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Kirt W. James
PRINCIPAL OFFICER
First Auto, Inc.
3131 Southwest Freeway, Number 42
Houston TX 77098
(Name and Address of Person Authorized to Receive Notices
and Communications on Behalf of the Person Filing Statement)
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WITH A COPY TO:
KARL E. RODRIGUEZ, ESQ
24843 Del Prado, #318
Dana Point, CA 92629
(949) 248-9561
fax (949) 248-1688
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934
FIRST AUTO, INC.
Nevada Optional
(Jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
3131 Southwest Freeway, Number 46, Houston TX 77098
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 949-248-1765
The following Securities are to be registered pursuant to Section 12(g) of the
Act:
Class-A Common Voting Equity Stock
7,981,500
The EXHIBIT INDEX is located at page 34 of this Registration Statement
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PART I 3
Item 1. Description of Business 3
(a) Business Development 3
(b) Business of the Issuer 3
(c) Reverse Acquisition Contingency 10
(d) Voluntary Reporting Contingency 10
Item 2. Managements Discussion and Analysis or Plan of Operation 10
(a) Plan of Operation 10
(b) Discussion and Analysis of Financial Condition and Results of
Operations 11
(c) Reverse Acquisition Contingency 12
Item 3. Description of Property 14
Item 4. Security Ownership of Certain Beneficial Owners and Management 14
(a) Security Ownership of Management 14
(b) Security Ownership of Certain Beneficial Owners 14
(c) Changes in Control 15
Item 5. Directors, Executive Officers, Promoters and Control Persons 15
(a) Previous Officers 15
(b) Current Officer 16
Item 6. Executive Compensation 17
Item 7. Certain Relationships and Related Transactions 17
Item 8. Description of Securities 18
PART II 20
Item 1 20
(a) Market Information 20
(b) Holders 20
(c) Dividends 20
(d) Secondary Trading 20
Item 2. Legal Proceedings 21
Item 3. Changes in and Disagreements with Accountants 21
Item 4. Recent Sales of Unregistered Securities 22
Item 5. Indemnification of Officers and Directors 22
PART F/S 24
PART III 34
Item 1. Index to Exhibits 34
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PART I
UNNUMBERED ITEM: INTRODUCTION
This registration statement is voluntarily filed pursuant to Section 12(g)
of the Securities Exchange Act of 1934, in order to comply with the requirements
of the National Association of Securities Dealers for submission for quotation
on the Over the Counter Bulletin Board, often called OTCBB . Our common stock
is not presently quoted on the OTCBB. Its common stock is not currently listed
on the Pink Sheets (submission pending) and has not traded in brokerage
transactions. The requirements of the OTCBB are that the financial statements
and information about our corporation be reported periodically to the Commission
and be and become information that the public can access easily. We wish to
report and provide disclosure voluntarily, and will file periodic reports in the
event that its obligation to file such reports is suspended under the Exchange
Act. If and when this 1934 Act Registration is effective and clear of comments
by the staff, we will be eligible for consideration for the OTCBB upon
submission of one or more NASD members for permission to publish quotes for the
purchase and sale of the shares of our common stock.
ITEM 1. DESCRIPTION OF BUSINESS.
(A) BUSINESS DEVELOPMENT.
(1) FORM AND YEAR OF ORGANIZATION. This Corporation First Auto, Inc.
(formally the Registrant , but more commonly "we", "us" and "our") was duly
incorporated in Nevada on March 24, 1999, with the intention of initiating a
wholesale consumer finance company that will be engaged in purchasing automobile
loans from third-party loan generation sources.
On March 29, 1999, we issued 6,816,500 Founders Shares, at par value for
organizational services, valued at $6,816 to three founders.
On that same day, the Officers were empowered and directed to conduct a
private placement/limited offering of up to 1,250,000 shares of common stock, at
$0.10 per share, to accredited purchasers, and not more than 35 unaccredited
purchasers. On June 14, 1999, the offering closed, 1,165,000 shares having been
placed and sold to 13 investors, at $0.10 per share, for a total of $165,000.
As a result, we have 7,981,500 shares of common stock issued and
outstanding. Please refer to Item 4 of Part II, Recent Sales of Unregistered
Securities, for more information and disclosure.
(2) BANKRUPTCY, RECEIVERSHIP OR SIMILAR PROCEEDING. None from inception
to date.
(B) BUSINESS OF THE ISSUER. We intend to become an Internet information
destination in the United
States for first-time buyers of new and used vehicles and for consumers seeking
information on automotive products and services, such as insurance, financing
and warranties. We will utilize the power of the Internet and our ability,
through strategic alliances, to aggregate in a single location an extensive
network of industry participants and a comprehensive database of automotive
information to create an up to date information resource that is targeted to
first-time buyers of automobiles. By providing this digital "many-to-many"
information center, we bring automobile dealers, other industry participants,
such as vendors of automotive products, and services and national advertisers,
together with purchase-minded consumers at the moment when these consumers are
directly engaged in a search for a first-time automobile or automotive products
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and services. Currently, we have a registered domain name of
www.myfirstauto.net. This site has not been developed but will be upon
commencement of operations.
We intend to provide significant benefits to dealers and other industry
participants by enabling them to advertise, interact and transact with
first-time buyers in the new and used vehicle market. We will create a network
of new and used automotive dealers on our Web site. We intend to provide
detailed information of new and used vehicles and links to the manufacturers web
sites on our Web site. The selection available to first-time buyers consumers
will be targeted to their needs, demographics, and socioeconomic statistics.
Through our Web site, consumers will be able to effectively navigate a database
of new and used vehicle types in the United States, thereby optimizing their
ability to find the vehicle of their choice. We will provide one of the most
comprehensive sources of automotive information, including a variety of decision
tools, buying and selling tips, vehicle specifications and reviews, vehicle
pricing and safety information, as well as assistance with financing, insurance
and warranty programs.
From our web site we will be able to generate leads (potential buyers
requesting a phone number, directions or an e-mail address) for dealers that
allow them to precisely target purchasers of new and used vehicles in a manner
which is more effective than traditional media.
The management of FirstAuto, Inc. has designed a business model built upon
multiple revenue streams from a variety of industry participants interested in
marketing their services to our consumer audience of first-time buyers. We will
generate our revenues primarily from advertising, and dealer database sales. A
significant portion of our revenues will be recurring in nature. We will focus
on creating and maintaining a solid information center on the Internet that will
encourage and/or facilitate transactions between first-time car buyers and
dealers of new and used vehicles.
The strategy will be to create a growing our database of new and used
vehicle dealers, a database of information regarding the vehicle searching
patterns of buyers, and the audience of users of our Web site. We will develop a
range of new products and services to enhance the value proposition that we
offer to dealers, consumers and vendors of automotive products and services,
which may include additional content and vehicle searching features, additional
forms of enhanced listings, additional dealer Web site services, additional
finance, insurance and aftermarket services and inspection and certification
services. We will also implement an aggressive national marketing campaign to
enhance the strength of our brand in the first-time auto buying market and to
increase consumer and dealer awareness and usage of our Web site and our
products and services.
We will focus on maintaining a diverse and detailed database of new and
used car dealers, to attract the target audience of first-time vehicle buyers.
We intend to do this by establishing partnerships and other strategic alliances
with Internet companies and sites targeted to the same 16-24 years old audience,
to enable us link our potential consumers to our site.
Our primary market of first-time buyers will be teenagers and young adults.
Our web site will be informative and educational on the many aspects of buying a
first automobile. We intend to educate these buyers as to everything involved
in buying, financing, and insuring an automobile. We intend to provide the
tools so that a young person can provide to their parents all of the details of
that first automotive purchase including total costs, down payments required,
monthly payments and insurance costs all based upon comparative shopping.
The process will develop responsibility and appreciation of what goes into
making a major purchase of a vehicle. In addition to the responsibility factor
for car buying decisions MYFIRSTAUTO.NET will provide articles on safe driving,
how to be a defensive driver, tips on how to keep automotive costs down and real
live stories related to driving safely, as well as links to sites for M.A.D.D.
(Mothers Against Drunk Driving) and S.A.D.D. (Students Against Drunk Driving).
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MARKET OPPORTUNITY
THE MARKET FOR FIRST-TIME AUTOMOBILE PURCHASES AND RELATED SERVICES.
The global proliferation of vehicles and automotive products and services
has served to make the automotive industry a $1 trillion industry in the United
States and one of the largest industries in the world. We will focuses on the
first-time buyer segment of the automotive industry. Approximately 40 million
individuals access the World Wide Web annually. Nearly 20% buy products and
services while on-line. Half of all women visiting the web will use it to shop
for a new or used car. 24% of all "first time" car buyers obtain ALL of their
car shopping information from the Web. Internet statistics provided by O'Reilly
& Associates, Jupiter Communications, NetSmart and Nielsen Interactive.
In the information age, the internet can be an invaluable source of
automotive information. This is the fastest way to research different vehicles,
locate cars, and do preliminary shopping comparisons. Over 50% of all first-time
car buyers do all of their car research on-line. (Actually buying on-line is
another matter entirely. Only a very small percentage (less than 5%) of new car
purchases are currently completed on-line. Many large corporations, however,
are banking that those numbers will increase substantially in the next few
years. In the used-car arena a smaller percentage of buyers are utilizing the
web, but their numbers are also increasing.) Internet statistics provided by
Smart Car Guide.
The automotive industry spends more money on advertising than any other
industry in the United States. A large market also exists for automotive
products and services, such as insurance, financing, warranties, parts, repairs
and accessories. According to A.M. Best, an insurance research firm, total
automobile insurance premiums were approximately $117 billion in 1999. In
addition, the U.S. Federal Reserve Board estimates that the automotive consumer
credit outstanding totaled approximately $468 billion as of the fourth quarter
of 1999, and total sales for automotive parts, repairs and accessories,
according to The Automotive Aftermarket Industry Association, exceeded $160
billion in 1999.
INEFFICIENCIES OF TRADITIONAL FIRST-TIME AUTO BUYING AND SELLING METHODS
The first-time car buying market has always been prominent but never
targeted directly in the manner of providing information, tips, links, reviews
and resources available only to the targeted segment. In the past, first-time
car buyers relied on the same tools that all car-buyers often over-looking
components of car-buying already discovered or known by experienced car buyers.
Before the Internet information tools for car-buyers were sparse and specific to
each car being purchasing. Although the purchase of a vehicle is one of the
largest purchases made by most consumers, consumers historically have not had
access in a single, centralized location to the information needed to research
and evaluate automotive purchasing decisions. In particular, many consumers
express dissatisfaction with the traditional sources of vehicle information,
such as newspaper classified advertisements or visits to a dealer, because these
individual sources contain only a small percentage of the total universe of
vehicles for sale in their local market. As a result, consumers must often make
significant purchasing decisions and compromises with limited and incomplete
information. At the time of a vehicle purchase, the consumer must also make
decisions on, and deal with multiple parties to arrange for, other products and
services such as financing, insurance and warranties, often with an insufficient
number of options and inadequate available information. First-time car buying
was often done with misconceptions and misunderstanding of automobile purchase
elements such as leasing, insurance, warranties, taxes and licensing, car
features and benefits and fuel and maintenance economics. Now with the Internet
and MyFirstAuto.net as tools first-time car buyers can access information on car
models, new and used, the manufacturer warranty, fuel and maintenance
requirements; financing options, either lease or loan; insurance premiums,
discounts, coverage; local taxes and licensing information; and affordability
calculators. This will give the consumer all the knowledge necessary to complete
a successful automotive purchase.
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THE MY FIRSTAUTO.NET SOLUTION (WWW.MYFIRSTAUTO.NET)
We believe that by providing a source on the Internet where first-time
buyers can meet dealers, negotiate and control their purchase decisions, we have
significantly improved the vehicle purchasing process. We will design an on-line
marketplace providing dealers, vendors of automotive products and services and
national advertisers an effective environment for reaching a specific target
audience who have expressed an interest in automotive information by logging
onto our Web site. We will create our Web site to provide consumers with a
"one-stop" destination that incorporates all aspects of commerce and content
related to the process for purchasing new and used vehicles and automotive
products and services. We will enable this by facilitating contacts and
transactions among dealers, other industry participants and consumers.
SIGNIFICANT BENEFITS TO DEALERS
Large On-line Consumer Audience. We will be able to offer dealers an
on-line consumer audience of first-time car buyers buy focusing on the increase
in visitors per month by advertising on related web sites. Our Web site will
provide dealers with access to a much larger and more geographically diverse
consumer base than they can find through traditional, locally-oriented
advertising and distribution channels.
Low Cost and Flexible Services. We can provide dealer listings and
advertisements in a cost-effective manner. Enhanced listings and other
promotional products such as banner advertising can be purchased for various
fees which depend on contract terms. According to the NADA, traditional
newspaper, radio and television advertisements typically cost a dealer from $250
to $300 per vehicle sold. By using our paid services, this cost frequently
ranges from $25 to $100 per vehicle, depending upon which promotional products a
dealer selects.
Wide Range of Listing and Advertising Products. Our Web site will have a
goal of creating an extensive target listing of new and used vehicles and
advertising products together with our highly effective, customer-driven search
tools and functionality facilitate effective presentation and matching of
dealers, other automotive vendors and service providers with the desired
features and criteria of prospective buyers.
Open, Non-Exclusive Marketplace. We will act as a neutral intermediary that
facilitates the interaction and exchange of information between dealers and
potential used vehicle purchasers.
SIGNIFICANT BENEFITS TO CONSUMERS
Extensive Marketplace for New and Used Vehicles Targeted to the First-time
Buyer. Our Web site will provide an extensive marketplace for new and used
vehicles in the United States, we will offer consumers the most comprehensive
selection of new and used vehicles in any centralized location. Listings from
strategic partners, our open network of dealers, finance companies and insurance
companies will enable us to provide consumers across the United States with
access to the an on-line selection of new and used vehicles. Consumers will also
be able to assemble a comparable amount of information in order to make their
first-time purchase of an automobile.
Convenient and Efficient Shopping Experience. We will design our Web site
to provide a "one-stop" shopping environment that can significantly enhance the
ongoing relationship between dealers and consumers by allowing consumers to
select a new or used vehicle and obtain automotive information conveniently in
the privacy of their home or office. We will also create a direct connection
between the consumer and the relevant dealer by providing the consumer with
contact information such as an e-mail address, telephone number and map with
directions.Consumers can obtain on-line access, at no charge, to the
comprehensive, up-to-date information on our Web site that they need to
make an informed
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purchase decision. Information about vehicle models and options, dealer costs,
safety information, used vehicle values and reviews and articles from trade
publications will be collected in a centralized location, providing consumers
with an objective, convenient and cost-effective means to make informed purchase
decisions.
Availability of Automotive Products and Services. Traditionally, consumers
have been dependent on dealers and third-party vendors for automotive products
and services, such as financing, insurance, warranty, automotive parts and
repair services. We intend to design our Web site to offer consumers convenient
access to and on-line connectivity with a comprehensive range of these services.
We will establish strategic partnerships and alliances with on-line companies.
Our focus will be to provide a variety of service offerings in a single location
the first-time buyer which will improves the consumer's ability to make an
automotive purchase and to research and purchase other automotive products and
services at the same moment, enhancing a consumer's satisfaction with our
service.
SIGNIFICANT BENEFITS TO OTHER INDUSTRY PARTICIPANTS
Vendors of Automotive Products and Services. We intend to provide vendors
of automotive products and services with access to a large and growing number of
purchase-minded consumers who, in many instances, may require insurance,
financing, warranties, a roadside assistance program or other automotive
products and services. Consumers seeking automotive information are also often
interested in, or may be specifically researching, information regarding
competitive providers for their current automotive products and services.
Vendors of automotive products and services can benefit from the ability of our
database and software to direct their advertised products to a targeted consumer
audience, which may provide them with a competitive advantage and an opportunity
to increase their product sales. In many cases, we link our consumers directly
to the on-line application forms of our e-commerce partners, which enable them
to capture immediate sales opportunities and customer contact information.
National Advertisers. The advertising available on MYFIRSTAUTO.NET will be
targeted to the specific of audience of first-time buyers, national advertisers
gain exposure to a targeted group of purchase-minded consumers at the moment
when these consumers are directly engaged in a search for information regarding
automotive products and services on our Web site. A sales team will established
national advertising accounts with companies in the automotive industry.
COMPETITIVE ADVANTAGES
TARGETED WEB SITE AND SERVICES
With the specific niche of first-time car buyers we can advertise and
provide information directly to our audience. We will enable the consumer to get
the information they desire without searching through all other car purchase
information that is not targeted to them. As a new Internet company we will be
able to face the challenge of establishing the web site by reaching out and
advertising to a specific audience.
STRATEGIC ALLIANCES
We intend to create strategic alliances with companies that we will be able
to links its on-line services to our consumers which will provide us with a
significant competitive advantages.
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STRATEGY
Our objective will be to build and maintain the preeminent on-line
marketplace for facilitating transactions between first-time car buyers and
sellers and services providers for new and used vehicles. We intend to
accomplish this goal by expanding our network of dealers and product
information, enhance and broaden services, establish relevant e-commerce
offerings and content offerings, and increase brand awareness and consumer
traffic.
An additional service provided by MYFIRSTAUTO.NET will be the "Top Deals Of
The Month". On the homepage of the web site we will list the best deals offered
by automotive manufacturers targeted to the similar target market of 16-24 year
old car buyers. We will also require our web site users to become registered to
use certain features and links to pages on the web site. The user registration
will also us to obtain the e-mail addresses of our target audience. We intend
to generate traffic to the www.myfirstauto.net web site by e-mailing the monthly
top deals to our target audience.
SALES AND MARKETING
Management intends to implement our sales and marketing strategy by hiring
a experienced team of sales and marketing people to attract new dealers and
automotive services providers.
Management also intends to build the brand name and increase consumer
traffic through advertising through similarly targeted web sites and
publications.
CUSTOMER SERVICE
Management believes that dedication to customer services is the key to a
successful business. We will provide quality customer service to dealers and
automotive service providers who list information on our web site.
TECHNOLOGY
We intend to build a user-friendly, integrated processing system that will
be designed and maintained by the hired web-master. The system will maintain the
database records, listings of vehicle models, dealerships, manufacturer
information, links with our e-commerce partners. The system will provide
immediate contact information for finding local dealers and other automotive
service providers.
The operations of our Web site will be available 24 hours a day, seven days
a week with occasional short interruptions due to maintenance or system
problems, such as power failures or router failures. We will have a web-master
and hired service providers for maintenance.
COMPETITION
The information provided about new and used vehicles, automotive products
and services and content offerings competes against a variety of Internet and
off line providers. Barriers to entry on the Internet are relatively low;
however, no other Web site currently offers our unique blend of vehicle
information and reviews, automotive products and services and relevant content
offerings to a specific target audience of first-time car buyers. We may face
significant competition in the future from new Web sites that offer the same
information and services.
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AUTOMOTIVE ADVERTISING MEDIA
The services provided by the MYFIRSTAUTO.NET web site will compete against
a number of Web sites that offer both new and used vehicle information and links
and a number of Web sites posting electronic classified ads. We will also
compete with traditional media companies such as print magazines, television and
radio stations. Many of these traditional media competitors either alone or as
part of a consortium have established or have announced plans to establish
on-line sites incorporating their automotive information, however have not
established in the target audience will be specific.
AUTOMOTIVE PRODUCTS AND SERVICES
Our automotive e-commerce service offerings compete against a variety of
Internet and off line automotive companies. There are a number of Web sites that
offer automotive products and services, some of which have substantial used
vehicle listings and shopping information. We also face competition indirectly
from traditional off line stores that offer automotive products and services
similar to those found on our Web site.
CONTENT OFFERINGS
Our content offerings compete with both Internet and off line content
providers. There are a number of Web sites that provide similar content. In
addition, print content providers such as magazines, books and newspapers also
provide similar content, however, none are targeted to the specific market of
first-time car buyers.
We believe that the principal competitive factors that will attract
dealers, automotive vendors and advertisers will include the volume of our Web
site's consumer traffic; awareness of our brand and dealer loyalty; the
demographics of our consumers; and the cost effectiveness of advertising on our
Web site, including the ability to target advertising to specific audiences.
We believe that the principal competitive factors that will attract
consumers
to our Web site will be the breadth and depth of new and used vehicle
information; brand awareness and loyalty; ease of use; Web site functionality,
responsiveness and information; a positive vehicle shopping experience for the
consumer; and the quality of content, other service offerings and customer
service.
INTELLECTUAL PROPERTY, PROPRIETARY RIGHTS AND LICENSES
We currently do not have any intellectual property, proprietary rights nor
licenses. We will enter into confidentiality agreements with our employees and
consultants. These confidentiality agreements generally seek to control access
to, and distribution of, our technology, documentation and other proprietary
information. Despite these precautions, it may be possible for a third party to
copy or otherwise obtain and use our information without authorization or to
develop similar technology independently.
We do not have a licensed trademark but have registered our domain name.
Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related businesses are
uncertain and still evolving, and we can give no assurance regarding the future
viability of proprietary rights. We also cannot assure you that we will take the
steps to prevent misappropriation or infringement of any future proprietary
information, which could have a material adverse effect on our business, results
of operations and financial condition.
Litigation may be necessary in the future to enforce our future
intellectual property rights, to protect our trade secrets or trademarks or to
determine the validity and scope of the proprietary rights of others. Such
litigation might result in substantial costs and diversion of resources and
management attention.
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Furthermore, our business activities may be alleged to infringe upon the
proprietary rights of others, and other parties may assert infringement claims
against us, including claims that arise from directly or indirectly providing
hyperlink text links to Web sites operated by third parties.
PRIVACY POLICY
We believe that issues relating to privacy and use of personal information
relating to Internet users are becoming increasingly important as the Internet
and its commercial use increase. We intend to adopt a privacy policy concerning
how we use information about our consumer visitors and the extent to which
others may have access to this information. We will not sell or rent any
personally identifiable information about our consumer visitors to any third
party, although we may consider doing so in the future. We will use information
about our consumer visitors for internal purposes in order to improve marketing
and promotional efforts, to analyze Web site usage statistically and to improve
content, product offerings and Web site layout.
EMPLOYEES
Currently the only employee is the sole officer and director. We intend to
hire employees upon launch of operations. When business operations are launched
we will need at least one web-master, two to three sales and marketing
employees, and two to three in manufacturer and dealer services and at least two
for general and administrative. The total number of employees to be hired upon
commencement of operations will be approximately seven. In order to launch
operations, many services will be employed through outside vendors.
MISCELLANEOUS
(C) REVERSE ACQUISITION CONTINGENCY. We are not a candidate for a reverse
acquisition transaction. We are committed to the development of our business
plan. A mature and businesslike evaluation of our affairs require the
consideration of the foreseeable possibility of business failure. Accordingly,
this Registration Statement will include a discussion of that contingency,
which, although uncertain, and which may not occur. While we have no present
plans to engage in Reverse Acquisition transactions, such transactions are
possible and forseeable, and for the reason that we are thinly capitalized, and
have ambitious plans for a capital intensive business, with no assurance that
our capital need will be realized. We feel that additional disclosure regarding
such a contingency is appropriate and we provide a discussion and disclosure.
This subject is further discussed in Item 2 of this Part, Management's
Discussion and Analysis.
(D) VOLUNTARY REPORTING CONTINGENCY. We do not anticipate any contingency upon
which we would voluntarily cease filing reports with the SEC, even though we may
cease to be required to do so. It is in our compelling interest to report our
affairs quarterly, annually and currently, as the case may be, generally to
provide accessible public information to interested parties, and also
specifically to maintain its qualification for the OTCBB, if and when the
Issuer's intended application for submission be effective.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
(A) PLAN OF OPERATION. The plan of operation for the next twelve months is to
become trading on an exchange, NQB Pink Sheets and then OTCBB, become a
full-reporting company, and raise capital through a registered offering. Upon
raising sufficient capital we will launch operations. The first stage of
operations is to develop the details and structure of the web site and how the
services will be provided to the target audience and the dealers, vendors and
advertisers. The second stage will be to establish e-commerce partners for links
for automotive service providers such as insurance, warranties, and financing
and to create a database of vehicle information, contact information for
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dealers, and links to auto manufacturer sights for further vehicle descriptions.
The third stage is to obtain initial web advertising on various search engines
and other high traffic Internet sites. Within six to eight months after receipt
of capital from the registered offering we will be able to roll-out the web site
and advertising campaign and begin full operation.
(1) CASH REQUIREMENTS AND OF NEED FOR ADDITIONAL FUNDS, TWELVE MONTHS. We
expect to require substantial capital formation during the first twelve months
of our operations. We cannot state at this time when our operations would launch
for the following reasons. We cannot interest knowledgeable investors until our
common stock can be quoted on the OTCBB. We cannot achieve quotation of our
common stock until and unless this 1934 Registration of our common stock is
effective and clear of comments by the staff of the Securities and Exchange
Commission. We would expect our principal shareholder to provide interim funding
until such time as we can attract investors.
Realistically, we would require $1,000,000 to launch. We would expect to
require an additional $1,000,000 to sustain us in operations for the first
twelve months. Accordingly, we expect to require an additional $1,000,000 for
the first twelve months of operation. We would need to interest knowledgeable
investors to fund our initial launch, and would expect to raise that first
$2,000,000 by the sale of common stock.
It is possible that with a successful first funding and launch of
operations, we would be able to secure interim loan financing to enable us to
expand our business sufficiently to make further capital formation more
attractive to investors.
There is no assurance that our funding plans will be realized or that our
requirements will be met. If we are not able to achieve this requirement, we may
not be able to become or continue as a going concern. In this connection we
refer to Note 2 of our audited financial statements: "The accompanying financial
statements have been prepared assuming that the Company will continue as a going
concern. The Company is dependent upon raising capital to continue operations.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty. It is management's plan to raise capital in
order to define their operations, thus creating operating revenues." We further
refer to Note 3: "The Company is a development stage company as defined in
Financial Accounting Standards Board Statement 7. It is concentrating
substantially all its efforts in raising capital and developing its business
operations in order to generate significant revenues.
We do not anticipate any contingency upon which we would voluntarily cease
filing reports with the SEC, even though we may cease to be required to do so.
It is in our compelling interest to report our affairs quarterly, annually and
currently, as the case may be, generally to provide accessible public
information to interested parties, and also specifically to maintain its
qualification for the OTCBB, if and when the Issuer's intended application for
submission be effective.
(2) SUMMARY OF PRODUCT RESEARCH AND DEVELOPMENT. None.
(3) EXPECTED PURCHASE OR SALE OF PLANT AND SIGNIFICANT EQUIPMENT. None.
(4) EXPECTED SIGNIFICANT CHANGE IN THE NUMBER OF EMPLOYEES. None for the
present. Following launch of operations, we would expect to require a staff of
employees. The number required would grow as our operations might grow.
(B) DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
(1) OPERATIONS AND RESULTS FOR THE PAST TWO FISCAL YEARS. We have not
launched operations since our inception on March 24, 1999, and have no operating
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history. Our activities have been organizational, and have focused on seeing our
corporation audited and this 1934 Act Registration Statement prepared.
We refer to our Auditor's Note 4: During 2000 and 1999, the Company paid
$119,988 for professional fees to companies affiliated with a major shareholder,
Polyandrous Trading Group. Our sole remaining Officer/Director was Dan
Sifford. Our principal shareholder was Polyandrous Trading Group. Inc. Mr.
Sifford was the sole owner and officer of our former principal shareholder.
Intrepid International, Ltd has been engaged to provide corporate
consultation and ministerial management services, to coordinate our auditing
relationship, and to secure and provide legal and professional services, for us,
as well as the non-allocated and non-exclusive use of its offices, and staff.
Intrepid bills us on a time/fee basis, at pre-established rates, no less
favorable to us than commercially available from other potential providers. Mr.
Sifford is an affiliate of the Intrepid entities. More information about
Intrepid and its people is provided in Item 7 of this Part: Relationships and
Transactions. Our consulting agreement with Intrepid is provided as Exhibit 10.1
hereto.CEOP
(2) SELECTED FINANCIAL INFORMATION.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Six Months One Year From
Audited Audited Inception
8/31/00 2/29/00 Audited
3/24/99
to
8/31/00
-----------------------------------------------------------
Total Assets . . . . . 3,329 3,329
-----------------------------------------------------------
Total Liabilities. . . 4,602 0
-----------------------------------------------------------
Revenues . . . . . . . 0 0 0
-----------------------------------------------------------
Operating Expenses . . 4,602 119,988 124,590
-----------------------------------------------------------
Net Earnings or (Loss) (4,602) (119,988) (124,590)
-----------------------------------------------------------
Per Share Earnings . . (0.00) (0.16) (0.16)
or (Loss)
-----------------------------------------------------------
Average Common Shares. 7.981,500 7,480,724 7,655,752
Outstanding
-----------------------------------------------------------
</TABLE>
(3) FUTURE PROSPECTS. We have disclosed an ambitious business plan.
There can be no assurance that our plan will succeed in whole or in part. We may
not be able to achieve our funding requirements. Even if substantial funding
proves available, there is no assurance that our business will prove competitive
or profitable. Our business may fail for any number of possible unforeseen
contingencies. Start-up ventures such as ours are inherently speculative and
fraught with risks of business failure. While management believes that its plan
contains the strategy for success, the road to failure is filled with good
intentions and missed opportunities. Caution must be expressed at this early
stage of our development, that we may be disappointed in our expectations.
(C) REVERSE ACQUISITION CONTINGENCY. We are not and do not intend to become a
candidate for a reverse acquisition transaction. A reverse acquisition is a
12
<PAGE>
formal acquisition by a non-operating company of a going business, in which
control passes to the owners of the acquired target company or business. It is
actually an acquisition of the non-operating corporation by the owners of the
target, in substance, and is labeled "reverse" for that reason. While we do not
intend to become a candidate for such an acquisition, and while we intend to
pursue our business plan as disclosed, we have indicated that substantial risks
of failure attend our efforts. If our business fails, we would cease to be a
going-concern. In that event we might find ourselves to have become such a
candidate.
Certain important consequences may attend such a contingency. We may be
deemed a Blank Check Company as defined in Rule 419, essentially a company
with no business or business plan, except to search for a business acquisition
or combination. In such a contingency, our officers, directors, affiliates, and
their transferees, if any, may be deemed promoters and underwriters with respect
to the shares owned by them, or any shares issued to them in connection with the
transaction. The result would be that such shares would not be entitled to
reliance on ordinary resale rules, and would not be entitled to resale without
registration or an exemption from registration as may be available at the time
of any proposed sale. Please see Item 1(d) of Part II, following, for more
discussion of the effect of such a contingency on Secondary Trading of our
common stock by affiliates and their transferees.
REGISTRANT'S COMPETITIVE POSITION WITH RESPECT TO REVERSE ACQUISITION.
Other better capitalized firms are engaged in the search for acquisitions or
business combinations which firms may be able to offer more and may be more
attractive to acquisition candidates. Other non-operating companies may have a
substantial reserve of cash, which we would not have in the case of such a
contingency. We have no significant pool of cash we could offer and no capital
formation incentive exists for our selection. We have a limited shareholder base
insufficient for acquisition target companies wishing to proceed for application
to NASDAQ. In comparison to other public shell companies we are unimpressive,
in the judgement of management, and totally lacking in unique features which
would make us more attractive or competitive than other public shell companies
. While management believes that the competition of other public shell
companies is intense and growing, it has no basis on which to quantify its
impression.
LIMITED SCOPE AND NUMBER OF POSSIBLE ACQUISITIONS: In the event of such a
contingency, we would not intend to restrict our consideration to any particular
business or industry segment, and we may consider, among others, finance,
brokerage, insurance, transportation, communications, research and development,
service, natural resources, manufacturing or high-technology. Of course, because
of our limited resources, the scope and number of suitable candidate business
ventures available would be limited accordingly, and most likely we would not be
able to participate in more than a single business venture. Accordingly, it is
anticipated that we would not be able to diversify, but may be limited to one
merger or acquisition because of limited financing. This lack of diversification
would not permit us to offset potential losses from one business opportunity
against profits from another.
REPORTING UNDER THE 1934 ACT. Following the effectiveness of this 1934 Act
Registration of our common stock, certain periodic reporting requirements will
be applicable. First and foremost, a 1934 Registrant is required to file an
Annual Report on Form 10-K or 10-K-SB, 90 days following the end of its fiscal
year. The key element of such annual filing is the Audited Financial Statement
prepared in accordance with standards established by the Commission. A 1934 Act
Registrant also reports on the share ownership of affiliates and 5% owners,
initially, currently and annually. In addition to the annual reporting, a
Registrant is required to file quarterly reports on Form 10-Q or 10-Q-SB,
containing audited or un-audited financial statements, and reporting other
material events. Some events are deemed material enough to require the filing of
a Current Report on Form 8-K. Any events may be reported currently, but some
events, like changes or disagreements with auditors, resignation of directors,
major acquisitions and other changes require aggressive current reporting. All
reports are filed and become public information. The practical effects of the
foregoing requirements on the criteria for selection of a target company are
two-fold: first, the target must have audited or auditable financial statements,
13
<PAGE>
and the target must complete an audit for filing promptly upon the consummation
of any acquisition; and, second, that the target management must be ready,
willing and able to carry forth those reporting requirements or face de-listing
from the OTCBB, if listed, and delinquency and possible liability for failure to
report.
ITEM 3. DESCRIPTION OF PROPERTY.
We have no property at the present time. Intrepid International, Ltd., has
been engaged to provide corporate consultation and ministerial management
services, to coordinate our auditing relationship, and to secure and provide
legal and professional services, for us, as well as the non-allocated and
non-exclusive use of its offices, and staff. Intrepid bills us on a time/fee
basis, at pre-established rates, no less favorable to us that commercially
available from other potential providers. Mr. James, our present Sole Interim
Officer/Director is an affiliate of Intrepid serving as our management pursuant
to this relationship. More information about Intrepid is provided in Items 5, 6
and 7 of this Part.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(A) SECURITY OWNERSHIP OF MANAGEMENT. To the best of our knowledge and belief
the following disclosure presents the total beneficial security ownership of all
Directors and Nominees, naming them, and by all Officers and Directors as a
group, without naming them. More than one person, entity or group could be
beneficially interested in the same securities, so that the total of all
percentages may accordingly exceed one hundred percent of some or any classes.
Please refer to explanatory notes if any, for clarification or additional
information.
COMMON STOCK
OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and Address of Beneficial. Actual Attributed %
Owner. . . . . . . . . . . . . . Ownership Ownership
---------------------------------------------------------------
Kirt W. James (1). . . . . . . . -0- 6,750,000 84.57
24843 Del Prado
PMB 318
Dana Point, CA 92629
---------------------------------------------------------------
</TABLE>
(1) While Mr. James is not an affiliate by reason of share ownership, the former
shares of Polyandrous Trading Group are believed to be attributed to him, by
reason of his affiliation with Mr. Sifford.
(B) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. To the best of our
knowledge and belief the following disclosure presents the total security
ownership of all persons, entities and groups, known to or discoverable by us,
to be the beneficial owner or owners of more than five percent of any voting
class of our stock. More than one person, entity or group could be beneficially
interested in the same securities, so that the total of all percentages may
accordingly exceed one hundred percent of some or any classes. Please refer to
explanatory notes if any, for clarification or additional information.
14
<PAGE>
COMMON STOCK
OWNERS OF 5% OR MORE
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address of Beneficial Actual %
Owner . . . . . . . . . . . . . Ownership
--------------------------------------------------
Quicksilver Development S.A.. . 6,750,000 84.57
PO Box 8807
Panama 5, Panama.
--------------------------------------------------
</TABLE>
(1) Quicksilver Development S.A. has reported that Nixia Aurora Zerna is its
sole Officer, Director and Owner. In connection with the retirement of Mr.
Sifford, on October 2, 2000, Polyandrous Trading Group transferred and divested
its 6,750,000 affiliate control shares to Quicksilver Development S.A., at par
value. Neither Quicksilver Development S.A., nor any affiliate of Quicksilver
Development S.A., is an affiliate of Mr. James, Mr. Sifford or Intrepid
International Ltd.
(C) CHANGES IN CONTROL. There are no arrangements known to us, including any
pledge by any persons, of our securities, which may at a subsequent date result
in a change of control of this Corporation.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
(A) PREVIOUS OFFICERS. The following persons were our Officers and Directors
from the inception of the issuer, to serve until their successors might be
elected or appointed. Mr. Clifton is deceased. James Clifton (now deceased,
formerly President and CEO) and J. Dan Sifford (formerly Secretary, Treasurer,
and CFO). Upon the death of Mr. Clifton, Mr. Sifford became our Sole Remaining
Officer, Director until his resignation and retirement from office on October 2,
2000, by reason of his filing of a Voluntary Petition in Bankruptcy, pursuant to
Chapter 13 of U.S. Bankruptcy Code.
J. Dan Sifford, Jr. (62) was our sole Officer and Director, following the
death of Mr. Clifton, earlier this year 2000. For the past several years Mr.
Sifford has served as affiliate of Intrepid International, Ltd., a Nevada
Corporation, providing consulting services to international private companies in
approaching the United States public market place for products, financing and
securities. Mr. Sifford is not and has never been a broker-dealer. He has acted
primarily as consultant, and in some cases has served as an interim officer and
director of public companies in their development stage. The following
disclosure identifies those public companies: Air Epicurean, Inc., All American
Aircraft, Earth Industries, Ecklan Corporation, EditWorks, Ltd., Market., Market
Formulation & Research, Inc., NetAir.com, Inc., NSJ Mortgage Capital
Corporation, Inc., North American Security & Fire, Oasis 4th Movie Project,
Professional Recovery Systems, Inc., Richmond Services, Inc., Telecommunications
Technologies, Ltd., and World Staffing II, Inc.
He grew up in Coral Gables, Florida, where he attended Coral Gables High
School and the University of Miami. After leaving the University of Miami, Mr.
Sifford formed a wholesale consumer goods distribution company which operated
throughout the southeastern United States and all of Latin America. In 1965, as
an extension of the operations of the original company, he founded Indiasa
Corporation (Indiasa), a Panamanian company which was involved in supply and
financing arrangements with many of the Latin American Governments, in
particular, their air forces and their national airlines. As customer
requirements dictated, separate subsidiaries were established to handle specific
activities. During each of the past five years he has served as President of
Indiasa, which serves only as a holding company owning: 100% of Indiasa Aviation
Corp. (a company which owns aircraft but has no operations); 100% of Overseas
Aviation Corporation (a company which owns Air Carrier Certificates but has no
operations); 50% of Robmar International, S.A. (a company operates a
manufacturing plant in Argentina and Brazil, but in which Mr. Sifford holds no
office). In addition to his general aviation experience, Mr. Sifford, an Airline
Transport rated pilot, has twenty two years experience in the airline business,
and is currently the President of Airline of the Virgin Islands, Ltd. a commuter
15
<PAGE>
passenger airline operating in the Caribbean, and has been its president
continuously during each of the past five years.
From 1970 to 1982, he was President and sole shareholder of Overseas
Aviation Corporation, an all cargo airline, with operations throughout South
America and Africa. He was founder, President and Chief Executive Officer of
Airline of the Virgin Islands from 1982 until 1993. He served for many years as
President of Indiasa Corporation which, through one of its subsidiaries, was
involved in the manufacture and distribution of chemical products in Argentina
and Brazil, and which, through another subsidiary, was for eight years engaged
in aviation consulting, the leasing, purchase and sale of aircraft, and the
operation of a cargo airline, primarily in Latin America. In recent years he has
been engaged continuously in a wide variety of business activities, including
the development of new business ventures.
(B) CURRENT OFFICER. On October 2, 2000, Mr. Sifford retiring, first appointed
Kirt W. James to succeed him as Sole Interim Officer and Director.
Kirt W. James (age 42), Intrepid's Principal Officer and Owner, has a
lifelong background in marketing and sales. From 1972 to 1987, Mr. James was
responsible for sales and business administrative matters for Glade N. James
Sales Co., Inc. and from 1987 to 1990 Mr. James built retail markets for
American International Medical Supply Co., a publicly traded company. In 1990 he
formed and became President of HJS Financial Services, Inc., and was responsible
for the day to day business operations of the firm as well as consultation with
Clients concerning their business and Product Development. He remains the
President and Sole Shareholder of HJS, which is presently substantially
inactive. During the past five years Mr. James has been involved in the
valuation of private companies for internal purposes, and as a consultant to
private companies engaged in the private sale and acquisition of other private
businesses. He has also assisted private and public companies in planning for
entry into the public market place. Mr. James is not and has never been a
broker-dealer. He has acted primarily as consultant, and in some cases has
served as an interim officer and director of public companies in their
development stage.
Currently, Mr. James is an Officer/Director of Oasis Entertainment
Corporation (a private corporation currently involved in the promotion of
entertainment projects. Mr. James is a principal officer and entrepreneur with
respect to this corporation. This corporation never made any offerings or
received any investors money. Its shares have never traded publicly or
privately); Oasis Entertainment's 4th Movie Project, Inc. (a corporation engaged
in the production of and investment in entertainment projects. It is actively
engaged in business. Its shares have never traded;) EditWorks, Ltd.
(incorporated in the State of Nevada on August 20, 1998, for the purpose of
establishing a computer aided, post-production editing service for various media
businesses. It is an active operating company. This company trades actively on
the OTCBB;) North American Security & Fire (an operating company, in the
business of fire prevention, and the installation of alarm and security systems.
This company is not currently quoted on the OTCBB or NQB Pink sheets, and its
shares are not trading;) DP Charters, Inc. (a business venture incorporated in
Nevada on December 18, 1997 with the intention of initiating a charter yacht
service from the Dana Point Harbor, Orange County, California. The Issuer later
expanded its business plan to include the organization of SCUBA dive tours at
various world locations. It is now investigating the possibility of new capital
formation, following its 1934 Act Registration;).
During the past five years, Mr. James has served as and officer or director
of the following public, or semi-public companies. Earth Industries, Inc.;
BBB-Huntor Associates, Inc. (HomeTeach.com); NSJ Mortgage Capital Corporation,
Inc.; Market Formulation & Research; PNG Ventures, Inc. (Paper Computer.com,
Inc.); and Last Company Clothing, Inc. (MIVI Biomedical, Inc.).
16
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION.
Mr. Sifford was awarded 6,750,000 shares of common stock (actually issued
to his corporation, Polyandrous Trading Group, Inc.) for organizational
services, at par value of $0.001 per share for an indicated value of $6,750, on
March 24, 1999, at or about inception. In connection with the retirement of Mr.
Sifford, on October 2, 2000, Polyandrous Trading Group transferred and divested
its 6,750,000 affiliate control shares to Quicksilver Development S.A..
During 2000 and 1999, we "paid $119,988 for professional fees to companies
affiliated with a major shareholder, Polyandrous Trading Group." (Audited
Financial Statements, Note 4-Related Party.) Our principal consultant Intrepid
International, Ltd. with which consultant, Mr. Sifford is an affiliate. Intrepid
was paid a total of $119,988 during 2000 and 1999, pursuant to billings for
services on a time-fee basis. It has accrued unpaid additional billings, as of
August 31, 2000 of $4,602. Mr. Sifford was not the principal provider of these
services and is only indirectly benefited by the payments and accruals to
Intrepid. These payments and accruals include reimbursement to Intrepid of legal
and professional expenses incurred by Intrepid on our behalf.
Intrepid International is not a shareholder. Polyandrous Trading Group is
no longer a shareholder.
Management believes that our financial statements accurately reflect the
true cost of doing business, because of the services and billings of our
principal consultant.
Please refer to Item 7 of this Part I, Certain Relationships and
Transactions, for more information and disclosure about Intrepid International.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Our principal consultant and service provider, Intrepid International,
Ltd., is a provider of corporate services to us and bills us regularly on a
time-fee basis. Intrepid is not a shareholder of our Corporation. Intrepid is
incorporated in the State of Nevada. Intrepid provides its services on a
negotiated time/fee basis no less favorable to us than could be obtained
commercially from unrelated third parties. Intrepid does not provide services
for commissions based upon the success or failure of any corporate program, and
Intrepid is not a fund-raiser or a source of capital financing. The principal
focus and benefit of the services offered by Intrepid are not its client's
capital formation nor fund raising activities, but the refinement of client's
business plan, analysis of its corporate structure, evaluation of its current
filing status and filing responsibilities, currency and accuracy of financial
information and auditability or status of current and past audits and audit
procedures, to assist managers in making the conceptual and procedural
transitions imposed upon Officers and Directors, with respect to shareholders,
shareholder rights, and maintenance of the kinds current public information
necessary to position a company to consider public trading of its existing
securities, and to maintain its impeccability as a publicly trading company if
and when its securities are exposed to the public markets. Accordingly, the
mission of Intrepid is to assist us in avoiding costly mistakes and pitfalls in
corporate management, going public, being public, and in handling the various
different relationships with professionals and the public which are appropriate,
practical, efficient and cost-effective in managing ourself as a public
corporation.
Please see Exhibit 10.1 for Intrepid's fee agreement.
In connection with the retirement of Mr. Sifford, on October 2, 2000,
Polyandrous Trading Group transferred and divested its 6,750,000 affiliate
control shares to Quicksilver Development S.A., PO Box 8807, Panama 5, Panama,
at par value. Neither Quicksilver Development S.A., nor any affiliate of
Quicksilver Development S.A., is an affiliate of Mr. James, Mr. Sifford or
Intrepid International Ltd.
17
<PAGE>
ITEM 8. DESCRIPTION OF SECURITIES.
THE REGISTRANT'S CAPITAL AUTHORIZED AND ISSUED. We are authorized to issue
50,000,000 shares of a single class of Common Voting Stock, of par value $0.001,
of which 7,981,500 shares of common stock issued and outstanding.
COMMON STOCK. All shares of Common Stock when issued were fully paid for and
nonassessable. Each holder of Common Stock is entitled to one vote per share on
all matters submitted for action by the stockholders. All shares of Common Stock
are equal to each other with respect to the election of directors and cumulative
voting is not permitted; therefore, the holders of more than 50% of the
outstanding Common Stock can, if they choose to do so, elect all of the
directors. The terms of the directors are not staggered. Directors are elected
annually to serve until the next annual meeting of shareholders and until their
successor is elected and qualified. There are no preemptive rights to purchase
any additional Common Stock or other securities. The owners of a majority of the
common stock may also take any action without prior notice or meeting which a
majority of shareholders could have taken at a regularly called shareholders
meeting, giving notice to all shareholders thereafter of the action taken. In
the event of liquidation or dissolution, holders of Common Stock are entitled to
receive, pro rata, the assets remaining, after creditors, and holders of any
class of stock having liquidation rights senior to holders of shares of Common
Stock, have been paid in full. All shares of Common Stock enjoy equal dividend
rights. There are no provisions in the Articles of Incorporation or By-Laws
which would delay, defer or prevent a change of control.
OPTIONS AND DERIVATIVE SECURITIES. We have no outstanding options or derivative
securities. We have no shares issued or reserved which are subject to options or
warrants to purchase, or securities convertible into common stock.
RISKS OF "PENNY STOCK." The Company's common stock may be deemed to be "penny
stock" as that term is defined in Reg.Section 240.3a51-1 of the Securities and
Exchange Commission. Penny stock share stocks (i) with a price of less than five
dollars per share; (ii) that are not traded on a "recognized" national exchange;
(iii) whose prices are not quoted on the NASDAQ automated quotation system
(NASDAQ) listed stocks must still meet requirement (i) above); or (iv) in
issuers with net tangible assets less than $2,000,000 (if the issuer has been in
continuous operation for at least three years) or $5,000,000 (if in continuous
operation for less than three years), or with average revenues of less than
$6,000,000 for the last three years.
Section 15(g) of the Securities Exchange Act of 1934, as amended, and Reg.
Section 240.15g-2 of the Securities and Exchange Commission require
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in a
penny stock for the investor's account. Potential investors in the Company's
common stock are urged to obtain and read such disclosure carefully before
purchasing any shares that are deemed to be "penny stock."
Moreover, Reg. Section 240.15g-9 of the Securities and Exchange Commission
requires broker-dealers in penny stocks to approve the account of any investor
for transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker-dealer to (i) obtain from the investor
information concerning his or her financial situation, investment experience and
investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the
investor has sufficient knowledge and experience as to be reasonably capable of
evaluating the risks of penny stock transactions; (iii) provide the investor
with a written statement setting forth the basis on which the broker-dealer made
the determination in (ii) above; and (iv) receive a signed and dated copy of
such statement from the investor, confirming that it accurately reflects the
investor's financial situation, investment experience and investment objectives.
Compliance with these requirements may make it more difficult for investors in
the Company's common stock to resell their shares to third parties or to
otherwise dispose of them.
18
<PAGE>
RISKS OF STATE BLUE SKY LAWS. In addition to other risks, restrictions and
limitations which may affect the resale of the existing shares of our common
stock, consideration must be given to the Blue Sky laws and regulations of
each State or jurisdiction in which a shareholder wishing to re-sell may reside.
Some States may distinguish between companies with active businesses and
companies whose only business is to seek to secure business opportunities, and
may restrict or limit resales of otherwise free-trading and unrestricted
securities. We have taken no action to register or qualify its common stock for
resale pursuant to the Blue Sky laws or regulations of any State or
jurisdiction. Accordingly offers to buy or sell our existing securities may be
unlawful in certain States
19
<PAGE>
PART II
ITEM 1.
MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY
AND SHAREHOLDER MATTERS.
(A) MARKET INFORMATION. Our common stock is not cleared for quotation
Over-the-Counter in the NQB Pink Sheets (submission pending), nor on the OTCBB.
Our securities have never traded in brokerage transactions.
(B) HOLDERS. There are presently 16 shareholders of our common stock.
(C) DIVIDENDS. We have not paid any cash dividends on our Common Stock, and do
not anticipate paying cash dividends on our Common Stock in the next year. We
anticipate that any income generated in the foreseeable future will be retained
for the development and expansion of our business. Future dividend policy is
subject to the discretion of the Board of Directors and will depend upon a
number of factors, including future earnings, debt service, capital
requirements, business conditions, the financial condition of the Company and
other factors that the Board of Directors may deem relevant.
(D) SECONDARY TRADING. Secondary Trading refers to re-selling of securities
in brokerage transactions, and that tradeability is generally governed by Rule
144, promulgated by the Securities and Exchange Commission pursuant to 3(b) of
the Securities Act of 1933. Securities which have not been registered pursuant
to the Securities Act of 1933, but were exempt from such registration when
issued, are generally Restricted Securities as defined by Rule 144(a). The
impact of the restrictions of Rule 144 are (a) a basic one year holding period
from purchase; and (b) a limitation of the amount any shareholder may sell
during the second year, as to non-affiliates; however, as to shares owned by
affiliates, the second-year limitation of amounts attaches and continues
indefinitely, at least until such person has ceased to be an affiliate for 90
days or more. The limitation of amounts is generally 1% of the total issued and
outstanding in any 90 day period.
There are 7,981,500 shares of common stock issued and outstanding.
6,750,000 shares are held by a single affiliate, and 1,231,500 shares held by
non-affiliates.
(1) AFFILIATE SHARES. The former Polyandrous Trading Group's 6,750,000
shares, now owned by Quicksilver Development S.A., are affiliate control shares,
notwithstanding their Rule 504 issuance. Although Rule 504 shares are not
Restricted Securities as defined by rule 144(a), all shares owned by affiliates
are subject to Rule 144(e)(1) limitation as to amounts that might be resold in
any 90 day period. Notwithstanding the normal application of Rule 144(e), our
Special Securities Counsel is of the opinion that these share are not prudently
entitled to reliance on Rule 144(e)(1) at this time, and many not be so entitled
for an indefinite period.
(I) RECENTLY ACQUIRED CONTROL SHARES. The consequences of holding
control securities are found in the definition of underwriter . In its most
basic provision, 2(a)(11) defines the term to mean any person who has
purchased from an issuer with a view to, or offers to sell for an issuer in
connection with, the distribution of any security. As used in this [section]
the term `issuer' shall includeany person directly or indirectly controlling or
controlled by the issuer, or any person under direct or common control with the
issuer. In more simple and concise English the term `Underwriter' means any
person who has purchased from an issuer or an affiliate with a view to, or
offers or sells for an issuer or an affiliate in connection with, the
20
<PAGE>
distribution of any security. Distribution is not defined in the statute, but
is understood generally to be synonymous with public offering.
These control shares were recently acquired and the new principal
shareholder may be considered an underwriter not entitled to reliance on Rule
144 or Section 4(1) of the Securities Act of 1933.
(II) REVERSE ACQUISITION CONTINGENCY. It is the view of the Staff of
the Commission that, both before and after a business combination or transaction
with an operating entity or other person, the promoters or affiliates of blank
check companies, as well as their transferees are `underwriters' of the
securities issued. The Staff is also of the view that the securities involved
can only be resold through registration under the Securities Act. Similarly Rule
144 would not be available for resale transactions in this situation.
We have indicated a remote but forseeable Reverse Acquisition Contingency.
Should our business plan fail or be abandoned, we may be classified as a "blank
check" company as defined in Rule 419, adopted by the Commission pursuant to
section 3(b) of the 1933 Act. It is not our present intention to abandon our
business plan or become a blank check company.
For these two reasons, our Special Securities Counsel is of the view that
the Affiliate 6,750,000 shares, are not entitled to any resale exemption at this
time, and may not be so entitled for an indefinite future.
(2) NON-AFFILIATE SHARES. There are 1,231,500 shares are owned by
non-affiliates, held continuously for more than one year and less than two
years, most of which are now restricted securities, and one ownership of which
is are not. The reason that one shareholder is not restricted arises from the
fact that only one investor subscribed and paid on or before April 7, 1999,
qualifying for reliance on Rule 504, for 165,000 shares. Other investors did not
so qualify, such that their restricted securities are subject to resale only in
the limited amounts previously mentioned. Of these non-affiliate shares, 803,890
might have been entitled to re-sale within the next ninety days, consistently
with Rule 144(e)(2), absent the filing of this Registration Statement.
The foregoing must be qualified by the rule that prohibits the re-sale of
restricted securities until 90 days following the effectiveness of this 1934 Act
Registration. This Registration Statement will become effective (whether or not
clear of SEC Comments) sixty days following its filing. During these 150 days
following the filling of this Registration Statement, the only shares that could
be resold in brokerage transactions, would be those 165,000 shares issued
pursuant to Rule 504, before April 7, 1999.
ITEM 2. LEGAL PROCEEDINGS.
There are no proceedings, legal, enforcement or administrative, pending,
threatened or anticipated involving or affecting us.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
There have been no disagreements of any sort or kind with Auditors or
Accountants respecting any matter or item reflected in our financial statements.
21
<PAGE>
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
On March 29, 1999, we issued 6,816,500 Founders Shares, at par value for
organizational services, valued at $6,816 to four accredited or sophisticated
founders:
<TABLE>
<CAPTION>
<S> <C> <C>
Founders' Shares: March 29, 1999. . . . . . . . . # Shares % of Total (1)
-----------------------------------------------------------------------------
Polyandrous Trading Group, Inc.. . . . . . . . . . 6,750,000 84.57
3131 Southwest Freeway, Number 42,
Houston TX 77098
Rule 504: Affiliate Restricted
-----------------------------------------------------------------------------
John Gardner . . . . . . . . . . . . . . . . . . . 16,500 0.21
1280 Caldara Drive
Colorado Springs CO 80904 Section 4(2) Restricted
-----------------------------------------------------------------------------
David Mees . . . . . . . . . . . . . . . . . . . . 45,000 0.56
704 Bridgeport Dr #3
Bismarck ND 58504 Section 4(2) Restricted
-----------------------------------------------------------------------------
Ralph Rodriguez. . . . . . . . . . . . . . . . . . 5,000 0.06
1334 Boyd Street
Cedar Hill TX 75104 Section 4(2) Restricted
-----------------------------------------------------------------------------
Total Founder's Shares . . . . . . . . . . . . . . 6,816,500 85.40
-----------------------------------------------------------------------------
</TABLE>
Polyandrous Trading Group, Inc., is a Texas Corporation, of which Mr. Dan
Sifford is the President and owner. Mr. Sifford was our Sole Remaining Officer
and Director, until October 2, 2000.
On or about March 25, 1999, the issuer offered a maximum of 1,250,000
shares, a minimum of 100,000 shares, at $0.10 per share. The offering closed
June 14, 1999. A total of 1,165,000 shares were placed. Only one of the
placements (165,000 shares) qualified for Rule 504, in the opinion of Special
Securities Counsel. The reason for this distinction arises from amendments to
the Rule which became effective April 7, 1999. In as much as other investors
subscribed and paid after April 7, 1999, Special Counsel was of the opinion that
they did not. Accordingly those other investors received shares restricted,
pursuant to 4(2) of the 1933 Act.
Each of the investors was either an accredited or sophisticated investor,
with a pre-existing relationship with management. Investors were qualified by
reason of their respective incomes, net worth, and previous investment
experience.
There were no underwriters or underwriting, and no discounts or
commissions. No securities sold are convertible or exchangeable into equity
securities, nor are there currently any warrants or options representing equity
securities.
ITEM 5. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
There is no provision in our Articles of Incorporation nor the By-Laws, nor
any Resolution of the Board of Directors, providing for indemnification of
Officers or Directors. We are aware of certain provision of the Nevada Corporate
Law which affects indemnity of Officers or Directors.
NRS 78.7502 provides for mandatory indemnification of officers,
directors, employees and agents, substantially as follows: the corporation shall
22
<PAGE>
indemnify a director, officer, employee or agent of a corporation; to the extent
that he or she has been successful on the merits or otherwise in defense of any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (except an action by or in the right of the corporation) by reason
of the fact that he or she is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise; if he or she acted in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best
interests of the corporation; and, with respect to any criminal action or
proceeding, in which he or she had no reasonable cause to believe his or her
conduct was unlawful.
23
<PAGE>
PART F/S
--------------------------------------------------------------------------------
FINANCIAL STATEMENTS PAGE
--------------------------------------------------------------------------------
F-1 Audited Financial Statements for the year ended February 29, 2000, and
for the six months ended August 31, 2000, and from
inception March 24, 1998 25
--------------------------------------------------------------------------------
24
<PAGE>
--------------------------------------------------------------------------------
EXHIBIT F1
AUDITED FINANCIAL STATEMENTS:
FOR THE YEAR ENDED FEBRUARY 29, 2000,
AND FOR THE SIX MONTHS ENDED AUGUST 31, 2000,
AND FROM INCEPTION MARCH 24, 1998
--------------------------------------------------------------------------------
25
<PAGE>
FIRST AUTO, INC.
(A Development Stage Company)
Financial Statements
August 31, 2000 and February 29, 2000
26
<PAGE>
CONTENTS
Independent Auditors' Report 28
Balance Sheet 29
Statements of Operations 30
Statements of Stockholders' Equity 31
Statements of Cash Flows 32
Notes to the Financial Statements 33
27
<PAGE>
Independent Auditors' Report
----------------------------
To the Board of Directors
and Stockholders of
First Auto, Inc.
We have audited the accompanying balance sheet of First Auto, Inc. (a
development stage company) (a Nevada corporation) as of August 31, 2000 and
February 29, 2000 and the related statements of operations, stockholders' equity
and cash flows from inception on March 24, 1999 through August 31, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Auto, Inc. as of August
31, 2000 and February 29, 2000 and the results of its operations and cash flows
from inception on March 24, 1999 through August 31, 2000 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has little operating capital, no revenues and
is dependent on financing to continue operations. These factors raise
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in the Note 2.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
/s/Crouch, Bierwolf & Chisholm
Salt Lake City, Utah
August 31, 2000
28
<PAGE>
FIRST AUTO, INC.
(A Development Stage Company)
Balance Sheet
August 31, February 29,
2000 2000
--------------------------------------------------------------------------------
ASSETS
Current Assets
Cash $ 3,329 $ 3,329
Total Current Assets 3,329 3,329
--------------------------------------------------------------------------------
Total Assets $ 3,329 $ 3,329
================================================================================
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities $ 4,602 $ 0
--------------------------------------------------------------------------------
Total Liabilities $ 4,602 $ 0
--------------------------------------------------------------------------------
Stockholders' Equity
Common stock, par value $.001; 50,000,000
shares authorized, 7,981,500 shares issued
and outstanding 7,982 7,982
Additional paid-in capital 115,335 115,335
Deficit accumulated during the
development stage (124,590) (119,988)
--------------------------------------------------------------------------------
Total Stockholders' Equity (1,273) 3,329
--------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 3,329 $ 3,329
================================================================================
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
FIRST AUTO, INC.
(A Development Stage Company)
Statements of Operations
From
For the inception on
Six Months For the Year March 24,
Ended Ended 1999 to
August 31 February 29 August 31
2000 2000 2000
--------------------------------------------------------------------------------
Revenue $ 0 $ 0 $ 0
--------------------------------------------------------------------------------
Expenses
General & Administrative 4,602 119,988 124,590
Net income (loss) $ (4,602) $(119,988) $ (124,590)
================================================================================
Net income (loss) per share $ (.001) $ (.016) $ (.016)
================================================================================
Weighted average
Outstanding shares 7,981,500 7,480,724 7,655,752
================================================================================
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
FIRST AUTO, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
For the Period March 24, 1999 (Inception)
through August 31, 2000
Deficit
Accumulated
Additional During the
Common Stock Paid-In Development
Shares Amount Capital Stage
--------------------------------------------------------------------------------
Balance at inception
March 24, 1999 0 $ 0 $ 0 $ 0
Common stock issued for
services at $.001 per share 6,816,500 6,817 0 0
Common stock issued for
cash at $.10 per share 1,165,000 1,165 115,335 0
Net Income (Loss) for the year ended
February 29, 2000 0 0 0 (119,988)
--------------------------------------------------------------------------------
Balance February 29, 2000 7,981,500 7,982 115,335 (119,988)
Net income (loss) for the six months ended
August 31, 2000 0 0 0 (4,602)
--------------------------------------------------------------------------------
Balance August 31, 2000 7,981,500 $ 7,982 $ 115,335 $ (124,590)
================================================================================
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
FIRST AUTO, INC.
(A Development Stage Company)
Statements of Cash Flows
From
Inception
For the Six For the Year March 24,
Months Ended Ended 1999 to
August 31 February 29 February 29
2000 2000 2000
--------------------------------------------------------------------------------
Cash Flow Used By Operations:
Net Loss $ (4,602) $ (119,988) $ (124,590)
Adjustment to reconcile net loss to
net cash used by Operations:
Stock issued for services 0 6,817 6,817
Increase in accounts payable 4,602 0 4,602
--------------------------------------------------------------------------------
Net Cash Flows Used in
Operating Activities 0 (113,171) (113,171)
--------------------------------------------------------------------------------
Cash Flow Used For
Investing Activities 0 0 0
--------------------------------------------------------------------------------
Cash Flow From Financing Activities
Shares issued for cash 0 116,500 116,500
--------------------------------------------------------------------------------
Increase (Decrease) in Cash 0 3,329 3,329
Cash-Beginning of Period 3,329 0 0
--------------------------------------------------------------------------------
Cash-End of Period $ 3,329 $ 3,329 $ 3,329
================================================================================
Supplemental Cash Flow Information:
Cash Paid for:
Interest $ 0 $ 0 $ 0
Taxes $ 0 $ 0 $ 0
Non-Cash Financing Activities
The Company issued 6,816,500 shares of common stock for organization costs.
These costs were valued at $6,817 and expensed in 1999.
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
FIRST AUTO, INC.
(A Development Stage Company)
Notes to Financial Statements
August 31, 2000 and February 29, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
a. Organization
First Auto, Inc. ("the Company") was incorporated under the laws of the
State of Nevada on March 24, 1999. The Company intends to establish a wholesale
consumer finance company that will be engaged in the business of purchasing
automobile loans from third party loan generation sources, then bundling, in
traunches, of one million dollars, and then reselling the bundles (without
recourse), secured primarily by first liens on the automobiles.
b. Accounting Method
The Company recognizes income and expenses on the accrual basis of
accounting.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on the
weighted average number of shares outstanding at the date of the financial
statements.
Income (loss) Shares Per-Share
(Numerator) (Denominator) Amount
--------------------------------------------------------------------------------
For the six months ended
August 31, 2000:
Income (loss) from operations $ (4,602)
---------------------------------------------
Basic EPS
Income (loss) to common
stockholders $ (4,602) 7,981,500 $ (.001)
================================================================================
For the year ended
February 29, 2000:
Income (loss) from operations $ (119,988)
---------------------------------------------
Basic EPS
Income (loss) to common
stockholders $ (119,988) 7,480,724 $ (.016)
================================================================================
From inception on March 24,
1999 to August 31, 2000:
Income (loss) from operations $ (124,590)
---------------------------------------------
Basic EPS
Income (loss) to common
stockholders $ (124,590) 7,655,752 $ (.016)
--------------------------------------------------------------------------------
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.
33
<PAGE>
FIRST AUTO, INC.
(A Development Stage Company)
Notes to Financial Statements
August 31, 2000 and February 29, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued)
e. Provision for Income Taxes
No provision for income taxes has been recorded due to net operating loss
carryforwards totaling approximately $124,590 that will be offset against future
taxable income. These NOL carryforwards begin to expire in the year 2020. No
tax benefit has been reported in the financial statements because the Company
believes there is a 50% or greater change the carryforward will expire unused.
Deferred tax assets and the valuation account is as follows at August 31,
2000 and February 29, 2000:
August 31 February 29
Deferred tax asset: 2000 2000
----------------------------------------------------------------------------
NOL carrryforward $ 31,840 $ 30,045
Valuation allowance (31,840) (30,045)
----------------------------------------------------------------------------
Total $ 0 $ 0
============================================================================
f. Organization Cost
The Company incurred $6,817 of organization costs in 1999. These costs,
which were paid by shareholders of the Company were exchanged for 6,816,500
shares of common stock. These costs were expensed in 1999 and will be recovered
only if, the Company is able to generate positive cash flow from operations.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is dependent upon raising
capital to continue operations. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty. It is
management's plan to raise capital in order to define their business operations,
thus creating necessary operating revenue.
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined in Financial
Accounting Standards Board Statement No. 7. It is concentrating substantially
all of its efforts in raising capital and developing its business operations in
order to generate significant revenues.
NOTE 4- RELATED PARTY
During 2000 and 1999, the Company paid $119,988 for professional fees to
companies affiliated with a major shareholder, Polyandrous Trading Group.
34
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS.
Exhibit Index
--------------------------------------------------------------------------------
Exhibit
Table
# Table Category / Description of Exhibit Page Number
--------------------------------------------------------------------------------
[3] ARTICLES/CERTIFICATES OF INCORPORATION, AND BY-LAWS
--------------------------------------------------------------------------------
3.1 Articles of Incorporation 36
3.2 By-Laws 39
--------------------------------------------------------------------------------
[10] MATERIAL CONTRACTS
--------------------------------------------------------------------------------
10.1 Intrepid International Financial Services Consulting Agreement 48
--------------------------------------------------------------------------------
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to signed on its behalf by the undersigned, thereunto
authorized.
FIRST AUTO, INC.
by
/s/Kirt W. James
Kirt W. James
Sole Officer/Director
35
<PAGE>
--------------------------------------------------------------------------------
EXHIBIT 3.1
ARTICLES OF INCORPORATION
--------------------------------------------------------------------------------
36
<PAGE>
ARTICLES OF INCORPORATION
OF
FIRST AUTO, INC.
ARTICLE I. The name of the Corporation is FIRSTAUTO, INC.
ARTICLE II. Its principal office in the State of Nevada is 774 Mays Blvd.
#10, Incline Village NV 89452. The initial resident agent for services of
process at that address is N&R Ltd. Group, Inc.
ARTICLE III. The purposes for which the corporation is organized are to
engage in any activity or business not in conflict with the laws of the State of
Nevada or of the United States of America. The period of existence of the
corporation shall be perpetual.
ARTICLE IV. The corporation shall have authority to issue an aggregate of
50,000,000 shares of common voting equity stock of par value one mil ($0.0001)
per share, and no other class or classes of stock, for a total capitalization of
$5,000. The corporation's capital stock may be sold from time to time for such
consideration as may be fixed by the Board of Directors, provided that no
consideration so fixed shall be less than par value.
ARTICLE V. No shareholder shall be entitled to any preemptive or
preferential rights to subscribe to any unissued stock or any other securities
which the corporation may now or hereafter be authorized to issue, nor shall any
shareholder possess cumulative voting rights at any shareholders meeting, for
the purpose of electing Directors, or otherwise.
ARTICLE VI. The name and address of the Incorporator of the corporation is
William Stocker, 34700 Pacific Coast Highway, Suite 303, Capistrano Beach CA
92624. The affairs of the corporation shall be governed by a Board of Directors
of not less than one (1) nor more than (7) persons. The Incorporator shall act
as Sole Initial Director.
ARTICLE VII. The Capital Stock, after the amount of the subscription price
or par value, shall not be subject to assessment to pay the debts of the
corporation, and no stock issued, as paid up, shall ever be assessable or
assessed.
ARTICLE VIII. The initial By-laws of the corporation shall be adopted by
its Board of Directors. The power to alter, amend or repeal the By-laws, or
adopt new By-laws, shall be vested in the Board of Directors, except as
otherwise may be specifically provided in the By-laws.
37
<PAGE>
I THE UNDERSIGNED, being the Incorporator hereinbefore named for the
purpose of forming a corporation pursuant the General Corporation Law of the
State of Nevada, do make and file these Articles of Incorporation, hereby
declaring and certifying that the facts herein stated are true, and accordingly
have set my hand hereunto this Day,
Dated: March 23, 1999.
/s/William Stocker
William Stocker
Incorporator
38
<PAGE>
--------------------------------------------------------------------------------
EXHIBIT 3.2
BY-LAWS
--------------------------------------------------------------------------------
39
<PAGE>
BY-LAWS
OF
FIRSTAUTO, INC.
A NEVADA CORPORATION
ARTICLE I
CORPORATE OFFICES
The principal office of the corporation in the State of Nevada shall be
located at 774 Mays Blvd. Suite 10, Incline Village NV 89451. The corporation
may have such other offices, either within or without the State of incorporation
as the board of directors may designate or as the business of the corporation
may from time to time require.
ARTICLE II
SHAREHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETINGS
The directors may designate any place, either within or without the State
unless otherwise prescribed by statute, as the place of meeting for any annual
meeting or for any special meeting called by the directors. A waiver of notice
signed by all stockholders entitled to vote at a meeting may designate any
place, either within or without the State unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or if
a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.
SECTION 2. ANNUAL MEETINGS
The time and date for the annual meeting of the shareholders shall be set
by the Board of Directors of the Corporation, at which time the shareholders
shall elect a Board of Directors and transact any other proper business. Unless
the Board of Directors shall determine otherwise, the annual meeting of the
shareholders shall be held on the second Monday of March in each year, if not a
holiday, at Ten o'clock A.M., at which time the shareholders shall elect a Board
of Directors and transact any other proper business. If this date falls on a
holiday, then the meeting shall be held on the following business day at the
same hour.
SECTION 3. SPECIAL MEETINGS
Special meetings of the shareholders may be called by the President, the
Board of Directors, by the holders of at least ten percent of all the shares
entitled to vote at the proposed special meeting, or such other person or
persons as may be authorized in the Articles of Incorporation.
SECTION 4. NOTICES OF MEETINGS
Written or printed notice stating the place, day and hour of the meeting
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) days nor more than
sixty (60) days before the date of the meeting, either personally or by mail, by
the direction of the president, or secretary, or the officer or persons calling
the meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the stockholder at his address
as it appears on the stock transfer books of the corporation, with postage
thereon prepaid.
Closing of Transfer Books or Fixing Record Date.
40
<PAGE>
(a) For the purpose of determining stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend, or in order to make a determination
of stockholders for any other proper purpose, the directors of the corporation
may provide that the stock transfer books shall be closed for a stated period
but not to exceed, in any case twenty (20) days. If the stock transfer books be
closed for the purpose of determining stockholders entitled to notice or to vote
at a meeting of stockholders, such books shall be closed for at least twenty
(20) days immediately preceding such meeting.
(b) In lieu of closing the stock transfer books, the directors may
prescribe a day not more than sixty (60) days before the holding of any such
meeting as the day as of which stockholders entitled to notice of the and to
vote at such meeting must be determined. Only stockholders of record on that day
are entitled to notice or to vote at such meeting
(c) The directors may adopt a resolution prescribing a date upon which the
stockholders of record are entitled to give written consent to actions in lieu
of meeting. The date prescribed by the directors may not precede nor be more
than ten (10) days after the date the resolution is adopted by directors.
SECTION 5. VOTING LIST.
The officer or agent having charge of the stock transfer books for the
shares of the corporation shall make, at least ten (10) days before each meeting
of stockholders, a complete list of stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and number of shares held by each, which list, for a period of ten
(10) days prior to such meeting, shall be kept on file at the principal office
of the corporation and shall be subject to inspection by any stockholder at any
time during usual business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any stockholder during the whole time of the meeting. The original stock
transfer book shall be prima facie evidence as to who are the stockholders
entitled to examine such list or transfer books or to vote at the meeting of
stockholders.
SECTION 6. QUORUM.
At any meeting of stockholders, a majority of fifty percent plus one vote,
of the outstanding shares of the corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of stockholders. If
less than said number of the outstanding shares are represented at a meeting, a
majority of the outstanding shares so represented may adjourn the meeting from
time to time without further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting originally notified. The stockholders present at
a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
41
<PAGE>
SECTION 7. PROXIES.
At all meetings of the stockholders, a stockholder may vote by proxy
executed in writing by the stockholder or by his duly authorized attorney in
fact. Such proxy shall be filed with the secretary of the corporation before or
at the time of the meeting. Such proxies may be deposited by electronic
transmission.
SECTION 8. VOTING.
Each stockholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by proxy, for each share of stock entitled to
vote held by such shareholder. Upon the demand of any stockholder, the vote for
directors and upon any question before the meeting shall be by ballot. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of Nevada.
SECTION 9. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as
follows:
a. Roll Call.
b. Proof of notice of meeting or waiver of notice.
c. Reading of minutes of preceding meeting.
d. Reports of Officers.
e. Reports of Committees.
f. Election of Directors.
g. Unfinished Business.
h. New Business.
SECTION 10. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be taken, or any
other action which may be taken, at a meeting of the stockholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the stockholders entitled to vote with respect to the
subject matter thereof. Unless otherwise provided by law, any action required to
be taken, or any other action which may be taken, at a meeting of the
stockholders, may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by a Majority of all of the
stockholders entitled to vote with respect to the subject matter thereof at any
regular meeting called on notice, and if written notice to all shareholders is
promptly given of all action so taken.
SECTION 11. BOOKS AND RECORDS.
The Books, Accounts, and Records of the corporation, except as may be
otherwise required by the laws of the State of Nevada, may be kept outside of
the State of Nevada, at such place or places as the Board of Directors may from
time to time appoint. The Board of Directors shall determine whether and to what
extent the accounts and the books of the corporation, or any of them, other than
the stock ledgers, shall be open to the inspection of the stockholders, and no
stockholder shall have any right to inspect any account or book or document of
this Corporation, except as conferred by law or by resolution of the
stockholders or directors. In the event such right of inspection is granted to
the Stockholder(s) all fees associated with such inspection shall be the sole
expense of the Stockholder(s) demanding the inspection. No book, account, or
42
<PAGE>
record of the Corporation may be inspected without the legal counsel and the
accountants of the Corporation being present. The fees charged by legal counsel
and accountants to attend such inspections shall be paid for by the Stockholder
demanding the inspection.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its board
of directors. The directors shall in all cases act as a board, and they may
adopt such rules and regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not inconsistent with
these by-laws and the laws of this State.
SECTION 2. NUMBER, TENURE, AND QUALIFICATIONS.
The number of directors of the corporation shall be a minimum of one (l)
and a maximum of nine (7), or such other number as may be provided in the
Articles of Incorporation, or amendment thereof. Each director shall hold office
until the next annual meeting of stockholders and until his successor shall have
been elected and qualified.
SECTION 3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without other notice than
this by-law immediately after, and at the same place as, the annual meeting of
stockholders. The directors may provide, by resolution, the time and place for
holding of additional regular meetings without other notice than such
resolution.
SECTION 4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of the
president or any two directors. The person or persons authorized to call special
meetings of the directors may fix the place for holding any special meeting of
the directors called by them.
SECTION 5. NOTICE.
Notice of any special meeting shall be given at least one day previously
thereto by written notice delivered personally, or by telegram or mailed to each
director at his business address. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail so addressed, with postage
thereon prepaid. The attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
SECTION 6. QUORUM.
At any meeting of the directors fifty (50) percent shall constitute a
quorum for the transaction of business, but if less than said number is present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice.
43
<PAGE>
SECTION 7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the directors.
SECTION 8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of the majority of the
directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause shall be filled by
vote of the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the unexpired
term of his predecessor.
SECTION 9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
SECTION 10. RESIGNATION.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the board
or such officer, and the acceptance of the resignation shall not be necessary to
make it effective.
SECTION 11. COMPENSATION.
No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance at
each regular or special meeting of the board may be authorized. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
SECTION 12. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an executive
committee and other committees, each consisting of one (l) or more directors.
Each such committee shall serve at the pleasure of the board.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER.
The officers of the corporation shall be the president, a secretary and a
treasurer, each of whom shall be elected by the directors. Such other officers
and assistant officers as may be deemed necessary may be elected or appointed by
the directors.
SECTION 2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided. In the event that no election of officers be held by the directors at
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that time, the existing officers shall be deemed to have been confirmed in
office by the directors.
SECTION 3. REMOVAL.
Any officer or agent elected or appointed by the directors may be removed
by the directors whenever in their judgement the best interest of the
corporation would be served thereby, but such removal shall be without prejudice
to contract rights, if any, of the person so removed.
SECTION 4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.
SECTION 5. PRESIDENT.
The president shall be the principal executive officer of the corporation
and, subject to the control of the directors, shall in general supervise and
control all of the business and affairs of the corporation. He shall, when
present, preside at all meetings of the stockholders and of the directors. He
may sign, with the secretary or any other proper officer of the corporation
thereunto authorized by the directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts, or other instruments which
the directors have authorized to be executed, except in cases where the
directors or by these by-laws to some other officer or agent of the corporation,
or shall be required by law to be otherwise signed or executed; and in general
shall perform all duties incident to the office of president and such other
duties as may be prescribed by the directors from time to time.
SECTION 6. CHAIRMAN OF THE BOARD.
In the absence of the president or in the event of his death, inability or
refusal to act, the chairman of the board of directors shall perform the duties
of the president, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the president. The chairman of the board of
directors shall perform such other duties as from time to time may be assigned
to him by the directors.
SECTION 7. SECRETARY.
The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, see that all
notices are duly given in accordance with the provisions of these by-laws or as
required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder, have general
charge of the stock transfer books of the corporation and in general perform all
the duties incident to the office of secretary and such other duties as from
time to time may be assigned to him by the president or by the directors.
SECTION 8. TREASURER.
If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the directors shall determine. He shall have charge and custody of and be
responsible for all funds and securities of the corporation; receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
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with these by-laws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the directors.
SECTION 9. SALARIES.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by reason
of fact that he is also a director of the corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents to
enter into any contract or execute and deliver any instrument in the name of and
on behalf of the corporation, and such authority may be general or confined to
specific instances.
SECTION 2. LOANS.
No loans shall be contracted on behalf of the corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution of
the directors. Such authority may be general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation, shall be signed
by such officer or officers, agent or agents of the corporation and in such
manner as shall from time to time be determined by resolution of the directors.
SECTION 4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited from
time to time to the credit of the corporation in such banks, trust companies or
other depositories as the directors may select.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall begin on the 1st day of January in
each year, or on such other day as the Board of Directors shall fix.
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ARTICLE VII
DIVIDENDS
The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE VIII
SEAL
The directors may provide a corporate seal which shall have inscribed
thereon the name of the corporation, the state of incorporation, year of
incorporation and the words, "Corporate Seal".
ARTICLE IX
WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions of
these by-laws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE X
AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may be
adopted in the same manner as their adoption, by the Board of Directors if so
adopted; by a vote of the stockholders representing a majority of all the shares
issued and outstanding, if so adopted or adopted by the Board of Directors; or,
in any case, at any annual stockholders' meeting or at any special stockholders'
meeting when the proposed amendment has been set out in the notice of such
meeting.
CERTIFICATION
THE SECRETARY of the Corporation hereby certifies that the foregoing is a
true and correct copy of the By-Laws of the Corporation named in the title
thereto and that such By-Laws were duly adopted by the Board of Directors of
said Corporation on the date set forth below.
EXECUTED, AND CORPORATE SEAL AFFIXED, this day of March 29, 1999.
/s/J. Dan Sifford, Jr.
J. Dan Sifford, Jr.
Secretary
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EXHIBIT 10.1
INTREPID INTERNATIONAL
FINANCIAL SERVICES CONSULTING AGREEMENT
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INTREPID INTERNATIONAL
FINANCIAL SERVICES
CONSULTING AGREEMENT
THIS AGREEMENT is made by and between Intrepid International, Ltd., a Nevada
Corporation, (hereafter IIL ), and First Auto, Inc. a Nevada Corporation,
(hereafter Client ) and dated May 24, 2000. In consideration of the mutual
promises contained herein, and on the terms and conditions herein set forth, the
parties agree as follows:
1. RETAINER AGREEMENT. Intrepid International, Ltd. is hereby retained as
financial services consultants for the Client, consistent with that certain
Description of Mission and Services Offered, a copy of which is Attachment 1 to
this Consulting Agreement, and incorporated herein by this reference as though
fully set forth herein. Among the services to be provided and contemplated by
this arrangement are the services of its President, Kirt W. James (billable at
$150.00/hr), its prime consultant, J. Dan Sifford Jr. (billable at $240.00/hr),
and such incidental secretarial services (billable at $100.00/hr) as may be
reasonably and necessarily performed by its secretary. Additional services may
be performed by subcontractors of IIL, subject to arrangements approved by
Client in advance. Our Counsel bill us at $300 per hour, for legal services in
execution of our clients' requests.
2. SERVICES. IIL agrees to provide, as requested, the widest possible
range of and Financial Consulting services, to Management of Client, subject to,
limited by and consistent with that certain Description of Mission and Services
Offered, a copy of which is Attachment 1 to this Consulting Agreement, and
incorporated herein by this reference as though fully set forth herein. Such
services include, as requested by Client, coordination of public relations,
shareholder relations, audit coordination, certificate and transfer
coordination, coordination of relationships with market-makers and broker
dealers in the securities of Client and consulting services, incidental analysis
and, where appropriate, and subject to the accompanying Attorney Disclosure
Agreement, written legal opinions by IIL Counsel acting, as requested by Client,
as Special Securities Counsel with Limited Authority, and the preparation and
coordination of annual, quarterly and current filings as may be required of the
Client pursuant to the Securities and Exchange Act of 1934 and Regulations of
the Securities and Exchange Commission promulgated pursuant to the 1934 Act.
3. COMPENSATION. In consideration for such services, Client agrees to pay
IIL pursuant to fee schedule set forth in paragraph 1 above. Billings for
services shall be invoiced by IIL and paid upon receipt.
4. PAYMENT OF EXPENSES. IIL must secure in writing approval in advance for
any expense that may be contracted on behalf of Client in excess of $400 in the
aggregate. Expenses, if approved, are to be invoiced by IIL and paid upon
receipt. In addition to charges for services, Client will be billed for all
normal and incidental identifiable costs such as copying charges, telephone
expenses, delivery fees, filing fees, and transcription fees; however, travel
expenses, expert witness fees and other extraordinary charges will not be
incurred without prior approval.
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5. UNPAID CHARGES. It is agreed that if at any time any invoice rendered
by this Firm to Client for investment banking, appropriate legal services and
expenses remains unpaid for any reason for longer than 30 days, we shall have
the right to discontinue performance of further services and to withdraw as your
attorneys, regardless of the status of any matter in which we will be involved
and regardless of any event or proceeding which may then be pending, unless we
have reached a subsequent written agreement with respect thereto.
6. LATE CHARGES. An amount past due will incur a late charge, after 30
days, of 1.5% per month (18% per annum) of the total unpaid balance. Late
charges will continue to accrue at the same rate on any unpaid balance during
any collection efforts and until the entire bill is paid in full, unless a
subsequent agreement with respect to such charges is made and reduced to
writing. Should it become necessary to seek collection of any past due
statement, you agree to pay all reasonable costs of collection including
reasonable attorneys' fees and all interest incurred.
7. ARBITRATION OF ANY DISPUTES. It is agreed that any dispute arising our
of this Agree-ment, or the Firm's representation of you, shall be resolved by
binding arbitration in Las Vegas, Nevada, by the American Arbitration
Association.
8. LIABILITY OF IIL. In furnishing Client with advice and other services
as requested, neither IIL nor any owner, employee or agent of IIL, shall be
liable to Client or its creditors for ordinary errors of judgment or for
anything except gross negligence, wilful malfeasance, or bad faith, in the
performance of its duties or reckless disregard of its obligations and duties
under the terms of this agreement. It is further understood and agreed that IIL
may rely upon information furnished to it reasonably believed to be accurate and
reliable and that, except as herein provided, IIL shall not be accountable for
any loss suffered by Client by reason of Client's action or non-action on the
basis of advice, recommendation or approval of IIL, its owners, employees or
agents.
9. GOOD FAITH AND FAIR DEALING. All parties to this agreement hereby
covenant expressly to deal with each other honestly, fairly and in good faith in
all respects, and to provide each other with reasonable further assurances in
furtherance of their mutual performances with respect to this Agreement.
10. INDEPENDENT CONTRACTOR. IIL is and shall at all times be understood
and deemed to be an independent contractor without authority to act or represent
Client or its clients, except as provided or authorized in this agreement.
11. NON-EXCLUSIVITY. Client recognizes and acknowledges that this
agreement is non-exclusive, and that accordingly IIL now renders and may in the
future render services to other clients, some of which may be of a nature
similar to those agreed to be performed herein, or to clients with similar
businesses, needing similar advice. IIL is and shall be free to render any such
service or advice and shall not be required to devote full-time and attention to
its obligations under this agreement, but only such amount as is reasonably
necessary.
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12. CONTROL. Nothing contained herein shall be deemed to require any
action by any Corporation contrary to law or its constituent documents or to
relieve the board of directors thereof from responsibility for control of the
affairs of such corporation.
13. OWNERSHIP OF FILES AND RECORDS. Except as to original records or any
records or files which we accept upon the understanding that they belong to you,
it hereby is agreed that all files, copies of documents, correspondence or other
materials which we may accumulate in connection with your representation,
including copies of materials filed with any regulatory agency, shall be the
property of IIL. Upon the termination of the engagement, IIL will return any
property belonging to you upon your request. Copies of our files and other
materials which IIL may have accumulated during our representation will be made
available to Client at its expense; however, it is specifically agreed that IIL
shall have the right, in its discretion, to dispose of these files at such times
as it deter-mines reasonably that such files need not be retained any longer.
After such destruction, such files will no longer be available.
14. TERMINATION. The term of this agreement shall begin with the complete
execution hereof, and shall continue in effect for until terminated by either
party in writing. Upon termination, all accrued charges shall be promptly
invoiced and paid.
15. MISCELLANEOUS. This agreement sets forth the entire agreement and
understanding between the parties and supersedes all prior discussions,
agreements and understandings, if any, of any and every kind and nature, between
them. This agreement is made and shall be construed and interpreted according to
the laws of the Client's place of Incorpo-ration if that be Nevada or Texas, and
if not, pursuant to the laws of the State of Nevada.
ACCORDINGLY the parties cause this agreement to be signed by their duly
authorized representative, as of the date written below.
Intrepid International, Ltd.
by
/s/Kirt W. James
Kirt W. James, President
THE ABOVE IS UNDERSTOOD AND AGREED TO and I state under the penalties of perjury
that I am authorized to execute this letter agreement:
First Auto, Inc.
Date: May 24, 2000 /s/ J. Dan Sifford
J. Dan Sifford, Secretary/Treasurer
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