U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities
Exchange Act of 1934
ESSEX CAPITAL CORPORATION
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(Name of Small Business Issuer in its charter)
Colorado 84-1113058
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5353 Manhattan Cir. Ste 201,
Boulder, Colorado 80303
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(Address of Principal Office) Zip Code
Issuer's telephone number: (303) 499-6000
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on
to be so registered which each class is to be
registered
Not Applicable
Securities to be registered under Section 12(g) of the Act:
common stock
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(Title of class)
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PART I
Item 1. Description of Business.
General
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Although Essex Capital Corporation was incorporated under the laws of the
State of Colorado on March 15, 1989, it is still in the early developmental and
promotional stages. To date its only activities have been organizational ones,
directed at developing a business plan and raising initial capital. It has not
commenced any commercial operations and have no full-time employees or real
estate.
At Essex Capital Corporation, our 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. We may acquire a
business opportunity by purchase, merger, exchange of stock, or otherwise. We
may acquire only assets or an entire business entity, such as a corporation,
joint venture, or partnership. We have very limited capital, and it is unlikely
that we will be able to take advantage of more than one business opportunity.
At the present time we have not identified any business opportunities that
we plan to pursue, nor have we reached any agreement or definitive understanding
with anyone concerning an acquisition.
We anticipate that our officers, directors, and affiliates will contact
broker-dealers and other persons with whom they are acquainted who are involved
in corporate finance matters to inform them about the company and to determine
if any companies or businesses they represent have a general interest in
considering a merger or acquisition with a blind pool or blank check entity. We
do not expect direct discussions regarding the possibility of a merger to occur
until after the effective date of this registration statement. Because of the
limited funds that are expected to be available for acquisitions, there can be
no assurance that we will be successful in finding or acquiring a desirable
business opportunity. Similarly, there can be no assurance or that any
acquisition we make will be on terms that are favorable to Essex Capital
Corporation or its shareholders.
Our search for a business opportunity will be directed toward small and
medium-sized enterprises that 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 (see "Investigation and Selection of Business Opportunities"). We
anticipate that the business opportunities presented to us will
o either be in the process of formation or, be recently organized with
limited operating history, or a history of losses attributable to
under-capitalization or other factors;
o be experiencing financial or operating difficulties;
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o be in need of funds to develop a new product or service or to expand
into a new market;
o be relying upon an untested product or marketing concept; or
o have a combination of the characteristics mentioned above.
We intend to concentrate our acquisition efforts on properties or businesses
that we believe to be undervalued or that we believe may realize a substantial
benefit from being publicly owned. Because of the factors listed above,
investors should expect that any business we acquire to have little or no
operating history, or a history of losses or low profitability.
We do not propose to restrict our search for investment opportunities to
any particular geographical area or industry. We may engage in essentially any
business, to the extent of our limited resources. This includes industries such
as service, finance, natural resources, manufacturing, high technology, product
development, medical, communications and others. Our 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 our securities, any entity that
has an interest in being acquired by, or merging into us, 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 we would issue stock constituting control of the company
to the acquiring entity or its affiliates.
Depending upon the nature of the transaction, the current officers and
directors of the company may resign their positions with the company in
connection with a change in control of the company or our 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, our current management would not have any control over the conduct
of our business following the change in control or the acquisition of a business
opportunity.
We anticipate that business opportunities will come to our attention from
various sources, including our officers and directors, our other shareholders,
professional advisors such as attorneys and accountants, securities
broker-dealers, venture capitalists, members of the financial community, and
others who may present unsolicited proposals. We have no plans, understandings,
agreements, or commitments with any individual for such person to act as a
finder of opportunities for us.
We do not foresee that we would enter into a merger or acquisition
transaction with any business with which our officers, directors or principal
shareholders are currently affiliated. Should we determine in the future,
contrary to the current expectations, that a transaction with an affiliate would
be in the best interests of the company and our shareholders, we would be
permitted by Colorado law and the Company's Articles of Incorporation to enter
into such a transaction if:
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(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
(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 shareholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
shareholders; 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 shareholders.
Investigation and Selection of Business Opportunities
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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 other 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. We will be dependent upon the owners of a business opportunity to
identify any such problems that may exist and to implement, or be primarily
responsible for the implementation of, required changes. Because we may
participate in a business opportunity with a newly organized firm or with a firm
that is entering a new phase of growth, we will incur further risks. These risks
arise 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 the company may not be profitable when we acquire
it.
We anticipate that we will not be able to diversify, but will essentially
be limited to one such venture because of the our limited financing. This lack
of diversification will not permit us to offset potential losses from one
business opportunity against profits from another, and should be considered an
adverse factor affecting any decision to purchase our securities.
It is emphasized that management may effect transactions having a
potentially adverse impact upon our shareholders pursuant to the authority and
discretion of our management to complete acquisitions without submitting any
proposal to the shareholders for their consideration. Shareholders should not
anticipate that we necessarily will furnish them, 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 shareholders for
their consideration, either voluntarily by such directors to seek the
shareholders' advice and consent or because state law so requires.
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The analysis of business opportunities will be undertaken by or under the
supervision of our officers, directors and affiliates, none of whom are
professional business analysts (see "Management"). Although there are no current
plans to do so, we might hire an outside consultant to assist management in the
investigation and selection of business opportunities, and might pay a finder's
fee. Since we have 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 the total amount of fees that may be paid.
However, because of our limited resources, it is likely that any such fee would
be paid in stock and not in cash. We anticipate that in evaluating any business
opportunity we 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) Our perception of how any particular business opportunity will be
received by the investment community and by our shareholders;
(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 our
securities 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
our securities to be exempt from the from the Penny Stock rules. (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 our participation as compared to the perceived
tangible and intangible values and potential; and
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(9) The accessibility of required management expertise, personnel, raw
materials, services, professional assistance, and other required items.
In regard to the possibility that our shares 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 net tangible assets of at least
$4,000,000, market capitalization of $50,000,000 or net income in the latest
fiscal year (or in two of the last three fiscal years) of $750,000. Many, and
perhaps most, of the business opportunities that might be potential candidates
for a combination with us 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. Because
of our limited capital available for investigation and management's limited
experience in business analysis, we may not discover or adequately evaluate
adverse facts about the opportunity to be acquired.
We cannot predict when we may participate in a business opportunity. We
expect, 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, we
will generally request that we 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 our investigation, our executive officers, directors and
principal shareholders 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 our limited financial resources and management expertise.
It is possible that the range of business opportunities that might be
available for our consideration 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 our 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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Our management believes that various types of potential merger or
acquisition candidates might find a business combination with us 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 us to be an attractive
alternative.
Form of Acquisition
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It is impossible to predict the manner in which we 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. On the basis of that review and the relative negotiating strength
of the parties, 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. We 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. In addition, the
present management and shareholders of the company most likely will not have
control of a majority of the voting shares of the company following a merger or
reorganization transaction. As part of such a transaction, our existing
directors may resign and new directors may be appointed without any vote by
shareholders.
It is likely that we will acquire our participation in a business
opportunity by issuing our common stock or other securities. Although the terms
of any such transaction cannot be predicted, you should note 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 shareholders 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, our current shareholders
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 our shareholders 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.")
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We anticipate 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, we 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 our securities may have a depressive effect upon such market.
We will participate in a business opportunity only after the negotiation
and execution of a definitive 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, we anticipate that we, and/or our 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 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 we 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 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.
We anticipate 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 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, our inability to pay until an
indeterminate future time may make it impossible to procure goods and services.
Investment Company Act and Other Regulation
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We may participate in a business opportunity by purchasing, trading or
selling the securities of such business. We do not, however, intend to engage
primarily in such activities. Specifically, we intend to conduct our activities
so as to avoid being classified as an "investment company" under the Investment
Company Act of 1940. This would allow us 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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Our plan of business may involve changes in our capital structure,
management, control and business, especially if we consummate 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 we will not
register as an investment company, shareholders will not be afforded these
protections.
Any securities that we might acquire in exchange for our common stock will
be "restricted securities" within the meaning of the Securities Act of 1933, as
amended (the "Act"). Although the plan of operation does not contemplate resale
of securities acquired, if such a sale were to be necessary, or if we elect 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.
Any acquisition we make 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
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We expect to encounter substantial competition in our efforts to locate
attractive opportunities, primarily from business development companies, venture
capital partnerships and corporations, venture capital affiliates of 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 we do and then will therefore be in a
better position than we are to obtain access to attractive business
opportunities. We also will experience competition from other public "blind
pool" companies, many of which may have more funds available than we do.
Administrative Offices
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We currently maintain a mailing address at 5353 Manhattan Cir., Ste. 201,
Boulder, Colorado 80303, which is the office address of our President. Our
telephone number there is (303) 499-6000. Other than this mailing address, we do
not currently maintain any other office facilities, and we do not anticipate the
need for maintaining office facilities at any time in the foreseeable future. We
pay no rent or other fees for the use of this mailing address.
Employees
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We currently have no employees. Our management expects to use consultants,
attorneys and accountants as necessary, and does not anticipate a need to engage
any full-time employees so long as we are 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.
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Risk Factors
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A. Conflicts of Interest. There are certain conflicts of interest between
us and our officers and directors. They have other business interests to which
they currently devote attention, and may be expected to continue to do so
although management time should be devoted to our business. As a result,
conflicts of interest may arise that can be resolved only through their exercise
of judgment in a manner which is consistent with their fiduciary duties to the
company. See "Management," and Conflicts of Interest."
It is anticipated that our principal shareholders 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. In this process, our principal shareholders may consider their own
personal pecuniary benefit rather than the best interests of our other
shareholders, and the other shareholders are not expected to be afforded the
opportunity to approve or consent to any particular stock buy-out transaction.
See "Conflicts of Interest."
B. Need for Additional Financing. We have very limited funds, and such
funds are unlikely to be adequate to take advantage of any available business
opportunities. Even if our funds prove to be sufficient to acquire an interest
in, or complete a transaction with, a business opportunity, we may not have
enough capital to exploit the opportunity. Our ultimate success may depend upon
our ability to raise additional capital. We have not investigated the
availability, source, or terms that might govern the acquisition of additional
capital and will not do so until we determine 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 us. If such funds are not available, our operations will be
limited to those that can be financed with our modest capital.
C. Regulation of Penny Stocks. Our 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 our securities and also may affect
the ability of our shareholders in this offering to sell their securities in any
market that might develop therefor.
Shareholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i) control
of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales tactics
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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
the penny stock market. Although we do 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 our securities.
D. No Operating History. Although Essex Capital Corporation was formed in
March of 1989 for the purpose of acquiring a business opportunity, we have no
operating history, revenues from operations, or assets other than cash from
private sales of stock. We face all of the risks of a new business and the
special risks inherent in the investigation, acquisition, or involvement in a
new business opportunity. We 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.
E. No Assurance of Success or Profitability. There is no assurance that we
will acquire a business opportunity. Even if we should become involved in a
business opportunity, there is no assurance that it will generate revenues or
profits, or that the market price of our common stock will be increased thereby.
F. Possible Business - Not Identified and Highly Risky. We have not
identified and have no commitments to enter into or acquire a specific business
opportunity. Therefore we can disclose the risks and hazards of a business or
opportunity that we may enter into in only a general manner, and cannot disclose
the risks and hazards of any specific business or opportunity. An investor can
expect a potential business opportunity to be quite risky. Our acquisition of or
participation in a business opportunity will likely be highly illiquid and could
result in a total loss to us and our shareholders if the business or opportunity
proves to be unsuccessful.
G. 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 our limited capital, it is more likely than not
that any acquisition 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.
H. Impracticability of Exhaustive Investigation. Our 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
before we commit our capital or other resources to such opportunity. Management
decisions, therefore, will likely be made without detailed feasibility studies,
independent analysis, market surveys and the like which, if we had more funds,
would be desirable. We will be particularly dependent in making decisions upon
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information provided by the promoter, owner, sponsor, or others associated with
the business opportunity seeking our participation. A significant portion of our
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.
I. Lack of Diversification. Because of our limited financial resources, it
is unlikely that we will be able to diversify our acquisitions or operations.
This probable inability to diversify our activities into more than one area will
subject us to economic fluctuations within a particular business or industry and
therefore increase the risks associated with the our operations.
J. Possible Reliance Upon Unaudited Financial Statements. We generally will
require audited financial statements from companies that we propose to acquire.
No assurance can be given, however, that audited financials will be available.
In cases where audited financials are unavailable, we will have to rely upon
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 we, in evaluating an acquisition with such a target company, will not have
the benefit of full and accurate information about the financial condition and
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 us or
our shareholders.
Moreover, we 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 to be appropriate for acquisition so long as the
reporting requirements of the Exchange Act are applicable. Should we, during the
time we remain subject to the reporting provisions of the Exchange Act, complete
an acquisition of an entity for which audited financial statements prove to be
unobtainable, we would be exposed to enforcement actions by the Securities and
Exchange Commission (SEC) and to corresponding administrative sanctions,
including permanent injunctions against us and our management. The legal and
other costs of defending an SEC enforcement action are likely to have material,
adverse consequences for us and our business. The imposition of administrative
sanctions would subject us to further adverse consequences.
In addition, the lack of audited financial statements would prevent our
securities from becoming eligible for listing on NASDAQ, the automated quotation
system sponsored by the National Association of Securities Dealers, Inc., 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 our securities. Without audited financial statements, we would
almost certainly be unable to offer securities under a registration statement
pursuant to the Securities Act of 1933, and our ability to raise capital would
be significantly limited until such financial statements were to become
available.
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K. Other Regulation. An acquisition we make 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 our other investment
opportunities.
L. Dependence Upon Management; Limited Participation of Management. We will
be heavily dependent upon the skills, talents, and abilities of our officers and
directors to implement our business plan, and may, from time to time, find that
the inability of such persons to devote their full-time attention to our
business results in a delay in progress toward implementing our business plan.
Furthermore, we will be entirely dependent upon the experience of our officers
and directors in seeking, investigating, and acquiring a business and in making
decisions regarding our operations. See "Management." Because investors will not
be able to evaluate the merits of our possible business acquisitions, they
should critically assess the information concerning our officers and directors.
M. Lack of Continuity in Management. The Company does not have an
employment agreement with any of its sole officers or directors, and as a
result, there is no assurance that they will continue to manage the Company in
the future. In connection with acquisition of a business opportunity, it is
likely the current officers and directors of the Company may resign. 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 shareholders of the Company.
N. Indemnification of Officers and Directors. Our Articles of Incorporation
provide that we may indemnify our directors, officers, employees, and agents to
the fullest extent permitted by Colorado law. We will also bear the expenses of
such litigation for any of our directors, officers, employees, or agents, upon
such person's promise to repay us if it is ultimately determined that any such
person shall not have been entitled to indemnification. This indemnification
policy could result in substantial expenditures which we may be unable to
recoup.
O. Director's Liability Limited. Our Articles of Incorporation exclude
personal liability of its directors to the company and our shareholders for
monetary damages for breach of fiduciary duty except in certain specified
circumstances. Accordingly, we will have a much more limited right of action
against our directors than otherwise would be the case. This provision does not
affect the liability of any director under federal or applicable state
securities laws.
P. Dependence Upon Outside Advisors. To supplement the business experience
of our officers and directors, we 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 our officers without any input
from shareholders. 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 management considers it necessary to
hire outside advisors, they may elect to hire persons who are affiliates, if
they are able to provide the required services.
13
<PAGE>
Q. Leveraged Transactions. There is a possibility that any acquisition of a
business opportunity we make may be leveraged, i.e., we 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 our exposure to 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.
R. Competition. The search for potentially profitable business
opportunities is intensely competitive. We expect to be at a disadvantage when
competing with many firms that have substantially greater financial and
management resources and capabilities than we do. These competitive conditions
will exist in any industry in which we may become interested.
S. No Foreseeable Dividends. We have not paid cash dividends on our common
stock and do not anticipate paying such dividends in the foreseeable future.
T. Loss of Control by Present Management and Shareholders. We may consider
an acquisition in which we would issue as consideration for the business
opportunity to be acquired an amount of our authorized but unissued common stock
that would, upon issuance, represent the great majority of the voting power and
equity of Essex Capital Corporation. The result of such an acquisition would be
that the acquired company's shareholders and management would control the
company, and our management could be replaced by persons unknown at this time.
Such a merger would result in a greatly reduced percentage of ownership by our
current shareholders.
U. No Public Market Exists. There is no public market for our 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. Because of 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 may
exceed the selling price. Further, many lending institutions will not permit the
use of such securities as collateral for any loans.
V. Rule 144 Sales. All of the outstanding shares of common stock held by
present shareholders 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
14
<PAGE>
the Act and as required under applicable state securities laws. Rule 144
provides in essence that a person who has held restricted securities for a
prescribed period 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. A
sale under Rule 144 or under any other exemption from the Act, if available, or
pursuant to subsequent registrations of shares of common stock of present
shareholders, may have a depressive effect upon the price of the common stock in
any market that may develop. All of the 500,000 shares of common stock held by
our present shareholders will become available for resale under Rule 144 ninety
(90) days after we register our common stock under Section 12(g) of the
Securities and Exchange Act.
W. State Securities Law Considerations. Because the securities registered
on this registration statement have not been registered for resale under the
securities 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 securities 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 our securities to be a
limited one.
Item 2. Management's Discussion and Analysis or Plan of Operations
Liquidity and Capital Resources
- -------------------------------
We remain in the development stage and, since inception, have experienced
no significant change in liquidity or capital resources or stockholder's equity
other than the receipt of net proceeds in the amount of $300 from its inside
capitalization funds. Consequently, our balance sheet at December 31, 1998,
reflects a current asset value of $205 and a total asset value of $205, in the
form of a related party receivable.
We will carry out our plan of business as discussed above. We cannot
predict to what extent our liquidity and capital resources will be diminished
prior to the consummation of a business combination or whether our capital will
be further depleted by the operating losses (if any) of the business entity
which we may eventually acquire.
Results of Operations
- ---------------------
During the period from March 15, 1989, (inception) through March 31, 1999,
we engaged in no significant operations other than organizational activities and
acquisition of capital. We received no revenues during this period.
For the current fiscal year, we anticipate incurring a loss as a result of
expenses associated with registration under the Securities Exchange Act of 1934,
and expenses associated with locating and evaluating acquisition candidates. We
15
<PAGE>
also anticipate that until a business combination is completed, we will not
generate revenues 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
- -----------------------------
Management believes that additional capital will be necessary to allow us
to meet our cash needs, including the costs of compliance with the continuing
reporting requirements of the Securities Exchange Act of 1934, as amended.
Accordingly, in the event we identify a business combination, we anticipate that
additional capital will be necessary to allow us to accomplish the goal of
completing a business combination. There is no assurance, however, that the
funds will be available to allow us to complete a business combination, and once
a business combination is completed, our needs for additional financing are
likely to increase substantially.
Neither management nor any current shareholder have made any commitments to
provide additional funds. Accordingly, there can be no assurance that any
additional funds will be available to us to allow us to cover our expenses.
Whether or not our cash assets prove to be inadequate to meet our
operational needs, we might seek to compensate providers of services by
issuances of stock in lieu of cash. For information about our policy in regard
to payment for consulting services, see "Certain Relationships and
Transactions."
Item 3. Description of Property
We do not currently maintain an office or any other facilities. We do,
however, maintain a mailing address at 5353 Manhattan Cir., Ste. 201, Boulder,
Colorado 80303, which is the business address of our President. We pay no rent
for the use of this mailing address. Management does not believe that we will
need to maintain an office at any time in the foreseeable future in order to
carry out its plan of operations described herein. Our telephone number is (303)
499-6000.
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 our executive officers and directors and persons who hold 5% or more of our
outstanding common stock. Also included are the shares held by all executive
officers and directors as a group.
16
<PAGE>
% of
Number of Shares Class
Name and Address Owned Beneficially Owned
---------------- ------------------ -----
Allen R. Goldstone
5353 Manhattan Cir. Ste. 201
Boulder, Colorado 80303 150,650 30.0%
Michael Goldstone
5353 Manhattan Cir. Ste. 201
Boulder, Colorado 80303 30,000 6.0%
Alexis Goldstone
5353 Manhattan Cir. Ste. 201
Boulder, Colorado 80303 27,500 5.5%
Sanford L. Schwartz
5353 Manhattan Cir. Ste. 201
Boulder, Colorado 80303 150,650 30.0%
Samantha Schwartz
5353 Manhattan Cir. Ste. 201
Boulder, Colorado 80303 57,500 11.5%
Dave Lilja(1)
5353 Manhattan Cir. Ste. 201
Boulder, Colorado 80303 40,000 8.0%
Mike Friess
5353 Manhattan Cir. Ste. 201
Boulder, Colorado 80303 30,000 6.0%
John Venette(1)
5353 Manhattan Cir. Ste. 201
Boulder, Colorado 80303 15,000 3.0%
All directors and executive
officers (2 persons) 70,000 14.0%
(1) The person listed is an officer and director of the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons
The directors and executive officers currently serving are as follows:
17
<PAGE>
Name Age Positions Held and Tenure
---- --- -------------------------
Dave Lilja 30 President and a Director since January, 1997,
Treasurer since May 6, 1999
John Venette 35 Secretary and a Director since January, 1997
At their annual meeting shareholders elect directors for one-year terms.
Officers hold their positions at 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 any of our directors or
officers 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 will devote their time to our affairs on an "as
needed" basis, which, depending on the circumstances, could amount to as little
as 5 hours per month, or more than 100 hours per month, but more than likely
will fall within the range of 10 to 20 hours per month.
Biographical Information
- ------------------------
Dave Lilja.
Mr. Lilja has served as President and a Director of the Company since
January 5, 1997. From January 1990 to June 1993, he was senior sales person for
McCaw Communications, a wireless communication company. From June, 1993 to 1997,
he was employed by Creative Business Strategies, Inc., a business consulting
firm. Since 1997, he has been President of Wall Street Financial, another
business consulting firm. Mr. Lilja also serves as a director of SGE Holding
Company.
John Venette.
Mr. Venette has served as Secretary and a Director of the Company since
January 5, 1997. He has also served as a director of Condor Capital, Inc., a
company traded on the NASDAQ Bulletin Board whose stated purpose is to seek out
a prospective merger partner that wishes to become a publicly-traded entity,
since 1997 and has been chief financial officer of that corporation since 1997.
From September 1993 until December of 1997, Mr. Venette was a student at the
University of Colorado, majoring in Economics and Finance. He was also an
officer and a director of Roosevelt Capital Corporation, which merged with
Sulphur Corporation of Canada in 1998 to form International Commodities
Corporation.
Indemnification of Officers and Directors
- -----------------------------------------
As permitted by Colorado law, our Articles of Incorporation provide that we
may indemnify our 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 directors or officers unless, in
any such action, they are adjudged to have acted with gross negligence or
18
<PAGE>
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, we have been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable.
Exclusion of Liability
- ----------------------
Pursuant to the Colorado Business Corporation Act, the Company's Articles
of Incorporation exclude 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 Section 7-106-401 of the Colorado Business 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
- ---------------------
None of our officers devote more than a portion of his time to the affairs
of the Company. There will be occasions when the time requirements of our
business conflict with the demands of the officers' other business and
investment activities. Such conflicts may require that we 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 us.
Certain of our principal stockholders 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. Current
shareholders either acquired their shares for $0.0006 per share, or $1.00 per
share, or as a gift from another stockholder. The total purchase price for all
presently issued and outstanding shares was $1600.00, all of which was paid in
cash. We anticipate that a substantial premium may be paid by the purchaser in
conjunction with any sale of shares by current shareholders 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 current
shareholders to acquire their shares creates a conflict of interest for them and
may compromise their state law fiduciary duties to our other shareholders. In
making any such sale, members of management may consider their own personal
pecuniary benefit rather than the best interests of the company and our other
shareholders, and the other shareholders are not expected to be afforded the
opportunity to approve or consent to any particular buy-out transaction
involving shares held by members of management.
Item 6. Executive Compensation
When the company was formed in 1989, Sanford L. Schwartz and Allen R.
Goldstone, the initial officers and directors of the Company, each received
125,000 shares of common stock for $150. Mr. Schwartz and Mr. Goldstone acquired
a total of 1,300 additional shares in 1998 for $1.00 per share. All other
shareholders of the company received their shares as gifts from Mr. Schwartz or
19
<PAGE>
Mr. Goldstone. No officer or director has received any other remuneration. Until
we acquire additional capital, it is not intended that any officer or director
will receive compensation other than reimbursement for out-of-pocket expenses
incurred on our behalf. See "Certain Relationships and Related Transactions." We
have 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
No officer, director, promoter, or affiliate of the company has or proposes
to have any direct or indirect material interest in any asset that we propose to
acquire through security holdings, contracts, options, or otherwise.
We may pay any consulting or finder's fee for consulting services to assist
management in evaluating a prospective business opportunity in stock or in cash.
Any such issuance of stock would be made on an ad hoc basis. Accordingly, we are
unable to predict whether or in what amount such a stock issuance might be made.
We currently do not anticipate that we will pay any salary, consulting fee,
or finder's fee to any of our directors or executive officers, or to any other
affiliate except as described under "Executive Compensation" above.
We maintain our offices at the offices of Creative Business Strategies,
Inc., a corporation of which Mr. Schwartz and Mr. Goldstone are principal
shareholders, for which we pay no rent. We anticipate that following the
consummation of a business combination with an acquisition candidate, our office
will be moved, but cannot predict future office or facility arrangements with
our officers, directors or affiliates.
Although we have no current plans to do so, it is possible that we may
enter into an agreement with an acquisition candidate requiring the sale of all
or a portion of the common stock held by our current shareholders to the
acquisition candidate or principals thereof, or to other individuals or business
entities, or requiring some other form of payment to our current shareholders,
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 our current
shareholders to an acquisition candidate would be at a price substantially
higher than that originally paid by such shareholders. Any payment to current
shareholders in the context of an acquisition in which we are involved 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
- ------------
Our Articles of Incorporation authorize the issuance of 800,000,000 shares
of common stock. Each record holder of common stock is entitled to one vote for
each share held on all matters properly submitted to the shareholders for their
vote. Cumulative voting for the election of directors is not permitted by the
Articles of Incorporation.
20
<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 our affairs, holders are entitled to receive, ratably, our net
assets available to shareholders after distribution is made to the preferred
shareholders, 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 we issue additional shares
of our common stock, the relative interests of then existing shareholders may be
diluted.
Preferred Stock
- ---------------
The Company's Articles of Incorporation authorize the issuance of
10,000,000 shares of preferred stock. The Board of Directors is authorized to
issue the preferred stock from time to time in series and is further authorized
to establish such series, to fix and determine the variations in the relative
rights and preferences as between series, to fix voting rights, if any, for each
series, and to allow for the conversion of preferred stock into common stock. We
have not issued any preferred stock to date, but we anticipate that preferred
stock may be used in making acquisitions.
Transfer Agent
- --------------
As of the date hereof, the company is serving as its own transfer agent.
Reports to Shareholders
- -----------------------
We plan to furnish our shareholders with an annual report for each fiscal
year ending December 31 containing financial statements audited by its
independent certified public accountants. In the event we enter into a business
combination with another company, it is the present intention of management to
continue furnishing annual reports to shareholders. Additionally, we may, in our
sole discretion, issue unaudited quarterly or other interim reports to our
shareholders when we deem appropriate. We also intend to comply with the
periodic reporting requirements of the Securities Exchange Act of 1934.
21
<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 our securities and all of our
outstanding securities are restricted securities as defined in Rule 144. There
were eight (8) holders of record of our common stock on December 31, 1998. We
have paid no cash dividends to date, and our Board of Directors does not
anticipate paying cash dividends in the foreseeable future.
Item 2. Legal Proceedings
We are 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 our securities, or any associate of any
such director, officer or security holder is a party adverse to us or has a
material interest adverse to us in reference to pending litigation.
Item 3. Changes in and Disagreements with Accountants
Not applicable.
Item 4. Recent Sales of Unregistered Securities
Effective December 31, 1998, the Company issued $1,300 of Common Stock to
two individuals. These shares were acquired for investment purposes and were
issued without registration under the Securities Act of 1933 in reliance on
Section 4(2) thereof for offerings not involving a public offering of
securities. No underwriter was involved in the offering and no commissions were
paid for the solicitation of investors.
Item 5. Indemnification of Directors and Officers
The Articles of Incorporation of the Company, filed as Exhibit 3, provide
that the Company may indemnify its officers and directors to the fullest extent
permitted by Colorado law.
22
<PAGE>
PART F/S
ESSEX CAPITAL CORPORATION
-------------------------
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Certified Public Accountants 24
Consolidated Balance Sheets at December 31, 1998 and 1997 25
Statements of Operations for the Years Ended December 31, 1998
and December 31, 1997 and the Year Ended March 31, 1996 26
Statement of Changes in Stockholders' Equity from March 15, 1989
through December 31, 1998 27
Statements of Cash Flows for the Years Ended December 31, 1997
and December 31, 1999 28
Notes to Consolidated Financial Statements December 31, 1998 29
Balance Sheet as of March 31, 1999 (unaudited) 31
Statements of Operations for the three months ended
March 31, 1999 and 1998 (unaudited) 32
Statements of Cash Flows for the three months ended
March 31, 1999 and 1998 (unaudited) 33
Notes to Financial Statements (unaudited) 34
23
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
The Board of Directors
Essex Capital Corporation
(A Development Stage Company)
Boulder, Colorado
We have audited the accompanying balance sheet of Essex Capital Corporation (A
Development Stage Company) as of December 31, 1998, and the related statements
of operations, stockholders' equity and cash flows for the two years ended
December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide 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 Essex Capital Corporation (A
Development Stage Company) as of December 31, 1998, and the results of its
operations, changes in its stockholders' equity and its cash flows for the two
years ended December 31, 1998, in conformity with generally accepted accounting
principles.
The accompanying balance sheet has been prepared assuming that the Company will
continue as a going concern. As described in Note 2 to the financial statements,
the Company has had operating losses since inception and has no recurring source
of revenue which raise substantial doubts about its ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Schumacher & Associates, Inc.
Certified Public Accountants
12835 E. Arapahoe Road
Tower II, Suite 110
Englewood, Colorado 80112
May 17, 1999
24
<PAGE>
ESSEX CAPITAL CORPORATION
-------------------------
(A Development Stage Company)
BALANCE SHEET
December 31, 1998
ASSETS
Current Assets:
Accounts receivable, related party $ 205
-------
TOTAL ASSETS $ 205
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities: $ --
-------
TOTAL LIABILITIES --
-------
Commitments and Contingencies (Note 2) --
Stockholders' equity:
Preferred stock, no par value
10,000,000 shares authorized --
Common Stock no par value
800,000,000 shares authorized
501,300 shares issued and outstanding 1,600
Accumulated equity during
development stage (1,395)
-------
TOTAL STOCKHOLDERS' EQUITY 205
-------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 205
=======
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
ESSEX CAPITAL CORPORATION
-------------------------
STATEMENTS OF OPERATIONS
From
March 15, 1989
(Inception)
Years Ended To
December 31, December 31,
1998 1997 1998
--------- --------- ---------
Revenue $ -- $ -- $ --
--------- --------- ---------
Expenses:
Audit fees 650 650 1,300
Other -- -- 95
--------- --------- ---------
650 650 1,395
--------- --------- ---------
Net (Loss) $ (650) $ (650) $ (1,395)
========= ========= =========
(Loss) Per Share $ nil $ nil $ nil
========= ========= =========
Weighted Average Shares
Outstanding 501,300 500,000 501,300
========= ========= =========
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
<TABLE>
<CAPTION>
ESSEX CAPITAL CORPORATION
-------------------------
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
From Inception (March 15, 1989) through December 31, 1998
-----------------------------------------------------------------------------
Preferred Stock Common Stock Additional Paid- Accumulated
No./Shares Amount No./Shares Amount in Capital Deficit Total
---------- ------ ---------- ------ ---------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 15, 1989 -- $ -- -- $ -- $ -- $ -- $ --
Issuance of stock for cash -- -- 500,000 300 -- -- 300
Net loss for the year ended December 31, 1989 -- -- -- -- -- (45) (45)
---- ---- -------- -------- -------- -------- --------
Balance at December 31, 1989 -- -- 500,000 300 -- (45) 255
Net loss for the year ended December 31, 1990 -- -- -- -- -- -- --
---- ---- -------- -------- -------- -------- --------
Balance at December 31, 1990 -- -- 500,000 300 -- (45) 255
Net loss for the year ended December 31, 1991 -- -- -- -- -- (25) (25)
---- ---- -------- -------- -------- -------- --------
Balance at December 31, 1991 -- -- 500,000 300 -- (70) 230
Net loss for the year ended December 31, 1992 -- -- -- -- -- -- --
---- ---- -------- -------- -------- -------- --------
Balance at December 31, 1992 -- -- 500,000 300 -- (70) 230
Net loss for the year ended December 31, 1993 -- -- -- -- -- (25) (25)
---- ---- -------- -------- -------- -------- --------
Balance at December 31, 1993 -- -- 500,000 300 -- (95) 205
Net loss for the year ended December 31, 1994 -- -- -- -- -- -- --
---- ---- -------- -------- -------- -------- --------
Balance at December 31, 1994 -- -- 500,000 300 -- (95) 205
Net loss for the year ended December 31, 1995 -- -- -- -- -- -- --
---- ---- -------- -------- -------- -------- --------
Balance at December 31, 1995 -- -- 500,000 300 -- (95) 205
Net loss for the year ended December 31, 1996 -- -- -- -- -- -- --
---- ---- -------- -------- -------- -------- --------
Balance at December 31, 1996 -- -- 500,000 300 -- (95) 205
Net loss for the year ended December 31, 1997 -- -- -- -- -- (650) (650)
---- ---- -------- -------- -------- -------- --------
Balance at December 31, 1997 -- -- 500,000 300 -- (745) (445)
Issuance of stock for related party payables -- -- 1,300 1,300 -- -- 1,300
Net loss for the year ended December 31, 1998 -- -- -- -- -- (650) (650)
---- ---- -------- -------- -------- -------- --------
Balance at December 31, 1998 -- $ -- 501,300 1,600 $ -- $ (1,395) $ 205
==== ==== ======== ======== ======== ======== ========
The accompanying notes are an integral part of the financial statements.
27
</TABLE>
<PAGE>
ESSEX CAPITAL CORPORATION
-------------------------
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
March 15,
1989
(Inception)
to
Years Ended December 31, December
1998 1997 31, 1998
---- ---- --------
Cash Flows Operating Activities:
Net loss $ (650) $ (650) $(1,395)
(Decrease) in accounts payable (650) 650 1,300
(Increase)in accounts
receivable -- -- (205)
------- ----------- -------
Net Cash (Used in) Operating
Activities (1,300) -- (300)
------- ----------- -------
Cash Flows from Investing Activities -- -- --
------- ----------- -------
Cash Flows from Financing Activities
Proceeds from issuance of stock 1,300 -- 300
------- ----------- -------
Net Cash Provided by Financing
Activities 1,300 -- 300
------- ----------- -------
(Decrease) in Cash -- -- --
Cash, Beginning of Year -- -- --
------- ----------- -------
Cash, End of Year $ -- $ -- $ --
======= =========== =======
Interest Paid $ -- $ -- $ --
======= =========== =======
Income Taxes Paid $ -- $ -- $ --
======= =========== =======
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
ESSEX CAPITAL CORPORATION
-------------------------
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
(1) Summary of Accounting Policies
------------------------------
This summary of significant accounting policies of Essex Capital
Corporation (A Development Stage Company)(Company) is presented to assist
in understanding the Company's financial statements. The financial
statements and notes are representations of the Company's management who is
responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
(a) Organization and Principles of Consolidation
--------------------------------------------
The Company was incorporated under the laws of Colorado on March 15,
1989 as a limited liability company. The Company is an inactive entity
other than it is looking for a business combination candidate.
The Company has selected the last day of December as its year end.
(b) Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ
from those estimates.
(2) Basis of Presentation - Going Concern
-------------------------------------
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation
of the Company as a going concern. However, the Company has had operating
losses since inception and has no recurring source of revenue. These
matters raise substantial doubt about the Company's ability to continue as
a going concern. Management is attempting to raise additional capital, and
is looking for a business combination candidate.
29
<PAGE>
ESSEX CAPITAL CORPORATION
-------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
(2) Basis of Presentation - Going Concern, Continued
------------------------------------------------
In view of these matters, continuing as a going concern is dependent upon
the Company's ability to meet its financing requirements, raise additional
capital, and the success of its future operations or completion of a
successful business combination. Management believes that actions planned
and presently being taken to revise the Company's operating and financial
requirements provide the opportunity for the Company to continue as a going
concern.
(3) Income Taxes
------------
As of December 31, 1998, the Company had net operating losses available for
carry-over to future years of approximately $1,395, expiring in various
years through 2018. As of December 31, 1998 the Company has total deferred
tax assets of approximately $279 due to operating loss carryforwards.
However, because of the uncertainty of potential realization of these tax
assets, the Company has provided a valuation allowance for the entire $279.
Thus, no tax assets have been recorded in the financial statements as of
December 31, 1998.
(4) Stock Split
-----------
Effective January 6, 1995 the Company effected a two for one stock split.
All references to stock outstanding have been retroactively adjusted as if
the split had taken place on the earliest date shown.
(5) Issuance of Stock
-----------------
Effective December 31, 1998, the Company issued 1,300 shares of common
stock in exchange for $1,300 of related party payables.
30
<PAGE>
ESSEX CAPITAL CORPORATRION
--------------------------
(A Development Stage Company)
BALANCE SHEET
March 31, 1999
ASSETS
Current Assets:
Accounts receivable, related party $ 205
-------
TOTAL ASSETS $ 205
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities: $ --
-------
TOTAL LIABILITIES $ --
-------
Stockholders' equity:
Preferred stock, no par value
10,000,000 share authorized --
Common Stock no par value
800,000,000 shares authorized
501,300 shares issued and
outstanding 1,600
Accumulated equity during
Development stage (1,395)
-------
TOTAL STOCKHOLDERS' EQUITY 205
-------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 205
=======
31
<PAGE>
ESSEX CAPITAL CORPORATION
-------------------------
Statements of Operations
From
March 15, 1989
Quarters Ended (Inception)
March 31, To
1999 1998 March 31, 1999
------------- ------------- --------------
Revenue $ -- $ -- $ --
------------- ------------- ---------
Expenses:
Audit fees -- -- 1,300
Other -- -- 95
------------- ------------- ---------
-- -- 1,395
------------- ------------- ---------
Net (Loss) -- -- ($ 1,395)
============= ============= =========
(Loss) Per Share $ nil $ nil $ nil
============= ============= =========
Weighted Average Shares
Outstanding 501,300 500,000 501,300
============= ============= =========
32
<PAGE>
ESSEX CAPITAL CORPORATION
-------------------------
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Quarters Ended From
March 31, Inception to
1999 1998 March 31, 1999
------ ------ --------------
Cash Flows Operating Activities:
Net Income/(Loss) -- -- ($1,395)
(Decrease) in accounts payable -- -- $ 1,300
(Increase) in accounts receivable -- -- ($ 205)
----- ----- -------
Net cash (used in) Operating Activities -- -- ($ 300)
Cash Flows from Investing Activities -- -- --
----- ----- -------
Cash Flows from Financing Activities
Proceeds from issuance of stock -- -- 300
----- ----- -------
Net Cash Provided by Financing Activities -- -- 300
----- ----- -------
(Decrease) in Cash -- -- --
Cash, Beginning of Year -- -- --
----- ----- -------
Cash, End of Quarter -- -- --
===== ===== =======
Interest Paid -- -- --
===== ===== =======
Income Taxes Paid -- -- --
===== ===== =======
33
<PAGE>
ESSEX CAPITAL CORPORATION
-------------------------
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
(1) Summary of Accounting Policies
------------------------------
This summary of significant accounting policies of Essex Capital
Corporation (A Development Stage Company)(Company) is presented to assist
in understanding the Company's financial statements. The financial
statements and notes are representations of the Company's management who is
responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
(a) Organization and Principles of Consolidation
--------------------------------------------
The Company was incorporated under the laws of Colorado on March 15,
1989 as a limited liability company. The Company is an inactive entity
other than it is looking for a business combination candidate.
The Company has selected the last day of December as its year end.
(b) Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ
from those estimates.
(2) Basis of Presentation - Going Concern
-------------------------------------
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation
of the Company as a going concern. However, the Company has had operating
losses since inception and has no recurring source of revenue. These
matters raise substantial doubt about the Company's ability to continue as
a going concern. Management is attempting to raise additional capital, and
is looking for a business combination candidate.
34
<PAGE>
ESSEX CAPITAL CORPORATION
-------------------------
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
(2) Basis of Presentation - Going Concern, Continued
------------------------------------------------
In view of these matters, continuing as a going concern is dependent upon
the Company's ability to meet its financing requirements, raise additional
capital, and the success of its future operations or completion of a
successful business combination. Management believes that actions planned
and presently being taken to revise the Company's operating and financial
requirements provide the opportunity for the Company to continue as a going
concern.
(3) Income Taxes
------------
As of December 31, 1998, the Company had net operating losses available for
carry-over to future years of approximately $1,395, expiring in various
years through 2018. As of December 31, 1998, the Company has total deferred
tax assets of approximately $279 due to operating loss carryforwards.
However, because of the uncertainty of potential realization of these tax
assets, the Company has provided a valuation allowance for the entire $279.
Thus, no tax assets have been recorded in the financial statements as of
December 31, 1998.
(4) Stock Split
-----------
Effective January 6, 1995 the Company effected a two for one stock split.
All references to stock outstanding have been retroactively adjusted as if
the split had taken place on the earliest date shown.
(5) Issuance of Stock
-----------------
Effective December 31, 1998, the Company issued 1,300 shares of common
stock in exchange for $1,300 of related party payables.
35
<PAGE>
PART III
Item 1. Index to Exhibits
The Exhibits listed below are filed as part of this Registration Statement.
Exhibit No. Document
----------- --------
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Specimen Stock Certificate
Item 2. Description of Exhibits
-i-
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
ESSEX CAPITAL CORPORATION
Date: June 20, 1999 By: /s/ Dave Lilja
-------------------
President and Director
(Principal Executive Officer)
Date: June 20, 1999 By: /s/ John Venette
-------------------
Secretary and Director
-ii-
<PAGE>
U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
ESSEX CAPITAL CORPORATION
-------------------------
(Name of Small Business Issuer in its charter)
ESSEX CAPITAL CORPORATION
-------------------------
(Name of Small Business Issuer in its charter)
Colorado 84-1113058
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5353 Manhattan Cir. Ste 201,
Boulder, Colorado 80303
----------------- -----
(Address of Principal Office) Zip Code
Issuer's telephone number: (303) 499-6000
-iii-
<PAGE>
EXHIBIT INDEX
Exhibit No. Document
----------- --------
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Specimen Stock Certificate
-iv-
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
ESSEX CAPITAL CORPORATION
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 Colorado does hereby sign, verify and
deliver in duplicate to the Secretary of State of the State of Colorado, these
Articles of Incorporation:
ARTICLE I
NAME
The name of the Corporation shall be: Essex Capital Corporation.
ARTICLE II
PERIOD OF DURATION
The Corporation shall exist in perpetuity, from and after the date of
filing these Articles of Incorporation with the Secretary of State of the State
of Colorado unless dissolved according to law.
ARTICLE III
PURPOSES AND POWERS
1. Purposes. Except as restricted by these Articles of Incorporation, the
Corporation is organized for the purpose of transacting all lawful business for
which corporations may be incorporated pursuant to the Colorado Corporation
Code.
2. General Powers. Except as restricted by these Articles of Incorporation,
the Corporation shall have and may exercise all powers and rights which a
corporation may exercise legally pursuant to the Colorado Corporation Code.
3. Issuance of Shares. The board of directors of the Corporation may divide
and issue any class of stock of the Corporation in series pursuant to a
resolution properly filed with the Secretary of State of the State of Colorado.
ARTICLE IV
CAPITAL STOCK
The aggregate number of shares which this Corporation shall have authority
to issue is Eight Hundred Million (800,000,000) shares of no par value each,
which shares shall be designated "common stock"; and Ten Million (10,000,000)
shares of no par value each, which shares shall be designated "Preferred Stock"
and which may be issued in one or more series at the discretion of the Board of
Directors. In establishing a series the Board of Directors shall give to it a
distinctive designation so as to distinguish it from the shares of all other
series and classes, shall fix the number of shares in such series, and the
preferences, rights and restrictions thereof. All shares of any one series shall
be alike in every particular except as otherwise provided by these Articles of
Incorporation or the Colorado Corporation Code.
v
<PAGE>
1. Dividends. Dividends in cash, property or shares shall be paid upon the
Preferred Stock for any year on a cumulative or noncumulative basis as
determined by a resolution of the Board of Directors prior to the issuance of
such Preferred Stock, to the extent earned surplus for each such year is
available, in an amount as determined by a resolution of the Board of Directors.
Such Preferred Stock dividends shall be paid pro rata to holders of Preferred
Stock in any amount not less than nor more than the rate as determined by a
resolution of the Board of Directors prior to the issuance of such Preferred
Stock. No other dividend shall be paid on the Preferred Stock.
Dividends in cash, property or shares of the Corporation may be paid upon
the common stock, as and when declared by the Board of Directors, out of funds
of the Corporation to the extent and in the manner permitted by law, except that
no common stock dividend shall be paid for any year unless the holders of
Preferred Stock, if any, shall receive the maximum allowable Preferred Stock
dividend for such year.
2. Distribution in Liquidation. Upon any liquidation, dissolution or
winding up of the Corporation, and after paying or adequately providing for the
payment of all its obligations, the remainder of the assets of the Corporation
shall be distributed, either in cash or in kind, first pro rata to the holders
of the Preferred Stock until an amount to be determined by a resolution of the
Board of Directors prior to issuance of such Preferred Stock, has been
distributed per share, and, then, the remainder pro rata to the holders of the
common stock.
3. Redemption. The Preferred Stock may be redeemed in whole or in part as
determined by a resolution of the Board of Directors prior to the issuance of
such Preferred Stock, upon prior notice to the holders of record of the
Preferred Stock, published, mailed and given in such manner and form and on such
other terms and conditions as may be prescribed by the Bylaws or by resolution
of the Board of Directors, by payment in cash or common stock for each share of
the Preferred Stock to be redeemed, as determined by a resolution of the Board
of Directors prior to the issuance of such Preferred Stock. common stock used to
redeem Preferred Stock shall be valued as determined by a resolution of the
Board of Directors prior to the issuance of such Preferred Stock. Any rights to
or arising from fractional shares shall be treated as rights to or arising from
one share. No such purchase or retirement shall be made if the capital of the
Corporation would be impaired thereby.
If less than all the outstanding shares are to be redeemed, such redemption
may be made by lot or pro rata as may be prescribed by resolution of the Board
of Directors; provided, however, that the Board of Directors may alternatively
invite from shareholders offers to the Corporation of Preferred Stock at less
than an amount to be determined by a resolution of the Board of Directors prior
to issuance of such Preferred Stock, and when such offers are invited, the Board
of Directors shall then be required to buy at the lowest price or prices
offered, up to the amount to be purchased.
From and after the date fixed in any such notice as the date of
redemption (unless default shall be made by the Corporation in the payment of
the redemption price), all dividends on the Preferred Stock thereby called for
redemption shall cease to accrue and all rights of the holders thereof as
shareholders of the Corporation, except the right to receive the redemption
price, shall cease and terminate.
Any purchase by the Corporation of the shares of its Preferred Stock shall
not be made at prices in excess of said redemption price.
4. Voting Rights; Cumulative Voting. Each outstanding share of common stock
shall be entitled to one vote and each fractional share of common stock shall be
entitled to a corresponding fractional vote on each matter submitted to a vote
of shareholders. A majority of the shares of common stock entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. Except as otherwise provided by these Articles of Incorporation or
the Colorado Corporation Code, if a quorum is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders. When, with respect to any
action to be taken by shareholders of this Corporation, the laws of Colorado
require the vote or concurrence of the holders of two-thirds of the outstanding
shares, of the shares entitled to vote thereon, or of any class or series, such
action may be taken by the vote or concurrence of a majority of such shares or
class or series thereof. Cumulative voting shall not be allowed in the election
of directors of this Corporation.
vi
<PAGE>
Shares of Preferred Stock shall only be entitled to such vote as is
determined by the Board of Directors prior to the issuance of such stock, except
as required by law, in which case each share of Preferred Stock shall be
entitled to one vote.
5. Denial of Preemptive Rights. No holder of any shares of the Corporation,
whether now or hereafter authorized, shall have any preemptive or preferential
right to acquire any shares or securities of the Corporation, including shares
or securities held in the treasury of the Corporation.
6. Conversion Rights. Holders of shares of Preferred Stock may be granted
the right to convert such Preferred Stock to common stock of the Corporation on
such terms as may be determined by the Board of Directors prior to issuance of
such Preferred Stock.
ARTICLE V
TRANSACTIONS WITH INTERESTED DIRECTORS
No contract or other transaction between the Corporation and one or more of
its directors or any other corporation, firm, association, or entity in which
one or more of its directors are directors or officers or are financially
interested shall be either void or voidable solely because of such relationship
or interest or solely because such directors are present at the meeting of the
board of directors or a committee thereof which authorizes, approves, or
ratifies such contract or transaction or solely because their votes are counted
for such purpose if:
(a) The fact of such relationship or interest is disclosed or known to the
board of directors or committee which authorizes, approves, or ratifies the
contract or transaction by a vote or consent sufficient for the purpose without
counting the votes or consents of such interested directors; or
(b) The fact of such relationship or interest is disclosed or known to the
shareholders entitled to vote and they authorize, approve, or ratify such
contract or transaction by vote or written consent; or
(c) The contract or transaction is fair and reasonable to the corporation.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the board of directors or a committee thereof which
authorizes, approves, or ratifies such contract or transaction.
ARTICLE VI
CORPORATE OPPORTUNITY
The officers, directors and other members of management of this Corporation
shall be subject to the doctrine of "corporate opportunities" only insofar as it
applies to business opportunities in which this Corporation has expressed an
interest as determined from time to time by this Corporation's board of
directors as evidenced by resolutions appearing in the Corporation's minutes.
Once such areas of interest are delineated, all such business opportunities
within such areas of interest which come to the attention of the officers,
directors, and other members of management of this Corporation shall be
disclosed promptly to this Corporation and made available to it. The board of
directors may reject any business opportunity presented to it and thereafter any
officer, director or other member of management may avail himself of such
opportunity. Until such time as this Corporation, through its board of
directors, has designated an area of interest, the officers, directors and other
members of management of this Corporation shall be free to engage in such areas
of interest on their own and this doctrine shall not limit the rights of any
officer, director or other member of management of this Corporation to continue
a business existing prior to the time that such area of interest is designated
by the Corporation. This provision shall not be construed to release any
employee of this Corporation (other than an officer, director or member of
management) from any duties which he may have to this Corporation.
vii
<PAGE>
ARTICLE VII
INDEMNIFICATION
The Corporation may indemnify any director, officer, employee, fiduciary,
or agent of the Corporation to the full extent permitted by the Colorado
Corporation Code as in effect at the time of the conduct by such person.
ARTICLE VIII
AMENDMENTS
The Corporation reserves the right to amend its Articles of Incorporation
from time to time in accordance with the Colorado Corporation Code.
ARTICLE IX
ADOPTION AND AMENDMENT OF BYLAWS
The initial Bylaws of the Corporation shall be adopted by its board of
directors. Subject to repeal or 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
management of the affairs of the Corporation not inconsistent with law or these
Articles of Incorporation.
ARTICLE X
REGISTERED OFFICE AND REGISTERED AGENT
The address of the initial registered office of the Corporation is 325
Canyon Boulevard, Boulder, Colorado 80302, and the name of the initial
registered agent at such address is Allen R. Goldstone. Either the registered
office or the registered agent may be changed in the manner permitted by law.
ARTICLE XI
INITIAL BOARD OF DIRECTORS
The number of directors of the Corporation shall be fixed by the Bylaws of
the Corporation, with the provision that there need be only as many directors as
there are shareholders in the event that the outstanding shares are held of
record by fewer than three shareholders. 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
---- -------
Allen R. Goldstone 325 Canyon Boulevard
Boulder, CO 80302
Sanford L. Schwartz 1720 Fourteenth Street
Boulder, CO 80302
Robert M. Geller 1720 Fourteenth Street
Boulder, CO 80302
ARTICLE XII
LIMITATION OF LIABILITY OF
DIRECTORS TO CORPORATIONS AND SHAREHOLDERS
No director shall be liable to the Corporation or any shareholder for
monetary damages for breach of fiduciary duty as a director, except for any
matter in respect of which such director (a) shall be liable under C.R.S.
viii
<PAGE>
Section 7-5-114 or any amendment thereto or successor provision thereto; (b)
shall have breached the director's duty of loyalty to the Corporation or its
shareholders; (c) shall have not acted in good faith or, in failing to act,
shall not have acted in good faith; (d) shall have acted or failed to act in a
manner involving intentional misconduct or a knowing violation of law; or (e)
shall have derived an improper personal benefit. Neither the amendment nor
repeal of this Article, nor the adoption of any provision in the Articles of
Incorporation inconsistent with this Article, shall eliminate or reduce the
effect of this Article in respect of any matter occurring prior to such
amendment, repeal or adoption of an inconsistent provision. This Article shall
apply to the full extent now permitted by Colorado law or as may be permitted in
the future by changes or enactments in Colorado law, including without
limitation C.R.S. Section 7-2-102 and/or C.R.S. Section 7-3-101.
ARTICLE XIII
INCORPORATOR
The name and address of the incorporator is as follows:
Name Address
---- -------
Jon D. Sawyer c/o Wills & Sawyer, P.C.
511 16th Street, Suite 400
Denver, Colorado 80202
IN WITNESS WHEREOF, the above-named incorporator has signed these Articles
of Incorporation this 15th day of March, 1989.
/s/ Jon D. Sawyer
-----------------
Jon D. Sawyer
ix
EXHIBIT 3.2
BYLAWS
OF
ESSEX CAPITAL CORPORATION
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I - OFFICES..........................................................1
1.1 Business Office............................................1
1.2 Registered Office..........................................1
ARTICLE II - SHARES AND TRANSFER THEREOF.....................................1
2.1 Regulation.................................................1
2.2 Certificates for Shares....................................1
2.3 Cancellation of Certificates...............................1
2.4 Lost, Stolen or Destroyed Certificates.....................1
2.5 Transfer of Shares.........................................1
2.6 Transfer Agent.............................................2
2.7 Close of Transfer Book and Record Date.....................2
ARTICLE III - SHAREHOLDERS AND MEETINGS THEREOF..............................2
3.1 Shareholders of Record.....................................2
3.2 Meetings...................................................2
3.3 Annual Meeting.............................................2
3.4 Special Meetings...........................................3
3.5 Notice.....................................................3
3.6 Meeting of All Shareholders................................3
3.7 Voting Record..............................................3
3.8 Quorum.....................................................3
3.9 Manner of Acting...........................................3
3.10 Proxies....................................................3
3.11 Voting of Shares...........................................4
3.12 Voting of Shares by Certain Holders........................4
3.13 Informal Action by Shareholders............................4
3.14 Voting by Ballot...........................................4
3.15 Cumulative Voting..........................................4
ARTICLE IV - DIRECTORS, POWERS AND MEETINGS..................................4
4.1 Board of Directors.........................................4
4.2 Regular Meetings...........................................4
x
<PAGE>
4.3 Special Meetings...........................................5
4.4 Notice.....................................................5
4.5 Participation by Electronic Means..........................5
4.6 Quorum and Manner of Acting................................5
4.7 Organization...............................................5
4.8 Presumption of Assent......................................5
4.9 Informal Action By Directors...............................5
4.10 Vacancies..................................................5
4.11 Compensation...............................................6
4.12 Removal of Directors.......................................6
4.13 Resignations...............................................6
4.14 General Powers.............................................6
ARTICLE V - OFFICERS.........................................................6
5.1 Term and Compensation......................................6
5.2 Powers.....................................................6
5.3 Compensation...............................................7
5.4 Delegation of Duties.......................................7
5.5 Bonds......................................................7
5.6 Removal....................................................7
ARTICLE VI - FINANCE.........................................................7
6.1 Reserve Funds..............................................7
6.2 Banking....................................................7
ARTICLE VII - DIVIDENDS......................................................7
ARTICLE VIII - CONTRACTS, LOANS AND CHECKS...................................8
8.1 Execution of Contracts.....................................8
8.2 Loans......................................................8
8.3 Checks.....................................................8
8.4 Deposits...................................................8
ARTICLE IX - FISCAL YEAR.....................................................8
ARTICLE X - AMENDMENTS.......................................................8
ARTICLE XI - EXECUTIVE COMMITTEE.............................................8
11.1 Appointment................................................8
11.2 Authority..................................................8
11.3 Tenure and Qualifications..................................9
11.4 Meetings...................................................9
11.5 Quorum.....................................................9
11.6 Informal Action by Executive Committee.....................9
11.7 Vacancies..................................................9
11.8 Resignations and Removal...................................9
11.9 Procedure..................................................9
ARTICLE XIII - EMERGENCY BYLAWS..............................................9
xi
<PAGE>
ARTICLE I
OFFICES
1.1 Business Office. The principal office and place of business of the
corporation shall be at 5353 Manhattan Circle, Suite 201, Boulder, Colorado
80303. Other offices and places of business may be established from time to time
by resolution of the Board of Directors or as the business of the corporation
may require.
1.2 Registered Office. The registered office of the corporation, required
by the Colorado Corporation Code to be maintained in the State of Colorado, may
be, but need not be, identical with the principal office in the State of
Colorado, and the address of the registered office may be changed from time to
time by the Board of Directors.
ARTICLE II
SHARES AND TRANSFER THEREOF
2.1 Regulation. The Board of Directors may make such rules and regulations
as it may deem appropriate concerning the issuance, transfer and registration of
certificates for shares of the corporation, including the appointment of
transfer agents and registrars.
2.2 Certificates for Shares. Certificates representing shares of the
corporation shall be respectively numbered serially for each class of shares, or
series thereof, as they are issued, shall be impressed with the corporate seal
or a facsimile thereof, and shall be signed by the Chairman or Vice Chairman of
the Board of Directors or by the President or a Vice-President and by the
Treasurer or an Assistant Treasurer or by the Secretary or an Assistant
Secretary; provided that any or all of the signatures may be facsimiles if the
certificate is countersigned by a transfer agent, or registered by a registrar,
other than the corporation itself or its employee. Each certificate shall state
the name of the corporation, the fact that the corporation is organized or
incorporated under the laws of the State of Colorado, the name of the person to
whom issued, the date of issue, the class (or series of any class), the number
of shares represented thereby and the par value of the shares represented
thereby or a statement that such shares are without par value. A statement of
the designations, preferences, qualifications, limitations, restrictions and
special or relative rights of the shares of each class shall be set forth in
full or summarized on the face or back of the certificates which the corporation
shall issue, or in lieu thereof, the certificate may set forth that such a
statement or summary will be furnished to any shareholder upon request without
charge. Each certificate shall be otherwise in such form as may be prescribed by
the Board of Directors and as shall conform to the rules of any stock exchange
on which the shares may be listed. The corporation shall not issue certificates
representing fractional shares and shall not be obligated to make any transfers
creating a fractional interest in a share of stock. The corporation may issue
scrip in lieu of any fractional shares, such scrip to have terms and conditions
specified by the Board of Directors.
2.3 Cancellation of Certificates. All certificates surrendered to the
corporation for transfer shall be cancelled and no new certificates shall be
issued in lieu thereof until the former certificate for a like number of shares
shall have been surrendered and cancelled, except as herein provided with
respect to lost, stolen or destroyed certificates.
2.4 Lost, Stolen or Destroyed Certificates. Any shareholder claiming that
his certificate for shares is lost, stolen or destroyed may make an affidavit or
affirmation of the fact and lodge the same with the Secretary of the
corporation, accompanied by a signed application for a new certificate.
Thereupon, and upon the giving of a satisfactory bond of indemnity to the
corporation not exceeding an amount double the value of the shares as
represented by such certificate (the necessity for such bond and the amount
required to be determined by the President and Treasurer of the corporation), a
new certificate may be issued of the same tenor and representing the same
number, class and series of shares as were represented by the certificate
alleged to be lost, stolen or destroyed.
2.5 Transfer of Shares. Subject to the terms of any shareholder agreement
relating to the transfer of shares or other transfer restrictions contained in
the Articles of Incorporation or authorized therein, shares of the corporation
shall be transferable on the books of the corporation by the holder thereof in
person or by his duly authorized attorney, upon the surrender and cancellation
of a certificate or certificates for a like number of shares. Upon presentation
and surrender of a certificate for shares properly endorsed and payment of all
taxes therefor, the transferee shall be entitled to a new certificate or
certificates in lieu thereof. As against the corporation, a transfer of shares
can be made only on the books of the corporation and in the manner hereinabove
provided, and the corporation shall be entitled to treat the holder of record of
any share as the owner thereof and shall not be bound to recognize any equitable
or other claim to or interest in such share on the part of any other person,
whether or not it shall have express or other notice thereof, save as expressly
provided by the statutes of the State of Colorado.
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2.6 Transfer Agent. Unless otherwise specified by the Board of Directors by
resolution, the Secretary of the corporation shall act as transfer agent of the
certificates representing the shares of stock of the corporation. He shall
maintain a stock transfer book, the stubs in which shall set forth among other
things, the names and addresses of the holders of all issued shares of the
corporation, the number of shares held by each, the certificate numbers
representing such shares, the date of issue of the certificates representing
such shares, and whether or not such shares originate from original issue or
from transfer. Subject to Section 3.7, the names and addresses of the
shareholders as they appear on the stubs of the stock transfer book shall be
conclusive evidence as to who are the shareholders of record and as such
entitled to receive notice of the meetings of shareholders; to vote at such
meetings; to examine the list of the shareholders entitled to vote at meetings;
to receive dividends; and to own, enjoy and exercise any other property or
rights deriving from such shares against the corporation. Each shareholder shall
be responsible for notifying the Secretary in writing of any change in his name
or address and failure so to do will relieve the corporation, its directors,
officers and agents, from liability for failure to direct notices or other
documents, or pay over or transfer dividends or other property or rights, to a
name or address other than the name and address appearing on the stub of the
stock transfer book.
2.7 Close of Transfer Book and 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 entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose, the
Board of Directors may provide that the stock transfer books shall be closed for
a stated period, but not to exceed, in any case, fifty days. If the stock
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 stock 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 stock
transfer books are not closed and no record date is fixed for the determination
of shareholders entitled to notice of or to vote at a meeting 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.
ARTICLE III
SHAREHOLDERS AND MEETINGS THEREOF
3.1 Shareholders of Record. Only shareholders of record on the books of the
corporation shall be entitled to be treated by the corporation as holders in
fact of the shares standing in their respective names, and the corporation shall
not be bound to recognize any equitable or other claim to, or interest in, any
shares on the part of any other person, firm or corporation, whether or not it
shall have express or other notice thereof, except as expressly provided by the
laws of Colorado.
3.2 Meetings. Meetings of shareholders shall be held at the principal
office of the corporation, or at such other place as specified from time to time
by the Board of Directors. If the Board of Directors shall specify another
location such change in location shall be recorded on the notice calling such
meeting.
3.3 Annual Meeting. In the absence of a resolution of the Board of
Directors providing otherwise, the annual meeting of shareholders of the
corporation for the election of directors, and for the transaction of such other
business as may properly come before the meeting, shall be held at such time as
may be determined by Board of Directors by resolution in conformance with
Colorado law. If the election of Directors shall not be held on the day so
designated for any annual meeting of the shareholders, 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.
3.4 Special Meetings. Special meetings of shareholders, for any purpose or
purposes, unless otherwise prescribed by statute, may be called by the
President, the Board of Directors, the holders of not less than one-tenth of all
the shares entitled to vote at the meeting, or legal counsel of the corporation
as last designated by resolution of the Board of Directors.
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3.5 Notice. Written notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered unless otherwise prescribed by statute not less
than ten days nor more than fifty days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the Secretary,
or the officer or person calling the meeting to each shareholder of record
entitled to vote at such meeting; except that, if the authorized shares are to
be increased, at least thirty days' notice shall be given, and if the sale of
all or substantially all of the corporation's assets is to be voted upon, at
least twenty days' notice shall be given. Any shareholder may waive notice of
any meeting. Notice to shareholders of record, if mailed, shall be deemed given
as to any shareholder of record, 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, but if three successive
letters mailed to the last-known address of any shareholder of record are
returned as undeliverable, no further notices to such shareholder shall be
necessary, until another address for such shareholder is made known to the
corporation.
3.6 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.
3.7 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 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
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held, 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 for any purpose germane to the
meeting 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.
3.8 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 transacted which might have been 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.
3.9 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 Article of Incorporation or these Bylaws.
3.10 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
three years from the date of its execution, unless otherwise provided in the
proxy.
3.11 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.
3.12 Voting of Shares by Certain Holders. 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
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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 pledgee, and
thereafter the pledgee 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 after the date on
which written notice of redemption has been mailed to shareholders and a sum
sufficient to redeem such shares has been irrevocably deposited or set aside to
pay the redemption price to the holders of the shares upon surrender of
certificates therefor.
3.13 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.
3.14 Voting by Ballot. Voting on any question or in any election may be by
voice vote unless the presiding officer shall order or any shareholder shall
demand that voting be by ballot.
3.15 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 principal among any number of candidates.
ARTICLE IV
DIRECTORS, POWERS AND MEETINGS
4.1 Board of Directors. The business and affairs of the corporation shall
be managed by a board of not less than two (2) nor more than seven (7)
directors; except that there shall be only as many directors as there are
shareholders in the event the outstanding shares are held of record by fewer
than two shareholders. Directors need not be shareholders of the corporation or
residents of the State of Colorado and who shall be elected at the annual
meeting of shareholders or some adjournment thereof. Directors shall hold office
until the next succeeding annual meeting of shareholders and until their
successors shall have been elected and shall qualify. The Board of Directors may
increase or decrease, to not less than two (2) nor more than seven (7), the
number of directors by resolution.
4.2 Regular Meetings. A regular, annual meeting of the Board of Directors
shall be held at the same place as, and immediately after, the annual meeting of
shareholders, and no notice shall be required in connection therewith. The
annual meeting of the Board of Directors shall be for the purpose of electing
officers and the transaction of such other business as may come before the
meeting. The Board of Directors may provide, by resolution, the time and place,
either within or without the State of Colorado, for the holding of additional
regular meetings without other notice than such resolution.
4.3 Special Meetings. Special meetings of the Board of Directors may be
called by or at the request of the President or any two directors. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the State of Colorado, as the place for
holding any special meeting of the Board of Directors called by them.
4.4 Notice. Written notice of any special meeting of directors shall be
given as follows:
(a) By mail to each director at his business address at least three
days prior to the meeting; or
(b) By personal delivery or telegram at least twenty-four hours prior
to the meeting to the business address of each director, or in the event
such notice is given on a Saturday, Sunday or holiday, to the residence
address of each director. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, so addressed, with
postage thereon prepaid. If notice be given by telegram, such notice shall
be deemed to be delivered when the telegram is delivered to the telegraph
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company. Any director may waive notice of any meeting. The attendance of a
director at any meeting shall constitute a waiver of notice of such
meeting, except where a director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the Board of Directors
need be specified in the notice or waiver of notice of such meeting.
4.5 Participation by Electronic Means. Except as may be otherwise provided
by the Articles of Incorporation or Bylaws, members of the Board of Directors or
any committee designated by such Board may participate in a meeting of the Board
or committee by means of conference telephone or similar communications
equipment by which all persons participating in the meeting can hear each other
at the same time. Such participation shall constitute presence in person at the
meeting.
4.6 Quorum and Manner of Acting. A quorum at all meetings of the Board of
Directors shall consist of a majority of the number of directors then holding
office, but a smaller number may adjourn from time to time without further
notice, until a quorum is secured. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, unless the act of a greater number is required by the laws of the
State of Colorado or by the Articles of Incorporation or these Bylaws.
4.7 Organization. The Board of Directors shall elect a chairman to preside
at each meeting of the Board of Directors. The Board of Directors shall elect a
Secretary to record the discussions and resolutions of each meeting.
4.8 Presumption of Assent. A director of the corporation who is present at
a meeting of the Board of Directors at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as the Secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
4.9 Informal Action By Directors. Any action required or permitted to be
taken by the Board of Directors, or a committee thereof, at a meeting may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all the directors or all the committee members
entitled to vote with respect to the subject matter thereof.
4.10 Vacancies. Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the Board of Directors. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office,
and shall hold such office until his successor is duly elected and shall
qualify. Any directorship to be filled by reason of an increase in the number of
directors shall be filled by the affirmative vote of a majority of the directors
then in office or by an election at an annual meeting, or at a special meeting
of shareholders called for that purpose. A director chosen to fill a position
resulting from an increase in the number of directors shall hold office only
until the next election of Directors by the shareholders.
4.11 Compensation. By resolution of the Board of Directors and irrespective
of any personal interest of any of the members, each director may be paid his
expenses, if any, of attendance at each meeting of the Board of Directors, and
may be paid a stated salary as director or a fixed sum for attendance at each
meeting of the Board of Directors or both. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
4.12 Removal of Directors. Any director or directors of the corporation may
be removed at any time, with or without cause, in the manner provided in the
Colorado Corporation Code.
4.13 Resignations. A director of the corporation may resign at any time by
giving written notice to the Board of Directors, President or Secretary of the
corporation. The resignation shall take effect upon the date of receipt of such
notice, or at any later period of time specified therein. The acceptance of such
resignation shall not be necessary to make it effective, unless the resignation
requires it to be effective as such.
4.14 General Powers. The business and affairs of the corporation shall be
managed by the Board of Directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
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the Articles of Incorporation or by these Bylaws directed or required to be
exercised or done by the shareholders. The directors shall pass upon any and all
bills or claims of officers for salaries or other compensation and, if deemed
advisable, shall contract with officers, employees, directors, attorneys,
accountants, and other persons to render services to the corporation.
ARTICLE V
OFFICERS
5.1 Term and Compensation. The elective officers of the corporation shall
consist of at least a President, a Secretary and a Treasurer, each of whom shall
be eighteen years or older and who shall be elected by the Board of Directors.
Unless removed in accordance with procedures established by law and these
Bylaws, the said officers shall serve until the next succeeding annual meeting
of the Board of Directors and until their respective successors are elected and
shall qualify. Any number of offices, but not more than two, may be held by the
same person at the same time, except that one person may not simultaneously hold
the offices of President and Secretary. The Board may elect or appoint such
other officers and agents as it may deem advisable, who shall hold office during
the pleasure of the Board.
5.2 Powers. The officers of the corporation shall exercise and perform the
respective powers, duties and functions as are stated below, and as may be
assigned to them by the Board of Directors.
(a) The President shall be the chief executive officer of the
corporation and shall, subject to the control of the Board of Directors,
have general supervision, direction and control of the business and
officers of the corporation. He shall preside, when present, at all
meetings of the shareholders and of the Board of Directors unless a
different chairman of such meetings is elected by the Board of Directors.
(b) In the absence or disability of the President, the Vice-President
or Vice-Presidents, if any, in order of their rank as fixed by the Board of
Directors, and if not ranked, the Vice-Presidents in the order designated
by the Board of Directors, shall perform all the duties of the President,
and when so acting shall have all the powers of, and be subject to all the
restrictions on the President. Each Vice-President shall have such other
powers and perform such other duties as may from time to time be assigned
to him by the President or the Board of Directors.
(c) The Secretary shall keep accurate minutes of all meetings of the
shareholders and the Board of Directors unless a different Secretary of
such meetings is elected by the Board of Directors. He shall keep, or cause
to be kept a record of the shareholders of the corporation and shall be
responsible for the giving of notice of meetings of the shareholders or the
Board of Directors. The Secretary shall be custodian of the records and of
the seal of the corporation and shall attest the affixing of the seal of
the corporation when so authorized. The Secretary or Assistant Secretary
shall sign all stock certificates, as described in Section 2.2 hereof. The
Secretary shall perform all duties commonly incident to his office and such
other duties as may from time to time be assigned to him by the President
or the Board of Directors.
(d) An Assistant Secretary may, at the request of the Secretary, or in
the absence or disability of the Secretary, perform all of the duties of
the Secretary. He shall perform such other duties as may be assigned to him
by the President or by the Secretary.
(e) The Treasurer, subject to the order of the Board of Directors,
shall have the care and custody of the money, funds, valuable papers and
documents of the corporation. He shall keep accurate books of accounts of
the corporation's transactions, which shall be the property of the
corporation, and shall render financial reports and statements of condition
of the corporation when so requested by the Board of Directors or
President. The Treasurer shall perform all duties commonly incident to his
office and such other duties as may from time to time be assigned to him by
the President or the Board of Directors. In the absence or disability of
the President and Vice-President or Vice-Presidents, the Treasurer shall
perform the duties of the President.
(f) An Assistant Treasurer may, at the request of the Treasurer, or in
the absence or disability of the Treasurer, perform all of the duties of
the Treasurer. He shall perform such other duties as may be assigned to him
by the President or by the Treasurer.
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5.3 Compensation. All officers of the corporation may receive salaries or
other compensation if so ordered and fixed by the Board of Directors. The Board
of Directors shall have authority to fix salaries in advance for stated periods
or render the same retroactive as the Board may deem advisable.
5.4 Delegation of Duties. In the event of absence or inability of any
officer to act, the Board of Directors may delegate the powers or duties of such
officer to any other officer, director or person whom it may select.
5.5 Bonds. If the Board of Directors by resolution shall so require, any
officer or agent of the corporation shall give bond to the corporation in such
amount and with such surety as the Board of Directors may deem sufficient,
conditioned upon the faithful performance of their respective duties and
offices.
5.6 Removal. Any officer or agent may be removed by the Board of Directors
or by the executive committee, if any, whenever in its judgment the best
interest of the corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not, of itself, create
contract rights.
ARTICLE VI
FINANCE
6.1 Reserve Funds. The Board of Directors, in its uncontrolled discretion,
may set aside from time to time, out of the net profits or earned surplus of the
corporation, such sum or sums as it deems expedient as a reserve fund to meet
contingencies, for equalizing dividends, for maintaining any property of the
corporation, and for any other purpose.
6.2 Banking. The moneys of the corporation shall be deposited in the name
of the corporation in such bank or banks or trust company or trust companies, as
the Board of Directors shall designate, and may be drawn out only on checks
signed in the name of the corporation by such person or persons as the Board of
Directors, by appropriate resolution, may direct. Notes and commercial paper,
when authorized by the Board, shall be signed in the name of the corporation by
such officer or officers or agent or agents as shall thereunto be authorized
from time to time.
ARTICLE VII
DIVIDENDS
Subject to the provisions of the Articles of Incorporation and the laws of
the State of Colorado, the Board of Directors may declare dividends whenever,
and in such amounts, as in the Board's opinion the condition of the affairs of
the corporation shall render such advisable.
ARTICLE VIII
CONTRACTS, LOANS AND CHECKS
8.1 Execution of Contracts. Except as otherwise provided by statute or by
these Bylaws, the Board of Directors may authorize any officer or agent of the
corporation to enter into any contract, or execute and deliver any instrument in
the name of, and on behalf of the corporation. Such authority may he general or
confined to specific instances and, unless so authorized, no officer, agent or
employee shall have any power to bind the corporation for any purpose, except as
may be necessary to enable the corporation to carry on its normal and ordinary
course of business.
8.2 Loans. No loans shall be contracted on behalf of the corporation and no
negotiable paper shall be issued in its name unless authorized by the Board of
Directors. When so authorized, any officer or agent of the corporation may
effect loans and advances at any time for the corporation from any bank, trust
company or institution, firm, corporation or individual. An agent so authorized
may make and deliver promissory notes or other evidence of indebtedness of the
corporation and may mortgage, pledge, hypothecate or transfer any real or
personal property held by the corporation as security for the payment of such
loans. Such authority, in the Board of Directors' discretion, may be general or
confined to specific instances.
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8.3 Checks. Checks, notes, drafts and demands for money or other evidence
of indebtedness issued in the name of the corporation shall be signed by such
person or persons as designated by the Board of Directors and in the manner the
Board of Directors prescribes.
8.4 Deposits. All funds of the corporation not otherwise employed shall be
deposited from time to time to the credit of the corporation in such banks,
trust companies or other depositories as the Board of Directors may select.
ARTICLE IX
FISCAL YEAR
The fiscal year of the corporation shall be the year adopted by resolution
of the Board of Directors.
ARTICLE X
AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by a majority of the Directors present at any meeting of the Board of
Directors of the corporation at which a quorum is present.
ARTICLE XI
EXECUTIVE COMMITTEE
11.1 Appointment. The Board of Directors by resolution adopted by a
majority of the full Board, may designate two or more of its members to
constitute an executive committee. The designation of such committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed by law.
11.2 Authority. The executive committee, when the Board of Directors is not
in session shall have and may exercise all of the authority of the Board of
Directors except to the extent, if any, that such authority shall be limited by
the resolution appointing the executive committee and except also that the
executive committee shall not have the authority of the Board of Directors in
reference to amending the Articles of Incorporation, adopting a plan of merger
or consolidation, recommending to the shareholders the sale, lease or other
disposition of all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the corporation or a
revocation thereof, or amending the Bylaws of the corporation.
11.3 Tenure and Qualifications. Each member of the executive committee
shall hold office until the next regular annual meeting of the Board of
Directors following his designation.
11.4 Meetings. Regular meetings of the executive committee maybe held
without notice at such time and places as the executive committee may fix from
time to time by resolution. Special meetings of the executive committee may be
called by any member thereof upon not less than one day's notice stating the
place, date and hour of the meeting, which notice may be written or oral, and if
mailed, shall be deemed to be delivered when deposited in the United States mail
addressed to the member of the executive committee at his business address. Any
member of the executive committee may waive notice of any meeting and no notice
of any meeting need be given to any member thereof who attends in person. The
notice of a meeting of the executive committee need not state the business
proposed to be transacted at the meeting.
11.5 Quorum. A majority of the members of the executive committee shall
constitute a quorum for the transaction of business at any meeting thereof, and
action of the executive committee must be authorized by the affirmative vote of
a majority of the members present at a meeting at which a quorum is present.
11.6 Informal Action by Executive Committee. Any action required or
permitted to be taken by the executive committee at a meeting may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the members of the committee entitled to vote with
respect to the subject matter thereof.
11.7 Vacancies. Any vacancy in the executive committee may be filled by a
resolution adopted by a majority of the full Board of Directors.
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11.8 Resignations and Removal. Any member of the executive committee may be
removed at any time with or without cause by resolution adopted by a majority of
the full Board of Directors. Any member of the executive committee may resign
from the executive committee at any time by giving written notice to the
President or Secretary of the Corporation, and unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
11.9 Procedure. The executive committee shall elect a presiding officer
from its members and may fix its own rules of procedure which shall not be
inconsistent with these Bylaws. It shall keep regular minutes of its proceedings
and report the same to the Board of Directors for its information at the meeting
thereof held next after the proceedings shall have been taken.
ARTICLE XIII
EMERGENCY BYLAWS
The Emergency Bylaws provided for in this Article shall be operative during
any emergency in the conduct of the business of the corporation resulting from
an attack on the United States or any nuclear or atomic disaster,
notwithstanding any different provision in the preceding articles of the Bylaws
or in the Articles of Incorporation of the corporation or in the Colorado
Corporation Code. To the extent not inconsistent with the provisions of this
Article, the Bylaws provided in the preceding articles shall remain in effect
during such emergency and upon its termination the Emergency Bylaws shall cease
to be operative.
During any such emergency:
(a) A meeting of the Board of Directors may be called by any officer
or director of the corporation. Notice of the time and place of the meeting
shall be given by the person calling the meeting to such of the directors
as it may be feasible to reach by any available means of communication.
Such notice shall be given at such time in advance of the meeting as
circumstances permit in the judgment of the person calling the meeting.
(b) At any such meeting of the Board of Directors, a quorum shall
consist of the number of directors in attendance at such meeting.
(c) The Board of Directors, either before or during any such
emergency, may, effective in the emergency, change the principal office or
designate several alternative principal offices or regional offices, or
authorize the officers so to do.
(d) The Board of Directors, either before or during any such
emergency, may provide, and from time to time modify, lines of succession
in the event that during such an emergency any or all officers or agents of
the corporation shall for any reason be rendered incapable of discharging
their duties.
(e) No officer, director or employee acting in accordance with these
Emergency Bylaws shall be liable except for willful misconduct.
(f) These Emergency Bylaws shall be subject to repeal or change by
further action of the Board of Directors or by action of the shareholders,
but no such repeal or change shall modify the provisions of the next
preceding paragraph with regard to action taken prior to the time of such
repeal or change. Any amendment of these Emergency Bylaws may make any
further or different provision that may be practical and necessary for the
circumstances of the emergency.
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EXHIBIT 4.1
SPECIMEN COMMON STOCK CERTIFICATE
CONTENTS:
State of Incorporation
Name of Company
Number of authorized shares of common stock Name of Individual
Shareholder Number of shares owned by individual shareholder
Fully paid and non-assessable shares
Date of issuance of certificate
Signature of Secretary
Signature of President
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