As filed with the Securities and Exchange Commission on August 23, 1999
File No. 333-80429
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form SB-1/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ASSET SERVICING CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 522200 75-2823489
(State or jurisdiction of (Primary Industrial I.R.S. Employer
incorporation or organization) Classification Code No.) Identification No.
709 B West Rusk, Suite 580, Rockwall, Texas 75087 (214) 212-2307
(Address, including the ZIP code & telephone number, including area code of
Registrant's principal executive office)
Charles E. Smith
709 B West Rusk, Suite 580, Rockwall, Texas 75087 (214) 212-2307
(Name, address, including zip code, and telephone number, including area code
of agent for service)
Copies to:
French & Hamilton
Attorneys at Law
14651 Dallas Parkway, Suite 434
Dallas, Texas 75248
(972) 404-1414
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
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CALCULATION OF REGISTRATION FEE
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Title of Each Amount Proposed Maximum Proposed Amount of
Class of Securities To be Offering Price Maximum Aggregate Registration
to be Registered Registered Per Unit Offering Price Fee
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<S> <C> <C> <C> <C>
Common Stock,
$0.001 par value
Minimum 50,000 $1.00 $ 50,000 $278
Maximum 1,000,000 $1.00 $1,000,000 $278
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that the registration statement
shall hereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Initial Public Offering
Prospectus
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Asset Servicing Corporation
Minimum of 50,000 shares for a total of $50,000, and a
Maximum of 1,000,000 shares for a total of $1,000,000
$1.00 per share
Asset Servicing Corporation
709 B West Rusk, Suite 580
Rockwall, Texas 75087
The Offering:
Per Share Minimum Maximum
--------- ------- ----------
Public Price . . . . . . . $1.00 $50,000 $1,000,000
Underwriting discounts . . 0.06 3,000 60,000
Proceeds to Issuer . . . . $0.94 $47,000 $ 940,000
Charles Smith is the sole officer and director and he is offering the securities
to investors. The funds will be held in escrow by an attorney until the minimum
amount is sold and the offering will end 180 days after the effective date of
this registration statement.
This is our initial public offering, and no public market currently exists for
our shares. The offering price may not reflect the market price of our shares
after the offering.
We intend to list the Company for trading on the NASDAQ Bulletin Board.
----------------------------
This Investment Involves a High Degree of Risk. You should Purchase Shares Only
If You Can Afford A Complete Loss. See "Risk Factors" Beginning on Page 3.
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor any state securities commission nor has the Commission
passed upon the accuracy or adequacy of this Prospectus or if it is truthful or
complete. Any representation to the contrary is a criminal offense.
-----------------------------
These securities are offered for sale by the sole officer and director of the
Company.
This Prospectus is dated August 23, 1999
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PROSPECTUS SUMMARY
OUR COMPANY
We are a new company engaged in the leasing of equipment and vehicles
to businesses with a class B or class C credit rating who would have a difficult
time getting financing at a bank or other traditional sources. We will
concentrate on equipment and vehicles that are an integral part of the business
to secure our position and secure our revenue stream as much as possible.
THE OFFERING
Minimum Maximum
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Common stock offered 50,000 1,000,000
Total shares outstanding after this offering 250,000 1,200,000
RISK FACTORS:
We are a new company with no operating history with a sole officer and director
and therefore an investor is relying on the ability of the sole officer and
director to accomplish the plan of business, without the oversight of outside
directors. If we are unsuccessful, there could be a loss of your entire
investment or, though we are successful, there still may not be a market for
your common stock; if a market does develop, the market price may be lower than
that stated in this offering. We will have stiff competition and will have
ongoing capital needs; if we raise only the minimum amount in this offering, we
may have to raise additional funds on unfavorable terms or may end up with a non
diversified loan/lease portfolio. This industry has some material business
risks, such as servicing the leases, and mistakes could cause the company to
take longer to implement its plan of business or cause more severe problems in
the company which could cause a loss of your entire investment.
USE OF PROCEEDS:
Most of the money you invest will represent proceeds to the company. The sole
officer and director will determine what and how it will be spent without the
oversight of outside directors. A portion of the money will be used for expenses
of this offering, part will be used to buy equipment to lease out, and part will
be used for marketing and general working capital. However, since most of the
money you invest represents proceeds to the company, it will be used for the
most part to purchase equipment for a given leasing contract. We will not
purchase equipment without a lease contract in place.
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DILUTION: You will suffer substantial dilution if you invest in this offering.
After After
Actual Minimum Maximum
April 30, 1999 Offering Offering
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* Consideration paid by the sole
officer and director July 1998 0.0125
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* Consideration paid per share
in this offering 1.00
* Net tangible book value per share
before/after this offering (0.01) ( 0.11) (0.67)
* Per share dilution to new stockholders ($0.89) (0.33)
</TABLE>
CORPORATE INFORMATION
We were incorporated in Nevada on May 27, 1998. Our executive offices
are located at 709 B West Rusk, Suite 580, Rockwall, Texas 75087, and our
telephone number is 214-212-2307. The founder, Charles Smith is our sole
director, officer and employee and holds 200,000 shares of common stock which we
issued to him for $2,500, composed of $500 cash and $2,000 of his services.
RISK FACTORS
1. Start up business with no history of operations: We are a start up
business with no operating history with no contracts or leases in
place; as such, you are relying on the ability of the sole officer and
director to successfully implement the plan of business of the company.
and as such our business is subject to the all of the risks associated
with a start up enterprise which has no previous operations.
2. Capital needs: The minimum offering of $50,000 may not provide
sufficient capital to meet our initial goal of financing enough leases
to the point of seasoning the loans to the point where we can sell them
for a profit and generate new leases and cash flow to finance continued
growth. There is no assurance that we will be able to attract
sufficient If we raise only the minimum amount in the this offering, we
will need to attract additional funds to finance more leases to
continue our growth, it and attracting that capital may not be
advantageous to us and could require us to sell our common stock on a
basis which would further dilute the common stock you purchase in this
offering.
3. Reliance on sole officer and director and Lack of experience: As
manager, I have no previous experience in starting this particular
kind of business and if you invest in this offering, you will be
relying upon me to carry out the plan of business and relying on me
not to terminate my relationship with the company. Should my
relationship with the company terminate, it may be difficult for the
company to attract another person to complete the plan of business.
Possible loss of entire investment - Material business risks: If you
purchase common stock in this offering, you should be aware that, if
we are not successful in our business enterprise, that your investment
may be entirely lost. When making, servicing and selling leases there
are some inherent risks: (i) in making leases we have the risk of a
company misrepresenting their financial condition, management ability
or principal's character; (ii) in servicing leases we have the risk of
the company not being punctual in their payments due on the leases
because the payment history of the lessee is a key factor in
`seasoning' the leases prior to sale/financing; and (iii) in selling
leases we have the risk that market interest rates may rise therefore
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making the interest rates factored into our leases low compared with
prevailing interest rates - the effective interest rate on our leases
will determine the price we can sell the lease contract for because
the prevailing market interest rates will determine what kind of
return an investor or company is looking for. (We will not purchase
any property and hold it for lease. All property/equipment will be
purchased after the lease document is signed.)
4. "Best Efforts" offering: We are offering common stock for sale for 180
days from the date of the effective date of this prospectus in which to
sell at least the minimum number of 50,000 shares for $50,000. If you
subscribe in this offering and the offering is not consummated, your
funds could be tied up for this time period (up to 180 days) with no
interest being due or payable to you.
5. No outside directors: We have no outside directors and therefore the
success of the company is in the hands and control of our sole officer
and director. Having the success of the company in the hands of one
person has its inherent risks (see 4. above).
6. No market for the common stock: It is possible that no public market
will develop for the company securities which would make the investment
in this offering illiquid and you may not be able to sell their
securities in the future.
7. Non-diversity of loan/lease portfolio: If the minimum offering amount
is sold, the loan/lease portfolio of the company will not be
diversified. Until we raise more funds in the offering and our
portfolio becomes more diversified, our risk will be concentrated in a
very few number of leases.
PLAN OF DISTRIBUTION
The common stock is being sold on a "best efforts" basis on behalf of
the Company by the sole officer and director of our Company, who will receive no
commission on such sales.
Funds raised in this offering before the minimum amount is raised will
be held under an escrow agreement with T. Alan Owen & Associates, P.C.,
Attorneys at Law. Such funds will be refunded immediately if the minimum amount
is not sold within 180 days.
We will also invite licensed soliciting broker-dealers that are members
of the National Association of Securities Dealers, Inc. to participate, who may
hereafter be engaged by us to sell the common stock since at this time we have
no underwriting agreement with any licensed broker-dealer. We will pay a 6%
commission to the registered broker dealers. In addition, the shares may be
offered and sold by Our offering will continue for a maximum of 180 days from
the effective date of this registration statement. Since we have no underwriting
agreement with a licensed broker-dealer, the success of this offering is based
on the efforts of the sole officer and director of the Company at this time. We
anticipate selling our common stock to investors in the United States, Canada
and in some foreign countries.
Mr. Smith or his associates/affiliates may not purchase securities in
this offering in order to reach the minimum. They may purchase shares after the
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minimum has been met but that amount is limited to ten percent (10%) of the
total number of shares sold.
Certificates for shares of common stock sold in this offering will be
delivered to the purchasers by Signature Transfer Company the stock transfer
company chosen by the company as soon as the Minimum subscription amount is
raised. See the section titled "TRANSFER AGENT".
USE OF PROCEEDS
The total cost of the minimum offering, exclusive of any sales
commissions paid to participating broker dealers, is estimated to be $14,128
($31,128 if the maximum is sold) consisting primarily of legal, accounting and
blue sky fees. There are no agreements or arrangements in place as of the date
of this Prospectus for participation of any broker dealers in this offering.
The following table sets forth how we anticipate using the proceeds
from selling common stock in this offering, reflecting the Minimum and Maximum
subscription amounts:
$50,000 $500,000 $1,000,000
Minimum Maximum
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Legal, Accounting & Printing Expenses (1) 8,000 12,000 25,000
Other Offering Expenses (2) 6,128 6,128 6,128
Marketing Expenses & Due Diligence (3) 3,000 30,000 60,000
Net Proceeds to Company 32,872 402,872 804,872
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TOTAL $ 50,000 $ 500,000 $1,000,000
(1) This amount of the offering proceeds will be used to pay for, or reimburse
for, these expenses.
(2) This amount includes SEC registration fee, Blue Sky fees and miscellaneous
expenses.
(3) We anticipate paying this amount to registered broker-dealers who might
help us raise money in this offering. This represents a commission of six
percent (6%) of the offering amount ($3,000 if brokers raise the minimum amount
for us and $60,000 if brokers raise the maximum amount for us). If registered
broker dealers do not help us raise funds, this amount will represent additional
proceeds to the company.
The following table sets forth how we anticipate using the net proceeds to the
company:
$50,000 $500,000 $1,000,000
Minimum Maximum
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Purchase of equipment $ 2,500 $ 20,000 $ 45,000
Purchase of software -0- 30,000 60,000
General corporate overhead 5,372 40,000 80,000
Funding of lease contracts 25,000 312,872 619,872
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Proceeds to company $ 32,872 $402,872 $804,872
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Discussion of the proceeds and the business is included in the following
section.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
The vehicle and equipment leasing industry is a non-regulated industry
(except for the general issue of usury) and has become much more widely accepted
in the recent past as more and more individuals and businesses have turned to
leasing as an alternative financing method. There are a tremendous number of
companies in the equipment leasing business performing some function, whether it
be of lender, broker, marketer or leasing company.
The vehicle and equipment leasing industry is very fragmented because
there are a large number of companies, both big and small, who service different
segments of the market and many specialize in particular products, for example,
automobiles or computers. In general, the key to the building of a business is
in the marketing and obtaining of loans. Any company with funds can set up an
operation to lend those funds out but the keys are: (i) being able to attract
the type of leases you want to finance and qualify them, (ii) servicing those
lease, and (iii) if the company should sell those lease contracts - their
portfolio - to sell them at a favorable rate so that a profit is made.
There are two types of leases: capital leases and operating leases.
Generally, companies who market lease financing will have a higher interest rate
than a bank will charge. However, one of the biggest advantages of lease
financing is that a borrower does not have to tie up his credit line at the bank
and in if it is an operating lease, it is not reflected as a liability on a
company's balance sheet. A capital lease is a lease where the buyer pays a
certain amount for a defined number of months and then has the option to buy the
equipment for some nominal amount, like ten dollars. An operating lease is
similar to a capital lease except that at the end of the term of the lease, the
buyout is at a higher amount - for example, ten percent or fair market value.
Attracting the type of loans you want to finance first involves
determining whether you want to concentrate on a particular product or a
particular industry or deciding your target market based on some other set of
factors. We as a company have decided to concentrate on small to medium sized
businesses with a class B or C credit rating. This means in general that they
would not be able to go to a bank for financing but would have to search for an
alternative type of financing like leasing. After that, a company needs to
market their lease financing to those markets and when they have potential
borrowers, they have to qualify them. Qualifying a potential borrower is the
process of doing some due diligence on their financial position, their payment
history to others as reflected on their credit report, and integrity of
management.
Servicing the lease contracts involves setting up a payment schedule
for the leases and collecting the payments. The main objective in this area is
to ensure the payments are collected on time. When we have received payments on
a lease contract for six months or twelve months, depending on the buyer, it is
then categorized as "seasoned" - to a buyer, this means the lease contract can
reasonably be ensured to pay timely in the future. This is why it is so
important to qualify a potential borrower in the first phase of the process.
Once a company has seasoned lease contracts, they may keep the lease
contracts in their own portfolio or sell them to someone else. A company may
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keep the lease contracts in their own portfolio (not sell them) if it has a
large amount of funds available or designated for that purpose and they are
satisfied with the return on their funds. A company may sell the lease contracts
in order to make a profit and turn the funds over into new lease contracts and
repeat that cycle over and over again.
Brokering lease financing is another aspect of the leasing business
which small companies fill who don't have a large pool of capital of their own.
They are basically marketers who obtain customers who need and wish lease
financing and enter into relationships with large finance companies and put
together the financing and the lessee. Essentially they are putting together the
buyer (lessee) and the seller (finance company). For this they build in a fee
and can "fund" loans without concern about running out of capital.
We, as a company, will market our lease financing to small sized
companies that are available from existing relationships through our President.
The potential for these contracts are expected to total more in value than the
proceeds from this offering if the maximum amount were raised. We know from our
relationships with other businesses that there are a large number of businesses
that need financing that cannot get it through traditional sources, but have
good cash flow, integrity in management and that we can achieve a higher
interest rate and therefore a higher return through lease financing to these
businesses. We will choose to specialize in leasing vehicles and/or equipment to
this segment of the business population. After we have exhausted all the
opportunities from our contacts, we will then move to some sort of advertising
campaign to generate new business.
After securing lease contracts, we will season the loans and then make
a decision whether or not to sell them. After we have used all the funds
available for leasing, we anticipate being able to secure a line of credit with
a bank or other institution that will provide us additional capital to create
lease contracts with where we will then make a "spread"; "spread" is the
difference between what interest rate we charge in our lease contracts and the
rate we will pay to the bank.
If we are unable to secure a loan with a bank or other institution, we
will continue to service our current portfolio while looking for some
alternative capital sources. We will also broker loans if our funds run out
before we can arrange for some alternate financing arrangement within our
company. However, we believe that when we can show a track record, that many
financial institutions will want to partake of our success.
One way to enhance our success is to buy the equipment we lease at
wholesale prices and lease it based upon the retail value. This enhances our
rate of return.
As an example of a lease we might make, a Company A may come to us and
say we want to lease a shuttle bus, it doesn't have to be new, but has to have
low miles and be in good condition. We would buy a used, but relatively new
shuttle bus say for $20,000 and lease it to Company A for $650 per month with a
10% buyout at the end of the lease. This will give us an effective yield of over
thirty percent (30%). The lease in this case is based upon us being able to buy
the vehicle at a lower price because we have cash in hand.
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Assuming we raise the minimum amount in this offering, we will not have
a large surplus of cash. However, we will be able to finance one or two
contracts with the $32,872 proceeds to the company as well as using some for
general working capital of the company. We will not pay salaries until such time
as the company is generating revenue from contracts and/or fees; our overhead
will be minimal because we will be using the resources of our President, Mr.
Smith. Mr. Smith has many contacts and we should be able to quickly generate
lease contracts to use up the funds generated in a minimum offering. After those
funds are used up, we will need to concentrate on raising additional funds to
give us funds to secure more lease contracts.
Assuming we raise $500,000 in this offering, a midpoint between the
minimum and maximum, we will be able to secure a good number of lease contracts
and have a more diversified portfolio. With the $402,872 cash proceeds to the
company from this midpoint offering, we will purchase some software unique to
servicing the contracts, start some marketing through professional organizations
but put most of the funds into funding lease contracts. At such time that we use
all of our funds, there should be the start of a trend of the seasoning of the
contracts and this should give us some foundation to go into a financial
institution and arrange a line of credit. If we lack sufficient track record or
seasoning of the contracts, we will concentrate on raising additional funds
until the track record and seasoning of our contracts give us the ability to
secure a line of credit. If we are unable to secure one in the first year or
two, we may sell our contracts as a package and take our profit and start the
funding process all over again. At some point, our track record and seasoning of
the contracts will be sufficient to obtain a line of credit.
Assuming we raise the maximum offering which would result in proceeds
to the company of $804,872, we believe we will have sufficient funds to fund
contracts while we season the initial contracts. We will purchase software
unique to this industry to enable us to service the contracts, but the major
portion of all funds will be used to fund lease contracts since that is the way
we will build up our revenue and asset base (portfolio). Of course, if we raise
the maximum amount in this offering, we will have plenty funds to create a
diversified portfolio where problems with any one contract will not cause a
problem with our company as a whole. The real key is marketing and obtaining
good lease contracts and after that infrastructure is in place, to obtain some
sort of additional financing like a line of credit to continue our growth.
In summary then, the lease financing business is a non-regulated
business where we will market for lease contracts, obtain them, service them and
possibly sell them. If we can obtain lines of credit, we will be able to grow as
fast as our marketing efforts can bring good lease contracts to us.
The foregoing discussion contains forward looking statements that
involve risks and uncertainties. These statements refer to our future plans,
goals, objectives, expectations and intentions. These statements may be
identified by the use of words such as "plans", "expects", "intends", and
"anticipates", as well as similar expressions. Our actual results may vary
materially from those indicated in such forward looking statements. Factors that
could contribute to these differences include, but are not limited to, those
discussed in this section and elsewhere in this prospectus.
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DESCRIPTION OF PROPERTY
We have no real or personal property at the date of this offering.
MANAGEMENT OF THE COMPANY
The directors and officers of the Company, their ages and principal
positions are as follows:
Name Age Position
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Charles Smith 41 President; Secretary and Director
Background of Directors and Executive Officers:
Charles Smith. Mr. Smith formed the Company and at this time is its only officer
and director. His term as a director expires in May 2000. He graduated from
Boston University, Boston, Massachusetts in 1979 and since that time has been a
Certified Public Accountant involved in all phases of business including the
audit of companies and tax matters. He is a consultant to various companies
ranging from an art distribution company to a junior resource company which is
developing a gold property in Sinaloa State, Mexico.
Mr. Smith's business affiliations during the last five years follow:
Chairman - Dynacap Group, Ltd. - a consulting and management firm - 1992 to the
present.
Sole proprietor as a Certified Public Accountant - 1983 to the present.
Sole officer and Director - MC Cambridge, Inc. - a financial consulting
firm - 1997 to present.
In the risk factor section, reference was made to the risk that Mr.
Smith would not initially spend full time on the activities of the company and
that his current activities would take up some of his time. These activities
include the financial and management consulting responsibilities and the
accounting services he performs at this time. He can devote more and more time
to the activities of the company as time goes on since the financial and
management consulting can be cut back and even dropped at any time. Initially,
he expects to spend ten to fifteen hours per week and increase that weekly time
as the activities of the company require. Mr. Smith fully expects that the
company will raise sufficient funds in this offering so that he will devote
himself full time to the success of the company's plan of business.
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DIRECTOR AND EXECUTIVE COMPENSATION
Our sole officer and director has received no compensation other than
the 160,000 shares of common stock he received for services in May 1998 and has
no employment contract with the company.
Name of Person Capacity in which he served Aggregate
Receiving compensation to receive remuneration remuneration
- --------------------------------------------------------------------------------
Charles Smith President, Secretary 160,000 shares
and Treasurer of common stock
The common stock was issued soon after formation of the company and it
is impracticable to determine the cash value. The stock was issued over one year
ago for services performed which we cannot estimate the value since that work
continues through the filing and effectiveness of this registration statement,
with no other compensation to be granted for the work done on this filing.
As of the date of this offering, there are no plans to pay any
remuneration to anyone in or associated with the company. When the company has
funds and/or revenue, the Board of Directors will determine any remuneration at
that time.
DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE
Our Articles of Incorporation and our Bylaws limit the liability of
directors to the maximum extent permitted by Nevada law. We carry no director or
executive liability insurance.
PRINCIPAL SHAREHOLDERS
The following table lists the persons who, at the date hereof, own of
record or beneficially, directly or indirectly, more than 10% of the outstanding
Common Stock, and all officers and directors of the Company:
Name and Address Amount owned
Title of Owner before offering Percent
President, Secretary Charles Smith 200,000 100.00%
And Director 709 B West Rusk
Suite 580
Rockwall, Texas 75087
After offering: Minimum 200,000 80.00
Maximum 200,000 16.67%
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SUMMARY FINANCIAL DATA
The following table sets forth certain of our summary financial
information. This information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this prospectus. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Unaudited Audited Audited
Balance Sheet: July 31, 1999 April 30, 1999 Dec 31, 1998
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Working Capital $ 116 $ 116 $ 177
Total Assets $ 116 $ 116 $ 177
Total Liabilities $ 2,848 $ -0- $ -0-
Stockholders' Equity $(2,732) $ 116 $ 116
May 27,1998
(date of
inception)
Statement of Operations: July 31, 1999 April 30, 1999 Dec 31, 1998
-------------------------------------------------------------------------
Revenue $ -0- $ -0- $ -0-
Operating Expense $ 2,909 $ 61 $ 2,323
Operating Income (Loss) $(2,909) $ (61) $(2,323)
Other Expenses $ -0- $ -0- $ -0-
Net Income (Loss) $(2,909) $ (61) $(2,323)
DIVIDEND POLICY
To date, we have not declared or paid any dividends on our common
stock. We do not intend to declare or pay any dividends on our common stock in
the foreseeable future, but rather to retain any earnings to finance the growth
of our business. Any future determination to pay dividends will be at the
discretion of our Board of Directors and will depend on our results of
operations, financial condition, contractual and legal restrictions and other
factors it deems relevant.
CAPITALIZATION
The following table sets forth our capitalization as of July 31, 1999.
Our capitalization is presented on: (i) an actual basis; (ii) a pro forma basis
to give effect to net proceeds from the sale of the minimum number of shares
(50,000) we plan to sell in this offering; and (iii) a pro forma basis to give
effect to the net proceeds from the sale of the maximum number of shares
(1,000,000) we plan to sell in this offering.
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After After
Actual Minimum Maximum
July 31, 1999 Offering Offering
------------- --------- --------
Stockholders' equity
Common Stock, $0.001 par value;
50,000,000 shares authorized; 200 250 1,200
Number of shares outstanding 200,000 250,000 1,200,000
Additional Paid In Capital 2,300 35,172 807,172
Retained deficit (5,232) (2,732) (2,732)
Total Stockholders' Equity (2,732) 32,440 804,440
Total Capitalization (2,732) 32,440 804,440
Number of shares outstanding 200,000 250,000 1,200,000
The company has only one class of stock outstanding. The common stock
sold in this offering will be fully paid and non assessable, having voting
rights of one vote per share, have no preemptive or conversion rights, and
liquidation rights as is common to a sole class of common stock. The company has
no sinking fund or redemption provisions on any of the currently outstanding
stock and will have none on the stock sold in this offering.
DILUTION
If you purchase the common stock, you will experience an immediate and
substantial dilution in the pro forma net tangible book value of the common
stock from the initial offering price. The pro forma net tangible book value
(deficit) of the common stock as of July 31, 1999 was $(2,732) or $(0.01) per
share. Pro forma net tangible book value per share is equal to our total
tangible assets, less total liabilities, divided by the number of shares of
common stock outstanding. After giving effect to the sale of common stock
offered by us in this offering, and the receipt and application of the estimated
net proceeds therefrom (at an assumed initial public offering price of $1.00 per
share, after deducting the underwriting discounts and commissions, and estimated
offering expenses), our pro forma tangible book value as of July 31, 1999 would
have been approximately $32,440 or $0.11 per share, if the minimum is sold, and
$804,440 or $0.67 per share, if the maximum is sold. This represents an
immediate increase in net tangible book value per common share to our current
stockholders and an immediate and substantial dilution to new stockholders
purchasing shares in this offering of (i) $43,512 or $0.87 per share if we sell
the minimum number of shares (50,000) in this offering; and (ii) $329,633 or
$0.33 per share if we sell the maximum number of shares (1,000,000) in this
offering. The following table illustrates this per share dilution:
12
<PAGE>
Minimum Maximum
Assumed initial public offering price $1.00 $1.00
Pro forma net tangible book value as of July 31, 1999 ($0.01) ($0.01)
Pro forma net tangible book value after this offering $0.13 $0.67
Increase attributable to new stockholders: $0.14 $0.68
Pro forma net tangible book value
as of April 30, 1999 after this offering $0.13 $0.67
Decrease to new stockholders ($0.87) ($0.33)
The following table summarizes on a pro forma basis as of July 31,
1999, the differences between the number of shares of common stock purchased,
the total consideration paid and the total average price per share paid by the
existing stockholders and the new investors purchasing shares of common stock in
this offering:
After After
Actual Minimum Maximum
April 30, 1999 Offering Offering
-------------- -------- --------
Existing stockholders:
- ---------------------
Total consideration paid
Consideration paid per share 0.0125
New stockholders:
- ----------------
Total consideration paid
Consideration paid per share 1.00
Dilution to new stockholders ($0.87) (0.33)
DESCRIPTION OF COMMON STOCK
We have authorized capital in our Company consisting of 50,000,000
shares of Common Stock, $0.001 par value per share. As of July 31, 1999, there
were 200,000 shares of Common Stock issued and outstanding.
Every investor who purchases common stock is entitled to one vote at
meetings of the shareholders of the Company and to participate equally and
ratably in any dividends declared by us and in any property or assets that may
be distributed by us to the holders of Common Stock in the event of a voluntary
or involuntary liquidation, dissolution or winding up of the Company.
The existing stockholders have no preemptive rights to purchase common
stock offered for sale by us, and no right to cumulative voting in the election
of our directors.
13
<PAGE>
LEGAL PROCEEDINGS
We are not involved in any legal proceedings at this time.
YEAR 2000 ISSUE
At this time the company has no systems and the Year 2000 issues
associated with them do not apply. However, we plan to purchase computer
hardware and software with the proceeds of this offering, and when evaluating
software to purchase, we will purchase software that is year 2000 compliant.
When we purchase this hardware and software, we will be one hundred percent
(100%) Year 2000 compliant. As part of our purchase, we will require proof that
the hardware and software is Year 2000 compliant so we will be one hundred
percent ready. The costs associated with this will be minimal because we will be
purchasing new hardware and software and therefore have no cost of conversion or
cost to be in a state of readiness.
The above also causes the company to have a zero risk for problems at
the Year 2000 and consequently the company has no contingency plans. The company
will not be interfacing with any other company or service to process and service
its leases so no Year 2000 problems will arise with respect to interfacing with
service providers or others.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
There are no special federal tax implications associated with this
business enterprise.
LEGAL MATTERS
Certain matters relating to the legality of the Common Stock offered
hereby will be passed upon for the Company by French & Hamilton, Attorneys at
Law, 14651 Dallas Parkway, Suite 434, Dallas, Texas 75248.
EXPERTS
The financial statements as of April 30, 1999 and December 31, 1998,
and for the four months ended April 30, 1999 and for the fiscal period from
inception (May 27, 1998) to December 31, 1998, of the Company included in this
Prospectus have been audited by Mark L. Cleland, independent certified public
accountant, as set forth in his report. The financial statements have been
included in reliance upon the authority of him as an expert in accounting and
auditing.
14
<PAGE>
The financial statements dated July 31, 1999 included in this offering
are unaudited and have not been audited by Mark L. Cleland.
TRANSFER AGENT
We will serve as out own transfer agent and registrar for the common
stock until such time as our registration on Form SB-1 is effective and then we
intend to retain Signature Transfer Company, 14675 Midway Road, Suite 221,
Dallas, Texas 75244.
15
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
BALANCE SHEETS
July 31, 1999 and December 31, 1998
ASSETS
July 31, 1999 Dec 31, 1998
-------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 116 $ 177
-------------- -------------
TOTAL ASSETS $ 116 $ 177
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 2,848 $ 0
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value 200 200
Additional paid-in-capital 2,300 2,300
Deficit accumulated during the development stage (5,232) (2,323)
-------------- -------------
Total Stockholders' Equity (2,732) 177
-------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 116 $ 177
============== =============
</TABLE>
F-1
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS AND ACCUMULATED
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE
For The Seven Month Period Ended July 31, 1999, The Period from May 27, 1998 (date of inception)
to December 31, 1998, and The Period from May 27 (date of inception) to July 31, 1999
Accumulated
May 27, 1998 Since
Seven Months Through Inception
July 31, 1999 Dec. 31, 1998 May 27, 1998
------------- ------------- ------------
<S> <C> <C> <C>
REVENUE: $ 0 $ 0 $ 0
OPERATING EXPENSE:
Labor 0 2,000 2,000
Licenses and fees 1,848 290 2,138
Professional fees 1,000 1,000
Office expense 61 33 94
-------------------------------- ------------
Total Operating Expense 2,909 2,323 5,232
-------------------------------- ------------
NET LOSS $ (2,909) (2,323) $ (5,232)
================================ ============
Weighted average shares outstanding 200,000 200,000 200,000
================================ ============
$ (0.01) $ (0.01) $ (0.03)
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF STOCKHOLDERS' EQUITY AND ACCUMULATED DEFICIT
Period from May 27, 1998 (date of inception) to December 31, 1998
Deficit
Accumulated
during
Common Paid in Development
Shares Amount Capital Stage Total
-------------------------------------------------- ----------
<S> <C> <C> <C> <C> <C>
Balance,
May 27, 1998
(date of inception) 0 $ 0 $ 0 $ 0 $ 0
Shares issued on
May 29, 1998 for:
Services $0.0125 per share 160,000 160 1,840 2000
Cash $0.0125 per share 40,000 40 460 500
Net Loss (2,323) (2,323)
------------------------------------------------ -----------
Balance
December 31, 1998 200,000 $ 200 $ 2,300 $ (2,323) $ 177
================================================ ===========
Net Loss (2,909) (2,909)
------------------------------------------------ -----------
Balance
July 31, 1999 200,000 $ 200 $ 2,300 $ (5,232) $ 116
================================================ ===========
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE
For The Seven Month Period Ended July 31, 1999, The Period from May 27, 1998 (date of inception)
to December 31, 1998, and The Period from May 27 (date of inception) to July 31, 1999
Accumulated
May 27, 1998 Since
Seven Months Through Inception
July 31, 1999 Dec 31,1998 May 27,1998
-------------- ------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,909) $ (2,323) $ (2,384)
Adjustments to reconcile net loss to net
cash (used) by operating activities:
Increase in accounts payable 2,848
Stock issued for services 2,000 2,000
------------------------------- --------------
NET CASH (USED) BY OPERATING ACTIVITIES: (61) (323) (384)
CASH FLOWS FROM INVESTING ACTIVITIES: 0 0 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 0 500 500
------------------------------- --------------
NET (DECREASE) INCREASE IN CASH: (61) 177 116
CASH AT BEGINNING OF PERIOD 177 0 0
------------------------------- --------------
CASH AT END OF PERIOD $ 116 177 $ 116
=============================== ==============
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE
For The Seven Month Period Ended July 31, 1999, The Period from May 27, 1998 (date of inception)
to December 31, 1998, and The Period from May 27 (date of inception) to July 31, 1999
SUPPLEMENTAL DISCLOSURE OF
--------------------------
CASH FLOW AND NON-CASH INVESTING ACTIVITIES
-------------------------------------------
Accumulated
May 27, 1998 Since
Seven Months Through Inception
July 31, 1999 Dec 31, 1999 May 27, 1998
------------- ------------ ------------
<S> <C> <C> <C>
CASH FLOW INFORMATION:
- ----------------------
Interest Paid $ 0 $ 0 $ 0
Income Taxes Paid 0 0 0
NON-CASH FINANCING ACTIVITIES:
- ------------------------------
Common Stock Issued For:
Services $ 0 $ 2,000 $ 2,000
</TABLE>
F-5
<PAGE>
Table of Contents
Page
Independent Auditor's Report 1
Balance Sheets 2
Statements of Operations and Accumulated Deficit
Accumulated During the Development State 3
Statements of Stockholders' Equity and Accumulated Deficit 4
Statements of Cash Flows 5
Notes to Financial Statements 7-8
<PAGE>
MARK L. CLELAND
CERTIFIED PUBLIC ACCOUNTANT
17430 CAMPBELL ROAD, SUITE 114
DALLAS, TEXAS 75252
972-735-0033 FAX 972-735-0035
------------------------------
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Asset Servicing Corporation
Rockwall, Texas
I have audited the accompanying balance sheets of Asset Servicing Corporation (a
Nevada corporation in the development stage) as of April 30, 1999 and December
31, 1998 and the related statements of operations and accumulated deficit
accumulated during the development stage, stockholders' equity and accumulated
deficit, and cash flows for the four month period ending April 30, 1999, and the
period May 27, 1998 (date of inception) to December 31, 1998. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, based on my audit, the financial statements referred to above
present fairly, in all material respects, the financial position of Asset
Servicing Corporation as of April 30,1999 and December 31, 1998, and the results
of their operations and their cash flows for the four month period ended April
30, 1999, and the period May 27, 1998 (date of inception) to December 31, 1998
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note D to the
financial statements, the Company has incurred net losses since its inception
which raises substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustment that might
result from the outcome of this uncertainty.
/s/ Mark L. Cleland
Dallas, Texas
May 28, 1999
F-6
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
BALANCE SHEETS
April 30, 1999 and December 31, 1998
ASSETS
April 30, 1999 Dec 31, 1998
-------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 116 $ 177
-------------- -------------
TOTAL ASSETS $ 116 $ 177
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 0 $ 0
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value 200 200
Additional paid-in-capital 2,300 2,300
Deficit accumulated during the development stage (2,384) (2,323)
-------------- -------------
Total Stockholders' Equity 116 177
-------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 116 $ 177
============== =============
</TABLE>
F-7
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS AND ACCUMULATED
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE
For The Four Month Period Ended April 30, 1999, The Period from May 27, 1998 (date of inception)
to December 31, 1998, and The Period from May 27 (date of inception) to July 31, 1999
Accumulated
May 27, 1998 Since
Four Months Through Inception
April 30, 1999 Dec. 31, 1998 May 27, 1998
------------- ------------- ------------
<S> <C> <C> <C>
REVENUE: $ 0 $ 0 $ 0
OPERATING EXPENSE:
Labor 0 2,000 2,000
Licenses and fees 0 290 290
Office expense 61 33 94
-------------------------------- ------------
Total Operating Expense 61 2,323 2,384
-------------------------------- ------------
NET LOSS $ (61) (2,323) $ (2,384))
================================ ============
Weighted average shares outstanding 200,000 200,000 200,000
================================ ============
$ (0.00) $ (0.01) $ (0.01)
================================ ============
</TABLE>
See accompanying notes
F-8
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF STOCKHOLDERS' EQUITY AND ACCUMULATED DEFICIT
Period from May 27, 1998 (date of inception) to December 31, 1998
Deficit
Accumulated
during
Common Paid in Development
Shares Amount Capital Stage Total
-------------------------------------------------- ----------
<S> <C> <C> <C> <C> <C>
Balance,
May 27, 1998
(date of inception) 0 $ 0 $ 0 $ 0 $ 0
Shares issued on
May 29, 1998 for:
Services $0.0125 per share 160,000 160 1,840 2000
Cash $0.0125 per share 40,000 40 460 500
Net Loss (2,323) (2,323)
------------------------------------------------ -----------
Balance
December 31, 1998 200,000 $ 200 $ 2,300 $ (2,323) $ 177
================================================ ===========
Net Loss (61) (61)
------------------------------------------------ -----------
Balance
April 30, 1999 200,000 $ 200 $ 2,300 $ (2,384) $ 116
================================================ ===========
</TABLE>
See accompanying notes
F-9
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
For The Four Month Period Ended April 30, 1999, The Period from May 27, 1998 (date of inception)
to December 31, 1998, and The Period from May 27 (date of inception) to July 31, 1999
Accumulated
May 27, 1998 Since
Four Months Through Inception
April 30, 1999 Dec 31,1998 May 27,1998
-------------- ------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (61) $ (2,323) $ (2,384)
Adjustments to reconcile net loss to net
cash (used) by operating activities:
Stock issued for services 2,000 2,000
------------------------------- --------------
NET CASH (USED) BY OPERATING ACTIVITIES: (61) (323) (384)
CASH FLOWS FROM INVESTING ACTIVITIES: 0 0 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 0 500 500
------------------------------- --------------
NET (DECREASE) INCREASE IN CASH: (61) 177 116
CASH AT BEGINNING OF PERIOD 177 0 0
------------------------------- --------------
CASH AT END OF PERIOD $ 116 177 $ 116
=============================== ==============
</TABLE>
See accompanying notes
F-10
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE
For The Four Month Period Ended April 30, 1999, The Period from May 27, 1998 (date of inception)
to December 31, 1998, and The Period from May 27 (date of inception) to July 31, 1999
SUPPLEMENTAL DISCLOSURE OF
--------------------------
CASH FLOW AND NON-CASH INVESTING ACTIVITIES
-------------------------------------------
Accumulated
May 27, 1998 Since
Four Months Through Inception
April 30, 1999 Dec 31, 1999 May 27, 1998
-------------- ------------ ------------
<S> <C> <C> <C>
CASH FLOW INFORMATION:
- ----------------------
Interest Paid $ 0 $ 0 $ 0
Income Taxes Paid 0 0 0
NON-CASH FINANCING ACTIVITIES:
- ------------------------------
Common Stock Issued For:
Services $ 0 $ 2,000 $ 2,000
</TABLE>
See accompanying notes.
F-11
<PAGE>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
April 30, 1999 and December 31, 1998
Note A - Nature of Business and Summary of Significant Accounting Policies:
- ---------------------------------------------------------------------------
History:
- --------
The Company was organized May 27, 1998 under the name of Asset Servicing
Corporation to engage in any lawful act or activity under the general
corporation law of the state of Nevada. The Company's business plan outlines its
plan of operations, which is to lease vehicles and equipment to businesses with
a class B or class C credit rating. The Company is in the development stage and
has had no income.
Basis of Accounting:
- --------------------
It is the Company's policy to prepare its financial statements on the accrual
basis of accounting in conformity with generally accepted accounting principles.
Sales are recorded as income in the period in which they are earned and expenses
are recognized in the period in which the related liability is incurred.
Revenue Recognition:
- --------------------
Revenue is recognized when service is performed and amounts invoiced.
Cash and Cash Equivalents:
- --------------------------
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments with a maturity of three months or less to be cash
equivalents.
Loss per Common Share:
- ----------------------
Loss applicable to common share is based on the weighted average number of
shares of common stock outstanding during the year.
Accounting Estimates:
- ---------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the amount reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Income Tax:
- -----------
The Company is subject to the greater of federal income taxes computed under the
regular system or the alternative minimum tax (AMT) system.
The Company uses an asset and liability approach for the accounting and
financial reporting of income tax. Under this method, deferred tax assets and
liabilities are determined based on temporary differences between the financial
carrying amounts and the tax bases of assets and liabilities using enacted tax
rates in effect in the years in which the temporary differences are expected to
reverse.
F-12
<PAGE>
ASSET SERVICING CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
April 30, 1999 and December 31, 1998
Note B - Stockholders' Equity:
- ------------------------------
Common Stock:
- -------------
The Company is authorized to issue 50,000,000 common shares of stock at a par
value of $0.001 per share. These shares have full voting rights. At April 30,
1999 and December 31, 1998, there were 200,000 shares outstanding.
The Company has not paid a dividend to its shareholders.
Note C - Income Taxes:
- ----------------------
The Company has net tax operating loss carryforward of approximately $2,384 that
is available to offset its future income tax liability. The net operating loss
carryforward expire as follows:
Year 2013 $2,323
Year 2119 61
No deferred tax asset has been recognized for the operating loss, as any
valuation allowance would reduce the benefit to zero.
Note D - Going Concern:
- -----------------------
The Company has minimal capital resources available to meet obligations expected
to be incurred given that it is a start up enterprise. Accordingly, the
Company's continued existence is dependent upon the successful operation of the
Company's business plan of operations, selling common stock in the Company, or
obtaining financing. Unless these conditions among others are met, the Company
may be unable to continue as a going concern.
F-13
<PAGE>
No dealer, salesman or any other person has been authorized to give any
quotation or to make any representations in connection with the offering
described herein, other than those contained in this Prospectus. If given or
made, such other information or representation; must not he relied upon as
having been authorized by the Company or by any Underwriter. This Prospectus
does not constitute an offer to sell, or a solicitation of an otter to buy any
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such an offer or solicitation in such jurisdiction.
The delivery of this Prospectus at any time does not imply that the
information herein is correct as of any time subsequent to its date.
TABLE OF CONTENTS
Prospectus Summary 3
Corporate Information 3
Use of Proceeds 4
Summary Financial Data 4
Risk Factors 5
Plan of Distribution 6
Dividend Policy 7
Capitalization 7
Dilution 9
Selected Financial Data 9
Description of Common Stock 9
Legal Proceedings 10
Management's Discussion and Analysis of Financial Condition 10
Year 2000 Issue 10
Management of the Company 10
Director and Executive Compensation 11
Director's and Officers' Indemnification and Insurance 11
Principal Shareholders 11
Certain Federal Income Tax Considerations 11
Legal Matters 11
Experts 12
Transfer Agent 12
Financial Statements F-1
Until termination of this offering, all dealers effecting transactions
in the registered securities, whether or not participating in this distribution,
may be required to deliver a prospectus.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Indemnification of Directors and Officers
If applicable, the Broker-Dealer Selling Agreement will provide for
indemnification of the Company, and its officers, directors and employees
against certain liabilities. **If applicable.
Item 14. Other Expenses of Issuance and Distribution
All expenses. including all allocated general administrative and overhead
expenses. related to the offering or the organization of the Company will be
borne by the Company. The following table sets forth a reasonable itemized
statement of all anticipated out-of-pocket and overhead expenses (subject to
future contingencies) to be incurred in connection with the distribution of the
securities being registered, reflecting the minimum and maximum subscription
amounts.
Minimum Maximum
----------------------------
SEC Registration Fee $ 278 $ 278
Printing and Engraving Expenses 2,000 19,000
Legal Fees and Expenses 5,000 5,000
Edgar Fees 1,800 1,800
Marketing and Due Diligence Expenses 3,000 60,000
Accounting Fees and Expenses 1,000 1,000
Blue Sky Fees and Expenses 3,850 3,850
Miscellaneous 200 200
-------- ----------
TOTAL $17,128 $ 95,128
Item 15. Recent Sales of Unregistered Securities
The Company sold to its founder 200,000 shares of common stock which was
issued to him for $2,500, composed of $500 cash and $2,000 of his services. This
stock was issued under the exemption under the Securities Act of 1933, section
4(2); this section states that transactions by an issuer not involving any
public offering is an exempted transaction. The company relied upon this
exemption because in a private transaction during May 1998, the founder, sole
officer and director purchased stock for a combination of $500 cash and $2,000
of services.
11.1
<PAGE>
Item 16. Exhibits
The following Exhibits are filed as part of the Registration Statement:
Exhibit No. Identification of Exhibit
- ----------- ------------------------------------------------------
3.1 - Articles of Incorporation
3.2 - By Laws
4.2 - Specimen Stock Certificate
10.4 - Subscription Escrow Agreement
10.5** - Form of Broker-Dealer Selling Agreement
10.6 - Form of Subscription Agreement
23.1 - Consent of French & Hamilton, Attorneys at Law
23.2 - Consent of Mark L. Cleland, Certified Public Accountant
** To be filed by amendment by Registrant if broker dealers are engaged to sell
Item 17. Undertakings
The Registrant hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act; and
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the Registration Statement.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
11.2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets the
requirements for filing on Form SB-1 and authorizes this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Rockwall, State of Texas, on the 23rd day of August, 1999.
ASSET SERVICING CORPORATION
By: /s/ Charles Smith
---------------------------
Charles Smith, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following person in the capacity and on
the date indicated:
Signature Title Date
--------------------------- --------------------- ----------------
By: /s/ Charles Smith President, Secretary, August 23, 1999
--------------------------- Treasurer; Director
Charles Smith, President
11.3
[File stamp of the
secretary of state of the
STATE OF NEVADA-
MAY 27 1998
No. c-12238-98]
ARTICLES OF INCORPORATION
OF
ASSET SERVICING CORPORATION
I, the undersigned natural person of the age eighteen (18) years or
more, acting as incorporator of a corporation under the General Corporation Law
of the State of Nevada, do hereby adopt the following Articles of Incorporation:
ARTICLE I
The name of this corporation is Asset Servicing Corporation.
ARTICLE II
Its registered office in the State of Nevada is to be located at 2533 North
Carson Street, Carson City, Nevada 89706. The registered agent in charge thereof
is Laughlin Associates at 2533 North Carson Street, Carson City, Nevada 89706.
ARTICLE III
The nature of the business and, the objects and purposes proposed to be
transacted, promoted and carried on, are to do any or all the things herein
mentioned as fully and to the same extent as natural persons might or could do
and in any part of the world, viz:
"The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the
General Corporation Law of the State of Nevada."
ARTICLE IV
The amount of the total authorized capital stock of this corporation is Fifty
Million (50,000,000) shares with a par value of $0.001 each, amounting to Fifty
Thousand Dollars ($50,000.00).
ARTICLE V
The name and address of the incorporator signing the articles of incorporation
is as follows:
Charles Smith
709 B West Rusk, Suite 580
Rockwall, Texas 75087
<PAGE>
ARTICLE VI
The governing board of this corporation shall be known as directors, and the
number of directors may from time to time be increased or decreased in such
manner as shall be provided in the bylaws of this corporation, provided that the
number of directors shall not be reduced less than one or be more than ten.
The name and address of the first director, which is one in number, is as
follows:
Charles Smith
709 B W. Rusk, Suite 580
Rockwall, Texas 75087
ARTICLE VII
Meetings of stockholders may be held outside of the State of Nevada at such
place or places as may be designated from time to time by the board of directors
or in the bylaws of the corporation.
ARTICLE VII
This corporation reserves the right to amend, alter, change or repeal any
provision contained in the articles of incorporation, in the manner now or
hereafter prescribed, and all rights conferred upon stockholders herein are
granted subject to this reservation.
ARTICLE VII Elimination or Limitation of Liability of Directors
No director shall be liable to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director: provided, however, that
nothing contained herein shall eliminate or limit the liability of a director
(i) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for any transaction
from which the director derived an improper personal benefit, or (iv) for any
act or omission occurring prior to their directorship.
ARTICLE VIII Indemnification of Directors and Officers
The corporation shall indemnify the directors and officers of the corporation,
and of any subsidiary of the corporation, to the full extent provided by the
laws of the State of Nevada. Expenses incurred by a director or officer in
defending a civil or criminal action, suit or proceeding shall be paid by the
corporation in advance of the final disposition of such action, suit
<PAGE>
or proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation. In addition, the corporation may
advance expenses of such nature on any other terms and/or in any other manner
authorized by law.
ARTICLE IX Amendment of Bylaws
In furtherance and not in limitation of the powers conferred by statute, the
Board of Directors is authorized, subject to the bylaws, if any, adopted by the
shareholders, to adopt, alter or amend the bylaws of the corporation.
I, THE UNDERSIGNED, being the sole incorporator herein before named for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Nevada, do make, file and record these articles of incorporation,
hereby declaring and certifying that the facts stated herein are true, and
accordingly have hereunto set my hand.
Dated this 12th day of May 1998.
/s/ Charles Smith
---------------------------
Charles Smith, Incorporator
State of Texas }
}
County of Dallas }
Before me, a notary public, on this day personally appeared Charles
Smith, known to me to be the person whose name is subscribed to the foregoing
document and, being by me first duly sworn, declared that the statements therein
contained are true and correct.
Given under my hand and official seal of office on the 12th day of May,
1998.
/s/ Judy Brackin
---------------------------------
Notary Public
in and for the State of Texas
My commission expires: 12-21-99 [Notary Stamp omitted]
ASSET SERVICING CORPORATION
BY-LAWS
ARTICLE I
STOCKHOLDERS
1. ANNUAL MEETING. An annual meeting of the stockholders, for the election
of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the
meeting, shall be held at such place on such date, and at such time as
the Board of Directors shall each year fix, which date shall be within
thirteen months subsequent to the later of the date of incorporation or
the last annual meeting of stockholders.
2. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose
or purposes prescribed in the notice of the meeting, may be called by
the Board of Directors for the chief executive officer and shall be
held at such place, on such date, and at such time as they or he shall
fix.
3. NOTICE OF MEETINGS. Written notice of the place, date and time of all
meetings of the stockholders shall be given, not less than ten days nor
more than sixty days before date on which the meeting shall be held, to
each stockholder entitled to vote at such meeting, except as otherwise
provided herein or required by the Business Corporation Act of the
State of Nevada or the Articles of Corporation.
When a meeting is adjourned to another place, date or time written
notice need not be given of the adjourned meeting if the place, date
and time thereof are announce at the meeting at which the adjournment
is taken; provided, however, that if the date of any adjourned meeting
is more that thirty days after the date for which the meeting as
originally noticed, or if a new record date is fixed for the adjourned
meeting, written notice of the place, date and time of the adjourned
meeting shall be given in conformity herewith. At any adjourned meeting
any, business may be transacted which might have been transacted at the
original meeting.
4. QUORUM. At any meeting of the stockholders, the holders of a majority
of all of the shares of the stock entitled to vote at the meeting, in
person or by proxy, shall constitute a quorum for purposes, unless or
except to the extent that the presence of a larger number may be
required by law.
If a quorum shall fail to attend any meeting, the chairman of the
meeting or the holders of a majority of the shared of the stock
entitled to vote who are present, in person or by proxy, may adjourn
the meeting to another place, date or time.
If a notice of any adjourned special meeting of stockholders is sent to
all stockholders entitled to vote thereat, stating that it will be held
with those present constituting a quorum, than except as otherwise
requires by law, those present at such adjourned meeting shall
constitute a quorum, and all matters shall be determined by a majority
of the votes cast as at such meeting.
5. ORGANIZATION. Such person as the Board of Directors may have designated
or in the absence
<PAGE>
of such a person, the highest ranking officer of the Corporation who is
present shall call to order any meeting of the stockholders and act as
chairman of the meeting. In the absence of the Secretary of the
Corporation, the secretary of the meeting shall be such person as the
chairman appoints.
6. CONDUCT OF BUSINESS. The chairman of any meeting of stockholders shall
determine the order of business and the procedure at the meeting,
including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.
7. PROXIES AND VOTING. At any meeting of the stockholders, every
stockholder entitled to vote any vote in person or by proxy authorized
by an instrument in writing filed in accordance with the procedure
established for the meeting.
Each stockholder shall have one vote for every share of stock entitled
to vote which is registered in his name on the record date for the
meeting except as otherwise provided herein or required by law.
All voting, except on the election of director and where otherwise
required by law, shall be held by a voice vote; provided, however, that
upon demand thereof by a stockholder entitled to vote or his proxy, a
stock vote shall be taken. Every stock vote shall be taken by ballots,
each of which shall state the name of the stockholder or proxy voting
and such other information as may be required under the procedure
established for the meeting. Every vote taken by ballots shall be
counted by an inspector appointed by the chairman of the meeting.
All elections shall be determined by a plurality of the votes cast, and
except as otherwise required by law, all other matters shall be
determined by a majority.
8. STOCK LIST. A complete list of stockholders entitled to vote at any
meeting of stockholders, arranged in alphabetical order for each class
of stock and showing the address of each such stockholder and the
number of shares registered in his name, shall be open to the
examination of any such stockholder, for any purpose germane to the
meeting, during ordinary business hours for a period of at least ten
(10) days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice
of the meeting, or if not specified, at the place where the meeting is
to be held.
The stock list shall be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the
identity of the stockholders entitled to vote at the meeting and the
number of shares held by each of them.
ARTICLE II
BOARD OF DIRECTORS
1. NUMBER AND TERM OF OFFICE. The number of directors who shall constitute
the whole board shall not be less than one nor more than twenty. Each
director shall be elected for a term of one year and until his
successor is elected and qualified, except as otherwise provided herein
or required by law. Any decrease in the authorized number of directors
shall not become effective until the expiration of the term of the
directors then in office unless, at the time of such decrease, there
shall be vacancies on the board which are being eliminated by the
decrease.
<PAGE>
2. VACANCIES. If the office of any director becomes vacant by reason of
death, resignation, disqualification, removal or other cause, a
majority of the directors remaining in office, although less than a
quorum, may elect a successor for the unexpired term and until his
successor is elected and qualified.
3. REGULAR MEETINGS. Regular meetings of the Board of Director shall be
held at such place or places, on such date or dates, and at such time
or times as shall have been established by the Board of Directors and
publicized among all directors. A notice of each regular meeting shall
not be required.
4. SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by one-third of the directors then in office if by the chief
executive officer and shall be held at such place, on such date and at
such time as they or he shall fix. Notice of the place, date and time
of each such special meeting shall be given to each director by whom it
is not waived by mailing written notice not less than three days
before the meeting of by telegraphing the same not less than 18 hours
before the meeting. Unless otherwise indicated in the notice thereof,
any and all business may be transferred at a special meeting.
5. QUORUM. At any of meeting of the Board of Directors, one-third of the
total number of the whole board, but never less than two, shall
constitute a quorum for all purposes. If a quorum shall fail to attend
any meeting, a majority of those present may adjourn the meeting to
another place, date, or time without further notice or waiver thereof.
6. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members of the Board
of Directors, or any committee thereof may participate in a meeting of
such board or committee by means of conference telephone or similar
communications equipment that enables all persons participating in the
meeting to hear each other. Such participation shall constitute
presence in person at such meeting.
7. CONDUCT OF BUSINESS. At any meeting of the Board of Directors, business
shall be transacted in such order and manner as the board may from time
to time determine, and all matters shall be determine by the vote of a
majority of the director present, except as otherwise provided herein
or required by law. Action may be taken by the Board of Directors
without a meeting if all members thereof consent thereto in writing and
the writing or writings are filed with the minutes of the proceedings
of the Board of Directors.
8. POWERS. The Board of Directors may, except as otherwise required by
law, exercise all such powers and so all such things as may be
exercised or done by the Corporation, including, without limiting the
generality of the foregoing, the unqualified power.
(1) To declare dividends from time to time in accordance with law;
(2) To purchase or other acquire any property, rights or
privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in such form
as it may determine of written obligations of every kind,
negotiable or non-negotiable, secured, or unsecured, and to do
all things necessary in connection therewith;
<PAGE>
(4) To remove any officer of the Corporation with or without
cause, and from time to time to devolve the powers and duties
of any officer upon any other person for the being;
(5) To confer upon any officer of the Corporation the power to
appoint, remove and suspend subordinate officers and agents;
(6) To adopt from time to time such stock, option, stock purchase,
bonus or other compensation plans for directors, officers and
agents of the Corporation and its subsidiaries as it may
determine;
(7) To adopt from time to time such insurance, retirement, and
other benefit plans for directors, officers and agents of the
Corporation and its subsidiaries as it may determine; and
(8) To adopt from time to time regulations, nor inconsistent with
these by-laws, for the management of the Corporation's
business and affairs.
ARTICLE III
COMMITTEES
1. COMMITTEES OF THE BOARD OF DIRECTORS. The Board of Directors, by a
vote of a majority of the whole board, may from time to time designate
committees of the board, with such lawfully delegatable powers and
duties as it thereby confers, to serve at the pleasure of the board
and shall, for those committees and any others provided for herein,
elect a director or directors to serve as the member or members,
designating, if it desires, other directors as alternative members who
may replace any absent or disqualified member at any meeting of the
committee. Any committee so designated may exercise the power and
authority of the Board of Directors to declare a dividend or to
authorize the issuance of stock of the resolution which designated the
committee or a supplemental resolution of the Board of Directors shall
so provide. In the absence or disqualification of any member of any of
any committee and any alternate member in his place, the member or
members of the committee present at the meeting and not disqualified
from voting, whether or not he or they constitute a quorum, may by
unanimous vote appoint another member of the Board of directors to act
at the meeting in the place of the absent or disqualified member.
2. CONDUCT OF BUSINESS. Each Committee may determine the procedural rules
for meeting and conducting its business and shall act in accordance
therewith, except as otherwise provided herein or required by law.
Adequate provision shall be made for notice to manners of all
meetings; one-third of the members shall constitute a quorum unless
the committee shall consist of one or two members, in which event one
member shall constitute a quorum; and all matters shall be determined
by a majority vote of the members present. Action may be taken by any
committee without a meeting if all members thereof consent thereto in
writing, and the writing or writings are filed with the minutes of the
proceedings of such committee.
ARTICLE IV
OFFICERS
1. GENERALLY. The officers of the Corporation shall consist of a
president, one or more vice-presidents, a secretary, a treasurer and
such other subordinate officers as may from time to time be appointed
by the Board of Directors. Officers shall be elected by the Board of
Directors, which
<PAGE>
shall consider that subject at its first meeting after every annual
meeting of stockholders. Each officer shall hold his office until his
successor is elected and qualified or until his earlier resignation or
removal. The President shall be a member of the Board of Directors. Any
number of offices may be held by the same person.
2. PRESIDENT. The president shall be the chief executive officer of the
Corporation. Subject to the provisions of these by-laws and to the
direction of the Board of directors, he shall have the responsibility
for the general management and control of the affairs and business of
the Corporation and shall perform all the duties and have all the
powers which are delegated to him by the Board of Directors. He shall
have power to sign all stock certificates, contracts and other
instruments of the Corporation which are authorized. He shall have
general supervision and direction of all of the other officers and
agents of the Corporation.
3. VICE PRESIDENTS. Each Vice-President shall perform such duties as the
Board of Directors shall prescribe. In the absence or disabilities of
the President, the Vice-President who has served in such capacity for
the longest time shall perform the duties and exercise the powers of
the President.
4. TREASURER. The Treasurer shall have the custody of all monies and
securities of the Corporation and shall keep regular books of account.
He shall make such disbursements of the funds of the Corporation as are
proper and shall render from time to time an account of all such
transactions and of the financial condition of the Corporation.
5. SECRETARY. The Secretary shall issue all authorized notices for, and
shall deep minutes of all meetings of the stockholders and the Board of
Directors. He shall have charge of the corporate books.
6. DELEGATION OF AUTHORITY. The Board of Directors may from time to time
delegate the powers or duties of any officer to any other officer or
agents, notwithstanding any provision hereof.
7. REMOVAL. Any officer of the Corporation may be removed at any time with
or without cause by the Board of Directors.
8. ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS. Unless
otherwise directed by the Board of directors, the President shall have
power to vote and otherwise act on behalf of the Corporation, in person
or by proxy, at any meeting of the stockholders of or with respect to
any action of stockholders of any other corporation in which this
Corporation may hold securities and otherwise to exercise any and all
rights and powers which this Corporation may possess by reason of its
ownership of securities in such other corporation.
ARTICLE V
RIGHT OF INDEMNIFICATION OF DIRECTOR, OFFICERS AND OTHERS
1. RIGHT TO INDEMNIFICATION. Each person who was or is made a party or is
threatened to be a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he or she or a person for
whom he or she is the legal representative is or was a director or
officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director or officer, employee or
agent
<PAGE>
of another corporation, or of a partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee
or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Nevada Business Corporation Act,
as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent such amendment permits the
Corporation to provide broader indemnification right than said law
permitted the Corporation to provide broader indemnification fight than
said law permitted the Corporation to provide prior to such amendment)
against all expenses, liability and loss (including attorney's fees,
judgments, fines, FRISA excise taxes or penalties and amounts paid or
to be paid in settlement) reasonably incurred or suffered by such
person in connection therewith. Such right shall be a contract right
and shall include the right to be paid by the Corporation for expenses
incurred in defending any such proceeding in advance of its final
disposition; provided, however, that the payment of such expenses
incurred by a director or officer of the Corporation in his or her
capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such person while a director of
officer, including, without limitation, service to an employee benefit
plan) in advance of the final disposition of such proceeding, shall be
made only upon delivery to the Corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced if
it should be determined ultimately that such director or offices is not
entitled to be indemnified under this section or otherwise.
2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 1 is not
paid in full by the Corporation within 90 days after a written claim
has been received by the Corporation, the claimant may at any time
thereafter bring suit against the corporation to recover the unpaid
amount of the claim, and if successful in whole or in part, the
claimant shall be entitled to be paid also the expense of prosecuting
such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending
any proceeding in advance of its final disposition where the required
undertaking has been tendered to the Corporation) that the claimant
has not met the standards of conduct which make it permissible under
the Texas Business Corporation Act for the Corporation to indemnify
the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal
counsel, or it stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is
proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the Texas Business Corporation Act,
nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the
claimant had not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that claimant had not
met the applicable standard of conduct.
3. NON-EXCLUSIVITY OF RIGHTS. The rights conferred by Sections 1 and 2
shall not be exclusive of any other right which such person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, by-law, agreement, vote of the stockholders or
disinterested directors or otherwise.
4. INSURANCE. The Corporation may maintain insurance, at its expense, to
protect itself and any such director, officer, employee or agent of the
Corporation or any other corporation, partnership, joint venture, trust
or other enterprise against any such expense, liability oil loss,
whether or not the Corporation would have the power to indemnify such
person against such expense, liability or loss under the Texas Business
Corporation Act.
<PAGE>
ARTICLE VI
STOCK
1. CERTIFICATES OF STOCK. Each stockholder shall be entitled to a
certificate signed by, or in the name if the Corporation by, the
President or a vice-president, and by the Secretary or and assistant
secretary, or the Treasurer or an assistant treasurer, certifying the
number of shares owned by him. Any of or all the signatures on the
certificate may be facsimile.
2. TRANSFERS OF STOCK. Transfers of stock shall be made only upon the
transfer books of the Corporation kept at an office of the Corporation
or by transfer agents designated to transfer shares of the stock of the
corporation. Except where a certificate is issued in accordance with
Section 4 of Article VI of these by-laws, an outstanding certificate
for the number of shares involved shall be surrendered for cancellation
before a new certificate is issued therefor.
3. RECORD DATE. The Board of Directors may fix a record date, which shall
not be more than 60 nor less than 10 days before the date of any
meeting of stockholders, nor more than 60 days prior to the time for
the other action hereinafter described, as of which there shall be
determined the stockholders who are entitled: to notice of or to vote
at any meeting of stockholders or any adjournment thereof; to express
consent to corporate action in writing without a meeting; to receive
payment of any dividend or other distribution or allotment of any
rights; or the exercise any rights with respect to any change,
conversion or exchange of stock or with respect to any other lawful
action.
4. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event of the loss, theft
or destruction of any certificate of stock, another may be issued in
its place pursuant to such regulations as the Board of directors may
establish concerning proof of such loss, theft or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.
5. REGULATIONS. The issue, transfer, conversion and registration of
certificates of stock shall be governed by such other regulations as
the Board of Directors may establish.
6. CAPITAL STOCK - AUTHORIZATION AND ISSUANCE. The total number of shares
of all classes of stock which the Corporation shall have the authority
to issue is FIFTY MILLION (50,000,000) shares of which all FIFTY
MILLION (50,000,000) shares, designated as Common Stock, shall have a
par value of One Millicent ($0.001) per share.
A statement of the preferences, limitations and relative rights with
respect to the shares of Common Stock is as follows:
B. COMMON STOCK:
Subject to limitations set forth herein, the holders of the
shares of the Common Stock shall be entitled to receive
dividends when and as declared by the Board of Directors out
of any funds legally available therefor. In the event of any
liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, after payment in full of the
amounts which the holders of the shares of the Series
Preferred Stock are entitled to receive in such event, the
remaining assets of the Corporation shall be distributed
ratably
<PAGE>
to the holders of the shares of the Common Stock. Each holder
of record of Common Stock shall be entitled to one vote for
each share held.
1. CUMULATIVE VOTING RESTRICTION. The share holders of the
Corporation shall not have cumulative voting rights in the
election of directors.
2. PREEMPTIVE RIGHTS RESTRICTION. The Stockholders of the
Corporation shall not have any preemptive rights. No holder
of any of the shares of any class of stock of this
Corporation shall be entitled to the right to subscribe for,
purchase, or otherwise acquire any shares of any class of
the Stock of this Corporation which the Corporation proposes
to issue or any rights or options which the Corporation
proposes to grant for the purchase of shares of any class of
the Corporation or for the purchase of any shares, bonds,
securities, or obligations of the Corporation which are
convertible into or exchangeable for, or which carry any
rights, to subscribe for, purchase, or otherwise acquire
shares of any class of the Corporation; and any and all of
such shares, bonds, securities, or obligations of the
Corporation, whether now or hereafter authorized or created,
may be issued, or may be reissued or transferred if the same
have been re-acquired and have treasury status, and any and
all of such rights and options may be granted by the Board
of Directors to such persons, firms, corporations, and
associations, and for such lawful consideration, and on such
terms, as the Board of Directors in its discretion may
determine, without first offering the same, or any thereof,
to any said holder.
7. CAPITAL DISTRIBUTIONS TO STOCKHOLDERS.
(a) The Board of Directors may from time to time
distribute to the stockholders in partial
liquidation, out of the stated capital surplus of the
Corporation, a portion of its assets, in cash or
property, subject to the limitations contained in the
statutes of Texas.
(b) Whenever the Corporation shall be engaged in the
business of exploiting natural resources, dividends
may be declared and paid in cash and/or kind out of
the depletion reserves at the discretion of the Board
of Directors and in conformity with the statutes of
Texas.
ARTICLE VII
NOTICES
1. NOTICES. Whenever notice is required to be given to any stockholder,
director, officer, employee or agent, such requirement shall not be
construed to mean personal notice. Such notice may in every instance be
effectively given by depositing a writing in a post office or letter
box, in a postpaid, sealed wrapper, or by dispatching a prepaid
telegram, addressed to such stockholder, director, officer, employee or
agent at his or her address as the same appears on the books of the
Corporation. The time when such notice is dispatched shall be the time
of the giving of the notice.
2. WAIVERS. A written waiver of any notice, signed by a stockholder
director, officer, employee or agent, whether before or after the time
of the event for which notice is to be given, shall be deemed
equivalent to the notice required to be given to such stockholder,
director, officer, employee or agent. Neither the business nor the
purpose of any meeting need be specified in such a waiver.
<PAGE>
ARTICLE VIII
MISCELLANEOUS
1. FACSIMILE SIGNATURE. In addition to the provisions for the use of
facsimile signatures elsewhere specifically authorized in these
by-laws, facsimile signatures of any director or officer of the
Corporation may be used whenever and as authorized by the Board of
Directors or a committee thereof.
2. CORPORATE SEAL. The Board of Directors may provide a suitable seal,
containing the name of the Corporation, which seal shall be in charge
of the secretary. If and when so directed by the Board of Directors or
a committee thereof, a duplicate of the seal may be kept and used by
the treasurer or by the assistant secretary of assistant treasurer.
3. RELIANCE UPON BOOKS, REPORTS, AND RECORDS. Each director, each member
of any committee designated by the Board of Directors, and each officer
of the Corporation shall, in performance of his duties, be fully
protected in relying in good faith upon the books of account or records
of the corporation, including reports made to Corporation by any of its
officers, by an independent certified public accountant, or by an
appraiser selected with reasonable care.
4. FISCAL YEAR. The fiscal year of the Corporation shall be as fixed by
the Board of Directors.
5. TIME PERIODS. In applying any provision of these by-laws which require
that an act be done during a period of specified number of days prior
to an event, calendar days shall be used of the doing of the act shall
be excluded, and the day of the event shall be included.
6. BANK ACCOUNT AND LOAN AUTHORIZATION. Resolutions required by the banks
and/or other depository and lending institutions which refer to Board
of Directors resolutions may be signed by two officers of the
Corporation one of which shall be the President or Vice-President or
assistant Vice-President and the other endorsement shall be the
Secretary-Treasurer, Secretary or Assistant Secretary. This section
shall confirm the Board of Directors Agreement to the signing if such
resolutions which are legally required by such bank and/or deposit or
loan institution. A copy of such resolution shall be immediately
filled in the records in and the minute books of the corporation.
ARTICLE IX
AMENDMENTS
These by-laws may be amended or repealed by the Board of Directors at any
meeting or by stockholders.
Certificate: The undersigned, being the duly elected and acting Secretary of
Asset Servicing Corporation, a Nevada corporation, hereby certifies the
foregoing By-laws of such corporation duly adopted by its Board of Directors.
Asset Servicing Corporation
/s/ Charles Smith
---------------------------
Secretary
<TABLE>
<S> <C>
Number [GRAPHIC OMITTED] Shares
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
ASSET SERVICING CORPORATION
The Corporation is authorized to issue 50,000,000 Common Shares - Par Value $.001 each
This Certifies that SPECIMEN IS THE OWNER OF
- ---------------------------------------------------------------- fully paid and
non-assessable Shares of the above Corporation transferable only on the
books of the Corporation by the holder hereof in person or by duly authorized
Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be signed
by its duly authorized officers and to be sealed with the Seal of the Corporation.
Dated____________________
- ------------------------------ [GRAPHIC OMITTED] ------------------------------
SECRETARY-TREASURER PRESIDENT
</TABLE>
ESCROW AGREEMENT
This Escrow Agreement (the "Agreement") is made and entered into by and
among T. Alan Owen & Associates, P.C. ("TAO"), Attorneys at Law, Arlington,
Texas, and Asset Servicing Corporation ("ASC"), a Nevada corporation, on behalf
of all subscribers (the "Investors") to the initial public offering (the
"Offering") of common stock by ASC, pursuant to a Registration Statement filed
under the Securities Act of 1933 on Form SB-1.
I
RECITALS
1.1 Purchase of Shares. The Investors, at a price of $1.00 per share,
desire to individually purchase from ASC, an aggregate of between 50,000 shares
and 1,000,000 shares (the "Shares") of the common stock of ASC pursuant to the
terms of the Offering. However, there is no certainty that any Shares may be
purchased under the Offering.
1.2 Purpose Hereof. In order to facilitate the purchase of the Shares,
ASC shall deposit all funds received by it from the sale of the Shares to
Investors (the "Escrow Funds") with TAO, and TAO shall hold the Escrow Funds and
not release them to ASC until such time as is described below.
II
ESCROW PROVISIONS
2.1 Appointment of TAO. TAO is hereby appointed as Escrow Agent to
receive, hold, and distribute all funds deposited by the Investors for Shares,
all as hereinafter provided.
2.2 Deposit and Receipt of Funds. TAO shall deposit all funds for
purchase of the Shares in its Attorney Trust Account (the "Escrow Account").
Concurrently with the delivery of the deposits by each Investor, TAO shall give
each Investor and ASC a receipt for the funds received by TAO.
2.3 Disbursement of Escrow Funds. Following deposit into the Escrow
Account of funds totaling $50,000.00, TAO shall disburse all such funds to ASC
and shall notify all Investors that placed Escrow Funds with TAO that such
disbursement has taken place.
2.4 TAO's Responsibility. TAO's sole responsibility under this
Agreement shall be for the recording of deposits by the Investors, the
safekeeping of the Escrow Funds, and the disbursement thereof in accordance with
Paragraph 2.3, and TAO shall not be required to take any other action with
reference to any matters which might arise in connection with the Escrow Funds
or this
ESCROW AGREEMENT -- Page 1
Asset Servicing Corp-TAO-Escrow Agrmt (C-17)
<PAGE>
Agreement. TAO shall not be liable to ASC or any Investor for anything which TAO
may do or refrain from doing in connection herewith, so long as TAO is acting in
good faith in an attempt to perform its duties under this Agreement or unless
Owen is guilty of gross negligence or willful misconduct. TAO is not a party to,
nor is it bound by, nor shall it give consideration to the terms or provisions
of, even though he may have knowledge of, (i) any agreement or undertaking of
any agreement with any other party or parties, except for this Agreement, (ii)
any agreement or undertaking which may be evidenced or disclosed by this
Agreement, and (iii) any other agreements regarding the Escrow Funds that may
now or in the future be deposited with TAO in connection with this Agreement.
TAO has no duty to determine or inquire into any happening or occurrence or any
performance or failure of performance of the Investors or ASC or any other
parties with respect to agreements or arrangements with each other or with any
other party or parties.
2.5 Indemnity to TAO. ASC agrees to indemnify and hold TAO harmless
against and from any and all costs, expenses, claims, losses, liabilities, and
damages (including reasonable attorneys' fees) that may arise out of or in
connection with TAO's acting as Escrow Agent under the terms of this Agreement,
except in those instances where TAO has been guilty of gross negligence or
willful misconduct.
2.6 Return of Escrow Funds. If $50,000.00 is not deposited in the
Escrow Account by the Investors on or before 180 days after the effective date
of the offering, TAO shall promptly return to each Investor from the Escrow
Funds, an amount equal to the amount deposited by such Investor.
2.7 Effective Date and Termination. This Escrow Agreement shall become
effective on the date the first deposit is made by an Investor into Escrow. All
of the provisions of this Agreement shall terminate 180 days after the effective
date of the offering by refunding all funds in escrow to the Investors, or by
the disbursement of all Escrow Funds as herein set out. If not so terminated,
TAO at any time after such date may disburse the allocable portion of the Escrow
Funds to each respective Investor, close his records, and withdraw all of TAO's
liability and obligations in connection with the Escrow Funds and this Agreement
shall terminate.
III
MISCELLANEOUS
3.1 Multiple Counterparts. It is intended that this Agreement shall be
executed in multiple counterparts, each of which, when so executed, shall be
considered an original, but all of which shall together constitute one and the
same instrument.
3.2 Entire Agreement. This instrument evidences the entire agreement
between TAO and ASC with respect to the purchase of the Shares by Investors
3.3 Controlling Law. The terms of this Agreement shall be governed by
and construed in accordance with the laws of the State of Texas.
ESCROW AGREEMENT -- Page 2
Asset Servicing Corp-TAO-Escrow Agrmt (C-17)
<PAGE>
3.4 Notices. Any notice, request, instruction, or other instrument to
be given or served hereunder upon any party shall be deemed given or served if
in writing and delivered personally or sent by United States Mail, postage
prepaid, certified, return receipt requested, to the respective party or parties
at the following addresses:
a) If to TAO: T. Alan Owen & Associates, P.C.
1112 East Copeland Road
Suite 420
Arlington, Texas 76011
Attn: T. Alan Owen
b) If to ASC: Asset Servicing Corporation
709 B West Rusk
Suite 580
Rockwall, Texas 75087
Attn: Charles E. Smith
EXECUTED to be effective as of the 20th day of August, 1999.
T. ALAN OWEN & ASSOCIATES, P.C.
By:________________________________
T. Alan Owen
ASSET SERVICING CORPORATION,
a Nevada corporation
By:________________________________
Charles E. Smith, President
ESCROW AGREEMENT -- Page 3
Asset Servicing Corp-TAO-Escrow Agrmt (C-17)
ASSET SERVICING CORPORATION
SUBSCRIPTION AGREEMENT
September __, 1999
ASSET SERVICING CORPORATION
709 B West Rusk, Suite 580
Rockwall, Texas75087
Ladies and Gentlemen:
1. PURCHASE OF COMMON STOCK. Intending to be legally bound, I hereby agree
to purchase ________ shares of voting, no par value common stock (the "Shares")
of Asset Servicing Corporation (the "Corporation") for ______________ U.S.
Dollars (number of Shares to be purchased multiplied by $1.00). This offer to
purchase is submitted in accordance with and subject to the terms and conditions
described in this Subscription Agreement (the "Agreement"). I acknowledge that
the Corporation reserves the right, in its sole and absolute discretion, to
accept or reject this subscription and the subscription will not be binding
until accepted by the Corporation in writing.
2. PAYMENT. I agree to deliver to the Corporation immediately available
funds in the full amount due under this Agreement, by certified or cashier's
check payable to the "ASC 1999 Public Offering Escrow Account." The Corporation
shall promptly deposit the funds into the Escrow Account.
3. ISSUANCE OF SHARES. The Shares subscribed for herein will only be issued
upon acceptance by the Corporation as evidenced by the Corporation returning to
the investor an executed Agreement acknowledging acceptance and upon
satisfaction of the terms and conditions of the Escrow Agreement.
4. REPRESENTATION AND WARRANTIES.
A. I understand that the offering and sale of the Shares is
registered under (i) the Securities Act of 1933, as amended (the "Securities
Act"), and (ii) various States' Divisions of Securities in compliance with their
administration and enforcement of the respective States' Blue Sky Laws and
Regulations. In accordance therewith and in furtherance thereof, I represent and
warrant to and agree with the Corporation as follows:
[1] I am a resident of the State of ________________ as of the date of
this Agreement and I have no present intention of becoming a resident of any
other state or jurisdiction;
<PAGE>
[2] I have received and have reviewed the Corporation's Prospectus
dated _________________, 1999;
[3] I have had a reasonable opportunity to ask questions of and receive
answers from a person or persons acting on behalf of the Corporation concerning
this investment, including the terms and conditions of this offering, and all
such questions have been answered to my full satisfaction;
[4] No oral or written representations have been made or oral or
written information furnished to me or to my advisors in connection with the
offering of Shares which was in any way inconsistent with the information stated
in the Prospectus;
[5] I have reached the age of majority, have adequate means of
providing for my current needs and personal contingencies, am able to bear the
substantial economic risks of an investment in the Shares for an indefinite
period of time, have no need for liquidity in such an investment and, at the
present time, could afford a complete loss of such investment;
[6] I have such knowledge and experience in financial, tax and business
matters in general, so as to enable me to utilize the information made available
to me in connection with the offering of Shares in order to evaluate the merits
and risks of an investment in the Corporation and am qualified by training and
experience in business and financial matters to evaluate the merits and risks of
an investment such as the purchase of the Shares; and
[7] I have been advised by my purchaser representative, if I have one,
that no material relationship exists between the Corporation and my purchaser
representative, nor has an material relationship existed between such parties
for at least the past two years, nor will any compensation be paid to my
purchaser representative.
B. Within five (5) days after receipt of a request from the
Corporation, I hereby agree to provide such information and to execute and
deliver such documents as may reasonably be necessary to comply with any and all
laws, regulations or ordinances to which the Corporation is subject.
C. The foregoing representations, warranties and agreements,
together with all other representations and warranties made or given by me to
the Corporation in any other written statement or document delivered in
connection with the transaction contemplated hereby shall be true and correct in
all respects on and as of the date of the Closing as if made on and as of such
date and shall survive the date of the Closing.
5. INDEMNIFICATION. I agree to indemnify and hold harmless the Corporation,
the officers, directors, agents, employees and affiliates of any thereof against
any and all loss, liability, claim or damage, (including attorney's fees and
disbursements) together with all costs and expense whatsoever arising out of or
based upon any false representation or warranty or breach or failure by me to
comply with any representation, warranty, covenant or agreement made by me
<PAGE>
herein or in any other document furnished by me of the foregoing in connection
with this transaction.
6. IRREVOCABILITY; BINDING EFFECT. I hereby acknowledge and agree that the
purchase hereunder is irrevocable, that I am not entitled to cancel, terminate
or revoke this Agreement or any agreements of the undersigned hereunder and that
this Agreement and such other agreements shall survive my death or disability
and shall be binding upon and inure to the benefit of the parties and their
heirs, executor, administrators, successors, legal representatives and assigns.
If the undersigned is more than one person, the obligations of the undersigned
hereunder shall be joint and several, and the agreements, representations,
warranties and acknowledgments herein contained shall be deemed to be made by
and are binding upon each such person and his heirs, executors, administrators,
successors, legal representatives and assigns.
7. MODIFICATION. Neither this Agreement not any provisions hereof shall be
waived, modified, discharged or terminated except by an instrument in writing
signed by the party against whom any such waiver, modification, discharge or
termination is sought.
8. NOTICES. Any notice, demand or other communication which any party hereto
may require, or may elect to give to anyone interested hereunder shall be
sufficiently given if [a] deposited, postage prepaid, in a United States mail
box, stamped registered or certified mail, return receipt requested addressed to
such address as may be listed on the books of the Corporation, [b] delivered
personally at such address, or [c] delivered (in person, or by a facsimile
transmission, telex or similar telecommunications equipment) against receipt.
9. COUNTERPARTS. This Agreement may be executed through the use of separate
signature pages or in any number of counterparts, and each of such counterparts
shall, for all purposes, constitute one agreement binding on all parties,
notwithstanding that all parties are not signatories to the same counterpart.
10. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties with respect to the subject matter hereof, and there are no
representations, covenants or other agreements except as stated or referred to
herein.
11. SEVERABILITY. Each provision of the Agreement is intended to be
severable from every other provision, and the invalidity or illegality of any
portion hereof shall not affect the validity or legality of the remainder
hereof.
12. ASSIGNABILITY. This Agreement is not transferable or assignable by the
undersigned except as may be provided herein.
<PAGE>
13. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas as applied to residents of that
state executing contracts wholly to be performed in that state.
INDIVIDUAL(S) SUBSCRIBER
IN WITNESS WHEREOF, I have executed this Agreement as of the ______ day of
________ ___, 1999.
- ---------------------------------------------
Signature of Purchaser
- - -------------------------------------------
Name(s) of Purchaser (Please print or type)
- ---------------------------------------------
Purchaser(s) Social Security Number
STATE OF ________________)
) SS
COUNTY OF _____________ )
On the ________day of _____________, 1999, before me personally appeared
___________________________________________, known to me to be the individual(s)
described herein and who acknowledged the foregoing instruments and swore and
acknowledged that (he)(she)(they) executed the same as (his)(her)(their) free
act and deed.
-------------------------------------
Notary Public, State of _____________
My commission expires:
-------------
<PAGE>
ENTITY SUBSCRIBER
IN WITNESS WHEREOF, I have executed this Agreement as of the ______ day of
_________________, 1999.
- --------------------------------------
Entity
- --------------------------------------
Signed By
Its:
----------------------------------
- --------------------------------------
Date
STATE OF _______________)
) SS
COUNTY OF _____________ )
On the _____day of _______________, 1999, before me personally appeared
___________________________________________, known to me to be the individual
described herein and who acknowledged the foregoing instruments and swore and
acknowledged that (he)(she) executed the same as (his)(her) free act and deed.
----------------------------------
Notary Public, State of ______________
My commission expires:
---------------
PURCHASE ACCEPTED FOR _________ SHARES:
ACTIVE ANKLE SYSTEMS, INC.
By: ________________________________
Charles Smith, President
Date: _______________________________
FRENCH A HAMILTON
Attorneys at Law
14651 Dallas Parkway, Suite 434
Dallas, Texas 75240
(972) 404-1414 (972)404-1808 FAX
H. Dawson French Charles M. Hamilton
August 18, 1999
Asset Servicing Corporation
709 B.W. Rusk, Suite 580
Rockwall, Texas 75087
Attn: Charles Smith
Dear Mr. Smith:
As the sole director, officer, and shareholder of Asset Servicing
Corporation (the "Corporation"), you have requested my opinion as special
securities counsel for the Corporation with regard to the issuance of its Common
Stock, par value of $.001 per share (the "Common Stock"), upon organization and
pursuant to a public offering of a maximum of not more than 1,000,000 shares and
a minimum of not less than 50,000 shares, at a price of $1.00 per share.
In this respect I have examined the following documents of the
Corporation:
l. Articles of Incorporation filed with the Secretary of State of
Nevada under date of May 27, 1998.
2. A set of by-laws approved and adopted by the Corporation upon its
organization.
3. Minutes of the organizational meeting held by Charles Smith on
May 29, 1998, as the sole director named in the Articles of
Incorporation, during which the following business among others
was transacted.
* Issuance of 200,000 shares of the Corporation's Common Stock
to Charles Smith for services rendered and cash advanced to
or for the Corporation at a stated value of $2,500.
* Authorization for a pubic offering of not more than
1,000,000 shares and not less than 50,000 shares of the
Corporations's Common Stock at a price of $1.00 per share
pursuant to a registration statement to be filed by the
Corporation with the SEC on Form SB-l.
<PAGE>
Asset Servicing Corporation
August 18, 1999
Page 2
Based upon my examination of the foregoing documents, which
constitute all of the records of the corporation, I am of the opinion that the
200,000 shares of its Common Stock presently outstanding constitute validly
issued, fully paid and non-assessable shares of Common Stock and that the shares
authorized for issuance pursuant to the public offering will upon payment
therefor likewise constitute validly issued, fully paid and non-assessable
shares of capital stock of the Corporation.
Yours Truly,
/s/ H. Dawson French
---------------------
H. Dawson French
HDF/mwf
MARK L. CLELAND
CERTIFIED PUBLIC ACCOUNTANT
17430 CAMPBELL ROAD, SUITE 114
DALLAS, TEXAS 75252
972-735-0033 FAX 972-735-0035
To the Board of Directors and Stockholders
of Asset Servicing Corporation
I consent to incorporation by reference in the registration statement on Form
SB-1 of Asset Servicing Corporation (a Nevada corporation in the development
stage) of my report dated May 28, 1999, relating to the balance sheets of Asset
Servicing Corporation as of April 30, 1999 and December 31, 1998 and the related
statements of operations and accumulated deficit accumulated during the
development stage, stockholders' equity and accumulated deficit, and cash flows
for the four month period ending April 30, 1999, and the period May 27, 1998
(date of inception) to December 31, 1998.
/s/ Mark L. Cleland
- -------------------
Dallas, Texas
August 9, 1999
