering to provide quick, customized and innovative
responses to customer specifications and requirements.
CASI is first provided with a set of requirements for a custom
application by a customer. Its engineering staff then completes a design
specification which includes hardware configuration and software control
programming. In some cases, prototypes are assembled for customer approval.
Once customer approval is received, the design specifications and bill of
materials, together with a purchase order, are delivered to Control
Manufacturing Co.("Control Manufacturing"), a custom assembly and
manufacturing facility co-located with the Company at its Plano, Texas,
facilities; these facilities are leased from Control Manufacturing.
Control Manufacturing sources the materials, assembles the hardware
and delivers the product to CASI for software installation and testing prior
to delivery to the customer. Control Manufacturing bills CASI for its
services when the hardware is complete; this arrangement reduces CASI's
capital needs as the cost of the materials is borne by Control Manufacturing
until the product is delivered and billed to the customer.
Control Manufacturing is an award winning custom assembler with over
20 years experience in telecommunications manufacturing and assembly. The
principals of Control Manufacturing, Sylvia McCollum and Sandra Cobb, are also
principal stockholders of the Company and were former stockholders of CASI
Texas; however, the Company believes the cost of services performed by Control
Manufacturing is equal to or less than could be obtained from other sources.
Reference to this arrangement can also be found in the audited financial
statements of the Company for the years ended December 31, 1998 and 1997,
specifically, in Notes 4 and 7. Information regarding the share holdings of
Messrs. McCollum and Cobb can be found in Part 1, Item 4.
The Company is one of ten Sun developers in the United States and
one of three Sun developers which specialize in the development of National
Equipment Building Standards("NEBS") certified, Sun microprocessor based,
fault tolerant systems for the telecommunications industry. NEBS is a set of
telecommunication industry standards to guide manufacturers of equipment
designed for use in telephone applications.
CASI offers a full line of rack mountable chassis and systems with
embedded Intel PC's. The Company also offers a line of ruggedized or notebook
computers manufactured for operation under harsh environmental conditions for
industrial, military and hazardous environment applications. The full line of
CASI's standard and customizable products may be viewed at www.casi1.com, and
include various sized rack mount chassis, disk expansion chassis, integral
monitor chassis, wall mount enclosures, industrial table top enclosures, large
and small industrial towers, rack mount keyboards, monitor/keyboard/mouse
switches, modular and expansion rack cabinets and rack mount monitors. See
the heading "Principal Products and Services" of this Item, Part I, Item 1.
The Company also owns the manufacturing, design and intellectual
property rights to the "Naked Mini Computer" product line. During the 1970's
and 1980's, between 30,000 and 50,000 Naked Mini Computers were supplied to
industrial process control original equipment manufacturers ("OEM") market.
These Naked Mini Computers were imbedded in all types of systems worldwide.
These computers are durable, reliable and fault tolerant or capable of
continuous function through extreme conditions like electrical spikes and
software "glitches." They have the ability to "reboot" without interruption
in functions, which is very important in the processing industry, but operate
with a proprietary software architecture. Today, CASI is one of the principal
sources for repair and upgrades of the installed base of Naked Mini Computer
systems which still number in the thousands worldwide. It also owns and
designs other intellectual property related to the Naked Mini Computers.
Michael E. Cherry was formerly employed by Computer Automation, Inc., a now
defunct entity which manufactured these computers.
Systems Integration
-------------------
The Company is also a systems integrator specializing in creating
custom process control systems for unique customer applications. CASI is
currently providing a database management system for Alcatel Network Systems,
Inc. ("Alcatel") which interfaces with a network switch controller to change
switch functions, alter switch activities and report on the functioning and
environment of the switch system. A "switch" is a telephone or Internet
(voice or data or both) device which is central to the delivery of a call or
data packet by routing them from point of origin to point of termination; this
is "switching." All telecommunications traffic is routed through one or more
switches. Alcatel makes switch controllers which it sells to AT&T. CASI makes
a database management system for Alcatel which is the interface with the
switch controller. The system which CASI created for Alcatel is embedded in
systems being installed by AT&T.
CASI is a true integrator in that it will design hardware, software,
components, enclosures and even colors to match a customer's specifications.
There is a trend by large manufacturers to out source system engineering and
assembly. CASI is actively targeting the outsourcing market. For companies
wishing to out source, CASI takes total responsibility for systems, providing
"one stop shop" convenience. The system engineering and software design are
created by CASI to customer specifications. Manufacturing and assembly of
diverse parts from multiple suppliers are delivered as one piece in a custom
enclosure, with CASI providing the technical specification documents and
warranty. CASI also takes responsibility to inform its clients on
obsolescence, appropriate upgrades and trends which might effect the client's
custom application, and thereby it can effectively be the engineering
department for the customer.
CASI intends to retain the services of one or more manufacturers
representatives on an interim basis to penetrate the outsourcing market while
it develops an in house direct sales force.
Any type of process control from automobile manufacturing to
agricultural processing is a potential user of a CASI designed system, but
because of the relative ease and minimal capital cost of addressing the
telecommunications market, this is market where CASI is concentrating its
efforts this year. Among companies to which CASI is promoting its services are
Telefon L.M.Ericsson, A.B., a Swedish telecommunications equipment
manufacturer ("Ericsson"); Intervoice, a telecommunications equipment
manufacturer; and Texas Instruments. Sun microprocessors are primarily
utilized in this line of business.
E-Commerce
- ----------
The Company is in the process of upgrading its web site,
www.casil.com, to provide for interactive e-commerce. A comprehensive, new,
Intel-based product line will be showcased and customers will be able to
configure systems and order online. The upgraded site will be online in
September-October, 1999. To support the web e-commerce activity, the Company
will be hiring an inside sales and customer service person to provide quick
responses to inquiries for quotations and questions about CASI's capabilities.
The base product line to be available on the web site is an inexpensive, rack
mount computer line designed to sell for approximately $1,500 or less and
address customer "bread and butter applications. While the Company has an
appropriate mark up on these items, the primary benefit that CASI will enjoy
from this product line is the establishment of relationships with new
customers. CASI intends to assign an engineer/account manager to new accounts
to develop opportunities for custom development and CASI's value added
services.
Starting in November of 1999, CASI will be advertising in the
Thomas Register. The Thomas Register is a comprehensive catalog resource of
electronic manufacturers and suppliers. CASI will have a banner advertisement
on each page of the industrial computer section directing interested parties
to its web site. CASI will also be listed in its source book.
Risk Factors.
- -------------
In any business venture, there are substantial risks specific to the
particular enterprise which cannot be ascertained in total until the business
is underway. However, at a minimum, the Company's present and proposed
business operations will be highly speculative and be subject to the same
types of risks inherent in any new or unproven venture, and will include those
types of risk factors outlined below.
Limited Assets; No Immediate Source of Revenue. The Company's
revenues may be insufficient to fund expansion of its business operations; the
Company can provide no assurance that its business prospects will produce
material revenues adequate for the Company to continue its present or proposed
operations; or that its current and intended business operations will be
profitable. See the heading "Plan of Operation"of the caption "Management's
Discussions and Analysis or Plan of Operation," Part I, Item 2.
Limited Funds Available for Operating Expenses. The Company
currently has limited operating capital or cash resources. Substantial
funding necessary to meet the Company's anticipated expansion may be needed,
though during the next 12 months the Company anticipates financing its current
operations from present revenues and cash flow. The Company's ability to
raise debt or equity funding from non-affiliated sources will be severely
limited by reason of its lack of historical operations, limited assets and the
limited public market for its common stock. See the heading "Plan of
Operation" of the caption "Management's Discussion and Analysis or Plan of
Operation," Part I, Item 2, respecting the Company's current and intended
operations; and the caption "Market Price of and Dividends on the Company's
Common Equity and Other Stockholder Matters," Part II, Item 1, respecting the
limited market for the Company's common stock.
No "Established Trading Market" for Common Stock. Although the
Company's common stock is quoted on the OTC Bulletin Board of the NASD
(nominal quotations commenced on or about December 24, 1997), there is
currently no "established trading market" for its common stock; and there
can be no assurance that any such market will ever develop or be maintained.
Any market price for shares of common stock of the Company is likely to be
very volatile, and numerous factors beyond the control of the Company may have
a significant adverse effect. In addition, the stock markets generally have
experienced, and continue to experience, extreme price and volume fluctuations
which have affected the market price of many small capital companies and which
have often been unrelated to the operating performance of these companies.
These broad market fluctuations, as well as general economic and political
conditions, may adversely affect the market price of the Company's common
stock in any market that may develop. See the caption "Market for Common
Equity and Related Stockholder Matters," Part II, Item 1. Sales of
"restricted securities" under Rule 144 may also have an adverse effect on any
market that may develop in the Company's common stock. See the caption
"Recent Sales of Unregistered Securities," Part II, Item 4, for information
respecting the number of shares which may be available for sale under Rule 144
by present stockholders of the Company.
Further, effective January 4, 1999, the NASD adopted rules and
regulations requiring that prior to any issuer having its securities quoted on
the OTC Bulletin Board of the NASD that such issuer must be a "reporting
issuer" which is required to file reports under Section 13 or 15(d) of the
Securities and Exchange Act of the 1934, as amended (the "1934 Act"). The
Company is not currently a "reporting issuer," and this Registration Statement
will bring the Company into compliance with these listing provision of the OTC
Bulletin Board and could prevent the NASD from delisting quotations of the
Company's common stock. Under the published "phase-in" schedule of the NASD,
the Company has until October, 1999, within which to become a "reporting
issuer" and to satisfy all comments of the Securities and Exchange Commission
respecting this Registration Statement. See Part II, Item 1. In the event
all comments of the Securities and Exchange Commission on this Registration
Statement have not been satisfied by October, 1999, the OTC Bulletin Board
quotations will cease, and the Company's common stock would thereafter be
quoted on in the "Pink Sheets" of the National Quotations Bureau, Inc.; this
result would further impede the development of an "established trading market"
in the common stock of the Company because the "Pink Sheets" market is not as
accepted by most brokers/dealers in securities as the OTC Bulletin Board, and
a broker/dealer must subscribe to this service to use it. If the quotations
for the Company's common stock on the OTC Bulletin Board are ceased by virtue
of these rules and regulations, the Company will, as soon as practicable
following the satisfaction of all necessary requirements, file for these
quotations; however, no assurance can be given that the NASD will allow the
quotations of the Company's common stock to be reinstated on the OTC Bulletin
Board.
Competition; Low Barriers to Entry. The Company expects
competition to persist, intensify and increase in the future. Present
competition includes almost every firm which designs and manufactures custom
computer applications, and the industry is growing every day. Systems
integration and e-commerce will result in even greater competition.
The Company's future potential competitors can be divided into several groups:
computer hardware and service vendors and/or manufacturers such as IBM and
Hewlett Packard; advertising and media agencies such as Ogilvy & Mather, Young
& Rubicam and Foote, Cone & Belding; Internet integrators and web presence
providers such as Agency.com and iXL Holdings; large information consulting
service providers such as Anderson Consulting, Cambridge Technology Partners
and Electronic Data Systems Corporation; telecommunications companies such as
AT&T and MCI; Internet and online service providers such as America Online,
Netcom Online and UUNet Technologies; and software vendors such as Microsoft,
Netscape, Novell and Oracle. Almost all of the Company's current and
potential competitors have longer operating histories, larger installed
customer bases, longer relationships with clients and significantly greater
financial, technical, marketing and public relation resources than the Company
and could decide at any time to increase their resource commitments to the
Company's target market. As a strategic response to changes in the
competitive environment, the Company may from time to time make certain
pricing, service technology or marketing decisions or business or technology
acquisitions that could have a material adverse effect on the Company's
business, financial condition, results of operations and prospects.
Competition of the type described above could materially adversely affect the
Company's business, results of operations, financial condition and prospects.
In addition, the Company's ability to generate clients will depend
to a significant degree on the quality of its products and services and its
reputation among its clients and potential clients, compared with the quality
of its services provided by, and the reputations of, the Company's
competitors. To the extent the Company loses clients to its competitors
because of dissatisfaction with the Company's services or its reputation is
adversely affected for any other reason, the Company's business, result of
operations, financial condition and prospects could be materially adversely
affected.
There are relatively low barriers to entry into the Company's
business. Because firms such as the Company rely on the skill of their
personnel and the quality of their client service, they have no patented
technology that would preclude or inhibit competitors from entering their
markets. The Company is likely to face additional competition from new
entrants into the market in the future. There can be no assurance that
existing or future competitors will not develop or offer services that provide
significant performance, price, creative or other advantages over those
offered by the Company, which could have a material adverse effect on its
business, financial condition, results of operations and prospects.
Rapid Technology Change. The market for computer products and
services is characterized by rapid technological change, changes in user and
client requirements and preferences, frequent new product and service
introductions embodying new processes and technologies and evolving industry
standards and practices that could render the Company's intended service
practices and methodologies obsolete. The Company's success will depend, in
part, on its ability to improve its existing products and services, develop
new products and services and solutions that address the increasingly
sophisticated and varied needs of any current and prospective clients, and
respond to technological advances, emerging industry standards and practices
and competitive service offerings. Failure to do so could result in the loss
of customers or the inability to attract and retain customers, either of which
developments could have a material adverse effect on the Company's business,
financial condition, results of operations and prospects. There can be no
assurance that the Company will be successful in responding quickly,
cost-effectively and sufficiently to these developments. If the Company is
unable, for technical, financial or other reasons, to adapt in a timely manner
in response to change in market conditions or client requirements, its
business, financial condition, result of operations and prospects would be
materially adversely affected.
Potential Liability to Clients. Many of the Company's intended
operations involve the development, implementation and maintenance of
applications that are critical to the operations of their clients' businesses.
Our failure or inability to meet a client's expectations in the performance of
our products or services could injure the Company's business reputation or
result in a claim for substantial damages, regardless of its responsibility
for such failure. In addition, the Company possesses technologies and content
that may include confidential or proprietary client information. Although the
Company will implement policies to prevent such client information from being
disclosed to unauthorized parties or used inappropriately, any such
unauthorized disclosure or use could result in a claim for substantial
damages. The Company will attempt to limit contractually its damages arising
from negligent acts, errors, mistakes or omissions in rendering professional
services; however, there can be no assurance that any contractual protections
will be enforceable in all instances or would otherwise protect the Company
from liability for damages. The successful assertion of one or more large
claims against the Company that are uninsured, exceed available insurance
coverage, if any, or result in changes to any insurance policies the Company
may obtain, including premium increases or the imposition of a large
deductible or co-insurance requirements, could adversely affect the Company's
business, results of operations and financial condition.
Future Capital Needs; Uncertainty of Additional Financing. The
Company currently does have the available cash resources and credit
facilities sufficient to meet its presently anticipated working capital and
capital expenditure requirements for this year. However, the Company may need
to raise additional funds in order to take advantage of unanticipated
opportunities. The Company's future liquidity and capital requirements will
depend upon numerous factors, including the success of its new product and
service offerings and competing technological and market developments. The
Company will be required to raise additional funds through public or private
financing, strategic relationships or other arrangements, particularly as its
acquisition strategy matures. There can be no assurance that such additional
funding, if needed, will be available on terms acceptable to the Company, or
at all. Furthermore, any additional equity financing may be dilutive to
stockholders, and debt financing, if available, may involve restrictive
covenants, which may limit the Company's operating flexibility with respect to
certain business matters. Strategic arrangements, if necessary to raise
additional funds, may require the Company to relinquish its rights to certain
of its products or selected business opportunities. If additional funds are
raised through the issuance of equity securities, the percentage ownership of
the stockholders of the Company will be reduced, stockholders may experience
additional dilution in net book value per share and such equity securities may
have rights, preferences or privileges senior to those of the holder of the
Company's common stock. If adequate funds are not available on acceptable
terms, the Company may be unable to develop or enhance its services and
products, take advantage of future opportunities or respond to competitive
pressures, any of which could have a material adverse effect on its business,
financial condition, results of operations and prospects.
Government Regulation and Legal Uncertainties. The Company is not
currently subject to direct governmental regulation, other than the securities
laws and the regulations thereunder applicable to all publicly owned
companies, and laws and regulations applicable to businesses generally, and
there are currently few laws or regulations directly applicable to access to
or commerce on the Internet. However, due to the increasing popularity and
use of the Internet, it is likely that a number of laws and regulations may be
adopted at the local, state, national and international levels with respect to
the Internet covering issues such as user privacy, freedom of expression,
pricing of products and services, taxation, advertising, intellectual property
rights, information security or the convergence of traditional communication
services with Internet communications. For example, the Telecommunications
Act of 1996 (the "Telecommunications Act") imposes criminal penalties on
anyone who distributes obscene or indecent communications over the Internet.
Although the anti-indecency provisions of the Telecommunications Act have been
declared unconstitutional by the federal courts, the increased attention
focused upon these liability issues as a result of the Telecommunications Act
could adversely affect the growth of the Internet and therefore demand for the
Company's services. In addition, because of the growth in the electronic
commerce market, Congress has held hearings on whether to regulate providers
of services and transactions in the electronic commerce market, which
regulations could negatively affect client demand for Internet solutions that
facilitate electronic commerce. Moreover, the adoption of any such laws or
regulations may decrease growth of the Internet, which could in turn decrease
the demand for the Company's products or services or increase the cost of
doing business or in some other manner have a material adverse effect on the
Company's business, financial conditions, results of operations or prospects.
Further, the applicability to the Internet of existing laws governing issues
such as property ownership, copyrights and other intellectual property issues,
taxation, libel and personal property is uncertain. The vast majority of such
laws were adopted prior to the advent of the Internet and related technologies
and, as a result, do not contemplate or address the unique issues of the
Internet and related technologies. Changes to such laws intended to address
these issues, including some recently proposed changes, could create
uncertainty in the marketplace which could reduce demand for the Company's
products or services or increase the cost of doing business as a result of
litigation expenses or increased service delivery costs, or could in some
other manner have a material adverse effect on the Company's business,
financial condition, results of operations and prospects.
Year 2000
- ---------
All of the Company's computer systems and applications are Y2K
compliant, and the Company only utilizes components in the design and
manufacturing of its customs systems which are Y2K compliant. Nearly all
primary computer products and components utilized by the Company are purchased
from Sun or Intel.
The Company can give no assurance that third parties with whom it
intends to do business will ensure Year 2000 compliance in a timely manner or
that, if they do not, their computer systems will not have an adverse effect
on the Company. However, the Company does not believe that Year 2000
compliance issues of such third parties will result in a material adverse
effect on its financial condition or results of operations.
Status of any Publicly Announced New Product or Service.
- --------------------------------------------------------
New Products
------------
"U" or "Unit," is an industry standard measurement of the vertical
space in a rack, equaling 1 3/4 inches. A rack mountable PC 1 3/4 inches high
is said to be "1U." Space in racks is at a premium, and smaller is more
desirable than larger.
CASI is designing a "1UPC" chassis which will provide an inexpensive
gateway for Internet service providers ("ISP"). CASI's research has
determined that it can deliver more features in a smaller space (1U) than any
currently available product being delivered for this purpose. CASI
anticipates delivery of this product by the fall of 1999. Currently, AT&T and
Ericsson are requesting to be Beta test sites for this product.
Web Sales
---------
The upgrade of CASI's web site, www.casi1.com, will be completed in
September-October, 1999. The first stage will consist of a complete listing
of Sun and Intel based product offerings for commercial and telecommunications
applications. Stage two will follow with the implementation of interactive e-
commerce features which will automate sales inquiries, system configurations,
quotations and order placement.
Principal Products and Services.
- --------------------------------
The Company designs and manufactures Sun and Intel based custom rack
mount and industrial computer applications for the telecommunications and
other industries. The Company has in-house engineering to provide quick,
customized and innovative responses to customer specifications and
requirements.
The Company is also a systems integrator specializing in creating
custom process control systems for unique customer applications. CASI is a
true integrator in that it will design hardware, software, components,
enclosures and even colors to match a customer's specifications. There is a
trend by large manufacturers to out source system engineering and assembly.
CASI is actively targeting the outsourcing market. For companies wishing to
out source, CASI takes total responsibility for systems, providing "one stop
shop" convenience. The system engineering and software design are created by
CASI to customer specifications. Manufacturing and assembly of diverse parts
from multiple suppliers are delivered as one piece in a custom enclosure, with
CASI providing the technical specification documents and warranty. CASI also
takes responsibility to inform its clients on obsolescence, appropriate
upgrades and trends which might effect the client's custom application, and
thereby it can effectively be the engineering department for the customer.
The Company is in the process of upgrading its web site,
www.casil.com, to provide for interactive e-commerce. A comprehensive, new,
Intel-based product line will be showcased and customers will be able to
configure systems and order online.
The full line of CASI's standard and customizable products may be
viewed at www.casi1.com, and include various sized rack mount chassis (1U to
6U), disk expansion chassis, integral monitor chassis, wall mount enclosures,
industrial table top enclosures, large and small industrial towers, rack mount
keyboards, monitor/keyboard/mouse switches, modular and expansion rack
cabinets and rack mount monitors.
Distribution Methods of the Products or Services.
- -------------------------------------------------
Presently, the Company contacts potential customers directly,
attends trade shows and utilizes customer referrals.
The Company is in the process of upgrading its web site,
www.casil.com to provide for interactive e-commerce. A comprehensive, new,
Intel-based product line will be showcased and customers will be able to
configure systems and order online. To support the web e-commerce activity,
the Company will be hiring an inside sales and customer service person to
provide quick responses to inquiries for quotations and questions about CASI's
capabilities. CASI also intends to assign an engineer/account manager to new
accounts to develop opportunities for custom development and CASI's value
added services to its web site.
Starting in November of 1999, CASI will be advertising in the Thomas
Register. The Thomas Register is a comprehensive catalog resource of
electronic manufacturers and suppliers. CASI will have a banner advertisement
on each page of the industrial computer section directing interested parties
to its web site. CASI will also be listed in its source book.
With respect to its Systems Integration, CASI intends to retain the
services of one or more manufacturers representatives on an interim basis to
penetrate the outsourcing market while it develops an in house direct sales
force.
Competitive Business Conditions.
- --------------------------------
There are numerous manufacturers and vendors of industrial rack mount
computers, but the Company manufactures custom applications for customers
specific needs. See the heading "Risk Factors" of the heading "Business,"
Part I, Item 1, specifically, the risk factor "Competition; Low Barriers to
Entry."
Sources and Availability of Raw Materials and Names of Principal
Suppliers.
- ----------
There is ample supply of all products, components and related
materials necessary for the conduct of the Company's present and proposed
business operations, and no shortfalls of supplies are anticipated which would
have any adverse effect on the present or intended business operations of the
Company. Most products and components are purchased directly from Sun or
Intel or their distributors.
Dependence on One or a Few Major Customers.
- -------------------------------------------
The Company's largest single account is Alcatel, a subsidiary of a
diversified French telecommunications manufacturer, Alcatel, S.A., whose
American Depository Receipts are traded on the New York Stock Exchange under
the symbol "ALA." CASI is currently providing a database management system
for Alcatel which interfaces with a network switch controller to change switch
functions, alter switch activities and report on the functioning and
environment of the switch system. A "switch" is a telephone or Internet
(voice or data or both) device which is central to the delivery of a call or
data packet by routing them from point of origin to point of termination; this
is "switching." All telecommunications traffic is routed through one or more
switches. Alcatel makes switch controllers which it sells to AT&T. CASI makes
a database management system for Alcatel which is the interface with the
switch controller. The system which CASI created for Alcatel is embedded in
systems being installed by AT&T. Alcatel has represented approximately 90% of
CASI's 1999 revenues, and it anticipates a projects increase of approximately
25% from current levels over the next 12 months; the Company generated
approximately $619,000 or 67% of its revenues from business done with Alcatel
during the year ended December 31, 1998.
The loss of revenues associated with the services provided to
Alcatel would have a substantial adverse effect on the Company and its present
and future prospects.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements or Labor Contracts.
- ------------------------------
The Company owns the intellectual property rights to the "Naked Mini
Computer," which are of an undetermined value and duration, because the
Company does not know how many of these computers are still in existence, nor
how long they will continue in existence. During the 1970's and 1980's,
between 30,000 and 50,000 Naked Mini Computers were supplied to industrial
process control OEM market. These Naked Mini Computers were imbedded in all
types of systems worldwide.
Need for any Governmental Approval of Principal Products or
Services.
- ---------
None presently; however, see the heading "Risk Factors" of the
heading "Business," Part I, Item 1, specifically, the risk factor "Government
Regulation and Legal Uncertainties."
Effect of Existing or Probable Governmental Regulations on
Business.
- ---------
The integrated disclosure system for small business issuers
adopted by the Securities and Exchange Commission in Release No. 34-30968 and
effective as of August 13, 1992, substantially modified the information and
financial requirements of a "Small Business Issuer," defined to be an issuer
that has revenues of less than $25 million; is a U.S. or Canadian issuer; is
not an investment company; and if a majority-owned subsidiary, the parent is
also a small business issuer; provided, however, an entity is not a small
business issuer if it has a public float (the aggregate market value of the
issuer's outstanding securities held by non-affiliates) of $25 million or
more.
The Securities and Exchange Commission, state securities commissions
and the North American Securities Administrators Association, Inc. ("NASAA")
have expressed an interest in adopting policies that will streamline the
registration process and make it easier for a small business issuer to have
access to the public capital markets.
Also, see the heading "Risk Factors" of the heading "Business," Part
I, Item 1, specifically, the risk factor "Government Regulation and Legal
Uncertainties."
Research and Development.
- -------------------------
The Company expended $214,945 during the year ended December 31,
1998, on research and development. The majority of these funds were expended
for the system currently being sold to Alcatel, or software development to
drive this system.
Cost and Effects of Compliance with Environmental Laws.
- -------------------------------------------------------
None; not applicable.
Number of Employees.
- --------------------
The Company has four employees.
Item 2. Management's Discussion and Analysis or Plan of Operation.
- --------------------------------------------------------------------
Plan of Operation.
- ------------------
The Company intends to concentrate on satisfying the demands of its
major customer, Alcatel, during the next 12 months. Once the details of
systems assembly, delivery and installation are at acceptable levels, the
Company will expand both its product line and customer base for similar and
ancillary applications.
The Company anticipates increased revenues for the next 12 months
from four areas: growth in sales to existing customers; new product
introductions; sales over the Internet; and from its upgraded web site and
advertising in the Thomas Register.
CASI's principal customer, Alcatel, represented approximately 90% of
CASI's 1999 revenues, and it anticipates a projects increase of approximately
25% from current levels over the next 12 months. Research , development and
design costs of the product currently being delivered to Alcatel have been
fully amortized, and CASI expects a better gross profit margin on this account
going forward than it has experienced in the past. The Company received
revenues of approximately $619,000 during the year ended December 31, 1998,
from its business with Alcatel, which represented approximately 67% of its
revenues.
CASI is designing a "1UPC" chassis which will provide an inexpensive
gateway for Internet service providers ("ISP"). CASI's research has
determined that it can deliver more features in a smaller space (1U) than any
currently available product being delivered for this purpose. CASI
anticipates delivery of this product by the fall of 1999. Currently, AT&T and
Ericsson are requesting to be Beta test sites for this product.
The upgrade of CASI's web site, www.casi1.com, will be completed in
September-October, 1999. The first stage will consist of a complete listing
of Sun and Intel based product offerings for commercial and telecommunications
applications. Stage two will follow with the implementation of interactive e-
commerce features which will automate sales inquiries, system configurations,
quotations and order placement.
Starting in November of 1999, CASI will be advertising in the Thomas
Register. The Thomas Register is a comprehensive catalog resource of
electronic manufacturers and suppliers. CASI will have a banner advertisement
on each page of the industrial computer section directing interested parties
to its web site. CASI will also be listed in its source book
CASI expects revenues to increase from a variety of market actions
with current customers, from new product introductions to e-commerce to
advertising. The new product research and development costs have been paid
from current cash flow and charged as an expense against current income;
accordingly, CASI anticipates generating solid profits from its ongoing
activities.
The Company has no major purchases planned for the next 12 months,
but it does expect to increase its personnel levels in engineering, sales and
sales support and administration. Cash provided from operations is believed
to be sufficient to fund these increases.
The Company has outstanding warrants with an exercise price of
$750,000 which may provide the Company with additional working capital, but
these warrants are presently "out of the market." See the heading "Warrants"
of the caption "Description of Securities," Part 1, Item 8.
Further, manufacturing costs of components are borne by the
Company's subcontractors until products are delivered to CASI for testing and
delivery to customers; as a result, any increased sales volume does not result
in a corresponding increase in working capital.
Results of Operations.
- ---------------------
The Company had revenues of $922,708 during the year ended December
31, 1998; there were no operations in fiscal 1997, and CASI Texas, which was
organized on February 13, 1998, was acquired by the Company on July 28, 1998.
67% of $619,000 of these revenues were attributable to operations with
Alcatel. The Company experienced a gross profit of $271,078 on these
revenues, before deduction of administrative expenses of %268,656. The
Company experienced a net loss of ($146,389) or $0.03 per share. During the
six months ended June 30, 1999, revenues were $1,168,103, resulting in a gross
profit of $513,613, before deduction of administrative expenses of $320,787.
This resulted in a net income of $129,193 or $0.02 per share.
Liquidity.
- ---------
As of June 30, 1999, the Company had cash assets of $93,866,
compared with $16,079 at December 31, 1998. During the first six months of
fiscal 1999, the Company raised $215,000 from the sale of Units consisting of
common stock and warrants pursuant to Regulation D, Rule 504 of the Securities
and Exchange Commission. See the caption "Recent Sales of Unregistered
Securities," Part II, Item 4.
Item 3. Description of Property.
- ---------------------------------
The Company leases 2,000 square feet of office and light industrial
space at 1825 East Plano Parkway, Suite #200, Plano, TX 75074, on a month to
month basis, at a monthly rent of $1,505; total rent for these facilities in
1998 was $6,020, which was accrued at December 31, 1998, and paid in May,
1999. These facilities are leased from Control Manufacturing, the owners of
which are stockholders of the Company; however, management believes the lease
terms for these facilities are fair and reasonable, and are at rates
comparable to similar facilities in the areas where the Company conducts its
business operations. Messrs. McCollum and Cobb are the "affiliated"
stockholders who own Control Manufacturing; see Part I, Item 4, for
information concerning their stock ownership in the Company.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
Security Ownership of Certain Beneficial Owners.
- ------------------------------------------------
The following table sets forth the share holdings of those persons
who own more than five percent of the Company's common stock as of the date of
this Registration Statement, assuming 8,333,334 shares are outstanding:
<TABLE>
<CAPTION>
Number of Shares Percentage
Name Beneficially Owned of Class
- ---- ------------------ --------
<S> <C> <C>
Michael E. Cherry 4,256,000 51.0%
Sandra Cobb 912,000 10.9%
Sylvia McCollum 912,000 10.9%
TOTAL 6,080,000 72.8%
</TABLE>
Security Ownership of Management.
- ---------------------------------
The following table sets forth the share holdings of the Company's
directors and executive officers as of the date of this Registration
Statement, assuming 8,333,334 shares are outstanding:
Number of Shares Percentage of
Name Beneficially Owned of Class
- ---- ------------------ -------------
[S] [C] [C]
Michael E. Cherry 4,256,000 51.0%
James R. Twedt 106,666 1.2%
James T. Williams 106,667 1.2%
TOTALS 4,469,333 53.4%
All Directors and Officers
as a group (3)
- --------------
4,469,333 53.4%
Changes in Control.
- -------------------
There are no present arrangements or pledges of the Company's
securities which may result in a change in control of the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
- -------- -------------------------------------------------------------
Identification of Directors and Executive Officers.
- ---------------------------------------------------
The following table sets forth the names of all current directors
and executive officers of the Company. These persons will serve until the
next annual meeting of the stockholders or until their successors are elected
or appointed and qualified, or their prior resignation or termination.
<TABLE>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
<S> <C> <C> <C>
Michael E. Cherry President 7/28/98 *
Director 7/28/98 *
James R. Twedt Secretary 7/28/98 *
Treasurer 7/28/98 *
Director 7/28/98 *
James T. Williams Director 7/28/98 *
</TABLE>
* These persons presently serve in the capacities indicated.
Business Experience.
- --------------------
Michael E. Cherry, President and Director. Mr. Cherry is 43 years
of age. During the previous five years, Mr. Cherry was Vice President of
Cytec Corporation where he was responsible for introducing Cytec Corporation
into the industrial computer marketplace. He was also responsible for sales
and marketing, administration and operations. He was the President and a
Director of CASI Texas from February, 1998, prior to its acquisition by the
Company pursuant to the CASI Texas Plan.
James R. Twedt, Secretary/Treasurer and Director. Mr. Twedt is 63
years of age. Mr. Twedt is self-employed as a Certified Public Accountant
since 1972, and has practiced individually in this capacity since 1989.
James T. Williams, Director. Mr. Williams is 81 years of age. Mr.
Williams has been a merger and acquisition consultant since 1970. He is
President of Merger Exchange Network, Inc., and has held this capacity since
1971.
Significant Employees.
- ----------------------
The Company has no significant employees who are not executive
officers.
Family Relationships.
- ---------------------
There are no family relationships among the directors or
executive officers of the Company.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
During the past five years, no present or former director,
executive officer or person nominated to become a director or an executive
officer of the Company:
(1) was a general partner or executive officer of any business
against which any bankruptcy petition was filed, either at the time of the
bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or
(4) was found by a court of competent jurisdiction (in a civil
action), the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended or vacated.
Item 6. Executive Compensation.
- --------------------------------
The following table sets forth the aggregate compensation paid
by the Company for services rendered during the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual rictedlying Pay- Comp-
Position Ended ($) ($) Compen-Stock Optionsouts ensat'n
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael E.
Cherry 12/31/98 $44,000 0 0 0 0 0 0
President, 6/30/99 $22,000 0 0 0 0 0 0
Director
James R.
Twedt, 12/31/98 0 0 0 0 0 0 $6,941
Sec/Tres 6/30/99 0 0 0 0 0 0 0
Director
James T.
Williams 12/31/98 0 0 0 0 0 0 0
director 6/30/99 0 0 0 0 0 0 0
</TABLE>
No cash compensation, deferred compensation or long-term incentive
plan awards were issued or granted to the Company's management during the
calendar years ended December 31, 1998, or the period ended June 30, 1999.
Further, no member of the Company's management has been granted any
option or stock appreciation rights; accordingly, no tables relating to such
items have been included within this Item.
Compensation of Directors.
- --------------------------
There are no standard arrangements pursuant to which the Company's
directors are compensated for any services provided as director. No
additional amounts are payable to the Company's directors for committee
participation or special assignments.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements.
- -------------
There are no employment contracts, compensatory plans or
arrangements, including payments to be received from the Company, with respect
to any director or executive officer of the Company which would in any way
result in payments to any such person because of his or her resignation,
retirement or other termination of employment with the Company, any change in
control of the Company, or a change in the person's responsibilities following
a change in control of the Company.
Item 7. Certain Relationships and Related Transactions.
- --------------------------------------------------------
There have been no material transactions, series of similar
transactions, currently proposed transactions, or series of similar
transactions, to which the Company and any director, executive officer, five
percent stockholder or associate of any of these persons, except the CASI
Texas Plan (see Part I, Item 1, and Part II, Item 4) and the lease of the
Company's principal executive offices (see Part I, Item 3).
Item 8. Description of Securities.
- -----------------------------------
Common Stock
- ------------
The Company has 15,000,000 shares of $0.001 par value common voting
stock authorized; 8,333,334 shares of common stock are presently outstanding.
The holders of common stock are entitled to one vote per share on each matter
submitted to a vote at a meeting of stockholders. The shares of common stock
do not carry cumulative voting rights in the election of directors.
Stockholders of the Company have no pre-emptive rights to acquire
additional shares of common stock or other securities. The common stock is
not subject to redemption rights and carries no subscription or conversion
rights. In the event of liquidation of the Company, the shares of common
stock are entitled to share equally in corporate assets after satisfaction of
all liabilities. All shares of the common stock now outstanding are fully
paid and non-assessable.
There are no outstanding options or calls to purchase authorized
securities of the Company; however, there are 333,334 outstanding warrants
entitling the holders, for a period of twelve months, to purchase 2.25
additional shares of the Company's common stock at a purchase price of $1.00
per share.
There is no provision in the Company's Articles of Incorporation,
as amended, or By-Laws, that would delay, defer, or prevent a change in
control of the Company.
Preferred Stock
- ---------------
The Company is authorized to issue 5,000,000 shares of preferred
stock, having a par value of $0.001 per share. The Board of Directors, by
resolution and without the vote of the stockholders, may amend the Articles of
Incorporation of the Company to prescribe classes, series and the number of
each class or series of such preferred stock and the voting powers,
designations, preferences, limitations, restrictions and the relative rights
of each such class or series. No shares of preferred stock are outstanding;
and the Board of Directors has not authorized the amendment of the Company's
Articles of Incorporation to designate any class or series of this preferred
stock.
Warrants
--------
Each warrant grants the holder the right to purchase 2.25 additional
shares of common stock at a price of $1.00; to issue the shares underlying
these warrants under Rule 504, the warrants would have to be exercised prior
to the effective date of this Registration Statement, and the Company would
have to comply with the post April 6, 1999, amendments to Rule 504 of
Regulation D; otherwise, the underlying securities would have to be issued as
"restricted securities" under an available exemption from the registration
provisions of the Securities Act of 1933, as amended, or pursuant to a
registration statement filed with the Securities and Exchange Commission.
Warrants are not entitled to voting, liquidation or other rights attributable
to common stock holders.
PART II
Item 1. Market Price of and Dividends on the Company's Common Equity and
Other Stockholder Matters.
- --------------------------
Market Information.
- -------------------
There has never been any "established trading market" for shares of
common stock of the Company. Quotation of its common stock on the OTC
Bulletin Board of the NASD commenced December 24, 1997, as $0.01 to $0.05; no
assurance can be given that any current market for the Company's common stock
will develop or be maintained. For any market that develops for the Company's
common stock, the sale of "restricted securities" (common stock) pursuant to
Rule 144 of the Securities and Exchange Commission by members of management or
any other person to whom any "restricted securities" may be issued in the
future may have a substantial adverse impact on any public market for the
Company's common stock. A minimum holding period of one year is required for
resales under Rule 144, along with compliance with other pertinent provisions
of the Rule, including publicly available information concerning the Company
(this requirement will be satisfied by the filing and effectiveness of this
Registration Statement, the passage of 90 days and the continued timely filing
by the Company of all reports required to be filed by it with the Securities
and Exchange Commission; limitations on the volume of "restricted securities"
which can be sold in any 90 day period; the requirement of unsolicited
broker's transactions; and the filing of a Notice of Sale of Form 144. For
information regarding "restricted securities" issued by the Company during the
past three years and the commencement date of the holding period of these
securities, see the caption "Recent Sales of Unregistered Securities," Part
II, Item 4.
The following quotations were provided by the National Quotation
Bureau, LLC, and do not represent actual transactions; these quotations do not
reflect dealer markups, markdowns or commissions.
<TABLE>
<CAPTION>
STOCK QUOTATIONS*
CLOSING BID
Quarter ended: High Low
- -------------- ---- ---
<S> <C> <C>
December 31, 1997 $0.01 $0.01
January 2, 1998
through
March 18, 1998 $0.01 $0.01
March 19, 1998*
through
March 31, 1998 $0.1875 $0.1875
April 1, 1998
through
June 30, 1998 $0.1875 $0.125
July 1, 1998
through
September 30, 1998 $0.125 $0.03125
October 1, 1998
through
December 31, 1998 $0.125 $0.125
January 4, 1999
through
March 31, 1999 $1.50 $0.0625
April 1, 1999
through
June 30, 1999 $2.00 $0.125
* Takes into account a one for 20 reverse split of the
Company's common stock effected at the time of the Company's change of
domicile from Utah to Nevada. See Part I, Item 1.
</TABLE>
Also, see the heading "Risk Factors" of the heading "Business," Part
1, Item 1, specifically the risk factor "No 'Established Trading Market' for
Common Stock."
Holders.
- --------
The number of record holders of the Company's securities as of the
date of this Registration Statement is approximately 127.
Dividends.
- ----------
The Company has not declared any cash dividends with respect to
its common stock, and does not intend to declare dividends in the foreseeable
future. The future dividend policy of the Company cannot be ascertained with
any certainty, and if and until the Company completes any acquisition,
reorganization or merger, no such policy will be formulated. There are no
material restrictions limiting, or that are likely to limit, the Company's
ability to pay dividends on its securities.
Item 2. Legal Proceedings.
- ---------------------------
The Company is not a party to any pending legal proceeding and, to
the knowledge of management, no federal, state or local governmental agency is
presently contemplating any proceeding against the Company. No director,
executive officer or affiliate of the Company or owner of record or
beneficially of more than five percent of the Company's common stock is a
party adverse to the Company or has a material interest adverse to the Company
in any proceeding.
Item 3. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ---------------------
There have been no changes in the Company's principal independent
accountants during the past two fiscal years ended December 31, 1998, or to
the date of this Registration Statement.
Item 4. Recent Sales of Unregistered Securities.
- -------------------------------------------------
CASI Texas Plan 6,400,000 common 7/28/98
Services 187,498 common 9/14/98
Rule 504 333,334 common(1) 4/06/99
333,334 Warrants(2) 4/06/99
(1) These securities are freely tradeable securities under Rule
502 of Regulation D a securities issued under Rule 504 need not be taken for
investment and "public solicitation" can be utilized in the offer and sale of
these securities.
(2) Each warrant grants the holder the right to purchase 2.25
additional shares of common stock at a price of $1.00; to issue the shares
underlying these warrants under Rule 504, the warrants would have to be
exercised prior to the effective date of this Registration Statement, and the
Company would have to comply with the post April 6, 1999, amendments to Rule
504 of Regulation D; otherwise, the underlying securities would have to be
issued as "restricted securities" under an available exemption from the
registration provisions of the Securities Act of 1933, as amended, or pursuant
to a registration statement filed with the Securities and Exchange Commission.
Item 5. Indemnification of Directors and Officers.
- ---------------------------------------------------
Section 78.751(1) of the Nevada Revised Statutes ("NRS")
authorizes a Nevada corporation to indemnify any director, officer, employee,
or corporate agent "who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, except an action by or
in the right of the corporation" due to his or her corporate role. Section
78.751(1) extends this protection "against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with the action, suit or proceeding if he
or she acted in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful."
Section 78.751(2) of the NRS also authorizes indemnification of
the reasonable defense or settlement expenses of a corporate director,
officer, employee or agent who is sued, or is threatened with a suit, by or in
the right of the corporation. The party must have been acting in good faith
and with the reasonable belief that his or her actions were not opposed to the
corporation's best interests. Unless the court rules that the party is
reasonably entitled to indemnification, the party seeking indemnification must
not have been found liable to the corporation.
To the extent that a corporate director, officer, employee, or
agent is successful on the merits or otherwise in defending any action or
proceeding referred to in Section 78.751(1) or 78.751(2), Section 78.751(3) of
the NRS requires that he be indemnified "against expenses, including
attorneys' fees, actually and reasonably incurred by him or her in connection
with the defense."
Section 78.751 (4) of the NRS limits indemnification under
Sections 78.751 (1) and 78.751(2) to situations in which either (1) the
stockholders, (2)the majority of a disinterested quorum of directors, or (3)
independent legal counsel determine that indemnification is proper under the
circumstances.
Pursuant to Section 78.751(5) of the NRS, the corporation may
advance an officer's or director's expenses incurred in defending any action
or proceeding upon receipt of an undertaking. Section 78.751(6)(a) provides
that the rights to indemnification and advancement of expenses shall not be
deemed exclusive of any other rights under any bylaw, agreement, stockholder
vote or vote of disinterested directors. Section 78.751(6)(b) extends the
rights to indemnification and advancement of expenses to former directors,
officers, employees and agents, as well as their heirs, executors, and
administrators.
Regardless of whether a director, officer, employee or agent has
the right to indemnity, Section 78.752 allows the corporation to purchase and
maintain insurance on his behalf against liability resulting from his or her
corporate role.
PART F/S
Index to Financial Statements
Report of Certified Public Accountants
Financial Statements
- --------------------
Independent Auditor's Report
Balance Sheet-December 31, 1998
Statement of Operations for the Years Ended December 31, 1998
and 1997
Statement of Stockholder's Equity for the Years Ended December
31, 1998 and 1997
Statement of Cash Flows for the Years Ended December 31, 1998
and 1997
Notes to Financial Statements
Unaudited Balance Sheet-June 30, 1999
Unaudited Condensed Statement of Operations-June 30, 1999
Unaudited Condensed Statement of Cash Flows-June 30, 1999
Notes to Condensed Financial Statements
<PAGE>
COMPUTER AUTOMATION SYSTEMS, INC.
Formerly
Intercontinental Strategic Minerals, Inc.
Financial Statements
and
Independent Auditors' Report
December 31, 1998
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Computer Automation Systems, Inc.
We have audited the accompanying balance sheet of Computer Automation Systems,
Inc., formerly Intercontinental Strategic Minerals, Inc., as of December 31,
1998, and the related statements of operations, stockholders' equity, and cash
flows for the years ended December 31, 1998 and 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Computer Automation Systems,
Inc. as of December 31, 1998, and the results of operations and cash flows for
the years ended December 31, 1998 and 1997, in conformity with generally
accepted accounting principles.
Mantyla McReynolds
Salt Lake City, Utah
July 10, 1999
<PAGE>
<TABLE>
COMPUTER AUTOMATION SYSTEMS, INC.
Formerly
Intercontinental Strategic Minerals, Inc.
Balance Sheet
December 31, 1998
<CAPTION>
ASSETS
<S> <C>
Current Assets:
Cash $16,079
Accounts receivable (net of allowance of
$11,997) 212,047
Other receivable 4,193
Deferred tax asset - Note 3 66,134
Inventory 8,848
Total Current Assets 307,301
Property and Equipment - Note 6 56,323
Less: Accumulated depreciation (9,219)
Net Property and Equipment 47,104
Other Assets:
Other assets - Note 10 2,944
Total Assets $357,349
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
Liabilities:
Current Liabilities:
Accounts payable $323,661
Accrued liabilities 29,635
Shareholder loan - Note 4 41,130
Total Current Liabilities 394,426
Total Liabilities 394,426
Stockholders' Equity/(Deficit): - Note 5
Preferred stock -- 5,000,000 shares
authorized, $.001 par value;
no shares issued or outstanding
Common stock -- 15,000,000 shares
authorized, $.001 par value; 8,000,000
shares issued and outstanding 8,000
Additional paid-in capital 101,312
Accumulated deficit (146,389)
Total Stockholders' Equity/(Deficit) (37,077)
Total Liabilities and
Stockholders' Equity/(Deficit) $ 357,349
</TABLE>
See accompanying notes to financial statements.
<TABLE>
COMPUTER AUTOMATION SYSTEMS, INC.
Formerly
Intercontinental Strategic Minerals, Inc.
Statements of Operations
For the Years Ended December 31, 1998 and 1997
<CAPTION>
1998 1997
<S> <C> <C>
Revenues $ 922,708 $ -0-
Cost of Sales 651,630 -0-
Gross Profit 271,078 -0-
General and Administrative Expenses 268,656 3,121
Research and Development Expense 214,945 -0-
Net Loss from Operations (212,523) (3,121)
Other Income/Expense -0- -0-
Net Loss Before Income Taxes (212,523) (3,121)
Current Year Income Taxes
Provision/(Benefit) (66,134) 100
Net Loss $(146,389) $(3,221)
Loss Per Share $ (.03) $ (.01)
Weighted Average Shares Outstanding 4,800,000 662,500
</TABLE>
See accompanying notes to financial statements.
<TABLE>
COMPUTER AUTOMATION SYSTEMS, INC.
Formerly
Intercontinental Strategic Minerals, Inc.
Statements of Stockholders' Equity/(Deficit)
For the Years Ended December 31, 1998 and 1997
<CAPTION>
Deficit
Accumulated
Additional During Net
Common Common Paid in Development Stockholders'
Shares Stock Capital Stage Equity/(Deficit)
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1996 13,250,000 6,625 86,525 (96,617) (3,467)
Loss for the Year Ended
December 31, 1997 (3,221) (3,221)
Balance,
December 31, 1997 13,250,000 $ 6,625 $86,525 $ (99,838) $ (6,688)
Issued Stock for debt
and service, Jan. 14,
1998 15,000,000 7,500 7,500 15,000
Reverse split stock
with change to Nevada
corporation, change par (26,837,500) (12,713) 12,713 -0-
Issued Stock for
services as part of
recapitalization 187,500 188 (188) -0-
Issued Stock for Assets,
recapitalization, 6/22/98 6,400,000 6,400 (5,238) 99,838 101,000
Net loss for the year
ended December 31, 1998 (146,389) (146,389)
Balance, December 31,
1998 8,000,000 $ 8,000 $101,312 $(146,389) $ (37,077)
</TABLE>
See accompanying notes to financial statements.
<TABLE>
COMPUTER AUTOMATION SYSTEMS, INC.
Formerly
Intercontinental Strategic Minerals, Inc.
Statements of Cash Flows
For the Years Ended December 31, 1998 and 1997
<CAPTION>
1998 1997
<S> <C> <C>
Cash Flows Provided by/(Used for) Operating
Activities
Net Loss $ (146,389) $ (3,221)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 9,808 -0-
Issued stock for services 8,312
Increase in accounts and other receivables (216,241)
Increase in inventory (8,848)
Increase in deferred taxes (66,134)
Increase in accounts payable 323,660 -0-
Increase in current liabilities 22,949 3,221
Net Cash Provided by/(Used for) Operating
Activities (72,883) -0-
Cash Flows Used for Investing Activities
Organization costs (3,533)
Purchases of property and equipment (56,323)
Net Cash Used for Investing
Activities (59,856) -0-
Cash Flows Provided by Financing Activities
Issuance of stock prior to combination 101,000
Principal loan from shareholder 41,130
Issued stock for debt 6,688
Net Cash Provided by Financing
Activities 148,818
Net Increase in Cash 16,079 -0-
Beginning Cash Balance -0- -0-
Ending Cash Balance $ 16,079 $ -0-
Supplemental Disclosure Information:
Cash paid during the year for interest $ -0- $ -0-
Cash paid during the year for income taxes 100 -0-
</TABLE>
See accompanying notes to financial statements.
COMPUTER AUTOMATION SYSTEMS, INC.
Formerly
Intercontinental Strategic Minerals, Inc.
Notes to Financial Statements
December 31, 1998
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization
Intercontinental Strategic Minerals, Inc. ("ISM" or the "Company")
was incorporated in the State of Utah on July 16, 1981. The Company was
formed for the primary purpose of acquiring and investing in mining
properties. The Company was not successful in its endeavors and ceased
operations in or before 1983 when all assets and liabilities were
liquidated. The Company was then dormant until it merged with and became
Intercontinental Strategic Minerals, Inc., a Nevada corporation formed for the
purpose of changing the domicile to Nevada, in March, 1998. On July 28, 1998
the Company acquired all of the outstanding common stock of Computer
Automation Systems, Inc. ("CASI"), pursuant to an Agreement and Plan of
Reorganization. Computer Automation Systems, Inc. is a Texas corporation
incorporated on February 13, 1998 for the purpose of designing and
manufacturing custom rack mount and industrial computer applications for the
telecom and other high tech industries. Subsequent to the Agreement and Plan
of Reorganization, the name of Intercontinental Strategic Minerals, Inc. was
changed to Computer Automation Systems, Inc.
Pursuant to The Agreement and Plan of Reorganization, ISM issued
6,400,000 shares to CASI's shareholders. At the time of said issuance, ISM
had 1,600,000 shares outstanding. Immediately after this issuance,
CASI's shareholders owned 6,400,000 of the total outstanding of 8,000,000
shares, or 80%.
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles. The following
summarizes the more significant of such policies:
(b) Income Taxes
Effective January 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109 [the Statement],
Accounting for Income Taxes. The Statement requires an asset and
liability approach for financial accounting and reporting for income
taxes, and the recognition of deferred tax assets and liabilities
for the temporary differences between the financial reporting bases
and tax bases of the Company's assets and liabilities at enacted tax
rates expected to be in effect when such amounts are realized or
settled.
(c) Net Loss Per Common Share
Net loss per common share is based on the weighted-average number of
shares outstanding.
(d) Statement of Cash Flows
For purposes of the statements of cash flows, the Company considers
cash and cash equivalents as deposits in commercial banks. The
Company had $16,079 cash at December 31, 1998.
(e) Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(f) Property and Equipment
Property and equipment are stated at cost. Depreciation is provided
using the straight-line basis over the useful lives of the related
assets. Expenditures for maintenance and repairs are charged to
expense as incurred.
(g) Inventory
Inventory consists of component parts and supplies valued at the
lower of cost or market (net realizable value) using the first-in,
first-out (FIFO) method.
NOTE 2 RECAPITALIZATION
On July 28, 1998, CASI entered into an agreement and plan of
reorganization with ISM, wherein CASI exchanged all of its common stock
outstanding for 6,400,000 shares of ISM. Immediately subsequent to the
exchange, CASI's shareholders held approximately 80% of the outstanding
shares of ISM. The Company continues its operations in the ISM structure but
has changed the name of Intercontinental Strategic Minerals, Inc. to Computer
Automation Systems, Inc. The transaction was a "reverse" acquisition on a
purchase basis.
NOTE 3 INCOME TAXES
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 109 [the Statement], Accounting for Income Taxes, as
of January 1, 1993. The tax effects of temporary differences that give rise
to significant portions of the deferred tax asset at December 31, 1998 are
summarized below.
Deferred tax assets Balance Tax Rate
Allowance for bad debt $11,997 $3,719 31%
Loss carryforward
(expires 2014) 200,525 62,415 31%
Valuation allowance -0-
Deferred tax asset $66,134
NOTE 4 RELATED-PARTY TRANSACTIONS
The Company has a Cooperation Agreement with an entity controlled by
former directors and shareholders of the Company. The agreement provides for
sharing complimentary resources in the engineering, manufacturing, and support
of industrial computers. Pricing is negotiated with each order as submitted.
The related party balance due as of December 31, 1998 was $6,020 for rent.
A shareholder advanced funds to the Company for the purchase of
testing equipment and for operating expenses throughout the year. The balance
due to this shareholder as of December 31, 1998 is $41,048, is non-interest
bearing, and is payable on demand.
NOTE 5 COMMON STOCK
In January of 1998 the Company issued 15,000,000 shares, $.0005 par,
of common stock to a shareholder as settlement of debt and for consulting
services provided.
In March of 1998 the Company merged with a newly formed
Intercontinental Strategic Minerals, Inc., a Nevada corporation. The plan of
merger effectively changed the domicile of ISM to Nevada. As part of the
merger, each share of issued, outstanding or subscribed common stock of ISM
Utah was converted into one-twentieth (1/20th) of one share of common stock of
ISM Nevada. The Articles of Incorporation of the surviving entity give
authority to the Corporation to issue 15,000,000 shares of common voting stock
having a par value of one mill ($.001) per share. Preferred shares authorized
are 5,000,000 having a par value of one mill ($.001) per share.
As part of the recapitalization, the Company issued 187,500
unregistered shares to four consultants and 6,400,000 common shares to
officers and directors for cash and services (See Note 2).
NOTE 6 PROPERTY AND EQUIPMENT
The major classes of assets as of the balance sheet date are as
follows:
Accumulated
Asset Class Cost Depreciation Method/Life
Testing & Manufacturing Equip $ 51,372 (8,446) SL/5 or 7
Office Equipment 4,951 (773) SL/5 or 7
Total $56,323 ($9,219)
Current year depreciation expense was $9,219.
NOTE 7 OFFICE LEASE\SUBSEQUENT EVENT
In 1998 the Company entered into an operating lease with a related
party for its facilities. The lease agreement provides for rents of
$1,505 to be paid on a month-to-month basis.. Total rent expense for
1998 on this facility was $6,020 and was accrued as of December 31, 1998, but
was not paid until May 1999. The Company is in the process of negotiating an
operating lease for additional storage and office space. Anticipated monthly
rental is $700 for a twelve month contract.
NOTE 8 SUBSEQUENT EVENT
The Board of Directors, effective April 6, 1999, resolved to offer
333,334 Units pursuant to Rule 504 of the Securities and Exchange
Commission at a price of $0.75 per Unit. Each Unit being comprised of one
share of the Company's common stock, $0.001 par value per share,
and one common share purchase warrant entitling the holder thereof, for
a period of twelve months, to purchase 2.25 additional shares of common
stock at a purchase price of $1.00 per share. Through June, 1999, the
Company has collected approximately $215,000 from this offering. None
of the warrants have been exercised.
NOTE 9 ACCOUNTS RECEIVABLE
The Company has sold customer accounts receivable of approximately
$580,000 to a financing institution with recourse. Activity has been
limited to one customer and one buyer within the Dallas/Fort Worth
metropolitan area. The buyer retains portions of the amounts for which
contracts were sold as reserves, which are released to the Company as
the customer makes payment. In the event of default, the Company has
granted a first priority interest in all accounts receivable and
inventory proceeds. The balance outstanding under recourse contracts
was approximately $38,714, at December 31, 1998.
NOTE 10 OTHER ASSETS
Other assets consist of organization costs incurred. Total
expenditures were $3,533 and are being amortized over 60 months on a
straight-line basis. Amortization for the 1998 was $589.
NOTE 11 SIGNIFICANT CONCENTRATION OF BUSINESS VOLUME RISK
Of the total revenue for 1998 of $922,708, approximately $619,000 or
67% was from a single customer. Accordingly, in the event that this
customer decreases or ceases its activities with the Company, the
Company's business volume would be significantly affected.
<PAGE>
Computer Automation Systems, Inc.
Formerly
Intercontinental Strategic Minerals, Inc.
Condensed Financial Statements
June 30, 1999
<PAGE>
<TABLE>
Computer Automation Systems, Inc.
Formerly
Intercontinental Strategic Minerals, Inc.
Condensed Balance Sheet
(Unaudited)
<CAPTION>
ASSETS
June 30, 1999
<S> <C>
Current Assets
Cash $ 93,866
Accounts receivable, net 112,259
Other receivables 82,804
Deferred tax asset 2,501
Inventory 109,077
Total Current Assets 400,507
Equipment, net 89,812
Other Assets 3,090
TOTAL ASSETS $493,409
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $155,574
Accrued liabilities 31,253
Total Current Liabilities 186,827
Stockholders' Equity
Common stock 8,286
Additional paid in capital 315,492
Retained earnings (17,196)
Total Stockholders' Equity 306,582
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 493,409
</TABLE>
See accompanying notes and Independent Accountants' report
<TABLE>
Computer Automation Systems, Inc.
Formerly
Intercontinental Strategic Minerals, Inc.
Condensed Statements of Operations
(Unaudited)
<CAPTION>
For the Six
Months Ended
June 30, 1999
<S> <C>
Revenues, net $1,168,103
Cost of sales 654,490
Gross Profit 513,613
Sales, general and administrative expense 320,787
Net Income From Operations 192,826
Provision for Income Taxes: 63,633
Net Income $ 129,193
Net Income per Share $ 0.02
Weighted Average Number of Shares Outstanding 8,143,477
</TABLE>
See accompanying notes and Independent Accountants' report
<TABLE>
Computer Automation Systems, Inc.
Formerly
Intercontinental Strategic Minerals, Inc.
Condensed Statements of Cash Flows
(Unaudited)
<CAPTION>
For the Six
Months Ended
June 30, 1999
<S> <C>
Cash Flows Used for Operating Activities:
Net Income $ 129,193
Adjustments to reconcile net loss to
net cash used for operating activities:
Depreciation and amortization 15,195
Increase in current assets other than cash (15,919)
Increase (decrease) in current liabilities (207,598)
Net Cash Flows Used for Operating Activities (79,129)
Cash Flows Used for Investing Activities:
Purchase of equipment (57,550)
Net Cash Flows Used for Investing Activities (57,550)
Cash Flows Provided by (Used for) Financing Activities:
Proceeds from sale of securities 214,466
Net Cash Flows Provided by Financing
Activities 214,466
Net Increase in Cash 77,787
Beginning Cash Balance 16,079
Ending Cash Balance $93,866
</TABLE>
See accompanying notes and Independent Accountants' report
Computer Automation Systems, Inc.
Formerly
Intercontinental Strategic Minerals, Inc.
Notes to Condensed Financial Statements
June 30, 1999
PRELIMINARY NOTE
The accompanying condensed consolidated financial statements have been
prepared without audit. Certain information and disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It is
suggested that these condensed financial statements be read in
conjunction with the financial statements and notes thereto for the year
ended December 31, 1998 included in the Company's report on Form 10-SB.
ORGANIZATION AND MERGER
Intercontinental Strategic Minerals, Inc. ("ISM" or the "Company") was
incorporated in the State of Utah on July 16, 1981. The Company was
formed for the primary purpose of acquiring and investing in mining
properties. The Company was not successful in its endeavors and ceased
operations in or before 1983 when all assets and liabilities were
liquidated. The Company was then dormant until it merged with and
became Intercontinental Strategic Minerals, Inc., a Nevada corporation
formed for the purpose of changing the domicile to Nevada, in February,
1998. On July 28, 1998 the Company acquired all of the outstanding
common stock of Computer Automation Systems, Inc. ("CASI"), pursuant to
an Agreement and Plan of Reorganization. Computer Automation Systems,
Inc. is a Texas corporation incorporated on February 13, 1998 for the
purpose of designing and manufacturing custom rack mount and industrial
computer applications for the telecom and other high tech industries.
Subsequent to the Agreement and Plan of Reorganization, the name of
Intercontinental Strategic Minerals, Inc. was changed to Computer
Automation Systems, Inc.
Pursuant to The Agreement and Plan of Reorganization, ISM issued
6,400,000 shares to CASI's shareholders. At the time of said issuance,
ISM had 1,600,000 shares outstanding. Immediately after this issuance,
CASI's shareholders owned 6,400,000 of the total outstanding of
8,000,000 shares, or 80%.
PART III
Item 1. Index to Exhibits.
- ---------------------------
The following exhibits are filed as a part of this Registration
Statement:
<TABLE>
<CAPTION>
Item 2. Description of Exhibits.
- --------------------------------
Exhibit
Number Description*
- ------ ------------
<S> <C>
3.1 Initial Articles of Incorporation filed in the State of Utah.
3.2 Initial Articles of Incorporation filed in the State of Nevada.
3.3 Articles of Merger to change the Company's domicile filed in the
State of Utah and Nevada and effecting a one for 20 reverse split
of the outstanding securities of the Company.
3.4 Certificate of Amendment changing the name of the Company to
"Computer Automation Systems, Inc." in the State of Nevada .
3.5 By-Laws
10.1 Agreement and Plan of Reorganization with CASI Texas.
Exhibit A- Stockholders of CASI Texas
Exhibit B- The Company's financial statements for the years
ended December 31, 1997 and 1996
Exhibit C- The Company's Exceptions.
Exhibit D- CASI Texas's balance sheet as of June 29, 1998
Exhibit E- CASI Texas's Exceptions.
Exhibit F- Investment Letter.
Exhibit G- The Company's Compliance Certificate.
Exhibit H- CASI Texas's Compliance Certificate.
21 Subsidiaries
27 Financial Data Schedule.
</TABLE>
* Summaries of all exhibits contained within this
Registration Statement are modified in their
entirety by reference to these Exhibits.
SIGNATURES
In accordance with Section 12 of the Securities
Exchange Act of 1934, the Registrant has caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto
duly authorized.
COMPUTER AUTOMATION SYSTEMS, INC.
Date: 9/20/99 By/s/Michael E. Cherry
----------- --------------------------
Michael E. Cherry, Director
and President
Date: 9/21/99 By/s/James R. Twedt
------------ ------------------------
James R. Twedt, Director
Secretary/Treasurer
Date: 9/20/99 By/w/James T. Williams
------------ ------------------------
James T. Williams, Director
ARTICLES OF INCORPORATION
OF
INTERCONTINENTAL STRATEGIC MINERALS, INC..
WE, THE UNDERSIGNED natural persons of the age of twenty-one, years or
more, acting as incorporators of a corporation under the Utah General
Corporation Law adopt the following Articles of Incorporation for such
corporation.
ARTICLE I
The name of this corporation is Intercontinental Strategic Minerals,
Inc.
ARTICLE II
The duration of this corporation is perpetual.
ARTICLE III
The purpose or purposes for which this corporation is organized are:
(a) To locate, patent, purchase, lease, exchange, trade for, o r
otherwise acquire, and to hold, own, use, operate, work, extend, improve, and
develop, and to sell, exchange, assign, transfer, mortgage, grant security
interests in, lease, or otherwise dispose of, in whole or in part, and
wherever situated, mines, mining rights, and claims, metalliferous lands,
quarries, quarry rights, water, water rights, ditches, reserviors, oil and gas
properties and interests therein, and any rights, rights of way, easements,
privileges, permits, or franchises suitable or convenient for any of the
purposes of the business, and to deal in the same in every way; to quarry,
mine, drill, excavate, produce, purchase, lease, prospect for, claim, and
otherwise acquire, and to process, refine, and develop, and to sell, exchange,
trade, deal in and with, and otherwise dispose of asbestos, sulphur, silica,
felspar, uranium, vanadium, rare earth, mica, copper, coal, lead, silver,
gold, gas, oil, oil shale, strategic metals, and other minerals ores, and
properties of every kind and nature, and of earth, rock, sand, shale, and
other substances containing mineral and ore deposits; and to manufacture,
produce, purchase, lease, or otherwise acquire, and to use , operate, improve,
repair, replace, and develop, and to sell, trade, exchange, lease, and
otherwise dispose of any and all materials, machinery, facilities, appliances,
products, equipment, or supplies proper or adapted to be used in or in
connection with or incidental to the prospecting, development, production,
processing, preparation, shipment, and delivery of any of the foregoing
minerals and ores and any by-products therefrom; and to do any and all things
incidental thereto, or necessary, expedient, or proper to be done in
connection with the matters and things set out herein.
(b) To do everything necessary, proper, advisable, or convenient
for the accomplishment of any of the purposes, or the attainment of any of the
objects or the futherance of any of the powers herein set forth, either alone
or in association with others,- and incidental or pertaining to, or growing
out of, or connected with, its business or powers, provided the same be not
inconsistent with the laws of the State of Utah.
(c) To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Utah.
(d) The provisions in the clauses contained in this Article are to be
construed both as purposes and powers and shall, except when otherwise
expressed in this Article, be in no wise limited or restricted by reference to
or infrerence from the terms of any other clause of this, or any other,
Article of this certificate, but each of the purposes and powers; and the
specification herein contained of particular powers is not intended to be, and
shall not be held to be, in limitation of the general powers herein contained
or in limitation of the powers granted to corporations under the laws of the
State of Utah, but is intended to be, and shall be held to be, in furtherance
hereof.
ARTICLE IV
The aggregate number of shares which this corporation shall have
authority to issue is Two Hundred Million (200,000,000) shares of par value
stock of par value of Five One Hundreths of One Cent ($.0005) per share. All
stock of the corporation shall be of the same class and shall have the same
rights and preferences. Fully paid stock of this corporation shall not be
liable to any further call or assessment.
ARTICLE V
The private property of the shareholders shall not be subject to
the payment of corporate debts to any extent whatever.
ARTICLE VI
This corporation will not commence business until consideration
of the value of at least One Thousand Dollars ($1,000) has been received for
the issuance of shares.
ARTICLE VII
The Directors shall adopt By-Laws which are not inconsistent with
law of these Articles for the regulation and management of the affairs of the
corporation. These By-Laws may be amended from time to time or repealed by
majority vote of the then existing Board of Directors. Directors need not be
stockholders of the Company.
ARTICLE VIII
The address of this corporation's initial registered office and
the name of its original registered agent at such address is:
Richard 1. Ashton
FOX, EDWARDS & GARDINER
American Plaza II, Suite 400
57 West 200 South
Salt Lake City, Utah 84101
ARTICLE IX
The Board of Directors shall consist of not less than three (3) nor
more than fifteen (15) members as the Board of Directors may itself from time
to time determine. The names ai addresses of persons who are to serve as
Directors until the first meeting of stockholders, or until their successors
be elected and qualify are:
NAME ADDRESS
Kenneth E. Ford 7742 Riverwood Drive
Sandy, Utah 84070
Gail L. Porritt 3973 South 9th East,.#48
Salt Lake City, Utah 84117
Fred A. Shelton 7742 Riverwood Drive
Sandy, Utah 84070
ARTICLE X
The names and addresses of each Incorporator are:
NAME ADDRESS
Richard I. Ashton American Plaza II, Suite 400
57 West 200 South
Salt Lake City, Utah 84101
Geoffrey R. Heath American Plaza II, Suite 400
57 West 200 South
Salt Lake City, Utah 84101
James E. Gleason American Plaza II, Suite 400
57 West 200 South
Salt Lake City, Utah 84101
ARTICLE XI
No contract or other transaction between this corporation and any
other corporation shall be affected by the fact that a Director of Officer of
this corporation is interested in or is a Director or Officer of such other
corporation; and any Director, individually or jointly, may be a party to or
may be interested in any corporation or transaction of this corporation or in
which this corporation is interested in such contract, act or transaction or
any way connected with such person, firm, or corporation, and every person who
may become a Director of this corporation is hereby relieved from liability
that might otherwise exist from contracting the corporation in which he may be
in any way interested, provided said Director acts in good faith.
ARTICLE XII
The corporation shall indemnify any and all persons who may serve
or have served at any time as directors or officers, or who at the request of
the Board of Directors of the Corporation may serve or at any time have served
as directors or officers of another corporation in which the corporation is
affiliated, owns shares of stock or of which it was or may be a creditor, and
respective heirs, administrators, successors, and assigns, against any and all
expenses, including amounts paid upon judgment, counsel fees, and
amounts paid in settlement (before or after suit is commenced) and actually
and necessarily incurred by such persons in connection with the defense or
settlement of any claim, action, suit, or proceeding in which-they or any of
them, are made parties or a party or which may be asserted against them or any
of them, by reason of being or having been directors or officers or a director
or officer of the corporation, or of such other corporation, except in
relation to matters as to which any such directors or officer or former
director or officer or person shall be adjudged in any action, suit or
proceeding to be liable for his own negligence or misconduct in the
performance of this duty. Such indemnification shall be in addition to any
other rights to which those indemnified may be entited under any law, by-law,
agreement, vote of stockholders, or otherwise.
ARTICLE XIII
Shareholders shall not have preemptive rights to acquire additional shares of
the Company's stock.
ARTICLE XIV
There shall be no cumulative voting rights for any shares in this corporation.
ARTICLE XV
The corporation reserves the right to amend, alter, change or repeal any
provision to these Articles upon a majority vote of the shareholders.
IN WITNESS WHEREOF, we have executed these Articles of Incorporation in
duplicate on this 16th day of 1981.
/s/Richard I. Ashton
RICHARD I. ASHTON
/s/Geoffrey R. Heath
GEOFFREY R. HEATH
/s/James E. Gleason
JAMES E. GLEASON
STATE OF UTAH
ss.
COUNTY OF SALT LAKE
On this 16th day of July, 1981, personally appeared before me Richard Ashton,
Geoffrey R. Heath, and James E. Gleason known to me to be the persons whose
names are subscribed to the within and foregoing Articles of Incorporation,
and acknowledge to me that they executed the same.
/s/Cindy C Lewis
NOTARY PUBLIC
Residing in Salt Lake City, UT
My Commission Expires:
4/2/84
ARTICLES OF INCORPORATION
OF
INTERCONTINENTAL STRATEGIC MINERALS, INC.
The undersigned natural person, acting as incorporator of the corporation
under the Nevada Revised Statutes, adopts the following Articles of
Incorporation for such corporation.
ARTICLE I
Name. The name of the corporation is "Intercontinental Strategic
Minerals, Inc." (hereinafter, the "Corporation").
ARTICLE II
Period of Duration. The period of duration of the Corporation is
perpetual.
ARTICLE III
Purposes and Powers. The purpose for which the Corporation is organized
is to engage in any and all lawful business.
ARTICLE IV
Common Capitalization. The Corporation shall have the authority to issue
15,000,000 shares of common voting stock having a par value of one mill
($0.001) per share. All common voting stock of the Corporation shall be of
the same class and shall have the same rights and preferences. Fully paid
stock of the Corporation shall not be liable for further call or assessment.
The authorized shares shall be issued at the discretion of the Board of
Directors of the Corporation.
Preferred Capitalization. The Corporation shall also have authority to
issue 5,000,000 shares of preferred stock having a par value of one mill
($0.001) per share. The Board of Directors shall, by resolution and amendment
to these Articles of Incorporation and without further approval of the
stockholders of the Corporation, prescribe the classes, series and the number
of each class or series of such preferred stock and the voting powers,
designations, preferences, limitations, restrictions and relative rights of
each such class or series.
ARTICLE V
Initial Resident Agent. The initial resident agent of the Corporation
shall be CSC Services of Nevada, Inc., and the street address and mailing
address of the initial resident agent are: 502 East John Street, Carson City,
Nevada 89706.
ARTICLE VI
Directors. The Corporation shall be governed by a Board of Directors
consisting of no less than one director. The number of directors constituting
the initial Board of Directors is three and the names and street addresses of
the persons who shall serve as directors until their successors are elected
and qualified are:
William Hollingsworth
192 North 1st West
Preston, Idaho 83263
Douglas Eames
5525 South 900 East, Suite 110
Salt Lake City, Utah 84117
Thomas J. Howells
5525 South 900 East, Suite 110
Salt Lake City, Utah 84117
ARTICLE VII
Incorporator. The name and street address of the incorporator is:
Leonard W. Burningham, Esq.
Suite 205 Hermes Building
455 East 500 South Street
Salt Lake City, UT 84111
ARTICLE VIII
Control Share Acquisitions. The provisions of NRS 78.378 to 78.3793,
inclusive, are not applicable to the Corporation.
ARTICLE IX
Indemnification of Directors and Executive Officers. To the fullest
extent allowed by law, the directors and executive officers of the Corporation
shall be entitled to indemnification from the Corporation for acts and
omissions taking place in connection with their activities in such capacities.
/s/Leonard W. Burningham, Esq.
_______________________________
Leonard W. Burningham, Esq.
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE )
On the 19th day of February, 1998, personally appeared before me Leonard
W. Burningham, Esq., who duly acknowledged to me that he is the person who
signed the foregoing instrument as incorporator; that he has read the
foregoing instrument and knows the contents thereof; and that the contents
thereof are true of his personal knowledge.
/s/Sheryl Ross
________________________________
Notary Public
ARTICLES OF MERGER
OF
INTERCONTINENTAL STRATEGIC MINERALS, INC.
(a Utah corporation)
AND
INTERCONTINENTAL STRATEGIC MINERALS, INC.
(a Nevada corporation)
To the Secretary of
State of Nevada
and the Division of
Corporations of the
State of Utah
Pursuant to the provisions of Section 92A.190 of the Nevada Revised
Statutes, it is hereby certified that:
1. The names and addresses of the merging corporations are
Intercontinental Strategic Minerals, Inc., 5525 South 900 East, Suite 110,
Salt Lake City, Utah 84117, which is a business corporation organized under
the laws of the State of Utah ("ISM Utah"), and Intercontinental Strategic
Minerals, Inc., 5525 South 900 East, Suite 110, Salt Lake City, Utah 84117,
which is a business corporation organized under the laws of the State of
Nevada ("ISM Nevada").
2. The following is the Plan of Merger (the "Plan") for merging ISM
Utah with and into ISM Nevada as approved by the Board of Directors and
stockholders of each of said corporations, pursuant to which ISM Nevada will
be the surviving corporation:
Plan of Merger
1.1 Merger and Surviving Corporation. ISM Utah will merge
into ISM Nevada, with ISM Nevada being the "Surviving Corporation"; the
separate existence of ISM Utah shall cease, and the name of the Surviving
Corporation shall become "Intercontinental Strategic Minerals, Inc." Until
amended, modified or otherwise altered, the Articles of Incorporation of ISM
Nevada shall continue to be the Articles of Incorporation of the Surviving
Corporation; and the Bylaws of ISM Nevada shall continue to be the Bylaws of
the Surviving Corporation.
1.2 Share Conversion. Each share of issued, outstanding or
subscribed common stock of ISM Utah (the "ISM Utah Shares") shall, upon the
effective date of the Plan, be converted into one-twentieth (1/20th) of one
share of common stock of ISM Nevada; all fractional shares shall be rounded to
the nearest whole share.
1.3 Survivor's Succession to Corporate Rights. The Surviving
Corporation shall thereupon and thereafter possess all the rights, privileges,
powers and franchises of a public as well as of a private nature, and be
subject to all of the restrictions, disabilities and duties of ISM Utah; and
all and singular, the rights, privileges, powers and franchises of ISM Utah,
and all property, real, personal and mixed, and all debts due to ISM Utah on
whatever account, as well for stock subscriptions as all other things in
action or belonging to ISM Utah shall be vested in the Surviving Corporation;
and all property, rights, privileges, powers and franchises, and all and every
other interest shall be thereafter as effectually the property of the
Surviving Corporation as they were of ISM Utah, and the title to any real
estate vested by deed or otherwise in ISM Utah shall not revert or be in any
way impaired by reason of the Plan; but all rights of creditors and all liens
upon any property of ISM Utah shall be preserved unimpaired, and all debts,
liabilities and duties of ISM Utah shall thenceforth attach to the Surviving
Corporation and may be enforced against it to the same extent as if said
debts, liabilities and duties had been incurred or contracted by it.
1.4 Survivor's Succession to Corporate Acts, Plans, Contracts,
etc. All corporate acts, plans, policies, contracts, approvals and
authorizations of ISM Utah and its stockholders, its Board of Directors,
committees elected or appointed by the Board of Directors, officers and
agents, which were valid and effective immediately prior to the effective time
of the Plan, shall be taken for all purposes as the acts, plans, policies,
contracts, approvals and authorizations of the Surviving Corporation and shall
be as effective and binding thereon as the same were with respect to ISM Utah.
The employees of ISM Utah shall become the employees of the Surviving
Corporation and shall continue to be entitled to the same rights and benefits
which they enjoyed as employees of ISM Utah.
1.5 Survivor's Rights to Assets, Liabilities, Reserves, etc.
The assets, liabilities, reserves and accounts of ISM Utah shall be recorded
on the books of the Surviving Corporation at the amounts at which they,
respectively, shall then be carried on the books of ISM Utah, subject to such
adjustments or eliminations of intercompany items as may be appropriate in
giving effect to the Plan.
1.6 Directors and Executive Officers. The directors and
executive officers of ISM Nevada shall be the directors and executive officers
of the Surviving Corporation.
1.7 Principal Office. The principal executive office of the
Surviving Corporation shall be located at 5525 South 900 East, Suite 110, Salt
Lake City, Utah 84117.
1.8 Adoption. The Plan shall be adopted by the Board of
Directors of ISM Utah as the sole stockholder of ISM Nevada, and by the
stockholders of ISM Utah.
1.9 Dissenters' Rights and Notification. Stockholders of ISM
Utah shall be accorded all rights and privileges and be subject to all of the
obligations contained within the Utah Revised Business Corporation Act
regarding dissenter's rights, and the Surviving Corporation shall be obligated
to notify the stockholders of ISM Utah as provided therein;
1.10 Delivery of Certificates by the ISM Utah Stockholders.
The transfer of the ISM Utah Shares by the ISM Utah stockholders shall be
effected by the delivery to ISM Utah or its transfer agent of certificates
representing the ISM Utah Shares endorsed in blank or accompanied by stock
powers executed in blank, with all signatures witnessed or guaranteed to the
satisfaction of ISM Utah and ISM Nevada and with any necessary transfer taxes
and other revenue stamps affixed (which are usually not applicable) and
acquired at the expense of the ISM Utah stockholders, and on receipt thereof
to the satisfaction of the Surviving Corporation, a stock certificate
representing shares in ISM Nevada shall be issued and delivered to the ISM
Utah stockholder.
1.11 Further Assurances. At the Closing and from time to
time thereafter, the parties shall execute such additional instruments and
take such other action as may be reasonably required or necessary to carry out
the terms and provisions hereof.
1.12 Effective Date. The Effective Date of the Plan shall be
the date when the Articles of Merger are filed and accepted by the Secretary
of State of the State of Nevada and at such time as all applicable provisions
of the Nevada Revised Statutes have been met.
3. The Plan has been approved by respective Boards of Directors of ISM
Nevada and ISM Utah and the stockholders of ISM Utah, in accordance with the
provisions of Sections 16-10a-725 and 16-10a-1103 of the Utah Revised Business
Corporation Act. ISM Utah has one class of outstanding securities, that being
common voting stock, with 28,250,000 shares being outstanding. A total of
28,250,000 shares were entitled to vote on the Plan, with 15,000,000 shares
voted in favor; none voting against; and none abstaining.
ISM Utah being the sole stockholder of ISM Nevada, the approval of the
Plan by the Board of Directors of ISM Utah constitutes due adoption,
ratification and approval of the Plan in accordance with Section 92A.120 of
the Nevada Revised Statutes.
4. The applicable provisions of the Nevada Revised Statutes relating to
the merger of ISM Utah with and into ISM Nevada will have been complied with
upon compliance with any of the filing and recording requirements thereof.
5. The merger herein provided for shall become effective in the State
of Nevada on the date of filing hereof.
INTERCONTINENTAL STRATEGIC
MINERALS, INC., a Nevada corporation
Date: 3/9/99 By/S/William Hollingsworth
William Hollingsworth, President
Date: 3/9/99 By/s/Thomas J. Howells
Thomas J. Howells, Secretary/Treasurer
STATE OF UTAH )
) ss
COUNTY OF Salt Lake )
Personally appeared before me this 9th day of March, 1998,
William Hollingsworth, who duly acknowledged to me that he is the President of
Intercontinental Strategic Minerals, Inc., a Nevada corporation, and that he
is authorized to and did execute the foregoing Articles of Merger.
/s/Sheryl A. Ross
NOTARY PUBLIC
STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
Personally appeared before me this 9th day of March, 1998,
Thomas J. Howells, who duly acknowledged to me that he is the
Secretary/Treasurer of Intercontinental Strategic Minerals, Inc., a Nevada
corporation, and that he is authorized to and did execute the foregoing
Articles of Merger.
/s/Sheryl A. Ross
NOTARY PUBLIC
INTERCONTINENTAL STRATEGIC
MINERALS, INC., a Utah corporation
Date: 3/9/99 By/S/William Hollingsworth
William Hollingsworth, President
Date: 3/9/99 By/s/Thomas J. Howells
Thomas J. Howells, Secretary/Treasurer
STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
Personally appeared before me this 9th day of March, 1998, William
Hollingsworth, who duly acknowledged to me that he is the President of
Intercontinental Strategic Minerals, Inc., a Utah corporation, and that he is
authorized to and did execute the foregoing Articles of Merger.
/s/Sheryl A. Ross
_________________________________________
NOTARY PUBLIC
STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
Personally appeared before me this 9th day of March, 1998, Thomas J.
Howells, who duly acknowledged to me that he is the Secretary/Treasurer of
Intercontinental Strategic Minerals, Inc., a Utah corporation, and that he is
authorized to and did execute the foregoing Articles of Merger.
/s/Sheryl A. Ross
_________________________________________
NOTARY PUBLIC
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
INTERCONTINENTAL STRATEGIC MINERALS, INC.
We, the undersigned, William Hollingsworth, President, and Thomas J.
Howells, Secretary, of Intercontinental Strategic Minerals, Inc., a Nevada
corporation (the "Corporation"), do hereby certify:
I
Pursuant to Section 78.390 of the Nevada Revised Statutes, the
Articles of Incorporation of the corporation shall be amended as follows:
The name of the Corporation is "Computer Automation Systems, Inc."
II
The foregoing amendment was adopted by Unanimous Consent of the Board
of Directors pursuant to Section 78.315 of the Nevada Revised Statutes and by
Consent of Majority Stockholder pursuant to Section 78.320 of the Nevada
Revised Statutes.
III
The number of shares entitled to vote on the amendment was 1,412,502.
IV
The number of shares voted in favor of the amendment was 750,000,
with none opposing and none abstaining.
/S/Douglas Eames
Douglas Eames, Vice President
/s/Thomas J. Howells
Thomas J. Howells, Secretary
STATE OF UTAH )
) ss
COUNTY OF CACHE )
On the 23rd day of July, 1998, personally appeared before me, a
Notary Public, Douglas Eames, who acknowledged that he is the Vice President
of Intercontinental Strategic Minerals, Inc., and that he is authorized to and
did execute the above instrument.
/s/Neil Hamilton
__________________________________________
NOTARY PUBLIC
(Notary Seal)
STATE OF UTAH )
) ss
COUNTY OF SALT LAKE )
On the 23rd day of July, 1998, personally appeared before me, a
Notary Public, Thomas J. Howells, who acknowledged that he is the Secretary of
Intercontinental Strategic Minerals, Inc., and that he is authorized to and
did execute the above instrument.
/s/Kathleen L. Morrison
__________________________________________
NOTARY PUBLIC
(Notary Seal)
BYLAWS
OF
INTERCONTINENTAL STRATEGIC MINERALS, INC.
ARTICLE I
OFFICES
Section 1.01 Location of Offices. The corporation may maintain such
offices within or without the State of Nevada as the Board of Directors may
from time to time designate or require.
Section 1.02 Principal Office. The address of the principal office of
the corporation shall be at the address of the registered office of the
corporation as so designated in the office of the Lieutenant
Governor/Secretary of State of the state of incorporation, or at such other
address as the Board of Directors shall from time to time determine.
ARTICLE II
SHAREHOLDERS
Section 2.01 Annual Meeting. The annual meeting of the shareholders
shall be held in the second week of July of each year or at such other time
designated by the Board of Directors and as is provided for in the notice of
the meeting, for the purpose of electing directors and for the transaction of
such other business as may come before the meeting. If the election of
directors shall not be held on the day designated for the annual meeting of
the shareholders, or at any adjournment thereof, the Board of Directors shall
cause the election to be held at a special meeting of the shareholders as soon
thereafter as may be convenient.
Section 2.02 Special Meetings. Special meetings of the shareholders may
be called at any time by the chairman of the board, the president, or by the
Board of Directors, or in their absence or disability, by any vice president,
and shall be called by the president or, in his or her absence or disability,
by a vice president or by the secretary on the written request of the holders
of not less than one-tenth of all the shares entitled to vote at the meeting,
such written request to state the purpose or purposes of the meeting and to be
delivered to the president, each vice-president, or secretary. In case of
failure to call such meeting within 60 days after such request, such
shareholder or shareholders may call the same.
Section 2.03 Place of Meetings. The Board of Directors may designate any
place, either within or without the state of incorporation, as the place of
meeting for any annual meeting or for any special meeting called by the Board
of Directors. A waiver of notice signed by all shareholders entitled to vote
at a meeting may designate any place, either within or without the state of
incorporation, as the place for the holding of such meeting. If no
designation is made, or if a special meeting be otherwise called, the place of
meeting shall be at the principal office of the corporation.
Section 2.04 Notice of Meetings. The secretary or assistant secretary,
if any, shall cause notice of the time, place, and purpose or purposes of all
meetings of the shareholders (whether annual or special), to be mailed at
least ten days, but not more than 50 days, prior to the meeting, to each
shareholder of record entitled to vote.
Section 2.05 Waiver of Notice. Any shareholder may waive notice of any
meeting of shareholders (however called or noticed, whether or not called or
noticed and whether before, during, or after the meeting), by signing a
written waiver of notice or a consent to the holding of such meeting, or an
approval of the minutes thereof. Attendance at a meeting, in person or by
proxy, shall constitute waiver of all defects of call or notice regardless of
whether waiver, consent, or approval is signed or any objections are made.
All such waivers, consents, or approvals shall be made a part of the minutes
of the meeting.
Section 2.06 Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any annual meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of any dividend or in order to make a determination of shareholders
for any other proper purpose, the Board of Directors of the corporation may
provide that the share transfer books shall be closed, for the purpose of
determining shareholders entitled to notice of or to vote at such meeting, but
not for a period exceeding fifty (50) days. If the share transfer books are
closed for the purpose of determining shareholders entitled to notice of or to
vote at such meeting, such books shall be closed for at least ten (10) days
immediately preceding such meeting.
In lieu of closing the share transfer books, the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than fifty (50) and, in
case of a meeting of shareholders, not less than ten (10) days prior to the
date on which the particular action requiring such determination of
shareholders is to be taken. If the share transfer books are not closed and
no record date is fixed for the determination of shareholders entitled to
notice of or to vote at a meeting or to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof. Failure to comply with
this Section shall not affect the validity of any action taken at a meeting of
shareholders.
Section 2.07 Voting Lists. The officer or agent of the corporation
having charge of the share transfer books for shares of the corporation shall
make, at least ten (10) days before each meeting of shareholders, a complete
list of the shareholders entitled to vote at such meeting or any adjournment
thereof, arranged in alphabetical order, with the address of, and the number
of shares held by each, which list, for a period of ten (10) days prior to
such meeting, shall be kept on file at the registered office of the
corporation and shall be subject to inspection by any shareholder during the
whole time of the meeting. The original share transfer book shall be prima
facia evidence as to the shareholders who are entitled to examine such list or
transfer books, or to vote at any meeting of shareholders.
Section 2.08 Quorum. One-half of the total voting power of the
outstanding shares of the corporation entitled to vote, represented in person
or by proxy, shall constitute a quorum at a meeting of the shareholders. If a
quorum is present, the affirmative vote of the majority of the voting power
represented by shares at the meeting and entitled to vote on the subject shall
constitute action by the shareholders, unless the vote of a greater number or
voting by classes is required by the laws of the state of incorporation of the
corporation or the Articles of Incorporation. If less than one-half of the
outstanding voting power is represented at a meeting, a majority of the voting
power represented by shares so present may adjourn the meeting from time to
time without further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might
have been transacted at the meeting as originally noticed.
Section 2.09 Voting of Shares. Each outstanding share of the corporation
entitled to vote shall be entitled to one vote on each matter submitted to
vote at a meeting of shareholders, except to the extent that the voting rights
of the shares of any class or series of stock are determined and specified as
greater or lesser than one vote per share in the manner provided by the
Articles of Incorporation.
Section 2.10 Proxies. At each meeting of the shareholders, each
shareholder entitled to vote shall be entitled to vote in person or by proxy;
provided, however, that the right to vote by proxy shall exist only in case
the instrument authorizing such proxy to act shall have been executed in
writing by the registered holder or holders of such shares, as the case may
be, as shown on the share transfer of the corporation or by his or her or her
attorney thereunto duly authorized in writing. Such instrument authorizing a
proxy to act shall be delivered at the beginning of such meeting to the
secretary of the corporation or to such other officer or person who may, in
the absence of the secretary, be acting as secretary of the meeting. In the
event that any such instrument shall designate two or more persons to act as
proxies, a majority of such persons present at the meeting, or if only one be
present, that one shall (unless the instrument shall otherwise provide) have
all of the powers conferred by the instrument on all persons so designated.
Persons holding stock in a fiduciary capacity shall be entitled to vote the
shares so held and the persons whose shares are pledged shall be entitled to
vote, unless in the transfer by the pledge or on the books of the corporation
he or she shall have expressly empowered the pledgee to vote thereon, in which
case the pledgee, or his or her or her proxy, may represent such shares and
vote thereon.
Section 2.11 Written Consent to Action by Shareholders. Any action
required to be taken at a meeting of the shareholders, or any other action
which may be taken at a meeting of the shareholders, may be taken without a
meeting, if a consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof.
ARTICLE III
DIRECTORS
Section 3.01 General Powers. The property, affairs, and business of the
corporation shall be managed by its Board of Directors. The Board of
Directors may exercise all the powers of the corporation whether derived from
law or the Articles of Incorporation, except such powers as are by statute, by
the Articles of Incorporation or by these Bylaws, vested solely in the
shareholders of the corporation.
Section 3.02 Number, Term, and Qualifications. The Board of Directors
shall consist of three to nine persons. Increases or decreases to said number
may be made, within the numbers authorized by the Articles of Incorporation,
as the Board of Directors shall from time to time determine by amendment to
these Bylaws. An increase or a decrease in the number of the members of the
Board of Directors may also be had upon amendment to these Bylaws by a
majority vote of all of the shareholders, and the number of directors to be so
increased or decreased shall be fixed upon a majority vote of all of the
shareholders of the corporation. Each director shall hold office until the
next annual meeting of shareholders of the corporation and until his or her
successor shall have been elected and shall have qualified. Directors need
not be residents of the state of incorporation or shareholders of the
corporation.
Section 3.03 Classification of Directors. In lieu of electing the entire
number of directors annually, the Board of Directors may provide that the
directors be divided into either two or three classes, each class to be as
nearly equal in number as possible, the term of office of the directors of the
first class to expire at the first annual meeting of shareholders after their
election, that of the second class to expire at the second annual meeting
after their election, and that of the third class, if any, to expire at the
third annual meeting after their election. At each annual meeting after such
classification, the number of directors equal to the number of the class whose
term expires at the time of such meeting shall be elected to hold office until
the second succeeding annual meeting, if there be two classes, or until the
third succeeding annual meeting, if there be three classes.
Section 3.04 Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this bylaw immediately
following, and at the same place as, the annual meeting of shareholders. The
Board of Directors may provide by resolution the time and place, either within
or without the state of incorporation, for the holding of additional regular
meetings without other notice than such resolution.
Section 3.05 Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the president, vice president,
or any two directors. The person or persons authorized to call special
meetings of the Board of Directors may fix any place, either within or without
the state of incorporation, as the place for holding any special meeting of
the Board of Directors called by them.
Section 3.06 Meetings by Telephone Conference Call. Members of the Board
of Directors may participate in a meeting of the Board of Directors or a
committee of the Board of Directors by means of conference telephone or
similar communication equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to
this Section shall constitute presence in person at such meeting.
Section 3.07 Notice. Notice of any special meeting shall be given at
least ten (10) days prior thereto by written notice delivered personally or
mailed to each director at his or her regular business address or residence,
or by telegram. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail so addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company. Any
director may waive notice of any meeting. Attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting solely for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.
Section 3.08 Quorum. A majority of the number of directors shall
constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but if less than a majority is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice.
Section 3.09 Manner of Acting. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors, and the individual directors shall have no power as such.
Section 3.10 Vacancies and Newly Created Directorship. If any vacancies
shall occur in the Board of Directors by reason of death, resignation or
otherwise, or if the number of directors shall be increased, the directors
then in office shall continue to act and such vacancies or newly created
directorships shall be filled by a vote of the directors then in office,
though less than a quorum, in any way approved by the meeting. Any
directorship to be filled by reason of removal of one or more directors by the
shareholders may be filled by election by the shareholders at the meeting at
which the director or directors are removed.
Section 3.11 Compensation. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 3.12 Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his or her or her dissent shall be entered in the minutes of the
meeting, unless he or she shall file his or her or her written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof, or shall forward such dissent by registered or certified
mail to the secretary of the corporation immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a director who voted in
favor of such action.
Section 3.13 Resignations. A director may resign at any time by
delivering a written resignation to either the president, a vice president,
the secretary, or assistant secretary, if any. The resignation shall become
effective on its acceptance by the Board of Directors; provided, that if the
board has not acted thereon within ten days from the date presented, the
resignation shall be deemed accepted.
Section 3.14 Written Consent to Action by Directors. Any action required
to be taken at a meeting of the directors of the corporation or any other
action which may be taken at a meeting of the directors or of a committee, may
be taken without a meeting, if a consent in writing, setting forth the action
so taken, shall be signed by all of the directors, or all of the members of
the committee, as the case may be. Such consent shall have the same legal
effect as a unanimous vote of all the directors or members of the committee.
Section 3.15 Removal. At a meeting expressly called for that purpose,
one or more directors may be removed by a vote of a majority of the shares of
outstanding stock of the corporation entitled to vote at an election of
directors.
ARTICLE IV
OFFICERS
Section 4.01 Number. The officers of the corporation shall be a
president, one or more vice-presidents, as shall be determined by resolution
of the Board of Directors, a secretary, a treasurer, and such other officers
as may be appointed by the Board of Directors. The Board of Directors may
elect, but shall not be required to elect, a chairman of the board and the
Board of Directors may appoint a general manager.
Section 4.02 Election, Term of Office, and Qualifications. The officers
shall be chosen by the Board of Directors annually at its annual meeting. In
the event of failure to choose officers at an annual meeting of the Board of
Directors, officers may be chosen at any regular or special meeting of the
Board of Directors. Each such officer (whether chosen at an annual meeting of
the Board of Directors to fill a vacancy or otherwise) shall hold his or her
office until the next ensuing annual meeting of the Board of Directors and
until his or her successor shall have been chosen and qualified, or until his
or her death, or until his or her resignation or removal in the manner
provided in these Bylaws. Any one person may hold any two or more of such
offices, except that the president shall not also be the secretary. No person
holding two or more offices shall act in or execute any instrument in the
capacity of more than one office. The chairman of the board, if any, shall be
and remain a director of the corporation during the term of his or her office.
No other officer need be a director.
Section 4.03 Subordinate Officers, Etc. The Board of Directors from time
to time may appoint such other officers or agents as it may deem advisable,
each of whom shall have such title, hold office for such period, have such
authority, and perform such duties as the Board of Directors from time to time
may determine. The Board of Directors from time to time may delegate to any
officer or agent the power to appoint any such subordinate officer or agents
and to prescribe their respective titles, terms of office, authorities, and
duties. Subordinate officers need not be shareholders or directors.
Section 4.04 Resignations. Any officer may resign at any time by
delivering a written resignation to the Board of Directors, the president, or
the secretary. Unless otherwise specified therein, such resignation shall
take effect on delivery.
Section 4.05 Removal. Any officer may be removed from office at any
special meeting of the Board of Directors called for that purpose or at a
regular meeting, by vote of a majority of the directors, with or without
cause. Any officer or agent appointed in accordance with the provisions of
Section 4.03 hereof may also be removed, either with or without cause, by any
officer on whom such power of removal shall have been conferred by the Board
of Directors.
Section 4.06 Vacancies and Newly Created Offices. If any vacancy shall
occur in any office by reason of death, resignation, removal,
disqualification, or any other cause, or if a new office shall be created,
then such vacancies or new created offices may be filled by the Board of
Directors at any regular or special meeting.
Section 4.07 The Chairman of the Board. The Chairman of the Board, if
there be such an officer, shall have the following powers and duties.
(a) He or she shall preside at all shareholders' meetings;
(b) He or she shall preside at all meetings of the Board of Directors;
and
(c) He or she shall be a member of the executive committee, if any.
Section 4.08 The President. The president shall have the following
powers and duties:
(a) If no general manager has been appointed, he or she shall be the
chief executive officer of the corporation, and, subject to the direction of
the Board of Directors, shall have general charge of the business, affairs,
and property of the corporation and general supervision over its officers,
employees, and agents;
(b) If no chairman of the board has been chosen, or if such officer is
absent or disabled, he or she shall preside at meetings of the shareholders
and Board of Directors;
(c) He or she shall be a member of the executive committee, if any;
(d) He or she shall be empowered to sign certificates representing shares
of the corporation, the issuance of which shall have been authorized by the
Board of Directors; and
(e) He or she shall have all power and shall perform all duties normally
incident to the office of a president of a corporation, and shall exercise
such other powers and perform such other duties as from time to time may be
assigned to him or her by the Board of Directors.
Section 4.09 The Vice Presidents. The Board of Directors may, from time
to time, designate and elect one or more vice presidents, one of whom may be
designated to serve as executive vice president. Each vice president shall
have such powers and perform such duties as from time to time may be assigned
to him or her by the Board of Directors or the president. At the request or
in the absence or disability of the president, the executive vice president
or, in the absence or disability of the executive vice president, the vice
president designated by the Board of Directors or (in the absence of such
designation by the Board of Directors) by the president, the senior vice
president, may perform all the duties of the president, and when so acting,
shall have all the powers of, and be subject to all the restrictions upon, the
president.
Section 4.10 The Secretary. The secretary shall have the following
powers and duties:
(a) He or she shall keep or cause to be kept a record of all of the
proceedings of the meetings of the shareholders and of the board or directors
in books provided for that purpose;
(b) He or she shall cause all notices to be duly given in accordance with
the provisions of these Bylaws and as required by statute;
(c) He or she shall be the custodian of the records and of the seal of
the corporation, and shall cause such seal (or a facsimile thereof) to be
affixed to all certificates representing shares of the corporation prior to
the issuance thereof and to all instruments, the execution of which on behalf
of the corporation under its seal shall have been duly authorized in
accordance with these Bylaws, and when so affixed, he or she may attest the
same;
(d) He or she shall assume that the books, reports, statements,
certificates, and other documents and records required by statute are properly
kept and filed;
(e) He or she shall have charge of the share books of the corporation and
cause the share transfer books to be kept in such manner as to show at any
time the amount of the shares of the corporation of each class issued and
outstanding, the manner in which and the time when such stock was paid for,
the names alphabetically arranged and the addresses of the holders of record
thereof, the number of shares held by each holder and time when each became
such holder or record; and he or she shall exhibit at all reasonable times to
any director, upon application, the original or duplicate share register. He
or she shall cause the share book referred to in Section 6.04 hereof to be
kept and exhibited at the principal office of the corporation, or at such
other place as the Board of Directors shall determine, in the manner and for
the purposes provided in such Section;
(f) He or she shall be empowered to sign certificates representing shares
of the corporation, the issuance of which shall have been authorized by the
Board of Directors; and
(g) He or she shall perform in general all duties incident to the office
of secretary and such other duties as are given to him or her by these Bylaws
or as from time to time may be assigned to him or her by the Board of
Directors or the president.
Section 4.11 The Treasurer. The treasurer shall have the following
powers and duties:
(a) He or she shall have charge and supervision over and be responsible
for the monies, securities, receipts, and disbursements of the corporation;
(b) He or she shall cause the monies and other valuable effects of the
corporation to be deposited in the name and to the credit of the corporation
in such banks or trust companies or with such banks or other depositories as
shall be selected in accordance with Section 5.03 hereof;
(c) He or she shall cause the monies of the corporation to be disbursed
by checks or drafts (signed as provided in Section 5.04 hereof) drawn on the
authorized depositories of the corporation, and cause to be taken and
preserved property vouchers for all monies disbursed;
(d) He or she shall render to the Board of Directors or the president,
whenever requested, a statement of the financial condition of the corporation
and of all of this transactions as treasurer, and render a full financial
report at the annual meeting of the shareholders, if called upon to do so;
(e) He or she shall cause to be kept correct books of account of all the
business and transactions of the corporation and exhibit such books to any
director on request during business hours;
(f) He or she shall be empowered from time to time to require from all
officers or agents of the corporation reports or statements given such
information as he or she may desire with respect to any and all financial
transactions of the corporation; and
(g) He or she shall perform in general all duties incident to the office
of treasurer and such other duties as are given to him or her by these Bylaws
or as from time to time may be assigned to him or her by the Board of
Directors or the president.
Section 4.12 General Manager. The Board of Directors may employ and
appoint a general manager who may, or may not, be one of the officers or
directors of the corporation. The general manager, if any shall have the
following powers and duties:
(a) He or she shall be the chief executive officer of the corporation
and, subject to the directions of the Board of Directors, shall have general
charge of the business affairs and property of the corporation and general
supervision over its officers, employees, and agents:
(b) He or she shall be charged with the exclusive management of the
business of the corporation and of all of its dealings, but at all times
subject to the control of the Board of Directors;
(c) Subject to the approval of the Board of Directors or the executive
committee, if any, he or she shall employ all employees of the corporation, or
delegate such employment to subordinate officers, and shall have authority to
discharge any person so employed; and
(d) He or she shall make a report to the president and directors as often
as required, setting forth the results of the operations under his or her
charge, together with suggestions looking toward improvement and betterment of
the condition of the corporation, and shall perform such other duties as the
Board of Directors may require.
Section 4.13 Salaries. The salaries and other compensation of the
officers of the corporation shall be fixed from time to time by the Board of
Directors, except that the Board of Directors may delegate to any person or
group of persons the power to fix the salaries or other compensation of any
subordinate officers or agents appointed in accordance with the provisions of
Section 4.03 hereof. No officer shall be prevented from receiving any such
salary or compensation by reason of the fact that he or she is also a director
of the corporation.
Section 4.14 Surety Bonds. In case the Board of Directors shall so
require, any officer or agent of the corporation shall execute to the
corporation a bond in such sums and with such surety or sureties as the Board
of Directors may direct, conditioned upon the faithful performance of his or
her duties to the corporation, including responsibility for negligence and for
the accounting of all property, monies, or securities of the corporation which
may come into his or her hands.
ARTICLE V
EXECUTION OF INSTRUMENTS, BORROWING OF MONEY,
AND DEPOSIT OF CORPORATE FUNDS
Section 5.01 Execution of Instruments. Subject to any limitation
contained in the Articles of Incorporation or these Bylaws, the president or
any vice president or the general manager, if any, may, in the name and on
behalf of the corporation, execute and deliver any contract or other
instrument authorized in writing by the Board of Directors. The Board of
Directors may, subject to any limitation contained in the Articles of
Incorporation or in these Bylaws, authorize in writing any officer or agent to
execute and delivery any contract or other instrument in the name and on
behalf of the corporation; any such authorization may be general or confined
to specific instances.
Section 5.02 Loans. No loans or advances shall be contracted on behalf
of the corporation, no negotiable paper or other evidence of its obligation
under any loan or advance shall be issued in its name, and no property of the
corporation shall be mortgaged, pledged, hypothecated, transferred, or
conveyed as security for the payment of any loan, advance, indebtedness, or
liability of the corporation, unless and except as authorized by the Board of
Directors. Any such authorization may be general or confined to specific
instances.
Section 5.03 Deposits. All monies of the corporation not otherwise
employed shall be deposited from time to time to its credit in such banks and
or trust companies or with such bankers or other depositories as the Board of
Directors may select, or as from time to time may be selected by any officer
or agent authorized to do so by the Board of Directors.
Section 5.04 Checks, Drafts, Etc. All notes, drafts, acceptances,
checks, endorsements, and, subject to the provisions of these Bylaws,
evidences of indebtedness of the corporation, shall be signed by such officer
or officers or such agent or agents of the corporation and in such manner as
the Board of Directors from time to time may determine. Endorsements for
deposit to the credit of the corporation in any of its duly authorized
depositories shall be in such manner as the Board of Directors from time to
time may determine.
Section 5.05 Bonds and Debentures. Every bond or debenture issued by the
corporation shall be evidenced by an appropriate instrument which shall be
signed by the president or a vice president and by the secretary and sealed
with the seal of the corporation. The seal may be a facsimile, engraved or
printed. Where such bond or debenture is authenticated with the manual
signature of an authorized officer of the corporation or other trustee
designated by the indenture of trust or other agreement under which such
security is issued, the signature of any of the corporation's officers named
thereon may be a facsimile. In case any officer who signed, or whose
facsimile signature has been used on any such bond or debenture, should cease
to be an officer of the corporation for any reason before the same has been
delivered by the corporation, such bond or debenture may nevertheless be
adopted by the corporation and issued and delivered as through the person who
signed it or whose facsimile signature has been used thereon had not ceased to
be such officer.
Section 5.06 Sale, Transfer, Etc. of Securities. Sales, transfers,
endorsements, and assignments of stocks, bonds, and other securities owned by
or standing in the name of the corporation, and the execution and delivery on
behalf of the corporation of any and all instruments in writing incident to
any such sale, transfer, endorsement, or assignment, shall be effected by the
president, or by any vice president, together with the secretary, or by any
officer or agent thereunto authorized by the Board of Directors.
Section 5.07 Proxies. Proxies to vote with respect to shares of other
corporations owned by or standing in the name of the corporation shall be
executed and delivered on behalf of the corporation by the president or any
vice president and the secretary or assistant secretary of the corporation, or
by any officer or agent thereunder authorized by the Board of Directors.
ARTICLE VI
CAPITAL SHARES
Section 6.01 Share Certificates. Every holder of shares in the
corporation shall be entitled to have a certificate, signed by the president
or any vice president and the secretary or assistant secretary, and sealed
with the seal (which may be a facsimile, engraved or printed) of the
corporation, certifying the number and kind, class or series of shares owned
by him or her in the corporation; provided, however, that where such a
certificate is countersigned by (a) a transfer agent or an assistant transfer
agent, or (b) registered by a registrar, the signature of any such president,
vice president, secretary, or assistant secretary may be a facsimile. In case
any officer who shall have signed, or whose facsimile signature or signatures
shall have been used on any such certificate, shall cease to be such officer
of the corporation, for any reason, before the delivery of such certificate by
the corporation, such certificate may nevertheless be adopted by the
corporation and be issued and delivered as though the person who signed it, or
whose facsimile signature or signatures shall have been used thereon, has not
ceased to be such officer. Certificates representing shares of the
corporation shall be in such form as provided by the statutes of the state of
incorporation. There shall be entered on the share books of the corporation
at the time of issuance of each share, the number of the certificate issued,
the name and address of the person owning the shares represented thereby, the
number and kind, class or series of such shares, and the date of issuance
thereof. Every certificate exchanged or returned to the corporation shall be
marked "Canceled" with the date of cancellation.
Section 6.02 Transfer of Shares. Transfers of shares of the corporation
shall be made on the books of the corporation by the holder of record thereof,
or by his or her attorney thereunto duly authorized by a power of attorney
duly executed in writing and filed with the secretary of the corporation or
any of its transfer agents, and on surrender of the certificate or
certificates, properly endorsed or accompanied by proper instruments of
transfer, representing such shares. Except as provided by law, the
corporation and transfer agents and registrars, if any, shall be entitled to
treat the holder of record of any stock as the absolute owner thereof for all
purposes, and accordingly, shall not be bound to recognize any legal,
equitable, or other claim to or interest in such shares on the part of any
other person whether or not it or they shall have express or other notice
thereof.
Section 6.03 Regulations. Subject to the provisions of this Article VI
and of the Articles of Incorporation, the Board of Directors may make such
rules and regulations as they may deem expedient concerning the issuance,
transfer, redemption, and registration of certificates for shares of the
corporation.
Section 6.04 Maintenance of Stock Ledger at Principal Place of Business.
A share book (or books where more than one kind, class, or series of stock is
outstanding) shall be kept at the principal place of business of the
corporation, or at such other place as the Board of Directors shall determine,
containing the names, alphabetically arranged, of original shareholders of the
corporation, their addresses, their interest, the amount paid on their shares,
and all transfers thereof and the number and class of shares held by each.
Such share books shall at all reasonable hours be subject to inspection by
persons entitled by law to inspect the same.
Section 6.05 Transfer Agents and Registrars. The Board of Directors may
appoint one or more transfer agents and one or more registrars with respect to
the certificates representing shares of the corporation, and may require all
such certificates to bear the signature of either or both. The Board of
Directors may from time to time define the respective duties of such transfer
agents and registrars. No certificate for shares shall be valid until
countersigned by a transfer agent, if at the date appearing thereon the
corporation had a transfer agent for such shares, and until registered by a
registrar, if at such date the corporation had a registrar for such shares.
Section 6.06 Closing of Transfer Books and Fixing of Record Date.
(a) The Board of Directors shall have power to close the share books of
the corporation for a period of not to exceed 50 days preceding the date of
any meeting of shareholders, or the date for payment of any dividend, or the
date for the allotment of rights, or capital shares shall go into effect, or a
date in connection with obtaining the consent of shareholders for any purpose.
(b) In lieu of closing the share transfer books as aforesaid, the Board
of Directors may fix in advance a date, not exceeding 50 days preceding the
date of any meeting of shareholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital shares shall go into effect, or a date in
connection with obtaining any such consent, as a record date for the
determination of the shareholders entitled to a notice of, and to vote at, any
such meeting and any adjournment thereof, or entitled to receive payment of
any such dividend, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of capital stock,
or to give such consent.
(c) If the share transfer books shall be closed or a record date set for
the purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for, or such record date
shall be, at least ten (10) days immediately preceding such meeting.
Section 6.07 Lost or Destroyed Certificates. The corporation may issue a
new certificate for shares of the corporation in place of any certificate
theretofore issued by it, alleged to have been lost or destroyed, and the
Board of Directors may, in its discretion, require the owner of the lost or
destroyed certificate or his or her legal representatives, to give the
corporation a bond in such form and amount as the Board of Directors may
direct, and with such surety or sureties as may be satisfactory to the board,
to indemnify the corporation and its transfer agents and registrars, if any,
against any claims that may be made against it or any such transfer agent or
registrar on account of the issuance of such new certificate. A new
certificate may be issued without requiring any bond when, in the judgment of
the Board of Directors, it is proper to do so.
Section 6.08 No Limitation on Voting Rights; Limitation on Dissenter's
Rights. To the extent permissible under the applicable law of any
jurisdiction to which the corporation may become subject by reason of the
conduct of business, the ownership of assets, the residence of shareholders,
the location of offices or facilities, or any other item, the corporation
elects not to be governed by the provisions of any statute that (i) limits,
restricts, modified, suspends, terminates, or otherwise affects the rights of
any shareholder to cast one vote for each share of common stock registered in
the name of such shareholder on the books of the corporation, without regard
to whether such shares were acquired directly from the corporation or from any
other person and without regard to whether such shareholder has the power to
exercise or direct the exercise of voting power over any specific fraction of
the shares of common stock of the corporation issued and outstanding or (ii)
grants to any shareholder the right to have his or her stock redeemed or
purchased by the corporation or any other shareholder on the acquisition by
any person or group of persons of shares of the corporation. In particular,
to the extent permitted under the laws of the state of incorporation, the
corporation elects not to be governed by any such provision, including the
provisions of the Nevada Control Share Acquisitions Act, Sections 78.378 to
78.3793, inclusive, of the Nevada Revised Statutes, or any statute of similar
effect or tenor.
ARTICLE VII
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 7.01 How Constituted. The Board of Directors may designate an
executive committee and such other committees as the Board of Directors may
deem appropriate, each of which committees shall consist of two or more
directors. Members of the executive committee and of any such other
committees shall be designated annually at the annual meeting of the Board of
Directors; provided, however, that at any time the Board of Directors may
abolish or reconstitute the executive committee or any other committee. Each
member of the executive committee and of any other committee shall hold office
until his or her successor shall have been designated or until his or her
resignation or removal in the manner provided in these Bylaws.
Section 7.02 Powers. During the intervals between meetings of the Board
of Directors, the executive committee shall have and may exercise all powers
of the Board of Directors in the management of the business and affairs of the
corporation, except for the power to fill vacancies in the Board of Directors
or to amend these Bylaws, and except for such powers as by law may not be
delegated by the Board of Directors to an executive committee.
Section 7.03 Proceedings. The executive committee, and such other
committees as may be designated hereunder by the Board of Directors, may fix
its own presiding and recording officer or officers, and may meet at such
place or places, at such time or times and on such notice (or without notice)
as it shall determine from time to time. It will keep a record of its
proceedings and shall report such proceedings to the Board of Directors at the
meeting of the Board of Directors next following.
Section 7.04 Quorum and Manner of Acting. At all meeting of the
executive committee, and of such other committees as may be designated
hereunder by the Board of Directors, the presence of members constituting a
majority of the total authorized membership of the committee shall be
necessary and sufficient to constitute a quorum for the transaction of
business, and the act of a majority of the members present at any meeting at
which a quorum is present shall be the act of such committee. The members of
the executive committee, and of such other committees as may be designated
hereunder by the Board of Directors, shall act only as a committee and the
individual members thereof shall have no powers as such.
Section 7.05 Resignations. Any member of the executive committee, and of
such other committees as may be designated hereunder by the Board of
Directors, may resign at any time by delivering a written resignation to
either the president, the secretary, or assistant secretary, or to the
presiding officer of the committee of which he or she is a member, if any
shall have been appointed and shall be in office. Unless otherwise specified
herein, such resignation shall take effect on delivery.
Section 7.06 Removal. The Board of Directors may at any time remove any
member of the executive committee or of any other committee designated by it
hereunder either for or without cause.
Section 7.07 Vacancies. If any vacancies shall occur in the executive
committee or of any other committee designated by the Board of Directors
hereunder, by reason of disqualification, death, resignation, removal, or
otherwise, the remaining members shall, until the filling of such vacancy,
constitute the then total authorized membership of the committee and, provided
that two or more members are remaining, continue to act. Such vacancy may be
filled at any meeting of the Board of Directors.
Section 7.08 Compensation. The Board of Directors may allow a fixed sum
and expenses of attendance to any member of the executive committee, or of any
other committee designated by it hereunder, who is not an active salaried
employee of the corporation for attendance at each meeting of said committee.
ARTICLE VIII
INDEMNIFICATION, INSURANCE, AND
OFFICER AND DIRECTOR CONTRACTS
Section 8.01 Indemnification: Third Party Actions. The corporation
shall have the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he or she is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees) judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him or her in connection with
any such action, suit or proceeding, if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The termination of any action, suit, or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests of the corporation, and with respect to
any criminal action or proceeding, he or she had reasonable cause to believe
that his or her conduct was unlawful.
Section 8.02 Indemnification: Corporate Actions. The corporation shall
have the power to indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending, or completed action or suit by
or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he or she is or was a director, officer, employee, or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection with the defense or settlement of such action or suit, if he or she
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which such a person shall have been adjudged to be liable for negligence or
misconduct in the performance of his or her duty to the corporation, unless
and only to the extent that the court in which the action or suit was brought
shall determine on application that, despite the adjudication of liability but
in view of all circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
Section 8.03 Determination. To the extent that a director, officer,
employee, or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred to in
Sections 8.01 and 8.02 hereof, or in defense of any claim, issue, or matter
therein, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection therewith.
Any other indemnification under Sections 8.01 and 8.02 hereof, shall be made
by the corporation upon a determination that indemnification of the officer,
director, employee, or agent is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in Sections 8.01 and 8.02
hereof. Such determination shall be made either (i) by the Board of Directors
by a majority vote of a quorum consisting of directors who were not parties to
such action, suit, or proceeding; or (ii) by independent legal counsel on a
written opinion; or (iii) by the shareholders by a majority vote of a quorum
of shareholders at any meeting duly called for such purpose.
Section 8.04 General Indemnification. The indemnification provided by
this Section shall not be deemed exclusive of any other indemnification
granted under any provision of any statute, in the corporation's Articles of
Incorporation, these Bylaws, agreement, vote of shareholders or disinterested
directors, or otherwise, both as to action in his or her official capacity and
as to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee, or agent,
and shall inure to the benefit of the heirs and legal representatives of such
a person.
Section 8.05 Advances. Expenses incurred in defending a civil or
criminal action, suit, or proceeding as contemplated in this Section may be
paid by the corporation in advance of the final disposition of such action,
suit, or proceeding upon a majority vote of a quorum of the Board of Directors
and upon receipt of an undertaking by or on behalf of the director, officers,
employee, or agent to repay such amount or amounts unless if it is ultimately
determined that he or she is to indemnified by the corporation as authorized
by this Section.
Section 8.06 Scope of Indemnification. The indemnification authorized by
this Section shall apply to all present and future directors, officers,
employees, and agents of the corporation and shall continue as to such persons
who ceases to be directors, officers, employees, or agents of the corporation,
and shall inure to the benefit of the heirs, executors, and administrators of
all such persons and shall be in addition to all other indemnification
permitted by law.
8.07. Insurance. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise against any liability asserted
against him or her and incurred by him or her in any such capacity, or arising
out of his or her status as such, whether or not the corporation would have
the power to indemnify him or her against any such liability and under the
laws of the state of incorporation, as the same may hereafter be amended or
modified.
ARTICLE IX
FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE X
DIVIDENDS
The Board of Directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares in the manner and on the terms
and conditions provided by the Articles of Incorporation and these Bylaws.
ARTICLE XI
AMENDMENTS
All Bylaws of the corporation, whether adopted by the Board of Directors
or the shareholders, shall be subject to amendment, alteration, or repeal, and
new Bylaws may be made, except that:
(a) No Bylaws adopted or amended by the shareholders shall be altered or
repealed by the Board of Directors.
(b) No Bylaws shall be adopted by the Board of Directors which shall
require more than a majority of the voting shares for a quorum at a meeting of
shareholders, or more than a majority of the votes cast to constitute action
by the shareholders, except where higher percentages are required by law;
provided, however that (i) if any Bylaw regulating an impending election of
directors is adopted or amended or repealed by the Board of Directors, there
shall be set forth in the notice of the next meeting of shareholders for the
election of directors, the Bylaws so adopted or amended or repealed, together
with a concise statement of the changes made; and (ii) no amendment,
alteration or repeal of this Article XI shall be made except by the
shareholders.
CERTIFICATE OF SECRETARY
The undersigned does hereby certify that he or she is the secretary of
INTERCONTINENTAL STRATEGIC MINERALS, INC., a corporation duly organized and
existing under and by virtue of the laws of the State of Nevada; that the
above and foregoing Bylaws of said corporation were duly and regularly adopted
as such by the Board of Directors of the corporation at a meeting of the Board
of Directors, which was duly and regularly held on the 9th day of March, 1998,
and that the above and foregoing Bylaws are now in full force and effect.
DATED THIS 9th day of March, 1998.
/s/Thomas J. Howells
_________________________________
Thomas J. Howells, Secretary/Treasurer
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT (the "Plan") effective as of the_______ day of
July, 1998, between Intercontinental Strategic Minerals, Inc., a Nevada
corporation ("ISM"); Computer Automation Systems, Inc., a Texas corporation
("CASI"); and all of the stockholders of CASI (the "CASI Stockholders");
WITNESSETH:
ISM wishes to acquire and the CASI Stockholders wish to exchan"
all of the outstanding common stock of CASI for common stock of ISM in a
transaction qualifying as a tax-free exchange pursuant to Section 368(a)(1)(B)
of the Internal Revenue Code of 1986, as amended; and
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, IT IS AGREED:
Section I
Exchange of Stock
1.1 Number of Shares. The CASI Stockholders agree to transfer to
ISM at the closing (the "Closing") 100% of the outstanding securities of CASI,
which are listed in Exhibit A hereof attached hereto and incorporated herein
by reference (the "CASI Shares"), in exchange for 6,400,000 shares of the one
mill ($0.001) par value "unregistered" and "restricted" common voting stock of
ISM, less 5% to be paid to certain consultants as reflected on Exhibits A and
I.
1.2 Delivery of Certificates by CASI Stockholders. The transfer
of the CASI Shares by the CASI Stockholders shall be effected by the delivery
to ISM at the Closing of stock certificates representing the transferred
shares duly endorsed in blank or accompanied by stock powers executed in
blank, with all signatures witnessed or guaranteed to the satisfaction of ISM
and with all necessary transfer taxes and other revenue stamps affixed and
acquired at the CASI Stockholders' expense.
1.3 Further Assurances. At the Closing and from time to time
thereafter, the CASI Stockholders shall execute such additional instruments
and take such other action as ISM may request in order to exchange and
transfer clear title and ownership in the CASI Shares to ISM.
1.4 Resignation of Present Directors and Executive Officers and
Designation of New Directors and Executive Officers. On Closing, the present
directors and executive officers of ISM, William Hollingsworth, Douglas Eames
and Thomas J. Howells, shall resign, in seriatim, and designate the directors
and executive officers nominated by CASI to serve in their place and stead,
until the next respective annual meetings of the stockholders and Board of
Directors of ISM, and until their respective successors shall be elected and
qualified or until their respective prior resignations or terminations.
1.5 Name Change. As soon as practicable following the Closing, the
Certificate of Incorporation of ISM shall be amended to change the name of ISM
to "Computer Automation Systems, Inc."
1.6 Issuance of Shares of ISM for Cash and Services. At or prior to
the Closing, 187,498 "unregistered" and "restricted" shares of common stock of
ISM shall be issued to certain consultants in consideration of the sum of
$100,000 and services rendered in connection with the Plan and in accordance
with the Consent of Directors of ISM adopting, ratifying and approving the
Plan.
Section 2
Closing
The Closing contemplated by Section 1. 1 shall be held at the
offices of Leonard W. Burningham, Esq., 455 East 500 South, Suite 205, Salt
Lake City, Utah, on or before July 3 1, 1998, unless another place or time is
agreed upon in writing by the parties. The Closing may be accomplished by
wire, express mail or other courier service, conference telephone
communications or as otherwise agreed by the respective parties or their duly
authorized representatives.
Section 3
Representations and Warranties of ISM
ISM represents and warrants to, and covenants with, the CASI
Stockholders and CASI as follows:
3.1 Corporate Status. ISM is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada
and is licensed or qualified as a foreign corporation in all states in which
the nature of its business or the character or ownership of its properties
makes such licensing or qualification necessary (Nevada only.) ISM is a
publicly held company, having previously and lawfully offered and sold a
portion of its securities in accordance with applicable federal and state
securities laws, rules and regulations.
3.2 Capitalization. The authorized capital stock of ISM consists
of 15,000,000 shares of one mill ($0.001) par value common voting stock, of
which 1,412,502 shares are issued and outstanding, all fully paid and non-
assessable; and 5,000,000 shares of one mill ($0.001) par value preferred
stock, none of which are issued and outstanding. Except as provided herein,
there are no outstanding options, warrants or calls pursuant to which any
person has the right to purchase any authorized and unissued common stock of
ISM.
3.3 Financial Statements. The financial statements of ISM
furnished to the CASI Stockholders and CASI, consisting of audited financial
statements for the periods ended December 31, 1997 and 1996, attached hereto
as Exhibit B and incorporated herein by reference, are correct and fairly
present the financial condition of ISM at such dates and for the periods
involved; such statements were prepared in accordance with generally accepted
accounting principles consistently applied, and no material change has
occurred in the matters disclosed therein, except as indicated in Exhibit C,
which is attached hereto and incorporated herein by reference. Such financial
statements do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading. ISM has had
no operations, as shown therein, and, as of this date has, and as of the date
of closing shall have, no debts or other obligations, including, but not
limited to, taxes, transfer agent fees, attorney's fees, accounting fees,
rent, wages, printing or mailing costs, insurance or any other claims or
liabilities, whether disclosed or undisclosed.
3.4 Undisclosed Liabilities. ISM has no liabilities of any
nature. None are reflected or reserved against in its balance sheets, whether
accrued, absolute, contingent or otherwise, including, without limitation, tax
liabilities and interest due or to become due.
3.5 Interim Changes. Since the date of its balance sheets, there
have been no (1) changes in financial condition, assets, liabilities or
business of ISM; (2) damages, destruction or losses of or to property of ISM,
payments of any dividend or other distribution in respect of any class of
stock of ISM, or any direct or indirect redemption, purchase or other
acquisition of any class of any such stock; or (3) obligations of any kind
incurred as to anyone, including, but not limited to compensation, retirement
benefits or other commitments to employees.
3.6 Title to Property. ISM has good and marketable title to all
properties and assets, real and personal, reflected in its balance sheets, and
the properties and assets of ISM are subject to no mortgage, pledge, lien or
encumbrance, and no default exists.
3.7 Litigation. There is no litigation or proceeding pending, or
to the knowledge of ISM, threatened, against or relating to ISM, its
properties or business. Further, no officer, director or person who may be
deemed to be an affiliate of ISM is party to any material legal proceeding
which could have an adverse affect on ISM (financial or otherwise), and none
is party to any action or proceeding wherein any has an interest adverse to
ISM.
3.8 Books and Records. From the date of this Plan to the
Closing, ISM will (1) give to the CASI Stockholders and CASI or their
respective representatives full access during normal business hours to all of
its offices, books, records, contracts and other corporate documents and
properties so that the CASI Stockholders and CASI or their respective
representatives may inspect and audit them; and (2) furnish such information
concerning the properties and affairs of ISM as the CASI Stockholders and CASI
or their respective representatives may reasonably request.
3.9 Tax Returns. ISM has filed all federal and state income or
franchise tax returns required to be filed or has received currently effective
extensions of the required filing dates.
3.10 Confidentiality. Until the Closing (and thereafter if
there is no Closing), ISM and its representatives 'will keep confidential any
information which they obtain from the CASI Stockholders or from CASI
concerning the properties, assets and business of CASI. If the transactions
contemplated by this Plan are not consummated by July 31, 1998, ISM will
return to CASI all written matter with respect to CASI obtained by ISM in
connection with the negotiation or consummation of this Plan.
3.11 Investment Intent. ISM is acquiring the CASI Shares to be
transferred to it under this Plan for investment and not with a view to the
sale or distribution thereof, and ISM has no commitment or present intention
to liquidate CASI or to sell or otherwise dispose of the CASI Shares.
3.12 Corporate Authority . ISM has full corporate power and
authority to enter into this Plan and to carry out its obligations hereunder
and will deliver to the CASI Stockholders and CASI or their respective
representatives at the Closing a certified copy of resolutions of its Board of
Directors authorizing execution of this Plan by its officers and performance
thereunder.
3.13 Due Authorization. Execution of this Plan and perfon-nance
by ISM hereunder have been duly authorized by all requisite corporate action
on the part of ISM, and this Plan constitutes a valid and binding obligation
of ISM and performance hereunder will not violate any provision of the
Articles of Incorporation, Bylaws, agreements, mortgages or other commitments
of ISM.
3.14 Environmental Matters. ISM has no knowledge of any
assertion by any governmental agency or other regulatory authority of any
environmental lien, action or proceeding, or of any cause for any such lien,
action or proceeding related to the business operations of ISM. In addition,
to the best knowledge of ISM, there are no substances or conditions which may
support a claim or cause of action against ISM or any of its current or former
officers, directors, agents or employees, whether by a governmental agency or
body, private party or individual, under any Hazardous Materials Regulations.
"Hazardous Materials" means any oil or petrochemical products, PCB's,
asbestos, urea formaldehyde, flammable explosives, radioactive materials,
solid or hazardous wastes, chemicals, toxic substances or related materials,
including, without limitation, any substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," or "toxic substances" under any applicable federal or state laws
or regulations. "Hazardous Materials Regulations" means any regulations
governing the use, generation, handling, storage, treatment, disposal or
release of hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act and the Federal Water Pollution Control
Act.
3.15 Access to Information Regarding CASI. ISM acknowledges
that it has been delivered copies of documents ISM has requested from CASI,
which CASI believes to be sufficient material information respecting CASI and
its present and contemplated business operations, potential acquisitions,
management and other factors; ISM further acknowledges that it has had a
reasonable opportunity to review such documentation and discuss it, to the
extent desired, with its legal counsel, directors and executive officers; that
it has had, to the extent desired, the opportunity to ask questions of and
receive responses from the directors and executive officers of CASI, and with
the legal and accounting firms of CASI, with respect to such documentation;
and that to the extent requested, all questions raised have been answered and
documents requested have been provided to ISM to its complete satisfaction.
Section 4
Representations, Warranties and Covenants of CASI
CASI represents and warrants to, and covenants with, ISM as
follows:
4.1 CASI Shares. The CASI Stockholders are the record and
beneficial owners of all of the CASI Shares listed in Exhibit A, free and
clear of adverse claims of third parties; and Exhibit A correctly sets forth
the names, addresses and the number of CASI Shares owned by the CASI
Stockholders.
4.2 Corporate Status. CASI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas and
is licensed or qualified as a foreign corporation in all states in which the
nature of its business or the character or ownership of its properties makes
such licensing or qualification necessary.
4.3 Capitalization. The authorized capital stock of CASI
consists of 10,000,000 shares of common voting stock, no par value, of which
1,000 shares are issued and outstanding, all ftilly paid and non-assessable.
There are no outstanding options, warrants or calls pursuant to which any
person has the right to purchase any authorized and unissued capital stock of
CASI.
4.4 Financial Statements. The financial statements of CASI
furnished to ISM, consisting of an unaudited balance sheet dated June 29,
1998, and a profit and loss statement from inception (February 13, 1998) to
June 29, 1998, attached hereto as Exhibit D, and incorporated herein by
reference, are correct and fairly present the financial condition of CASI as
of these dates and for the periods involved, and such statements were prepared
in accordance with generally accepted accounting principles consistently
applied. To the best of CASI's knowledge, these financial statements do not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
4.5 Undisclosed Liabilities. CASI knows of no material
liabilities of any nature except to the extent reflected or reserved against
in the balance sheets, whether accrued, absolute, contingent or otherwise,
including, without limitation, tax liabilities and interest due or to become
due, except as set forth in Exhibit E attached hereto and incorporated herein
by reference.
4.6 Interim Changes. To the best of CASI's knowledge, except as
set forth in Exhibit E, there have been no (1) changes in the financial
condition, assets, liabilities or business of CASI, in the aggregate, have
been materially adverse; (2) damages, destruction or loss of or to the
property of CASI, payment of any dividend or other distribution in respect of
the capital stock of CASI, or any direct or indirect redemption, purchase or
other acquisition of any such stock; or (3) increases paid or agreed to in the
compensation, retirement benefits or other commitments to its employees.
4.7 Title to Property. CASI has good and marketable title to all
properties and assets, real and personal, proprietary or otherwise, reflected
in these balance sheets, and the properties and assets of CASI are subject to
no mortgage, pledge, lien or encumbrance, except as reflected in the balance
sheet or in Exhibit E, with respect to which no default exists.
4.8 Litigation. Except as set forth in Exhibit E, there is no
litigation or proceeding pending, or to the knowledge of CASI, threatened,
against or relating to CASI or its properties or business, except as set forth
in Exhibit E. Further, no officer, director or person who may be deemed to be
an affiliate of CASI is party to any material legal proceeding which could
have an adverse effect on CASI (financial or otherwise), and none is party to
any action or proceeding wherein any has an interest adverse to CASI.
4.9 Books and Records. From the date of this Plan to the
Closing, CASI will (1) give to ISM and its representatives filll access during
normal business hours to all of its offices, books, records, contracts and
other corporate documents and properties so that ISM may inspect and audit
them; and (2) famish such information concerning the properties and affairs of
CASI as ISM may reasonably request.
4.10 Tax Returns. CASI has filed all federal and state income
or franchise tax returns required to be filed or has received currently
effective extensions of the required filing dates.
4.11 Confidentiality. Until the Closing (and continuously if
there is no Closing), CASI, the CASI Stockholders and their representatives
will keep confidential any information which they obtain from ISM concerning
its properties, assets and business. If the transactions contemplated by this
Plan are not consummated by July 31, 1998, CASI and the CASI Stockholders will
return to ISM all written matter with respect to ISM obtained by them in
connection with the negotiation or consummation of this Plan.
4.12 Investment Intent. The CASI Stockholders are acquiring the
shares to be exchanged and delivered to them under this Plan for investment
and not with a view to the sale or distribution thereof, and the CASI
Stockholders have no commitment or present intention to liquidate the Company
or to sell or otherwise dispose of the ISM shares. The CASI Stockholders shall
execute and deliver to ISM on the Closing an Investment Letter attached hereto
as Exhibit F and incorporated herein by reference, acknowledging the
"unregistered" and "restricted" nature of the shares of ISM being received
under the Plan in exchange for the CASI Shares, and receipt of certain
material information regarding ISM.
4.13 Corporate Authority. CASI has full corporate power and
authority to enter into this Plan and to carry out its obligations hereunder
and will deliver to ISM or its representative at the Closing a certified copy
of resolutions of its Board of Directors authorizing execution of this Plan by
its officers and performance thereunder.
4.14 Due Authorization. Execution of this Plan and performance
by CASI hereunder have been duly authorized by all requisite corporate action
on the part of CASI, and this Plan constitutes a valid and binding obligation
of CASI and performance hereunder will not violate any provision of the
Articles of Incorporation, Bylaws, agreements, mortgages or other commitments
of CASI.
4.15 Environmental Matters. CASI has no knowledge of any
assertion by any governmental agency or other regulatory authority of any
environmental lien, action or proceeding, or of any cause for any such lien,
action or proceeding related to the business operations of CASI or its
predecessors. In addition, to the best knowledge of CASI, there are no
substances or conditions which may support a claim or cause of action against
CASI or any of its current or former officers, directors, agents, employees or
predecessors, whether by a governmental agency or body, private party or
individual, under any Hazardous Materials Regulations. "Hazardous Materials"
means any oil or petrochemical products, PCB's, asbestos, urea formaldehyde,
flammable explosives, radioactive materials, solid or hazardous wastes,
chemicals, toxic substances or related materials, including, without
limitation, any substances defined as or included in the definition of
"hazardous substances ... .. hazardous wastes," "hazardous materials," or
"toxic substances" under any applicable federal or state laws or regulations.
"Hazardous Materials Regulations" means any regulations governing the use,
generation, handling, storage, treatment, disposal or release of hazardous
materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conservation and
Recovery Act and the Federal Water Pollution Control Act.
4.16 Access to Information Regarding ISM. CASI and the CASI
Stockholders acknowledge that they have been delivered copies of what has been
represented to be documentation containing all material information respecting
ISM and its present and contemplated business operations, potential
acquisitions, management and other factors; that they have had a reasonable
opportunity to review such documentation and discuss it, to the extent
desired, with their legal counsel, directors and executive officers; that they
have had, to the extent desired, the opportunity to ask questions of and
receive responses from the directors and executive officers of ISM, and with
the legal and accounting firms of ISM, with respect to such documentation; and
that to the extent requested, all questions raised have been answered to their
complete satisfaction.
Section 5
Conditions Precedent to Obligations of CAST and the CAST Stockholders
All obligations of CASI and the CASI Stockholders under this Plan
are subject, at their option, to the fulfillment, before or at the Closing, of
each of the following conditions:
5.1 Representations and Warranties True at Closing. The
representations and warranties of ISM contained in this Plan shall be deemed
to have been made again at and as of the Closing and shall then be true in all
material respects and shall survive the Closing.
5.2 Due Performance. ISM shall have performed and complied with
all of the terms and conditions required by this Plan to be performed or
complied with by it before the Closing.
5.3 Officers' Certificate. CASI and the CASI Stockholders shall
have been furnished with a certificate signed by the President of ISM,
attached hereto as Exhibit G and incorporated herein by reference, dated as of
the Closing, certifying (1) that all representations and warranties of ISM and
Jenson contained herein are true and correct; and (2) that since the date of
the financial statements (Exhibit B hereto), there has been no material
adverse change in the financial condition, business or properties of ISM,
taken as a whole.
5.4 Opinion of Counsel of ISM. CASI and the CASI Stockholders
shall have received an opinion of counsel for ISM, dated as of the Closing, to
the effect that (1) the representations of Sections 3.1, 3.2 and 3.12 are
correct; (2) except as specified in the opinion, counsel knows of no
inaccuracy in the representations in 3.5, 3.6 or 3.7; and (3) the shares of
ISM to be issued to the CASI Stockholders under this Plan will, when so
issued, be validly issued, fully paid and non-assessable.
5.5 Assets and Liabilities of ISM. ISM shall have $100,000 in
cash assets and no liabilities at Closing, and all costs, expenses and fees
incident to the Plan shall have been paid.
5.6 Resignation of Directors and Executive Officers and
Designation of New Directors and Executive Officers. The present directors and
executive officers of ISM shall resign, and shall have designated nominees of
CASI as directors and executive officers of ISM to serve in their place and
stead, until the next respective annual meetings of the stockholders and Board
of Directors of ISM, and until their respective successors shall be elected
and qualified or until their respective prior resignations or terminations.
Section 6
Conditions Precedent to Obligations of ISM
All obligations of ISM under this Plan are subject, at its option,
to the fulfillment, before or at the Closing, of each of the following
conditions:
6.1 Representations and Warranties True at Closing. The
representations and warranties of CASI and the CASI Stockholders contained in
this Plan shall be deemed to have been made again at and as of the Closing and
shall then be true in all material respects and shall survive the Closing.
6.2 Due Performance. CASI and the CASI Stockholders shall have
performed and complied with all of the terms and conditions required by this
Plan to be performed or complied with by them before the Closing.
6.3 Officers' Certificate. ISM shall have been furnished with a
certificate signed by the President of CASI, attached hereto as Exhibit H and
incorporated herein by reference, dated as of the Closing, certifying (1) that
all representations and warranties of CASI and the CASI Stockholders contained
herein are true and correct; and (2) that since the date of the financial
statements (Exhibit D), there has been no material adverse change in the
financial condition, business or properties of CASI, taken as a whole.
6.4 Opinion of Counsel of CASI. ISM shall have received an
opinion of counsel for CASI, dated as of the Closing, to the effect that (1)
the representations of Sections 4.2, 4.3 and 4.13 are correct; (2) except as
specified in the opinion, counsel knows of no inaccuracy in the
representations in 4.7 or 4.8; (3) the CASI Shares to be delivered to ISM
under this Plan will, when so delivered, have been validly issued, fully paid
and non-assessable.
6.5 Books and Records. The CASI Stockholders or the Board of
Directors of CASI shall have caused CASI to make available all books and
records of CASI, including minute books and stock transfer records; provided,
however, only to the extent requested in writing by ISM at Closing.
6.6 Acceptance by CASI Stockholders. The terms of this
Plan shall have been accepted by the CASI Stockholders by execution and
delivery of a copy of the Plan and related instruments.
Section 7
Termination
Prior to Closing, this Plan may be terminated (1) by mutual
consent in writing; (2) by either the sole director of ISM or CASI and the
CASI Stockholders if there has been a material misrepresentation or material
breach of any warranty or covenant by the other party; or (3) by either the
directors of ISM or CASI and the CASI Stockholders if the Closing shall not
have taken place, unless adjourned to a later date by mutual consent in
writing, by the date fixed in Section 2.
Section 8
General Provisions
8.1 Further Assurances. At any time, and from time to time,
after the Closing, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to confirm
or perfect title to any property transferred hereunder or otherwise to carry
out the intent and purposes of this Plan.
8.2 Waiver. Any failure on the part of any party hereto to
comply with any of its obligations, agreements or conditions hereunder may be
waived in writing by the party to whom such compliance is owed.
8.3 Brokers. Except as set forth in Exhibits A and I, each party
represents to the other parties hereunder that no broker or finder has acted
for it in connection with this Plan, and ISM agrees to indemnify and hold
harmless CASI and the CASI Stockholders against any fee, loss or expense
arising out of claims by brokers or finders employed or alleged to have been
employed by ISM.
8.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered in
person or sent by prepaid first class registered or certified mail, return
receipt requested, as follows:
If to ISM: 5525 South 900 East, #110
Salt Lake City, Utah 84117
With a copy to: Leonard W. Burningham, Esq.
455 East 500 South, #205
Salt Lake City, Utah 84111
If to CASI: 1825 E. Plano Parkway, Suite 200
Plano, Texas 75074
With a copy to: M. Stephen Roberts, Esq.
One Riverway, Suite 1700
Houston, Texas 77086
If to the CASI To the Addresses listed in Exhibit A
Stockholders:
8.5 Entire Agreement. This Plan constitutes the entire agreement
between the parties and supersedes and cancels any other agreement,
representation, or communication, whether oral or written, between the parties
hereto relating to the transactions contemplated herein or the subject matter
hereof.
8.6 Headings. The section and subsection headings in this Plan
are inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Plan.
8.7 Governing Law. This Plan shall be governed by and construed
and enforced in accordance with the laws of the State of Nevada, except to the
extent pre-empted by federal law, in which event (and to that extent only),
federal law shall govern.
8.8 Assignment. This Plan shall inure to the benefit of, and be
binding upon, the parties hereto and their successors and assigns; provided
however, that any assignment by any party of its rights under this Plan
without the prior written consent of the other parties shall be void.
8.9 Counterparts. This Plan may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement and
Plan of Reorganization effective the day and year first above written.
INTERCONTINENTAL STRATEGIC
MINERALS, INC.
Date: 7/23/98. By/s/Douglas Eames
Douglas Eames, Vice President
COMPUTER AUTOMATION SYSTEMS, INC.
Date: 7/23/98. By/s/Michael E. Cherry
Michael E. Cherry, President
COMPUTER AUTOMATION
SYSTEMS, INC. STOCKHOLDERS
Date: 7/23/98. /s/Michael E. Cherry
Michael E. Cherry
Date: 7/23/98. /s/Sylvia McCollum
Sylvia McCollum
Date: 7/23/98. /s/Sandra Cobb
Sandra Cobb
<PAGE>
EXHIBIT A
Number of Shares of
Number of Shares ISM
Owned of to be
Name and Address CASI Received in Exchange
Michael E. Cherry 700 4,256,000
1404 Andover
Richardson, Texas 75075
Sylvia McCollum 150 912,000
5990 Westgrove
Dallas, Texas 75248
Sandra Cobb 150 912,000
5990 Westgrove
Dallas, Texas 75248
Consultants:*
J.T. Williams 106,667
4149 Bellaire, #102
Houston, Texas 77025
James Twedt 106,666
20244 NW 94rd Ave.
Tualatin, OR 97062
Frank R. Neukomm 106,667
6601 Kirby Drive, #600
Houston, Texas 77005
6,400,000
*Also, see Exhibit I.
<PAGE>
EXHIBIT B
INTERCONTINENTAL STRATEGIC MINERALS, INC.
AUDITED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED DECEMBER 31,1997 AND 1996
<PAGE>
<PAGE>
INTERCONTINENTAL STRATEGIC MINERALS, INC.
[A DEVELOPMENT STAGE COMPANY]
FINANCIAL STATEMENTS
December 31, 1997 and 1996
[WITH INDEPENDENT AUDITORS' REPORT]
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
Intercontinental Strategic Minerals, Inc.
We have audited the balance sheets of Intercontinental Strategic Minerals,
Inc. [a development stage company] as of December 31, 1997 and 1996, and the
related statements of operations, stockholders' equity/(deficit), and cash
flows for the years ended December 31, 1997 and 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of Intercontinental Strategic Minerals,
Inc. for the period from July 16, 1981 [inception] to December 31, 1990, were
audited by other auditors, whose report dated January 31, 1991, expressed an
unqualified opinion on those statements.
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 Intercontinental Strategic
Minerals, Inc. as of December 31, 1997, and the results of its operations and
its cash flows for the period then ended in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that
Intercontinental Strategic Minerals, Inc. will continue as a going concern.
As discussed in Note 2 to the financial statements, the Company has incurred
losses from inception amounting to $99,838, and has a net working capital
deficit as of the audit date. These issues raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 2. The financial statements do not include
any adjustment that might result from the outcome of this uncertainty.
/S/Mantyla, McReynolds & Associates
MANTYLA, McREYNOLDS & ASSOCIATES
Salt Lake City, Utah
February 27, 1998
<TABLE>
INTERCONTINENTAL STRATEGIC MINERALS, INC.
[A Development Stage Company]
Balance Sheet
December 31, 1997 and 1996
<CAPTION>
ASSETS
1997 1996
<S> <C> <C>
Current Assets $ -0- $ -0-
Total Assets $ -0- $ -0-
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Payable to stockholder $ 6,588 $ 3,367
State franchise taxes payable 100 100
Total Current Liabilities 6,688 3,467
Total Liabilities 6,688 3,467
Stockholders' Deficit - Note 1:
Common stock, $.0005 par value;
authorized 200,000,000 shares; issued
and outstanding 13,250,000 6,625 6,625
Additional paid-in capital 86,525 86,525
Deficit accumulated during the
development stage (99,838) (96,617)
Total Stockholders' Deficit (6,688) (3,467)
Total Liabilities and
Stockholders Deficit $ -0- $ -0-
</TABLE>
See accompanying notes to financial statements
<TABLE>
INTERCONTINENTAL STRATEGIC MINERALS, INC.
[A Development Stage Company]
Statements of Operations
For the Years Ended December 31, 1997 and 1996
And for the Period from Inception [July 16, 1981]
Through December 31, 1997
<CAPTION>
Year Ended Year Ended Inception
Dec. 31, Dec. 31, to Dec. 31,
1997 1996 1997
<S> <C> <C> <C>
Revenue -0- -0- -0-
General and Administrative
Expenses 3,121 2,547 98,982
Operating Loss (3,121) (2,547) (98,982)
Other Income (Expense)
Interest income -0- -0- 164
Net Loss Before Taxes -0- -0- (98,818)
Income taxes 100 100 1,020
Net Loss $ (3,221) $ (2,647) $ (99,838)
Loss per share $ (.01) $ (.01)
Weighted Average Shares
Outstanding - Note 1 13,250,000 13,250,000
</TABLE>
See accompanying notes to financial statements
<TABLE>
INTERCONTINENTAL STRATEGIC MINERALS, INC.
[A Development Stage Company]
Statements of Stockholders' Equity/(Deficit)
For the Years Ended December 31, 1997 and 1996
and for the Period from Inception [July 16, 1981]
Through December 31, 1997
<CAPTION>
Deficit
Accumulated
Additional During Net
Common Common Paid in Development Stockholders'
Shares Stock Capital Stage Equity/(Deficit)
<S> <C> <C> <C> <C> <C>
Balance at Inception,
July 16, 1981 - $ - $ - $ - $ -
Issued 3,250,000 shares of
common stock to officers &
directors on July 16, 1981,
for $12,500 3,250,000 1,625 10,875 12,500
Issued 10,000,000 share of
common stock to the public
for $0.01 per share 10,000,000 5,000 95,000 100,000
Less costs of public
offering (20,000) (20,000)
Accumulated deficit
from inception [07/16/81]
through December 31, 1988 (92,500) (92,500)
Balance,
December 31, 1988 13,250,000 6,625 85,875 (92,500) -0-
Expenses paid on behalf
of the company by a
shareholder 550 550
Loss for the Year Ended
December 31, 1989 (793) (793)
Balance,
December 31, 1989 13,250,000 6,625 86,425 (93,293) (243)
Expenses paid on behalf
of the company by a
shareholder 100 100
Loss for the Year Ended
December 31, 1990 (331) (331)
Balance,
December 31, 1990 13,250,000 6,625 86,525 (93,624) (474)
Loss for the year ended
December 31, 1991 (179) (179)
Balance,
December 31, 1991 13,250,000 6,625 86,525 (93,803) (653)
Loss for the Year Ended
December 31, 1992 (167) (167)
Balance,
December 31, 1992 13,250,000 6,625 86,525 (93,970) (820)
Loss for the Year Ended
December 31, 1993 -0- -0-
Balance,
December 31, 1993 13,250,000 6,625 86,525 (93,970) (820)
Loss for the Year Ended
December 31, 1994 -0- -0-
Balance,
December 31, 1994 13,250,000 6,625 86,525 (93,970) (820)
Loss for the Year Ended
December 31, 1995 -0- -0-
Balance,
December 31, 1995 13,250,000 6,625 86,525 (93,970) (820)
Loss for the Year Ended
December 31, 1996 (2,647) (2,647)
Balance,
December 31, 1996 13,250,000 6,625 86,525 (96,617) (3,467)
Loss for the Year Ended
December 31, 1997 (3,221) (3,221)
Balance,
December 31, 1997 13,250,000 $ 6,625 $86,525 $ (99,838) $ (6,688)
</TABLE>
See accompanying notes to financial statements
<TABLE>
INTERCONTINENTAL STRATEGIC MINERALS, INC.
[A Development Stage Company]
Statements of Cash Flows
For the Years Ended December 31, 1997 and 1996
And for the Period From Inception [July 16, 1981]
Through December 31, 1997
<CAPTION>
Inception
Year Ended Year Ended to
12/31/97 12/31/96 12/31/97
<S> <C> <C> <C>
Cash Flows from Operating
Activities:
Net Loss $ (3,221) $ (2,647) $ (99,838)
Adjustments to reconcile
net loss to net cash
provided by/(used for)
operating activities:
Expenses paid on behalf
of company by a
shareholder 3,221 3,367 7,238
Increase (decrease)in
franchise taxes payable -0- (720) 100
Net Cash Used in
Operating Activities -0- -0- (92,500)
Cash Flows From Financing
Activities:
Proceeds from issuance of
common stock -0- -0- 92,500
Net Increase (Decrease) in cash -0- -0- -0-
Beginning Cash -0- -0- -0-
Ending Cash $ -0- $ -0- $ -0-
Supplemental Disclosure of
Cash Flow Information
Cash paid during the period
for interest $ -0- $ -0- $ -0-
for taxes $ -0- $ -0- $ -0-
</TABLE>
See accompanying notes to financial statements
INTERCONTINENTAL STRATEGIC MINERALS, INC.
[A Development Stage Company]
Notes to Financial Statements
December 31, 1997
Note 1 Summary of Significant Accounting Policies
(a) Organization and History:
The Company incorporated under the laws of the State of Utah on July
16, 1981, under the name of Intercontinental Strategic Minerals, Inc.
The Company was formed primarily for the purpose of engaging in the
business of acquiring interests in mining properties for exploration,
development and/or resale and otherwise buying, selling, trading and dealing
with natural resource properties. In 1983, all assets and liabilities were
liquidated and the Company has had no activity since then. The Company is
currently seeking new business opportunities and is classified as a
development stage company for financial reporting purposes.
(b) Basis of Presentation:
The accompanying financial statements have been prepared on a going
concern basis which contemplates the realization of assets and the
satisfaction of liabilities and commitments in the normal course of business.
The Company plans to seek additional capital to continue as a going concern
through merger or acquisition of existing companies.
(c) Loss per Share:
Loss per share of common stock is based on the weighted average
number of shares issued and outstanding.
(d) Provision for Taxes:
No provision for federal income taxes has been made due to the
Company's dormant status for the years after December 31, 1988. State
franchise taxes have been accrued at the minimum amounts required by the state
of Utah, along with penalties and interest due.
(e) Use of Estimates in Preparation of Financial Statements:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(f) Statement of Cash Flows
For purposes of the statements of cash flows, the Company considers
cash on deposit in the bank to be cash. The Company has $0 cash at December
31, 1997.
Note 2 Liquidity
The Company has incurred losses from inception amounting to $99,838,
and has a net working capital deficit at December 31, 1997. Financing the
Company's activities to date has been primarily generated from the issuance of
its shares and loans from shareholders. The Company's ability to achieve a
level of profitable operations and/or additional financing impacts the
Company's ability to continue as it is presently organized. Management is
currently seeking a well-capitalized merger candidate in order to commence
operations.
Note 3 Related Party Transactions
A stockholder has paid expenses on behalf of the Company in the
amount of $6,588, as of December 31, 1997.
Note 4 Common Stock
On January 14, 1998, the Company resolved to issue 15,000,000
restricted and unregistered shares of common stock to a shareholder as
consideration for expenses paid on behalf of the Company and for consulting
services.
<PAGE>
EXHIBIT C
None.
<PAGE>
EXHIBIT D
COMPUTER AUTOMATION SYSTEMS, INC.
BALANCE SHEET DATED JUNE 29,1998
AND
PROFIT AND LOSS STATEMENT FROM INCEPTION (February 13,1998)
TO JUNE 29,1998
<PAGE>
<TABLE>
Computer Automation Systems, Inc.
Balance Sheet
As of June 29, 1998
Jun 29,'98
<S> <C>
ASSETS
Current Assets
Checking/Savings
WELLS FARGO BANK 445.00
Total Checking/Savings 445.00
Accounts Receivable 38,495.13
Accounts Receivable
Total Accounts Receivable 38,495.13
Other Current Assets
Inventory Asset 4,514.45
Total Other Current Assets 4,514.45
Total Current Assets 43,454.58
Fixed Assets
Equipment CA 233,287.83
Office Equipment 4,909.48
Total Fixed Assets 238,197.31
Other Assets
Inventory 2,300.20
Organization Cost 310.00
Total Other Assets 2,610.20
TOTAL ASSETS 284,262.09
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
Accounts Payable 11,973.15
Total Accounts Payable 11,973.15
Total Current Liabilities 11,973.15
Long Term Liabilities
Equipment Contract 8,287.83
Shareholder Loan CM 57,443.12
Shareholder Loans Cherry 10,918.97
Total Long Term Liabilities 16,649.92
Total Liabilities 88,623.07
Equity
Common Stock 1,000.00
Paid In Capital 225,000.00
Net Income -30,360.98
Total Equity 195,639.02
TOTAL LIABILITIES & EQUITY 284,262.09
</TABLE>
<TABLE>
Computer Automation Systems, Inc.
Profit and Loss
February 13 through June 29, 1998
Feb 13 - Jun 29, '98
<S> <C>
Ordinary Income/Expense
Income
OTHER 2,834.00
RACKMOUNT 46,569.00
REPAIRS& SERVICE CA 18,243.00
Total Income 67,646.00
Cost of Goods Sold
Cost of Goods Sold
Contracted Manufacturer 533.80
Freight 185.76
Purchased Parts 31,439.46
Cost of Goods Sold - Other 0.00
Total Cost of Goods Sold 32,159.02
Total COGS 32,159.02
Gross Profit 35,486.98
Expense
AIR TRAVEL 356.00
CONTRACTED SERVICES 58,513.07
Legal Fees 2,500.00
MEALS & PROMOTION 44.00
OFFICE SUPPLIES 1,610.41
POSTAGE 419.82
TELEPHONE 2,404.66
Total Expense 65,847.96
Net Ordinary income -30,360.98
Other Income/Expense
Other Expense
contract Services 0.00
Total Other Expense 0.00
Net Other Income 0.00
Net Income -30,360.98
</TABLE>
EXHIBIT E
LAW OFFICES OF
FRANKLIN HARRIS HYTKEN, P.C.
16960 DALLAS PARKWAY. SUITE 1000
DALLAS, TEXAS 75248-1937
NICHOLAS C. WISEMAN (972)713-8083
FAX (972) 713-8790
MAY 22, 1998
To Whom It may Concern:
I represent Mike Cherry and Computer Automation Systems, Inc. Mike
asked me to write regarding his ownership interest in Computer Automation
Systems, Inc. and the litigation involving Cytec Software Systems, Inc.
Currently, Mr. Cherry has filed a lawsuit against Cytec Software
Systems, Inc. and Oscar De Leon, who is the President of Cytec. This lawsuit
alleges that Cytec is illegally holding computer repair parts, etc. belonging
to Mr. Cherry. Recently, Mr. De Leon filed a general denial of Mr. Cherry's
lawsuit without including any counterclaims against Mr. Cherry or any other
person or entity. To date, Cytec has not responded to the lawsuit and has not
filed a counterclaim against Mr. Cherry or any other person or entity.
Based on my conversations with Mr. Cherry, Cytec and Mr. De Leon are
illegally holding on to computer repair equipment, computer control equipment,
parts, plans, specification and other computer related items which were owned
by Mr. Cherry. This fact has been corroborated by Robert A. Lloyd who is the
former Chief Financial Officer of Computer Automation Services, Inc. and who
sold Mr. Cherry these assets. I anticipate that the testimony in lawsuit will
further corroborate Mr. Cherry's position and he will eventually recover his
assets.
Sincerely,
/s/ Nicholas C. Wiseman
<PAGE>
CAUSE NO.
IN THE DISTRICT COURT
MICHAEL CHERRY
Plaintiff,
DALLAS COUNTY, TEXAS
CYTEC SOFTWARE SYSTEMS, INC
and OSCAR DE LEON
Defendants JUDICIAL DISTRICT
PLAINTIFF'S ORIGINAL PETITION
T0 THE HONORABLE JUDGE OF SAID COURT:
COMES NOW, Michael Cherry (Plaintiff) in the above entitled and numbered
cause, complaining of Cytec Softvare Systems, Inc. and Oscar De Leon
(Defendants) for cause of action file this his Plaintiff's Original Petition,
and would respectfully show the Court as follows:
I.
PARTIES
PLAINTIFF:
1.1 Plaintiff is an individual residing in Dallas, Dallas County, Texas.
DEFENDANT.
2.1 Cytec Software Systems, Inc. is a Texas corporation doing business in
Dallas, Dallas County, Texas and may be served by and through its registered
agent for service at:
1311 East 7th Street, Austin, Texas 79702.
3.1 Oscar De Leon is on individual who may be served at:
10877 Sanden Drive, Dallas, Texas 75238.
II.
FACTUAL SUMMARY
2.1 On or about May 27, 1994, Plaintiff agreed to begin a.business association
with Defendants. Plaintiff among other things, would bring to Defendants
specialized knowledge, proprietary business information, parts and equipment
and personnel so that he and Defendants could manufacture and service
electronic equipment and other related goods. Defendant among other things,
were to provide funding for the now business activities.
2.2 This association between, Mike Cherry and Defendants was based, among
other things, on representations and promises by Oscar De Leon, individually
and as the president of Cytec Software Systems, Inc., including but not
limited to, that Mike Cherry would be granted a fifty (50%) percent ownership
interest in Cytec Software Systems, Inc. Mike Cherry reasonably relied
upon the representations of Cytec Software Systems, Inc. and/or Oscar De Leon
and the information they gave him about the business in deciding to acquire
the fifty (50%) percent interest in Cytec Software Systems, Inc. and moving
his manufacturing and repair activities to Cytec Software Systems. Inc.
2.3 Pursuant to the agreement, Mike Cherry brought the specialized knowledge,
proprietary business information, parts and electronic equipment and
personnel, that he bad promised. The electronic equipment and parts were used
in the new business but the title was never transferred and to this day
remains with Mike Cherry.
2.4 In February of 1998, Oscar De Leon ordered Mike Cherry off Cytec Software
Systems, Inc's Premises. Since that time, despite repeated efforts to retrieve
his electronic equipment, Cytec Software Systems, Inc. and Oscar De Leon have
refused to return the equipment over to Mike Cherry and have refused to give
him the stock certificate that was promised.
CAUSE OF ACTION
Defendants made false promises to transfer stock to Plaintiff. Defendant's
promises were material and made with the intention to induce Defendant to join
their business association. Defendants made their promises with the intention
of never fulfilling them. Plaintiff relied on Defendants promises when he
agreed to do business with them. As such, Defendants' conduct is a fraudulent
stock transaction and a violation of sec 27.01 of the Texas Business and
Commerce Code. Defendants' conduct is also common law fraud.
VI.
CONVERSION
4.1 Defendants' unauthorized aud illegal refusal to return Plaintiff's
electronic equipment and repair parts constitutes a conversion of Plaintiff's
property.
V.
DAMAGES
5.1 Plaintiff has suffered damages in excess of the jurisdictional limits of
the Court.
VI.
EXEMPLARY DAMAGES
6.1 Plaintiff further alleges that by reason of the fact the Defendant knew
that the representations described above were false at the time they were
made, the representations were willful and malicious and constitute conduct
for which the law allows the imposition of exemplary damages. In this
connection, Plaintiff will show that he has incurred significant expenses,
including attorney's fees, in the investigation and prosecutiou of this
action. Accordingly, Plaintiff requests that exemplary damages be awarded
against the Defendants in a sum which exceeds the minimum, jurisdictional
limits of the Court.
Wherefore, promises considered, Plaintiff prays that it have judgment
against Defendants for Plaintiff's actual damages, costs of court, attorney's
fees, prejudgment and post judgment interest as provided by law, exemplary
damages and any other and further relief both in law and in equity to which
Plaintiff may show himself justly entitled.
Respectfully submitted
NICHOLAS C. WISEMAN
Bar Card No. 00792922
FRANKLIN HARRIS HYTKEN, P.C.
16950 Dallas Parkway
Suite 1000
Dallas, Texas 75248-1937
Telephone (972) 713-8083
Fax (972) 713-8790
ATTORNEY FOR THE PLAINTIFF
<PAGE>
EXHIBIT F
Intercontinental Strategic Minerals, Inc.
5525 South 900 East, #110
Salt Lake City, Utah 84117
Re: Exchange of shares of Computer Automation Systems,
Inc., a Texas corporation ("CASI"), for shares of
Intercontinental Strategic Minerals, Inc., a Nevada
corporation ("ISM" or the "Company")
Dear Ladies and Gentlemen:
Pursuant to that certain Agreement and Plan of Reorganization (the
"Plan") between the undersigned, CASI, the other stockholders of CASI and ISM,
I acknowledge that I have approved this exchange; that I am aware of all of
the terms and conditions of the Plan; that I have received and personally
reviewed a copy of the Plan and any and all material documents regarding the
Company, including, but not limited to Articles of Incorporation, Bylaws,
minutes of meetings of directors and stockholders and financial statements. I
represent and warrant that I have sufficient knowledge and experience to
understand the nature of the exchange and am fully capable of bearing the
economic risk of the loss of my entire cost basis.
I further understand that immediately prior to the completion of
the Plan, ISM had no assets and no liabilities, of any measurable value, and
that in actuality, the completion of the Plan and the exchange of my shares of
CASI for shares of ISM results in a decrease in the actual percentage of
ownership that my shares of CASI represented in CASI prior to the completion
of the Plan.
I understand that you have and will make books and records of your
Company available to me for my inspection in connection with the contemplated
exchange of my shares, options or warrants, and that I have been encouraged to
review the information and ask any questions I may have concerning the
information of any director or officer of the Company or of the legal and
accounting firms for the Company. I understand that the accountant for the
Company is Mantyla, McReynolds & Associates, 5872 South 900 East, #250, Salt
Lake City, Utah 84121, Telephone (801) 269-1818; and that legal counsel for
ISM is Leonard W. Burningham, Esq., 455 East 500 South, #205, Salt Lake City,
Utah 84111, Telephone (801) 3637411. 1 further understand that, upon the
completion of the Plan, no accountant, attorney, employee or consultant will
have any claim of any kind against the Company for any event or occurrence on
or prior to the completion of the Plan.
I also understand that I must bear the economic risk of ownership
of any of the ISM shares for a long period of time, the minimum of which will
be one (1) year, as these shares are "unregistered" shares and may not be sold
unless any subsequent offer or sale is registered with the United States
Securities and Exchange Commission or otherwise exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Act"), or other
applicable laws, rules and regulations.
I intend that you rely on all of my representations made herein
and those in the personal questionnaire (if applicable) I provided to CASI for
use by ISM as they are made to induce you to issue me the shares of ISM under
the Plan, and I further represent (of my personal knowledge or by virtue of my
reliance on one or more personal representatives), and agree as follows, to-
wit:
1 . That the shares being acquired are being received for
investment purposes and not with a view toward further distribution;
2. That I have a full and complete understanding of the phrase
"for investment purposes and not with a view toward further distribution";
3. That I understand the meaning of "unregistered" shares and
know that they are not freely tradeable;
4. That any stock certificate issued by you to me in connection
with the shares being acquired shall be imprinted with a legend restricting
the sale, assignment, hypothecation or other disposition unless it can be made
in accordance with applicable laws, rules and regulations;
5. I agree that the stock transfer records of your Company
shall reflect that I have requested the Company not to effect any transfer of
any stock certificate representing any of the shares being acquired unless I
shall first have obtained an opinion of legal counsel to the effect that the
shares may be sold in accordance with applicable laws, rules and regulations,
and I understand that any opinion must be from legal counsel satisfactory to
the Company and, regardless of any opinion, I understand that the exemption
covered by any opinion must in fact be applicable to the shares;
6. That I shall not sell, offer to sell, transfer, assign,
hypothecate or make any other disposition of any interest in the shares,
options or warrants being acquired except as may be pursuant to any applicable
laws, rules and regulations;
7. I fully understand that my shares which are being exchanged
for shares of the Company are "risk capital," and I am fully capable of
bearing the economic risks attendant to this investment, without
qualification; and
8. I also understand that without approval of counsel for ISM,
all shares of ISM to be issued and delivered to me in exchange for my shares
of CASI shall be represented by one certificate only and which such
certificate shall be imprinted with the following legend or a reasonable
facsimile thereof on the front and reverse sides thereof:
The shares, options or warrants of stock represented
by this certificate have not been registered under the
Securities Act of 1933, as amended, and may not be
sold or otherwise transferred unless compliance with
the registration provisions of such Act has been made
or unless availability of an exemption from such
registration provisions has been established,, or
unless sold pursuant to Rule 144 under the Act.
Any request for more than one stock certificate must be
accompanied by a letter signed by the requesting stockholder setting forth all
relevant facts relating to the request. ISM will attempt to accommodate any
stockholders' request where ISM views the request is made for valid business
or personal reasons so long as in the sole discretion of ISM, the granting of
the request will not facilitate a "public" distribution of unregistered shares
of ISM.
You are requested and instructed to issue a stock certificate as
follows, to-wit:
___________________________________________________
(Name(s) and Number of Shares)
___________________________________________________
(Address)
___________________________________________________
(City, State and Zip Code)
If joint tenancy with full rights of survivorship is desired, put
the initials JTRS after your names.
Dated this day of ______ day of _________________________, 1998.
Very truly yours,
/s/Michael E. Cherry
/s/Sandra C. Cobb
/s/Sylvia A. McCollum
<PAGE>
EXHIBIT G
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Intercontinental Strategic
Minerals, Inc., a Nevada corporation ("ISM"), represents and warrants the
following as required by the Agreement and Plan of Reorganization (the "Plan")
between ISM and Computer Automation Systems, Inc., a Texas corporation
("CASI"), and the CASI Stockholders, to-wit:
1 . That the undersigned, William Hollingsworth, is the
President of ISM and has been authorized and empowered by its Board of
Directors to execute and deliver this Certificate to CASI and the CASI
Stockholders;
2. Based upon the personal knowledge, information and
belief of the undersigned and opinions of counsel for ISM regarding the Plan:
(i) All representations and warranties of ISM contained
within the Plan are true and correct;
(ii) ISM has complied with all terms and provisions
required of it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of ISM as set forth in its
financial statements for the periods ended December
31, 1997 and 1996, except as set forth in Exhibit C
to the Plan.
INTERCONTINENTAL STRATEGIC
MINERALS, INC.
By/s/Douglas Eames
Douglas Eames, Vice President
<PAGE>
EXHIBIT H
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Computer Automation Systems,
Inc., a Texas corporation ("CASI"), represents and warrants the following as
required by the Agreement and Plan of Reorganization (the "Plan") between
CASI, the CASI Stockholders and Intercontinental Strategic Minerals, Inc., a
Nevada corporation ("ISM"), to-wit:
1 . That he is the President of CASI and has been authorized and
empowered by its Board of Directors to execute and deliver this Certificate
to, ISM;
2. Based on his personal knowledge, information, belief.
(i) All representations and warranties of CASI contained
within the Plan are true and correct;
(ii) CASI has complied with all terms and provisions
required of it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of CASI as set forth in its
unaudited balance sheet dated June 29, 1998, and a
profit and loss statement from inception (February
13, 1998) to June 29, 1998, except as
set forth in Exhibit E to the Plan.
COMPUTER AUTOMATION SYSTEMS, INC.
By/s/Michael E. Cherry
Michael E. Cherry, President
<PAGE>
EXHIBIT I
Consultant Shares
Shares
J. T. Williams 106,667
4149 Bellaire #102
Houston, Texas 77005
James Twedt 106,666
20244 NW 93rd Ave.
Tualatin, OR 97062
Frank R. Neukomm 106,667
6601 Kirby Drive, #600
Houston, Texas 77005
SUBSIDIARIES
Computer Automated Systems, Inc., a Texas corporation, a wholly owned
subsidiary.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-END> JUN-30-1999 DEC-31-1998
<CASH> 93866 16079
<SECURITIES> 0 0
<RECEIVABLES> 195063 224044
<ALLOWANCES> 0 11997
<INVENTORY> 109077 8848
<CURRENT-ASSETS> 400507 307301
<PP&E> 105007 56323
<DEPRECIATION> 15195 9219
<TOTAL-ASSETS> 493409 357349
<CURRENT-LIABILITIES> 186827 394426
<BONDS> 0 0
0 0
0 0
<COMMON> 8286 8000
<OTHER-SE> 298296 (45077)
<TOTAL-LIABILITY-AND-EQUITY> 493409 357349
<SALES> 1168103 922708
<TOTAL-REVENUES> 1168103 922708
<CGS> 654490 651630
<TOTAL-COSTS> 654490 651630
<OTHER-EXPENSES> 320787 483601
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 192826 (212523)
<INCOME-TAX> 63633 (66134)
<INCOME-CONTINUING> 129193 (146389)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 129193 (146389)
<EPS-BASIC> .02 (.03)
<EPS-DILUTED> .02 (.03)
</TABLE>
