SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
FUZZY LOGIC SOFTWARE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 33-0880355
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
609 Granville Street, Suite 1600, Vancouver, British Columbia, V7Y 1C3
(Address of registrant's principal executive offices) (Zip Code)
604.688.5180
(Registrant's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of Each Exchange on which
to be so registered: each class is to be registered:
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par Value $.0001
(Title of Class)
Copies to:
Thomas E. Stepp, Jr.
Stepp & Beauchamp LLP
Attorneys-at-Law
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
Page 1 of 14
Exhibit Index is specified on Page 13
<PAGE>
Fuzzy Logic Software Corporation,
a Delaware corporation
Index to Registration Statement on Form 10-SB
Item Number and Caption Page
- ----------------------- ----
1. Description of Business 3
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 4
3. Description of Property 7
4. Security Ownership of Certain Beneficial Owners and Management 7
5. Directors, Executive Officers, Promoters and Control Persons 8
6. Executive Compensation - Remuneration of Directors and Officers 8
7. Certain Relationships and Related Transactions 9
8. Description of Securities 9
PART II
1. Market Price of and Dividends on the Registrant's Common
Equity and Related Stockholder Matters 10
2. Legal Proceedings 10
3. Changes in and Disagreements with Accountants 11
4. Recent Sales of Unregistered Securities 11
5. Indemnification of Directors and Officers 11
PART F/S
Financial Statements F-1 through F-19
PART III
1(a). Index to Exhibits 13
1(b). Exhibits E-1 through E-14
Signatures 14
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Item 1. Description of Business.
The Company. Fuzzy Logic Software Corporation, a Delaware corporation
("Company") was incorporated in the State of Delaware on or about August 25,
1997. The executive offices of the Company are located at 609 Granville Street,
Suite 1600, Vancouver, British Columbia, Canada V7Y 1C3. The Company's telephone
number is 604.688.5180.
Background of the Company. The Company was originally incorporated for the
purpose of developing software programs and manufacturing control boards and
computer chips for Fuzzy Logic control applications. Fuzzy Logic is a computer
modeling language that recognizes multi-valued states between zero and one,
thereby allowing computers to represent or manipulate terms with greater
complexity; and to exercise "human-like" judgment in the automation of
sophisticated tasks. This system eliminates the on/off rigidity typical of
computer control systems and results in more flexible and subtle process
controls. On September 16, 1997, FZZ, Inc., a Colorado corporation ("FZZ") was
merged into the Company. Prior to the merger, FZZ had not conducted any
operations. In July 1999, management of the Company changed and new management
decided to establish an environmental remediation business.
Environmental Remediation. In October 1999, the Company entered into a Letter of
Intent with Ethxx International Inc., an Ontario corporation, to acquire
environmental remediation technology. Environmental remediation services are
used to remove and detoxify contaminants from existing sites where the
generation of wastes has ceased and to restore the sites to acceptable
environmental standards. Environmental remediation services are also required in
ongoing manufacturing and chemical processing operations to collect, process and
detoxify harmful emissions which would otherwise be released into the
environment.
The environmental remediation business involves the processing or conversion of
certain waste products and materials, including certain toxic waste products and
materials, into products or materials which can be disposed of or otherwise
dealt with in an environmentally safe manner. The business is expected to derive
its revenues from payments for the processing or conversion of such products or
materials, including revenues for services rendered or charges for the removal
and disposal of such materials. Revenues from product or by-product sales are
expected to be a secondary source of revenues.
Pearson Gas Reformer Technology. The Company anticipates that its remediation
technology will consist of the proprietary "Pearson Gas Reformer Technology"
used to convert carbon, hydrocarbon and toxic waste environmental contaminants
originally derived from fossil fuels (whether as a product, by-product,
derivative chemical or processed waste) into synthetic gas for use as a fuel.
The conversion process uses steam gasification to convert the waste products
into synthetic gas which can be used for cogeneration, such as firing a steam
turbine or a boiler. The Company believes that the conversion process will
filter out the waste products so that any remaining by-products can be
encapsulated for proper disposal. Key pieces of equipment such as the gasifier
will be transportable from site to site for smaller projects. For more sustained
environmental remediation projects, the equipment will be permanently installed
at the facilities being serviced.
Acquisitions and Joint Ventures. The Company believes that acquisitions and
joint ventures will be necessary to obtain the proper expertise and
complimentary services with firms able to provide business operations such as
dredging and excavation, electrical cogeneration, demolition, transportation,
material containment and other similar operations. The Company also anticipates
that additional specialized and conventional services and expertise which are
not fundamental to the Company's technologies will be procured as required from
time to time by contract, joint venture and/or acquisition.
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Employees. The Company currently has no employees. Management of the Company
anticipates hiring people who have expertise in environmental remediation to
develop and implement the Company's business plan.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources. The Company had cash of $250,000.00 as of
September 30, 1999.
Results of Operations. The Company has not yet realized any revenue from
operations.
The Company's success is materially dependent upon its ability to satisfy
additional financing requirements. The Company is reviewing its options to raise
substantial equity capital. The Company cannot personally estimate when it will
begin to realize positive gross revenue. In order to satisfy its requisite
budget, management has held and continues to conduct negotiations with various
investors. The Company anticipates that these negotiations will result in
additional investment income for the Company. To achieve and maintain
competitiveness, the Company may be required to raise additional substantial
funds. The Company anticipates that it will need to raise significant capital to
develop, promote and conduct its operations. Such capital may be raised through
public or private financing as well as borrowing and other sources.
There can be no assurance that funding for the Company's operations will be
available under favorable terms, if at all. If adequate funds are not available,
the Company may be required to curtail operations significantly or to obtain
funds by entering into arrangements with collaborative partners or others that
may require the Company to relinquish rights to certain products and services
that the Company would not otherwise relinquish.
Compliance with Government and Environmental Regulations. The collection,
detoxification and disposal of contaminates, and rendering of related
environmental services, are subject to federal, state and local laws and
regulations which regulate health, safety, the environment, zoning and land-use.
Any violation of, and cost of compliance with, these laws and regulations could
have a material adverse effect on the Company's business, financial condition
and results of operations. Operating permits are generally required for
recycling facilities and certain collection vehicles, and these permits are
subject to revocation, modification, and renewal. Federal, state and local
regulations vary, but generally govern all types of waste disposal activities,
including the location and use of facilities and also impose restrictions to
prohibit or minimize soil, air and water pollution. In connection with the
Company's proposed environmental remediation business activities, it may be
necessary to expend considerable time, effort and money to bring the Company's
existing or acquired facilities into compliance with applicable requirements and
to obtain the permits and approvals necessary to permit the Company to process
and dispose of toxic wastes and contaminates. In addition, governmental
authorities have the power to enforce compliance with these regulations and to
obtain injunctions or impose fines in the case of violations, including criminal
penalties. These regulations are administered by the United States Environmental
Protection Agency ("EPA") and various other federal, state and local
environmental and health and safety agencies and authorities, including the
Occupational Safety and Health Administration of the United States Department of
Labor.
Hazardous Substances Liability. The Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("Superfund" or "CERCLA"),
has been interpreted by some courts to impose strict, joint and several
liability on current and former owners or operators of facilities at which there
has been a release or a threatened release of a "hazardous substance" and on
persons who generate, transport or arrange for the disposal of such substances
at the facility. Thousands of substances are defined as "hazardous" under
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CERCLA and their presence, even in minute amounts, can result in substantial
liability. The statute provides for the remediation of contaminated facilities
and imposes the costs therefor on the responsible parties. The costs of
conducting such a cleanup and the damages can be very significant and, given the
limitations in insurance coverage for these risks, could have a material adverse
impact on the Company and its financial condition. Notwithstanding the Company's
efforts to comply with applicable regulations, the processing of waste products
and materials, including toxic waste products, and the acquisition or
development of hazardous waste disposal operations, will expose the Company to
significant and continuing liability.
Lack of Environmental Liability Insurance. While the Company may acquire and
maintain site-specific pollution legal liability insurance, which may provide
coverage under certain circumstances for pollution damage to third parties, such
coverage is restrictive in nature, and subject to certain exclusions and
effective dates, consistent with insurance industry requirements. In addition,
such coverage is subject to specific and aggregate limits which may not be
sufficient to cover claims, if they should arise. If the Company is not able to
obtain comprehensive pollution insurance at reasonable costs, it may carry only
such coverage, if any, as is required by regulatory permits. In addition, the
extent of insurance coverage under certain forms of policies has been the
subject in recent years of litigation in which insurance companies have, in some
cases, successfully taken the position that certain risks are not covered by
such policies. If, in the absence of such insurance, the Company were to incur
liability for environmental damages of sufficient magnitude, it could have a
material adverse effect on the Company and its financial condition.
Risks of Future Legal Proceedings. In addition to the costs of complying with
environmental regulations, recycling, environmental remediation and other waste
management companies, by the nature of the businesses, may be involved in legal
proceedings in the ordinary course of business. Government agencies may seek to
impose fines on the Company for alleged failure to comply with laws and
regulations or to deny, revoke or impede the renewal of the Company's permits
and licenses. In addition, such governmental agencies, as well as the Company's
customers or landowners located near the Company's facilities, may claim the
Company is liable for environmental damage. Citizen's groups have become
increasingly active in challenging the grant or renewal of permits and licenses,
and responding to such challenges has further increased the costs associated
with permitting new facilities or expanding current facilities. A significant
judgment against the Company, the issuance of a permanent cease and desist
order, the loss of a significant permit or license or the imposition of a
significant fine could have a material adverse effect on the Company's financial
condition.
Competition in the Environmental Remediation Industry. The Company is a new
entry into the environmental remediation industry and its management has no
experience in this industry. The hazardous waste remediation and disposal
industry is led by several large national waste management companies and
numerous regional and local companies, all of which contribute to the
significant competition that characterizes the industry. All of these companies
have significantly greater financial and operational resources and more
established market positions than the Company.
Expansion and Equipment Acquisition Risks. New toxic waste processing facilities
are subject to a number of risks, including risks of city, state and, where
necessary, federal licensing delays and cost overruns that may increase
operating costs. Leases for such facilities may not be entered into on schedule.
The Company's proposed toxic waste processing operations may not achieve
anticipated volume to generate income to pay operating expenses, and new
projects inherently face risks that zoning, occupancy and other required
governmental permits and authorizations will not be granted in a timely manner
or at all. Acquisition of machinery incidental to the operation of such toxic
waste processing facilities entails risks that the machinery will fail to
perform in accordance with expectations and that the Company's judgments with
respect to the costs of such machinery will prove inaccurate, as well as general
investment risks associated with any expanding
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business venture. There are also risks that servicing and the Company's
equipment and facilities maintenance will be more expensive or time-consuming
than currently anticipated.
Toxic wastes typically require special processing at very high temperatures.
Many toxic waste treatment facilities utilize a powerful special waste furnace
for this purpose. Temperatures of 1200 degrees Celsius are needed to burn most
toxic substances, which are typically delivered in barrels, other types of
containers, or in liquid or pasteous form. The principle of the furnace is
simple. It consists mainly of a huge, slightly inclined tube, pivoting about its
main axis, in which the wastes are slowly moved forward by the rotation of the
tube. An oil burner reaching into the front end propels a flame through the
length of the tube. The remainders can be categorized as ashes, slag and gas.
The solid remainders, ashes and slag, are collected separately in containers;
the gaseous substances are post-treated in a separate vertical fire chamber and
are then finally filtered. Problems arise when more than one type of waste is
processed at the same time, which is normally unavoidable if a reasonable
throughput is targeted. Combinations can lead to interactions between chemical
components, which in turn can have negative effects on the equipment.
Furthermore, law restricts the amount of each substance per cubic meter of
exhaust gas.
Unproven Technology. Although the Company hopes to acquire proprietary new
technology for use in the environmental remediation business, this technology is
unproven. In the event this technology does not prove successful in processing
or converting waste products or materials, including toxic waste, into products
or materials that can be disposed of or recycled in an environmentally
acceptable manner, the Company could face significant liabilities, costs, and
regulatory actions at the local, state and federal level, as well as significant
civil liabilities.
Reports to Security Holders. The Company will become a reporting company with
the Securities and Exchange Commission ("SEC") when this Form 10-SB is effective
and will then be obligated to provide an annual report to its security holders,
which will include audited financial statements. The public may read and copy
any materials filed with the SEC at the SEC's Public Reference Room at 450 Fifth
Street N.W., Washington, D.C. 20549. The public may also obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC. The address of that site is http://www.sec.gov. The Company does
not currently maintain its own Internet address.
Year 2000 Compliance. The Company's management has addressed the Year 2000 issue
by a management review of potential exposures within the Company. The Company's
main application software has been confirmed as Year 2000 compliant and the
Company does not have any reliance on older mainframe based applications, about
which most concern exists for potential Year 2000 issues.
In order to ascertain the Company's state of readiness for Year 2000 compliance,
the Company has undertaken a management review of potential exposures within the
Company. All software, hardware and communications equipment owned by or
supplied to the Company have been analyzed by reviewing all relevant product and
service manuals, contacting vendors, and conducting online research of relevant
vendor websites. The Company's main application software is Microsoft
Windows-based, which has been confirmed as Year 2000 compliant. Furthermore, all
computer hardware systems owned by or supplied to the Company have been
confirmed as Year 2000 compliant subsequent to management's review of the
various vendor and supplier websites regarding the particular systems owned by
the Company. For other software used by the Company, the Company has contacted
the providers, reviewed the relevant manuals and reviewed vendor websites to
ensure Year 2000 compliance.
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For non-information technology systems ("non-IT"), which systems depend on
computer clocks or date calculation and operations, including fire detection,
heating, venting, and air conditioning systems and other electronic control
systems, the Company has reviewed the relevant manuals and contacted the various
suppliers of such systems to ascertain the Year 2000 readiness of these non-IT
systems.
For critical systems, and when confirmation of Year 2000 compliance was not
available from the vendor, tests have been conducted to evaluate operation after
the calendar changes to 1st January 2000. When a test identified possible
problems, software and or hardware has been upgraded or new processes put in
place.
Third-Party Year 2000 Compliance Risks to the Company. Although the Company has
received assurances from third parties regarding Year 2000 compliance with such
non-IT systems, the Company cannot be certain that a business interruption may
not occur as the result of a Year 2000 issue concerning these non-IT systems.
The Company believes that the most significant Year 2000 risk to the Company's
continued operations is the Company's dependence on third party suppliers and
vendors. While the Company has ascertained from the various third party
suppliers and vendors the Year 2000 readiness of the various hardware and
software systems supplied to the Company, there can be no assurance that a
business interruption will not occur as the result of some unforeseen Year 2000
issue.
In a worst case scenario, the Company's primary operations could be adversely
affected by non-compliance of banks, communications providers, utilities, common
carriers, the Company's suppliers and vendors, potential customers and other
sources known and unknown to the Company. The ultimate impact of Year 2000
issues on the Company's operations cannot be reasonably estimated at this time.
Item 3. Description of Property
Property held by the Company. As of the date specified in the following table,
the Company held the following property:
- --------------------------------------------------------------------------------
Property September 30, 1999
- --------------------------------------------------------------------------------
Cash $250,000.00
- --------------------------------------------------------------------------------
Property and Equipment $0
- --------------------------------------------------------------------------------
The Company's Facilities. At this time, the Company occupies facilities provided
by the Company's Canadian securities counsel at no charge to the Company. This
office space is located at 609 Granville Street, Suite 1600, Vancouver, British
Columbia, Canada V7Y 1C3.
Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners. The following are
persons, other than directors and officers, who are beneficial owners
of 5% or more of the Company's issued and outstanding common stock:
<TABLE>
<CAPTION>
Amount of
Title of Class Name of Beneficial Owner Beneficial Owner Percent of Class
-------------- ------------------------ ---------------- ----------------
<S> <C> <C> <C>
Common Stock John Good 470,000 Shares 11.5%
Common Stock Daniel Vassey 470,000 Shares 11.5%
Common Stock David Adair 450,000 Shares 11.0%
Common Stock Ronald Vassey 450,000 Shares 11.0%
Common Stock Marla Lynch 425,000 Shares 10.4%
Common Stock Laurie Romaro 325,000 Shares 7.9%
Common Stock Craig Dalziel 275,000 Shares 6.7%
Common Stock Ron Content 480,000 Shares 11.7%
Common Stock Brent Soleway 480,000 Shares 11.7%
</TABLE>
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(b) Security Ownership of Management. The directors and principal
executive officers of the Company beneficially own, in the aggregate,
20,000 shares of the Company's common stock, or approximately 0.49% of
the issued and outstanding shares, as set forth on the following
table:
<TABLE>
<CAPTION>
Name and Address of Amount of
Title of Class Beneficial Owner Beneficial Owner Percent of Class
- -------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
Common Stock Michael Lynch, President 20,000 shares 0.49%
and Director
</TABLE>
Changes in Control. Management of the Company is not aware of any arrangements
which may result in "changes in control" as that term is defined by the
provisions of Item 403(c) of Regulation S-B.
Item 5. Directors, Executive Officers, Promoters and Control Persons
The sole director and principal executive officer of the Company is specified on
the following table:
- --------------------------------------------------------------------------------
Name Age Position
- --------------------------------------------------------------------------------
Michael Lynch 32 President and a Director
- --------------------------------------------------------------------------------
Michael Lynch is the President and has been a director of the Company since July
1999. From 1999 to 1996, Mr. Lynch operated a real estate construction and
development company in Vancouver, British Columbia. Prior to 1996, Mr. Lynch
operated a real estate development firm in London, Ontario, Canada.
Other than Mr. Lynch, there are no significant employees expected by the Company
to make a significant contribution to the business of the Company; however, the
Company anticipates hiring employees with expertise in the environmental
remediation business during the next 12 months. All directors of the Company
serve until the next annual meeting of stockholders. The Company's executive
officers are appointed by the Company's Board of Directors and serve at the
discretion of the Board of Directors.
There are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining Mr. Lynch from engaging in or continuing any conduct, practice or
employment in connection with the purchase or sale of securities, or convicting
him of any felony or misdemeanor involving a security, or any aspect of the
securities business or of theft or of any felony.
Item 6. Executive Compensation - Remuneration of Directors and Officers.
Remuneration of Officers. Mr. Lynch is the only officer of the Company and does
not earn either compensation or remuneration from the Company for services
provided to the Company.
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Remuneration of Directors. As of November 1, 1999, no compensation has been paid
to Mr. Lynch for his services to the Company as a director.
Item 7. Certain Relationships and Related Transactions
Related Party Transactions. There have been no related party transactions which
would be required to be disclosed pursuant to Item 404 of Regulation S-B, except
for the following:
At inception, the Company entered into a fee and cost reimbursement arrangement
with a related party who is a former major shareholder of the Company. In
connection with this arrangement, a management fee of $100,000 per year is
charged to the Company. All of the Company's expenses are paid by the related
party and have been accrued.
Item 8. Description of Securities
The Company is authorized to issue 30,000,000 shares of $.0001 par value common
stock, each share of common stock having equal rights and preferences, including
voting privileges. As of November 8, 1999, 4,075,456 shares of the Company's
common stock were issued and outstanding. The Company is also authorized to
issue 5,000,000 shares of $.0001 par value preferred stock, none of which is
issued and outstanding.
Common Stock. The holders of the Company's common stock are entitled to one vote
for each share held of record on all matters to be voted on by those
shareholders. In the event of liquidation, dissolution, or winding up of the
Company, the holders of the Company's common stock are entitled to share ratably
in all assets remaining available for distribution to them after payment of the
Company's liabilities and after provision has been made for each class of stock,
if any, having preference over the Company's common stock. Holders of shares of
the Company's common stock, as such, have no conversion, preemptive or other
subscription rights, and there are no redemption provisions applicable to the
Company's common stock.
Non-Cumulative Voting. The holders of shares of common stock of the Company do
not have cumulative voting rights, which means that the holders of more than 50%
of the outstanding common stock of the Company, voting for the election of
directors of the Company, may elect all of the directors of the Company to be
elected, if they so desire, and, in such event, the holders of the remaining
common stock of the Company may not be able to elect any of the Company's
directors.
Registration Rights. Existing holders of shares of the Company's common stock
are not entitled to rights with respect to the registration of such shares under
the Securities Act.
Dividends. The payment by the Company of dividends, if any, in the future, shall
be determined by the Company's Board of Directors, in its discretion, and will
depend on among other things, the Company's earnings, the Company's capital
requirements, and the Company's financial condition, as well as other relevant
factors. The Company has not paid or declared any dividends to date. Holders of
common stock are entitled to receive dividends as declared and paid from time to
time by the Company's Board of Directors from funds legally available. The
Company intends to retain any earnings for the operation and expansion of its
business and does not anticipate paying cash dividends in the foreseeable
future.
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PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters.
The Company participates in the OTC Bulletin Board, an electronic quotation
medium for securities traded outside of the Nasdaq Stock Market, and prices for
the Company's common stock are published on the OTC Bulletin Board under the
trading symbol "FZZY". This market is extremely limited and the prices quoted
are not a reliable indication of the value of the Company's common stock. Over
the last 52 weeks, the Company's common stock had a low bid price of $0.25 per
share and a high bid price of $1.00 per share. The bid price is currently
approximately $0.50 per share.
Penny Stock Regulation. The Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks". Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system). The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from those rules, to deliver a
standardized risk disclosure document prepared by the Commission, which (i)
contains a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading; (ii) contains a
description of the broker's or dealer's duties to the customer and of the rights
and remedies available to the customer with respect to violation to such duties
or other requirements of Securities' laws; (iii) contains a brief, clear,
narrative description of a dealer market, including "bid" and "ask" prices for
penny stocks and significance of the spread between the "bid" and "ask" price;
(iv) contains a toll-free telephone number for inquiries on disciplinary
actions; (v) defines significant terms in the disclosure document or in the
conduct of trading in penny stocks; and (vi) contains such other information and
is in such form (including language, type, size and format), as the Commission
shall require by rule or regulation. The broker-dealer also must provide, prior
to effecting any transaction in penny stock, the customer (i) with bid and offer
quotations for the penny stock; (ii) the compensation of the broker-dealer and
its salesperson in the transaction; (iii) the number of shares to which such bid
and ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (iv) monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules. If any of the Company's securities become subject to the penny
stock rules, holders of those securities may have difficulty selling those
securities.
Item 2. Legal Proceedings.
The Company is not aware of any pending litigation nor does it have any reason
to believe that any such litigation exists, except for the following:
On or about October 28, 1998, Ronald Content, a former employee of the Company,
filed an action in the Province of Ontario, Canada seeking damages arising from
the termination of his employment contract with the Company. The Company
believes that the claim is without merit and intends to vigorously defend it.
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Item 3. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements with the Company's accountants
since the formation of the Company required to be disclosed pursuant to Item 304
of Regulation S-B.
Item 4. Recent Sales of Unregistered Securities.
There have been no sales of unregistered securities within the last three (3)
years which would be required to be disclosed pursuant to Item 701 of Regulation
S-B, except for the following:
On or about September 23, 1999, the Company sold 500,000 units for $0.50 per
unit. Each unit consisted of one share of the Company's $.0001 par value common
stock and one share purchase warrant. The shares were issued in reliance upon
the exemption from the registration requirements of the Securities Act of 1933
("Act") specified by the provisions of Section 5 of the Act and Regulation S
promulgated by the Securities and Exchange Commission pursuant to that Section
5. Specifically, the offer was made to "non-U.S. persons", as that term is
defined under applicable federal and state securities laws. The offering price
for the shares was arbitrarily established by the Company and had no
relationship to assets, book value, revenues or other established criteria of
value. The Company realized proceeds of $250,000.00. The proceeds of the
offering were used to provide working capital to the Company.
Item 5. Indemnification of Directors and Officers
Article XIII of the Company's Certificate of Incorporation provides that no
director or officer of the Company shall be personally liable to the Company or
any of its stockholders for damages for breach of fiduciary duty as a director
or officer involving any act or omission of any such director or officer;
provided, however, that the foregoing provision does not eliminate or limit the
liability of a director or officer for acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law, or the payment of
dividends in violation of General Corporation Law of Delaware.
The Company will enter into indemnification agreements with each of its
executive offices pursuant to which the Company agrees to indemnify each such
person for all expenses and liabilities, including civil and criminal monetary
judgments, penalties and fines, incurred by such person in connection with any
criminal or civil action brought or threatened against such person by reason of
such person being or having been an officer or director or employee of the
Company. In order to be entitled to indemnification by the Company, such person
must have acted in good faith and in a manner such person believed to be in the
best interests of the Company and, with respect to criminal actions, such person
must have had no reasonable cause to believe his or her conduct was unlawful.
DISCLOSURE OF POSITION OF COMMISSION REGARDING INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES:
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE COMPANY
PURSUANT TO THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN INFORMED THAT IN THE
OPINION OF THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS
AGAINST PUBLIC POLICY AS EXPRESSED IN THE SECURITIES ACT OF 1933 AND IS,
THEREFORE, UNENFORCEABLE.
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PART F/S
Copies of the Company's Financial Statements specified in Regulation 228.310
(Item 310) are filed with this Registration Statement, Form 10-SB (see Item 15
below).
<TABLE>
<CAPTION>
(a) Index to Financial Statements. Page
- ----------------------------------- ----
<S> <C>
Independent Auditor's Report F-1
Balance Sheet, June 30, 1999 F-2
Statements of Operations for the year ended June 30, 1999 and for the period
from August 25, 1997 (inception) to June 30, 1998 and for the period from
August 25, 1997 (inception) to June 30, 1999 F-3
Statements of Shareholders' Equity for the year ended June 30, 1999 and for the
period from August 25, 1997 (inception) to June 30, 1998 and for the period from
August 25, 1997 (inception) to June 30, 1999 F-4
Statements of Cash Flows for the year ended June 30, 1999 and for the period
from August 25, 1997 (inception) to June 30, 1998 and for the period from
August 25, 1997 (inception) to June 30, 1999 F-5 through F-6
Notes to Financial Statements F-7 through F-11
Accountant's Disclaimer Report F-12
Unaudited Balance Sheet, September 30, 1999 F-13
Unaudited Statements of Operations as of September 30, 1999 and for the three
months periods ended September 1999 and 1998 and for the period from August 25,
1997 (inception) to September 30, 1999 F-14
Unaudited Statements of Shareholders' Equity as of September 30, 1999 and for
the three months periods ended September 1999 and 1998 and for the period from
August 25, 1997 (inception) to September 30, 1999 F-15
Unaudited Statements of Cash Flows as of September 30, 1999 and for the three
months periods ended September 1999 and 1998 and for the period from August 25,
1997 (inception) to September 30, 1999 F-16 through F-17
Unaudited Notes to Financial Statements F-18 through F-19
</TABLE>
12
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
Fuzzy Logic Software Corporation
We have audited the accompanying balance sheets of Fuzzy Logic Software
Corporation (a development stage company) as of June 30, 1999, and the related
statements of operations, shareholders' equity, and cash flows for the year
ended June 30, 1999 and for the period from August 25, 1997 (inception) to June
30, 1999 and for the period from August 25, 1997 (inception) to June 30, 1998.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 Fuzzy Logic Software
Corporation (a development stage company) as of June 30, 1999, and the results
of operations and cash flows for the year ended June 30, 1999 and for the period
from August 25, 1997 (inception) to June 30, 1999 and for the period from August
25, 1997 (inception) to June 30, 1998 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has no operations, products, or facilities,
and significant resources will be required to implement its plan of operations,
thereby raising substantial doubt about its ability to continue as a going
concern. Management's plan in regard to these matters is also described in Note
1. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Kelly & Company
Kelly & Company
Newport Beach, California
November 3, 1999
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Balance Sheet
June 30, 1999
- --------------------------------------------------------------------------------
ASSETS
<TABLE>
<S> <C>
Total assets $ --
============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accrued liabilities $ 1,213
Due to related party 212,031
------------
Total liabilities 213,244
------------
Shareholders' equity:
Common stock, $.0001 par value; 30,000,000
shares authorized; 4,075,456 shares issued
and outstanding 408
Preferred stock, $.0001 par value; 5,000,000
shares authorized, none issued and
outstanding --
Additional paid-in capital 3,767
Deficit accumulated during the development
stage (217,419)
------------
Total shareholders' equity (213,244)
------------
Total liabilities and shareholders' equity --
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Statements of Operations
For the Year Ended June 30, 1999 and for the Period from
August 25, 1997 (Inception) to June 30, 1998 and for the Period from
August 25, 1997 (Inception) to June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from Period from
August 25, 1997 August 25, 1997
Year Ended (Inception) to (Inception) to
June 30, 1999 June 30, 1998 June 30, 1999
------------- ------------- -------------
<S> <C> <C> <C>
Revenue -- -- --
Gross profit -- -- --
Consulting fees $100,000 $100,000 $200,000
Organization costs -- 5,000 5,000
Legal and consulting -- 5,368 5,368
Loss on investment 175 -- 175
General and administrative expenses 5,608 1,268 6,876
-------- -------- --------
Net loss $105,783 $111,636 $217,419
======== ======== ========
Loss per common share - basic and diluted $ 0.03 $ 0.03 $ 0.05
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Statements of Shareholders' Equity
For the Year Ended June 30, 1999 and for the Period from
August 25, 1997 (Inception) to June 30, 1998 and for the Period from
August 25, 1997 (Inception) to June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Preferred Preferred Common Common Paid-in Accumulated
Shares Stock Shares Stock Capital (Deficit) Total
--------- --------- ------ ------ ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Formation of corporation, August 25, 1997 -- -- -- -- -- -- --
Common shares issued to the founders of the Company -- -- 5,075,456 $ 508 $4,667 -- $ 5,175
Purchase and retirement of common stock -- -- (1,000,000) (100) (900) -- (1,000)
Net loss -- -- -- -- -- $(111,636) (111,636)
------ ------ ---------- ----- ------ --------- ---------
Balance, June 30, 1998 -- -- 4,075,456 408 3,767 (111,636) (107,461)
Net loss -- -- -- -- -- (105,783) (105,783)
------ ------ ---------- ----- ------ --------- ---------
Balance, June 30, 1999 -- -- 4,075,456 $ 408 $3,767 $(217,419) $(213,244)
====== ====== ========== ===== ====== ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Statements of Cash Flows
For the Year Ended June 30, 1999 and for the Period from
August 25, 1997 (Inception) to June 30, 1998 and for the Period from
August 25, 1997 (Inception) to June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from Period from
August 25, 1997 August 25, 1997
Year Ended (Inception) to (Inception) to
June 30, 1999 June 30, 1998 June 30, 1999
------------- --------------- ----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(105,783) $(111,636) $(217,419)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Shares issued to founders
of the Company -- 5,175 5,175
Investment received in
connection with the
issuance of shares to
founders -- (175) --
Shares reacquired -- (1,000) (1,000)
Loss on investment 175 -- --
Increase (decrease) in liabilities:
Accrued liabilities (55) 1,268 1,213
Due to related party 105,663 106,368 212,031
--------- --------- ---------
Cash used in operating activities -- -- --
--------- --------- ---------
Net increase (decrease) in cash -- -- --
Cash at beginning of period -- -- --
--------- --------- ---------
Cash at end of period $ -- $ -- $ --
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Statements of Cash Flows
For the Year Ended June 30, 1999 and for the Period from
August 25, 1997 (Inception) to June 30, 1998 and for the Period from
August 25, 1997 (Inception) to June 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Supplemental Disclosure of Cash Flow Information
Period from Period from
August 25, 1997 August 25, 1997
Year Ended (Inception) to (Inception) to
June 30, 1999 June 30, 1998 June 30, 1999
------------- --------------- ----------------
<S> <C> <C> <C>
Interest paid -- -- --
Income taxes paid -- -- --
Supplemental Schedule of Non-Cash Financing Activities
Repurchase of shares -- $ 1,000 $ 1,000
Increase in payable -- $(1,000) $(1,000)
Organization expenses -- $ 5,175 $ 5,175
Issuance of founders shares -- $(5,175) $(5,175)
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Notes to Financial Statements
For the Year Ended June 30, 1999 and for the Period from
August 25, 1997 (Inception) to June 30, 1998 and for the Period from
August 25, 1997 (Inception) to June 30, 1999
- --------------------------------------------------------------------------------
1. Development Stage Operations
Fuzzy Logic Software Corporation (a development stage company) (the
"Company") was incorporated in the state of Delaware on August 25, 1997. It
has no operating history, no revenues, no products nor technology. The
Company's initial business plan anticipated the development of computer
hardware and software. As such, the Company is subject to the risks and
uncertainties associated with a new business. The success of the Company's
future operation is dependent upon the Company's ability to successfully
develop and market its yet unidentified products and obtain the necessary
capital.
2. Summary of Significant Accounting Policies
Revenue Recognition
Revenue will be recognized when goods are shipped or services are
performed.
Start-up Costs
The Company expenses start-up costs as they are incurred.
Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Disclosures about Fair Value of Financial Instruments
The Company will account for the value of financial instruments using the
fair value method.
7
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Notes to Financial Statements
For the Year Ended June 30, 1999 and for the Period from
August 25, 1997 (Inception) to June 30, 1998 and for the Period from
August 25, 1997 (Inception) to June 30, 1999
- --------------------------------------------------------------------------------
2. Summary of Significant Accounting Policies, Continued
Income Taxes
The Company accounts for deferred income taxes using the liability method.
Deferred income taxes are computed based on the tax liability or benefit in
future years of the reversal of temporary differences in the recognition of
income or deduction of expenses between financial and tax reporting
purposes. The net difference between tax expense and taxes currently
payable will be reflected in the financial statements as deferred taxes.
Deferred tax assets and/or liabilities will be classified as current and
noncurrent based on the classification of the related asset or liability
for financial reporting purposes, or based on the expected reversal date
for deferred taxes that are not related to an asset or liability.
3. Deferred Income Taxes
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
Period from Period from
August 25, 1997 August 25, 1997
Year Ended (Inception) to (Inception) to
June 30, 1999 June 30, 1998 June 30, 1999
------------- ------------- -------------
<S> <C> <C> <C>
Current tax expense
Federal -- -- --
State -- -- --
----- ----- -----
-- -- --
Deferred tax expense:
Federal -- -- --
State -- -- --
----- ----- -----
-- -- --
----- ----- -----
Total provision -- -- --
===== ===== =====
</TABLE>
8
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Notes to Financial Statements
For the Year Ended June 30, 1999 and for the Period from
August 25, 1997 (Inception) to June 30, 1998 and for the Period from
August 25, 1997 (Inception) to June 30, 1999
- --------------------------------------------------------------------------------
3. Deferred Income Taxes, Continued
Significant components of the Company's deferred income tax assets and
liabilities at June 30, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
Period from Period from
August 25, 1997 August 25, 1997
Year Ended (Inception) to (Inception) to
June 30, 1999 June 30, 1998 June 30, 1999
------------- ------------- -------------
<S> <C> <C> <C>
Deferred income tax asset:
Capitalized start-up expenses $ 73,863 $ 37,956 $ 73,863
-------- -------- --------
Total deferred income tax asset 73,863 37,956 73,863
Valuation allowance (73,863) (37,956) (73,863)
-------- -------- --------
Net deferred income tax liability -- -- --
======== ======== ========
Reconciliation of the effective tax rate to the U.S. statutory rate is as
follows:
Tax expense at U.S. statutory rate (34.0)% (34.0)% (34.0)%
Change in the valuation allowance 34.0 34.0 34.0
-------- -------- --------
Effective income tax rate -- -- --
======== ======== ========
</TABLE>
4. Stock Transactions
Founders Shares
In August 1997, the Company issued 5,175,456 shares to the founders.
Additionally, the Company received from the founders, an investment of
non-market grade corporate stock valued at $175. In the year ended June 30,
1999, the shares received were deemed worthless.
Stock Repurchase
In October 1997, the Company reacquired and retired 1,000,000 shares of its
outstanding common stock from a major shareholder for $1,000 (par value).
5. Related Party Transactions
At inception, the Company entered into a fee and cost reimbursement
arrangement with a related party who is a former major shareholder of the
Company. In connection with this arrangement, a management fee of $100,000
per year is charged to the Company. All of the Company's expenses are paid
by the related party and have been accrued.
9
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Notes to Financial Statements
For the Year Ended June 30, 1999 and for the Period from
August 25, 1997 (Inception) to June 30, 1998 and for the Period from
August 25, 1997 (Inception) to June 30, 1999
- --------------------------------------------------------------------------------
6. Loss Per Common Share
Basic and diluted loss per common share have been computed by dividing the
loss available to common shareholders by the weighted-average number of
common share for the period.
The computations of basic and diluted loss per common share for the year
ended June 30, 1999 and for the period from August 25, 1997 (inception) to
June 30, 1999 and for the period from August 25, 1997 (inception) to June
30, 1998 are as follows:
<TABLE>
<CAPTION>
Period from Period from
August 25, 1997 August 25, 1997
Year Ended (Inception) to (Inception) to
June 30, 1999 June 30, 1998 June 30, 1999
------------- ------------- -------------
<S> <C> <C> <C>
Net loss available to common shareholders $ 105,783 111,636 $ 217,419
Weighted-average shares, basic and diluted 4,075,456 3,899,133 3,994,358
---------- ---------- ----------
Loss per common share, basic and diluted $ 0.03 $ 0.03 $ 0.05
========== ========== ==========
</TABLE>
No potentially dilutive securities have been issued by the Company.
7. Year 2000 Disclosure (Unaudited)
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the
Company's programs that have time-sensitive software might have recognized
a date using "00" as the year 1900 rather than the year 2000. This could
have resulted in a system failure or miscalculations. The Company has not
commenced operations as of December 31, 1999 and believes the Year 2000
Issue will not pose significant operational problems.
10
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Notes to Financial Statements
For the Year Ended June 30, 1999 and for the Period from
August 25, 1997 (Inception) to June 30, 1998 and for the Period from
August 25, 1997 (Inception) to June 30, 1999
- --------------------------------------------------------------------------------
8. Subsequent Event
Private Placement Offering
In September 1999, the Company completed a private placement offering of
500,000 units at a price of $.50 per unit. Each unit consists of one share
of the Company's common stock, and one share purchase warrant. Each warrant
is exercisable into one share of common stock at a price of $.50 per share
and is exercisable at any time and expire two years after the closing date
of the offering.
11
<PAGE>
Accountants' Disclaimer Report
To the Board of Directors
Fuzzy Logic Software Corporation
The accompanying balance sheet (unaudited) of Fuzzy Logic Software Corporation
(a development stage company) as of September 30, 1999, the related statements
of operations, shareholders' equity and cash flows for the three-month period
ended June 30, 1999 (unaudited) and the statements of operations and cash flows
(unaudited) for the three-month period ended June 30, 1998 (unaudited) were not
audited by us and, accordingly, we do not express an opinion on them.
Kelly & Company
Kelly & Company
Newport Beach, California
November 3, 1999
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Balance Sheet
September 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
ASSETS
Stock subscriptions receivable $ 250,000
Total assets $ 250,000
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accrued liabilities $ 1,638
Due to related party 237,031
---------
Total liabilities 238,669
---------
Shareholders' equity:
Common stock, $.0001 par value; 30,000,000 shares
authorized; 4,075,456 shares issued and outstanding 408
Common stock subscribed 50
Preferred stock, $.0001 par value; 5,000,000 shares
authorized, none issued and outstanding --
---------
Additional paid-in capital 253,717
Deficit accumulated during the development stage (242,844)
---------
Total shareholders' equity 11,331
---------
Total liabilities and shareholders' equity $ 250,000
=========
The accompanying notes are an integral part of the financial statements.
See accountants' disclaimer report.
2
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Statement of Operations
As of September 30, 1999 and for
TheThree Month Periods Ended September 1999 and 1998 and for
The Period from August 25, 1997 (Inception) to September 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from
Three-Month Three-Month August 25, 1997
Period Ended Period Ended (Inception) to
September 30, 1999 September 30, 1998 September 30, 1999
------------------ ------------------ ------------------
<S> <C> <C> <C>
Revenue -- -- --
Gross profit -- -- --
Consulting fees $ 25,000 $ 25,000 225,000
Organization costs -- -- 5,000
Legal and consulting -- -- 5,368
Loss on investment -- -- 175
General and administrative expenses 425 1,310 7,301
-------- -------- --------
Net loss $ 25,425 $ 26,310 $242,844
======== ======== ========
Loss per common share - basic and diluted $ 0.01 $ 0.01 $ 0.05
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
See accountants' disclaimer report.
3
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Statement of Shareholders' Equity
As of September 30, 1999 and for
TheThree Month Periods Ended September 1999 and 1998 and for
The Period from August 25, 1997 (Inception) to September 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Additional
Preferred Preferred Common Common Stock Paid-in Accumulated
Shares Stock Shares Stock Subscribed Capital (Deficit) Total
----- ----- ---------- ----- ----- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Formation of corporation, August
25, 1997 -- -- -- -- -- -- -- --
Common shares issued to the
founders of the Company -- -- 5,075,456 $ 508 -- $ 4,667 -- $ 5,175
Purchase and retirement of
common stock -- -- (1,000,000) (100) -- (900) -- (1,000)
Net loss -- -- -- -- -- -- $(111,636) (111,636)
----- ----- ---------- ----- ----- -------- --------- ---------
Balance, June 30, 1998 -- -- 4,075,456 408 -- 3,767 (111,636) (107,461)
Net loss -- -- -- -- -- -- (105,783) (105,783)
----- ----- ---------- ----- ----- -------- --------- ---------
Balance, June 30, 1999 -- -- 4,075,456 408 -- 3,767 (217,419) (213,244)
Common stock subscribed -- -- -- -- 50 249,950 -- 250,000
Net loss -- -- -- -- -- -- (25,425) (25,425)
----- ----- ---------- ----- ----- -------- --------- ---------
Balance, September 30, 1999 -- -- 4,075,456 $ 408 $ 50 253,717 $(242,844) $ 11,331
===== ===== ========== ===== ===== ======== ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
See accountants' disclaimer report.
4
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Statement of Cash Flows
As of September 30, 1999 and for
TheThree Month Periods Ended September 1999 and 1998 and for
The Period from August 25, 1997 (Inception) to September 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from
Three-Month Three-Month August 25, 1997
Period Ended Period Ended (Inception) to
September 30, 1999 September 30, 1998 September 30, 1999
------------------ ------------------ ------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (25,425) $ (26,310) $(242,844)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Shares issued to founders of the
Company -- -- 5,175
Investment received in connection
with the issuance of shares to
founders -- -- --
Shares acquired -- -- (1,000)
Loss on investment -- -- --
Increase (decrease) in liabilities:
Accrued liabilities -- -- 1,213
Due to related party 25,425 26,310 237,456
--------- --------- ---------
Cash used in operating activities -- -- --
--------- --------- ---------
Net increase (decrease) in cash -- -- --
Cash at beginning of period -- -- --
--------- --------- ---------
Cash at end of period $ -- $ -- $ --
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
See accountants' disclaimer report.
5
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Statement of Cash Flows
As of September 30, 1999 and for
The Three Month Periods Ended September 1999 and 1998 and for
The Period from August 25, 1997 (Inception) to September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Supplemental Disclosure of Cash Flow Information
Period from
Three-Month Three-Month August 25, 1997
Period Ended Period Ended (Inception) to
September 30, 1999 September 30, 1998 September 30, 1999
------------------ ------------------ ------------------
<S> <C> <C> <C>
Interest paid -- -- --
Income taxes paid -- -- --
<CAPTION>
Supplemental Schedule of Non-Cash Investing and Financing Activities
<S> <C> <C> <C>
Repurchase of shares -- -- $ 1,000
Increase in payable -- -- $ (1,000)
Organization expenses -- -- $ 5,175
Issuance of founders shares -- -- $ (5,175)
</TABLE>
The accompanying notes are an integral part of the financial statements.
See accountants' disclaimer report.
6
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Notes to Financial Statements
As of September 30, 1999 and for
The Three Months Period Ended September 1999 and 1998 and for
The Period from August 25, 1997 (Inception) to September 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
1. Basis of Presentation
In the opinion of the Company, the accompanying unaudited condensed
financial statements contain all adjustments, consisting of only normal
recurring adjustments, except as noted elsewhere in the notes to the
financial statements, necessary to present fairly its financial position as
of September 30, 1999 and the results of its operations and cash flows for
the period from August 25, 1997 (inception) to September 30, 1999 and the
three months ended September 30, 1999 and 1998.
2. Development Stage Operations
Fuzzy Logic Software Corporation (a development stage company) (the
"Company") was incorporated in the state of Delaware on August 25, 1997. It
has no operating history, no revenues, no products nor technology. The
Company's initial business plan anticipated the development of computer
hardware and software. As such, the Company is subject to the risks and
uncertainties associated with a new business. The success of the Company's
future operation is dependent upon the Company's ability to successfully
develop and market its yet undeveloped products and obtain the necessary
capital.
3. Loss Per Common Share
Basic and diluted loss per common share have been computed by dividing the
loss available to common shareholders by the weighted-average number of
common share for the period.
The computations of basic and diluted loss per common share for the year
ended September 30, 1999 and for the period from August 25, 1997
(inception) to September 30, 1999 and 1998 are as follows:
See accountants' disclaimer report.
7
<PAGE>
Fuzzy Logic Software Corporation
(A Development Stage Company)
Notes to Financial Statements
As of September 30, 1999 and for
The Three Months Period Ended September 1999 and 1998 and for
The Period from August 25, 1997 (Inception) to September 30, 1999
(Unaudited)
- --------------------------------------------------------------------------------
3. Loss Per Common Share, Continued
<TABLE>
<CAPTION>
Period from
Three-Month Three-Month August 25, 1997
Period Ended Period Ended (Inception) to
September 30, 1999 September 30, 1998 September 30, 1999
------------------ ------------------ ------------------
<S> <C> <C> <C>
Net loss available to common
shareholders $ 25,425 26,310 $ 217,244
Weighted-average shares, basic
and diluted 4,075,056 4,075,056 3,994,358
---------- ---------- ----------
Loss per common share, basic and
diluted $ 0.01 $ 0.01 $ 0.05
========== ========== ==========
</TABLE>
No potentially dilutive securities have been issued or granted by the
Company.
4. Year 2000 Disclosure (Unaudited)
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the
Company's programs that have time-sensitive software might have recognized
a date using "00" as the year 1900 rather than the year 2000. This could
have resulted in a system failure or miscalculations. The Company has not
commenced operations as of December 31, 1999 and believes the Year 2000
Issue will not pose significant operational problems.
5. Subsequent Event
Private Placement Offering
In September 1999, the Company completed a private placement offering of
500,000 units at a price of $.50 per unit. Each unit consists of one share
of the Company's common stock, and one share purchase warrant. Each warrant
is exercisable into one share of common stock at a price of $.50 per share
and is exercisable at any time and expire two years after the closing date
of the offering.
See accountants' disclaimer report.
8
<PAGE>
<PAGE>
PART III
Item 1. Index to Exhibits
Copies of the following documents are filed with this Registration Statement,
Form 10-SB as exhibits:
3.1 Certificate of Incorporation of Fuzzy Logic E-1 through E-6
Software Corporation (Charter document)
3.2 Bylaws of Fuzzy Logic Software Corporation E-7 through E-14
(Instrument defining the rights Security
Holders)
13
<PAGE>
SIGNATURES
In accordance with the provisions of Section 12 of the Securities Exchange
Act of 1934, the Company has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Vancouver, British Columbia, Canada, on November 10, 1999.
Fuzzy Logic Software Corporation,
a Delaware corporation
By: /s/ Michael Lynch
-------------------------
Michael Lynch
Its: President
14
CERTIFICATE OF INCORPORATION
OF
FUZZY LOGIC SOFTWARE CORPORATION
The undersigned natural, adult person, acting as incorporator of a
corporation (hereinafter usually referred to as the "Corporation") pursuant to
the provisions or the Delaware Corporation Law, hereby adopts the following
Certificate of Incorporation for said Corporation:
ARTICLE I
Name
The name of the Corporation shall be Fuzzy Logic Software Corporation.
ARTICLE II
Duration
The period of duration of the Corporation shall be perpetual.
ARTICLE III
Purpose
The purpose for which the Corporation is organized is to transact any or
all lawful business for which corporations may be incorporated pursuant to the
Delaware Corporation Law.
ARTICLE IV
Capital Stock
The authorized capital stock of the Corporation shall consist of 30,000,000
shares of common stock, $0.0001 par value, and 5,000,000 shares of preferred
stock, $0.0001 par value.
ARTICLE V
Preferences, Limitations,
and Relative Rights or
Capital Stock
No share of the common stock shall have any preference over or limitation
in respect to any other share of such common stock. All shares of common stock
shall have equal rights and privileges, including the following:
1. All shares of common stock shall share equally in dividends. Subject to
the applicable provisions of the laws of this State, the Board of Directors
of the Corporation may, from time to time, declare and the Corporation may
pay dividends in cash, property, or it's own shares, except when the
Corporation is insolvent or when the payment thereof would render the
Corporation insolvent or when the declaration or payment thereof would be
contrary to any restrictions contained in this Certificate of
Incorporation. When any dividend is paid or any other distribution is made,
in whole or in part, from
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 08/25/1997
971283942 - 2790557
<PAGE>
sources other than unreserved and unrestricted earned surplus, such
dividend or distribution shall be identified as such, and the source and
amount per share paid from each source shall be disclosed to the
stockholder receiving the same concurrently with the distribution thereof
and to all other stockholders not later than six months after the end of
the Corporation's fiscal year during which such distribution was made.
2. All shares of common stock shall share equally in distributions in
partial liquidation. Subject to the applicable provisions of the laws of
this State, the Board of Directors of the Corporation may distribute, from
time to time, to its stockholders in partial liquidation, out of stated
capital or capital surplus of the Corporation, a portion of its assets in
cash or property, except when the Corporation is insolvent or when such
distribution would render the Corporation insolvent. Each such
distribution, when made, shall be identified as a distribution in partial
liquidation, out of stated capital or capital surplus, and the source and
amount per share paid from each source shall be disclosed to all
stockholders of the Corporation concurrently with the distribution thereof.
Any such distribution may be made by the Board of Directors from stated
capital without the affirmative vote of any stockholders of the
Corporation.
3. Each outstanding share of common stock shall be entitled to one vote at
stockholders' meetings, either in person or by proxy.
(b) The designations, powers, rights, preferences, qualifications,
restrictions and limitations of the preferred stock shall be established from
time to time by the Corporation's Board of Directors, in accordance with the
Delaware Corporation Law.
(c) 1. Cumulative voting shall not be allowed in elections of directors or
for any purpose.
2. No holders of shares of capital stock of the Corporation shall be
entitled, as such, to any preemptive or preferential right to subscribe to any
unissued stock or any other securities which the Corporation may now or
hereafter be authorized to issue. The Board of Directors of the Corporation,
however, in its discretion by resolution, may determine that any unissued
securities of the Corporation shall be offered for subscription solely to the
holders of common stock of the Corporation, or solely to the holders of any
class or classes of such stock, which the Corporation may now or hereafter be
authorized to issue, in such proportions based on stock ownership as said board
in its discretion may determine.
3. The Board of Directors may restrict the transfer of any of the
Corporation's stock issued by giving the Corporation or any stockholder first
right of refusal to purchase the stock, by making the stock redeemable, or by
restricting the transfer of the stock under such terms and in such manner as the
directors may deem necessary and as are not inconsistent with the laws of this
State. Any stock so restricted must carry a conspicuous legend noting the
restriction and the place where such restriction may be found in the records of
the Corporation.
<PAGE>
4. The judgment of the Board of Directors as to the adequacy of any
consideration received or to be received for any shares, options, or any other
securities which the Corporation at any time may be authorized to issue or sell
or otherwise dispose of shall be conclusive in the absence of and, subject to
the provisions of these Articles of Incorporation and any applicable law.
ARTICLE VI
Registered Agent
The name and address of the Corporation's initial registered agent shall
be:
The Company Corporation
1313 North Market Street
New Castle County
Wilmington, Delaware 19801-1151
The Board of Directors, however, from time to time may establish such other
offices, branches, subsidiaries, or divisions which it may consider to be
advisable.
ARTICLE VII
Directors
The affairs of the Corporation shall be governed by a board of not less
than one (1) director, who shall be elected in accordance with the Bylaws of the
Corporation. Subject to such limitation, the number of directors shall be fixed
by or in the manner provided in the Bylaws of the Corporation, as may be amended
from time to time. The organization and conduct of the board shall be in
accordance with the following:
1. The name and address of the initial Director, who shall hold office
until the first annual meeting of the stockholders of the Corporation or
until his successor shall have been elected and qualified, is:
Name Address
---------------------------------------------------------------------------
Dan Vassey 701 West Georgia St., Suite 1500
Vancouver, British Columbia, Canada V7Y-lA1
2. The directors of the Corporation need not be residents of Delaware and
shall not be required to hold shares of the Corporation's capital stock.
3. Meetings of the Board of Directors, regular or special, may be held
within or without Delaware upon such notice as may be prescribed by the
Bylaws of the Corporation. Attendance of a director at a meeting shall
constitute a waiver by him of notice of such meeting
<PAGE>
unless he attends only for the express purpose of objecting to the
transaction of any business thereat on the ground that the meeting is not
lawfully called or convened.
4. A majority of the number of directors at any time constituting the Board
of Directors shall constitute a quorum for the transaction of business.
5. By resolution adopted by a majority of the Directors at any time
constituting the Board of Directors, the Board of Directors may designate
two or more directors to constitute an Executive Committee or one or more
other committees each of which shall have and may exercise, to the extent
permitted by law or in such resolution, all the authority of the Board of
Directors in the management of the Corporation; but the designation of any
such committee and the delegation of authority thereto shall not operate to
relieve the Board of Directors, or any member thereof, of any
responsibility imposed on it or him by law.
6. Any vacancy in the Board of Directors, however caused or created, may be
filled by the affirmative vote of a majority of the remaining directors,
though less than a quorum of the Board of Directors. A director elected to
fill a vacancy shall be elected for the unexpired term of his predecessor
in office and until his successor is duly elected and qualified.
ARTICLE VIII
Officers
The officers of the Corporation shall be prescribed by the Bylaws of this
Corporation.
ARTICLE IX
Meetings of Stockholders
Meetings of the stockholders of the Corporation shall be held at such place
within or without Delaware and at such times as may be prescribed in the Bylaws
of the Corporation. Special meetings of the stockholders of the Corporation may
be called by the President of the Corporation, the Board of Directors, or by the
record holder or holders of at least ten percent (10%) of all shares entitled to
vote at the meeting. At any meeting of the stockholders, except to the extent
otherwise provided by law, a quorum shall consist of a majority of the shares
entitled to vote at the meeting; and, if a quorum is present, the affirmative
vote of the majority of shares represented at the meeting and entitled to vote
thereat shall be the act of the stockholders unless the vote of a greater number
is required by law.
ARTICLE X
Voting
When, with respect to any action to be taken by stockholders of this
Corporation, the laws of Delaware requires the affirmative vote of the holders
of more than a majority of the outstanding shares entitled to vote thereon, or
<PAGE>
of any class or series, such action may be taken by the affirmative vote of the
holders of a majority of the outstanding shares entitled to vote on such action.
ARTICLE XI
Bylaws
The initial Bylaws of the Corporation shall be adopted by its Board of
Directors. Subject to repeal or change by action of the stockholders, the power
to alter, amend, or repeal the Bylaws or to adopt new Bylaws shall be vested in
the Board of Directors.
ARTICLE XII
Transactions with Directors and
Other Interested Parties
No contract or other transaction between the Corporation and any other
corporation, whether or not a majority of the shares of the capital stock of
such other corporation is owned by the Corporation, and no act of the
Corporation shall in any way be affected or invalidated by the fact that any of
the directors of the Corporation are pecuniarily or otherwise interested in, or
are directors or officers of, such other corporation. Any director or the
corporation, individually, or any firm with which such director is affiliated
may be a party to or may be pecuniarily or otherwise interested in any contract
or transaction of the Corporation; provided, however, that the fact that he or
such firm is so interested shall be disclosed or shall have been known to the
Board of Directors of the Corporation, or a majority thereof, at or before the
entering into such contract or transaction; and any director of the Corporation
who is also a director or officer of such other corporation, or who is so
interested, may be counted in determining the existence of a quorum at any
meeting of the Board of Directors of the Corporation which shall authorize such
contract or transaction, with like force and effect as if he were not such
director or officer of such other corporation or not so interested.
ARTICLE XIII
Limitation of Director Liability
and Indemnification
No director of the Corporation shall have liability to the Corporation or
to its stockholders or to other security holders for monetary damages for breach
of fiduciary duty as a director; provided, however; that such provisions shall
not eliminate or limit the liability of a director to the Corporation or to its
shareholders or other security holders for monetary damages for: (i) any breach
of the director's duty of loyalty to the Corporation or to its shareholders or
other security holders; (ii) acts or omissions of the director not in good faith
or which involve intentional misconduct or a knowing violation of the law by
such director; (iii) acts by such director as, specified by the Delaware
Corporation Law; or (iv) any transaction from which such director derived an
improper personal benefit.
<PAGE>
No officer or director shall be personally liable for any injury to person
or property arising out of a tort committed by an employee of the Corporation
unless such officer or director was personally involved in the situation giving
rise to the injury or unless such officer or director committed a criminal
offense. The protection afforded in the preceding sentence shall not restrict
other common law protections and rights that an officer or director may have.
The word "director" shall include at least the following, unless limited by
Delaware law: an individual who is or was a director of the Corporation and an
individual who, while a director of a Corporation is or was serving at the
Corporation's request as a director, officer, partner, trustee, employee or
agent of any other foreign or domestic corporation or of any partnership, joint
venture, trust, other enterprise or employee benefit plan. A director shall be
considered to be serving an employee benefit plan at the Corporation's request
if his duties to the Corporation also impose duties on or otherwise involve
services by him to the plan or to participants in or beneficiaries of the plan.
To the extent allowed by Delaware law, the word "director" shall also include
the heirs and personal representatives of all directors.
This Corporation shall be empowered to indemnify its officers and directors
to the fullest extent provided by law, including but not limited to the
provisions set forth in the Delaware Corporation Law, or any successor
provision.
ARTICLE XIII
Incorporator
The name and address of the incorporator of the Corporation is as follows:
Name Address
--------------------------------------------------------------------
William T. Hart 1624 Washington Street
Denver, CO 80203
IN WITNESS WHEREOF, the undersigned incorporator has hereunto affixed his
signature on the 20th day of August, 1997.
/s/ William T. Hart
-------------------------------
William T. Hart
BYLAWS
OF
FUZZY LOGIC SOFTWARE CORPORATION
ARTICLE I
OFFICES
Section 1. Offices:
The principal office of the Corporation shall be determined by the Board of
Directors, and the Corporation shall have other offices at such places as the
Board of Directors may from time to time determine.
ARTICLE II
STOCKHOLDER'S MEETINGS
Section 1. Place:
The place of stockholders' meetings shall be the principal office of the
Corporation unless some other place shall be determined and designated from time
to time by the Board of Directors.
Section 2. Annual Meeting:
The annual meeting of the stockholders of the Corporation for the election
of directors to succeed those whose terms expire, and for the transaction of
such other business as may properly come before the meeting, shall be held each
year on a date to be determined by the Board of Directors.
Section 3. Special Meetings:
Special meetings of the stockholders for any purpose or purposes may be
called by the President, the Board of Directors, or the holders of ten percent
(10%) or more of all the shares entitled to vote at such meeting, by the giving
of notice in writing as hereinafter described.
Section 4. Voting:
At all meetings of stockholders, voting may be viva voce; but any qualified
voter may demand a stock vote, whereupon such vote shall be taken by ballot and
the Secretary shall record the name of the stockholder voting, the number of
shares voted, and, if such vote shall be by proxy, the name of the proxy holder.
Voting may be In person or by proxy appointed in writing, manually signed by the
stockholder or his duly authorized attorney-in-fact. No proxy shall be valid
after eleven months from the date of its execution, unless otherwise provided
therein.
<PAGE>
Each stockholder shall have such rights to vote as the Articles of
Incorporation provide for each share of stock registered in his name on the
books of the Corporation, except where the transfer books of the Corporation
shall have been closed or a date shall have been fixed as a record date, not to
exceed, in any case, fIfty (50) days preceding the meeting, for the
determination of stockholders entitled to vote. The Secretary of the Corporation
shall make, at least ten (10) days before each meeting of stockholders, a
complete list of the stockholders entitled to vote at such meeting or any
adjournment thereof, arranged in alphabetical order, with the address of and the
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.
Section 5. Order of Business:
The order of business at any meeting of stockholders shall be as follows:
1. Calling the meeting to order.
2. Calling of roll.
3. Proof of notice of meeting.
4. Report of the Secretary of the stock represented at the meeting and the
existence or lack of a quorum.
5. Reading of minutes of last previous meeting and disposal of any
unapproved minutes.
6. Reports of officers
7. Reports of committees.
8. Election of directors, if appropriate.
9. Unfinished business.
10. New business.
11. Adjournment.
12. To the extent that these Bylaws do not apply, Roberts' Rules of Order
shall prevail.
<PAGE>
ARTICLE III
BOARD OF DIRECTORS
Section 1. Organization and Powers:
The Board of Directors shall constitute the policy-making or legislative
authority of the Corporation. Management of the affairs, property, and business
of the Corporation shall be vested in the Board of Directors, which shall
consist of not less than one nor more than ten members, who shall be elected at
the annual meeting of stockholders by a plurality vote for a term of one (1)
year, and shall hold office until their successors are elected and qualify.
Directors need not be stockholders. Directors shall have all powers with respect
to the management, control, and determination of policies of the Corporation
that are not limited by these Bylaws, the Articles of Incorporation, or by
statute, and the enumeration of any power shall not be considered a limitation
thereof.
Section 2. Vacancies:
Any vacancy in the Board of Directors, however caused or created, shall be
filled by the affirmative vote of a majority of the remaining directors, though
less than a quorum of the Board, or at a special meeting of the stockholders
called for that purpose. The directors elected to fill vacancies shall hold
office for the unexpired term and until their successors are elected and
qualify.
Section 3. Regular Meetings:
A regular meeting of the Board of Directors shall be held, without notice
than this Bylaw, immediately after and at the same place as the annual meeting
of stockholders or any special meeting of stockholders at which a director or
directors shall have been elected. The Board of Directors may provide by
resolution the time and place, either within or without the State of Colorado,
for the holding of additional regular meetings without other notice than such
resolution.
Section 4. SPecial Meetings:
Special meetings of the Board of Directors may be held at the principal
office of the Corporation, or such other place as may be fixed by resolution of
the Board of Directors for such purpose, at any time on call of the President or
of any member of the Board, or may be held at any time and place without notice,
by unanimous written consent of all the members, or with the presence and
participation of all members at such meeting. A resolution in writing signed by
all the directors shall be as valid and effectual as if it had been passed at a
meeting of the directors duly called, constituted, and held.
Section 5. Notices:
Notices of both regular and special meetings, save when held by unanimous
consent or participation, shall be mailed by the Secretary to each member of the
Board not less than three days before any such meeting and
<PAGE>
notices of special meetings may state the purposes thereof. No failure or
irregularity of notice of any regular meeting shall invalidate such meeting or
any proceeding thereat.
Section 6. Quorum and Manner of Acting:
A quorum for any meeting of the Board of Directors shall be a majority of
the Board of Directors as then constituted. Any act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. Any action of such majority, although not at a regularly
called meeting, and the record thereof, if assented to in writing by all of the
other members of the Board, shall always be as valid and effective in all
respects as if otherwise duly taken by the Board of Directors.
Section 7. Executive Committee:
The Board of Directors may by resolution of a majority of the Board
designate two (2) or more directors to constitute an executive committee, which
committee, to the extent provided in such resolution, shall have and may
exercise all of the authority of the Board of Directors in the management of the
Corporation; but the designation of such committee and the delegation of
authority thereto shall not operate to relieve the Board of Directors, or any
member thereof, of any responsibility imposed on it or him by law.
Section 8. Order of Business:
The order of business at any regular or special meeting of the Board of
Directors, unless otherwise prescribed for any meeting by the Board, shall be as
follows:
1. Reading and disposal of any unapproved minutes.
2. Reports of officers and committees.
3. Unfinished business.
4. New business.
5. Adjournment.
6. To the extent that these Bylaws do not apply, Roberts' Rules of Order
shall prevail.
Section 9. RemuneratIon:
No stated salary shall be paid to directors for their services as such,
but, by resolution of the Board of Directors, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board. Members of special or standing committees may be allowed
like compensation for attending meetings. Nothing herein contained shall be
construed to preclude any director from receiving compensation for serving the
Corporation in any other capacity, subject to such resolutions of the Board of
Directors as may then govern receipt of such compensation.
<PAGE>
ARTICLE IV
OFFICERS
Section 1. Titles:
The officers of the Corporation shall consist of a President, one or more
Vice Presidents, a Secretary, and a Treasurer, who shall be elected by the
directors at their first meeting following the annual meeting of stockholders.
Such officers shall hold office until removed by the Board of Directors or until
their successors are elected and qualify. The Board of Directors may appoint
from time to time such other officers as it deems desirable who shall serve
during such terms as may be fixed by the Board at a duly held meeting. The
Board, by resolution, shall specify the titles, duties and responsibilities of
such officers.
Section 2. President:
The President shall preside at all meetings of stockholders and, in the
absence of a, or the, Chairman of the Board of Directors, at all meetings of the
directors. He shall be generally vested with the power of the chief executive
officer of the Corporation and shall countersign all certificates, contracts,
and other Instruments of the Corporation as authorized, by the Board of
Directors or required by law. He shall make reports to the Board of Directors
and stockholders and shall perform such other duties and services so may be
required of him from time to time by the Board of Directors.
Section 3. Vice President:
The Vice President shall perform all the duties of the President if the
President is absent or for any other reason is unable to perform his duties and
shall have such other duties as the Board of Directors shall authorize or
direct.
Section 4. Secretary:
The Secretary shall issue notices of all meetings of stockholders and
directors, shall keep minutes of all such meetings, and shall record all
proceedings. He shall have custody and control of the corporate records and
books, excluding the books of account, together with the corporate seal. He
shall make such reports and perform such other duties as may be consistent with
his office or as may be required of him from time to time by the Board of
Directors.
Section 5. Treasurer:
The Treasurer shall have custody of all moneys and securities of the
Corporation and shall have supervision over the regular books of account. He
shall deposit all moneys, securities, and other valuable effects of the
Corporation in such banks and depositories as the Board of Directors may
designate and shall disburse the funds of the Corporation in payment of just
debts and demands against the Corporation, or as they may be ordered by the
Board of Directors, shall render such account of his transactions as may be
<PAGE>
required of him by the President or the Board of Directors from time to time and
shall otherwise perform such duties as may be required of him by the Board of
Directors.
The Board of Directors may require the Treasurer to give a bond
indemnifying the Corporation against larceny, theft, embezzlement, forgery,
misappropriation, or any other act of fraud or dishonesty resulting from his
duties as Treasurer of the Corporation, which bond shall be in such amount as
appropriate resolution or resolutions of the Board of Directors may require.
Section 6. Vacancies or Absences:
If a vacancy in any office arises in any manner, the directors then may
choose, by a majority vote, a successor to hold office for the unexpired term of
the officer. If any officer shall be absent or unable for any reason to perform
his duties, the Board of Directors, to the extent not otherwise inconsistent
with these Bylaws, may direct that the duties of such officer during such
absence or inability shall be performed by such other officer or subordinate
officer as seems advisable to the Board.
Section 7. Compensation:
No officer shall receive any salary or compensation for his services unless
and until the Board of Directors authorizes and fixes the amount and terms of
such salary or compensation.
ARTICLE V
STOCK
Section 1. Regulations:
The Board of Directors shall have power and authority to take all such
rules and regulations as they deem expedient concerning the issue, transfer, and
registration of certificates for shares of the capital stock of the Corporation.
The Board of Directors may appoint a Transfer Agent and/or a Registrar and may
require all stock certificates to bear the signature of such Transfer Agent
and/or Registrar.
Section 2. Restrictions on Stock:
The Board of Directors may restrict any stock issued by giving the
Corporation or any stockholder "first right of refusal to purchase" the stock,
by making the stock redeemable or by restricting the transfer of the stock,
under such terms and in such manner as the directors may deem necessary and as
are not inconsistent with the Articles of Incorporation or by statute. Any stock
so restricted must carry a stamped legend setting out the restriction or
conspicuously noting the restriction and stating where it may be found in the
records of the Corporation.
<PAGE>
ARTICLE VI
DIVIDENDS AND FINANCES
Section 1. Dividends:
Dividends may be declared by the directors and paid out of any funds
legally available therefor under the laws of Colorado, as may be deemed
advisable from time to time by the Board of Directors of the Corporation. Before
declaring any dividends, the Board of Directors may set aside out of net profits
or earned or other surplus such sums as the Board may think proper as a reserve
fund to meet contingencies or for other purposes deemed proper and to the best
interests of the Corporation.
Section 2. Monies:
The monies, securities, and other valuable effects of the Corporation shall
be deposited in the name of the Corporation in such banks or trust companies as
the Board of Directors shall designate and shall be drawn out or removed only as
may be authorized by the Board of Directors from time to time.
Section 3. Fiscal Year:
Unless and until the Board of Directors by resolution shall determine the
fiscal year of the Corporation.
ARTICLE VII
AMENDMENTS
These Bylaws may be altered, amended, or repealed by the Board of Directors
by resolution of a majority of the Board.
ARTICLE VIII
INDEMNIFICATION
The Corporation shall indemnify any and all of its directors or officers,
or former directors or officers, or any person who may have served at its
request as a director or officer of another corporation in which this
Corporation owns shares of capital stock or of which it is a creditor and the
personal representatives of all such persons, against expenses actually and
necessarily incurred in connection with the defense of any action, suit, or
proceeding in which they, or any of them, were made parties, or a party, by
reason of being or having been directors or officers or a director or officer of
the Corporation, or of such other corporation, except in relation to matters as
to which any such director or officer or person shall have been adjudged in such
action, suit, or proceeding to be liable for negligence or misconduct in the
performance of any duty owed to the Corporation. Such indemnification shall not
be deemed exclusive of any other rights to which those indemnified may be
entitled, independently of this Article, by law, under any Bylaw agreement, vote
of stockholders, or otherwise.
<PAGE>
ARTICLE IX
CONFLICTS OF INTERESTS
No contract or other transaction of the Corporation with any other persons,
firms or corporations, or in which the Corporation is interested, shall be
affected or invalidated by the fact that any one or more of the directors or
officers of the Corporation is interested in or is a director or officer of such
other firm or corporation; or by the fact that any director or officer of the
Corporation, individually or jointly with others, may be a party to or may be
interested in any such contract or transaction.
2767D: 36--43
