UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Consolidated Data Inc.
(Exact name of Small Business Issuer as specified in its charter)
Colorado, USA 84-1343219
- ------------------------------ ---------------------------------
State or other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization
6912 220th, Mountlake Terrace, Washington 98043
-----------------------------------------------
(Address of principal executive offices)
Issuer's Telephone Number, (800) 256-3954
----------------
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Shares, with no par value.
(Title of Class)
Page 1 of xxxxx
Index to Exhibits on Page 41
<PAGE>
CONSOLIDATED DATA, INC.
Form 10-SB
TABLE OF CONTENTS
PART I
Page
Item 1. Description of Business............................. 3
Item 2. Management's Discussion and Analysis or Plan of
Operation........................................... 27
Item 3. Description of Property............................. 30
Item 4. Security Ownership of Certain Beneficial Owners
and Management..................................... 30
Item 5. Directors, Executive Officers, Promoters
and Control Persons................................. 32
Item 6. Executive Compensation.............................. 35
Item 7. Certain Relationships and Related Transactions...... 36
Item 8. Description of Securities........................... 36
PART II
Item 1. Market Price Of And Dividends on the Registrant's
Common Equity and Related Stockholder Matters....... 40
Item 2. Legal Proceedings................................... 41
Item 3. Changes in and Disagreements with Accountants...... 41
Item 4. Recent Sales of Unregistered Securities............ 41
Item 5. Indemnification of Directors and Officers.......... 41
PART F/S
Item 1. Financial Statements................................ 42
PART III
Item 1. Index to Exhibits.................................. 43
Signatures......................................... 44
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Introduction
Consolidated Data Inc. (hereinafter is also referred to as the "Company" and/or
the "Registrant") is a company in the development phase. The Company was
incorporated July 14, 1995 under the laws of the State of Colorado and was
originally known as Attache Holdings, Ltd.
The Company was inactive until it acquired Contractor's Directory on April 17,
1997 via a reverse merger. In November of 1998, Attache Holdings Ltd. Became
Consolidated Data, Inc. From 1997 to the first quarter of 1999, the Company was
exclusively involved in the development of an E Commerce business designed to
fill the needs of the construction industry. Development included a web site
called "Contractors Directory.Com". Use of Contractors Directory allows public
information to be downloaded, via the internet, and reformatted for ease of use
by contractors and suppliers. This information includes credit information and
information pertaining to building permits.
In February 1999 the Company purchased a software system called
"(yourbank)Online" which is now its primary asset. The Company's current
business involves the marketing, sale and support of this software to members of
the banking industry and the operation of Contractors Directory.
The Company's principal office is located at 6912 220th, Mountlake Terrace,
Washington 98043. The contact person is Mr. Pakie Plastino, Chairman and
Director. The telephone number is (800) 256-3954; the facsimile number is (425)
776-1855. The Company currently maintains two websites which are
yourbankonline.com and contractors-directory.com.
The Company's authorized capital includes 50,000,000 shares of common stock with
no par value and 5,000,000 shares of non-voting preferred stock with no par
value. As of the close of the Company's latest fiscal year, September 30, 1998,
there were 5,256,000 shares of common stock outstanding and 100,000 shares of
preferred shares outstanding. As of March 31, 1999, there were 7,581,000 shares
of common stock outstanding and 100,000 shares of preferred shares outstanding.
The Company's common stock trades on the Over-the-Counter Electronic Bulletin
Board with the symbol "CSDD".
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The information in this Registration Statement is current as of July 15, 1999,
unless otherwise indicated.
Historical Corporate Development
The Company was incorporated in Colorado, USA on July 14, 1995 under the name
Attache Holdings, Ltd.
The organization meeting of the Company and the initial directors meeting of the
Company was held on April 24, 1996. At this meeting it was decided that the
fiscal year of the Company would end on December 31st of each calendar year and
forms of Common and Preferred Stock certificates were presented. It was also
agreed that the Company issue up to 100,000 shares of its preferred stock for an
aggregate of up to $10,000 to Tudor Trading Limited, Casa Bella Holdings, Inc.
and EDR Financial, Inc. On May 24, 1996, the Company issued the preferred stock.
Also at this meeting, Clark Burch was appointed as President of the Company and
Gary Clark was appointed as Secretary of the Company.
A meeting of the Board of Directors was held on April 28, 1996 and it was
resolved that the Company offer and sell up to 10,000,000 shares of its common
stock, in an offering under the exemptions to registration provided under
Section 3(b), Regulation D, Rule 504 of the Securities Act of 1933, as amended
and under the exemption to registration under Section 11-51-308(1)(p) of the
Colorado Securities Act.
Pursuant to a prospectus dated May 31, 1996, the Company sold 1,701,000 common
shares for an aggregate purchase price of $850.50.
Pursuant to an offering in October, 1997, the Company sold 80,000 shares of
common stock for a aggregate purchase price of $10,000.
A special meeting of the Directors of the Company was held on March 14, 1997 at
which time it was resolved that the Company acquire the marketing rights to
Contractor's Directory for the states of Colorado, New Mexico and California in
exchange for 1,500,000 shares of its common stock which was restricted.
Effective April 20, 1997 the Company assumed all worldwide rights and ownership
to the Contractor's Directory by acquiring 100% of the issued and outstanding
common stock of Contractor's Directory in exchange for 1,000,000 common shares
of the Company's stock which was restricted.
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On March 20, 1997, Pakie V. Plastino, the current Chairman of the Company, was
appointed to the Board of Directors and was also appointed President of the
Company. Also on this date, William D. Doehne, the current Chief Operating
Officer of the Company, was appointed to the Board of Directors and was also
appointed Secretary and Treasurer. The Company's corporate headquarters was also
changed to its current location in Mountlake Terrace, Washington.
BUSINESS
Banking Software
Historical Development of (yourbank)Online Software
The Company's primary business involvement today involves the marketing, sale
and support of a banking software product called "(yourbank)Online" to members
of the banking industry.
This software system was originally developed by River City Bank of Sacramento,
California in 1996 and 1997. River City Bank began offering a range of online
services, resulting from the "(yourbank)Online" product in September of 1997.
The system was developed internally with a goal to offer state-of-the-art
service to River City Bank's customers.
Following the successful implementation at River City Bank, management of that
bank licensed and installed the system in three additional community banks
located in northern California. These banks were Citizens Bank, Tri-Counties
Bank and Auburn National Bank. River City Bank also acted as a service bureau
for these banks. (i.e.: provided them computing capabilities.)
In 1998, management at River City Bank decided to focus on the bank's operations
and not expand the online banking system to additional banks.
DTEK Corporation, a privately held company located in Boise, Idaho, purchased
the software from River City Bank of Sacramento, California in September 1998
for total consideration of $410,000. Payment was in the form of a $60,000
downpayment and a note for $350,000 due to River City Bank in September 1999.
Prior to the purchase by the Company of the (yourbank)Online software from DTEK,
DTEK granted a license in the software to Global Payment Systems Inc., a
subsidiary of National Data Inc. The license is a perpetual worldwide
non-exclusive irrevocable transferable right and license to the (yourbank)Online
software. Global Payment Systems Inc. has the right to modify, customize,
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sublicense, resale and distribute the system. Global can also transfer its
rights to a third party.
In consideration of this assignment, Global Payment Systems Inc. agreed to pay
DTEK 50% of the first $1,300,000 in license fees received, plus commissions,
plus a final lump sum of $50,000. There is no certain date for the payment.
Global Payment Systems Inc. also agreed to operate and maintain the existing
(yourbank)Online server sites. Global Payment Systems Inc. currently receives
the monthly fee of $1100 paid by the three banks other than River City Bank
(e.g. Citizens Bank, Tri-Counties Bank and Auburn Bank) as licensing fees for
the system.
In February 1999 the Company purchased this software system and all rights
related to it from DTEK Corporation. Consideration for the purchase was
$10,000,000 payable as follows:
a. $4,000,000 paid by the issuance of 2,000,000 common shares of the
Company's common restricted stock at $2.00 per share;
b. $6,000,000 paid at the rate of $10,000 per license use or the stock
equivalent at the rate of $5.00 per share of the Company's restricted
common stock or 1,200,000 shares. The cash or the stock must be paid by
the Company within twelve months from the date of the contract or by
March 10, 2000;
On April 12, 1999, the Company authorized and did issue 1,200,000 shares of its
restricted common stock in full satisfaction of its agreements with DTEK
Corporation.
As part of the agreement with DTEK Corporation, DTEK Corporation has assigned to
the Company all rights and title to an existing software license between DTEK
Corporation and Global Payment Systems, LLC which shall include payments from
River City Bank of Sacramento, subject to DTEK Corporation receiving the balance
of the initial licensing revenues as compensation for its consulting and
support. All residual income will go to the Company. Management expects this
income to be insignificant.
Description of (yourbank)Online Software
- ----------------------------------------
(yourbank)Online is a browser-based solution designed and developed to help
banks provide a full range of online banking products and services to their
commercial and retail customers. The system allows the bank's customers to do
more than view balances and transfer money. It gives users the ability to manage
their financial activity without leaving the bank's website, thus
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creating a strong financial relationship between the bank and its customers.
The modular design and flexible technology of (yourbank)Online can be changed
quickly and easily to accommodate the needs of all types of customers. This
allows the banks to tailor online services to different segments of their
customer bases.
Key features of (yourbank)Online include the following:
a. Customizable User Interface: The bank's customer can choose screen
colors, page lengths, and simplified interface options;
b. Transaction Editing: Bank's customers can modify the description
reference of a transaction to better explain its purpose. They can also
categorize the transaction for reporting purposes;
c. Payment Scheduling and Bill Payment: Bank's customers can schedule
payments to be performed at later dates. The system incorporates a pay
anyone approach, which doesn't limit the customer to specific payees;
d. User Defined Reports: Several detailed and summary reports provided can
be configured in a variety of formats according to the bank's customers
specific preferences;
e. Stop Payment Requests: Back office staff processes and generates a
confirmation letter to the customer for extended stop payment
authorization. (Limited only to what is available through the host
system.);
f. Custom Information Reporting: AR cleared transaction detail, including
extended descriptions for ATM and Debit and Credit Card transactions;
g. Funds Transfer Between Linked Accounts;
h. 24 Hour Access to Statements: Statements can be generated at anytime
throughout the month. The system maintains the statement cycle
information specified within the host system;
i. User Configurable Transaction History: The amount of history maintained
is configurable on the user level.
The software allows banks to provide a number of user-specific financial
services and products to their customers through a dynamic interface between
traditional backend systems of the bank and the bank's customers. The base of
the software is a data warehouse that collects and distributes information
between the bank and the customer. The data warehouse can be linked to the
customer via the Internet, intranet, or Web TV. The design of the data warehouse
allows banks to provide services by user or by group of users and deliver the
information via a medium that is appropriate for each user or group of users. On
the back end,
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banks can choose to link virtually any financial product or service to the data
warehouse. This includes standard balance and account information to insurance
services, loan information, credit and debit card information, and investment
services.
Additionally, the technology can be used to seamlessly connect existing IT
systems for automating collaborative and administrative processes to provide
managers and key personnel with valuable information for decision making and
targeted marketing efforts.
Security
(yourbank)Online uses US grade encryption of 128 bit-key Secure Socket Layer
(SSL) standard designed by Netscape Corporation for secure Internet
conversations. This encryption, along with unique Sign-On ID and password
security front-end, provides the foundation for a secure, reliable interface. In
addition, a customer-selected name rather than an account number references
customer accounts. This ensures the privacy of account information should an
unauthorized individual gain access.
Individual security control levels are maintained at the customer level by the
financial institution, providing the ability to isolate certain functions of the
system to different levels of security. An example of this implementation would
be to set the security requirement for bill-pay higher than other activities.
This would allow the ability to track bill-pay enabled customers for billing
purposes. Another level could be given to categorization capabilities, thus
providing a way of controlling the customer capabilities based on subscription.
(yourbank)Online accommodates 99 user specific levels of security.
Encrypted Messaging provides security for sensitive communication between the
customer and the bank and detailed Transaction Logging (Audit Trail) is
incorporated into (yourbank)Online. All activity is logged by date and time to a
log file that can be analyzed to track individual activity by bank personnel and
end-users.
The entire system is maintained through a single interface with an
administrator-privileged account. The system can be locked down for crisis
management or unscheduled modification requirements. This eliminates the need
for additional applications and management tools and allows an administrator to
control access when the system is available for use from anywhere in the world.
When locked, customers received a customizable screen informing them of the
system availability.
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The software utilizes a centralized data warehouse concept of providing
functional interfaces between the bank and its customers. Users use a front-end
interface to access a subset of information collected and maintained separately
from the bank's core system, eliminating virtually all risk of tampering with
vital data.
Database
(yourbank) Onlines' architecture utilizes current Microsoft established
standards for Client/Server access. The host system runs on an Intel platform
microcomputer running a Microsoft NT Server 4.0 operating system. The system
runs as a subset of Microsoft's Internet Information Server 4.0 Web Server
software, which is shipped with NT Server. A collection of ODBC compliant
databases and Active Server scripts are incorporated on the server which provide
the foundation for the (yourbank)Online system. Five application modules combine
to maintain and update the ODBC databases. These modules are used to maintain
timed executions, query the host system, update and modify the local databases
with the account detail information, update and modify the local databases with
the cleared transaction information, and collect, process, and monitor scheduled
payments.
The User Interface is provided through several Active Server scripts and graphic
files maintained on the Microsoft NT server. These scripts are activated through
customer requests and combine with database information to produce the bulk of
the user screens and input forms within (yourbank)Online. These scripts and
graphic files provide almost unlimited flexibility and can be modified to
accommodate individual interests and presentation specific to the environment.
They can also be modified to accommodate user controllable variations. Screen
colors, information placement, navigation control visuals and placements can be
modified to give the interface an entirely different and unique look and feel by
individual and by group.
Bank administrative personnel and customers gain access to the (yourbank)Online
system through a standard commercial browser over the Internet. This allows the
user to gain access from virtually any system that provides an Internet access
point. This can be a home PC, Office PC, laptop, or even other Internet capable
devices such as Internet Terminals, Web enabled television sets, Internet ready
telephones, etc.
Bill-pay requests are warehoused within the (yourbank)Online system up to the
date of processing, allowing the end-user full control of the scheduled
transaction. Following processing, bill-pay transactions are collected in a file
and can be sent to a third party bill payment processor, i.e. Global Payment
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Systems, Checkfree, etc., or can be processed internally on Global's PayLink
bill payment module on behalf of the account holder. The flexibility of the
PayLink module enables the bank to not only fulfill in-house bill pay processing
but also leverage the technology to create any type of payment including
cashiers checks and accounts payables checks.
The following table summarizes the technical specifications of (yourbank)Online:
<TABLE>
- ---------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Bank Features Modular Design Yes
- ---------------------------- -------------------------------------- --------------------------------------
Overviews Automated Billing for Bank Yes
- ---------------------------- -------------------------------------- --------------------------------------
Voice Response Module Can be accommodated
- ---------------------------- -------------------------------------- --------------------------------------
Credit Card Interface Yes (optional)
- ---------------------------- -------------------------------------- --------------------------------------
Administrative Options According to user rights, different
administrators can maintain the entire
system from the administrative area.
- ---------------------------- -------------------------------------- --------------------------------------
Set the interface by user.
- ---------------------------- -------------------------------------- --------------------------------------
Maintain automated billing for each
customer including: grace periods,
promotional pricing and per
transaction pricing.
- ---------------------------- -------------------------------------- --------------------------------------
Send broadcast or user-specific
e-mails.
- ---------------------------- -------------------------------------- --------------------------------------
Turn on and off specific modules,
features, and functionality by
customer.
- ---------------------------- -------------------------------------- --------------------------------------
Setup, modify and delete customers.
- ---------------------------- -------------------------------------- --------------------------------------
Audit Trail Reporting
- ---------------------------- -------------------------------------- --------------------------------------
Information Programming Microsoft Active Data Objects
Technical
- ---------------------------- -------------------------------------- --------------------------------------
Hardware Platform (bank) Windows NT
- ---------------------------- -------------------------------------- --------------------------------------
Hardware Platform (user) Platform Independent
- ---------------------------- -------------------------------------- --------------------------------------
Software (bank) Any Internet Browser
- ---------------------------- -------------------------------------- --------------------------------------
Software (user) Any Internet Browser
- ---------------------------- -------------------------------------- --------------------------------------
Communication Network Internet access, private
dial-up access.
- ---------------------------- -------------------------------------- --------------------------------------
Security Security Type Secure Socket Layer
- ---------------------------- -------------------------------------- --------------------------------------
Encryption Independent encryption allows full
range from 40 bit to 128 bit from any
site certificate authority.
- ---------------------------- -------------------------------------- --------------------------------------
User Security Sign On ID and Pass Code
- ---------------------------- -------------------------------------- --------------------------------------
User Security Levels 99 levels of security
- ---------------------------- -------------------------------------- --------------------------------------
End User Account Access Checking, Savings,
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Functionality Loans, CD and Others
- ---------------------------- -------------------------------------- --------------------------------------
Real-time Access( bank specified Yes
timing)
- ---------------------------- -------------------------------------- --------------------------------------
Transaction Categorization Yes
- ---------------------------- -------------------------------------- --------------------------------------
Transaction History Unlimited
- ---------------------------- -------------------------------------- --------------------------------------
Research/Reporting Capabilities Date Range, Deposits/Credits,
Category of Transaction, Check, Stop
Payments, Number of Withdrawals
- ---------------------------- -------------------------------------- --------------------------------------
Reports Available Category List, Category
Summary, Category Detail, Payee List,
Electronic Statement, Transaction
Detail, Export Transaction and Custom
(user definable) Reporting.
- ---------------------------- -------------------------------------- --------------------------------------
Export Options Quicken, MS Money and ASCII (custom)
- ---------------------------- -------------------------------------- --------------------------------------
Account Transfers DDA/TDA, Loans/LOC's and Credit card
- ---------------------------- -------------------------------------- --------------------------------------
E-mail Yes
- ---------------------------- -------------------------------------- --------------------------------------
Event Notification E-mail notification
- ---------------------------- -------------------------------------- --------------------------------------
Pager notification
- ---------------------------- -------------------------------------- --------------------------------------
Check Imaging Yes
- ---------------------------- -------------------------------------- --------------------------------------
Bill Payment Yes
- ---------------------------- -------------------------------------- --------------------------------------
Financial Institution Minimum Hardware Requirements: Intel Recommended: Intel Pentium II 266
Pentium 166 Mhz, 128 Mb RAM, 4 Gig Mhz duel processor, 512 Mb RAM, 18
Hard Drive, 24 Gig Tap to Storage Gig Hard Drive, 24 Gig Tap to
and Seagate Backup Exec Storage and Seagate Backup Exec
- ---------------------------- -------------------------------------- --------------------------------------
Software Reqirements: Microsoft NT
Server 4.0 w/Internet Information
Server 4.0 and Microsoft SQL Server
6.5
- ---------------------------- -------------------------------------- --------------------------------------
End-User Communication Requirements Internet connection access
- ---------------------------- -------------------------------------- --------------------------------------
Platform Independent Browser depends on level of
encryption required by financial
institution
- ---------------------------- -------------------------------------- --------------------------------------
End-User Functionality Online Applications (yourbank)Online, Loans and Credit
Card
- ---------------------------- -------------------------------------- --------------------------------------
Discount Brokerage Currently in Beta test
- ---------------------------- -------------------------------------- --------------------------------------
End-User Options Change Password, Change Session
Timeout, Change Account Names,
Change basic color scheme, Change
level of interface from standard to
enhanced, Change Amount of History,
Change Lines per page and Bank
customized user options.
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- ---------------------------- -------------------------------------- --------------------------------------
Cash Management ACH origination PPD/PPD+, CCD/CCD+, CTX, Importing
capabilities, NACHA File Processing,
Multiple Company Option, State &
Federal Taxes, Customer controlled
security, Multi-level approvals,
Auto prenotes, On-Us processing,
Warehousing, File limits,
Transaction limits, Bank Controlled
offset and NACHA Import
- ---------------------------- -------------------------------------- --------------------------------------
</TABLE>
Management of the Company believes that it has created a "service bureau"
environment for its potential customers.
The Company will provide all service bureau technologies to its customers so
that they do not have to hire additional personnel, purchase additional
equipment, train personnel or devote additional development time to the project.
Management believes that this program is beneficial for the financial
institution that wants to obtain immediate Internet presence.
In this context the Company will provide to its customers the following: a
Server, Customer Service, Technical Support, Monthly Reporting, Staff & Customer
Training, Upgrades, Web Page Development and Web Hosting Services.
The Market for (yourbank)Online Software
The Internet has rapidly become a significant marketplace for buying and selling
goods and services. Management of the Company estimates that total worldwide
commerce on the Internet will grow from an estimated $32.4 billion in 1997 to an
estimated $425.7 billion in 2002. Many consumers are showing strong preferences
for transacting certain types of business over the Internet, including booking
airline tickets, trading securities and purchasing consumer products. As
consumers and companies become more familiar and comfortable with making
purchases online, this increase in knowledge and comfort level will translate
into higher interest and willingness to do their banking online.
Management believes that the Web has clearly arrived for the marketing and sales
of financial services and credit products. Some of the recent developments are
summarized as follows:
o The Internet became an accepted way to purchase a credit card. Almost 11
million people have already applied for a credit card online. At year-end
1998, one million applications per month were being submitted. NextCard
offered a credit card
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optimized for the Internet and received over 750,000 applications within
nine months of its startup.
o Fifteen million Internet users have checked mortgage and equity loan rates
online. A new loan marketplace business model has been created on the Net
where consumers apply once to receive multiple offers on their loan. These
companies are among the biggest non-credit card advertisers in search
engine loan categories
o Internet only banks appear to be flourishing. Net.B@nk, TeleBank and
Security First, the only public companies, each have a market
capitalization over $1 billion, and are valued higher than Amazon.com on a
value per customer basis. Net.B@ank claims to have 29,000 customers in
April 1999 and over $330.0 million in deposits. As many as 25 to 35
Net-only banks are expected to launch in 1999, many of them spin-offs of
existing banks.
o Banking has come to the portals. Yahoo!, AOL, MSN, and Excite have entered
into very expensive long-term agreements with major banks. Advertisements
on the portals offer mortgages, credit cards, automobile loans, savings
instruments, home equity loans and checking services.
o Bank One Corp. Chief Executive Officer John McCoy, one of the most
aggressive acquirers in the banking industry, has indicated his corporation
isn't planning any more major purchases but will instead rely on the
Internet for the bank's growth. The nation's fourth largest bank already
has arrangements with America Online Inc., Excite Inc., Yahoo! Inc., and
Microsoft to sell its credit cards.
Consumers have indicated a preference for conducting all of their financial
transactions at a single web site. River City Bank is currently running a
demonstration version of this portfolio management feature using
[yourbank]Online software.
The bank reform bill nearing passage in the U.S. Congress will allow banks, for
the first time, to integrate financial services including banking, security
trading, insurance and more. Through the internet, banks will be able to offer
one-click access to a full range of financial services, giving the customer a
much simpler and more efficient experience.
Traditional banks have been slow to add Internet banking to their services until
they could be confident that demand was sufficient to offset the added expenses.
However, the technology is changing so rapidly and new forms of competition
appearing so broadly, that banks must carefully reconsider their reluctance.
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Specific factors affecting a bank's decision to offer Online banking are:
o Customer Retention. Near the end of 1998, there were 73 million adults
using the Internet in the U.S., an increase of 30% in just twelve months.
This is 37% of the U.S. adult population. The nations' largest banks are
beginning to offer some level of online banking, and there are large
numbers of new Internet entrants into the financial markets trying to
capture traditional bank business. For banks to retain customers who
respond favorably to online technologies, they will have to provide
competing products and services. River City Bank, where the
[yourbank]Online system was developed, has achieved higher retention rates
since the system was installed.
o Service Improvements. Service levels can be enhanced significantly through
the technologies coming available, which should improve overall customer
satisfaction.
o Cross Sales Generator. The online connection gives the bank opportunities
to cross sell its other products and services much more effectively than
through the mail or in the branch.
o New Fee-Based or Revenue Sharing Revenue Streams. Banks will have the
ability to add new services to their product offerings that can be sourced
from outside providers. Examples are mortgage lending, equipment leasing,
credit cards, investment services, financial planning services,
advertisements, insurance and others to be developed.
o Bill Payment. While bill payment has become a component of most bank's
online services offering, bill presentment over the Internet is finally
nearing a launch and should become a highly hyped service in late 1999 or
2000. Recent research indicated that consumers would prefer banks as their
preferred provider for bill presentment and payment, compared to other
options. However, given the huge potential volume of transactions in this
category, aggressive competition will come from large banks, the web
portals, and new companies being started to specialize in this area.
Transpoint, LLC, a joint venture between Microsoft, First Data Corp. and
Citibank, just announced that it will start up its national bill
presentment and payment service later this year.
o Cost Savings. Over time, the highly efficient electronic equipment and
systems used in online banking should allow significant cost savings as
paper-based transactions are eliminated. Management estimates that costs
per transaction
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via the Internet are significantly lower than those via established
methods, as follows:
o $1.07 in a physical branch
o $0.54 over the phone
o $0.27 at an ATM
o $0.01 over the Internet
The table below sets out the number of FDIC insured banks and S&Ls, as well as
the deposits and number of accounts under $100,000. 54% of accounts under
$100,000 are with the 10,630 institutions with assets of less than $10 billion.
The average of these banks has 20,000 deposit accounts under $100,000.
FDIC INSURED INSTITUTIONS
<TABLE>
Assets Number of Client Accts Under $100 Thousand
Institutions Number Percent Cum Percent
<S> <C> <C> <C> <C> <C>
Under $25 million 1,509 2,961,743 1% 1%
$25 to 50 million 2,240 9,028,289 2% 3%
$50 to $100 million 2,624 18,854,073 5% 8%
$100 to 300 million 2,813 45,288432 12% 20%
$300 to 500 million 566 18,368,196 4% 24%
$500 to 1 billion 432 23,591,074 6% 30%
$1 to 3 billion 306 35,810,864 9% 39%
$3 to 10 billion 140 56,153,044 14% 54%
$10 billion or more 82 180,125,114 46% 100%
Total Institutions 10,712 390,180,829 100%
</TABLE>
Assuming the nation's 100 million households are distributed among banks in
proportion to the distribution of bank accounts, 54 million households use over
10,000 institutions for banking. These 10,000 institutions have over 200 million
deposit accounts under $10,000. Although individual banks vary greatly,
management estimates that a bank represents one household for every four
accounts. The average household has two adults. Thus an institution with 20,000
accounts represents 5,000 households containing 10,000 adults or registered
users. Actual results for River City Bank are shown in Table 3, which indicates
one household for every 2.3 accounts.
River City Bank
FDIC Insured Accounts Under $100 thousand 47,000
Total Assets $450,000,000
Personal Core Deposit Accounts 33,632
Households 19,985
Online Households 2,243
Registered Users 4,956
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The target market of the Company for its (yourbank)Online software is the 1,444
institutions with assets of $300 million to $10 billion, which represent over 60
million users.
The Marketing Strategy for (yourbank)Online Software
- ----------------------------------------------------
June 30, 1998
Total
FDIC Customer
Number of Institutions Insured Population
---------------------- ------- ----------
Less than $25 million 1,509 1,366,325
$25 to 50 million 2,240 4,164,971
$50 to 100 million 2,624 8,697,847
$100 to 300 million 2,813 20,892,666
$300 to 500 million 566 8,473,700
$500 to 1 billion 432 10,883,142
$1 to 3 billion 306 16,520,431
$3 to 10 billion 140 25,904,778
$10 billion or more 82 83,096,139
Total institutions 10,712 180,000,000
The Company intends to rapidly establish a national market presence by
leveraging a customer base of community banks.
Marketing Strategy:
The Company will utilize its [yourbank]online system to build the user base as
rapidly as possible and leverage its position to permit banks to become
"Financial Portals", defined as central sites where customers can use the
Internet to manage all their financial transactions, information and planning.
The Company will make it easy and economical for banks to participate in online
banking and then the banks and the Company will share in the fee income
generated by the online banking sites.
Pricing Strategy:
The range of prices for online banking systems is currently very broad, from a
low of about $30,000 to well over $1 million plus recurring monthly fees of $1
to $3 per user. Management believes the pricing strategy for the basic
[yourbank]online system should be to minimize the initial cost to the bank, so
that only the Company's hard system costs and marketing expenses are covered.
This pricing should encourage the banks to initiate online banking and then
progress toward becoming a portal that creates revenue opportunities for both
the bank and the Company. The current model calls for the Company to contract
with individual banks to provide the [yourbank]online software for a fixed fee
of $10,000. The Company will absorb the ongoing site maintenance
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and software development costs. The Company intends to be compensated by
retaining 25% of the usable space on each page to be used for advertising and
e-commerce. The resulting revenue will be shared, net of commissions and costs,
25% to the bank and 75% to CDI. Advertising for the bank's existing products and
services will be provided free. Should the bank identify other services and
goods to be advertised on the site, the resulting revenue will be shared 50/50
net of cost.
Distribution Strategy:
The Company intends to build a network of relationships with established
companies in order to achieve national market coverage in a short period of time
with a moderate investment. Management is currently in preliminary talks with
several companies that already sell systems related products and services to
target market banks. Their customer relationships should permit fast access to
banks' decision makers, and system specialists from [yourbank]Online will
provide technical support to close the sale. In addition, the Company plans on
building an internal sales force.
Revenue Model:
The Company's revenues are projected to come from several sources. Since the
Company's economic model is unique in the marketplace, management has used its
best judgment to identify these sources, recognizing that substantial changes
may occur as the market grows and matures:
1. Sales of the basic online banking system, including licensing, software and
installation support.
2. Sales of system enhancements and newly developed financial service modules.
3. Service bureau fees.
4. Referral revenue and transaction fees from outside service providers, such
as mortgage lenders, stock trading, and equipment leasing.
5. Share of advertising and sponsorship revenues.
The Company believes that owning online financial accounts is a strategic
gateway to other electronic purchases, making online customers worth much more
than traditional bank customers. User acquisition costs are lower than pure
Internet companies, due to the banks' existing client relationship. Revenues
from advertising will be higher due to the desirable demographics of the user,
inherent "stickiness' of bank accounts and the frequent account visits. River
City Bank reports that registered users visit the site an average of 2.5 times
per week. The Financial Portal will give customers more reasons to regularly
visit the
17
<PAGE>
bank's web site. When customers find relevant and useful services in addition to
the basic ones, then they are discouraged from search for and going to competing
sites thus, providing more opportunities for revenue for the bank and more time
for relationship building.
Factors in the revenue model are:
Target Market
- -------------
The first target market will be all banks and credit unions under the top tier,
with a focus on banks that have higher demographics in the retail customer base.
The target market is the 1,444 institutions with assets of $400 million to $10
billion, which represent over 60 million users.
Turn-Key Approach
- -----------------
The Company will provide a turn-key Internet banking system to create immediate
presence without a bank having to add staff, extensive equipment, training or
development time. The Company will establish a service bureau in a central
location where server "farms" will be housed. These servers will act as the
Online Financial Warehouses for the banks. [yourbank]online will also provide
technical assistance, customer service, staff training, system upgrades, web
page creative development, and monthly activity reporting. A bank will only need
to provide Internet access, a database transfer file and a staff member at the
bank to work with [yourbank]online representatives. The Company will provide the
systems and support to help the banks become portals.
Portal Development
- ------------------
Management expects each bank's portal to develop in stages. The initial stage
will include basic services such as checking/savings account management, loan
account management and bill payment. In the second stage, banks build their
experience with their customer base, and introduce additional financial services
according to the preferences of its customers. In the mature stage, when the
banks become financial portals, more opportunities emerge. The range of services
will be selected according to the needs and opportunities of each bank's
customer base. A stream of revenue from a diverse range of services, including
bank-based and outsourced services should generate strong profitability for the
banks and the Company. Vast amounts of demographic data and transaction data
collected and analyzed from customer experience with the system will create
opportunities for highly targeted marketing. Management believes that customized
services can be marketed to individual customers or categories of customers
identified from the analysis. The potential for one-to-one marketing is
exceptional through the
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<PAGE>
Financial Portal, and superior to opportunities of other Internet- based
businesses.
Competition for (yourbank)Online Software
- -----------------------------------------
Competition consists of software companies offering products comparable to
[yourbank]Online and a wide array of internet companies with offerings ranging
from specific financial services (i.e. Schwab) to general portals such as Yahoo!
or AOL, which include some financial services among their wide range of
offerings.
The only software product as full-featured and with as wide a range of
capabilities as [yourbank]Online is the range of products put out by Security
First (NASDAQ: "SONE"). Security First has targeted banks over $10 billion.
While they have been well received in the stock market, their entire revenue
model is based on up front fees as high as $1 million, and user fees to the
banks ranging from $1.50 to $3.50 per account per month. A reading of their
investment materials is highly recommended to any potential investor in
Consolidated Data.
Online Resources and Nfront are examples of two direct competitors. Neither of
these companies offer products with the full range of features and capabilities
of [yourbank]online. Moreover, their entire model is built on obtaining fees
from banks for the software.
More than 100 companies offer some type of internet software to banks, including
many that have been long-time providers of bank operating systems. No company
has achieved a dominant market share and with less than 5% of the banks online
there is a large share available. These companies are not internet companies,
but software companies. The possibility exists that some will eventually prefer
to buy existing software rather than develop their own; indeed Security First
recently purchased Edify in order to augment their online capabilities.
In regard to the wider market of specialized financial sites and general-purpose
portals, each of these can be considered as much a potential strategic partner
as a competitor. The Company's strategy of acquiring and leveraging community
banks' customer base is based on the premise that a large group of customers
will ultimately prefer doing business with a local financial institution that
they can readily access in physical form. The Company's competitive advantage is
simply to provide a superior product for far below market cost in order to
leverage a bank's customer base into a set of registered users. The Company
believes this can be done for far less investment than building a financial
services portal through advertising.
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Contractors Directory
Historical Development of the Contractors Directory
- ---------------------------------------------------
From 1997 through First Quarter 1999, the Company was involved in the
development and operation of a website, Contractors Directory
(contractors-directory.com). This site was designed to provide construction
contractors with information useful to their business such as notices of liens
filed, notices of building permits, directories of contractors, notices of
upcoming bids, and other services of interest to a contractor. Contractors
Directory also provided website development for individual contractors. The site
grew from Pakie Plastino's previous history as a contractor and his ownership of
another company, Contractors Lien Service, which files and enforces liens for
contractors.
The Company, through loans from Pakie Plastino and his related companies, has
invested approximately $700,000 in the development of Contractors Directory.
This has resulted in the production of negligible revenue. Current plans are to
sell off all assets of Consolidated Data Inc. associated with Contractors
Directory.
Description of the Contractors Directory
- ----------------------------------------
The Contractor's Directory provides an internet site available to general
contractors, subcontractors, architects, property managers, insurance companies
and other individuals and entities involved in the construction industry.
Subscribers in various categories are able to provide information about their
companies that interested parties can review in the privacy of their office
using DOS or Windows. Each subcontractor or supplier can provide a color photo
and up to eight pages of text describing their company. Additionally, bid lists,
building permits, and credit and lien information will be updated daily of the
website. General contractors and other interested parties can receive this
service for a fee.
Competition
- -----------
Management believes that there are no other companies offering services similar
to the Contractor's Directory. General contractors, property managers,
engineers, architects and others in the industry normally find sub-contractors
and suppliers through the standard Yellow Pages or by word of mouth.
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Risk Factors
1. Dependence on the Banking Industry
For the foreseeable future, Consolidated Data expects to derive
substantially all of its revenues from products and services provided to banks
and other participants in the banking industry. Accordingly, the Company's
future success significantly depends upon the continued demand for its solutions
within this industry. The Company believes that an important factor in its
growth will be the willingness of the banking industry to pursue technological
innovation and customer demand and acceptance of such innovation. If this
environment of change were to slow, the Company could experience reduced demand
for its products and services. In addition, changes in economic conditions and
unforeseen events, such as recession, inflation or other adverse occurrences,
may result in a significant decline in the utilization of bank services or
demand for the Company's products and services. Any event that results in
decreased consumer or corporate use of bank services, or increased pressures on
banks toward the in-house development and implementation of revenue enhancement
or cost reduction measures, could have a material adverse effect on the
Company's business, financial condition and results of operations.
2. Dependence On Uncertain Market
The market for Internet-based financial services only has recently
begun to develop and market demand for the Company's products and services is
uncertain. Certain critical issues concerning commercial use of the Internet for
financial services, including security, reliability, ease and cost of access,
and quality of service are evolving and may impact the growth of Internet use.
The Company cannot predict the size of the market for Internet-based financial
services or the rate at which such market will grow. If the market for
Internet-based financial services fails to grow, grows more slowly than
anticipated, or becomes saturated with competitors, the Company's business,
financial condition and results of operations would be materially adversely
affected.
The Company's future success will depend on its ability to design,
develop, test, sell and support enhancements of current products and new
software products on a timely basis in response to changing customer needs,
competition, technological developments and emerging industry standards. There
is no assurance that the Company will be able to do this.
The market for the Company's products and services is characterized by
rapidly changing technology, evolving industry
21
<PAGE>
standards, emerging competition and frequent new product and service
introductions. Such developments could limit the marketability of its products
and services. There can be no assurance that the Company can successfully
identify new product opportunities and develop and bring new products and
services to market in a timely manner. Furthermore, telephone and personal
computer banking systems have been marketed in the past by other banking
companies, and have not enjoyed widespread consumer demand. Accordingly, there
can be no assurance that there will be widespread consumer acceptance of
sophisticated banking systems such as that of the Company.
3. Dependence On Key Personnel.
The Company's continued success is dependent, to a large degree, upon
the efforts of its current executive officers. The loss or unavailability of any
such person could have an adverse effect on the Company. At the present time the
Company does not maintain key man life insurance policies for any of these
individuals. Also, the continued success and viability of the Company is
dependent upon its ability to attract and retain qualified personnel in all
areas of its business, especially management positions. In the event the Company
is unable to attract and retain qualified personnel, its business may be
adversely affected. There are currently no employment agreements in place.
Management is; however, currently negotiating agreements with the executive
officers of the Company.
4. Limited Operating History
The Company only has no operating history upon which to base an
evaluation of its business and prospects. Operating results for future periods
are subject to numerous uncertainties, and there can be no assurance that the
Company will achieve or sustain profitability on an annual or quarterly basis.
The Company's prospects must be considered in light of the risks encountered by
companies in the early stage of development, particularly companies in new and
rapidly evolving markets. Future operating results will depend upon many
factors, including the demand for the Company's software products, the level of
product and price competition, the Company's success in attracting and retaining
motivated and qualified personnel, and in particular, the growth of activity on
the Internet World Wide Web as it relates to the financial services industry.
5. Product Concentration
Substantially all of the projected revenue of the Company is
attributable to the Company's (yourbank)Online software product. This product
and related services currently are expected to
22
<PAGE>
account for most of the Company's total revenue for the foreseeable future. As a
result, a decline in demand for, or failure to achieve broad market acceptance
of (yourbank)Online as a result of competition, technological change or
otherwise, would have a material adverse effect on the Company's business,
financial condition and results of operations. The Company's future financial
performance will depend in part on the successful development, introduction and
customer acceptance of new and enhanced versions of (yourbank)Online and other
products. There can be no assurance that the Company will be successful in
marketing (yourbank)Online or any new or enhanced products.
6. Risks of Product Defects and Product Liability
As a result of their complexity, software products may contain
undetected errors or failures when first introduced or as new versions are
released. There can be no assurance that, despite testing by the Company and
testing and use by current and potential customers, errors will not be found in
new products after commencement of commercial shipments. The occurrence of such
errors could result in loss of or delay in market acceptance of the Company's
products, which could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company's product also may be
vulnerable to break-ins and similar disruptive problems caused by Internet or
other users. Such computer break-ins and other disruptions would jeopardize the
security of information stored in and transmitted through the computer systems
of the Company's customers, which may result in significant liability to the
Company and deter potential customers. The sale and support of the Company's
products may entail the risk of liability claims. A product liability claim
brought against the Company or could have a material adverse effect on the
Company's business, financial condition and results of operations.
7. The Ability to Manage Growth
Should the Company be successful in the sales and marketing efforts of
its (yourbank)Online software product it will experience significant growth in
operations. If this occurs management anticipates that additional expansion will
be required in order to continue its product development. Any expansion of the
Company's business would place further demands on its management, operational
capacity and financial resources. The Company anticipates that it will need to
recruit qualified personnel in all areas of its operations, including
management, sales, marketing, delivery and software development. There can be no
assurance that the Company will be effective in attracting and retaining
additional qualified personnel, expanding its
23
<PAGE>
operational capacity or otherwise managing growth. In addition, there can be no
assurance that the Company's current systems, procedures or controls will be
adequate to support any expansion of S1's operations. The failure to manage
growth effectively could have a material adverse effect on the Company's
business, financial condition and results of operations.
8. Risk of System Failure and/or Security Risks
Despite the implementation of security measures, the core of the Company's
network infrastructure could be vulnerable to unforeseen computer problems.
Although the Company believes it has taken steps to mitigate much of the risk,
it may in the future experience interruptions in service as a result of the
accidental or intentional actions of Internet users, current and former
employees or others. Unknown security risks may result in liability to the
Company and also may deter financial institutions from purchasing its software
and services, and individuals from conducting transactions with it. Although the
Company intends to continue to implement and establish security measures, there
can be no assurance that measures implemented by S1 will not be circumvented in
the future, which could have a material adverse effect on the Company's
business, financial condition or results of operations.
9. Competition
The market for Internet-based financial software applications and
banking services is extremely competitive and the Company expects that
competition will intensify in the future. The Company believes that its ability
to compete successfully depends upon a number of factors, including market
presence; the capacity, reliability and security of its network infrastructure;
ease of access to and navigation of the Internet; the pricing policies of its
competitors and suppliers; the timing of introductions of its new products and
services and that of its competitors; its ability to support industry standards;
and industry and general economic trends. Many of these competitors are larger
than the Company and have greater financial and other resources.
In addition to competing with a variety of third parties, the Company
will experience competition from its customers and potential customers. From
time to time, these potential customers develop, implement and maintain their
own services and applications for revenue enhancements, cost reductions and/or
enhanced customer services, rather than purchasing services and related products
from third parties. As a result, the Company must continuously educate existing
and prospective customers about the advantages of purchasing its solutions.
There can be no
24
<PAGE>
assurance that these customers or other potential customers will perceive
sufficient value in the Company's solutions to justify investing in them. In
addition, customers or potential customers could enter into strategic
relationships with one or more of the Company's competitors to develop, market
and sell competing services or products.
10. Dependence on Proprietary Technology and Risk of Infringement
The Company's success will depend significantly upon its proprietary
technology and information. The Company relies upon a combination of copyright,
trademark and trade secret laws and confidentiality procedures to protect its
proprietary technology and information. There can be no assurance that the steps
taken by it to protect its services and products are adequate to prevent
misappropriation of its technology or that the Company's competitors
independently will not develop technologies that are substantially equivalent or
superior to its technology. Further, it is very difficult to police unauthorized
use of the Company's software due to the nature of software. Any such
misappropriation of the Company's proprietary technology or information or the
development of competitive technologies could have a material adverse effect on
the Company's business, financial condition and results of operations. It may
also be necessary or desirable in the future to obtain additional licenses for
use of third-part products in the Company's solutions and there can be no
assurance that the Company will be able to do so on commercially reasonable
terms, if at all.
11. Government Regulation
The Company's primary customers are banks. Although the products and
services currently offered by it will not be subject to any material, specific
government regulation the banking industry, including electronic banking, is
regulated heavily, and the Company expects that such regulation will affect the
relative demand for its products and services. There can be no assurance that
federal, state or foreign governmental authorities will not adopt new
regulations addressing electronic banking or banking operations generally which
could require the Company to modify its current or future solutions. The
adoption of laws or regulations affecting the Company or its customers' business
could reduce the Company's growth rate or could otherwise have a material
adverse effect on the Company's business, financial condition and results of
operations.
12. Dividend Policy
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The Company does not presently intend to pay cash dividends in the
foreseeable future, as any earnings are expected to be retained for use in
developing and expanding its business. However, the actual amount of dividends
received from the Company will remain subject to the discretion of the Company's
Board of Directors and will depend on results of operations, cash requirements
and future prospects of the Company and other factors.
Significant Customers and/or Suppliers
N/A
Employees
At 7/15/99 the Company operated with the services of its Directors, Executive
Officers, and three additional employees and consultants. There is no collective
bargaining agreement in place.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
SELECTED FINANCIAL DATA
- -----------------------
The selected financial data in Table No. 1 for Fiscal 1998 and 1997 ended
September 30th was derived from the financial statements of the Company which
were audited by William Butcher, CPA, as indicated in his report which is
included elsewhere in this Registration Statement.
The selected financial data for the six month period ended March 31st is derived
from the unaudited financial statements of the Company, also included herein
and, in the opinion of the Company, present fairly the information set forth
herein.
The selected financial data was extracted from the more detailed financial
statements and related notes included herein and should be read in conjunction
with such financial statements and with the information appearing under the
heading, "Management's Discussion and Analysis of Financial Condition and
Results of Operations".
Table No. 1
Selected Financial Data
($ in 000, except per share data)
6 Months Ended Year Year
3/31/99 Ended Ended
9/30/98 9/30/97
Revenue $13.9 $17.5 $29.5
Net Income (Loss) ($164) ($175.8) ($405.9)
Earnings (Loss) per Share ($0.02) ($0.03) ($0.08)
Dividends per Share 0 0 0
WtgAvg#Shares (000) 7,581 5,256 5,026
Working Capital $0.1 $0.5 $0.6
Long Term Debt $552 $526 $378
Shareholders' Equity $3,505 ($396) ($240)
Total Assets $4,057 $130 $140
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Cash Balances
- -------------
The Company maintains its major cash balances at one financial institution,
Seattle First National Bank, located in Mountlake Terrace, Washington. The
balances are insured by the Federal Deposit Insurance Corporation up to
$100,000. At July 15, 1999, there were no uninsured cash balances.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Fiscal 1998 and 1997 Ended 9/30
- -------------------------------
Cash Used In 1998 Operating Activities totaled ($106), including the ($175,773)
Net Loss; the primary adjusting items were ($3,348) in office equipment, ($632)
for accrued interest receivable, ($2,111) in payroll taxes, $14,003 in
depreciation and amortization and $42,703 in accrued interest payable. Cash
provided by 1998 Financing Activities totaled $125,052.
Cash Used from inception through September 30, 1997 Operating Activities totaled
($589), including the ($405,879) Net Loss; the primary adjusting items were
$75,000 for Directory Marketing Rights, $10,589 in depreciation and
amortization, $2,111 in payroll taxes, $20,758 in accrued interest payable, and
($25,000) for software Cash provided from 1997 Financing Activities totaled
$472,989.
RESULTS OF OPERATIONS
- ---------------------
Fiscal 1998 and 1997 Ended 9/30
- -------------------------------
General and administrative expenses for the fiscal year ended September 30, 1998
totaled $151,217 and the Company experienced a net loss of ($175,773) against
revenues of $17,515. The major expenses during this period were $13,333 in
amortization; $102,201 for contract labor; $7,500 for Director's fees; $12,974
for rent of equipment; and, $3,600 for office rent and related office expenses.
The categories of telephone; travel; general supplies; office expense;
miscellaneous expenses; licenses; internet expenses; depreciation; consulting;
and, bank charges made up the remainder of the total expenses.
From inception through September 30, 1997, general and administrative expenses
totaled $414,620 and the Company experienced a net loss of $405,879 against
revenues of $29,518. The major expenses during this period were $36,589 in
advertising and promotion; $10,589 in amortization; $31,247 in consulting fees;
28
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$197,217 in contract labor; $25,000 in Director's fees; $17,092 in legal and
professional fees; $16,484 in office expenses; $12,443 in equipment rent;
$10,754 in wages and salaries; and, $27,545 in website fees. The categories of
travel; telephone; supplies; miscellaneous expenses; and, bank charges made up
the remainder of the total expenses.
The Six Months ended March 31, 1999
- -----------------------------------
General and administrative expenses for the six months ended March 31, 1999,
totaled $153,359. These costs were comprised of: $72,084 in amortization;
$60,000 in consulting fees; $14,332 in contract labor; $5,000 in Director's
fees; and other expenses comprised of bank charges depreciation; office and
miscellaneous expenses; travel; and, website fees.
The Company reported a net loss for the six months ended March 31, 1999, of
($164,105).
Known Trends
- ------------
Management has determined that because of the deficiency in working capital,
significant operating losses and lack of liquidity, there is doubt about the
ability of the Company to continue in existence unless additional working
capital is obtained. Consequently such trends or conditions could have a
material adverse effect on the Company's financial position, future results of
operations, or liquidity. The Company currently has plans to raise sufficient
working capital through equity financing or reorganization of the Company.
Inflation
- ---------
The Company's results of operations have not been affected by inflation and
management does not expect inflation to have a material impact on its operations
in the future.
Y2K Compliance
- --------------
Management believes the (yourbank)Online system is fully Y2K compliant and does
not expect Year 2000 transition issues to have a material impact on operations.
All aspects of the system have been designed to accurately handle any Y2K issue.
FORWARD-LOOKING STATEMENTS
- --------------------------
From time-to-time, the Company or its representatives may have made or may make
forward-looking statements, orally or in writing. Such forward-looking
statements may be included in, but not limited to, press releases, oral
statements made with the
29
<PAGE>
approval of an authorized executive officer or in various filings made by the
Company with the Securities and Exchange Commission or other regulatory
agencies. Words or phrases "will likely result", "are expected to", "will
continue", " is anticipated", "estimate", "project or projected", or similar
expressions are intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"). The Reform Act does not apply to initial registration statements,
including this filing by the Company. The Company wishes to ensure that such
statements are accompanied by meaningful cautionary statements, so as to
maximize to the fullest extent possible the protections of the safe harbor
established in the Reform Act. Accordingly, such statements are qualified in
their entirety by reference to and are accompanied by the following discussion
of certain important factors that could cause actual results to differ
materially from such forward-looking statements.
The risks identified here are not inclusive. Furthermore, reference is also made
to other sections of this Registration Statement that include additional factors
that could adversely impact the Company's business and financial performance.
Also, the Company operates in a very competitive and rapidly changing
environment. New risk factors emerge from time to time and it is not possible
for management to predict all such risk factors, not can it access the impact of
all such risk factors on the Company's business or the extent to which any
factor or combination of factors may cause actual results to differ
significantly from those contained in any forward-looking statements.
Accordingly, forward-looking statements should not be relied upon as a
prediction of actual results.
ITEM 3. DESCRIPTION OF PROPERTY
The Company rents approximately 1,400 square feet of space at 6912 220th,
Mountlake Terrace, Washington 98043 for administrative and sales efforts. The
Company considers the facility adequate for current purposes.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The Registrant is a publicly-owned corporation, the shares of which are owned by
United States residents. The Registrant is not controlled directly or indirectly
by another corporation or any foreign government.
Table No. 2 lists as of July 15, 1999 all persons/companies the Registrant is
aware of as being the beneficial owner of more than five percent (5%) of the
common stock of the Registrant.
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Table No. 2
5% Shareholders
Title Amount and Nature Percent
of of Beneficial of
Class Name of Beneficial Owner Ownership Class #
- ------ ------------------------ ----------------- -------
Common Pakie Plastino (1) 4,875,000 45.2%
Common DTEK (2) 2,685,000 24.9%
TOTAL 7,560,000 70.1% (3)(4)
# Based on 10,784,000 shares outstanding as of July 15, 1999.
1. 4,650,000 of these shares are restricted pursuant to Rule 144
2. All of these shares are restricted pursuant to Rule 144
3. Does not reflect share purchase options for 250,000 shares of common stock
issued to Wall Street Marketing Group Inc. for consulting services; does
not include 300,000 shares of common stock issued to Intercorp Inc. for
consulting services; and, does not include the conversion of preferred
stock.
4. All 100,000 shares of Preferred Stock currently outstanding are owned
beneficially and of record by HEP Trust Company, located at 22
Grapetree/Cocoplum West Bay Road, Grand Cayman Island, British West
Indies.
Table No. 3 lists as of July 15, 1999 all Directors and Executive Officers who
beneficially own the Registrant's voting securities and the amount of the
Registrant's voting securities owned by the Directors and Executive Officers as
a group.
Table No. 3
Shareholdings of Directors and Executive Officers
Title Amount and Nature Percent
of of Beneficial of
Class Name of Beneficial Owner Ownership Class #
- ------ ----------------------------------- ----------------- -------
Common Pakie Plastino, Chairman & Director 4,875,000 45.2%
Common William D. Doehne 250,000 2.3%
Total 6,125,000 47.5%(1)
# Based on 10,784,000 shares outstanding as of July 15, 1999.
(1) Does not reflect share purchase options for 250,000 shares of common stock
issued to Wall Street Marketing Group Inc. for consulting services; does not
include 300,000 shares of common
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stock issued to Intercorp Inc. for consulting services; and, does not include
the conversion of preferred stock
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS
Table No. 4 lists as of July 15, 1999 the names of the Directors of the Company.
The Directors have served in their respective capacities since their election
and/or appointment and will serve until the next Annual Shareholders' Meeting or
until a successor is duly elected, unless the office is vacated in accordance
with the Articles/By-Laws of the Company. All Directors are residents and
citizens of the United States.
Table No. 4
Directors
Date First
Elected
Name Age or Appointed
- ------------------------------ --- ------------
Pakie Plastino 50 July 1997
William D. Doehne 46 July 1997
(1) Member of Audit Committee.
Table No. 5 lists, as of July 15, 1999, the names of the Executive Officers of
the Company. The Executive Officers serve at the pleasure of the Board of
Directors. All Executive Officers are residents/citizens of the United States.
Table No. 5
Executive Officers
Name Position Date of Board Approval
- ----------------- ------------------------ ------------------------
Pakie Plastino Chairman July 1997
William D. Doehne Chief Operating Officer July 1997
Business Experience
Pakie Plastino. Mr. Plastino is Chairman and a Director of the Company. He has
been employed by the Company since March 1997. His responsibilities include
coordinating strategy, planning, and marketing. Mr. Plastino is also an officer
of Construction Lien and Credit Services, a Seattle-based company that provides
lien filing and collection services for contractors, and ChekProtekt, a
Seattle-based company that provides check collection services for merchants. Mr.
Plastino has been an active businessman in the Seattle area for more than 20
years and resides in Seattle and in Palm Springs, California.
Johathan J. Goody. Mr. Goody is a member of the Advisory Board of the Company.
He is a former Vice President and sales executive
32
<PAGE>
for Private Business Inc. of Brentwood, Tennessee. Private Business is a
software company that provides cash management software to small business
through community bank partners. Mr. Goody joined Private Business in 1992 and
was it grow to over $60 million in sales and more than 350 people. Private
Business became a public company in June 1999. The Private Business business
manager system has been sold to over 1,400 bank clients. Mr. Goody's primary
responsibility with Private Business included sales to banks located on the West
Coast. In this capacity he sold the Company's software to over 200 community
banks. Mr. Goody is also a founding partner of Bay Equity Real Estate
Acquisitions, a private real estate holding company. Mr. Goody attended the
University of Southern California where he received a Bachelor of Science Degree
in Business Administration.
William D. Doehne. Mr. Doehne is the Chief Operating Officer and a Director of
the Company.. Mr. Doehne is also the President of Contractors Directory, a
company owned by Pakie Plastino, the Chairman and a Director of the Company.
Prior to joining Contractors Directory, Mr. Doehne was the President of
Consolidated Bank Card Systems, of Bothell, Washington, a company which he
owned.
Curt Dean Blake. Mr. Blake is a member of the Company's Advisory Committee. He
is formerly the Chief Operating Officer of Starwave Corporation, a company
involved in the collection of content sites on the Internet. Mr. Blake graduated
from the University of Washington in 1980 when he received his Bachelor of Arts
degree in Business Administration. In June 1983 he received his Juris Doctorate
from the University of Washington and in 1984 he received his MBA from the
University of Washington.
Gary L. Bylund. Mr. Bylund is a member of the Company's Advisory Committee. He
is currently the President and Chief Executive Officer of Corporate Planning
Systems, L.L.C., a company involved in employee benefit brokerage and
consulting.
Jim David. Mr. David is a member of the Company's Advisory Committee. He is the
President of Trilogy Software, a mainframe software publisher. From 1996 through
1998 he was employed by Data I/O Corporation first as Vice President Worldwide
Sales & Marketing and then as President. From 1992 through 1995 he was a Vice
President of Aldus USA. Mr. David received both his MBA and B.S (Business
Administration/Mathematics) from the University of Washington.
Involvement in Certain Legal Proceedings
- ----------------------------------------
Steven Everett Coryell
33
<PAGE>
On December 20, 1995, a civil injunctive complaint was filed in the
Fourth Judicial District Court in Boise,(Cause #CV0C95-06373D) Idaho
charging that Steven Everett Coryell, the former Chief Executive
Officer of Consolidated Data, and his company, National Investigative
Consultants, Inc. violated the anti-fraud and registrations provisions
of the Idaho Securities Act. The defendants admitted the allegations in
the complaint which included that they sold securities in the form of
stock, distressed loans packages and limited partnership interests to
13 residents of the state of Idaho. A judgement was entered against the
defendants on March 27, 1996. The court's order found that the
defendants violated the securities laws and permanently enjoined them
from engaging in such practices in the future. Full restitution to the
investors in the amount of nearly $345,000 was ordered by the court.
Stipulation for judgement and permanent injunction was entered on May
13, 1996. Mr. Coryell is the sole owner of DTEK Corporation, the owner
of 2,685,000 common shares of the Company.
Pakie Plastino
On or around June 11, 1994, Pakie Plastino was debarred from acting in
any capacity as a contractor in any federally funded construction
project by the U.S. Department of Education. The term of the exclusion
expired on or about August 28, 1995.
Other than that described above, there have been no events during the last five
years that are material to an evaluation of the ability or integrity of any
director, person nominated to become a director, executive officer, promoter or
control person including:
a) any bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the bankruptcy
or within two years prior to that time;
b) any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
c) being subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
enjoining, barring, suspending or otherwise limiting his/her involvement in any
type of business, securities or banking activities;
34
<PAGE>
d) being found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
Family Relationships
- --------------------
There are no family relationships between any of the officers and/or directors.
Other Relationships/Arrangements
- --------------------------------
There are no arrangements or understandings between any two or more Directors or
Executive Officers, pursuant to which he/she was selected as a Director or
Executive Officer. There are no material arrangements or understandings between
any two or more Directors or Executive Officers.
On March 3, 1999 in response to newly instituted public company regulatory
requirements, the Company engaged Inter Corp., Inc. of Seattle, Washington to
procure accounting and legal services necessary to produce current audited
financial statements and to complete and file Form 10-SB with the Securities and
Exchange Commission. Inter Corp., Inc. also was to develop a business plan for
the online banking system. The Company issued 300,000 restricted common shares
as payment for the $60,000 fee charged by Inter Corp., Inc.
The Company has awarded 250,000 share purchase options to Wall Street Marketing
Group, Inc., a firm which was hired to assist the Company in investor relations
matter. To date Wall Street Marketing Group Inc. has exercised 75,000 of these
share purchase options.
ITEM 6. EXECUTIVE COMPENSATION
The Company has no formal plan for compensating its Directors for their service
in their capacity as Directors. Directors are entitled to reimbursement for
reasonable travel and other out-of-pocket expenses incurred in connection with
attendance at meetings of the Board of Directors. The Board of Directors may
award special remuneration to any Director undertaking any special services on
behalf of the Company other than services ordinarily required of a Director.
During Fiscal 1997, no Director received and/or accrued any compensation for his
services as a Director, including committee participation and/or special
assignments.
35
<PAGE>
During Fiscal 1999, the Company awarded 25,000 shares of common stock to each
member of the Advisory Board.
The Company has no material bonus or profit sharing plans pursuant to which cash
or non-cash compensation is or may be paid to the Company's Directors or
Executive Officers. The Company has no stock option or other long-term
compensation program.
During 1998, no funds were set aside or accrued by the Company to provide
pension, retirement or similar benefits for Directors or Executive Officers.
The Company has no plans or arrangements in respect of remuneration received or
that may be received by Executive Officers of the Company in Fiscal 1998 to
compensate such officers in the event of termination of employment (as a result
of resignation, retirement, change of control) or a change of responsibilities
following a change of control, where the value of such compensation exceeds
$60,000 per Executive Officer.
The Company has no written employment agreements.
Between April 1997 and March 1999, Pakie Plastino received 100,000 shares per
month as compensation for his services.
Other than that disclosed above, no compensation was paid during Fiscal 1998 to
any of the officers or directors of the Company to the extent that they were
compensated in excess of $60,000.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no transactions since July 14, 1995 (Date of Inception), or
proposed transactions, which have materially affected or will materially affect
the Company in which any Director, Executive Officer, or beneficial holder of
more that 10% of the outstanding common stock, or any of their respective
relatives, spouses, associates or affiliates has had or will have any direct or
material indirect interest.
ITEM 8. DESCRIPTION OF SECURITIES
The authorized capital of the Registrant is 50,000,000 shares of common stock
with no par value and 5,000,000 shares of non-voting preferred stock with no par
value of which 5,256,000 of common stock was issued and outstanding at September
30, 1998, the end of the most recent fiscal year. At July 15, 1999, there were
10,784,000 shares of common stock outstanding. At September 30, 1998, the end of
the most recent fiscal year there were 100,000 shares of non-voting preferred
stock outstanding and as of July
36
<PAGE>
15, 1999 there were 100,000 shares of non-voting preferred stock outstanding.
All common shares are equal to each other, and when issued, are fully paid and
non-assessable, and the private property of shareholders who are not liable for
corporate debts. Preferred shares have such preferences as the Directors may
assign to them prior to issuance. Each holder of a common share of record has
one vote for each share of stock outstanding in his name on the books of the
Corporation and shall be entitled to vote said stock.
The common stock of the Company shall be issued for such consideration as shall
be fixed from time to time by the Board of directors. In the absence of fraud,
the judgment of the Directors as to the value of any property or services
received in full or partial payment for shares shall be conclusive. When shares
are issued upon payment of the consideration fixed by the board of Directors,
such shares shall be taken to be fully paid stock and shall be non-assessable.
Except as may otherwise be provided by the Board of Directors, holders of shares
of stock of the Corporation shall have no preemptive right to purchase,
subscribe for or otherwise acquire shares of stock of the Company, rights,
warrants or options to purchase stocks or securities of any kind convertible
into stock of the Company.
Dividends in cash, property or shares of the Company may be paid, as and when
declared by the Board of Directors, out of funds of the Company to the extent
and in the manner permitted by law.
Upon any liquidation, dissolution or winding up of the Company, and after paying
or adequately providing for the payment of all its obligations, the remainder of
the assets of the company shall be distributed, either in cash or in kind, pro
rata to the holders of the common stock, subject to preferences, if any, granted
to holders of the preferred shares. The Board of Directors may, from time to
time, distribute to the shareholders in partial liquidation from stated capital
of the Company, in cash or property, without the vote of the shareholders, in
the manner permitted and upon compliance with limitations imposed by law.
Each outstanding share of common stock is entitled to one vote and each
fractional share of common stock is entitled to a corresponding fractional vote
on each matter submitted to a vote of shareholders. Cumulative voting shall not
be allowed in the election of Directors of the company and every shareholder
entitled to vote at such election shall have the right to vote
37
<PAGE>
the number of shares owned by him for as many persons as there are Directors to
be elected, and for whose election he has a right to vote. Preferred shares have
no voting rights unless granted by amendment to the Articles of Incorporation.
When, with respect to any action to be taken by the Shareholders of the Company,
the Colorado Corporation Code requires the vote or concurrence of the holders of
two-thirds of the outstanding shares entitled to vote thereon, or of any class
or series, any and every such action shall be taken, notwithstanding such
requirements of the Colorado Corporation Code, by the vote or concurrence of the
holders of a majority of the outstanding shares entitled to vote thereon, or of
any class or series.
Preferred Stock
The Company initially authorized 5,000,000 shares of no par value, non-voting
preferred stock, the rights and preferences of which to be determined by the
Board of Directors at the time of issuance.
On May 24, 1996, the Company issued 100,000 shares of its preferred stock at a
price of $0.10 per share. The Directors have assigned the following preferences
to the issued and outstanding shares of Preferred Stock: (I) the Preferred Stock
shall be non-voting, (II) the holders of the stock as a group have the right to
receive, prorata, a mandatory dividend of 10% of the Company's adjusted gross
profit as reflected on its annual corporate income tax return and to be paid
within ten days of the filing thereof, and (III) upon dissolution or winding up
of the Company, 10% of the assets of the Company shall be distributed on a
prorata basis to the holders of the Preferred Stock prior to division and
distribution of assets to the holders of the Company's Common Stock; Further,
the holder of the preferred shares shall sell to the Company the preferred
shares for a price equal to the price paid by the preferred shareholder for the
shares, plus 50% of the Company's net profit as of the end of six months from
the issuance in the event there is any change in the Company's management
(officers and directors) in the six months following issuance, but subject to
the Company's obligation to pay the same amount to purchase and retire the
shares if at the end of six months from the issuance there is no change in
management. The preferences may be changed at any time with written unanimous
approval by and between the Company and all holders of the preferred shares.
Subsequently, on or about May 19, 1997, the Board of Directors altered the
rights and preferences of the preferred stock as follows:
38
<PAGE>
i) Upon declaration of any dividends by the Company,
preferred shares shall each receive 4.5 times the amount of
dividends on each common share, and preferred dividends shall
be paid in full prior to payment of any dividends on common
shares.
ii) Each share of preferred stock may be converted at
any time into 4.5 common shares.
iii) Upon liquidation, after the payment of all
creditors or other parties having superiority to capital
stock, preferred shares shall be paid a liquidation value of
$1.00 per share prior to any distribution to common
shareholders
All 100,000 shares of Preferred Stock currently outstanding are owned
beneficially and of record by HEP Trust Company, Grand Cayman Island, British
West Indies.
Debt Securities to be Registered. Not applicable.
American Depository Receipts. Not applicable.
Other Securities to be Registered. Not applicable.
39
<PAGE>
PART II
Item 1. Market Price Of And Dividends on the Registrant's
Common Equity and Other Shareholder Matters
The Company's common stock trades on the Over-the-Counter Electronic Bulletin
Board in the United States, having the trading symbol "CSDD" and CUSIP# 20902
W106. Trading volume and high/low/closing prices for the past ten quarters are
disclosed in the following table:
Table No. 7
NASBD Stock Trading Activity
Quarter High Low Close Volume
Ended
- -------- -------------- -------------- -------------- --------------
06/30/99 $17.00 $1.87 $4.50 2,171,000
03/31/99 $2.00 $0.12 $1.81 565,000
12/31/98 $0.69 $0.19 $0.25 78,101
09/30/98 No Trading No Trading No Trading No Trading
06/30/98 No Trading No Trading No Trading No Trading
3/31/98 No Trading No Trading No Trading No Trading
12/31/97 No Trading No Trading No Trading No Trading
09/30/97 No Trading No Trading No Trading No Trading
06/30/97 No Trading No Trading No Trading No Trading
03/31/97 No Trading No Trading No Trading No Trading
The Company's common stock is issued in registered form. Corporate Stock
Transfer (located in Denver, Colorado) is the registrar and transfer agent for
the common stock.
On July 15, 1999 shareholders' list for the Company's common shares showed
twenty four registered shareholders and 10,784,000 shares outstanding
The Company has not declared any dividends since incorporation and does not
anticipate that it will do so in the foreseeable future. The present policy of
the Company is to retain future earnings for use in its operations and expansion
of its business.
The preferred stock of the Company is not registered and does not trade.
40
<PAGE>
ITEM 2. LEGAL PROCEEDINGS
Other than discussed below, the Company knows of no material, active or pending
legal proceedings against them; nor is the Company involved as a plaintiff in
any material proceeding or pending litigation.
Other than discussed below, the Company knows of no active or pending
proceedings against anyone that might materially adversely affect an interest of
the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Not Applicable
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
Not Applicable
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's By-Laws address indemnification under Article XIII.
No director or officer of the Corporation shall be personally liable to the
Corporation or any of its stockholders for damages for breach of fiduciary duty
as a director or officer involving any act or omission of any such director of
officer; provided however, that the foregoing provision shall not eliminate or
limit the liability of a director of officer (i for acts or omissions which
involve intentional misconduct, fraud or a knowing violation of law, or (ii) the
payment of dividends in violation of Section 70-109-102, et. seq. of the
Colorado Revised Statues. Any repeal or modification of this Article by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director or
officer of the Corporation for acts or omissions prior to such repeal or
modification.
41
<PAGE>
PART F/S
ITEM 1. FINANCIAL STATEMENTS
The financial statements and notes thereto as required under ITEM #13 are
attached hereto and found immediately following the text of this Registration
Statement. The audit report of William Butcher, Independent Certified Public
Accountant, for the audited financial statements for Fiscal 1998, 1997 and for
the six months ended March 31, 1999 and notes thereto is included herein
immediately preceding the audited financial statements.
(A-1) Audited Financial Statements: Fiscal 1998, 1997, and the six months ended
March 31, 1999.
Auditor's Report, dated July 27, 1999
Consolidated Balance Sheets for inception to 9/30/97, 9/30/98 and 3/31/99
Consolidated Statement of Loss and Accumulated Deficit from inception to
9/30/97, 9/30/98 and the interim six months ended 3/31/99.
Consolidated Statements of Cash Flows from inception to 9/30/97, 9/30/98 and the
interim six months ended 3/31/99.
Consolidated Statement of Changes in Stockholders' Equity from inception to
9/30/97, 9/30/98 and the interim six months ended 3/31/99.
Notes to Financial Statements
42
<PAGE>
PART III
Item 1. INDEX TO EXHIBITS:
Exhibit number Exhibit
- ------------- -------
3.1 Articles of Incorporation
3.2 BYLAWS
4 Amendment to Form D
23 Consent of Accountants
43
<PAGE>
CONSOLIDATED DATA, INC.
AND SUBSIDIARY
(A Development Stage Company)
AUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 1999 AND
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997
WILLIAM L. BUTCHER, CPA P.S.
Certified Public Accountant
7304 10th Street SE, Suite "C"
Everett, WA 98205
PHONE (425) 335-0603
FAX - (425) 335-3567
<PAGE>
TABLE OF CONTENTS
Page
Accountant's Report 1
Financial Statements
Balance Sheet 2-3
Statements of Loss and Accumulated Deficit 4
Statements of Cash Flows 5
Statements of Changes in Stockholders' Equity 6
Notes to Financial Statements 7-10
42
<PAGE>
PART III
Item 1. INDEX TO EXHIBITS:
Exhibit number Exhibit
- ------------- -------
3.1 Articles of Incorporation
3.2 BYLAWS
4 Amendment to Form D
23 Consent of Accountants
43
<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.
Consolidated Data, Inc.
August 6, 1999 /s/Pakie Plastino
- -------------- -----------------
Date Chairman and Director
44
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Consolidated Data, Inc.
Mountlake Terrace, Washington
I have audited the accompanying Consolidated Balance Sheet of
Consolidated Data, Inc. and subsidiary as of March 31, 1999 and
September 30, 1998 and 1997 and the related Consolidated Statements
of Loss and Deficit, Consolidated Statement of Cash Flows for the
periods then ended, and the Consolidated Statement of Changes in
Shareholders' Equity. My responsibility is to express an opinion on
these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. I believe
that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Consolidated Data, Inc. and subsidiary as of March 31, 1999 and
September 30, 1998 and 1997, and the results of its operations and
its cash flows for the periods then ended in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that Consolidated Data, Inc. will continue as a going concern. As
discussed in Note 4 to the financial statements, Consolidated Data,
Inc. is engaged in new operations, and the ability to continue to
exist as a going concern relies on the company's ability to retain
adequate financing and to generate sufficient sales. Management plans
in this regard are described in Note 4. The financial statements do
not include any adjustment that might result from the outcome of the
uncertainty of future agreements, financings or sales.
WILLIAM L. BUTCHER, CPA P.S.
Everett, Washington
July 27, 1999
<PAGE>
CONSOLIDATED DATA, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
MARCH 31, 1999 and SEPTEMBER 30, 1998 and 1997
<TABLE>
ASSETS
------
3/31/99 9/30/98 9/30/97
------------ ------------ ------------
<S> <C> <C> <C>
CURRENT ASSETS
- --------------
Cash $ 138 $ 492 $ 598
------------ ------------ ------------
Total Current Assets 138 492 598
FIXED ASSETS
Office Equipment 3,348 3,348 -0-
Less: Accumulated Depreciation ( 1,205) ( 670) -0-
Software 25,000 25,000 25,000
Less: Accumulated Amortization ( 20,139) ( 15,972) -0-
------------ ------------ ------------
Total Fixed Assets 7,004 11,706 -0-
OTHER ASSETS
Investment in Subsidiary-CDI 50,000 50,000 50,000
Accrued Interest Receivable-CDI 983 632 -0-
Directory Marketing Rights 75,000 75,000 75,000
Online Banking Software Rights 4,000,000 -0- -0-
Less: Accumulated Amortization ( 75,867) ( 7,950) ( 10,589)
------------ ------------ ------------
Total Other Assets 4,050,116 117,682 139,411
------------ ------------ ------------
TOTAL ASSETS $ 4,057,258 $ 129,880 $ 140,009
============ ============ ============
</TABLE>
See accompanying notes and independent auditor's report
- 2 -
<PAGE>
CONSOLIDATED DATA, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
MARCH 31, 1999 and SEPTEMBER 30, 1998 and 1997
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
3/31/99 9/30/98 9/30/97
------------ ------------ ------------
LIABILITIES
<S> <C> <C> <C>
Payroll Taxes Payable $ -0- $ -0- $ 2,111
Loans Payable-Construct. Lien 109,471 121,220 120,145
Loans Payable-CheKproteKt 290,844 277,683 173,206
Loans Payable-HEP Trust 64,000 64,000 64,000
Advance From Shareholder ( 475) ( 475) ( 475)
Accrued Interest Payable 88,562 63,491 20,788
------------ ------------ ------------
Total Liabilities 552,402 525,919 379,775
STOCKHOLDERS' EQUITY
Common Stock, No Par Value,
50,000,000 shares authorized;
5,026,000 shares issued and
outstanding at September 30,
1997; 5,256,000 shares issued
and outstanding at September
30, 1998; and 7,581,000 shares
issued and outstanding at
March 31, 1999 4,240,463 175,463 155,963
Common Stock-CDI (Note 8) 100 100 100
Preferred Stock, 5,000,000
shares authorized; 100,000
issued and outstanding at
September 30, 1997, 1998 and
at March 31, 1999 10,050 10,050 10,050
Accumulated Deficit ( 745,757) ( 581,652) ( 405,879)
------------ ------------ ------------
Total Stockholders' Equity 3,504,856 ( 396,039) ( 239,766)
------------ ------------ ------------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $ 4,057,258 $ 129,880 $ 140,009
============ ============ ============
</TABLE>
See accompanying notes and independent auditor's report
- 3 -
<PAGE>
CONSOLIDATED DATA, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF LOSS AND ACCUMULATED DEFICIT
MARCH 31, 1999 and SEPTEMBER 30, 1998 and 1997
<TABLE>
Interim Inception to
Period Ended Year Ended Year Ended
3/31/99 9/30/98 9/30/97
------------ ------------ ------------
<S> <C> <C> <C>
Revenues
Service revenue $ 13,970 $ 17,515 $ 29,518
------------ ------------ ------------
Gross Profit $ 13,970 $ 17,515 $ 29,518
Expenses
Advertising and promotion -0- -0- 36,589
Amortization 72,084 13,333 10,589
Bank Charges 172 321 423
Consulting 60,000 2,009 31,247
Contract labor 14,332 102,201 197,217
Depreciation 536 670 -0-
Directors fees 5,000 7,500 25,000
Insurance expense -0- -0- 105
Internet expense -0- 802 -0-
Legal and professional -0- -0- 17,092
Licenses -0- 1,730 -0-
Marketing -0- -0- 9,260
Meals and entertainment -0- -0- 189
Miscellaneous expense 225 1,226 1,076
Office expense 260 419 16,484
Rent - equipment -0- 12,974 12,443
Rent - office -0- 3,600 10,350
Supplies -0- 110 1,599
Taxes - payroll -0- 1,649 -0-
Telephone -0- 1,964 2,258
Travel 550 -0- 4,400
Wages and salaries -0- -0- 10,754
Website fees 200 709 27,545
------------ ------------ ------------
Total Expenses $ 153,359 $ 151,217 $ 414,620
------------ ------------ ------------
Loss From Operations $ ( 139,389) $ ( 133,702) $ ( 385,102)
Other Income & Expense
Other income -0- -0- 10
Interest income 353 633 1
Other expense -0- -0- -0-
Interest expense ( 25,069) ( 42,704) ( 20,788)
------------ ------------ ------------
Total Other Income & Expense $ ( 24,716) $ ( 42,071) $ ( 20,777)
Net Loss ( 164,105) ( 175,773) ( 405,879)
Accumulated Deficit,
beginning of period ( 581,652) ( 405,879) -0-
Accumulated Deficit,
end of period $ ( 745,757) $( 581,652) $ ( 405,879)
============ =========== ============
</TABLE>
See accompanying notes and independent auditor's report
- 4 -
<PAGE>
CONSOLIDATED DATA, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIODS ENDING
MARCH 31, 1999 and SEPTEMBER 30, 1998 and 1997
<TABLE>
Interim Inception to
Period Ended Year Ended Year Ended
3/31/99 9/30/98 9/30/97
------------ ------------ ------------
<S> <C> <C> <C>
Cash Flows From
Operating Activities:
Net Loss $( 164,105) $ ( 175,773) $ ( 405,879)
------------ ------------ ------------
Adjustments to Reconcile
Net Loss to Net Cash
Provided by Operating Activities
Net Cash Provided by
Operating Expenses:
Depreciation & Amortization 72,619 14,003 10,589
(Increase) Decrease In:
Office Equipment -0- ( 3,348) -0-
Software -0- -0- ( 25,000)
Accrued Interest Rec'ble ( 351) ( 632) -0-
Directory Marketing Rights -0- -0- 75,000
Online Bank Software Right (4,000,000) -0- -0-
Increase (Decrease) In:
Payroll Taxes -0- ( 2,111) 2,111
Accrued Interest Payable 25,071 42,703 20,758
------------ ------------ ------------
Total Adjustments (3,902,661) 50,615 ( 66,512)
Net Cash Provided by
Operating Activities:
Cash Flows From
Financing Activities:
Investment-Subsidiary -0- -0- ( 50,000)
Loans Payable 1,412 105,552 357,351
Advances-Shareholder -0- -0- ( 475)
Common Stock 4,065,000 19,500 155,963
Common Stock-Subsidiary -0- -0- 100
Preferred Stock -0- -0- 10,050
------------ ------------ ------------
Net Cash Received From
Financing Activities: 4,066,412 125,052 472,989
Cash Beginning of Periods 492 598 -0-
Cash End of Periods 138 492 598
============ ============ ============
</TABLE>
See accompanying notes and independent auditor's report
- 5 -
<PAGE>
CONSOLIDATED DATA, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
MARCH 31, 1999 and SEPTEMBER 30, 1998 and 1997
<TABLE>
Number of Shares Amount Accumulated
Common Preferred Common Preferred Deficit Total
--------- ------- --------- ------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT INCEPTION,
JULY 14, 1995 -0- -0- -0- -0- -0- -0-
May 1996 issuance of
100,000 shares
preferred stock -0- 100,000 -0- 10,050 -0- 10,050
June 1996 issuance of
1,701,000 shares
common stock at
$0.0005 per share 1,701,000 -0- 851 -0- -0- 851
Net Loss - Year Ended
September 30, 1996 -0- -0- -0- -0- ( 38,561) ( 38,561)
--------- ------- --------- ------ --------- -----------
BALANCE,
SEPTEMBER 30, 1996 1,701,000 100,000 851 10,050 ( 38,561) ( 27,660)
March 1997 issuance
of shares of common
stock at $0.0005 per
share 225,000 -0- 112 -0- -0- 112
March 1997 issuance
of 1,500,000 shares
of common stock for
directory marketing
rights at $0.05 per
share 1,500,000 -0- 75,000 -0- -0- 75,000
April 1997 issuance
of 1,000,000 shares
of common stock for
acquisition of Con-
tractors Directory,
Inc. at $0.05 per
share (Note 8) 1,000,000 -0- 50,100 -0- -0- 50,100
Issuance of shares
for services
(directors fees) at
$0.05 per share 500,000 -0- 25,000 -0- -0- 25,000
Issuance of shares
for services at
$0.05 per share 100,000 -0- 5,000 -0- -0- 5,000
Net Loss - Year Ended
September 30, 1997 -0- -0- -0- -0- (367,318) (367,318)
--------- ------- --------- ------ --------- -----------
BALANCE,
SEPTEMBER 30, 1997 5,026,000 100,000 156,063 10,050 (405,879 (239,766)
See accompanying notes and independent auditor's report
- 6 -
CONSOLIDATED DATA, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
MARCH 31, 1999 and SEPTEMBER 30, 1998 and 1997
Number of Shares Amount Accumulated
Common Preferred Common Preferred Deficit Total
--------- ------- --------- ------ --------- -----------
BALANCE,
SEPTEMBER 30, 1997 5,026,000 100,000 156,063 10,050 (405,879) (239,766)
October-December
1997 issuance of
shares pursuant to
private placement
at $0.15 per share 80,000 -0- 12,000 -0- -0- 12,000
August 1998
issuance of shares
for services (Dir-
ectors fees) at
$0.05 per share 150,000 -0- 7,500 -0- -0- 7,500
Net Loss - Year Ended
September 30, 1998 -0- -0- -0- -0- (175,773) (175,773)
--------- ------- --------- ------ --------- -----------
BALANCE,
SEPTEMBER 30, 1998 5,256,000 100,000 175,563 10,050 (581,652) (396,039)
March 1999
issuance of shares
for services (Dir-
ectors fees) at
$0.20 per share 25,000 -0- 5,000 -0- -0- 5,000
March 1999
issuance of shares
for services (Dir-
ectors fees) at
$0.20 per share 300,000 -0- 60,000 -0- -0- 60,000
March 1999
issuance of shares
for online banking
software rights at
$2.00 per share 2,000,000 -0- 4,000,000 -0- -0- 4,000,000
Net Loss - Interim
March 31, 1999 -0- -0- -0- -0- (164,105) ( 164,105)
--------- ------- --------- ------ --------- -----------
BALANCE,
MARCH 31, 1999 7,581,000 100,000 4,240,563 10,050 (745,757) 3,504,856
========= ======== ========= ====== ========= ===========
</TABLE>
See accompanying notes and independent auditor's report
- 7 -
<PAGE>
CONSOLIDATED DATA, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 and SEPTEMBER 30, 1998 and 1997
Note 1. The Company
Consolidated Data, Inc. (formerly Attache' Holdings, Ltd), a Colorado
corporation, (the "Company") initially was capitalized in May 1996 through an
issuance of 100,000 shares of its preferred stock in consideration for $10,050.
Shortly thereafter in June 1996, the Company commenced an offering of up to
20,000,000 shares of its common stock in units of 5,000 shares for $2.50 per
unit pursuant to Rule 504 of Regulation D of the Securities Act of 1933. The
Company sold a total of 1,926,000 common shares in this Regulation D offering.
In early 1997, the company acquired all of the marketing rights to its
electronic directory system for Colorado, California and New Mexico for
1,500,000 common shares of the Company's restricted stock. These electronic
directories, through extensive use of state-of-the-art computer and Internet
telecommunications technology, will provide comprehensive listings of available
sub-contractors and materials suppliers as well as daily up-dated information on
other key items such as building permits, bid lists and credit and lien
information. Each of the companies electronic directories will cover a specific
region of the country which can be readily accessed by anyone involved in real
estate activities. Essentially, they will constitute geographic "Contractor's
Electronic Yellow Pages" which will be much superior to and considerably less
expensive than the traditional telephone directory yellow pages.
The Company soon realized the large potential of this business and effective
April 20, 1997 the Company assumed all worldwide rights and ownership to the
electronic directory system by acquiring 100% of the issued and outstanding
common stock of Contractors Directory, Inc., a Washington corporation, in
exchange for 1,000,000 common shares of the Company's restricted stock.
Funding for development by the Company's electronic directory system was
obtained by the Company's wholly-owned subsidiary through short-term loans made
by the Company's management.
As an expansion of the Company's Internet business on March 10, 1999, the
Company acquired from DTEK Corporation all worldwide rights, exclusively and
irrevocably, to DTEK's proprietary online Internet technology and software for
$10,000,000 payable as follows:
1. $4,000,000 paid by the issuance of 2,000,000 common shares of the
Company's restricted stock at $2.00 per share.
2. $6,000,000 paid at the rate of $10,000 per license use or the stock
equivalent at the rate of $5.00 per share of the Company's restricted common
stock or 1,200,000 shares. The cash or the stock must be paid by the Company
twelve months from the date of the contract or by March 10, 2000.
On April 12, 1999 subsequent to the date of these financial statements, the
Company authorized and did issue 1,200,000 shares of its restricted common stock
in full satisfaction of its agreements with DTEK Corporation above.
As a part of the Company's online banking rights acquisition, DTEK Corporation
has assigned to the Company all rights and title to an existing software license
between DTEK and Global Payment Systems, LLC which shall include payments from
River City Bank of Sacramento, subject to DTEK receiving the balance of the
initial licensing revenues as compensation for its consulting and support. All
residual income will go to Consolidated Data, Inc..
- 8 -
<PAGE>
CONSOLIDATED DATA, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 and SEPTEMBER 30, 1998 and 1997
Note 2. Consulting Agreement
On March 3, 1999 in response to newly instituted public company regulatory
requirements, the Company engaged Inter Corp, Inc. to procure accounting and
legal services necessary to produce current audited financial statements and to
complete and file form 10SB with the SEC. Inter Corp, Inc. also was to develop a
business plan for the online banking system. The Company issued 300,000
restricted common shares as payment for the $60,000 fee charged by Inter Corp,
Inc. at $5.00 per share.
Note 3. Summary of Significant Accounting Policies
These Financial Statements include all of the assets, liabilities and results of
operation of the Company. property and equipment are stated at the lower of cost
or fair market value. Depreciation is computed for financial statement purposes
as well as for federal income tax purposes using the MACRS (Modified Accelerated
Cost Recovery System) method of depreciation. Equipment is depreciated over five
years. Software is amortized over five years. Electronic directory marketing
rights and on online banking license rights are amortized over five years.
Note 4. Going Concern
Because of a deficiency in working capital and significant operating losses,
there is doubt about the ability of the Company to continue in existence unless
additional working capital is obtained. The Company currently has plans to raise
sufficient working capital through equity financing and through the acquisition
of companies having sufficient assets and cash flow to enable the Company to be
self-sufficient and profitable.
Note 5. Company Facilities
The Company currently rents shared office space from Construction Lien and
Credit Service, Inc., 6912-220th Street SW, Suite 320, Mountlake Terrace,
Washington 98043, for which it is charged $300 per month. (see Note 7 below)
Note 6. Income Tax
The Company has not filed any tax returns since inception. It is anticipated
that if tax returns were filed, the company would have net operating losses. The
current deficit of $745,757 at September 30, 1998 would potentially create a
similar net operating loss which could begin expiring for tax purposes in 2011.
Note 7. Certain Relationships
Pakie V. Plastino, President of the company, has periodically funded the Company
over the past three years through loans from Construction Lien and Credit
Services, Inc. and CheKproteKt, Inc., companies under the ownership and control
of Mr. Plastino. Such loans will be paid back consistent with the Company's
capital requirements.
- 9 -
<PAGE>
CONSOLIDATED DATA, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 and SEPTEMBER 30, 1998 and 1997
Note 8. Stockholders' Equity
The $100 of common stock for Contractor's Directory, Inc. is shown as a separate
line item on the Consolidated Balance Sheet. However, it is combined with the
$50,000 fair market value of the acquisition of Contractors' Directory, Inc. in
the Consolidated Statement of Changes in Stockholders' Equity for a total of
$50,100.
- 10 -
Exhibit 3.1
(SEAL OF THE STATE OF COLORADO)
(DEPARTMENT OF
STATE
CERTIFICATE
I, VICTORIA BUCKLEY, Secretary of State of the State of
Colorado hereby certify that ACCORDING TO THE RECORDS OF
THIS OFFICE,
ATTACHE HOLDINGS, LTD
(COLORADO CORPORATION)
BECAME INCORPORATED UPON FILING ARTICLES OF INCORPORATION
DATED 07/14/95. . . .
Dated: JULY 14, 1995
/s/ Victoria Buckley
---------------------
SECRETARY OF STATE
<PAGE>
(SEAL OF THE STATE OF COLORADO)
(DEPARTMENT OF
STATE
CERTIFICATE
I, VICTORIA BUCKLEY, Secretary of State of the State of
COLORADO HEREBY CERTIFY THAT
ACCORDING TO THE RECORDS OF THIS OFFICE
ATTACHE HOLDINGS, LTD
(COLORADO CORPORATION)
FILE # 19951089443 WAS FILED IN THIS OFFICE ON July 14, 1995 AND HAS COMPLIED
WITH THE APPLICABLE PROVISIONS OF THE LAWS OF THE STATE OF COLORADO AND ON THIS
DATE IS IN GOOD STANDING AND AUTHORIZED AND COMPETENT TO TRANSACT BUSINESS OR TO
CONDUCT ITS AFFAIRS WITHIN THIS STATE.
Dated: March 06, 1997
/s/ Victoria Buckley
---------------------
SECRETARY OF STATE
<PAGE>
ARTICLES OF INCORPORATION
OF
ATTACHE HOLDINGS, LTD.
KNOW ALL MEN BY THESE PRESENTS that the undersigned Incorporator being
a natural person of the age of eighteen years of age or older 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 is ATTACHE HOLDINGS, LTD.
ARTICLE II
Period of Duration
------------------
This Corporation shall exist in perpetuity, from and after the date of
filing these Articles of Incorporation with the Secretary of State of Colorado
unless and until dissolved according to the laws of the State of Colorado.
ARTICLE III
Purposes
--------
Section 1. Specific Purposes
-----------------
A. To engage in the business of developing and establishing electronic
and computer testing corporations in selected locations.
B. To provide management services to corporations engaged in the
electronic and computer testing operations
Section 2. General Purposes
----------------
A. To own, operate and maintain such real or personal property as may
be necessary to conduct such business and to do all of the things in connection
with the real or personal property which might be done by an individual.
B. To hire and employ agents and employees, and to enter into
agreements of employment and collective bargaining agreements for the purpose of
advancement and performance of the purposes of this Corporation.
<PAGE>
C. To carry on any other business, whether or not related to the
foregoing, including the transaction of all lawful business for which
corporations may be organized pursuant to the Colorado Corporation Act, to have
and exercise all powers, privileges and immunities now or hereafter conferred
upon or permitted to corporations by the laws of the State of Colorado, and to
do any and all things herein set forth to the same extent as natural persons
could do insofar as permitted by the laws of the State of Colorado.
D. To do those things which are authorized and permitted by the
Colorado Corporations Code.
E. To do all things authorized by law or incidental thereto.
ARTICLE IV
Powers
------
The powers of the Corporation shall be those powers granted by Article
Two of the Colorado Corporation Code under which this Corporation is formed. In
addition, the Corporation shall have the following specific powers:
Section 1. Officers. The Corporation shall have the power to elect or
appoint officers and agents of the Corporation and to fix their compensation.
Section 2. Capacity. The Corporation shall have the power to act as an
agent for any individual, association, partnership, corporation or other legal
entity, and to act as general partner for any limited partnership.
Section 3. Acquisitions. The Corporation shall have the power to
receive, acquire, hold, exercise right ad out of the ownership or possession
thereof, sell, or otherwise dispose of, shares or other interests in, or
obligations of, individuals, associations , partnerships, corporations or
governments.
Section 4. Earned Surplus. The Corporation shall have the power to
receive, acquire, hold, pledge, transfer, or otherwise dispose of shares of the
Corporation, but such shares may only be purchased, directly or indirectly, out
of earned surplus.
Section 5. Gifts. The Corporation shall have the power to make gifts or
contributions for the public welfare or for charitable, scientific or
educational purposes.
2
<PAGE>
ARTICLE V
Capital Structure
-----------------
Section 1. Authorized Capital. The aggregate number of shares and the
amount of the total authorized capital of said Corporation shall consist of
50,000,000 shares of common stock, no par value per share, and 5,000,000 shares
of non-voting preferred stock, no par value per share.
Section 2. Share Status. All common shares will be equal to each other,
and when issued, shall be fully paid and nonassessable, and the private property
of shareholders shall not be liable for corporate debts. Preferred shares shall
have such preferences as the Directors may assign to them prior to issuance.
Each holder of a common share of record shall have one vote for each share of
stock outstanding in his name on the books of the Corporation and shall be
entitled to vote said stock.
Section 3. Consideration for Shares. The common stock of the
Corporation shall be issued for such consideration as shall be fixed from time
to time by the Board of Directors. In the absence of fraud, the judgment of the
Directors as to the value of any property or services received in full or
partial payment for shares shall be conclusive. When shares are issued upon
payment of the consideration fixed by the Board of Directors such shares shall
be taken to be fully paid stock and shall be nonassessable.
Section 4. Pre-emptive Rights. Except as may otherwise be provided by
the Board of Directors, holders of shares of stock of the Corporation shall have
no pre-emptive right to purchase subscribe for or otherwise acquire shares of
stock of the Corporation, rights, warrants or options to purchase stocks or
securities of any kind convertible into stock of the Corporation.
Section 5. Dividends. Dividends in cash, property or shares of the
Corporation may be paid, 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.
Section 6. 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 of the
Corporation shall be distributed, either in cash or in kind, pro rata to the
holders of the common stock, subject to preferences, if any, granted to holders
of the preferred shares. The Board of Directors may, from time to time,
distribute to the shareholders in partial liquidation from stated capital of the
Corporation, in cash or property, without the vote of the shareholders in the
manner permitted and upon compliance with limitations imposed by law.
3
<PAGE>
ARTICLE VI
Voting by Shareholders
----------------------
Section 1. Voting Rights; Cumulative Voting. Each outstanding share of
common stock is entitled to one vote and each fractional share of common stock
is entitled to a corresponding fractional vote on each matter submitted to a
vote of shareholders. Cumulative voting shall not be allowed in the election of
Directors of the Corporation and every shareholder entitled to vote at such
election shall have the right to vote the number of shares owned by him for as
many persons as there are Directors to be elected, and for whose election he has
a right to vote. Preferred shares have no voting rights unless granted by
amendment to these Articles of Incorporation.
Section 2. Majority Vote. When, with respect to any action to be taken
by the Shareholders of the Corporation, the Colorado Corporation Code requires
the vote or concurrence of the holders of two-thirds of the outstanding shares
entitled to vote thereon, or of any class or series, any and every such action
shall be taken, notwithstanding such requirements of the Colorado Corporation
Code, by the vote or concurrence of the holders of a majority of the outstanding
shares entitled to vote thereon, or of any class or series.
ARTICLE VII
Registered and Initial Principal Office and Registered Agent
------------------------------------------------------------
The registered office and initial principal office of the Corporation
is located at 1291 South Lincoln Street Denver, Colorado 80210, and the name of
the registered agent of the Corporation at such address is Edward H. Hawkins.
ARTICLE VIII
Incorporator
------------
The name and address of the Incorporator is Edward H. Hawkins, 1291
South Lincoln Street, Denver, Colorado 80210
ARTICLE IX
Board of Directors
------------------
Section 1. The corporate powers shall be exercised by a majority of the
Board of Directors. The number of individuals to serve on the Board of Directors
shall be set forth in the Bylaws of the Corporation; provided, however, that the
initial Board of Directors shall consist of one person below-named to manage the
affairs of the Corporation until such time as he resigns or his successor is
elected by a majority vote of the shareholders:
Name of Director Address
---------------- -------
Edward H. Hawkins 1291 So. Lincoln St.
Denver, CO 80210
4
<PAGE>
Section 2. If in the interval between the annual meetings of
shareholders of the Corporation, the Board of Directors of the Corporation deems
it desirable that the number of Directors be increased, additional Directors may
be elected by a unanimous vote of the Board of Directors of the Corporation then
in office, or as otherwise set forth in the Bylaws of the Corporation.
Section 3. The number of Directors comprising the whole Board of
Directors may be increased or decreased from time to time within such foregoing
limit as set forth in the Bylaws of the Corporation.
ARTICLE X
Powers of the Board of Directors
--------------------------------
In furtherance and not in limitation of the powers conferred by the
State of Colorado, the Board of Directors is expressly authorized and empowered:
Section 1. Bylaws. To make, alter, amend and repeal the Bylaws, subject
to the power of the shareholders to alter or repeal the Bylaws made by the Board
of Directors.
Section 2. Books and Records. Subject to the applicable provisions of
the Bylaws then in effect, to determine, from time to time, whether and to what
extent, and at what times and places, and under what conditions and regulations,
the accounts and books of the Corporation or any of them, shall be open to
shareholder inspection. No shareholder shall have any right to inspect any of
the accounts, books, or documents of the Corporation, except as permitted by
law, unless and until authorized to do so by resolution of the Board of
Directors or of the shareholders of the Corporation.
Section 3. Power to Borrow. To authorize and issue without shareholder
consent, obligations of the Corporation, secured and unsecured, under such terms
and conditions as the Board, in its sole discretion, may determine, and to
pledge, or mortgage, as security therefor, any real or personal property of the
Corporation, including after-acquired property.
Section 4. Dividends. To determine whether my and, if so, what part, of
the earned surplus of the Corporation shall be paid in dividends to the
shareholders, and to direct and determine other use and disposition of any such
earned surplus.
Section 5. Profits. To fix, from time to time, the amount of the
profits of the Corporation to be reserved as working capital or for any other
lawful purposes.
Section 6. Employees' Plans. From time to time to provide and carry out
and to recall, abolish, revise, amend, alter, or change a plan or plans for the
participation by all or any of the employees, including Directors and officers
of this Corporation or of any corporation in which or in the welfare of which
the Corporation has any interest, and those actively engaged in the conduct of
this Corporation's business, in the profits of this
5
<PAGE>
Corporation or of any branch or division thereof, as a part of this
Corporation's legitimate expenses, and for the furnishing to such employees and
persons, or any of them, at this Corporation's expense, of medical services,
insurance against accident, sickness, or death, pensions during old age,
disability, or unemployment, education, housing, social services, recreation, or
other similar aids for their relief or general welfare, in such manner and upon
such terms and conditions as may be determined by the Board of Directors.
Section 7. Warrants and Actions. The Corporation, by resolution or
resolutions of its Board of Directors, shall have power to create and issue,
whether or not in connection with the issue and sale of any shares of any other
securities of the Corporation, warrants, rights, or options entitling the
holders thereof to purchase from the Corporation any shares of any class or
classes of any other securities of the Corporation, such warrants, rights or
options to be evidenced by or in such instrument or instruments as shall be
approved by the Board of Directors. The terms upon which, the time or times
(which may be limited or unlimited in duration), and the price or prices (not
less than the minimum amount prescribed by law, if any at which any such
warrants, rights, or options may be issued and any such shares or other
securities may be purchased from the Corporation upon the exercise of such
warrant, right, or option shall be such as shall be fixed and stated in the
resolution or resolutions of the Board of Directors providing for the creation
and issue of such warrants, rights or options. The Board of Directors is hereby
authorized to create and issue any such warrants, rights or options from time to
time for such consideration, and to such persons, firms, or corporations, as the
Board of Directors may determine.
Section 8. Compensation. To provide for the reasonable compensation of
its own members, and to fix the terms and conditions upon which such
compensation will be paid.
Section 9. Not in Limitation. In addition to the powers and authority
hereinabove, or by statute expressly conferred upon it, the Board of Directors
may exercise all such powers and do all such acts and things as may be exercised
or done by the Corporation, subject, nevertheless, to the provisions of the laws
of the State of Colorado, of these Articles of Incorporation and of the Bylaws
of the Corporation.
ARTICLE 113
Right of Directors to Contract with Corporation
-----------------------------------------------
No contract air other transaction between this Corporation and one or
more of its Directors or my other corporation, firm, association, or entity in
which one or more of its Directors me 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:
6
<PAGE>
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 of 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.
ARTICLE X11
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 my 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
area of interest on their own and this doctrine shall not limit the right 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.
ARTICLE XIII
Indemnification of Officers, Directors and Others
-------------------------------------------------
The Board of Directors of the Corporation shall have the power to:
A. Indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably Warred by him in connection
7
<PAGE>
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in the best interests of the Corporation and, with
respect to any criminal action or proceedings, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement or conviction or upon a plea of nolo
contendre or its equivalent shall not of itself create a presumption that the
person did not act in good faith and in a manner which he reasonably believed to
be in the best interests of the Corporation and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct was
unlawful.
B. Indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgement in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of the Corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in the best interests of the Corporation; but no
indemnification shall be made in respect of any claim, issue or matter as to
which such person has been adjudged to be liable for negligence or misconduct
in the performance of his duty to the Corporation unless and only to the extent
that the court in which such action or suit was brought determines upon
application that, despite the adjudication of liability, but in
view of all of the case, such person is fairly and reasonably entitled to
indemnification for such expenses which such court deems proper.
C. Indemnify a Director, officer, employee or agent of the Corporation
to the extent that such person has been successful on the merits in defense of
any action, suit or proceeding referred to in Subparagraph A or B of this
Article or in defense of any claim, issue, or matter therein, against expenses
(including attorney's fees) actually and reasonably incurred by him in
connection therewith.
D. Authorize indemnification under Subparagraph A or B of this Article
(unless ordered by a court) in the specific case upon a determination that
indemnification of the Director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
said Subparagraph A or B. Such shall be made by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or, if such a quorum is to obtainable, or even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or by the shareholders.
E. Authorize payment of expenses (including attorney's fees) incurred
in defending a civil or criminal action, suit or proceeding in advance of the
find disposition of such action, suit or proceeding as authorized in
Subparagraph D of this Article upon receipt of an undertaking by or on behalf of
the Director, officer, employee or agent to
8
<PAGE>
repay such amount unless it is ultimately determined that he is entitled to be
indemnified by the Corporation as authorized in this Article.
F. Purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the Corporation or who is or was
serving at the request of the Corporation as a Director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provision of this Article.
The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
these Articles of Incorporation, and the Bylaws, agreement, vote of shareholders
or disinterested directors or otherwise, and any procedure provided for by any
of the foregoing, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director, officer, employee or agent and shall inure to
the benefit of heirs, executors and administrators of such a person.
ARTICLE XIV
Right to Amend
--------------
The right is expressly reserved to amend, alter, change, or repeal any
provision or provisions contained in these Article of Incorporation or any
Article herein by a majority vote of the members of the Board of Directors, and
a majority vote of the shareholders of the Corporation.
IN WITNESS WHEREOF, the undersigned has set his hand and seal this 13th
day of July, 1995.
/s/ Edward H. Hawkins
- -------------------------------
Edward H. Hawkins, Incorporator
CONSENT OF AGENT
The undersigned hereby consents to the appointment as agent for the
above name corporation under the Section 105 of the Colorado Business
Corporation Act, until such time as lie resigns such position.
/s/ Edward H. Hawkins
- -------------------------------
Edward H. Hawkins, Agent
1291 So. Lincoln St., Denver, CO 80210
9
Exhibit 3.2
BYLAWS
OF
ATTACHE HOLDINGS, LTD.
ARTICLE I
Offices
-------
The principal office of the Corporation in Colorado shall initially be
located in Denver, Colorado. The Corporation may have such other offices, either
within or outside the State of Colorado, as the Board of Directors may
designate, or as the business of the Corporation may require from time to time.
The registered office of the Corporation required by the Colorado
Business Corporation Act to be maintained in the State of Colorado may be, but
need not be, identical with the principal office, and the address of the
registered office may be changed from time to time by the Board of Directors.
ARTICLE II
Shareholders
------------
Section 1. Annual Meeting.
---------------
The annual meeting of the shareholders shall be held pursuant to notice
given by the Board of Directors for the purpose of electing directors and for
the transaction of such other business as may come before the meeting.
Section 2. Special Meetings
----------------
Special meetings of the shareholders, for any purpose, unless otherwise
prescribed by statute, may be called by the President or by the Board of
Directors, and shall be called by the President at the request of the holders of
not less than ten (10%) percent of all the outstanding shares of the Corporation
entitled to vote at the meeting. Such request shall state the purposes of the
proposed meeting.
Section 3. Adjournment
-----------
a. When the annual meeting is convened, or when any special meeting is
convened, the presiding officer may adjourn it for such period of time as may be
reasonably necessary to reconvene the meeting at another place and another time.
b. The presiding officer shall have the power to adjourn any meeting of
the shareholders for any including but no limited to, lack of a quorum, to
secure a more adequate meeting place, to elect officials to count and tabulate
votes, to review any shareholder proposals or to pass upon any challenge which
may properly come before the meeting.
C. When a meeting is adjourned to another time at place, it shall not
be necessary to give any notice of the adjourned meeting if the time and place
to which the meeting is adjourned are announced at the meeting at which the
adjournment is taken and any business may be transacted at the adjourned meeting
that might have been transacted on the original date of the meeting. If,
however, after the adjournment the Board fixes a new record date for the
adjourned meeting, a notice of the adjourned meeting shall be given in
compliance with Subsection (4)(a) of this Article II to each shareholder of
record on the new record date entitled to vote at such meeting.
<PAGE>
Section 4. Notice of Meeting: Purpose of Meeting; Waiver
---------------------------------------------
a. Each shareholder of record entitled to vote at any meeting shall be
given in person, or by first class mail, postage prepaid, written notice of such
meeting which, in the case of a special meeting, shall set forth the purpose(s)
for which the meeting is called, not less than ten (10) or more then fifty (50)
days before the date of such meeting. If mailed, such notice is to be sent to
the shareholder's address as it appears on the stock transfer books of the
Corporation unless the shareholder shall have requested of the Secretary in
writing at least fifteen (15) days prior to the distribution of any required
notice that any notice intended for him to be sent to some other address, in
which case the notice may be sent to the address so designated. Notwithstanding
any such request by a shareholder, notice sent to a shareholder's address as it
appears on the stock transfer books of this Corporation as of the record date
shall be deemed properly given. Any notice of a meeting sent by the United
States mail shall be deemed delivered when deposited with proper postage thereon
with the United States Postal Service or in any mail receptacle under its
control.
b. A shareholder waives notice of any meeting by attendance, either in
person or by proxy, at such meeting or by waiving notice in writing either
before, during or after such meeting. Attendance at a meeting for the express
purpose of objecting that the meeting was not lawfully called or convened,
however, will not constitute a waiver of notice by a shareholder stating at the
beginning of the meeting, his objection that the meeting is not lawfully called
or convened.
c. Whenever the holders of at least eighty (80%) percent of the capital
stock of the Corporation having the right to vote shall be present at any annual
or special meeting of shareholders, however called or notified, and shall sign a
written consent thereto on the minutes of such meeting, the meeting shall be
valid for all purposes.
d. A Waiver of Notice signed by all shareholders entitled to vote at a
meeting of shareholders may also be used for any other proper purpose including
but not limited to, designating any place within or without the State of
Colorado as the place for holding such a meeting.
e. Neither the business to be transacted at nor the purpose of, any
regular or special meeting of shareholders need be specified in any written
Waiver of Notice.
Section 5. Closing of Transfer Books; Record Date; Shareholders' List.
-----------------------------------------------------------
a. In order to determine the holders of record of the capital stork of
the Corporation who are entitled to notice of meetings, to vote at a meeting or
adjournment thereof, or to receive payment of any dividend, or for any other
purpose, the Board of Directors may fix a datr not more than fifty (50) days
prior to the date set for any of the abovementioned activities for such
determination of shareholders.
b. 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 (10) days immediately
preceding such meeting.
c. In lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the date for such determination of shareholders,
such date in any case to be not more than fifty (50) days and, in case of a
meeting of shareholders, not less than ten (10) days prior to the date on which
the particular action, requiring such determination of shareholders is to be
taken.
d. If the stock transfer books are not closed and no record date is
fixed for the determination of shareholders entitled to notice or to vote at a
meeting of shareholders, or to receive payment of a dividend, the date on which
notice of the meeting is mailed at 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.
BYLAWS Page 2
<PAGE>
e. 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, unless the Board of Directors new record
date under this section for the adjourned meeting.
f. The officer or agent having charge of the stock transfer books of
the Corporation shall make, as of a date at least ten (10) days before each
meeting of shareholders, a complete list of the shareholders entitled to vote at
such meeting or any adjournment thereof, with the address of each shareholder
and the number and class and series, if any, of shares held by each shareholder.
Such list shall be kept on file at the registered office of the Corporation or
at the office of the transfer agent or registrar of the Corporation for a period
of ten (10) days prior to such meeting and shall be available for inspection by
any shareholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of any meeting of shareholders and
shall be subject to inspection by any shareholder at any time during the
meeting.
g. The original stock transfer books shall be prima facie evidence as
to the shareholders entitled to examine such list or stock transfer books or to
vote at any meeting of shareholders.
h. If the requirements of Subsection 5(f) of this Article II have not
been substantially complied with then, on the demand of any shareholder in
person or by proxy, the meeting shall be adjourned until such requirements an
complied with.
i. If no demand pursuant to Section 5(h) is made, failure to comply
with the requirements of this Section shall not affect the validity of any
action taken at such meeting.
j. Subsection 5(g) of this Article II shall be operative only at such
time(s) as the Corporation shall have six (6) or more shareholders.
Section 6. Quorum
------
a. At any meeting of the shareholders of the Corporation, the presence,
in person or by proxy, of Shareholders owning a majority of the issued and
outstanding shares of the capital stock of the Corporation entitled to vote
thereat shall be necessary to constitute a quorum for the transaction of any
business. If a quorum is present the affirmative vote of a majority of the
shares represented at such meeting and entitled to vote on the subject matter
shall be the act of the shareholders. If there shall not be a quorum at any
meeting of the shareholders of the Corporation, then the holders of a majority
of the shares of the capital stock of the Corporation who shall be present at
such meeting, in person or by proxy, may adjourn such meeting from time to time
until holders of a majority of the shares of the capital stock shall attend. At
any such adjourned meeting at which a quorum shall be present, any business may
be transacted which might have been transacted at the meeting as originally
scheduled.
b. The shareholders at a duly organized meeting having a quorum may
continue to transact business until adjournment notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
Section 7. Presiding Officer; Order of Business.
-------------------------------------
a. Meetings of the shareholders shall be presided over by the Chairman
of to Board, or, if he is not present, by the President, if be is not present,
by a Vice President or, if none of the Chairman of the Board, the President, or
a Vice President is present the meeting shall be presided over by a Chairman to
be chosen by a plurality of the shareholders entitled to vote at the meeting who
are present, in person or by proxy. The presiding officer of any meeting of th
shareholders may delegate the duties and obligations of the presiding officer of
the meeting as he sees fit.
b. The Secretary of the Corporation, or, in his absence, an Assistant
Secretary shall act as Secretary of every meeting of shareholders, but if
neither the Secretary nor an Assistant Secretary is present, the presiding
officer of the meeting shall choose any person present to act as Secretary of
the meeting
BYLAWS Page 3
<PAGE>
c. The order of business shall be as follows:
1. Call of meeting to order.
2. Proof of notice of meeting.
3. Reading of minutes of last previous shareholders meeting or a
Waiver thereof.
4. Reports of officers.
5. Reports of committees.
6. Election of directors.
7. Regular and miscellaneous business.
8. Special matters.
9. Adjournment.
d. Notwithstanding the provisions of Article II, Section 7, Subsection
c, the order and topics of business to be transacted at any meeting shall be
determined by the presiding officer of the meeting in his sole discretion. In no
event shall any variation in the order of business or additions and deletions
from the order of business as specified in Article II, Section 7, Subsection c,
invalidate any actions properly taken at any meeting.
Section 8. Voting.
-------
a. Unless otherwise provided for in the Certificate of Incorporation,
each shareholder shall be entitled, at each meeting and upon each proposal to be
voted upon, to one vote for each share of voting stock recorded in his name on
the books of the Corporation on the record date fixed as provided for in Article
II, Section 5.
b. The presiding officer at any meeting of the shareholders shall have
the power to determine the method and means of voting when any matter is to be
voted upon. The method and means of voting may include, but shall not be limited
to, vote by ballot, vote by hand or vote by voice. However, no method of voting
may be adopted which fails to take account of any shareholder's right to vote by
proxy as provided for in Section 10 of this Article II. In no event may any
method of voting be adopted which would prejudice the outcome of the vote.
Section 9. Action Without Meeting.
-----------------------
a. Any action required to be taken at any annual or special meeting of
shareholders of the Corporation, or any action which may be taken at any annual
or special meeting of such shareholders, may be taken without a without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. If any class of shares is entitled to vote
thereon as a class, such written consent shall be required of the holders a
majority of the shares of each class of shares to vote thereon.
b. Within ten (10) days after obtaining such authorization by written
consent, notice must be given to those shareholders who have not consented in
writing. The notice shall fairly summarize the material features of the
authorized action and, if the action be a merger, consolidation or sale or
exchange of assets for which dissenters' rights are provided under the Colorado
Business Corporation Act, the notice shall contain a clear statement of do right
of the shareholders dissenting therefrom to be paid the fair value of their
shares upon compliance with further provisions of the Colorado Business
Corporation Act regarding the rights of dissenting shareholders.
c. In the event that the action to which the shareholders' consent is
such as would have required the filing of a certificate under the Colorado
Business Corporation Act if such action had been voted on by shareholders at a
meeting thereof, the certificate filed under such other section shall state that
written consent has been given in accordance with the provisions of this Article
II, Section 9.
BYLAWS Page 4
<PAGE>
Section 10. Proxies.
--------
a. Every shareholder entitled to vote at a meeting of shareholders or
to express consent or dissent without a meeting, or his duly authorized
attorney-in-fact may authorize another person or persons to act for him by
proxy.
b. Every proxy must be signed by the shareholder or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the shareholder executing it except as
otherwise provided in this Article II, Section 10.
c. The authority of the holder of a proxy to act shall not be revoked
by the incompetence or death of the shareholder who executed the proxy unless,
before the authority is exercised, written notice of an adjudication of such
incompetence or of such death is received by the corporate officer responsible
for maintaining the list of shareholders.
d. Except when other provisions shall have been made by written
agreement between the parties, the record holder of shares held as pledges or
otherwise as security or which belong to another, shall issue to the pledgor or
to such owner of such shares, upon demand therefor and payment of necessary
expenses thereof, a proxy to vote or take other action thereon.
e. A proxy which states that it is irrevocable is irrevocable when it
is held by any of the following or a nominee of any of the following: (i) a
pledgee; (ii) a person who has purchased or agreed to purchase the shares; (iii)
a creditor or creditors of the Corporation who extend or continue to extend
credit to the Corporation in consideration of the proxy, if the proxy states
that it was given in consideration of such extension or continuation of credit,
the amount thereof, and the name of the person extending or continuing credit;
(iv) a person who has contracted to perform services as an officer of the
Corporation, if a proxy is required by the contract of employment, if the proxy
states that it was given in consideration of such contract of employment and
states the name of the employee and the period of employment contacted for, and
(v) a person designated by or under an agreement as provided in Article XI
hereof.
f. Notwithstanding a provision in a proxy stating that it is
irrevocable, the proxy becomes revocable after the pledge is redeemed, or the
debt of the Corporation is paid, or the period of employment provided for in the
contract of employment has terminated or the agreement under Article XII hereof,
has terminated and, in a case provided for in Subsection 10(e)(iii) or
Subsection 10(e)(iv) of this Article II becomes irrevocable three years after
the date of the proxy or at the end of the period, if any, specified therein,
whichever period is less, unless the period of irrevocability is renewed from
time to time by the execution of anew irrevocable proxy as provided in this
Article II, Section 10. This Subsection 10(f) does not affect the duration of a
proxy under Subsection 10(b) of this Article II.
g. A proxy may be revoked, notwithstanding a provision making it
irrevocable by a purchaser of shares without knowledge of the existence of the
provision unless the existence of the proxy and its irrevocability is noted
conspicuously on the face or back of the certificates representing such shares.
h. If a proxy for the same shares confers authority upon two (2) or
more persons and does not otherwise provide a majority of such persons present
at the meeting, or if only one is present, then that one may exercise all the
powers confered by the proxy. If the proxy holders present at the meeting are
equally divided as to the right and manner of voting in any particular case, the
voting of such shares shall be prorated.
i. If a proxy expressly so provides, any proxy holder may appoint in
writing a substitute to act in his place.
Section 11. Voting of Shares by Shareholders.
---------------------------------
a. Shares standing in the name of another corporation, domestic or
foreign, may be voted by the officer, agent, or proxy designated by the Bylaws
of the corporate shareholder, or, into absence diary applicable Bylaw, by such
person as the Board of Directors of the corporate shareholder may designate.
Proof of such designation may be
BYLAWS Page 5
<PAGE>
made by presentation of a certified copy of the Bylaws or other instrument of
the corporate shareholder. In the absence of any such designation, or in case of
conflicting designation by the corporate shareholder, the Chairman of the Board,
President, any vice president, secretary and treasurer of the corporate
shareholder, in that order shall be presumed to possess authority to vote such
shares.
b. Shares held by an administrator, executor, guardian or conservator
may be voted by him, either in person or by proxy, without a transfer of such
shares into his name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without a transfer of such shares into his name.
c. Shares standing in the name of a receiver may be voted by such
receiver. Shares held by or under the control of a receiver but not standing in
the name of such receiver, may be voted by such receiver without the transfer
thereof into his name if authority to do so is contained in an appropriate order
of the court by which such receiver was appointed.
d. A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledge.
e. Shares of the capital stock of the Corporation belonging to the
Corporation or held by it in a fiduciary capacity shall not be voted, directly
or indirectly, at any meeting, and shall not be counted in determining the total
number of outstanding shares.
ARTICLE III
Directors
---------
Section 1. Board of Directors; Exercise of Corporate Powers.
-------------------------------------------------
a. All corporate powers shall be exercised by or under the authority
of, and the business and affairs of the Corporation shall be managed under the
direction of the Board of Directors except as may be otherwise provided in the
Articles of Incorporation. If any such provision is made in The Articles of
Incorporation, the powers and duties conferred or imposed upon the Board of
Directors, shall be exercised or performed to such extent and by such person or
persons as shall be provided in the Articles of Incorporation.
b. Directors need to be residents of the state of incorporation unless
the Articles of Incorporation so require.
c. The Board of Directors shall have authority to fix the compensation
of Directors unless otherwise provided in the Articles of Incorporation.
d. A Director shall perform big duties as a Director, including his
duties as a member of any committee of the Board upon which be may serve, in
good faith, in a manner he reasonably believes to be in the beat interests of
the Corporation, and with such care as an ordinary prudent person in a like
position would use under similar circumstances.
e. In performing his duties, a Director shall be entitled to rely on
information, opinion, reports or statements including financial data, in each
case prepared or presented by: (i) one or more officers or employees of the
Corporation whom the Director reasonably believes to be reliable and competent
in the matters presented; (ii) counsel, public accountants or other persons as
to matters which the Director reasonably believes to be within such persons
professional or expert competence; or (iii) a committee of the Board upon which
he does not serve, duly designated in accordance with a provision of the
Articles of Incorporation or the Bylaws, as to matters within its designated
authority, which committee the Director reasonably believes to merit confidence.
BYLAWS Page 6
<PAGE>
f. A Director shall not be considered to be acting in good faith if he
has knowledge concerning the matter in question that would cause such reliance
described in Subsection 1(e) of this Article III to be unwarranted.
g. A person who performs his duties in compliance with this Article
III, Section 1 shall have no liability by reason of being or having been a
Director of the Corporation.
h. 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 consents
thereto unless he votes against such action or abstains from voting in respect
thereto because of an asserted conflict of interest.
Section 2. Number; Election Classification of Directors; Vacancies.
--------------------------------------------------------
a. The Board of Directors of this Corporation shall consist of not less
than two (2) nor more than seven (7) members, unless the number of shareholders
is less than two, in which the Corporation shall one director until such time as
the number of shareholders increase to two or more. The number of directors
shall be fixed by the initial Board of Directors. The number of directors
constituting the initial Board of Directors shall be fixed by the Articles of
Incorporation. The number of directors may be increased from time to time by the
Board of Directors, but no decrease have the effect of shortening the term of
any incumbent director.
b. Each person named in the Articles of Incorporation as a member of
the initial Board of Directors, shall hold office until the first annual meeting
of shareholders, and until his successor shall have been elected and qualified
or until his earlier resignation, removal from office or death.
c. At the first annual meeting of shareholders and at each annual
meeting thereafter the shareholders shall elect directors to hold office until
the next succeeding annual meeting, except in case of the classification of
directors as permitted by the Colorado Business Corporation Act. Each director
shall hold office for the term for which he is elected and until his successor
shall have been elected and qualified or until his earlier resignation, removal
from office or death.
d. The shareholders, by amendment to these Bylaws, may provide that the
directors be divided into not more than four classes, as nearly equal in number
as possible, whose terms of office shall respectively expire at different times,
but no such term shall continue longer than four (4) years, and at lead
one-fifth (1/5) in number of the directors shall be elected annually.
e. If directors are classified and the number of directors is
thereafter changed, any increase or decrease in directorships shall be so
apportioned as to make the classes as to make all classes as nearly equal in
number as possible.
f. Any vacancy occurring in the Board of Directors including any
vacancy created by reason of an increase in the number 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 hold office only until the next election of directors by the
shareholders.
Section 3. Removal of Directors.
---------------------
a. At a meeting of shareholders called expressly for that purpose,
directors may be removed in the manner provided in this Article III, Section 3.
Any director or the entire Board of Directors may be removed, with or without
cause, by a vote of the holders of a majority of the shares then entitled to
vote at an election of directors.
b. If the Corporation has cumulative voting, if less than the entire
Board is to be removed no one of the directors may be removed if the votes cast
against his removal would be sufficient to elect him if then cumulatively voted
at an election of the entire Board of Directors, or, if there be classes of
directors, at an election of the class of directors of which he is a member.
BYLAWS Page 7
<PAGE>
Section 4. Director Quorum and Voting.
---------------------------
a. A majority of the number of directors fixed in the manner provided
in these Bylaws shall constitute a quorum for the transaction of business unless
a greater number if required elsewhere in these Bylaws.
b. A majority of the members of an Executive Committee or other
committee shall constitute a quorum for the transaction of business at any
meeting of such Executive Committee or other committee.
c. The act of the majority of the directors present at a Board meeting
at which a quorum is present shall be the act of the Board of Directors.
d. The act of a majority of the members of an Executive Committee
present at an Executive Committee meeting at which a quorum is present shall be
the act of the Executive Committee.
e. The act of a majority of the members of any other committee present
at a committee meeting at which a quorum is present shall be the act of the
committee.
Section 5. Director Conflicts of Interest.
-------------------------------
a. No contract or other transaction between this 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 because of a
relationship or interest or because such director or directors an present at the
meeting of the Board of Directors or a committee thereof which authorizes,
approves or ratifies such contract or transaction or because his or their votes
are counted for such purpose, if:
(i) 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
(ii) 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
(iii) The contract or transaction is fair and reasonable as to
the Corporation at the time it is authorized by the Board, a committee, or the
shareholders.
b. 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 action.
Section 6. Executive and Other Committee; Designation; Authority.
------------------------------------------------------
a. The Board of Directors, by resolution adopted by a majority of do
full Board of Directors, may designate from among its members an Executive
committee and one or more other committees each of which, to the extent provided
in such resolution of In the Articles of Incorporation or these Bylaws, shall
have and may exercise all the authority of the Board of Directors, except that
no such committee shall have authority to: (i) approve or recommend to
shareholders actions or proposals required by the Colorado Business Corporation
Act to be approved by shareholders; (ii) designate candidates for the office of
director for purposes of proxy solicitation or otherwise; (iii) fill vacancies
on the Board of Directors of any committee thereof; (iv) amend the Bylaw, or (v)
authorize or approve the issuance or sale of, or any contract to issue or sell,
shares or designate the terms of a series of class of shares, unless the Board
of Directors, having acted regarding general authorization for the issuance or
sale of shares, or any contract therefor, and in the case of a series, the
designation thereof, has specified a general formula or method by resolution by
adoption of a stock option or other plan, authorized a committee to fix the
terms upon which such shares may be issued or sold, including without
limitation, the price, the rate or manner of payment of dividends provisions for
BYLAWS Page 8
<PAGE>
redemption, sinking fund, conversion, and voting preferential rights, and
provisions for other featrues of a class of shares, or a series of class of
shares, with full power in such committee to adopt any final resolution setting
forth all the terms thereof and to authorize the statement of the terms of a
series for filing with the Secretary of State under the Colorado Business
Corporation Act.
b. The Board, by resolution adopted in accordance with Article III,
Subsection 6(a) may designate one or more directors as alternate members of any
such committee, who may act in the place and stead of any absent member or
members at any meeting of such committee.
c. Neither the designation of any such committee, the delegation
thereto of authority, nor action by such committee pursuant to such authority
shall alone constitute compliance by any member of the Board of Directors, not a
member of the committee in question, with his responsibility to act in good
faith, in a manner he reasonably believes to be in the best interests of the
Corporation, and with such care as an ordinarily prudent person in a like
position would use under similar circumstances.
Section 7. Place, Time, Notice, and Call of Directors' Meetings.
-----------------------------------------------------
a. Meetings of the Board of Directors, regular or special, may be held
either within or without this state.
b. A regular meeting of the Board of Directors of the Corporation shall
be held for the election of officers of the Corporation and for the transaction
of such other business as may come before such meeting as promptly a practicable
after the annual meeting of the shareholders of this Corporation without the
necessity of other notice than this Bylaw. Other regular meetings of the Board
of Directors of the Corporation may be held at such times and at such pieces as
the Board of Directors of the Corporation may from time to time resolve without
other notice than such resolution. Special meetings of the Board of Directors
may be held at any time upon call of the Chairman of the Board or the President
or a majority of the Directors of the Corporation, at such time and at such
place as shall be specified in the call thereof. Notice of any special meeting
of the Board of Directors shall be given at least two (2) days prior thereto, if
by written notice delivered personally; or at least five (5) days prior thereto,
if mailed; or at least two (2) days prior thereto, if by telegram; at least two
(2) days prior thereto, if by telephone. If such notice is given by mail, such
notice shall be deemed to have been delivered when deposited with the United
States Postal Service addressed to the business address of such director with,
postage thereon prepaid. If notice be given by telegram, such notice shall be
deemed delivered when the telegram is delivered to the telegraph company. If
notice is given by telephone, such notice shall be deemed delivered when the
call is completed.
c. Notice of a meeting of the Board of Directors need so be given to
any director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such and waiver of any and all objections to the place of the meeting, the time
of the meeting, or the manner in which it has been called or convened, except
when a director states at the beginning of the meeting, any objection to the
transaction of business because the meeting is not lawfully called or convened.
d. 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.
e. A majority of the directors present, whether or not a quorum
exists, may adjourn any meeting of the Board of Directors to another time and
place. Notice of any such adjourned meeting shall be given to the directors who
were not present at the time of the adjournment and, unless the time and place
of the adjourned meeting are announced at the time of the adjournment, to the
other directors.
f. Members of the Board of Directors may participate a meeting of such
Board by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time. Participation by such means shall constitute presence in person
at a meeting.
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Section 8. Action by Directors Without a Meeting.
--------------------------------------
Any action required by the Colorado Business Corporation Act to be
taken at a meeting of the directors of the Corporation, or a committee thereof,
may be taken without a meeting if a consent in writing, setting forth the action
so to be taken, signed by all of the directors, or all of the members of the
committee, as the case may be, is filed in the minutes of the proceedings of the
Board or of the committee. Such consent shall have the same effect as a
unanimous vote.
Section 9. Compensation.
-------------
The directors and members of the Executive and any other committee of
the Board of Directors shall be entitled to such reasonable compensation for
their services and on such basis as shall be fixed from time to time by
resolution of the Board of Directors. The Board of Directors and members of any
committee of the Board of Directors shall be entitled to reimbursement for any
reasonable expenses incurred in attending any Board or committee meeting. Any
director receiving compensation under this section shall not be prevented from
serving the Corporation in any other capacity and shall not be prohibited from
receiving reasonable compensation for such other services.
Section 10. Resignation.
------------
Any Director of the Corporation may resign at any time without
acceptance by the Corporation. Such resignation shall be in writing and may
provide that such resignation shall take effect immediately or on any future
date stated in such notice.
Section 11. Removal.
--------
Any Director of the Corporation may be removed for cause by a majority
vote of the other members of the Board of Directors as then constituted or with
or without cause by the vote of the holders of a majority of the outstanding
shares of capital stock shareholders of the Corporation called for such purpose.
Section 12.
Section 12. Vacancies.
----------
In the event a vacancy shall occur on the Board of Directors of the
Corporation whether because of death, resignation, removal, an increase in the
number of directors or any other reason, such vacancy may be filled by the vote
of a majority of the remaining directors of the Corporation even though such
remaining directors represent less than a quorum. An increase in the number of
directors shall create vacancies for the purpose of this section. A director of
the Corporation elected to fill a vacancy shall hold office for the unexpired
term of his predecessor, or in the case of an increase in the number of
directors, until the election and qualification of directors at the next annual
meeting of the shareholders.
ARTICLE IV
Section 1. Election; Number; Terms of Office.
----------------------------------
a. The officers of the Corporation shall consist of a Chairman of the
Board, a President, a Secretary and a Treasurer, each of whom shall be elected
by the Board of Directors at such time and in such manner as may be prescribed
by these Bylaws. Such other officers and assistant officers and agents as may be
deemed necessary may be elected or appointed by the Board of Directors.
b. All officers and agents, as between themselves and the Corporation,
shall have such authority and perform such duties in the management of the
Corporation as are provided in these Bylaws, or as may be determined by
resolution of the Board of Directors so inconsistent with these Bylaws.
BYLAWS Page 10
<PAGE>
c. Any two (2) or more offices may be held by the same person except
the offices of the President and Secretary.
d. A failure to elect a Chairman of the Board, President, a Secretary
and a Treasurer shall not affect the existence of the Corporation.
Section 2. Removal.
--------
An officer of the Corporation shall hold office until the election and
qualification of his successor; however, any officer of the Corporation may be
removed from office by the Board of Directors whenever in its judgment the best
interests of the Corporation will be served thereby. Such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of any officer shall not of itself create any contract
right to employment or compensation
Section 3. Vacancies.
----------
Any vacancy in any office from any cause may be filled for the
unexpired portion of the term of such office by the Board of Directors.
Section 4. Powers and Duties.
------------------
a. The Chairman of the Board shall be the Chief Executive Officer of
the Corporation. The Chairman of the Board shall preside at all meetings of the
shareholders and of the Board of Directors. Except where by law the signature of
the President is required or unless the Board of Directors shall rule otherwise,
the Chairman of the Board shall the same power as the President to sign all
certificates, contracts and other instruments of the Corporation which may be
authorized by the Board of Directors. Unless a Chairman of the Board is
specifically elected, the President shall be deemed to be the Chairman of the
Board.
b. The President shall be the Chief Operating Officer of the
Corporation. He shall be responsible for the day-to-day supervision of the
business and affairs of the Corporation. He shall sign or countersign all
certificates, contracts or other instruments of the Corporation as authorized by
the Board of Directors. He may, but need not, be a member of the Board of
Directors. In the absence of the Chairman of the Board, the President shall be
the Chief Executive Officer of the Corporation, and shall preside at all meeting
of the shareholders and the Board of Directors. He shall make reports to the
Board of Directors and shareholders. He shall perform such other duties as are
incident to his office or are properly required of him by the Board of
Directors. The Board of Directors will at all times retain the power to
expressly delegate the duties of the President to any other officer of the
Corporation.
c. The Vice-President(s), if any, in the order designated by the Board
of Directors, shall exercise the functions of the President during the absence,
disability, death, or refusal to act of the President. During the time that any
Vice-President is properly exercising the functions of the President, such
Vice-President shall have all the powers of and be subject to all the
restriction upon the President. Each Vice-President shall have such other duties
as we assigned to him from time to time by the Board of Directors or by the
President of the Corporation.
d. The Secretary of the Corporation shall keep the minutes of the
meetings of the shareholders of the Corporation and, if so requested, the
Secretary shall keep the minutes of the meetings of On Board of Nectars of the
Corporation. The Savory shall be the custodian of the minute books of the
Corporation and such other books and records of the Corporation as the Board of
Directors of the Corporation may direct. The Secretary shall make or cause to be
made all proper entries in all corporate books that the Board of Directors of
the Corporation may direct. The Secretary shall have the general responsibility
for maintaining the stock transfer books of the Corporation, or of supervising
the maintenance of the stock transfer books of the Corporation by the transfer
agent, if any, of the Corporation. The Secretary shall be the custodian of the
corporate seal of the Corporation and shall affix the corporate seal of the
Corporation on contracts and other instruments as the Board of Directors of the
Corporation may direct.
BYLAWS Page 11
<PAGE>
The Secretary shall perform such other duties as are assigned to him from time
to time by the Board of Directors or the President of the Corporation.
e. The Treasurer of the Corporation shall have custody of all funds
and securities owned by the Corporation. The Treasurer shall cause to be entered
regularly in the proper books of account of the Corporation full and accurate
accounts of the receipts and disbursements of the Corporation. The Treasurer of
the Corporation shall render a statement of cash, financial and other accounts
of the Corporation whenever he is directed to render such a statement by the
Board of Directors or by the President of the Corporation. The Treasurer shall
at all reasonable times make available the Corporation's books and financial
accounts to any Director of the Corporation during normal business hours. The
Treasurer shall perform all other acts incident to the office of the Treasurer
of the Corporation, and he shall have such other duties as are assigned to him
from time to time by the Board of Directors or the President of the Corporation.
f. Other subordinate or assistant officers appointed by the Board of
Directors or by the President, if such authority is delegated to him by the
Board of Directors, shall exercise such powers and perform such duties as may be
delegated to them by the Board of Directors or by the President, as the case may
be.
g. In case of the absence or disability of any officer of the
Corporation and of any person authorized to act in his place during such period
of absence or disability, the Board of Directors may from time to time delegate
the powers and duties of such officer to any other officer or any director or
any other person whom it may select.
Section 5. Salaries.
---------
The salaries of all Officers of the Corporation shall be fixed by the
Board of Directors. No officer shall be in ineligible to receive such salary by
reason of the fact that he is also a Director of the Corporation and receiving
compensation therefor.
ARTICLE V
Loans to Employees and Officers:
Guaranty of Employees and Officers
----------------------------------
This Corporation may lend money to, guarantee any obligation of, or
otherwise assist any officer or other employee of the Corporation or of a
subsidiary, including any officer or employee who is a Director of the
Corporation or of a subsidiary, whenever, a the judgement of the Directors, such
low guaranty at assistance may reasonably be expected to benefit the
Corporation. The loan, guaranty or other assistance may be with or without
interest, and may be unsecured, or secured in such manner as the Board of
Directors shall approve including, without limitation, a pledge of shares of
stock of the Corporation. Nothing in this Article shall be deemed to deny, limit
or restrict the powers of guaranty or Warranty of this Corporation at common law
or under any statute.
ARTICLE VI
STOCK CERTIFICATES; VOTING TRUSTS; TRANSFERS
--------------------------------------------
Section 1. Certificates Representing Shares.
---------------------------------
a. Every holder of shares in this Corporation shall be entitled to one
or more certificates, representing all shares to which be is entitled and such
certificates shall be signed by the President or a Vice President and the
Secretary or an Assistant Secretary of the Corporation and may be sealed with
the seal of the Corporation or a facsimile thereof. The signatures of the
President or Vice President and the Secretary or Assistant Secretary may be
facsimiles if the certificate is manually signed on behalf a of a transfer agent
or a registrar, other than the Corporation itself or an employee of the
Corporation. In case any officer who signed or whose facsimile signature has
been placed upon such certificate
BYLAWS Page 12
<PAGE>
shall have ceased to be such officer before such certificate is issued, it may
be used by the Corporation with the same effect as if he were such officer at
the date of its issuance.
b. Each certificate representing shares shall state upon the face
thereof: (i) the name of the Corporation; (ii) that the Corporation is organized
under the laws of this state; (iii) the name of the person or persons to whom
issued; (iv) the number and class of shares, and the designation of the series,
if any, which such certificate represents; and (v) the par value of each share
represented by such certificate, or a statement that the shares are without par
value.
c. No certificate shall be issued for any shares until such shares are
fully paid.
Section 2. Transfer Book.
--------------
The Corporation shall keep at its registered office or principal place
of business or in the office of its transfer agent or registrar, a book (or
books where more than one kind, class, or series of stock is outstanding) to be
known as the Stock Book, containing the names, alphabetically arranged,
addresses and Social Security numbers of every shareholder, and the number of
shares of each kind, class or series of stock held of record. Where the Stock
Book is kept in the office of the transfer agent, the Corporation shall keep at
its office in the State of Colorado copies of the stock lists prepared from said
Stock Book and sent to it from time to time by said transfer agent. The Stock
Book or stock lists shall show the current status of the ownership of shares of
the Corporation provided, if the transfer agent of the Corporation be located
elsewhere, a reasonable time shall be allowed for transit or mail.
Section 3. Transfer of Shares.
-------------------
a. The name(s) and address(s) of the person(s) to whom share of stock
of this Corporation are issued, be entered on the Stock Transfer Books of the
Corporation, with the number of shares and date of issuance.
b. Transfer of shares of the Corporation shall be made on the Stock
Transfer Books of the Corporation by the Secretary or the transfer agent, only
when the holder of record thereof or the legal representative of such holder of
record or the attorney-in-fact of such holder of record, authorized by power of
attorney duly executed and filed with the Secretary or transfer agent of the
Corporation, shall surrender the Certificate representing such shares for
cancellation. Lost, destroyed or stolen Stock Certificates shall be replaced
pursuant to Section 5 of this Article VI.
c. The person or persons in whose names shares stand on the books of
the Corporation shall be deemed by the Corporation to be the owner of such
shares for all purposes, except as otherwise provided pursuant so section 10 and
11 of Article II, or Section 4 of this Article VI.
Section 4. Voting Trusts
-------------
a. Any number shareholders of the Corporation may create a voting trust
for the purpose of conferring upon a trustee or trustees the right to vote or
otherwise represent their shares, for a period not to exceed ten (10) years, by:
(i) entering into a written voting trust (ii) depositing a counterpart of the
agreement with the Corporation at its registered office; and (iii) transferring
their shares to such trustee or trustees for the purposes of this Agreement.
Prior to the recording of the Agreement, the shareholder concerned shall tender
the stock certificate(s) described therein so the Corporate secretary who shall
note on each certificate:
"This Certificate is subject to the provisions of a voting
trust agreement dated , recorded in Minute Book of the
Corporation.
--------------------------
Secretary"
b. Upon the transfer of such shares, voting trust certificates shall be
issued by the trustee or trustees to shareholders who transfer their share in
trust. Such trustee or trustees shall keep a record of the holders of the voting
BYLAWS Page 13
<PAGE>
trust certificates evidencing a beneficial interest in the voting trust, giving
the names and addresses of all such holders and the number and class of the
shares in respect of which the voting trust certificates held by each are
issued, and shall deposit a copy of such record with the Corporation at its
registered office.
b. Upon the transfer of such shares, voting trust certificates shall
be issued by the trustee or trustees to the shareholders who transfer their
shares in trust. Such trustee or trustees shall keep a record of the holders of
the voting trust certificates evidencing a beneficial interest in the voting
trust, giving the names and addresses of all such holders and the number and
class of the shares in respect of which the voting trust certificates held by
each are issued, and shall deposit a copy of such record with the Corporation at
its registered office.
c. The counterpart of the voting trust agreement and the copy of such
record so deposited with the Corporation shall be subject to the same right of
examination by a shareholder of the Corporation, in person or by agent or
attorney, as are the books and records of the Corporation, and such counterpart
and such copy of such record shall be subject to examination by any bolder of
record of voting trust certificates either in person or by agent or attorney, at
any reasonable time for any proper purpose.
d. At any time before the expiration of a voting trust agreement as
originally fixed or as extended one or more times under this Article VI,
Subsection 4(d) one or more holders of voting trust certificates may, by
agreement in writing, extend the duration of such voting trust agreement,
nominating the same or substitute trustee or trustees, for an additional period
not exceeding ten (10) years. Such extension agreement shall not affect the
rights or obligations of persons not parties to the agreement, and such persons
shall be entitled to remove their shares from the trust and promptly to have
their stock certificates reissued upon the expiration date of the original term
of the voting trust agreement. The extension agreement shall in every respect
comply with and be subject to all the provisions of this Article VI, Section 4
applicable to the original voting trust agreement except that the ten (10) year
maximum period of duration shall commence on the date of adoption of the
extension agreement.
e. The trustees under the terms of the agreements entered into under
the provisions of this Article VI, Section 4 shall not acquire the legal title
to the shares but shall be vested only with the legal right and title to the
voting power which is incident to the ownership of the shares.
Section 5. Lost, Destroyed, or Stolen Certificates.
----------------------------------------
No certificate representing shares of the stock in the Corporation
shall be issued in place of any Certificate alleged to have been lost,
destroyed, or stolen except on production of evidence, satisfactory to the Board
of Directors, of such loss, destruction or theft, and, if the Board of Directors
so requires, upon the furnishing of an indemnity bond in such amount (but not to
exceed twice the fair market value of the shares represented by the Certificate)
and with such terms and with such surety as the Board of Directors may, in its
discretion, require.
ARTICLE VII
Books and Records
-----------------
a. The Corporation shall keep correct and complete books and records of
account and shall keep minutes of the proceedings of its shareholders, Board of
Directors and committees of Directors.
b. Any books, records and minutes may be in written form or in any
other form capable of being converted into written form within a reasonable
time.
c. Any person who shall have been a bolder of record of one quarter of
one percent of all shares or of voting trust certificates therefor at least six
months immediately preceding his demand or shall be the holder of record of, or
the holder of record of voting trust certificates for, at least five (5%)
percent of the outstanding shares of any class or series of the Corporation,
upon written demand stating the purpose thereof, shall have the right to
examine, in person
BYLAWS Page 14
<PAGE>
or by agent or attorney, at any reasonable time or times, for any proper
purpose, its relevant books and records of account, minutes and record of
shareholders and to make extracts therefrom.
d. No shareholder who within two (2) years has sold or offered for sale
any list of shareholders or of holders of voting trust certificates for shares
of this Corporation or any other Corporation; has aided or abetted any person in
procuring any list of shareholders or of holders of voting trust certificates
for any such purpose; or has improperly used any information secured through any
prior examination of the books and records of account, minutes, or record of
shareholders or of holders of voting trust certificates for shares of the
Corporation or any other Corporation; shall be entitled to examine the documents
and records of the Corporation as provided in Subsection (c) of this Article
VII. No shareholder who does not act in good faith or for a proper purpose in
making his demand shall be entitled to examine the documents and records of the
Corporation as provided in Subsection (c) of this Article VII.
e. Unless modified by resolution of the shareholders, this Corporation
shall prepare not later than four (4) months after the close of each fiscal
year:
(i) A balance sheet showing in reasonable detail the financial
conditions of the Corporation as of the date of its fiscal year.
(ii) A profit and loss statement showing the results of its
operation during its fiscal year.
f. Upon the written request of any shareholder or holder of voting
trust certificates for shares of the Corporation, the Corporation shall mail to
such shareholder or holder of voting trust certificates a copy of its most
recent balance sheet and profit and loss statement.
g. Such balance sheets and profit and loss statements shall be filed
and kept for at least five (5) years in the registered office of the Corporation
in this state and shall be subject to inspection during business hours by any
shareholder or holder of voting trust certificates.
ARTICLE VII
Dividends
---------
The Board of Directors of the Corporation, may from time to time, declare and
the Corporation may pay dividends an its shares in cash, property or its own
shares, except when the Corporation is insolvent or when the payment thereof
would render the Corporation insolvent subject to the following provisions:
a. Dividends in cash or property may be declared and paid, except as
otherwise provided in this Article VII, only out of the and unrestricted earned
surplus of the Corporation or out of capital surplus, however arising, but each
dividend paid out of capital surplus shall be identified as a distribution of
capital surplus, and the amount per share paid from such capital surplus shall
be disclosed to the shareholders receiving the some concurrently with the
distribution.
b. Dividends may be declared and paid in the Corporation's treasury
shares.
c. Dividends way be declared and paid in the Corporations authorized
but unissued shares out of any unreserved and unrestricted surplus of the
Corporation upon the following conditions:
(i) If a dividend is payable in the Corporation's own shares
having a par value, such shares shall be issued at not less than the par value
thereof and there shall be transferred to stated capital at the time such
dividend is paid an amount of surplus equal to the aggregate par value of the
shares to be issued as a dividend.
(ii) If a dividend is Payable in the Corporation's own shares
without par value, such shares shall be issued at such stated value as shall be
fixed by the Board of Directors by resolution adopted at the time such dividend
BYLAWS Page 15
<PAGE>
is declared, and there shall be transferred to stated capital at the time such
dividend is paid an amount of surplus equal to the aggregate stated value so
fixed in respect of such shares; and the amount per share so transferred to
stated capital shall be disclosed to the shareholders receiving such dividend
concurrently with the payment thereof.
d. No dividend payable in shares of any class shall be paid to the
holders of shares of any other class unless the Articles of Incorporation so
provide or such payment is authorized by the affirmative vote or written consent
of the holders of at least a majority of the outstanding shares of the class in
which the payment is to be made.
c. A split up or division of the issued shares of any class into a
greater number of shares of the same class without increasing the stated capital
of the Corporation shall not be construed to be a stock dividend within the
meaning of this Article VIII.
ARTICLE IX
Indemnification
---------------
Section 1. Action, etc. Other Than by or in the Right of the
-------------------------------------------------
Corporation.
-------------
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding or investigation, whether civil, criminal or administrative,
and whether external or internal to the Corporation, (other than a judicial
action or suit brought by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or that, being or having been such a director, officer, employee,
or trustee or agent, he is or was serving at the request of the Corporation as a
director, officer, employee, or trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise in (all such persons being
referred to hereafter as an "Agent"), against expenses (including attorneys'
fees), judgments, fines and amounts paid is settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding, or any
appeal therein, if such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe such conduct was unlawful. The termination of any action, suit or
proceeding -- whether by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent -- shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best in interests of the
Corporation, and, with respect to any criminal action or proceeding, that such
person had reasonable cause to believe that his conduct was unlawful
Section 2. Action, etc., by or in the Right of the Corporation.
----------------------------------------------------
The Corporation shall indemnify any person who was at is a party or is
threatened to be made a party to any threatened, pending or completed judicial
action or suit brought by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was an Agent (as
defined above) against expenses (including attorneys' fees) actually and
reasonably be incurred by him in connection with the defense, settlement or
appeal of such action or suit if he acted in good faith and in a manner be
reasonably believed to be in or not opposed to the bee interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter which as to which such person shall have been adjudged to
be liable for gross negligence or willful misconduct in the performance of his
or her duty to the Corporation unless and only to the extent that the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnify for such
expenses which the court shall deem proper.
Section 3. Determination of Right of Indemnification.
------------------------------------------
Any indemnification under Section 1 or 2 (unless ordered by a court)
shall be made by the Corporation unless a determination is reasonably promptly
made (i) by the Board by a majority vote of a quorum consisting of directors who
were not parties to such action, suit at proceeding, or (ii) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (iii) by the
BYLAWS Page 16
<PAGE>
stockholders, that such person acted in bad faith and in a manner that such
person did not believe to be in or not opposed to the best interests of the
Corporation, or, with respect to any criminal proceeding, that such person
believed or had reasonable cause to believe that his conduct was unlawful.
Section 4. Indemnification Against Expenses of Successful Party.
-----------------------------------------------------
Notwithstanding the other provisions of this Article, to the extent
that an Agent has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice or the settlement of an
action without admission of liability, in defense of any proceeding or in
defense of any claim, issue or matter therein, or on appeal from any such
proceeding, action, claim or matter, such Agent shall be indemnified against all
expenses incurred in connection therewith.
Section 5. Advances of Expenses.
---------------------
Except as limited by Section 6 of this Article, costs, charges and
expenses (including attorneys' fees) incurred in any action, suit, proceeding or
investigation or any appeal therefrom shall be paid by the Corporation in
advance of the final disposition of such matter, if the Agent shall undertake to
repay such amount in the event that it is ultimately determined, as provided
herein, that such person is not entitled to indemnification. Notwithstanding the
foregoing, no advance shall be made by the Corporation if a determination is
reasonably and promptly made by the Board of Directors or if a majority vote of
a quorum of disinterested directors cannot be obtained, then by independent
legal counsel in a written opinion, that, based upon the facts known to the
Board or counsel at the time such determination is made, such person acted in
bad faith and a manner that such person did not believe to be in or not opposed
to the best interest of the Corporation, or, with respect to any criminal
proceeding, that such person believed or had reasonable cause to believe his
conduct was unlawful. Is no event shall any advance be made in instances where
the Board or independent legal counsel reasonably determines that such person
deliberately breached his duty to the Corporation or its shareholders.
Section 6.Right of Agent to Indemnification Upon Application: Procedure
-------------------------------------------------------------
Upon Application.
-----------------
Any indemnification under Sections 1, 2 and 4 or advance under Section
5 of this Article, shall be made promptly, and in any event within ninety (90)
days, upon the written request of the Agent, unless with respect to applications
under Sections 1, 2 or 5, a determination is reasonably and promptly made by the
Board of Directors by a majority vote of a quorum of disinterested directors
that such Agent acted in a manner set forth in such Sections as to justify the
Corporation's not indemnifying or making an advance to the Agent. In the event
no quorum of disinterested directors is obtainable, the Board of Directors shall
promptly direct that independent legal counsel shall decide whether the Agent
acted in the manner set forth in such Sections as to justify the Corporation's
not indemnifying or making an advance to the Agent. The right to indemnification
or advances as granted by this Article shall be enforceable by the Agent in any
court of competent jurisdiction, if the Board or independent legal counsel
denies the claim, in whole or in part, or if no disposition of such claim is
made within ninety (90) days. The Agent's costs and expenses incurred in
connection with successfully establishing his right to indemnification, in whole
or in part, in any such proceeding shall also be indemnified by the Corporation.
Section 7. Contribution.
-------------
In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Article is held
by a court of competent jurisdiction to be unavailable to an indemnitee in whole
or part, the Corporation shall, in such an event, after taking into account,
among other things, contributions by other directors and officers of the
Corporation pursuant to indemnification agreements or otherwise, and, in the
absence of personal enrichment, acts of intentional fraud or dishonesty or
criminal conduct on the part of the Agent, contribute to the payment of Agent's
losses to the extent that, after other contributions are taken into account,
such losses exceed: (i) in the case of a director of the Corporation or any of
its subsidiaries who is not an officer of the Corporation or any of such
subsidiaries, the amount of fees paid to him for serving as a director during
the 12 months proceeding the commencement of the suit, proceeding or
investigation; or (ii) in the case of a director of the Corporation or any of
its subsidiaries who
BYLAWS Page 17
<PAGE>
is also an officer of the Corporation or any of such subsidiaries, the amount
set forth in clause (i) plus 5% of the aggregate cash compensation paid to said
director for service in such office(s) during the 12 months preceding the
commencement of the suit, proceeding or investigation; or (iii) in the case of
an officer of the Corporation or any of its subsidiaries, 5% of the aggregate
cash compensation paid to such officer of service in such office(s) during the
12 months preceding the commencement of such suit, proceeding or investigation.
Section 8. Other Rights and Remedies.
--------------------------
The indemnification provided by this Article shall not be deemed
exclusive of, and shall not affect, any other rights to which an Agent seeking
indemnification may be entitled under any law, Bylaw, or charter provision,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be an
Agent and shall inure to the benefit of the heirs, executors and administrators
of such a person. All rights to indemnification under this Article shall be
deemed to be provided by a contract between the Corporation and the Agent who
serves in such capacity at any time while these Bylaws and other relevant
provisions of the general corporation law and other applicable law, if any are
in effect. Any repeal or modification thereof shall not affect any rights or
obligations then existing.
Section 9. Insurance.
----------
Upon resolution passed by the Board, the Corporation may purchase and
maintain insurance on behalf of any person who is or was an Agent against any
liability asserted against such person and incurred by him in any such capacity
or arising out of his status as such, whether or not the Corporation would have
the power to indemnify such person against such liability under the provisions
of this Article. The Corporation may create a mist fund, grant a security
interested or use other means (including, without limitation, a letter of
credit) to ensure the payment of such sums may become necessary to effect
indemnification as provided herein.
Section 10. Constituent Corporation.
------------------------
For the purposes of this Article, references to the "Corporation"
include all constituent corporations absorbed in a consolidation or merger as
well as the resulting or surviving corporation, so that any person who is or was
a director, officer, employee, agent or trustee of such a constituent
corporation or who, being or having been such a director, officer, employee or
trustee, of another corporation, partnership, joint venture, trust or other
enterprise shall stand in the same position under the provision of this Article
with respect to the resulting or surviving corporation as such person would if
be had served the resulting or surviving corporation in the same capacity.
Section 11. Other Enterprises, Fines and Serving at Corporation's
-----------------------------------------------------
Request.
---------
For purposes of this Article, references to "other enterprise" in
Sections 1 and 10 shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to any employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service by Agent as director, officer, officer, employee,
trustee or agent of the Corporation which imposes duties on, or involves
services by, such Agent with respect to any employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article.
Section 12. Savings Clause.
---------------
If this Article or any portion thereof shall be invalidated as any
ground by any court of competent jurisdiction then the Corporation shall
nevertheless indemnify each Agent as to expenses (including attorneys' fees),
judgments, fines and amounts paid is settlement with respect to any action,
suit, appeal proceeding or investigation, whether, civil
BYLAWS Page 18
<PAGE>
ARTICLE X
Amendment of Bylaws
-------------------
a. The Board of Directors shall have the power to amend, alter, or
repeal these Bylaws, and to adopt new Bylaws, from time to time.
b. The shareholders of the Corporation, may, at any annual meeting of
the shareholders of the Corporation or at any special meeting of the
shareholders of the Corporation called for the purpose of amending these Bylaws,
amend, alter, or repeal these Bylaws, and adopt new Bylaws, from time to time.
c. The Board of Directors shall not have the authority to adopt or
amend any Bylaw if such new Bylaw of such amendment would be inconsistent with
any Bylaw previously adopted by the shareholders of the Corporation. The
shareholders may prescribe in any Bylaw made by them that such Bylaw shall not
be altered, amended or repealed by the Board of Directors.
ARTICLE XI
Shareholder Agreements
----------------------
Unless the share of this Corporation are listed on a national
securities exchange or are regularly quoted by licensed securities dealers and
brokers, all the shareholders of this Corporation may enter into agreements
relating to any phase of business and affairs of the Corporation and which may
provide for, among other things, the election of directors of the Corporation in
a manner determined without reference to the number of shares of capital stock
of the Corporation owned by its shareholders the determination of management
policy, and division of profits. Such agreement may restrict the discretion of
the Board of Directors and its management of the business of the Corporation or
may treat the Corporation as if it, were a partnership or may arrange the
relationships of the shareholders in a manner that would be appropriate only
among partners. In the event such agreement shall be inconsistent in whole or in
part with the Articles of Incorporation and/or Bylaws of the Corporation, the
terms of such agreement shall govern. Such agreement shall be binding upon any
transferee of shares of this corporation provided such transferee has actual
notice thereof or a legend referring to such agreement is noted on the face or
back of the certificate or certificates representing the shares transferred to
such transferee.
ARTICLE XII
Fiscal Year
-----------
The Fiscal Year of this Corporation shall be determined by the Board of
Directors.
Date: 4-24-96 /s/ Gary G. Clark
------- -----------------------
Secretary
[SEAL]
BYLAWS Page 19
Exhibit 4
Form D
SEC 1972 Potential persons who are to respond to the collection of information
contained (6/99) in this form are not required to respond unless the form
displays a currently valid OMB control
number.
ATTENTION
Failure to file notice in the appropriate states will not result in a loss
of the federal exemption. Conversely, failure to file the appropriate
federal notice will not result in a loss of an available state exemption
state exemption unless such exemption is predicated on the filing of a
federal notice.
OMB APPROVAL
OMB Number: 3235-0076
Expires: November 30, 2001
Estimated average burden
hours per response...16.00
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM D
NOTICE OF SALE OF SECURITIES
PURSUANT TO REGULATION D,
SECTION 4(6), AND/OR
UNIFORM LIMITED OFFERING EXEMPTION
- --------------------------------------------------------------------------------
Name of Offering (check if this is an amendment and name has changed,
and indicate change.)
ATTACHE HOLDINGS, LTD.
- --------------------------------------------------------------------------------
Filing Under (Check box(es) that
apply):[X] Rule 504[ ] Rule
505[ ] Rule 506[ ] Section
4(6)[ ] ULOE
Type of Filing: [ ] New Filing [ X ] Amendment
- --------------------------------------------------------------------------------
A. BASIC IDENTIFICATION DATA
- --------------------------------------------------------------------------------
1. Enter the information requested about the issuer
- --------------------------------------------------------------------------------
Name of Issuer (check if this is an amendment and name has changed,
and indicate change.)
ATTACHE HOLDINGS, LTD.
- --------------------------------------------------------------------------------
Address of Executive Offices Telephone Number
(Number and Street, City, State, Zip Code) (Including Area Code)
529 Cherokee St., Denver, CO 80204 303/691-6163
- --------------------------------------------------------------------------------
Address of Principal Business Operations Telephone Number
(Number and Street, City, State, Zip Code) (Including Area Code)
(if different from Executive Offices)
- --------------------------------------------------------------------------------
Brief Description of Business
Developing and establishing electronic and computer testing corporations.
- --------------------------------------------------------------------------------
Type of Business Organization
[ X ] corporation [ ] limited partnership, already formed [ ] other
(please specify): [ ] business trust [ ] limited partnership, to be
formed
- --------------------------------------------------------------------------------
Month Year
Actual or Estimated Date of Incorporation or Organization: [07] [95]
[X] Actual [ ] Estimated
Jurisdiction of Incorporation or Organization: (Enter two-letter
U.S. Postal Service abbreviation for
State:
CN for Canada; FN for other foreign jurisdiction) [C][O]
<PAGE>
GENERAL INSTRUCTIONS
Federal:
Who Must File: All issuers making an offering of securities in reliance on
an exemption under Regulation D or
Section 4(6), 17 CFR 230.501 et seq. or 15 U.S.C. 77d(6).
When to File: A notice must be filed no later than 15 days after the first sale
of securities in the offering. A notice is deemed filed with the U.S. Securities
and Exchange Commission (SEC) on the earlier of the date it is received by the
SEC at the address given below or, if received at that address after the date on
which it is due, on the date it was mailed by United States registered or
certified mail to that address.
Where to File: U.S. Securities and Exchange Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549.
Copies Required: Five (5) copies of this notice must be filed with the SEC, one
of which must be manually signed. Any copies not manually signed must be
photocopies of manually signed copy or bear typed or printed signatures.
Information Required: A new filing must contain all information requested.
Amendments need only report the name of the issuer and offering, any changes
thereto, the information requested in Part C, and any material changes from the
information previously supplied in Parts A and B. Part E and the Appendix need
not be filed with the SEC.
Filing Fee: There is no federal filing fee.
State:
This notice shall be used to indicate reliance on the Uniform Limited Offering
Exemption (ULOE) for sales of securities in those states that have adopted ULOE
and that have adopted this form. Issuers relying on ULOE must file a separate
notice with the Securities Administrator in each state where sales are to be, or
have been made. If a state requires the payment of a fee as a precondition to
the claim for the exemption, a fee in the proper amount shall accompany this
form. This notice shall be filed in the appropriate states in accordance with
state law. The Appendix in the notice constitutes a part of this notice and must
be completed.
<PAGE>
- --------------------------------------------------------------------------------
A. BASIC IDENTIFICATION DATA
- --------------------------------------------------------------------------------
2. Enter the information requested for the following:
- - Each promoter of the issuer, if the issuer has been organized within the
past five years;
- - Each beneficial owner having the power to vote or dispose, or direct the
vote or disposition of, 10% or more
of a class of equity securities of the issuer;
- - Each executive officer and director of corporate issuers and of corporate
general and managing partners of
partnership issuers; and
- - Each general and managing partner of partnership issuers.
- --------------------------------------------------------------------------------
Check Box(es) that Apply: [ ] Promoter[ ] Beneficial Owner
[ X ] Executive Officer[ X ] Director[ ] General and/or Managing Partner
- --------------------------------------------------------------------------------
Full Name (Last name first, if individual)
BURCH, Clark
- --------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
529 Cherokee Street, Denver, CO 80204
- --------------------------------------------------------------------------------
Check Box(es) that Apply: [ ] Promoter[ ] Beneficial Owner
[ X ] Executive Officer[ X ] Director[ ] General and/or Managing Partner
- --------------------------------------------------------------------------------
Full Name (Last name first, if individual)
CLARK, Gary
- --------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
4155 E. Jewell Avenue, Suite 909, Denver, CO 80222
- --------------------------------------------------------------------------------
Check Box(es) that Apply: [ ] Promoter[ ] Beneficial Owner
[ ] Executive Officer[ ] Director[ ] General and/or Managing Partner
- --------------------------------------------------------------------------------
Full Name (Last name first, if individual)
- --------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
- --------------------------------------------------------------------------------
Check Box(es) that Apply: [ ] Promoter[ ] Beneficial Owner
[ ] Executive Officer[ ] Director[ ] General and/or Managing Partner
- --------------------------------------------------------------------------------
Full Name (Last name first, if individual)
- --------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
- --------------------------------------------------------------------------------
Check Box(es) that Apply: [ ] Promoter[ ] Beneficial Owner
[ ] Executive Officer[ ] Director[ ] General and/or Managing Partner
- --------------------------------------------------------------------------------
Full Name (Last name first, if individual)
- --------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
- --------------------------------------------------------------------------------
Check Box(es) that Apply: [ ] Promoter[ ] Beneficial Owner
[ ] Executive Officer[ ] Director[ ] General and/or Managing Partner
- --------------------------------------------------------------------------------
Full Name (Last name first, if individual)
- --------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
- --------------------------------------------------------------------------------
Check Box(es) that Apply: [ ] Promoter[ ] Beneficial Owner
[ ] Executive Officer[ ] Director[ ] General and/or Managing Partner
- --------------------------------------------------------------------------------
Full Name (Last name first, if individual)
- --------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
- --------------------------------------------------------------------------------
(Use blank sheet, or copy and use additional copies of this
sheet, as necessary.)
<PAGE>
- --------------------------------------------------------------------------------
B. INFORMATION ABOUT OFFERING
- --------------------------------------------------------------------------------
1. Has the issuer sold, or does the issuer intend to sell, to non-accredited
investors in this offering?...................................[X] Yes [ ]No
Answer also in Appendix, Column 2, if filing under ULOE.
2. What is the minimum investment that will be accepted from any individual?$25
3. Does the offering permit joint ownership of a single unit? [X] Yes [ ]No
4. Enter the information requested for each person who has been or will be paid
or given, directly or indirectly, any commission or similar remuneration for
solicitation of purchasers in connection with sales of securities in the
offering. If a person to be listed is an associated person or agent of a broker
or dealer registered with the SEC and/or with a state or states, list the name
of the broker or dealer. If more than five (5) persons to be listed are
associated persons of such a broker or dealer, you may set forth the information
for that broker or dealer only.
- --------------------------------------------------------------------------------
Full Name (Last name first, if individual) N/A
- --------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
- --------------------------------------------------------------------------------
Name of Associated Broker or Dealer
- --------------------------------------------------------------------------------
States in Which Person Listed Has Solicited or Intends to Solicit Purchasers
(Check "All States" or check individual States) .................. [ ] All
States [AL] [AK] [AZ] [AR] [CA] [CO] [CT] [DE] [DC] [FL] [GA] [HI] [ID] [IL]
[IN] [IA] [KS] [KY] [LA] [ME] [MD] [MA] [MI] [MN] [MS] [MO] [MT] [NE] [NV] [NH]
[NJ] [NM] [NY] [NC] [ND] [OH] [OK] [OR] [PA] [RI] [SC] [SD] [TN] [TX] [UT] [VT]
[VA] [WA] [WV] [WI] [WY] [PR]
- --------------------------------------------------------------------------------
Full Name (Last name first, if individual) N/A
- --------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
- --------------------------------------------------------------------------------
Name of Associated Broker or Dealer
- --------------------------------------------------------------------------------
States in Which Person Listed Has Solicited or Intends to Solicit Purchasers
(Check "All States" or check individual States.................. [ ] All States
[AL] [AK] [AZ] [AR] [CA] [CO] [CT] [DE] [DC] [FL] [GA] [HI] [ID] [IL] [IN] [IA]
[KS] [KY] [LA] [ME] [MD] [MA] [MI] [MN] [MS] [MO] [MT] [NE] [NV] [NH] [NJ] [NM]
[NY] [NC] [ND] [OH] [OK] [OR] [PA] [RI] [SC] [SD] [TN] [TX] [UT] [VT] [VA] [WA]
[WV] [WI] [WY] [PR]
- --------------------------------------------------------------------------------
Full Name (Last name first, if individual) N/A
- --------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
- --------------------------------------------------------------------------------
Name of Associated Broker or Dealer
- --------------------------------------------------------------------------------
States in Which Person Listed Has Solicited or Intends to Solicit Purchasers
(Check "All States" or check individual States) .................. [ ] All
States [AL] [AK] [AZ] [AR] [CA] [CO] [CT] [DE] [DC] [FL] [GA] [HI] [ID] [IL]
[IN] [IA] [KS] [KY] [LA] [ME] [MD] [MA] [MI] [MN] [MS] [MO] [MT] [NE] [NV] [NH]
[NJ] [NM] [NY] [NC] [ND] [OH] [OK] [OR] [PA] [RI] [SC] [SD] [TN] [TX] [UT] [VT]
[VA] [WA] [WV] [WI] [WY] [PR]
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
C. OFFERING PRICE, NUMBER OF INVESTORS, EXPENSES AND USE OF PROCEEDS
- --------------------------------------------------------------------------------
1. Enter the aggregate offering price of securities included in this offering
and the total amount already sold. Enter "0" if answer is "none" or "zero."
If the transaction is an exchange offering, check this box and indicate in
the columns below the amounts of the securities offered for exchange and
already exchanged.
Type of Security Aggregate Amount Already
Offering Price Sold
Debt .................................... $ -0- $ -0-
------------------
Equity .................................... $ 50,000 $ -0-
------------------
[X] Common [ ] Preferred
Convertible Securities (including warrants) . $ -0- $ -0-
------------------
Partnership Interests ) ..................... $ -0- $ -0-
------------------
Other (Specify $ -0- $ -0-
------------------
Total .................................. $ 50,000 $ -0-
------------------
Answer also in Appendix, Column 3, if filing under
ULOE.
2. Enter the number of accredited and non-accredited investors who have
purchased securities in this offering and the aggregate dollar amounts of
their purchases. For offerings under Rule 504, indicate the number of
persons who have purchased securities and the aggregate dollar amount of
their purchases on the total lines.
Enter "0" if answer is "none" or "zero."
Aggregate
Number Dollar Amount
Investors of Purchases
Accredited Investors ........................ -0- $ -0-
------------------
Non-Accredited Investors..................... 25 $ 963
------------------
Total (for filings under Rule 504 only) ..... 25 $ 963
------------------
Answer also in Appendix, Column 4, if filing under
ULOE.
3. If this filing is for an offering under Rule 504 or 505, enter the
information requested for all securities sold by the issuer, to date, in
offerings of the types indicated, the twelve (12) months prior to the first
sale of securities in this offering. Classify securities by type listed in
Part C-Question 1.
Type of Dollar Amount
Type of Offering Security Sold
Rule 505 ................................. -0- $ -0-
------------------
Regulation A.............................. -0- $ -0-
------------------
Rule 504 ................................. common $ 963
------------------
Total ............................... -0- $ 963
------------------
4. a. Furnish a statement of all expenses in connection with the issuance and
distribution of the securities in this offering. Exclude amounts relating
solely to organization expenses of the issuer. The information may be given
as subject to future contingencies. If the amount of an expenditure is not
known, furnish an estimate and check the box to the left of the estimate.
Transfer Agent's Fees.................................[x] $ -0-
---------
Printing and Engraving Costs..........................[x] $ 200
---------
Legal Fees............................................[x] $ 1,500
---------
Accounting Fees.......................................[x] $ 1,000
---------
Engineering Fees......................................[x] $ -0-
---------
Sales Commissions (specify finders' fees separately)..[x] $ -0-
---------
Other Expenses (identify) Administrative..............[x] $ 300
--------------- ---------
Total.............................................[x] $ 3,000
---------
<PAGE>
- --------------------------------------------------------------------------------
C. OFFERING PRICE, NUMBER OF INVESTORS, EXPENSES AND USE OF PROCEEDS
- --------------------------------------------------------------------------------
b. Enter the difference between the aggregate offering price given in response
to Part C - Question 1 and total expenses furnished in response to Part C -
Question 4.a. This difference is the "adjusted gross proceeds to the
issuer.".................................................... $47,000
-------
5. Indicate below the amount of the adjusted gross proceeds to the issuer used
or proposed to be used for each of the purposes shown. If the amount for any
purpose is not known, furnish an estimate and check the box to the left of the
estimate. The total of the payments listed must equal the adjusted gross
proceeds to the issuer set forth in response to Part C - Question 4.b above.
Payments to
Officers
Directors, Payments To
Affliates Others
Salaries and fees ...............................[x] $ 5,000 [x] $ -0-
Purchase of real estate .........................[ ] $ -0- [ ] $ -0-
Purchase, rental or leasing and installation
of machinery and equipment.......................[ ] $ -0- [x] $ 2,000
Construction or leasing of plant buildings and
facilities.......................................[ ] $ -0- [x] $ 6,000
Acquisition of other businesses (including the value Of securities involved in
this offering that may be Used in exchange for the assets or securities of
another
Issuer pursuant to a merger) ................... [ ] $ -0- [ ] $ -0-
Repayment of indebtedness ...................... [ ] $ -0- [ ] $ -0-
Working capital ................................ [ ] $ -0- [x] $ 28,000
Other (specify): Administrative, office rent
telephone, fax, secretarial............ [ ] $ -0- [ ] $ 6,000
Column Totals .................................. [x] $ 5,000 [ ] $ 42,000
Total Payments Listed (column totals added...... [x] $ 47,000
- --------------------------------------------------------------------------------
D. FEDERAL SIGNATURE
- --------------------------------------------------------------------------------
The issuer has duly caused this notice to be signed by the undersigned duly
authorized person. If this notice is filed under Rule 505, the following
signature constitutes an undertaking by the issuer to furnish to the U.S.
Securities and Exchange Commission, upon written request of its staff, the
information furnished by the issuer to any non-accredited investor pursuant to
paragraph (b)(2) of Rule 502.
- --------------------------------------------------------------------------------
Issuer (Print or Type) Signature Date ATTACHE HOLDINGS, LTD. /s/ Gary G. Clark
3/14/97
- --------------------------------------------------------------------------------
Name of Signer (Print or Type) Title of Signer (Print or Type) Gary Clark
Secretary
- --------------------------------------------------------------------------------
ATTENTION
Intentional misstatements or omissions of fact constitute
federal criminal violations. (See 18 U.S.C. 1001.)
<PAGE>
- --------------------------------------------------------------------------------
E. STATE SIGNATURE
- --------------------------------------------------------------------------------
1. Is any party described in 17 CFR 230.262 presently subject to any of the
disqualification provisions of such rule?
See Appendix, Column 5, for state response.
2. The undersigned issuer hereby undertakes to furnish to any state
administrator of any state in which this notice is filed, a notice on Form
D (17 CFR 239,500) at such times as required by state law.
3. The undersigned issuer hereby undertakes to furnish to the state
administrators, upon written request, information furnished by the issuer
to offerees.
4. The undersigned issuer represents that the issuer is familiar with the
conditions that must be satisfied to be entitled to the Uniform limited
Offering Exemption (ULOE) of the state in which this notice is filed and
understands that the issuer claiming the availability of this exemption has
the burden of establishing that these conditions have been satisfied.
The issuer has read this notification and knows the contents to be true and has
duly caused this notice to be signed on its behalf by the undersigned duly
authorized person.
- --------------------------------------------------------------------------------
Issuer (Print or Type) Signature Date
ATTACHE HOLDINGS, LTD. /s/ Gary G. Clark 3/14/97
- --------------------------------------------------------------------------------
Name of Signer (Print or Type) Title of Signer (Print or Type)
Gary Clark Secretary
- --------------------------------------------------------------------------------
Instruction:
Print the name and title of the signing representative under his signature for
the state portion of this form. One copy of every notice on Form D must be
manually signed. Any copies not manually signed must be photocopies of the
manually signed copy or bear typed or printed signatures.
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX
- --------------------------------------------------------------------------------
State Yes No
- --------------------------------------------------------------------------------
AL
- --------------------------------------------------------------------------------
AK
- --------------------------------------------------------------------------------
AZ
- --------------------------------------------------------------------------------
AR
- --------------------------------------------------------------------------------
CA
- --------------------------------------------------------------------------------
CO X common 25 $962 -0- -0- x
- --------------------------------------------------------------------------------
CT
- --------------------------------------------------------------------------------
DE
- --------------------------------------------------------------------------------
DC
- --------------------------------------------------------------------------------
FL
- --------------------------------------------------------------------------------
GA
- --------------------------------------------------------------------------------
HI
- --------------------------------------------------------------------------------
ID
- --------------------------------------------------------------------------------
IL
- --------------------------------------------------------------------------------
IN
- --------------------------------------------------------------------------------
IA
- --------------------------------------------------------------------------------
KS
- --------------------------------------------------------------------------------
KY
- --------------------------------------------------------------------------------
LA
- --------------------------------------------------------------------------------
ME
- --------------------------------------------------------------------------------
MD
- --------------------------------------------------------------------------------
MA
- --------------------------------------------------------------------------------
MI
- --------------------------------------------------------------------------------
MN
- --------------------------------------------------------------------------------
MS
- --------------------------------------------------------------------------------
MO
<PAGE>
State Yes No
- --------------------------------------------------------------------------------
MT
- --------------------------------------------------------------------------------
NE
- --------------------------------------------------------------------------------
NV
- --------------------------------------------------------------------------------
NH
- --------------------------------------------------------------------------------
NJ
- --------------------------------------------------------------------------------
NM
- --------------------------------------------------------------------------------
NY
- --------------------------------------------------------------------------------
NC
- --------------------------------------------------------------------------------
ND
- --------------------------------------------------------------------------------
OH
- --------------------------------------------------------------------------------
OK
- --------------------------------------------------------------------------------
OR
- --------------------------------------------------------------------------------
PA
- --------------------------------------------------------------------------------
RI
- --------------------------------------------------------------------------------
SC
- --------------------------------------------------------------------------------
SD
- --------------------------------------------------------------------------------
TN
- --------------------------------------------------------------------------------
TX
- --------------------------------------------------------------------------------
UT
- --------------------------------------------------------------------------------
VT
- --------------------------------------------------------------------------------
VA
- --------------------------------------------------------------------------------
WA
- --------------------------------------------------------------------------------
WV
- --------------------------------------------------------------------------------
WI
- --------------------------------------------------------------------------------
WY
- --------------------------------------------------------------------------------
PR
Exhibit 23
WILLIAM L. BUTCHER, CPA P.S.
Certified Public Accountant
TELEPHONE EVERETT-(425) 335-0603 OR SEATTLE-(206) 953-9383 FAX (425) 335-3567
7304 10TH STREET S.E., SUITE "C", EVERETT, WASHINGTON 98205
621 SR 9 NE, #F-4 O LAKE STEVENS, WASHINGTON 98258
Consolidated Data, Inc.
6912 - 220th Street SW
Suite 320
Mountlake Terrace, WA 98043
We consent to the inclusion in this registration statement on
Form 10SB of our report dated July 27, 1999, on our audit of
the financial statements and financial statement schedules of
Consolidated Data, Inc. We also consent to the reference to
our firm under the caption "Experts"
William L. Butcher CPA PS
Everett, Washington
July 30, 1999
