U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
File No.: __________________
CIK: 0001089905
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
PHILLIPS 44, INC.
-------------------
(Name of Small Business Issuer in its charter)
Wyoming 84-1402775
State or other jurisdiction of IRS Employer ID Number
incorporation or organization
544 E. Yellowstone Highway, Casper, WY 82601
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (303) 422-8127
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Not Applicable
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of class)
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TABLE OF CONTENTS
PART I
Page
Item 1. Business.....................................................3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................21
Item 3. Properties..................................................22
Item 4. Security Ownership of Certain Beneficial Owners
and Management........................................23
Item 5. Directors and Executive Officers of the Registrant..........23
Item 6. Executive Compensation......................................28
Item 7. Certain Relationships and Related Transactions..............29
Item 8. Description of Securities...................................30
PART II
Item 1. Market for Registrant's Common Stock and
Security Holder Matters...............................31
Item 2. Legal Proceedings...........................................31
Item 3. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure................31
Item 4. Recent Sales of Unregistered Securities.....................31
Item 5. Indemnification of Directors and Officers...................34
PART F/S
Financial Statements and Supplementary Data..................................F-1
Signature Page................................................................35
Exhibits, Financial Statement Schedule and Reports on Form 8-K................49
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PART I
Item 1. Description of Business.
General
The Company was incorporated under the laws of the State of Wyoming on
April 17, 1997, and is in the early developmental and promotional stages. To
date the Company's activities have been organizational ones, directed at
developing its business plan and raising its initial capital. The Company was
formed to seek business opportunities and is currently a "shell" with no
business. The company has no commercial operations as of date hereof. The
company has no full-time employees and owns no real estate.
The Company is a "shell" company and its only current business plan is to
seek, investigate, and, if warranted, acquire one or more properties or
businesses, and to pursue other related activities intended to enhance
shareholder value. The acquisition of a business opportunity may be made by
purchase, merger, exchange of stock, or otherwise, and may encompass assets or a
business entity, such as a corporation, joint venture, or partnership. The
Company has no capital, and it is unlikely that the Company will be able to take
advantage of more than one such business opportunity. The Company intends to
seek opportunities demonstrating the potential of long-term growth as opposed to
short-term earnings.
At the present time the Company has not identified any business opportunity
that it plans to pursue, nor has the Company reached any agreement or definitive
understanding with any person concerning an acquisition. The Company is filing
Form 10-SB on a voluntary basis in order to become a 12(g) registered company
under the Securities Exchange Act of 1934. As a "reporting company," the Company
may be more attractive to a private acquisition target because it may be listed
to trade its shares on the OTCBB.
It is anticipated that the Company's officers and directors will contact
broker-dealers and other persons with whom they are acquainted who are involved
in corporate finance matters to advise them of the Company's existence and to
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determine if any companies or businesses they represent have an interest in
considering a merger or acquisition with the Company. No assurance can be given
that the Company will be successful in finding or acquiring a desirable business
opportunity, given that no funds that are available for acquisitions, or that
any acquisition that occurs will be on terms that are favorable to the Company
or its stockholders.
The Company's search will be directed toward small and medium-sized
enterprises which have a desire to become public corporations and which are able
to satisfy, or anticipate in the reasonably near future being able to satisfy,
the minimum asset requirements in order to qualify shares for trading on NASDAQ
or a stock exchange (See "Investigation and Selection of Business
Opportunities"). The Company anticipates that the business opportunities
presented to it will (i) be recently organized with no operating history, or a
history of losses attributable to under-capitalization or other factors; (ii) be
experiencing financial or operating difficulties; (iii) be in need of funds to
develop a new product or service or to expand into a new market; (iv) be relying
upon an untested product or marketing concept; or (v) have a combination of the
characteristics mentioned in (i) through (iv). The Company intends to
concentrate its acquisition efforts on properties or businesses that it believes
to be undervalued. Given the above factors, investors should expect that any
acquisition candidate may have a history of losses or low profitability.
The Company does not propose to restrict its search for investment
opportunities to any particular geographical area or industry, and may,
therefore, engage in essentially any business, to the extent of its limited
resources. This includes industries such as service, finance, natural resources,
manufacturing, high technology, product development, medical, communications and
others. The Company's discretion in the selection of business opportunities is
unrestricted, subject to the availability of such opportunities, economic
conditions, and other factors.
As a consequence of this registration of its securities, any entity which
has an interest in being acquired by, or merging into the Company, is expected
to be an entity that desires to become a public company and establish a public
trading market for its securities. In connection with such a merger or
acquisition, it is highly likely that an amount of stock constituting control of
the Company would be issued by the Company or purchased from the current
principal shareholders of the Company by the acquiring entity or its affiliates.
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If stock is purchased from the current shareholders, the transaction is very
likely to result in substantial gains to them relative to their purchase price
for such stock. In the Company's judgment, none of its officers and directors
would thereby become an "underwriter" within the meaning of the Section 2(11) of
the Securities Act of 1933, as amended. The sale of a controlling interest by
certain principal shareholders of the Company could occur at a time when the
other shareholders of the Company remain subject to restrictions on the transfer
of their shares.
Depending upon the nature of the transaction, the current officers and
directors of the Company may resign management positions with the Company in
connection with the Company's acquisition of a business opportunity. See "Form
of Acquisition," below, and "Risk Factors - The Company - Lack of Continuity in
Management." In the event of such a resignation, the Company's current
management would not have any control over the conduct of the Company's business
following the Company's combination with a business opportunity.
It is anticipated that business opportunities will come to the Company's
attention from various sources, including its officer and director, its other
stockholders, professional advisors such as attorneys and accountants,
securities broker-dealers, venture capitalists, members of the financial
community, and others who may present unsolicited proposals. The Company has no
plans, understandings, agreements, or commitments with any individual for such
person to act as a finder of opportunities for the Company.
The Company does not foresee that it would enter into a merger or
acquisition transaction with any business with which its officers or directors
are currently affiliated. Should the Company determine in the future, contrary
to foregoing expectations, that a transaction with an affiliate would be in the
best interests of the Company and its stockholders, the Company is in general
permitted by Wyoming law to enter into such a transaction if:
1. The material facts as to the relationship or interest of the affiliate and as
to the contract or transaction are disclosed or are known to the Board of
Directors, and the Board in good faith authorizes the contract or transaction by
the affirmative vote of a majority of the disinterested directors, even though
the disinterested directors constitute less than a quorum; or
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2. The material facts as to the relationship or interest of the affiliate and as
to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
3. The contract or transaction is fair as to the Company as of the time it is
authorized, approved or ratified, by the Board of Directors or the stockholders.
Investigation and Selection of Business Opportunities
To a large extent, a decision to participate in a specific business opportunity
may be made upon management's analysis of the quality of the other company's
management and personnel, the anticipated acceptability of new products or
marketing concepts, the merit of technological changes, the perceived benefit
the company will derive from becoming a publicly held entity, and numerous other
factors which are difficult, if not impossible, to analyze through the
application of any objective criteria. In many instances, it is anticipated that
the historical operations of a specific business opportunity may not necessarily
be indicative of the potential for the future because of the possible need to
shift marketing approaches substantially, expand significantly, change product
emphasis, change or substantially augment management, or make other changes. The
Company will be dependent upon the owners of a business opportunity to identify
any such problems which may exist and to implement, or be primarily responsible
for the implementation of, required changes. Because the Company may participate
in a business opportunity with a newly organized firm or with a firm which is
entering a new phase of growth, it should be emphasized that the Company will
incur further risks, because management in many instances will not have proved
its abilities or effectiveness, the eventual market for such company's products
or services will likely not be established, and such company may not be
profitable when acquired.
It is anticipated that the Company will not be able to diversify, but will
essentially be limited to one such venture because of the Company's limited
financing. This lack of diversification will not permit the Company to offset
potential losses from one business opportunity against profits from another, and
should be considered an adverse factor affecting any decision to purchase the
Company's securities.
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It is emphasized that management of the Company may effect transactions having a
potentially adverse impact upon the Company's shareholders pursuant to the
authority and discretion of the Company's management to complete acquisitions
without submitting any proposal to the stockholders for their consideration.
Holders of the Company's securities should not anticipate that the Company
necessarily will furnish such holders, prior to any merger or acquisition, with
financial statements, or any other documentation, concerning a target company or
its business. In some instances, however, the proposed participation in a
business opportunity may be submitted to the stockholders for their
consideration, either voluntarily by such directors to seek the stockholders'
advice and consent or because state law so requires.
The analysis of business opportunities will be undertaken by or under the
supervision of the Company's President, who is not a professional business
analyst. See "Management." Although there are no current plans to do so, Company
management might hire an outside consultant to assist in the investigation and
selection of business opportunities, and might pay a finder's fee. Since Company
management has no current plans to use any outside consultants or advisors to
assist in the investigation and selection of business opportunities, no policies
have been adopted regarding use of such consultants or advisors, the criteria to
be used in selecting such consultants or advisors, the services to be provided,
the term of service, or regarding the total amount of fees that may be paid.
However, because of the limited resources of the Company, it is likely that any
such fee the Company agrees to pay would be paid in stock and not in cash.
Otherwise, the Company anticipates that it will consider, among other things,
the following factors:
1. Potential for growth and profitability, indicated by new technology,
anticipated market expansion, or new products;
2. The Company's perception of how any particular business opportunity will be
received by the investment community and by the Company's stockholders;
3. Whether, following the business combination, the financial condition of the
business opportunity would be, or would have a significant prospect in the
foreseeable future of becoming sufficient to enable the securities of the
Company to qualify for listing on an exchange or on a national automated
securities quotation system, such as NASDAQ, so as to permit the trading of such
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securities to be exempt from the requirements of Rule 15c2-6 recently adopted by
the Securities and Exchange Commission. See "Risk Factors - The Company -
Regulation of Penny Stocks."
4. Capital requirements and anticipated availability of required funds, to be
provided by the Company or from operations, through the sale of additional
securities, through joint ventures or similar arrangements, or from other
sources;
5. The extent to which the business opportunity can be advanced;
6. Competitive position as compared to other companies of similar size and
experience within the industry segment as well as within the industry as a
whole;
7. Strength and diversity of existing management, or management prospects that
are scheduled for recruitment;
8. The cost of participation by the Company as compared to the perceived
tangible and intangible values and potential; and
9. The accessibility of required management expertise, personnel, raw materials,
services, professional assistance, and other required items.
In regard to the possibility that the shares of the Company would qualify
for listing on NASDAQ, the current standards include the requirements that the
issuer of the securities that are sought to be listed have total assets of at
least $4,000,000 and total capital and surplus of at least $2,000,000. Many, and
perhaps most, of the business opportunities that might be potential candidates
for a combination with the Company would not satisfy the NASDAQ listing
criteria.
No one of the factors described above will be controlling in the selection
of a business opportunity, and management will attempt to analyze all factors
appropriate to each opportunity and make a determination based upon reasonable
investigative measures and available data. Potentially available business
opportunities may occur in many different industries and at various stages of
development, all of which will make the task of comparative investigation and
analysis of such business opportunities extremely difficult and complex.
Potential investors must recognize that, because of the Company's limited
capital available for investigation and management's limited experience in
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business analysis, the Company may not discover or adequately evaluate adverse
facts about the opportunity to be acquired.
The Company is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals and
the selection of a business opportunity may take several months or more.
Prior to making a decision to participate in a business opportunity, the
Company will generally request that it be provided with written materials
regarding the business opportunity containing such items as a description of
products, services and company history; management resumes; financial
information; available projections, with related assumptions upon which they are
based; an explanation of proprietary products and services; evidence of existing
patents, trademarks, or services marks, or rights thereto; present and proposed
forms of compensation to management; a description of transactions between such
company and its affiliates during relevant periods; a description of present and
required facilities; an analysis of risks and competitive conditions; a
financial plan of operation and estimated capital requirements; audited
financial statements, or if they are not available, unaudited financial
statements, together with reasonable assurances that audited financial
statements would be able to be produced within a reasonable period of time not
to exceed 60 days following completion of a merger transaction; and other
information deemed relevant.
As part of the Company's investigation, the Company's executive officers
and directors may meet personally with management and key personnel, may visit
and inspect material facilities, obtain independent analysis or verification of
certain information provided, check references of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise.
It is possible that the range of business opportunities that might be
available for consideration by the Company could be limited by the impact of
Securities and Exchange Commission regulations regarding purchase and sale of
"penny stocks." The regulations would affect, and possibly impair, any market
that might develop in the Company's securities until such time as they qualify
for listing on NASDAQ or on another exchange which would make them exempt from
applicability of the "penny stock" regulations. See "Risk Factors -- Regulation
of Penny Stocks."
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Company management believes that various types of potential merger or
acquisition candidates might find a business combination with the Company to be
attractive. These include acquisition candidates desiring to create a public
market for their shares in order to enhance liquidity for current shareholders,
acquisition candidates which have long-term plans for raising capital through
the public sale of securities and believe that the possible prior existence of a
public market for their securities would be beneficial, and acquisition
candidates which plan to acquire additional assets through issuance of
securities rather than for cash, and believe that the possibility of development
of a public market for their securities will be of assistance in that process.
Acquisition candidates which have a need for an immediate cash infusion are not
likely to find a potential business combination with the Company to be an
attractive alternative.
There are no loan arrangements or arrangements for any financing whatsoever
relating to any business opportunities.
Form of Acquisition
It is impossible to predict the manner in which the Company may participate
in a business opportunity. Specific business opportunities will be reviewed as
well as the respective needs and desires of the Company and the promoters of the
opportunity and, upon the basis of that review and the relative negotiating
strength of the Company and such promoters, the legal structure or method deemed
by management to be suitable will be selected. Such structure may include, but
is not limited to leases, purchase and sale agreements, licenses, joint ventures
and other contractual arrangements. The Company may act directly or indirectly
through an interest in a partnership, corporation or other form of organization.
Implementing such structure may require the merger, consolidation or
reorganization of the Company with other corporations or forms of business
organization, and although it is likely, there is no assurance that the Company
would be the surviving entity. In addition, the present management and
stockholders of the Company most likely will not have control of a majority of
the voting shares of the Company following a reorganization transaction. As part
of such a transaction, the Company's existing directors may resign and new
directors may be appointed without any vote by stockholders.
It is likely that the Company will acquire its participation in a business
opportunity through the issuance of Common Stock or other securities of the
Company. Although the terms of any such transaction cannot be predicted, it
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should be noted that in certain circumstances the criteria for determining
whether or not an acquisition is a so-called "tax free" reorganization under the
Internal Revenue Code of 1986, depends upon the issuance to the stockholders of
the acquired company of a controlling interest (i.e. 80% or more) of the common
stock of the combined entities immediately following the reorganization. If a
transaction were structured to take advantage of these provisions rather than
other "tax free" provisions provided under the Internal Revenue Code, the
Company's current stockholders would retain in the aggregate 20% or less of the
total issued and outstanding shares. This could result in substantial additional
dilution in the equity of those who were stockholders of the Company prior to
such reorganization. Any such issuance of additional shares might also be done
simultaneously with a sale or transfer of shares representing a controlling
interest in the Company by the current officers, directors and principal
shareholders. (See "Description of Business - General").
It is anticipated that any new securities issued in any reorganization
would be issued in reliance upon exemptions, if any are available, from
registration under applicable federal and state securities laws. In some
circumstances, however, as a negotiated element of the transaction, the Company
may agree to register such securities either at the time the transaction is
consummated, or under certain conditions or at specified times thereafter. The
issuance of substantial additional securities and their potential sale into any
trading market that might develop in the Company's securities may have a
depressive effect upon such market.
The Company will participate in a business opportunity only after the
negotiation and execution of a written agreement. Although the terms of such
agreement cannot be predicted, generally such an agreement would require
specific representations and warranties by all of the parties thereto, specify
certain events of default, detail the terms of closing and the conditions which
must be satisfied by each of the parties thereto prior to such closing, outline
the manner of bearing costs if the transaction is not closed, set forth remedies
upon default, and include miscellaneous other terms.
As a general matter, the Company anticipates that it, and/or its officers
and principal shareholders will enter into a letter of intent with the
management, principals or owners of a prospective business opportunity prior to
signing a binding agreement. Such a letter of intent will set forth the terms of
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the proposed acquisition but will not bind any of the parties to consummate the
transaction. Execution of a letter of intent will by no means indicate that
consummation of an acquisition is probable. Neither the Company nor any of the
other parties to the letter of intent will be bound to consummate the
acquisition unless and until a definitive agreement concerning the acquisition
as described in the preceding paragraph is executed. Even after a definitive
agreement is executed, it is possible that the acquisition would not be
consummated should any party elect to exercise any right provided in the
agreement to terminate it on specified grounds.
It is anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys and others. If a
decision is made not to participate in a specific business opportunity, the
costs theretofore incurred in the related investigation would not be
recoverable. Moreover, because many providers of goods and services require
compensation at the time or soon after the goods and services are provided, the
inability of the Company to pay until an indeterminate future time may make it
impossible to procure goods and services.
In all probability, upon completion of an acquisition or merger, there will
be a change in control through issuance of substantially more shares of common
stock. Further, in conjunction with an acquisition or merger, it is likely that
management may offer to sell a controlling interest at a price not relative to
or reflective of any value of the shares sold by management, and at a price
which could not be achieved by individual shareholders at the time.
Investment Company Act and Other Regulation
The Company may participate in a business opportunity by purchasing,
trading or selling the securities of such business. The Company does not,
however, intend to engage primarily in such activities. Specifically, the
Company intends to conduct its activities so as to avoid being classified as an
"investment company" under the Investment Company Act of 1940 (the "Investment
Act"), and therefore to avoid application of the costly and restrictive
registration and other provisions of the Investment Act, and the regulations
promulgated thereunder.
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Section 3(a) of the Investment Act contains the definition of an
"investment company," and it excludes any entity that does not engage primarily
in the business of investing, reinvesting or trading in securities, or that does
not engage in the business of investing, owning, holding or trading "investment
securities" (defined as "all securities other than government securities or
securities of majority-owned subsidiaries") the value of which exceeds 40% of
the value of its total assets (excluding government securities, cash or cash
items). The Company intends to implement its business plan in a manner which
will result in the availability of this exception from the definition of
"investment company." Consequently, the Company's participation in a business or
opportunity through the purchase and sale of investment securities will be
limited.
The Company's plan of business may involve changes in its capital
structure, management, control and business, especially if it consummates a
reorganization as discussed above. Each of these areas is regulated by the
Investment Act, in order to protect purchasers of investment company securities.
Since the Company will not register as an investment company, stockholders will
not be afforded these protections.
Any securities which the Company might acquire in exchange for its Common
Stock are expected to be "restricted securities" within the meaning of the
Securities Act of 1933, as amended (the "Act"). If the Company elects to resell
such securities, such sale cannot proceed unless a registration statement has
been declared effective by the Securities and Exchange Commission or an
exemption from registration is available. Section 4(1) of the Act, which exempts
sales of securities not involving a distribution, would in all likelihood be
available to permit a private sale. Although the plan of operation does not
contemplate resale of securities acquired, if such a sale were to be necessary,
the Company would be required to comply with the provisions of the Act to effect
such resale.
An acquisition made by the Company may be in an industry which is regulated
or licensed by federal, state or local authorities. Compliance with such
regulations can be expected to be a time-consuming and expensive process.
Competition
The Company expects to encounter substantial competition in its efforts to
locate attractive opportunities, primarily from business development companies,
venture capital partnerships and corporations, venture capital affiliates of
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large industrial and financial companies, small investment companies, and
wealthy individuals. Many of these entities will have significantly greater
experience, resources and managerial capabilities than the Company and will
therefore be in a better position than the Company to obtain access to
attractive business opportunities. The Company also will possibly experience
competition from other public "blank check" companies, some of which may have
more funds available than does the Company.
No Rights of Dissenting Shareholders
The Company does not intend to provide Company shareholders with complete
disclosure documentation including audited financial statements, concerning a
possible target company prior to acquisition, because Wyoming Business
Corporation Act vests authority in the Board of Directors to decide and approve
matters involving acquisitions within certain restrictions. Any transaction
would be structured as an acquisition, not a merger, with the Registrant being
the parent company and the acquiree being merged into a wholly owned subsidiary.
Therefore, a shareholder will have no right of dissent under Wyoming law.
No Target Candidates for Acquisition
None of the Company's Officers, Directors, promoters, affiliates, or
associates have had any preliminary contact or discussion with any specific
candidate for acquisition. There are no present plans, proposals, arrangements,
or understandings with any representatives of the owners of any business or
company regarding the possibility of an acquisition transaction.
Administrative Offices
The Company currently maintains a mailing address at 544 E. Yellowstone
Highway, Casper, Wyoming 82601 which is the office address of its secretary
Michael R. Butler. Other than this mailing address, the Company does not
currently maintain any other office facilities, and does not anticipate the need
for maintaining office facilities at any time in the foreseeable future. The
Company pays no rent or other fees for the use of this mailing address.
Employees
The Company is a development stage company and currently has no employees.
Management of the Company expects to use consultants, attorneys and accountants
as necessary, and does not anticipate a need to engage any full-time employees
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so long as it is seeking and evaluating business opportunities. The need for
employees and their availability will be addressed in connection with the
decision whether or not to acquire or participate in specific business
opportunities. Although there is no current plan with respect to its nature or
amount, remuneration may be paid to or accrued for the benefit of, the Company's
officers prior to, or in conjunction with, the completion of a business
acquisition for services actually rendered, if for. See "Executive Compensation"
and under "Certain Relationships and Related Transactions."
Risk Factors
1. Conflicts of Interest. Certain conflicts of interest may exist between the
Company and its officers and directors. They have other business interests to
which they devote their attention, and may be expected to continue to do so
although management time should be devoted to the business of the Company. As a
result, conflicts of interest may arise that can be resolved only through
exercise of such judgment as is consistent with fiduciary duties to the Company.
See "Management," and "Conflicts of Interest."
It is anticipated that Company's officers and directors may actively
negotiate or otherwise consent to the purchase of a portion of his common stock
as a condition to, or in connection with, a proposed merger or acquisition
transaction. In this process, the Company's officers may consider his own
personal pecuniary benefit rather than the best interests of other Company
shareholders, and the other Company shareholders are not expected to be afforded
the opportunity to approve or consent to any particular stock buy-out
transaction. See "Conflicts of Interest."
2. Need For Additional Financing. The Company has very limited funds, and such
funds may not be adequate to take advantage of any available business
opportunities. Even if the Company's funds prove to be sufficient to acquire an
interest in, or complete a transaction with, a business opportunity, the Company
may not have enough capital to exploit the opportunity. The ultimate success of
the Company may depend upon its ability to raise additional capital. The Company
has not investigated the availability, source, or terms that might govern the
acquisition of additional capital and will not do so until it determines a need
for additional financing. If additional capital is needed, there is no assurance
that funds will be available from any source or, if available, that they can be
obtained on terms acceptable to the Company. If not available, the Company's
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operations will be limited to those that can be financed with its modest
capital.
3. Regulation of Penny Stocks. The Company's securities, when available for
trading, will be subject to a Securities and Exchange Commission rule that
imposes special sales practice requirements upon broker-dealers who sell such
securities to persons other than established customers or accredited investors.
For purposes of the rule, the phrase "accredited investors" means, in general
terms, institutions with assets in excess of $5,000,000, or individuals having a
net worth in excess of $1,000,000 or having an annual income that exceeds
$200,000 (or that, when combined with a spouse's income, exceeds $300,000). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Consequently, the rule may
affect the ability of broker-dealers to sell the Company's securities and also
may affect the ability of purchasers in this offering to sell their securities
in any market that might develop therefore.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange Act
of 1934, as amended. Because the securities of the Company may constitute "penny
stocks" within the meaning of the rules, the rules would apply to the Company
and to its securities. The rules may further affect the ability of owners of
Shares to sell the securities of the Company in any market that might develop
for them.
Shareholders should be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. The
Company's management is aware of the abuses that have occurred historically in
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the penny stock market. Although the Company does not expect to be in a position
to dictate the behavior of the market or of broker-dealers who participate in
the market, management will strive within the confines of practical limitations
to prevent the described patterns from being established with respect to the
Company's securities.
4. Lack of Operating History. The Company was formed in April, 1997 for the
purpose of seeking a business opportunity. Due to the special risks inherent in
the investigation, acquisition, or involvement in a new business opportunity,
The Company must be regarded as a new or start-up venture with all of the
unforeseen costs, expenses, problems, and difficulties to which such ventures
are subject.
5. No Assurance of Success or Profitability. There is no assurance that the
Company will acquire a favorable business opportunity. Even if the Company
should become involved in a business opportunity, there is no assurance that it
will generate revenues or profits, or that the market price of the Company's
Common Stock will be increased thereby.
6. Possible Business - Not Identified and Highly Risky. The Company has not
identified and has no commitments to enter into or acquire a specific business
opportunity and therefore can disclose the risks and hazards of a business or
opportunity that it may enter into in only a general manner, and cannot disclose
the risks and hazards of any specific business or opportunity that it may enter
into. An investor can expect a potential business opportunity to be quite risky.
The Company's acquisition of or participation in a business opportunity will
likely be highly illiquid and could result in a total loss to the Company and
its stockholders if the business or opportunity proves to be unsuccessful. See
Item 1 "Description of Business."
7. Type of Business Acquired. The type of business to be acquired may be one
that desires to avoid effecting its own public offering and the accompanying
expense, delays, uncertainties, and federal and state requirements which purport
to protect investors. Because of the Company's limited capital, it is more
likely than not that any acquisition by the Company will involve other parties
whose primary interest is the acquisition of control of a publicly traded
company. Moreover, any business opportunity acquired may be currently
unprofitable or present other negative factors.
8. Impracticability of Exhaustive Investigation. The Company's limited funds and
the lack of full-time management will likely make it impracticable to conduct a
complete and exhaustive investigation and analysis of a business opportunity
<PAGE>
before the Company commits its capital or other resources thereto. Management
decisions, therefore, will likely be made without detailed feasibility studies,
independent analysis, market surveys and the like which, if the Company had more
funds available to it, would be desirable. The Company will be particularly
dependent in making decisions upon information provided by the promoter, owner,
sponsor, or others associated with the business opportunity seeking the
Company's participation. A significant portion of the Company's available funds
may be expended for investigative expenses and other expenses related to
preliminary aspects of completing an acquisition transaction, whether or not any
business opportunity investigated is eventually acquired.
9. Lack of Diversification. Because of the limited financial resources that the
Company has, it is unlikely that the Company will be able to diversify its
acquisitions or operations. The Company's probable inability to diversify its
activities into more than one area will subject the Company to economic
fluctuations within a particular business or industry and therefore increase the
risks associated with the Company's operations.
10. Reliance upon Financial Statements. The Company generally will require
audited financial statements from companies that it proposes to acquire. Given
cases where audited financials are available, the Company will have to rely upon
interim period unaudited information received from target companies' management
that has not been verified by outside auditors. The lack of the type of
independent verification which audited financial statements would provide,
increases the risk that the Company, in evaluating an acquisition with such a
target company, will not have the benefit of full and accurate information about
the financial condition and recent interim operating history of the target
company. This risk increases the prospect that the acquisition of such a company
might prove to be an unfavorable one for the Company or the holders of the
Company's securities.
Moreover, the Company will be subject to the reporting provisions of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and thus will
be required to furnish certain information about significant acquisitions,
including audited financial statements for any business that it acquires.
Consequently, acquisition prospects that do not have, or are unable to provide
reasonable assurances that they will be able to obtain, the required audited
statements would not be considered by the Company to be appropriate for
acquisition so long as the reporting requirements of the Exchange Act are
applicable. Should the Company, during the time it remains subject to the
<PAGE>
reporting provisions of the Exchange Act, complete an acquisition of an entity
for which audited financial statements prove to be unobtainable, the Company
would be exposed to enforcement actions by the Securities and Exchange
Commission (the "Commission") and to corresponding administrative sanctions,
including permanent injunctions against the Company and its management. The
legal and other costs of defending a Commission enforcement action would have
material, adverse consequences for the Company and its business. The imposition
of administrative sanctions would subject the Company to further adverse
consequences.
In addition, the lack of audited financial statements would prevent the
securities of the Company from becoming eligible for listing on NASDAQ, or on
any existing stock exchange. Moreover, the lack of such financial statements is
likely to discourage broker-dealers from becoming or continuing to serve as
market makers in the securities of the Company. Without audited financial
statements, the Company would almost certainly be unable to offer securities
under a registration statement pursuant to the Securities Act of 1933, and the
ability of the Company to raise capital would be significantly limited until
such financial statements were to become available.
11. Other Regulation. An acquisition made by the Company may be of a business
that is subject to regulation or licensing by federal, state, or local
authorities. Compliance with such regulations and licensing can be expected to
be a time-consuming, expensive process and may limit other investment
opportunities of the Company.
12. Dependence upon Management; Limited Participation of Management. The Company
currently has only two individuals who are serving as its officers and directors
on a part time basis. The Company will be heavily dependent upon their skills,
talents, and abilities to implement its business plan, and may, from time to
time, find that the inability of the officers and directors to devote their full
time attention to the business of the Company results in a delay in progress
toward implementing its business plan. See "Management." Because investors will
not be able to evaluate the merits of possible business acquisitions by the
Company, they should critically assess the information concerning the Company's
officers and directors.
13. Lack of Continuity in Management. The Company does not have an employment
agreement with its officers and directors, and as a result, there is no
assurance they will continue to manage the Company in the future. In connection
with acquisition of a business opportunity, it is likely the current officers
<PAGE>
and directors of the Company may resign subject to compliance with Section 14f
of the Securities Exchange Act of 1934. A decision to resign will be based upon
the identity of the business opportunity and the nature of the transaction, and
is likely to occur without the vote or consent of the stockholders of the
Company.
14. Indemnification of Officers and Directors. Wyoming Statutes provide for the
indemnification of its directors, officers, employees, and agents, under certain
circumstances, against attorney's fees and other expenses incurred by them in
any litigation to which they become a party arising from their association with
or activities on behalf of the Company. The Company will also bear the expenses
of such litigation for any of its directors, officers, employees, or agents,
upon such person's promise to repay the Company therefor if it is ultimately
determined that any such person shall not have been entitled to indemnification.
This indemnification policy could result in substantial expenditures by the
Company which it will be unable to recoup.
15. Director's Liability Limited. Wyoming Statutes exclude personal liability of
its directors to the Company and its stockholders for monetary damages for
breach of fiduciary duty except in certain specified circumstances. Accordingly,
the Company will have a much more limited right of action against its directors
than otherwise would be the case. This provision does not affect the liability
of any director under federal or applicable state securities laws.
16. Dependence upon Outside Advisors. To supplement the business experience of
its officers and directors, the Company may be required to employ accountants,
technical experts, appraisers, attorneys, or other consultants or advisors. The
selection of any such advisors will be made by the Company's President without
any input from stockholders. Furthermore, it is anticipated that such persons
may be engaged on an "as needed" basis without a continuing fiduciary or other
obligation to the Company. In the event the President of the Company considers
it necessary to hire outside advisors, he may elect to hire persons who are
affiliates, if they are able to provide the required services.
17. Leveraged Transactions. There is a possibility that any acquisition of a
business opportunity by the Company may be leveraged, i.e., the Company may
finance the acquisition of the business opportunity by borrowing against the
assets of the business opportunity to be acquired, or against the projected
future revenues or profits of the business opportunity. This could increase the
<PAGE>
Company's exposure to larger losses. A business opportunity acquired through a
leveraged transaction is profitable only if it generates enough revenues to
cover the related debt and expenses. Failure to make payments on the debt
incurred to purchase the business opportunity could result in the loss of a
portion or all of the assets acquired. There is no assurance that any business
opportunity acquired through a leveraged transaction will generate sufficient
revenues to cover the related debt and expenses.
18. Competition. The search for potentially profitable business opportunities is
intensely competitive. The Company expects to be at a disadvantage when
competing with many firms that have substantially greater financial and
management resources and capabilities than the Company. These competitive
conditions will exist in any industry in which the Company may become
interested.
19. No Foreseeable Dividends. The Company has not paid dividends on its Common
Stock and does not anticipate paying such dividends in the foreseeable future.
20. Loss of Control by Present Management and Stockholders. The Company may
consider an acquisition in which the Company would issue as consideration for
the business opportunity to be acquired an amount of the Company's authorized
but unissued Common Stock that would, upon issuance, represent the great
majority of the voting power and equity of the Company. The result of such an
acquisition would be that the acquired company's stockholders and management
would control the Company, and the Company's management could be replaced by
persons unknown at this time. Such a merger would result in a greatly reduced
percentage of ownership of the Company by its current shareholders. In addition,
the Company's major shareholders could sell control blocks of stock at a premium
price to the acquired company's stockholders.
21. No Public Market Exists. There is no public market for the Company's common
stock, and no assurance can be given that a market will develop or that a
shareholder ever will be able to liquidate his investment without considerable
delay, if at all. If a market should develop, the price may be highly volatile.
Factors such as those discussed in this "Risk Factors" section may have a
significant impact upon the market price of the securities offered hereby. Owing
to the low price of the securities, many brokerage firms may not be willing to
effect transactions in the securities. Even if a purchaser finds a broker
willing to effect a transaction in these securities, the combination of
brokerage commissions, state transfer taxes, if any, and any other selling costs
<PAGE>
may exceed the selling price. Further, many lending institutions will not permit
the use of such securities as collateral for any loans.
22. Rule 144 Sales. All of the outstanding shares of Common Stock held by
present officers, directors, and stockholders are "restricted securities" within
the meaning of Rule 144 under the Securities Act of 1933, as amended. As
restricted shares, these shares may be resold only pursuant to an effective
registration statement or under the requirements of Rule 144 or other applicable
exemptions from registration under the Act and as required under applicable
state securities laws. Rule 144 provides in essence that a person who has held
restricted securities for one year may, under certain conditions, sell every
three months, in brokerage transactions, a number of shares that does not exceed
the greater of 1.0% of a company's outstanding common stock or the average
weekly trading volume during the four calendar weeks prior to the sale. There is
no limit on the amount of restricted securities that may be sold by a
nonaffiliate after the restricted securities have been held by the owner for a
period of two years. Nonaffiliate shareholders holding 360,000 common shares of
the Company have held their shares for two years and under Rule 144(K) are
eligible to have freely tradable shares. A sale under Rule 144 or under any
other exemption from the Act, if available, or pursuant to subsequent
registration of shares of Common Stock of present stockholders, may have a
depressive effect upon the price of the Common Stock in any market that may
develop. Of the total, 420,000 shares become available for resale (subject to
volume limitations for affiliates) under Rule 144, ninety (90) days after the
Company registers its common stock under Section 12(g) with the Securities and
Exchange Commission, all of which will be subject to applicable volume
restrictions under the Rule.
23. Blue Sky Considerations. Because the securities registered hereunder have
not been registered for resale under the blue sky laws of any state, the holders
of such shares and persons who desire to purchase them in any trading market
that might develop in the future, should be aware that there may be significant
state blue-sky law restrictions upon the ability of investors to sell the
securities and of purchasers to purchase the securities. Some jurisdictions may
not under any circumstances allow the trading or resale of blind-pool or
"blank-check" securities. Accordingly, investors should consider the secondary
market for the Company's securities to be a limited one.
24. Blue Sky Restrictions. Many states have enacted statutes or rules which
restrict or prohibit the sale of securities of "blank check" companies to
residents so long as they remain without specific business companies. To the
<PAGE>
extent any current shareholders or subsequent purchaser from a shareholder may
reside in a state which restricts or prohibits resale of shares in a "blank
check" company, warning is hereby given that the shares may be "restricted" from
resale as long as the company is a shell company.
At the date of this registration statement, the Company has no
intention of offering further shares in a private offering to anyone. Further,
the policy of the Board of Directors is that any future offering of shares will
only be made after an acquisition has been made and can be disclosed in
appropriate 8-K filings.
In the event of a violation of state laws regarding resale of "blank
check" shares the Company could be liable for civil and criminal penalties which
would be a substantial impairment to the Company. At date of this registration
statement, all shareholders' shares bear a "restrictive legend," and the Company
will examine each shareholders' resident state laws at the time of any proposed
resale of shares now outstanding to attempt to avoid any inadvertent breach of
state laws.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS OR PLAN OF
OPERATIONS.
Liquidity and Capital Resources
The Company remains in the development stage and, since inception, has
experienced significant liquidity problems and has no capital resources or
stockholder's equity. The Company has no current assets in the form of cash of
$1,306 and total assets of $2,056 and no current liabilities.
The Company will carry out its plan of business as discussed above. The
Company cannot predict to what extent its lack of liquidity and capital
resources will impair the consummation of a business combination or whether it
will incur further operating losses through any business entity which the
Company may eventually acquire.
During the period from April 17, 1997 (inception) through December 31,
1998 the Company has engaged in no significant operations other than
organizational activities, acquisition of capital and preparation for
registration of its securities under the Securities Exchange Act of 1934, as
amended and a limited venture into offering consulting services to clients
seeking debt or equity financing for start-up ventures. No revenues were
received by the Company during this period. The company has incurred operating
expenses since inception of ($194). The net loss on operations was ($194)
through December 31, 1998. Such losses will continue unless revenues and
business can be acquired by the company. There is no assurance that revenues or
profitability will ever be achieved by the company.
Results of Operations year ended December 31, 1998 compared to 1997
The Company had no revenues in 1997 or 1998. The Company incurred $25 in
expenses in 1998 as compared to $144 in expenses in 1997.
The net operating loss in 1998 was ($25) as compared to ($144) in 1997.
The losses in 1998 were as a result of filing fees. In 1997 the company incurred
office expenses of $144. The net loss per share each year was less than ($.01)
per share.
Results of Operations - quarter ended March 31, 1999 compared to same period in
1998.
<PAGE>
The Company had no income or expenses in the quarter ended March 31, 1999
or 1998 and no operating income or loss.
For the current fiscal year, the Company anticipates incurring a loss
as a result of legal and accounting expenses, expenses associated with
registration under the Securities Exchange Act of 1934, and expenses associated
with locating and evaluating acquisition candidates. The Company anticipates
that until a business combination is completed with an acquisition candidate, it
will not generate revenues other than interest income, and may continue to
operate at a loss after completing a business combination, depending upon the
performance of the acquired business.
Need for Additional Financing
The Company does not have capital sufficient to meet the Company's cash
needs, including the costs of compliance with the continuing reporting
requirements of the Securities Exchange Act of 1934. The Company will have to
seek loans or equity placements to cover such cash needs. In the event the
Company is able to complete a business combination during this period, lack of
its existing capital may be a sufficient impediment to prevent it from
accomplishing the goal of completing a business combination. There is no
assurance, however, that without funds it will ultimately allow registrant to
complete a business combination. Once a business combination is completed, the
Company's needs for additional financing are likely to increase substantially.
No commitments to provide additional funds have been made by management
or other stockholders. Accordingly, there can be no assurance that any
additional funds will be available to the Company to allow it to cover its
expenses as they may be incurred.
Irrespective of whether the Company's cash assets prove to be
inadequate to meet the Company's operational needs, the Company might seek to
compensate providers of services by issuances of stock in lieu of cash.
Year 2000 Issues
Year 2000 problems result primarily from the inability of some computer
software to property store, recall, or use data after December 31, 1999. These
problems may affect many computers and other devices that contain embedded
computer chips. The Company's operations, however, do not rely on information
<PAGE>
technology (IT) systems. Accordingly, the Company does not believe it will be
material affected by Year 2000 problems.
The Company relies on non-IT systems that may suffer from Year 2000
problems, including telephone systems and facsimile and other office machines.
Moreover, the Company relies on third-parties that may suffer from Year 2000
problems that could affect the Company's operations, including banks, oil field
operators, and utilities. In light of the Company's substantially reduced
operations, the Company does not believe that such non-IT systems or third-party
Year 2000 problems will affect the Company in a manner that is different or more
substantial than such problems affect other similarly situated companies or
industry generally. Consequently, the Company does not currently intend to
conduct a readiness assessment of Year 2000 problems or to develop a detailed
contingency plan with respect to Year 2000 problems that may affect the Company.
Item 3. Description of Property.
The Company has no property. The Company does not currently maintain an
office or any other facilities. It does currently maintain a mailing address at
544 E. Yellowstone Highway, Csper, WY 82601, which is the office address of its
Secretary, Michael R. Butler. The Company pays no rent for the use of this
mailing address. The Company does not believe that it will need to maintain an
office at any time in the foreseeable future in order to carry out its plan of
operations described herein.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of the date of this Registration
Statement, the number of shares of Common Stock owned of record and beneficially
by executive officers, directors and persons who hold 5.0% or more of the
outstanding Common Stock of the Company. Also included are the shares held by
all executive officers and directors as a group.
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OWNERSHIP
SHAREHOLDERS BENEFICIAL OWNERS PERCENTAGE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Philip G. Hinds, President & Director 140,000 17.9%
P.O. Box 472
Evansville, WY 82636
140,000 17.9%
Michael R. Butler, Treasurer and Director
13750 Bessemer Bend Rd.
Alcova Route
Casper, WY 82604
140,000 17.9
Z. S. Merritt, Director
P.O. Box 3192
Casper, WY 82602
All directors and executive 420,000 53.7%
officers as a group (3 persons)
</TABLE>
Each principal shareholder has sole investment power and sole voting power over
the shares.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and executive officers currently serving the Company are
as follows:
Name Position Held Tenure
- -------------------------------------------------------------------
Philip G. Hinds President and Director Annual
Michael R. Butler Secretary, Treasurer and
Director Annual
Z.S. Merritt Director Annual
The directors named above will serve until the next annual meeting of
the Company's stockholders. Thereafter, directors will be elected for one-year
terms at the annual stockholders' meeting. Officers will hold their positions at
<PAGE>
the pleasure of the board of directors, absent any employment agreement, of
which none currently exists or is contemplated. There is no arrangement or
understanding between the directors and officers of the Company and any other
person pursuant to which any director or officer was or is to be selected as a
director or officer.
The directors and officers of the Company will devote such time to the
Company's affairs on an "as needed" basis, but less than 20 hours per month. As
a result, the actual amount of time which they will devote to the Company's
affairs is unknown and is likely to vary substantially from month to month.
Biographical Information
Philip G. Hinds, age 57, President and Director of Phillips 44, Inc.
(incorporated in Wyoming in April 1997), is also President and a Director of
Hindsight, Inc. (incorporated in Wyoming in October, 1988) and is President and
a Director of Hinds, Inc. (incorporated in Wyoming in May, 1999). Mr. Hinds, a
journeyman printer for 35 years, has owned and operated Oil City Printers,
Casper, WY since 1988. It is a commercial printing plant that employs four
people. He was also a town councilman for the town of Evansville, Wyoming for
five years.
Michael R. Butler, age 45, is Secretary/Treasurer and a Director of the
Company. Mr. Butler was employed for 19 years by Amoco Production Company, an
oil and gas producing company, operating in the state of Wyoming. In 1997 and
1998, Mr. Butler has owned and operated a farm/ranch west of Casper, Wyoming.
Mr. Butler has been trained in and has experience in waterflood injection, oil
and gas producing operations, maintenance, and wetland development. Mr. Butler
is a Director of Hindsight, Inc., dba Oil City Printers, a commercial printing
business (since 1998). Mr. Butler is a Director and Secretary/Treasurer of The
Art Boutique, Inc. (since 1996), Phillips 44, Inc. (since 1998) Tempus, Inc.
(since 1997), and Garner Investments, Inc. (since 1997).
Z.S. Merritt, age 71, has been an officer and Director of Phillips 44, Inc.
since April of 1997. Mr. Merritt has offered independent consulting services as
a geologist and landman for the past five years. He is also owner/broker of
Merit Realty in Casper, Wyoming. Mr. Merritt majored in geology at the
University of Wyoming, where he received both Bachelors and Masters degrees. Mr.
Merritt has also been a officer and Director of Viable Resources, in Prairie
<PAGE>
Energies Minerals, Western Technology and Research, Inc., and Hi-Plains Energy
Corp. in the past five years.
Management will devote minimal time to the operations of the Company,
and any time spent will be devoted to screening and assessing and, if warranted,
negotiating to acquire business opportunities.
None of the Company's officers and/or directors receives any
compensation for their respective services rendered to the Company, nor have
they received such compensation in the past. They all have agreed to act without
compensation until authorized by the Board of Directors, which is not expected
to occur until the Company has generated revenues from operations after
consummation of a merger or acquisition. As of the date of filing this report,
the Company has no funds available to pay officers or directors. Further, none
of the officers or directors is accruing any compensation pursuant to any
agreement with the Company. No retirement, pension, profit sharing, stock option
or insurance programs or other similar programs have been adopted by the Company
for the benefit of its employees.
It is possible that, after the Company successfully consummates a
merger or acquisition with an unaffiliated entity, that entity may desire to
employ or retain one or a number of members of the Company's management for the
purposes of providing services to the surviving entity, or otherwise provide
other compensation to such persons. However, the Company has adopted a policy
whereby the offer of any post-transaction remuneration to members of management
will not be a consideration in the Company's decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the Company's
Board of Directors any discussions concerning possible compensation to be paid
to them by any entity which proposes to undertake a transaction with the Company
and further, to abstain from voting on such transaction. Therefore, as a
practical matter, if each member of the Company's Board of Directors were
offered compensation in any form from any prospective merger or acquisition
candidate, the proposed transaction would not be approved by the Company's Board
of Directors as a result of the inability of the Board to affirmatively approve
such a transaction.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for their
<PAGE>
referral in the form of a finder's fee. It is anticipated that this fee will be
either in the form of restricted Common Stock issued by the Company as part of
the terms of the proposed transaction, or will be in the form of cash
consideration. However, if such compensation is in the form of cash, such
payment will be tendered by the acquisition or merger candidate, because the
Company has insufficient cash available. The amount of such finder's fee cannot
be determined as of the date of filing this report, but is expected to be
comparable to consideration normally paid in like transactions. No member of
management of the Company will receive any finders fee, either directly or
indirectly, as a result of their respective efforts to implement the Company's
business plan outlined herein.
The Company has adopted a policy that its affiliates and management
shall not be issued further common shares of the Company, except in the event
discussed in the preceding paragraphs.
Previous "Blank Check" or "Shell" Company Involvement
Management of the Company has been involved in prior private "blank
check" or "shell" companies as follows:
Michael R. Butler is a Director, Secretary/Treasurer of The Art Boutique,
Inc. since 1996, a shell company currently preparing a Form 10-SB for filing
with the Securities and Exchange Commission and is President and a Director of
Garner Investments, Inc. which has filed a Form 10-SB with the Securities and
Exchange Commission. Mr. Butler is a Director and Secretary of Phillips 44, Inc.
since 1998 and Tempus, Inc. since 1997 both of which are shell corporations
without business.
Philip G. Hinds is president and a director of Hinds, Inc. (formed May,
1999) without a business purpose.
Indemnification of Officers and Directors
As permitted by Wyoming Statutes, the Company may indemnify its
directors and officers against expenses and liabilities they incur to defend,
settle, or satisfy any civil or criminal action brought against them on account
of their being or having been Company directors or officers unless, in any such
action, they are adjudged to have acted with gross negligence or willful
misconduct. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that, in the opinion of the Securities and Exchange Commission,
<PAGE>
such indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable.
Exclusion of Liability
The Wyoming Corporation Act excludes personal liability for its
directors for monetary damages based upon any violation of their fiduciary
duties as directors, except as to liability for any breach of the duty of
loyalty, acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, acts in violation of the Wyoming
Corporation Act, or any transaction from which a director receives an improper
personal benefit. This exclusion of liability does not limit any right which a
director may have to be indemnified and does not affect any director's liability
under federal or applicable state securities laws.
Conflicts of Interest
The officers and directors of the Company will not devote more than a
portion of their time to the affairs of the Company. There will be occasions
when the time requirements of the Company's business conflict with the demands
of their other business and investment activities. Such conflicts may require
that the Company attempt to employ additional personnel. There is no assurance
that the services of such persons will be available or that they can be obtained
upon terms favorable to the Company.
Conflicts of Interest - General. Certain of the officers and directors of the
Company may be directors and/or principal shareholders of other companies and,
therefore, could face conflicts of interest with respect to potential
acquisitions. In addition, officers and directors of the Company may in the
future participate in business ventures which could be deemed to compete
directly with the Company. Additional conflicts of interest and non-arms length
transactions may also arise in the future in the event the Company's officers or
directors are involved in the management of any firm with which the Company
transacts business. The Company's Board of Directors has adopted a policy that
the Company will not seek a merger with, or acquisition of, any entity in which
management serve as officers or directors, or in which they or their family
members own or hold a controlling ownership interest. Although the Board of
Directors could elect to change this policy, the Board of Directors has no
present intention to do so. In addition, if the Company and other companies with
which the Company's officers and directors are affiliated both desire to take
advantage of a potential business opportunity, then the Board of Directors has
agreed that said opportunity should be available to each such company in the
<PAGE>
order in which such companies registered or became current in the filing of
annual reports under the Exchange Act subsequent to January 1, 1997.
The Company's officers and directors may actively negotiate or
otherwise consent to the purchase of a portion of their common stock as a
condition to, or in connection with, a proposed merger or acquisition
transaction. It is anticipated that a substantial premium over the initial cost
of such shares may be paid by the purchaser in conjunction with any sale of
shares by the Company's officers and directors which is made as a condition to,
or in connection with, a proposed merger or acquisition transaction. The fact
that a substantial premium may be paid to the Company's officers and directors
to acquire their shares creates a potential conflict of interest for them in
satisfying their fiduciary duties to the Company and its other shareholders.
Even though such a sale could result in a substantial profit to them, they would
be legally required to make the decision based upon the best interests of the
Company and the Company's other shareholders, rather than their own personal
pecuniary benefit.
<TABLE>
<CAPTION>
Item 6. Executive Compensation.
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Awards
- ------------------------ ------------ -------------- ------------ ----------------------- -------------------- ---------------------
Name and Principal Year Salary ($) Bonus ($) Other Annual Restricted Stock Securities
Position Compensation ($) Award(s) Underlying Options/
($) SARs (#)
- ------------------------ ------------ -------------- ------------ ----------------------- -------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Philip G. Hinds, 1996 0 0 0 0 0
President, 1997 0 0 0 0 0
Director
------------ -------------- ------------ ----------------------- -------------------- ---------------------
1998 0 0 0 0 0
- ------------------------ ------------ -------------- ------------ ----------------------- -------------------- ---------------------
Michael R. Butler
- ------------------------ ------------ -------------- ------------ ----------------------- -------------------- ---------------------
Michael R. Butler, 1996 0 0 0 0 0
Secretary, Treasurer 1997 0 0 0 0 0
Director
------------ -------------- ------------ ----------------------- -------------------- ---------------------
1998 0 0 0 0 0
- ------------------------ ------------ -------------- ------------ ----------------------- -------------------- ---------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Directors' Compensation
-----------------------
Name Annual Meeting Consulting Number Number of
Retainer Fees Fees/Other of Securities
Fee ($) ($) Fees ($) Shares Underlying
(#) Options
SARs (#)
<S> <C> <C> <C> <C> <C>
A. Director 0 0 0 0 0
Philip G. Hinds
B. Director
Michael R. Butler 0 0 0 0 0
C. Director
Z.S. Merritt 0 0 0 0 0
</TABLE>
Option/SAR Grants Table (None)
Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End Option/SAR
value (None)
Long Term Incentive Plans - Awards in Last Fiscal Year (None)
No officer or director has received any other remuneration in the two
year period prior to the filing of this registration statement. Although there
is no current plan in existence, it is possible that the Company will adopt a
plan to pay or accrue compensation to its officers and directors for services
related to seeking business opportunities and completing a merger or acquisition
transaction. See "Certain Relationships and Related Transactions." The Company
has no stock option, retirement, pension, or profit-sharing programs for the
benefit of directors, officers or other employees, but the Board of Directors
may recommend adoption of one or more such programs in the future.
Item 7. Certain Relationships and Related Transactions.
The Company issued to its founding directors a total of 120,000 shares
of Common Stock for a total of $300. Subsequently in 1997, 15 persons purchased
shares totaling 360,000 at $.0033 per share totaling $1,500. In December 1998,
the Company sold 100,000 shares to each director at $.0025 per share are total
of 300,000 shares for $750. Certificates evidencing the Common Stocks issued by
the Company to these persons have all been stamped with a restrictive legend,
and are subject to stop transfer orders by the Company. For additional
information concerning restrictions that are imposed upon the securities held by
current stockholders, and the responsibilities of such stockholders to comply
<PAGE>
with federal securities laws in the disposition of such Common Stock, see "Risk
Factors - Rule 144 Sales."
No officer, director, or affiliate of the Company has or proposes to
have any direct or indirect material interest in any asset proposed to be
acquired by the Company through security holdings, contracts, options, or
otherwise.
The Company has adopted a policy under which any consulting or finder's
fee that may be paid to a third party or affiliate for consulting services to
assist management in evaluating a prospective business opportunity would be paid
in stock or in cash. Any such issuance of stock would be made on an ad hoc
basis. Accordingly, the Company is unable to predict whether or in what amount
such a stock issuance might be made.
Although there is no current plan in existence, it is possible that the
Company will adopt a plan to pay or accrue compensation to its officers and
directors for services related to seeking business opportunities and completing
a merger or acquisition transaction.
Although management has no current plans to cause the Company to do so,
it is possible that the Company may enter into an agreement with an acquisition
candidate requiring the sale of all or a portion of the Common Stock held by the
Company's current stockholders to the acquisition candidate or principals
thereof, or to other individuals or business entities, or requiring some other
form of payment to the Company's current stockholders, or requiring the future
employment of specified officers and payment of salaries to them. It is more
likely than not that any sale of securities by the Company's current
stockholders to an acquisition candidate would be at a price substantially
higher than that originally paid by such stockholders. Any payment to current
stockholders in the context of an acquisition involving the Company would be
determined entirely by the largely unforeseeable terms of a future agreement
with an unidentified business entity.
Item 8. Description of Securities.
Common Stock
The Company's Articles of Incorporation authorize the issuance of
50,000,000 shares of Common Stock $.001 par value. Each record holder of Common
Stock is entitled to one vote for each share held on all matters properly
submitted to the stockholders for their vote. Cumulative voting for the election
of directors is not permitted by the Articles of Incorporation.
<PAGE>
Holders of outstanding shares of Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors out of
legally available funds; and, in the event of liquidation, dissolution or
winding up of the affairs of the Company, holders are entitled to receive,
ratably, the net assets of the Company available to stockholders after
distribution is made to the preferred stockholders, if any, who are given
preferred rights upon liquidation. Holders of outstanding shares of Common Stock
have no preemptive, conversion or redemptive rights. All of the issued and
outstanding shares of Common Stock are, and all unissued shares when offered and
sold will be, duly authorized, validly issued, fully paid, and nonassessable. To
the extent that additional shares of the Company's Common Stock are issued, the
relative interests of then existing stockholders may be diluted.
Shareholders
Each shareholder has sole investment power and sole voting power over
the shares owned by such shareholder.
No shareholder has entered into or delivered any lock up agreement or
letter agreement regarding their shares or options thereon. Under Wyoming laws,
no lock up agreement is required regarding the Company's shares as it might
relate to an acquisition.
Transfer Agent
The Company has engaged Interstate Transfer Company, 874 E. 5900 South,
Suite 101, Salt Lake City, Utah 8410 as its transfer agent.
Reports to Stockholders
The Company plans to furnish its stockholders with an annual report for
each fiscal year containing financial statements audited by its independent
certified public accountants. In the event the Company enters into a business
combination with another company, it is the present intention of management to
continue furnishing annual reports to stockholders. The Company intends to
comply with the periodic reporting requirements of the Securities Exchange Act
of 1934 for so long as it is subject to those requirements, and to file
unaudited quarterly reports and annual reports with audited financial statements
as required by the Securities Exchange Act of 1934.
<PAGE>
PART II
Item 1. Market Price and Dividends on the Registrant's Common Equity and Other
Shareholder Matters
No public trading market exists for the Company's securities and all of its
outstanding securities are restricted securities as defined in Rule 144. There
were thirty (30) holders of record of the Company's common stock on June 30,
1999. No dividends have been paid to date and the Company's Board of Directors
does not anticipate paying dividends in the foreseeable future.
Item 2. Legal Proceedings
The Company is not a party to any pending legal proceedings, and no
such proceedings are known to be contemplated.
No director, officer or affiliate of the Company, and no owner of
record or beneficial owner of more than 5.0% of the securities of the Company,
or any associate of any such director, officer or security holder is a party
adverse to the Company or has a material interest adverse to the Company in
reference to any litigation.
Item 3. Changes in and Disagreements with Accountants.
Not applicable.
Item 4. Recent Sales of Unregistered Securities.
Since April 17, 1997 (the date of the Company's formation), the Company has
sold its Common Stock to the persons listed in the table below in transactions
summarized as follows:
Date of
Purchaser Price Purchase Shares
- --------- ------ -------- ------
M. Ann Anderson $.0033 4-30-97 30,000
P.O Box 1382
Glenrock, WY 82637
John E. Bradley $.0033 4-30-97 30,000
6322 South Geneva Circle
Englewood, Colorado 80111
Michael R. Butler $.0025 4-30-97 40,000
13750 Bessemer Bend Road
Alcova Route
Casper, Wyoming 82604
<PAGE>
Percy S. Chopping, Jr. $.0033 4-30-97 30,000
P.O Box 1308
Casper, Wyoming 82602
Michael G. Crank $.0033 4-30-97 30,000
57 Magnolia
Casper, Wyoming 82602
Donn C. Douglass $.0033 4-30-97 30,000
6445 East Ohio, Suite 150
Denver Colorado 80224
William A. Erickson $.0033 4-30-97 30,000
2300 East 18th Street, #224
Casper, Wyoming 82609
Brenda L. Ford $.0033 4-30-97 30,000
1001 East Bayard, #1402
Denver, Colorado 80206
Warren N. Golliher, M.D $.0033 4-30-97 30,000
R.R 1- Box 237D
Spearfish, South Dakota 57783
Philip G. Hinds $.0025 4-30-97 40,000
P.O Box 472
Evansville, Wyoming 82636
Thomas A. Hockaday $.0033 4-30-97 30,000
801 East "A" Street
Casper, Wyoming 82636
Z.S. Merritt $.0025 4-30-97 40,000
P.O Box 3192
Casper, Wyoming 82602
Harlan A. Schmidt $.0033 4-30-97 30,000
P.O Box 1048
Spearfish, South Dakota 57783
Gordon Waddell $.0033 4-30-97 30,000
1440 South Lowell
Casper, Wyoming 82601
Rodger W. Wesnitzer $.0033 4-30-97 30,000
300 Country Club Road, #302
Casper, Wyoming 82609
<PAGE>
Philip G. Hinds $.0025 5-15-98 100,000
P.O Box 472
Evansville, Wyoming 82639
Michael R. Butler $.0025 5-15-98 100,000
13750 Bessemer Bend Road
Alcova Route
Casper, Wyoming 82604
Z.S. Merritt $.0025 5-15-98 100,000
P.O Box 3192
Casper, Wyoming 82602
Each of the sales listed above was made for cash as listed. All of the listed
sales were made in reliance upon the exemption from registration offered by
Section 4(2) of the Securities Act of 1933, as amended. Based upon Subscription
Agreements completed by each of the subscribers, the Company had reasonable
grounds to believe immediately prior to making an offer to the private
investors, and did in fact believe, when such subscriptions were accepted, that
such purchasers (1) were purchasing for investment and not with a view to
distribution, and (2) had such knowledge and experience in financial and
business matters that they were capable of evaluating the merits and risks of
their investment and were able to bear those risks. The purchasers had access to
pertinent information enabling them to ask informed questions. The shares were
issued without the benefit of registration. An appropriate restrictive legend is
imprinted upon each of the certificates representing such shares, and
stop-transfer instructions have been entered in the Company's transfer records.
All such sales were effected without the aid of underwriters, and no sales
commissions were paid.
Item 5. Indemnification of Directors and Officers
The Wyoming Statutes provide that the Company may indemnify its
officers and directors for costs and expenses incurred in connection with the
defense of actions, suits, or proceedings where the officer or director acted in
good faith and in a manner he reasonably believed to be in the Company's best
interest and is a party by reason of his status as an officer or director,
absent a finding of negligence or misconduct in the performance of duty.
<PAGE>
SIGNATURES:
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
DATED: ____________________
PHILLIPS 44, INC.
by: ------------------------------
Phillip G. Hinds, President
Directors:
----------------------------------
Michael R. Butler, Secretary &
Director
----------------------------------
Z.S. Merritt, Director
----------------------------------
Phillip G. Hinds, Director
<PAGE>
PHILLIIPS 44, INC.
(A Development Stage Company)
Index to Financial Statements
Cover Page F-1
Auditors Report for years ended December 31, 1997
and 1998 and period ended April 30, 1999 F-2
Balance Sheet F-3
Statement of Operations F-4
Statement of Stockholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7 - 8
Interim Financials (unaudited) for period ended
March 31, 1999 F-9
Balance Sheet F-10
Statement of Operations F-11
Statement of Cash Flows F-12
Notes to Financial Statements F-13 - 14
<PAGE>
PHILLIPS 44, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
April 30, 1999
F-1
<PAGE>
Michael Johnson & Co., LLC
Certified Public Accountants
9175 East Kenyon Ave., Suite 100
Denver, Colorado 80237
Michael B. Johnson C.P.A.
Member: A.I.C.P.A. Telephone: (303) 796-0099
Colorado Society of C.P.A.s Fax: (303) 796-0137
INDEPENDENT AUDITORS REPORT
Board of Directors
Phillips 44, Inc.
Casper, WY 82602
We audited the accompanying balance sheet of Phillips 44, Inc., (A Development
Stage Company) as of December 31, 1998 and December 31, 1997, and the related
statements of operations, stockholders' equity and cash flow for the years then
ended, and the 4 months ended April 30, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatements. An audit includes examining, on a test basis evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Phillips 44, Inc. as of
December 31, 1998 and December 31, 1997, and its results of their operation and
their cash flows for the years then ended, and the 4 months ended April 30, 1999
in conformity with generally accepted accounting principles.
/s/ Michael B. Johnson
Denver, CO
June 3, 1999
F-2
<PAGE>
<TABLE>
<CAPTION>
PHILLIPS 44, INC
(A Development Stage Company)
Balance Sheet
April 30,1999
With Comparative Totals for December 31, 1998 and 1997
April 30, December 31, December 31,
ASSETS: 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Current Assets:
Cash $ 1,306 $ 1,331 $ 606
------- ------- -----
Total Current Assets 1,306 1,331 606
Other Assets:
Investment in Western Technology 750 750 750
--- --- ---
Total Other Assets 750 750 750
Total Assets $ 2,056 $ 2,081 $ 1,356
======= ======= =======
LIABILITIES & STOCKHOLDERS' EQUITY
Stockholders' Equity (Note 2)
50,000,000 shares authorized $.001
par value,
780,000 shares issued and outstanding
in 1999 & 1998 780 780 480
480,000 shares Issued and outstanding
in 1997
Additional Paid-In Capital 1,470 1,470 1,020
Deficit accumulated during the
development stage (194) (169) (144)
----- ----- -----
Total Liabilities & Stockholders' Equity $ 2,056 $ 2,081 $ 1,356
</TABLE>
======= ======= =======
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
PHILLIPS 44, INC
(A Development Stage Company)
Statement of Operations
For the Period April 17, 1997 (Inception) to April
30, 1999 With Comparative Totals for December 31, 1998 and 1997
Apr. 17, 1997
April 30, December 31, December 31, Inception to
1999 1998 1997 Apr. 30, 1999
1999
--------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
Revenue: $ - $ - $ - $ -
Costs and Expenses:
Office Expenses - - 144 144
Filing Fees 25 25 - 50
------- -------- -------- --------
Net Loss $ 25 $ 25 $ 144 $ 194
======== ========= ======== ========
Per share information:
Weighted average number
of common shares outstanding 780,000 505,000 480,000 580,000
------- ------- ------- ---------
Net Loss per common share * * * *
======= ======= ======= =======
* Less than $.01
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
PHILLIPS 44, INC.
Stockholders' Equity
April 30,1999
COMMON STOCK Additional Retained Total
Paid -In Earning Stockholder's
Shares Amount Capital (Deficit) Equity
<S> <C> <C> <C> <C> <C>
Issuance of Stocks for Cash
4/21/97 480,000 480 1,020 - 1,500
Net Deficit 12/31/97 - - - (144) (144)
------- ----- ---- ---- ----
Balance 12/31/97 480,000 480 1,020 (144) 1,356
Issuance 12/28/98 for Cash 300,000 300 450 - 750
Net Deficit 12/31/98 - - - (25) (25)
------- ---- ---- ---- ----
Balance 12/31/98 780,000 780 1,470 (169) 2,081
Net Deficit 4/30/99 - - - (25) (25)
------- ---- ---- ---- ----
Balance April 30, 1999 780,000 $ 780 $1,470 (194) $2,056
======= ====== ======= ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
PHILLIPS 44, INC.
(A Development Stage Company)
Statement of Cash Flows
For the Period From April 17, 1997 (Inception) to
April 30, 1999 With Comparative Totals for December 31, 1998 and 1997
Apr.17, 1997
April 30, December December Inception
1999 31, 1998 31, 1997 Apr.30, 1999
------------------------------------------
Cash Flows from Operating Activities:
<S> <C> <C> <C> <C>
Net Loss $ (25) $ (25) $ (144) $(194)
(Increase) in Investment - - (750) (750)
----- ----- ------- -------
Net Cash Provided by Operating
Activities (25) (25) (894) (944)
Cash Flows from Financing Activities:
Proceed from stock issuance, net
of issuance costs - 750 1,500 2,250
----- ----- ------- -------
Net Cash Provided by Financing
Activities - 750 1,500 2,250
Net Increase In Cash & Cash
Equivalent (25) 725 606 1,306
Beginning Cash & Cash Equivalent 1,331 606 - -
------ ----- ----- -----
Ending Cash & Cash Equivalent $ 1,306 $ 1,331 $ 606 $1,306
====== ====== ===== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
PHILLIPS 44. INC.
(A Development Stage Company)
Notes to Financial Statements
For the Period April 17, 1997 (inception) to April 30, 1999
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The company was incorporated on April 17, 1997, in the state of Wyoming. The
Company is in the development stages and was organized for the purpose of
general investing. The Company's fiscal year end is December 31. The financial
statements are presented on the accrual basis of accounting.
The accompanying financial statements have been prepared on the going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The company's continuation as a
going concern is dependent on its ability to generate sufficient cash flows to
meet its obligation on a timely basis, to raise additional capital as may be
required, and ultimately to attain successful operations. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Basis of Presentation
The Company is primarily engaged in general investing, The authorized capital
stock of the corporation is 50,000,000 shares of common stock at $.001 par
value. There is no preferred stock authorized or issued
Cash and Cash Equivalent
The Company considers all highly-liquid debt instruments purchased with an
original maturity of three months or less, to be cash equivalents.
Revenue Recognition
Revenue is recognized when earned and expenses are recognized when they occur.
Use of Estimates
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period Actual
results could differ from those estimates.
F-7
<PAGE>
PHILLIPS 44, INC.
(A Development Stage Company)
Notes to Financial Statements
For the Period April 17, 1997 (inception) to April 30, 1999
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Net Less Per Share
Net loss per share is based on the weighted average number of common shares and
common shares equivalents outstanding during the period.
Note 2 - STOCKHOLDERS' EQUITY
During the period, the Company issued 780,000 shares of its $.001 par value
common stock. 480,000 shares were sold to 15 persons at $.003 per share for cash
of $ 1,500 in 1997. In. December 1998 the directors purchased an additional
300,000 shares at $.0025 per share for cash of $750.
Note 3 - FEDERAL INCOME TAXES
The Company adopted statement of financial Accounting Standards No. 109,
"Accounting For Income Taxes." FAS 109 requires the recognition of deferred tax
liabilities and assets for the anticipated future tax effects of temporary
differences that arm as a result of differences in the carrying amounts and tax
bases of assets and liabilities. There was no material effect on the financial
statements as a result of adopting FAS 109.
Note 4 - RELATED PARTY TRANSACTION
The officers and directors of this company are also officers and directors of
other companies.
F-8
<PAGE>
PHILLIPS 44,INC.
(A Development Stage Company)
Interim Financial Statements
(Unaudited)
For Quarter Ended March 31, 1999
F-9
<PAGE>
Phillips 44
(A Development Stage Company)
BALANCE SHEET
(unaudited)
March 31, December 31,
1999 1998
---- ----
Current Assets:
Cash and cash equivalents 1,306 1,331
---- ----
Total current assets $1,331
Total Assets 750 750
Other Assets- Investments 2,056 2,081
Total Current Liabilities: 0 0
- -
Stockholders' equity:
Common stock, $.001 par value 780 780
Authorized 50,000,000 shares:
Issued and outstanding 780,000
shares
Additional paid-in capital 1,470 1,470
Retained Earnings (deficit) (194) (169)
---- ----
TOTAL LIABILITIES &
STOCKHOLDERS= EQUITY $2,056 $2,081
===== =====
The accompanying notes are an integral part of the financial statements.
F-10
<PAGE>
PHILLIPS 44, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(unaudited)
Three Months Three Months
Ending March Ending March
31, 1999 31, 1998
Revenue & interest $ 0 $ 0
Expenses, general and administrative 25 0
Provision for income taxes - -
--------------------------------------
Net income (loss) for period (25) $ 0
Net income (loss) per share $ (-) $ (-)
Weighted average number of common shares 780,000 480,000
The accompanying notes are an integral part of the financial statements.
F-11
<PAGE>
PHILLIPS 44, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(unaudited)
Three Months Three Months
Ending March Ending March
31, 1999 31, 1998
Cash flows from operating activities: (25) $0
Net income (loss) 0 0
Adjustments to reconcile net
income (loss) to net cash
provided (used) by operating
activities: 0 0
Amortization 0 0
Rent 0 0
Changes in: 0 0
Accounts payable - related parties 0 0
--------------------------------
Cash provided (used) by operating activities 25 0
Cash at beginning of period 1,331 6,060
===== =====
Cash at end of period $1,306 $ 606
====== ======
The accompanying notes are an integral part of the financial statements.
F-12
<PAGE>
PHILLIPS 44. INC.
(A Development Stage Company)
(Unaudited)
Notes to Financial Statements
For the Quarter Ended March 31, 1999
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Organization
The company was incorporated on April 17, 1997, in the state of Wyoming. The
Company is in the development stages and was organized for the purpose of
general investing. The Company's fiscal year end is December 31. The financial
statements are presented on the accrual basis of accounting.
The accompanying financial statements have been prepared on the going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The company's continuation as a
going concern is dependent on its ability to generate sufficient cash flows to
meet its obligation on a timely basis, to raise additional capital as may be
required, and ultimately to attain successful operations. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Basis of Presentation
The Company is primarily engaged in general investing, The authorized capital
stock of the corporation is 50,000,000 shares of common stock at $.001 par
value. There is no preferred stock authorized or issued
Cash and Cash Equivalent
The Company considers all highly-liquid debt instruments purchased with an
original maturity of three months or less, to be cash equivalents.
Revenue Recognition
Revenue is recognized when earned and expenses are recognized when they occur.
Use of Estimates
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period Actual
results could differ from those estimates.
F-13
<PAGE>
PHILLIPS 44, INC.
(A Development Stage Company)
(Unaudited)
Notes to Financial Statements
For the Quarter Ended March 31, 1999
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
- ----------------------------------------------------------
Net Less Per Share
Net loss per share is based on the weighted average number of common shares and
common shares equivalents outstanding during the period.
Note 2 - STOCKHOLDERS' EQUITY
- -----------------------------
During the period, the Company issued 780,000 shares of its $.001 par value
common stock. 480,000 shares were sold to 15 persons at $.003 per share for cash
of $ 1,500 in 1997. In. December 1998 the directors purchased an additional
300,000 shares at $.0025 per share for cash of $750.
Note 3 - FEDERAL INCOME TAXES
- -----------------------------
The Company adopted statement of financial Accounting Standards No. 109,
"Accounting For Income Taxes." FAS 109 requires the recognition of deferred tax
liabilities and assets for the anticipated future tax effects of temporary
differences that arm as a result of differences in the carrying amounts and tax
bases of assets and liabilities. There was no material effect on the financial
statements as a result of adopting FAS 109.
Note 4 - RELATED PARTY TRANSACTION
- ----------------------------------
The officers and directors of this company are also officers and directors of
other companies.
F-14
<PAGE>
INDEX TO EXHIBITS
SK#
3.1 Articles of Incorporation
3.2 Bylaws
EXHIBIT 3.1
ARTICLES OF INCORPORATION
<PAGE>
ARTICLES OF INCORPORATION
OF
PHILLIPS 44, INC.
KNOW ALL MEN BY THESE PRESENTS: That the undersigned
incorporator being a natural person of the age of eighteen years or more and
desiring to form a body corporate under the laws of the State of Wyoming does
hereby sign, verify and deliver in duplicate to the Secretary of State of the
State of Wyoming, the Articles of Incorporation.
ARTICLE I
NAME
The name of the Corporation shall be: PHILLIPS, 44, INC.
ARTICLE II
PERIOD OF DURATION
The Corporation shall exist in perpetuity, from and after the
date of filing the Articles of Incorporation with the Secretary of State of the
State of Wyoming, unless dissolved according to law.
ARTICLE III
PURPOSES AND POWERS
This Corporation shall have unlimited power to engage in and
to do any lawful act concerning any or all lawful business for which
corporations may be organized under the Wyoming Business Corporation Act.
ARTICLE IV
CAPITAL STOCK
The aggregate number of shares which this Corporation shall
have authority to issue is fifty million (50,000,000) shares of $0.001 par value
each, which shares shall be of one (1) class of voting common stock.
1. Denial of Preemptive Rights. No holder of any shares of the
Corporation, whether now or hereafter authorized, shall have any preemptive of
preferential right to acquire any shares or securities of the Corporation,
including shares or securities held in the treasury of the Corporation.
ARTICLE V
AMENDMENTS
The Corporation reserves the right to amend its Articles of
Incorporation from time to time in accordance with the General Corporation Law
of Wyoming.
ARTICLE VI
ADOPTION AND AMENDMENT OF BYLAWS
The initial Bylaws of the corporation shall be adopted by its
Board of Directors. Subject to repeal of change by action of the shareholders,
the power to alter, amend or repeal the Bylaws or adopt new Bylaws shall be
vested in the Board of Directors. The Bylaws may contain any provisions for the
regulation and managements of the affairs of the Corporation not inconsistent
with law of the Articles of Incorporation.
ARTICLE VII
REGISTERED OFFICE AND REGISTERED AGENT
The address of the initial registered office of the
Corporation is 544 East Yellowstone Highway - Casper, Wyoming 82601. The name of
the initial registered agent at such address is Philip G. Hinds. Either the
registered office or the registered agent may be changed in the manner permitted
by law.
ARTICLE III
INITIAL BOARD OF DIRECTORS
The number of directors of the Corporation shall be fixed by
the Bylaws of the Corporation. The initial Board of Directors of the Corporation
shall consist of three (3) directors. The names and addresses of the persons who
shall serve as directors until the first annual meeting of shareholders and
until their successors are elected and shall qualify are as follows:
NAME ADDRESS
------------------ --------------------------
Philip G. Hinds P.O. Box 472
Evansville, Wyoming 82636
Michael R. Butler 13750 Bessemer Bend Road
Alcova Route
Casper, Wyoming 82604
Z. S. Merritt P.O. Box 3192
Casper, Wyoming 82602
ARTICLE IX
INCORORATOR
The name and address of the incorporator is as follows:
NAME ADDRESS
--------------- -------------------------
Philip G. Hinds P.O. Box 472
Evansville, Wyoming 82636
IN WITNESS WHEREOF, the above-named incorporator, for the
purpose of forming a Corporation under the laws of the State of Wyoming does
make, file and record this certificate of Incorporation and certify that the
facts herein stated are true and have according, set his hand and seal at
Casper, Wyoming this 15th day of April, 1997.
/s/ Philip G. Hinds
-------------------------
Philip G. Hinds
<PAGE>
STATE OF WYOMING )
) SS.
COUNTY OF NATRONA )
I, the undersigned, a Notary Public, hereby certify that on
the 15th day of April, 1997, personally appeared before me, Philip G. Hinds, who
being by me first duly sworn, declared that he is the person who signed the
foregoing document as incorporator, that it was his free and voluntary act and
deed, and that the statements therein contained are true.
WITNESS my hand and official sea.
My Commission expires: September 14, 1997
/s/ Linda L. Conner
------------------------------------
Notary Public
BY-LAWS
of
PHILLIPS 44, INC.
a Wyoming Corporation
ARTICLE I
The initial principal office of the Corporation shall be in Casper,
Wyoming. The corporation may have offices at such other places within or without
the State of Wyoming as the board of Directors may from time to time establish.
ARTICLE II
Shareholders
Section 2.1 - ANNUAL MEETING. The annual meeting of the shareholders
shall be held on the first Tuesday of the month of February each year, at the
hour of 7:30 o'clock P.M., or at such other time on such other day as shall be
fixed by the Board of Directors, for the purpose of electing directors and for
the transaction of such other business as may come before the meeting. If the
day fixed for the annual meeting shall be a legal holiday in the State of
Colorado, such meeting shall be held on the next succeeding business day. If the
election of directors shall not be held on the day designated herein for any
annual meeting of the shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as may be convenient.
Section 2.2 - SPECIAL MEETINGS. Special meetings of the shareholders,
for any purpose or purposes, unless otherwise prescribed by statute, may be
called by the President or by the Board of Directors, and shall be called by the
President at the request of the holders of not less than one-tenth of all
outstanding shares of the corporation entitled to vote at the meeting.
Section 2.3 - PLACE OF MEETING. The Board of Directors may designate
any place, either within or without the State of Colorado, as the place of
meeting for any annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all shareholders entitled to vote at a
meeting may designate any place, either within or without the State of Colorado,
as the place for the holding of such meeting. If no designation is made, or if a
special meeting be otherwise called, the place of meeting shall be the principal
office of the corporation in the State of Colorado.
Section 2.4 - NOTICE OF MEETING. Written notice stating the place, day
and hour of the meeting of shareholders and, in case of a special meeting, the
purpose of purposes for which the meeting is called, shall, unless otherwise
prescribed by statute, be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail, by or at the
direction of the President, or the Secretary, or the officer or other persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting; provided, however, that if the authorized shares 'of the corporation
are to be increased, at least thirty days' notice shall be given, and if sale of
all or substantially all assets are to be voted upon, at least twenty days'
notice shall be given. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail addressed to the shareholder at his
address as it appears on the stock transfer books of the corporation, with
postage thereon prepaid.
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Section 2.5 - MEETING OF ALL SHAREHOLDERS. If all of the shareholders
shall meet at any time and place, either within or without the State of
Colorado, and consent to the holding of a meeting at such time and place, such
meeting shall be valid without call or notice, and at such meeting any corporate
action may be taken.
Section 2.6 - CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For
the purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other purpose, the Board of Directors of the corporation
may provide that the share transfer books shall be closed for a stated period
but not to exceed, in any case, fifty days. If the share transfer books shall be
closed for the purpose of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such books shall be closed for at least ten
days immediately preceding such meeting. In lieu of closing the share transfer
books, the Board of Directors may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than fifty days and, in case of a meeting of shareholders, not less than ten
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the share transfer books are
not closed and no record date is fixed for the determination of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has, been Made as
provided in this section, such determination shall apply to any adjournment
thereof.
Section 2.7 - VOTING RECORD. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make, at least ten days
before such meeting of shareholders, a complete record of the shareholders
entitled to vote at each meeting of shareholders or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each. The record, for a period of ten days prior to such meeting, shall
be kept on file at the principal office of the corporation, whether within or
without the State of Colorado, and shall be subject to inspection by any
shareholder for any purpose germane to the meeting at any time during usual
business hours. Such record shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes thereof.
The original stock transfer books shall be the prima facie evidence as
to who are the shareholders entitled to examine the record or transfer books or
to vote at any meeting of shareholders.
Section 2.8 - QUORUM. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at any meeting of shareholders, except as otherwise provided
by the Colorado Corporation Code and the Articles of Incorporation. In the
absence of a quorum at any such meeting, a majority of the shares so represented
may adjourn the meeting from time to time for a period not to exceed sixty days
without further notice. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transaction 'which might have been
<PAGE>
transacted at the meeting as originally noticed. The shareholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 2.9 - MANNER OF ACTING. If a quorum is present, the affirmative
vote of the majority of the shares represented at the meeting and entitled to
vote on the subject matter shall be the act of the shareholders, unless the vote
of a greater proportion or number or voting by classes is otherwise required by
statute or by the Articles of Incorporation or these By-laws.
Section 2.10 - PROXIES. At all meetings of shareholders a shareholder
may vote in person or by proxy executed in writing by the shareholder or by his
duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary
of the corporation before or at the time of the meeting. No proxy shall be valid
after eleven months from the date of its execution, unless otherwise provided in
the proxy.
Section 2.11 - VOTING OF SHARES. Unless otherwise provided by these
Bylaws or the Articles of Incorporation, each outstanding share entitled to vote
shall be entitled to one vote upon each matter submitted to a vote at a meeting
of shareholders, and each fractional share shall be entitled to a corresponding
fractional vote on 'each such -matter.
Section 2.12 - VOTING OF SHARES BY CERTAIN SHAREHOLDERS. Shares
standing in the name of another corporation may be voted by such officer, agent
or proxy as the Bylaws of such corporation may prescribe, or, in the absence of
such provision, as the Board of Directors of such other corporation may
determine.
Shares standing in the name of a deceased person, a minor ward or an
incompetent person, may be voted by his administrator, executor, court appointed
guardian or conservator, either in person or by proxy without a transfer of such
shares into the name of such administrator, executor, court appointed guardian
or conservator. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority so to do
be contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledges, and
thereafter the pledges shall be entitled to vote the shares so transferred.
Neither shares of its own stock belonging to this corporation, nor
shares of its own stock held by it in a fiduciary capacity, nor shares of its
own stock held by another corporation if the majority of shares entitled to vote
for the election of directors of such corporation is held by this corporation
may be voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any given time.
Redeemable shares which have been called for redemption shall not be
entitled to vote on any matter and shall not be deemed outstanding shares on and
<PAGE>
after the date on which written notice of redemption has been mailed to
shareholders and a sum sufficient to redeem such shares has been deposited with
a bank or trust company with irrevocable instruction and authority to pay the
redemption price to the holders of the shares upon surrender of certificates
therefor.
Section 2.13 - INFORMAL ACTION BY SHAREHOLDERS. Any action required or
permitted to be taken at a meeting of the shareholders may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof.
Section 2.14 - VOTING BY BALLOT. Voting on any question or in any
election may be by voice vote unless the presiding officer shall order or any
shareholders shall demand that voting be by ballot.
Section 2.15 - NO CUMULATIVE VOTING. No shareholder shall be
permitted to cumulate his votes by giving one candidate as many votes as the
number of such directors multiplied by the number of his shares shall equal, or
by distributing such votes on the same principle among any number of candidates.
ARTICLE III
Board of Directors
Section 1. GENERAL POWERS. The business of the Corporation shall be managed
by the Board of Directors, except as otherwise provided by statute or by the
Certificate of Incorporation.
Section 2. NUMBER AND QUALIFICATIONS. The Board of Directors shall
consist of up to nine (9) members with three (3) initial members. This number
can be increased by the vote or written consent of the Board of Directors. The
current number of Directors shall be determined by the Board of Directors at a
special meeting. No Director need be a stockholder.
Section 3. ELECTION AND TERM OF OFFICE. The Directors shall be elected
annually by the stockholders, and shall hold office until their successors are
respectively elected and qualified.
Election of Directors need not be by ballot.
Section 4. COMPENSATION. The members of the Board of Directors shall
be paid a fee of $100.00 for attendance at all annual, regular, special and
adjourned meetings of the Board. No such fee shall be paid any director if
absent. Any director of the Corporation may also serve the Corporation in any
other capacity, and receive compensation therefor in any form. Members of
special or standing committees may be allowed like compensation for attending
committee meetings.
Section 5. REMOVAL AND RESIGNATIONS. The stockholders may, at any
meeting called for the purpose, by vote of two-thirds of the capital stock
issued and outstanding, remove any directors from office, with or without cause;
provided however, that no director shall be removed in case the vote of a
sufficient number of shares are cast against his removal, which if cumulatively
voted at any election of directors would be sufficient to elect him, if
cumulative voting is allowed by the Articles of Incorporation.
The stockholders may, at any meeting, by vote of a majority of such stock
represented at such meeting accept the resignation of any director.
<PAGE>
Section 6. VACANCIES. Any vacancy occurring in the office of director
may be filled by a majority of the directors then in office, though less than a
quorum, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and qualified, unless
sooner displaced.
When one or more directors resign from the Board, effective at a future
date, a majority of the directors then in office, including those who have so
resigned, shall have powers to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations become effective.
ARTICLE IV
Meetings of Board of Directors
Section 1. REGULAR MEETINGS. A regular meeting of the Board of
Directors may be held without call or formal notice immediately after and at the
same place as the annual meeting of the stockholders or any special meeting of
the stockholders at such places within or without the State of Wyoming and at
such times as the Board may by vote from time to time determine.
Section 2. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be held at any place whether within or without the State of Wyoming at any
time when called by the President, Treasurer, Secretary or two or more
directors. Notice of the time and place thereof shall be given to each director
at least three (3) days before the meeting if by mail or at least twenty-four
hours if in person or by telephone or telegraph. A waiver of such notice in
writing, signed by the person or persons entitled to said notice, either before
or after the time stated therein, shall be deemed equivalent to such notice.
Notice of any adjourned meeting of the Board of Directors need not be given.
Section 3. QUORUM. The presence, at any meeting, of one-third of the
total number of directors, but in no case less than two (2) directors, shall be
necessary and sufficient to constitute a quorum for the transaction of business
except as otherwise required by statute or by the Certificate of Incorporation,
the act of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. In the absence of a quorum,
a majority of the directors present at the time and place of any meeting may
adjourn such meeting from time to time until a quorum be present.
Section 4.a. CONSENT OF DIRECTORS IN LIEU OF MEETING. Unless otherwise
restricted by the Certificate of Incorporation, any action required or permitted
to be taken at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting, if prior to such action a written consent
thereto is signed by all members of the Board or committee, and such written
consent is filed within the minutes of the Corporation.
b. The Board of Directors may hold regular or special meetings by
telephone conference call, provided that any resolutions adopted shall be
recorded in writing within 3 days of such telephone conference, and written
ratification of such resolutions by the directors shall be provided within 10
days thereafter.
ARTICLE V
Committees of Board of Directors
The Board of Directors may, by resolution passed by a majority of the whole
Board, designate one or more committees, each committee to consist of two or
more of the directors of the Corporation, which, to the extent provided in the
resolution, shall have and may exercise the powers of the Board of Directors in
<PAGE>
the management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the Board of Directors.
The committees of the Board of Directors shall keep regular minutes of
their proceedings and report the same to the Board of Directors when required.
ARTICLE VI
Officers
Section 1. NUMBER. The Corporation shall have a President, one or more Vice
Presidents, a Secretary and a Treasurer, and such other officers, agents and
factors as may be deemed necessary. one person may hold any two offices except
the offices of President and Vice President and the offices of President and
Secretary.
Section 2. ELECTION, TERM OF OFFICE AND QUALIFICATION. The officers
specifically designated in Section 1 of this Article VT shall be chosen annually
by the Board of Directors and shall hold office until their successors are
chosen and qualified. No officer need be a director.
Section 3. SUBORDINATE OFFICERS. The Board of Directors from time to
time may appoint other officers and agents, including one or more Assistant
Secretaries and one or more Assistant Treasurers, each of whom shall hold office
for such period, have such authority and perform such duties as are provided in
these By-Laws' or as the Board of Directors from time to time may determine. The
Board of Directors may delegate to any office the power to appoint any such
subordinate officers, agents and factors and to prescribe their respective
authorities and duties.
Section 4. REMOVALS AND RESIGNATIONS. The Board of Directors may at any
meeting called for the purpose, by vote of a majority of their entire number,
remove from office any officer or agent of the Corporation, or any member of any
committee appointed by the Board of Directors.
The Board of Directors may at any meeting, by vote of a majority of the
directors present at such meeting, accept the resignation of any officer of the
Corporation.
Section 5. VACANCIES. Any vacancy occurring in the office of President,
Vice President, Secretary, Treasurer or any other office by death, resignation,
removal or otherwise shall be filled for the expired portion of the term in the
manner prescribed by these By-Laws for the regular election or appointment to
such office.
Section 6. THE PRESIDENT. The President shall be the chief executive
officer of the Corporation and, subject to the direction and under the
supervision of the Board of Directors, shall have general charge of the
business, affairs and property of the Corporation, and control over its
officers, agents and employees. The President shall preside at all meetings of
the stockholders and of the Board of Directors at which he is present. The
President shall do and perform such other duties and may exercise such other
powers as from time to time may be assigned to him by these By-Laws or by the
Board of Directors.
Section 7. THE VICE PRESIDENT. At the request of the President or in
the event of his absence or disability, the Vice President, or in case there
shall be more than one Vice President, the Vice President designated by the
President, or in the absence of such designation, the Vice President designated
by the Board of Directors, shall perform all the duties of the President, and
<PAGE>
when so acting, shall have all the powers of, and be subject to all the
restrictions upon, the President. Any Vice President shall perform such other
duties and may exercise such other powers as from time to time may be assigned
to him by these By-Laws or by the Board of Directors, or the President.
Section 8. THE SECRETARY. The Secretary shall:
a. Record all the proceedings of the meetings of the Corporation and
directors in a book to be kept for that purpose;
b. Have charge of the stock ledger (which may, however, be kept by any
transfer agent or agents of the Corporation under the direction of the
Secretary), an original or duplicate of which shall be kept at the principal
office or place of business of the Corporation in the State of Wyoming;
c. Prepare and make, at least ten (10) days before every election of
directors, a complete list of the stockholders entitled to vote at said
election, arranged in alphabetical order;
d. See that all notices are duly given in accordance with the
provisions of these By-Laws or as required by statute;
e. Be custodian of the records of the Corporation and the Board of
Directors, and of the seal of the Corporation, and see that the seal is affixed
to all stock certificates prior to their issuance and to all documents, the
execution of which on behalf of the Corporation under its seal have been duly
authorized;
f. See that all books, reports, statements, certificates and the other
documents and records required by law to be kept or filed are properly kept or
filed; and
g. In general, perform all duties and have all powers incident to the
office of Secretary and perform such other duties and have such powers as from
time to time may be assigned to him by these By-Laws or by the Board of
Directors or the President.
Section 9. THE TREASURER. The Treasurer shall:
a. Have supervision over the funds, securities, receipts, and disbursements
of the Corporation;
b. Cause all monies and other valuable effects of the Corporation to
be deposited in its name and to its credit, in such depositories as shall be
selected by the Board of Directors or pursuant to authority conferred by the
Board of Directors.
c. Cause the funds of the Corporation to be disbursed by checks or
drafts upon the authorized depositories of the Corporation, when such
disbursements shall have been duly authorized;
d. Cause to be taken and preserved proper vouchers for all monies
disbursed;
e. Cause to be kept at the principal of f ice of the Corporation
correct books of account of all its business and transactions;
f. Render to the President or the Board of Directors, whenever
requested, an account of the financial condition of the Corporation and of his
transactions as Treasurer;
<PAGE>
g. Be empowered to require from the officers or agents of the
Corporation reports or statements giving such information as he may desire with
respect to any and all financial transactions of the Corporation; and
h. In general, perform all duties and have all powers incident to the
office of Treasurer and perform such other duties and 'have such power as from
time to time may be assigned to him by these By-Laws or by the Board of
Directors or President.
Section 10. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
Assistant Secretaries and Assistant Treasurers shall have such duties as from
time to time may be assigned to them by the Board of Directors or the President.
Section 11. SALARIES. The salaries of the officers of the Corporation
shall be fixed from time to time by the Board of Directors, except that the
Board of Directors may delegate to any person the power to fix the salaries or
other compensation of any officers or agents appointed in accordance with the
provisions of Section 3 of this Article VI. No officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
Corporation.
Section 12. SURETY BOND. The Board of Directors may secure the fidelity of
any or all of the officers of the Corporation by bond or otherwise.
ARTICLE VII
Execution of Instruments
Section 1. EXECUTION OF INSTRUMENTS GENERALLY. All documents or
writings of any nature shall be signed, executed, verified, acknowledged and
delivered by such officer or officers or such agent of the Corporation and in
such manner as the Board of Directors from time to time may determine.
Section 2. CHECKS, DRAFTS, ETC. All notes, drafts, acceptances, checks,
endorsements, and all evidence of indebtedness of the corporation whatsoever,
shall be signed by such officer or officers or such agent or agents of the
Corporation and in such manner as the Board of Directors from time to time may
determine. Endorsements for deposit to the credit of the Corporation in any of
its duly authorized depositories shall be made in such manner as the Board of
Directors from time to time may determine.
Section 3. PROXIES. Proxies to vote with respect to shares of stock of
other corporations owned by or standing in the name of the Corporation may be
executed and delivered from time to time on behalf of the Corporation by the
President or vice President and the Secretary or Assistant Secretary of the
Corporation or by any other person or persons duly authorized by the Board of
Directors.
ARTICLE VIII
Section 1. CERTIFICATES OF STOCK. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed in the name of the
Corporation by the Chairman or Vice President of the Board of Directors, the
President or a Vice President and by the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary of the Corporation, certifying the
number of shares owned by him in the Corporation; provided, however, that where
such certificate is signed by a transfer agent or an assistant transfer agent or
by a transfer clerk acting on behalf of the Corporation and a registrar, the
signature of any such Chairman of the Board of Directors, President, Vice
President, Treasurer, Assistant Treasurer, Secretary, or Assistant Secretary may
be facsimile. In case any officer or officers who shall have signed, or whole
facsimile signature or signatures shall have been used thereon, any such
certificate or certificates shall cease to be such officer or officers of the
<PAGE>
Corporation, whether because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the Corporation, such
certificate or certificates may nevertheless be adopted by the Corporation and
be issued and delivered as though the person or persons who signed such
certificate or certificates, or whose facsimile signature or signatures shall
have been used thereon, had not ceased to be such officer or officers of the
Corporation, and any such delivery shall be regarded as an adoption by the
Corporation of such certificate or certificates.
Certificates of stock shall be in such form as shall, in conformity to
law, be prescribed from time to time by the Board of Directors.
Section 2. TRANSFER OF STOCK. Shares of stock of the Corporation shall
only be transferred on the books of the Corporation by the holder of record
thereof or by his attorney duly authorized in writing, upon surrender to the
Corporation of the certificates for such shares endorsed by the appropriate
person or persons, with such evidence of the authenticity of such endorsement,
transfer, authorization and other matters as the Corporation may reasonably
require, and accompanied by all necessary stock transfer tax stamps. In that
event, it shall be the duty of the Corporation to issue a new certificate to the
person entitled thereto, cancel the old certificate, and record the transaction
on its books.
Section 3. RIGHTS OF CORPORATION WITH RESPECT TO REGISTERED OWNERS.
Prior to the surrender to the Corporation of the certificates for shares of
stock with a request to record the transfer of such shares, the Corporation may
treat the registered owner as the person entitled to receive dividends, to vote,
to receive notifications, and otherwise to exercise all the rights and powers of
an owner.
Section 4. CLOSING STOCK TRANSFER BOOK. The Board of Directors may
close the Stock Transfer Book of the Corporation for a period not exceeding
- -fifty (50) days preceding the date of any meeting of the stockholders or the
date for payment of any dividend or the date for the allotment of rights or the
date when any change or conversion or exchange of capital stock shall go into
effect or for a period of not exceeding (50) days in connection with obtaining
the consent of stockholders for any purpose. However, in lieu of closing the
Stock Transfer Book, the Board of Directors may fix in advance a date, not
exceeding fifty (50) days preceding the date of any meeting of stockholders or
the date for the payment of any dividend or the date for the allotment of
rights, or the date when any change or conversion or exchange of capital stock
shall go into effect, or a date in connection with obtaining such consent, as a
record date for the determination of the stockholders entitled to notice of, and
to vote at, any such meeting and any adjournment thereof, or entitled to receive
payment of any such dividend, or to any such allotment of rights or to exercise
the rights in respect of any such change, conversion or exchange of capital
stock, or to give such consent, and in such case such stockholders, and only
such stockholders as shall be stockholders of record on the date so fixed shall
be entitled to such notice of, and to vote at, such meeting and any adjournment
thereof, or to receive payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the Corporation after
any such record date fixed as aforesaid.
Section 5. LOST, DESTROYED AND STOLEN CERTIFICATES. Where the owner of
a Certificate for shares claims that such certificate has been lost, destroyed
or wrongfully taken, the Corporation shall issue a new certificate in place of
the original certificate if the owner (a) so requests before the Corporation has
notice that the shares have been acquired by a bona fide purchaser; (b) files
with the Corporation a sufficient indemnity bond; and (c) satisfies such other
reasonable requirements, including evidence of such loss, destruction, or
wrongful taking, as may be imposed by the Corporation.
<PAGE>
ARTICLE IX
Dividends
Section 1. SOURCES OF DIVIDENDS. The directors of the Corporation,
subject to any restrictions contained in the statutes and Certificate of
Incorporation, may declare and pay dividends upon the shares of the capital
stock of the Corporation either (a) out of its new assets in excess of its
capital, or (b) in case there shall be no such excess, out of its net profits
for the fiscal year then current or the current and preceding fiscal year.
Section 2. RESERVES. Before the payment of any dividend, the directors
of the Corporation may set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper purpose, and the
directors may abolish any such reserve in the manner in which it was created.
Section 3. RELIANCE ON CORPORATE RECORDS. A director shall be fully
protected in relying in good faith upon the books of account of the Corporation
or statements prepared by any of its officials as to the value and amount of the
assets, liabilities and net profits of the Corporation, or any other facts
pertinent to the existence and amount of surplus or other funds from which
dividends might properly be declared and paid.
Section 4. MANNER OF PAYMENT. Dividends may be paid in cash, in property,
or in shares of the capital stock of the Corporation at par.
ARTICLE X
Seal
The Corporate seal, subject to alteration by the Board of Directors,
shall be in the form of a circle and shall bear the name of the Corporation and
shall indicate its formation under the laws of the State of Wyoming. Such seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
ARTICLE XI
Fiscal Year
Except as from time to time otherwise provided by the Board of
Directors, the fiscal year of the Corporation shall be the calendar year.
ARTICLE XII
Amendments
Section 1. BY THE STOCKHOLDERS. Except as otherwise provided in the
Certificate of Incorporation or in these By-Laws, these By-Laws may be amended
or repealed, or new By-Laws may be made and adopted by a majority vote of all
the stock of the Corporation issued and outstanding and entitled to vote at any
annual or special meeting of the stockholders, provided that notice of intention
to amend shall have been contained in the notice of meeting.
<PAGE>
Section 2. BY THE DIRECTORS. Except as otherwise provided in the
Certificate of Incorporation or in these By-Laws, these By-Laws, including
amendments adopted by the stockholders, may he amended or repealed by a majority
vote of the whole Board of Directors at any regular or special meeting of the
Board, provided that the stockholders may from time to time specify particular
provisions of the By-Laws which shall not be amended by the Board of Directors.
ARTICLE XIII
Indemnification
The Board of Directors hereby adopt the provision of C.R.S. 7-3-101 S
(as it may be amended from time to time) relating to Indemnification and in
corporate such provisions by this reference as fully as if set forth herein.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-END> DEC-31-1998 MAR-31-1999
<CASH> 1,331 1,306
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,331 1,306
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 2,081 2,056
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 0
0 0
0 0
<COMMON> 780 780
<OTHER-SE> 1,301 1,276
<TOTAL-LIABILITY-AND-EQUITY> 2,081 2,056
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 25 25
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (25) (25)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (25) (25)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (25) (25)
<EPS-BASIC> .0 .0
<EPS-DILUTED> .0 .0
</TABLE>
