U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities
of Small Business Issuers
Under Section 12(b) or (g) of
the Securities Exchange Act of 1934
CAPSTRA CAPITAL CORP.
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(Name of Small Business Issuer)
Washington 98-01-16-179
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(State or Other Jurisdiction of I.R.S. Employer Identification
Incorporation or Organization) Number
c/o John Mackay
2160-650 West Georgia Street, Vancouver, B.C. Canada V6B 4N7
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(Address of Principal Executive Offices including Zip Code)
(604) 687-1919
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(Issuer's Telephone Number)
Securities to be Registered Under Section 12(b) of the Act: None
Securities to be Registered Under Section 12(g) of the Act: Common Voting
Stock,NPV
(Title of Class)
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TABLE OF CONTENTS
PART 1
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ITEM 1. BUSINESS 4
History and Organization 4
Proposed Business 4
Risk Factors 5
ITEM 2. PLAN OF OPERATION 11
General Business Plan 11
Structure of Acquisition 13
No Dividend 14
Employees 14
Competition 15
Liquidity and Capital Resources 15
ITEM 3. DESCRIPTION OF PROPERTY 15
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT 15
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTER
AND CONTROL PERSONS 16
ITEM 6. EXECUTIVE COMPENSATION 17
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS 17
ITEM 8. DESCRIPTION OF SECURITIES 18
PART II
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ITEM 1. MARKET PRICE FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS 19
ITEM 2. LEGAL PROCEEDINGS 20
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS AND FINANCIAL DISCLOSURE 20
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES 20
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS 20
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PART F/S
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FINANCIAL STATEMENTS 23
PART III
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ITEMS 1& 2 INDEX TO AND DESCRIPTION OF EXHIBITS 30
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PART I
ITEM 1. BUSINESS.
HISTORY AND ORGANIZATION
Capstra Capital Corp. (the "Company"), organized under the laws of the
State of Washington on April 4, 1995 under the name Strand Capital Corporation.
The Company changed it's name to Capstra Capital Corp on December 3 1999. Since
inception, the Company's primary activity has been directed to organizational
efforts and obtaining initial financing. The Company was formed as a vehicle to
pursue a business combination or asset acquisition.
The Company was organized for the purposes of creating a corporate vehicle
to locate and acquire an operating business entity which management believes is
a suitable acquisition candidate (a "target company"). The Company will not
restrict its search to any specific business, industry or geographical location.
The Company does not currently engage in any business activities that
provide any cash flow. The costs of identifying, investigating, and analyzing
business combinations will be paid with money in the Company's treasury or
loaned by management.
Although the Company was under no obligation to do so, it has voluntarily
filed this registration statement because it believes that it can better
facilitate its business goals if it were a "reporting issuer" under the
Securities Exchange Act of 1934 (the "Exchange Act").
PROPOSED BUSINESS
The Company will seek to locate an acquire a target company which is the
opinion of the Company's management (sometimes referred to as the "Management")
offers long term growth potential. The Company will not restrict its search to
any specific business, industry or geographical location. The Company may seek
to acquire a target company which has just commenced operations, or which works
to avail itself of the benefits of being a "reporting issuer" in order to
facilitate capital formation to expand into new products or market.
There are certain perceived benefits to being a reporting company with a
class of publicly-traded securities. These are commonly thought to include the
following:
- the ability to use registered securities to make
acquisitions of assets or businesses;
- increased visibility in the financial community;
- the facilitation of borrowing from financial institutions;
- improved trading efficiency;
- shareholder liquidity;
- greater ease in subsequently raising capital;
- compensation of key employees through stock options;
- enhanced corporate image;
- a presence in the United States capital market.
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A target company, if any, which may be interested in a business combination
with the Company may include the following:
- a company for which a primary purpose of becoming public is
the use of its securities for the acquisition of assets or
businesses;
- a company which is unable to find an underwriter of its securities
or is unable to find an underwriter of securities on terms
acceptable to it;
- a company which wishes to become public with less dilution of its
common stock than would occur upon an underwriting;
- a company which believes that it will be able obtain investment
capital on more favorable terms after it has become public;
- a foreign company which may wish an initial entry into the United
States securities market;
- a special situation company, such as a company seeking a public
market to satisfy redemption requirements under a qualified
Employee Stock Option Plan;
- a company seeking one or more of the other perceived benefits of
becoming a public company.
There is no assurances that the Company will be able to effect an
acquisition of a target company. In addition, at this time, no specifics as to
an acquisition or as to the nature of the target company can be provided.
RISK FACTORS
The Company's business is subject to numerous risk factors, including the
following:
1. Anticipated Change in Control and Management. Upon the successful
completion of the acquisition of a target company, the Company anticipates that
it will have to issue to the target company or its shareholders some authorized
but unissued common stock which, when issued will comprise a majority of the
Company's then issued and outstanding shares of common stock. Therefore, the
Company anticipates that upon the closing of the acquisition of a target
company, the Company will no longer be controlled by the current shareholders.
In addition, existing management and directors may resign. The Company cannot
give any assurance that the experience or qualifications of new management, as
it relates to either in the operation of the Company's activities or in the
operation of the business, assets or property being acquired, will be adequate
for such purposes.
2. Conflict of Interest - Management's Fiduciary Duties. A conflict of
interest may arise between management's personal financial benefit and
management's fiduciary duty to you. The Company's directors and officers are
or may become, in their individual capacities, officers, directors, controlling
shareholders and/or partners of other entities engaged in a variety of
businesses. Messrs. Mackay and Saunders are engaged in other business
activities. Accordingly, the amount of time each will devote to the Company's
business will only be about five (5) to ten (10) hours per month. There exists
potential conflicts of interest including allocation of time between the Company
and its representatives other business interests.
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3. Experience of Management; Consultants. Although Management has
general business experience, it has limited experience in effecting business
combinations and may not have any significant experience in acquiring or
operating certain business interests that the company might choose to acquire.
Management does not have, nor does it presently intend to enter into, any
contracts or agreements with any consultants or advisors with respect to its
proposed business activities. Consequently, Management has not established the
criteria that will be used to hire independent consultants regarding their
experience, the services to be provided, the term of service, etc., and no
assurance can be made that the Company will be able to obtain such assistance on
acceptable terms.
4. Potential Future Rule 144 Sales. Of the 5,000,000,000 shares of the
Company's Common Stock authorized, there are presently issued and outstanding
5,000,000 shares; all are "restricted securities" as that term is defined under
the Securities Act of 1933 (the "Securities Act"), and in the future may be sold
in compliance with Rule 144 of the Act, or pursuant to a Registration Statement
filed under the Act. Rule 144 provides, in essence, that a person holding
restricted securities for a period of 1 year may sell those securities in
unsolicited brokerage transactions of in transactions with a market maker, in an
amount equal to 1% of our outstanding common stock every 3 months.
Additionally, Rule 144 requires that an issuer of securities make available if
the issuer satisfies the reporting requirements of Sections 13 or 15(d) of the
Exchange Act and of Rule 15c2-11 thereunder. Rule 144 also permits, under
certain circumstances, that sale of shares by a person who is not an affiliate
of ours and who has satisfied a 2 two year holding period without any quantity
limitation and whether or not there is adequate current public information
available. Investors should be aware that sales under Rule 144, or pursuant to
a registration statement filed under the Securities Act, may have a depressive
effect on the market price of our common stock in any market that may develop
for such shares.
5. Possible Issuance of Additional Shares. The Company's Certificate of
Amendment of Incorporation, authorizes the issuance of 5,000,000,000 shares of
common stock. The Company's Board of Directors has the power to issue any or
all of such additional shares without stockholder approval for such
consideration as it deems. Management presently anticipates that it may choose
to issue a substantial amount of the Company's shares in connection with the
acquisition of a target business.
6. Risks of Leverage. There are currently no limitations relating to the
Company's ability to borrow funds to increase the amount of capital available to
it to effect a business combination or otherwise finance the operations of any
acquired business. The amount and nature of any borrowings by the Company will
depend on numerous factors, including the Company's capital requirements, the
Company's perceived ability to meet debt services on any such borrowings, and
then-prevailing conditions in the financial, if required or otherwise sought,
will be available on terms deemed to be commercially acceptable and in the best
interest of the Company's inability to borrow funds required to effect or
facilitate a business combination, or to provide funds for an additional
infusion of capital into an acquired business, may have a material adverse
affect on the Company's financial condition and future prospects.
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Additionally, to the extent that debt financing ultimately proves to be
available, any borrowings may subject the Company to various risks traditionally
associated with incurring of indebtedness, including:
- - if the Company's operating revenues after the acquisition were to be
insufficient to pay debt service, there would be a risk of default and
foreclosure on our assets.
- - if a loan agreement containing covenants is breached without a waiver or
renegotiation of the terms of that covenant, then the lender could have the
right to accelerate the payment of the indebtedness even if the Company has made
all principal and interest payments when due.
- - if the interest rate on a loan fluctuated or the loan was payable on
demand, the Company would bear the risk of variations in the interest rate or
demand for payment.
- - if the terms of a loan did not provide for amortization prior to
maturity of the full amount borrowed and the "balloon" payment could not be
refinanced at maturity on acceptable terms, we might be required to seek
additional financing and, to the extent that additional financing is not
available on acceptable terms, to liquidate the Company's assets.
7. Possible Need for Additional Financing. The Company cannot ascertain
with any degree of certainty the capital requirements for an particular acquired
business inasmuch as the Company has not yet identified any acquisition
candidates. If the target company requires additional financing, such
additional financing (which, among other forms, could be derived from the public
or private offering of securities or from the acquisition of debt through
conventional bank financing), may not be available, due to, among other things,
the target company not having sufficient:
- credit or operating history;
- income stream;
- profit level;
- asset base eligible to be collateralized; or
- market for its securities.
Since no specific business has been targeted for acquisition, it is not possible
to predict the specific reasons why conventional private or public financing or
conventional bank financing might not become available. Although there are no
agreements between the Company and any of its officers and/or directors pursuant
to which we may borrow and such officers and/or directors are obligated to lend
the Company monies, there are no restrictions on our right to borrow money from
officers and directors. No stockholder approval is required in connection with
any such loan.
8. Penny Stock Rules. Under Rule 15g-9, a broker or dealer may not sell a
"penny stock" (as defined in Rule 3a51-1) to or effect the purchase of a penny
stock by any person unless:
(1) such sale or purchase is exempt from Rule 15g-9; or
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(2) prior to the transaction the broker or dealer has (a) approved the
person's account for transaction in penny stocks in accordance with Rule 15g-9
and (b) received from the person a written agreement to the transaction setting
forth the identity and quantity of the penny stock to be purchased.
The United States Securities and Exchange Commission (the "Commission") adopted
regulations that generally define a penny stock to be any equity security other
than a security excluded from such definition by Rule 3a51-1. Such exemptions
include, but are not limited to (a) an equity security issued by an issuer that
has (i) net tangible assets of at least $2,000,000, if such issuer has been in
continuous operations for at least three years; (ii) net tangible assets of at
least $5,000,000, if such issuer has been in continuous operation for less than
three years; or (iii) average revenue of at least $6,000,000 for the preceding
three years; (b) except for purposes of Section 7(b) of the Exchange Act and
Rule 419, any security that has a price of $5.00 or more; (c) and a security
that is authorized or approved for authorization upon notice of issuance for
quotation on the National Association of Securities ("NASD") Dealers Automated
Quotation System ("NASDAQ").
It is likely that the Company's common stock will be subject to the regulations
on penny stocks; consequently, the market liquidity for our common stock may be
adversely affected by such regulations. This, in turn, will affect shareholders
ability to sell his shares following the completion of an acquisition.
There is no current trading market for shares (the "Shares") the Company's
common stock and there can be no assurance that a trading market will develop,
or, if such a trading market does develop, that it will be sustained. The
Shares, to the extent that a market develops for the Shares at all, will likely
appear in what is customarily known as the "pink sheets" or on the NASD
over-the-counter Bulletin Board (the "OTCBB"), which may limit the marketability
and liquidity of the Shares.
To date, neither the Company nor anyone acting on behalf of the Company has
taken any affirmative steps to request or encourage any broker/dealer to act as
a market maker for our common stock. The Company has had no discussions or
understandings, with any "market makers" regarding the participation of any such
market maker in the future trading market, if any, in the Company's common
stock. Management expects that discussions in this area will ultimately be
initiated by the management in office after completion of the acquisition of a
target company.
9. Risks Associated with Operations in Foreign Countries. The Company's
business plan is to seek to acquire a target company. Management's discretion
is unrestricted, and the Company may participate in any business whatsoever that
may in the opinion of Management meet the Company's business objectives. The
Company may acquire a business outside the United States. The Company has not
limited the scope of its search to a particular region or country. Accordingly,
if the Company acquires a business located, or operating in a foreign
jurisdiction, the Company's operations may be adversely affected to the extent
of the existence of unstable economic, social and/or political conditions in
such foreign regions and countries.
10. No Operating History or Revenue and Minimal Assets. The Company has
had no operating history nor any revenues or earnings from operations. The
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Company has no significant assets or financial resources. The Company will, in
all likelihood, sustain operating expenses without corresponding revenues, at
least until the consummation of a business combination. This may result in the
Company incurring a net operating loss which will increase continuously until
the Company can consummate a business combination with a target company. There
is no assurance that the Company can identify such a target company and
consummate such a business combination.
11. Speculative Nature of the Company's Proposed Operations. The success
of the Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified target company.
While management will prefer business combinations with entities having
established operating histories, there can be no assurance that the Company will
be successful in locating candidates meeting such criteria. In the event the
Company completes a business combination, of which there can be no assurance,
the success of the Company's operations will be dependent upon management of the
target company and numerous other factors beyond the Company's control.
12. Scarcity of and Competition for Business Opportunities and
Combinations. The Company is and will continue to be an insignificant
participant in the business of seeking mergers with and acquisitions of business
entities. A large number of established and well-financed entities, including
venture capital firms, are active in mergers and acquisitions of companies which
may be merger or acquisition target candidates for the Company. Nearly all such
entities have significantly greater financial resources, technical expertise and
managerial capabilities than the Company and, consequently, the Company will be
at a competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Moreover, the Company will also
compete with numerous other small public companies in seeking merger or
acquisition candidates.
13. No Agreement for Acquisition of a Target Company Combination. The
Company has no current arrangement, agreement or understanding with respect to
engaging in a merger with or acquisition of a specific business entity. There
can be no assurance that the Company will be successful in identifying and
evaluating suitable business opportunities or in concluding a business
combination. Management has not identified any particular industry or specific
business within an industry for evaluation by the Company. There is no
assurance that the Company will be able to negotiate a business combination on
terms favorable to the Company. The Company has not established a specific
length of operating history or a specified level of earnings, assets, net worth
or other criteria which it will require a target company to have achieved, or
without which the Company would not consider a business combination with such
business entity. Accordingly, the Company may enter into a business combination
with a business entity having no significant operating history, losses, limited
or no potential for immediate earnings, limited assets, negative net worth or
other negative characteristics.
14. Reporting Requirements May Delay or Preclude Acquisition. Section 13
of the Securities Exchange Act of 1934 (the "Exchange Act") requires companies
subject thereto to provide certain information about significant acquisitions
including certified financial statements for the company acquired covering one
or two years, depending on the relative size of the acquisition. The time and
additional costs that may be incurred by some target companies to prepare such
financial statements may significantly delay or essentially preclude
consummation of an otherwise desirable acquisition by the Company. Acquisition
prospects that do not have or are unable to obtain the required audited
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statements may not be appropriate for acquisition so long as the reporting
requirements of the Exchange Act are applicable.
15. Lack of Market Research or Marketing Organization. The Company has
neither conducted, nor have others made available to it, market research
indicating that demand exists for the transactions contemplated by the Company.
Even in the event demand exists for a merger or acquisition of the type
contemplated by the Company, there is no assurance the Company will be
successful in completing any such business combination.
16. Lack of Diversification. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a business
combination with only one business entity. Consequently, the Company's
activities will be limited to those engaged in by the business entity which the
Company merges with or acquires. The Company's inability to diversify its
activities into a number of areas may subject the Company to economic
fluctuations within a particular business or industry and therefore increase the
risks associated with the Company's operations.
17. Regulation under Investment Company Act. Although the Company will be
subject to regulation under the Exchange Act, management believes the Company
will not be subject to regulation under the Investment Company Act of 1940,
insofar as the Company will not be engaged in the business of investing or
trading in securities. In the event the Company engages in business
combinations which result in the Company holding passive investment interests in
a number of entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be required to
register as an investment company and could be expected to incur significant
registration and compliance costs. The Company has obtained no formal
determination from the Securities and Exchange Commission as to the status of
the Company under the Investment Company Act of 1940 and, consequently, any
violation of such Act could subject the Company to material adverse
consequences.
18. Probable Change In Control and Management. A business combination
involving the issuance of the Company's common stock will, in all likelihood,
result in shareholders of a target company obtaining a controlling interest in
the Company. Any such business combination may require shareholders of the
Company to sell or transfer all or a portion of the Company's common stock held
by them. The resulting change in control of the Company will likely result in
removal of the present officer and director of the Company and a corresponding
reduction in or elimination of his participation in the future affairs of the
Company.
19. Taxation. Federal and state tax consequences will, in all
likelihood, be major considerations in any business combination the Company may
undertake. Currently, such transactions may be structured so as to result in
tax-free treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as to
minimize the federal and state tax consequences to both the Company and the
target company; however, there can be no assurance that such business
combination will meet the statutory requirements of a tax-free reorganization or
that the parties will obtain the intended tax-free treatment upon a transfer of
stock or assets. A non-qualifying reorganization could result in the imposition
of both federal and state taxes which may have an adverse effect on both parties
to the transaction.
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20. Year 2000 Risks. Many existing computer programs use only two digits
to identify a year in such program's date field. These programs were designed
and developed without consideration of the impact of the change in the century
for which four digits will be required to accurately report the date. If not
corrected, many computer applications could fail or create erroneous results by
or following the year 2000 ("Year 2000 Problem"). Many of the computer programs
containing such date language problems have not been corrected by the companies
or governments operating such programs. It is impossible to predict what
computer programs will be effected, the impact any such computer disruption will
have on other industries or commerce or the severity or duration of a computer
disruption.
The Company does not have operations and does not maintain computer systems.
Before the Company enters into any business combination, it may inquire as to
the status of any target company's Year 2000 Problem, the steps such target
company has taken or intends to take to correct any such problem and the
probable impact on such target company of any computer disruption. However,
there can be no assurance that the Company will not acquire a target company
that has an uncorrected Year 2000 Problem or that any planned Year 2000 Problem
corrections will be sufficient. The extent of the Year 2000 Problem of a target
company may be impossible to ascertain and any impact on the Company will likely
be impossible to predict.
ITEM 2. PLAN OF OPERATION
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire a target company which desires to seek the perceived
advantages of a corporation which has a class of securities registered under the
Exchange Act.
Management anticipates seeking out a target company through solicitation.
Such solicitation may include newspaper or magazine advertisements, mailings and
other distributions to law firms, accounting firms, investment bankers,
financial advisors and similar persons, the use of one or more World Wide Web
sites and similar methods. No estimate can be made as to the number of persons
who will be contacted or solicited. Management may engage in such solicitation
directly or may employ one or more other entities to conduct or assist in such
solicitation. Management and its affiliates pay referral fees to consultants
and others who refer target businesses for mergers into public companies in
which management and its affiliates have an interest. Payments are made if a
business combination occurs, and may consist of cash or a portion of the stock
in the Company retained by management and its affiliates, or both.
The Company will not restrict its search to any specific business,
industry, or geographical location and the Company may participate in a business
venture of virtually any kind or nature. Management anticipates that it will be
able to participate in only one potential business venture because the Company
has nominal assets and limited financial resources. Please refer to "ITEM F/S.
FINANCIAL STATEMENTS." This lack of diversification should be considered a
substantial risk to the shareholders of the Company because it will not permit
the Company to offset potential losses from one venture against gains from
another.
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The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company may acquire assets and establish wholly-owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Management believes
(but has not conducted any research to confirm) that there are business entities
seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, increasing the opportunity
to use securities for acquisitions, providing liquidity for shareholders and
other factors. Business opportunities may be available in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
difficult and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business entities with any cash or other assets. However,
management believes the Company will be able to offer owners of acquisition
candidates the opportunity to acquire a controlling ownership interest in a
public company without incurring the cost and time required to conduct an
initial public offering. Management has not conducted market research and is
not aware of statistical data to support the perceived benefits of a merger or
acquisition transaction for the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or under
the supervision of, the officer and director of the Company, who is not a
professional business analyst. In analyzing prospective business opportunities,
management may consider such matters as the available technical, financial and
managerial resources; working capital and other financial requirements; history
of operations, if any; prospects for the future; nature of present and expected
competition; the quality and experience of management services which may be
available and the depth of that management; the potential for further research,
development, or exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact the proposed activities of the Company; the
potential for growth or expansion; the potential for profit; the perceived
public recognition or acceptance of products, services, or trades; name
identification; and other relevant factors.
This discussion of the proposed criteria is not meant to be restrictive of
the Company's virtually unlimited discretion to search for and enter into
potential business opportunities.
The Exchange Act requires that any merger or acquisition candidate comply
with certain reporting requirements, which include providing audited financial
statements to be included in the reporting filings made under the Exchange Act.
The Company will not acquire or merge with any company for which audited
financial statements cannot be obtained at or within a reasonable period of time
after closing of the proposed transaction.
The Company may enter into a business combination with a business entity
that desires to establish a public trading market for its shares. A target
company may attempt to avoid what it deems to be adverse consequences of
undertaking its own public offering by seeking a business combination with the
Company. Such consequences may include, but are not limited to, time delays of
the registration process, significant expenses to be incurred in such an
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offering, loss of voting control to public shareholders or the inability to
obtain an underwriter or to obtain an underwriter on satisfactory terms.
The Company will not restrict its search for any specific kind of business
entities, but may acquire a venture which is in its preliminary or development
stage, which is already in operation, or in essentially any stage of its
business life. It is impossible to predict at this time the status of any
business in which the Company may become engaged, in that such business may need
to seek additional capital, may desire to have its shares publicly traded, or
may seek other perceived advantages which the Company may offer.
Management of the Company, which in all likelihood will not be experienced
in matters relating to the business of a target company, will rely upon its own
efforts in accomplishing the business purposes of the Company. Outside
consultants or advisors may be utilized by the Company to assist in the search
for qualified target companies. If the Company does retain such an outside
consultant or advisor, any cash fee earned by such person will need to be
assumed by the target company, as the Company has limited cash assets with which
to pay such obligation. No such consultant or advisor has been retained.
Following a business combination the Company may benefit from the services
of others in regard to accounting, legal services, underwriting and corporate
public relations. If requested by a target company, management may recommend
one or more underwriters, financial advisors, accountants, public relations
firms or other consultants to provide such services.
A potential target company may have an agreement with a consultant or
advisor providing that services of the consultant or advisor be continued after
any business combination. Additionally, a target company may be presented to
the Company only on the condition that the services of a consultant or advisor
be continued after a merger or acquisition. Such preexisting agreements of
target companies for the continuation of the services of attorneys, accountants,
advisors or consultants could be a factor in the selection of a target company.
STRUCTURE OF ACQUISITION
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with a target company. It may also acquire
stock or assets of a target company. Upon consummation of an acquisition, it
is likely that the present management and shareholders of the Company will no
longer be in control of the Company. In addition, it is likely that the
Company's officers and directors will, as part of the terms of the acquisition
transaction, resign and be replaced by one or more new officers and directors.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, of which there can be
no assurance, it will be undertaken by the surviving entity after the Company
has entered into an agreement for a business combination or has consummated a
business combination and the Company is no longer considered a blank check
company. The issuance of additional securities and their potential sale into
any trading market which may develop in the Company's securities may depress the
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market value of the Company's securities in the future if such a market
develops, of which there is no assurance.
While the terms of a business transaction to which the Company may be a
party cannot be predicted, it is expected that the parties to the business
transaction will desire to avoid the creation of a taxable event and thereby
structure the acquisition in a "tax-free" reorganization under Sections 351 or
368 of the Internal Revenue Code of 1986, as amended (the "Code").
With respect to any merger or acquisition negotiations with a target
company, management expects to focus on the percentage of the Company which
target company shareholders would acquire in exchange for their shareholdings in
the target company. Depending upon, among other things, the target company's
assets and liabilities, the Company's shareholders will in all likelihood hold a
substantially lesser percentage ownership interest in the Company following any
merger with or acquisition of a target company. The percentage of ownership may
be subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's shareholders at such time.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require certain
representations and warranties of the parties thereto, will specify certain
events of default, will detail the terms of closing and the conditions which
must be satisfied by the parties prior to and after such closing and will
include miscellaneous other terms
The Company will not acquire or merge with any entity which cannot provide
audited financial statements at or within a reasonable period of time after
closing of the proposed transaction. The Company is subject to all of the
reporting requirements included in the Exchange Act. Included in these
requirements is the duty of the Company to file audited financial statements as
part of or within 60 days following its Form 8-K to be filed with the Securities
and Exchange Commission upon consummation of a merger or acquisition, as well as
the Company's audited financial statements included in its annual report on Form
10-K (or 10-KSB, as applicable). If such audited financial statements are not
available at closing, or within time parameters necessary to insure the
Company's compliance with the requirements of the Exchange Act, or if the
audited financial statements provided do not conform to the representations made
by the target company, the closing documents may provide that the proposed
transaction will be voidable at the discretion of the present management of the
Company.
NO DIVIDENDS
The Company has not paid any dividends on its common stock; nor does the
Company intend to declare and pay dividends prior to the consummation of an
acquisition. The payment of dividends after any acquisition will be within the
discretion of the Company's then Board of Directors.
EMPLOYEES
The Company presently has no employees. The Company has two (2) officers
and two (2) directors. Messrs. Mackay, and Saunders are engaged in other
business activities, and the amount of time each will devote to the Company's
business will only be between five (5) and ten (10) hours per month. Upon
<PAGE>
Page 15
completion of the public offering, it is anticipated that management will devote
such time to our affairs each month as may be necessary to carry on our business
plans.
COMPETITION
The Company will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many established
venture capital and financial concerns which have significantly greater
financial and personnel resources and technical expertise than the Company. In
view of the Company's combined extremely limited financial resources and limited
management availability, the Company will continue to be at a significant
competitive disadvantage compared to the Company's competitors.
LIQUIDITY AND CAPITAL RESOURCES
The Company has limited working capital and a deficit. The ability of the
Company to continue as a going concern is dependent upon its ability to obtain
adequate financing to reach profitably levels of operation. It is not possible
to predict whether financing efforts will be successful or it the Company will
attain profitable levels of operations.
ITEM 3. DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no agreements to acquire
any properties. The Company is presently using as a mailing address the office
of it's President 2160 - 650 West Georgia St. Vancouver B.C. Canada V6B 4N7, at
no cost, as it's office. Such arrangement is expected to continue until
completion of the acquisition of a target company. See "Item 4. Security
Ownership of Certain Beneficial Owners and Management."
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth each person known by the Company to be the
beneficial owner of five percent or more of the Company's Common Stock, all
directors individually and all directors and officers of the Company as a group.
Except as noted, each person has sole voting and investment power with respect
to the shares shown.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
NAME AND ADDRESS OF SHARES OF COMMON STOCK ATTRIBUTED APPROXIMATE PERCENTAGE
BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIAL OWNER OWNERSHIP
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unigro U.S.A. Inc. 2,750,000 Frits Jelgersma 55%
1221 Lexington Court
El Dorado hills, CA 95762
- -----------------------------------------------------------------------------------------------
Carrie Nelson 450,000 NA 9%
639 Thurston Crt.
Port Moody B.C.
Canada V3H 4J4
- -----------------------------------------------------------------------------------------------
Lynne Tam 450,000 NA 9%
2433 West 47th Ave.
Vancouver, B.C.
Canada V6M 2N3
- -----------------------------------------------------------------------------------------------
John Mackay 450,000 NA 9%
2280 S.W. Marine Drive
Vancouver B.C.
Canada V6P 6C2
- -----------------------------------------------------------------------------------------------
Officers and Directors as a Group 450,000 NA 9%
(2 persons)
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Page 16
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The Company's Directors and Officers are as follows:
Set forth below is the name of each of the directors and officers of the
Company, all positions and offices with the Company held, the period during
which such person has never served as such, and the business experience during
at least the last five years:
Name Age Positions and Offices Held
John Mackay 49 President and Director (since inception)
Rod Saunders 39 Secretary (since May 1st 1996)
There are no agreements or understandings for the officer or director to
resign at the request of another person and the above-named officers and
director are not acting on behalf of nor will act at the direction of any other
person.
Mr. John Mackay is and since 1990 has been the President of Strand
Properties Corporation. Mr Mackay holds a Bachelor of Commerce degree and a
Bachelor of laws degree, both from the University of British Columbia.
Mr. Rod Saunders is and since 1990 has been the Vice President , Finance of
Strand Properties Corporation. Mr Saunders holds a Bachelor of Commerce degree
from the University of British Columbia and is a Certified Public Accountant and
a member of the Delaware Society of Certified Public Accountants.
Conflicts of Interest.
The Company's officers and directors expect to organize other companies of
a similar nature and with a similar purpose as the Company. Consequently, there
are potential inherent conflicts of interest in acting as an officer and
director of the Company. Insofar as the officers and directors are engaged in
other business activities, each will devote only a minor amount of time to the
Company's affairs. The Company does not have a right of first refusal
pertaining to opportunities that come to management's attention insofar as such
opportunities may relate to the Company's proposed business operations.
A conflict may arise in the event that another blank check and/or blind
pool company (a "blind pool company") with which management is affiliated is
formed and actively seeks a target company. It is anticipated that target
companies will be located for the Company and other blind pool companies in
chronological order of the date of formation of such blind pool companies or by
lot. However, any blank check companies that may be formed may differ from the
<PAGE>
Page 17
Company in certain items such as place of incorporation, number of shares and
shareholders, working capital, types of authorized securities, or other items.
It may be that a target company may be more suitable for or may prefer a certain
blind pool company formed after the Company. In such case, a business
combination might be negotiated on behalf of the more suitable or preferred
blind pool company regardless of date of formation or choice by lot. Mr. Mackay
will be responsible for seeking, evaluating, negotiating and consummating a
business combination with a target company which may result in terms providing
benefits to Mr. Mackay.
The Company may agree to pay finder's fees, as appropriate and allowed, to
unaffiliated persons who may bring a target company to the Company where that
reference results in a business combination. No finder's fee of any kind will
be paid by the Company to management or promoters of the Company or to their
affiliates. No loans of any type have, or will be, made by the Company to
management or promoters of the Company or to any of their associates or
affiliates.
Management has not adopted policies involving possible conflicts of
interest.
There are no binding guidelines or procedures for resolving potential
conflicts of interest. Failure by Management to resolve conflicts of interest
in favor of the Company could result in liability of Management to the Company.
However, any attempt by shareholders to enforce a liability of Management to the
Company would most likely be prohibitively expensive and time consuming.
Investment Company Act of 1940.
Although the Company will be subject to regulation under the Securities Act
of 1933 (the "Securities Act") and the Exchange Act, management believes the
Company will not be subject to regulation under the Investment Company Act of
1940 insofar as the Company will not be engaged in the business of investing or
trading in securities. In the event the Company engages in business
combinations which result in the Company holding passive investment interests in
a number of entities the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be required to
register as an investment company and could be expected to incur significant
registration and compliance costs. The Company has not obtained a formal
determination from the Commission as to the status of the Company under the
Investment Company Act of 1940. Any violation of such Investment Company Act
would subject the Company to material adverse consequences.
ITEM 6. EXECUTIVE COMPENSATION.
The Company's officers and directors do not receive any compensation for
their services rendered to the Company, have not received such compensation in
the past, and are not accruing any compensation pursuant to any agreement with
the Company.
No retirement, pension, profit sharing, stock option or insurance programs
or other similar programs have been adopted by the Company for the benefit of
its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has no properties and at this time has no agreements to acquire
any properties. The Company is presently using as a mailing address the office
of it's President 2160 - 650 West Georgia St. Vancouver B.C. Canada V6B 4N7, at
no cost, as it's office. Such arrangement is expected to continue until
completion of the acquisition of a target company.
<PAGE>
Page 18
ITEM 8. DESCRIPTION OF SECURITIES.
The Company is authorized to issue 5 billion (5,000,000,000) shares of
common stock, non par-value, of which 5,000,000 shares were issued and
outstanding as of the date of this Registration Statement. Each outstanding
share of common stock entitles the holder to one vote, either in person or by
proxy, on all matters that may be voted upon by the owners thereof at meetings
of the stockholders.
The holders of common stock (i) have equal rights to dividends from funds
legally available therefor, when, as and if declared by the Board of Directors
of the Company; (ii) are entitled to share ratably in all of the assets of the
Company available for distribution to holders of common stock upon liquidation,
dissolution or winding up of the affairs of the Company; (iii) do not have
preemptive, subscription or conversion rights, and (iv) are entitled to one
non-cumulative vote per share on all matters on which stockholders may vote at
all meetings of stockholders.
Reports to Stockholders.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements as soon as practicable after the end of
each fiscal year. Our fiscal year ends on September 30, 1999. In addition, we
intend to issue unaudited interim reports and financial statements on a
quarterly basis.
Dividends.
The Company has not declared any dividends since inception, and has no
present intention of paying any cash dividends on its common stock in the
foreseeable future. The payment by the Company of dividends, if any, in the
future, rests within the discretion of our Board of Directors and will depend,
among other things, upon our earnings, capital requirements and financial
condition, as well as other relevant factors.
<PAGE>
Page 19
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
There is no trading market for the Company's Common Stock at present and
there has been no trading market to date. There is no assurance that a trading
market will ever develop or, if such a market does develop, that it will
continue.
The National Securities Market Improvement Act of 1996 limited the
authority of states to impose restrictions upon sales of securities made
pursuant to Sections 4(1) and 4(3) of the Securities Act of 1933, as amended
(the "Securities Act") of companies which file reports under Sections 13 or
15(d) of the Securities Exchange Act. The Company files such reports. As a
result, sales of the Company's common stock in the secondary trading market by
the holders thereof may be made pursuant to Section 4(1)of the Securities Act
(sales other than by an issuer, underwriter or broker).
The Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stocks in both public offerings and
in secondary trading, and about commissions payable to both the broker-dealer
and the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
If, after a merger or acquisition, the Company does not meet the
qualifications for listing on the Nasdaq Stock Market Inc.'s SmallCap Market
("NASDAQ_SCM"), the Company's securities may be traded on the OTCBB. The OTCBB
market differs from national and regional stock exchanges in that it (1) is not
sited in a single location but operates through communication of bids, offers
and confirmations between broker-dealers and (2) securities admitted to
quotation are offered by one or more broker-dealers rather than the "specialist"
common to stock exchanges. The Company may seek to have its securities quoted
on the OTCBB or may offer its securities in what are commonly referred to as the
"pink sheets" of the National Quotation Bureau, Inc.
In order to qualify for listing on the NASDAQ-SCM, a company must have at
least (i) net tangible assets of $4,000,000 or market capitalization of
$50,000,000 or net income for two of the last three years of $750,000; (ii)
<PAGE>
Page 20
public float of 1,000,000 shares with a market value of $5,000,000; (iii) a bid
price of $4.00; (iv) three market makers; (v) 300 shareholders and (vi) an
operating history of one year or, if less than one year, $50,000,000 in market
capitalization. For continued listing on the Nasdaq SmallCap Market, a company
must have at least (i) net tangible assets of $2,000,000 or market
capitalization of $35,000,000 or net income for two of the last three years of
$500,000; (ii) a public float of 500,000 shares with a market value of
$1,000,000; (iii) a bid price of $1.00; (iv) two market makers; and (v) 300
shareholders.
If the Company is unable initially to satisfy the requirements for
quotation on the NASDAQ-SCM or becomes unable to satisfy the requirements for
continued quotation thereon, and trading, if any, is conducted in the OTCBB, a
shareholder may find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, the Company's securities.
Holders. There are 43 holders of the Company's Common Stock. The issued
and outstanding shares of the Company's Common Stock were issued in accordance
with the exemptions from registration afforded by Sections 3(b) and 4(2) of the
Securities Act of 1933 and Rule 701 promulgated thereunder.
Dividends. The Company has not paid any dividends to date, and has no
plans to do so in the immediate future.
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company has not changed accountants since its formation and there are
no disagreements with the findings of its accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Company has not sole any securities.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 23B.08.510 of the Washington Business Corporation Act provides
that a Washington corporation may, indemnify an individual made a party to a
proceeding be cause the individual is or was a director or officer against
liability incurred in the proceeding if (a) the individual acted in good faith;
and the individual believed in the case of conduct of the individual's official
capacity with the corporation, that the individual's conduct was in its best
interest, (c)in the case of any criminal proceedings, the individual had no
reasonable cause to believe the individual's conduct was unlawfulThe Certificate
of Incorporation and the By-laws of the Company provide for indemnification of
directors and officers to the fullest extent permitted by the Washington
Business Corporation Act.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS
CONTROLLING THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION
<PAGE>
Page 21
OF THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST
PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
<PAGE>
Page 22
PART F/S
FINANCIAL STATEMENTS
Index
Page
Auditors Report dated November 15, 1999 23
Audited Balance Sheets as of September 30, 1999 and 1998 24
Audited Statement of Loss for the year ended
September 30, 1999, 1998 and 1997 25
Audited Statement of Cash Flow for the year ended
September 30, 1999, 1998 and 1997 26
Statement of Shareholder Equity (Deficit) for the
year ended September 30, 1999, 1998, and 1997 27
Notes to Financial Statements 28
<PAGE>
Page 23
Russell & Co.
AUDITORS' REPORT TO THE DIRECTORS OF:
STRAND CAPITAL CORPORATION
(A Washington Corporation)
(A development stage company)
We have audited the balance sheet of Strand Capital Corporation as at September
30, 1999, and September 30, 1998 and the statements of loss and shareholders'
equity (deficit) and cash flows for the years ended September 30, 1999,
September 30, 1998 and September 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance 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.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at September 30, 1999 and
September 30, 1998 and the results of its operations and its cash flows for the
years ended September 30, 1999, September 30, 1998 and September 30, 1997 in
accordance with accounting principles generally accepted in the United States.
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's negative working capital and deficit raises
substantial doubt about its ability to continue as a going concern. The
financial statements do not contain any adjustments that might result from the
outcome of this uncertainty.
Chartered Accountant
West Vancouver, B.C. By /s/ Joyce Russell
Canada. Russell & Co.
November 15, 1999
415 Gordon Ave., West Vancouver, B.C., V7T 1P4
Telephone: (604) 913-0405 - Fax: (604) 913-0406
<PAGE>
Page 24
STRAND CAPITAL CORPORATION
(A Washington Corporation)
(A development stage company)
FINANCIAL STATEMENTS
September 30, 1999,
September 30, 1998 and
September 30, 1997.
STRAND CAPITAL CORPORATION
(A Washington Corporation)
(A development stage company)
Balance Sheet
as at September 30, 1999 and September 30, 1998
(U.S. DOLLARS)
1999 1998
Assets
Incorporation costs $ 1,000 $ 1,000
- ------------------- ------------- -------------
Total Assets $ 1,000 $ 1,000
============ ============= =============
Liabilities
Current liabilities
Accounts payable $ 2,000 $ -
---------------- ------------ -------------
Total Liabilities 2,000 -
------------ -------------
Shareholders' equity (deficit)
Share Capital
Authorized:
1,000 common shares non par value
Issued and outstanding
10,000 common shares non par value
at September 30, 1999 and
September 30, 1998 1,000 1,000
- ------------------- ------------ -------------
1,000 1,000
Accumulated Deficit (2,000) -
- -------------------- ------------ -------------
(1,000) 1,000
------------ -------------
$ 1,000 $ 1,000
============ =============
CONTINUING OPERATIONS (NOTE 1)
/s/ John Mackay
- -------------------
John Mackay, Director
<PAGE>
Page 25
STRAND CAPITAL CORPORATION
(A Washington Corporation)
(A development stage company)
Statement of Loss
For the year ended September 30, 1999,
year ended September 30, 1998 and the year ended September 30, 1997
(U.S. DOLLARS)
1999 1998 1997
Expenses
Legal $ 2,000 $ - $ -
----- ------- ------- -------
Net earnings (loss) for the period $ (2,000) $ - $ -
================================== ======= ======= =======
Basic and diluted loss per share $(2.0000) $(0.0000) $(0.0000)
- -------------------------------- ------- ------- -------
Weighted average shares Outstanding 10,000 10,000 10,000
- ----------------------------------- ------- ------- -------
<PAGE>
Page 26
STRAND CAPITAL CORPORATION
(A Washington Corporation)
(A development stage company)
Statement of Cash Flow
For the year ended September 30, 1999,
year ended September 30, 1998 and the year ended September 30, 1997
(U.S. DOLLARS)
1999 1998 1997
Cash provided by (used in
Operations
Net Loss for period $ (2,000) $ - $ -
------------------- ------- ------- -------
Net change in non-cash
working capital balances (2,000) $ - $ -
Accounts payable 2,000 - -
---------------- ------- ------- -------
Net cash used in operating
activities - - -
Change in cash for period - - -
Cash, beginning of period - - -
- ------------------------- -------- ------- -------
Cash, end of period $ - $ - $ -
=================== ======== ======= =======
<PAGE>
Page 27
STRAND CAPITAL CORPORATION
(A Washington Corporation)
(A development stage company)
Statement of Shareholders' Equity (Deficit)
Year ended September 30, 1999,
and year ended September 30, 1998 and September 30, 1997
(U.S. DOLLARS)
Common shares Total
Accumulated Shareholders'
Shares Amount (Deficit) Equity
------ ------ --------- ------
(Deficit)
--------
Balance September 30, 1996 1,000 $ 1,000 - $ 1,000
Net loss - - - -
- -------- ----- ------ ------- -------
Balance at September 30, 1997 1,000 1,000 - 1,000
Net loss - - - -
- -------- ----- ------ ------- -------
Balance at September 30, 1998 1,000 1,000 - 1,000
Net loss - - (2,000) (2,000)
- -------- ----- ------ ------- -------
Balance at September 30, 1999 1,000 $ 1,000 $(2,000) $(1,000)
============================= ===== ====== ======= =======
<PAGE>
Page 28
STRAND CAPITAL CORPORATION
(A Washington Corporation)
(A development stage company)
Notes to Financial Statements
Year ended September 30, 1999
(U.S. DOLLARS)
1. Continuing operations
Strand Capital Corporation was incorporated on April 4, 1995 in the State
of Washington, U.S.A.
The Company has negative working capital and a deficit. The ability for
the Company to continue as a going concern is dependent upon its ability to
obtain adequate financing to reach profitable levels of operations. It is not
possible to predict whether financing efforts will be successful or if the
Company will attain profitable levels of operations.
2. Summary of significant accounting policies
These financial statements have been prepared in accordance with generally
accepted accounting principles in the United States and reflect the following
significant accounting principles:
a. Estimates and assumptions
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make 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 amount
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
b. Earnings (loss) per common share
In February, 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings Per Share (SFAS 128), which established new standards for
computing and presenting earnings per share effective for fiscal years ending
after December 15, 1997. With SFAS 128, primary earnings per share is replaced
by basic earnings per share, which is computed by dividing income available to
common shareholders by the weighted average number of shares outstanding for the
period. In addition, SFAS 128 requires the presentation of diluted earnings per
share, which includes the potential dilution that could occur if dilutive
securities were exercised or converted into common stock. The computation of
diluted EPS does not assume the conversion or exercise of securities if their
effect is anti-dilutive. Common equivalent shares consist of the common shares
issuable upon the conversion of the convertible loan notes and special warrants
<PAGE>
Page 29
(using the if-converted method) and incremental shares issuable upon the
exercise of stock options and share purchase warrants ( using the treasury stock
method).
c. Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits in banks and highly
liquid investments with an original maturity of three months or less.
2. Income taxes
The Company has net operating losses which may give rise to future tax benefits
of approximately $2,000 as of September 30, 1999. To the extent not used, net
operating loss carry forwards expire in varying amounts beginning in the year
2014. Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No.109 (SFAS 109). Under this method, deferred income
taxes are determined based on differences between the tax basis of assets and
liabilities and their financial reporting amounts at each year end, and are
measured based on enacted tax rates and laws that will be in effect when the
differences are expected to reverse. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be realized.
No provision for income taxes is included in the statement due to its immaterial
amount.
<PAGE>
Page 30
PART III
ITEMS 1&2 INDEX TO AND DESCRIPTION OF EXHIBITS
Exhibit
2(1) Certificate of Incorporation
2(2) Certificate of Amendment to the Articles of Incorporation
2(3) Articles
<PAGE>
Page 32
SIGNATURE
Pursuant to the requirements of the Securities Act of 1934, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form 10SB and has duly caused
this Registration Statement to be signed on its behalf by the undersigned
hereunto duly authorized in the City of Vancouver, on the 3rd day of December,
1999.
CAPSTRA CAPITAL CORP.
(Registrant)
By: /s/ John Mackay
---------------------
John Mackay, President and Director
<PAGE>
Exhibit 2(1)
THE SEAL OF THE STATE OF WASHINGTON
1889
STATE OF WASHINGTON SECRETARY OF STATE
I, Ralph Munro, Secretary of State of the State of Washington and custodian of
its seal, hereby issue this
CERTIFICATE OF INCORPORATION
to
STRAND CAPITAL CORPORATION
a Washington Profit corporation. Articles of Incorporation were filed for
record in this office on the date indicated below:
U.B.I. Number 601 631 026 Date: April 4, 1995
THE SEAL OF THE STATE OF WASHINGTON
1889 Given under my hand and the seal of
the State of Washington, at Olympia,
the State Capitol
/s/Ralph Munro
------------------------------------
Ralph Munro, Secretary of State
2-511574-2
SSF 57
<PAGE>
Exhibit 2(2)
SEAL OF THE STATE OF WASHINGTON WASHINGTON
Ralph Munro, Secretary of State PROFIT CORPORATION
(Per Chapter 23B, 10RCW)
- -Please PRINT or TYPE in black ink FEE $30
- -Sign, date and return original AND ONE COPY to:
CORPORATIONS DIVISION EXPEDITED(24-HOUR) SERVICE AVAILABLE-$20 PER
505 E. UNION - PO BOX 40234 ENTITY INCLUDE FEE AND WRITE "EXPEDITE" IN
OLYMPIA, WA 98504-0234 BOLD LETTERS ON THE OUTSIDE OF THE ENVELOPE
- -BE SURE TO INCLUDE FILING FEE. Checks FOR OFFICE USE ONLY FILED
should be made payable to Filed: / / STATE OF WASHINGTON
"Secretary of State" Dec 3 1999
Ralph Munro
Secretary of State
IMPORTANT! Person to contact about this Daytime Phone Number(with area code)
filing
- --------------------------------------------------------------------------------
CT CORPORATION SYSTEMS, ATT: Jack Caskey (206) 621-8813
- --------------------------------------------------------------------------------
AMENDMENT TO ARTICLES OF INCORPORATION
- --------------------------------------------------------------------------------
NAME OF CORPORATION (As currently recorded with the Office of the Secretary
of State)
STRAND CAPITAL CORPORATION
- --------------------------------------------------------------------------------
USI NUMBER CORPORATION NUMBER AMENDMENT TO ARTICLES OF INCORPORATION WERE
(if known) ADOPTED ON
601 631 026 2-511574-2 Date: October 21, 1999
- --------------------------------------------------------------------------------
EFFECTIVE DATE (Specified effective date may be up to 30 days AFTER receipt of
OF ARTICLES OF the document by the Secretary of State)
AMENDMENT Specific Date: X Upon filing by the Secretary of State
- --------------------------------------------------------------------------------
ARTICLES OF AMENDMENT WERE ADOPTED BY (Please check one of the following)
Incorporators. Shareholders action was not required
Board of Directors. Shareholders action was not required
X Duly approved shareholder action in accordance with Chapter 23B.10RCW
- --------------------------------------------------------------------------------
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AMENDMENTS TO THE ARTICLES OF INCORPORATION ARE AS FOLLOWS
If amendment provides for an exchange, reclassification, or cancellation of
issued shares, provisions for implementing the amendment must be included. If
necessary, attach additional amendments for information.
RESOLVED, that the Articles of Incorporation of STRAND CAPITAL CORPORATION be
amended by changing the First Article thereof so that, the said Article shall be
read as follows:
The name of the corporation is Capstra Capital Corp.
BE IT FURTHER RESOLVED that the Certificate of Incorporation of STRAND CAPITAL
CORPORATION be amended by changing the Fourth Article thereof so that, as
amended, the said Articles shall be and read as follows:
AUTHORIZED STOCK: The authorized shares of stock of this corporation
shall consist of 5,000,000,000 shares of non-par voting stock, all one
class. There shall be no other class or shares of stock in this
corporation.
BE IT FURTHER RESOLVED that the amendments herein certified becoming effective
and without further action on the part of the Corporation or its stockholders,
each of the currently outstanding shares of Common Stock shall be automatically
converted and split into Five Hundred (500) shares of Common Stock with the
result that the Corporation shall have 5,000,000 shares of issued and
outstanding Common Stock. Upon the amendments herein certified becoming
effective, each certificate representing shares of Common Stock theretofore
issued and outstanding shall be deemed to represent a number of shares of
Common Stock equal to the number of shares of Common Stock formerly represented
by such certificate multiplied by Five Hundred (500) shares and such shares
shall be deemed duly authorized, validly issued, fully paid and non-assessable;
and the holder of record of each such certificate shall be entitled to receive
a new certificate, representing a number of shares of Common Stock equal to the
number of shares of Common Stock formerly represented by such certificate
multiplied by 500.
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SIGNATURE OF OFFICER
This document is hereby executed under penalties of perjury, and is, to the
best of my knowledge, true and correct.
/s/R. Saunders Rob Saunders Vice Pres 11/19/99
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Signature of Officer Printed Name Date
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INFORMATION AND ASSISTANCE - 360/753-7115(TDD-360/753-1485)
<PAGE>
Exhibit 2(3)
Page 1
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Check - 04/03/1995-9041
FILED
STATE OF
WASHINGTON
APR 0 4 1995
RALPH MUNRO
SECRETARY OF STATE
ARTICLES OF INCORPORATION
OF
STRAND CAPITAL CORPORATION
The undersigned, being over the age of eighteen (18) years, for the
purpose of forming a corporation under the Washington Business Corporation Act,
hereby certifies and adopts in duplicate the following Articles of
Incorporation.
ARTICLE I.
NAME: The name of this corporation shall be "STRAND CAPITAL CORPORATION"
and its existence shall be perpetual.
ARTICLE II.
PURPOSES:
Section 1. This corporation's primary purpose is to engage in real estate
development and investment opportunities.
Section 2. To engage in any business, trade or activity which may be
lawfully conducted by a corporation organized under the Washington Business
Corporation Act.
Section 3. To engage in all such activities as are incidental or conducive
to the attainment of the purposes of this corporation, or any of them, and to
exercise any and all powers authorized or permitted to be done by a corporation
under any laws that may be now or hereafter applicable to this corporation.
The foregoing clause of this Article II shall be construed as purposes and
powers, and the matters expressed in this clause shall in no way be limited or
restricted by reference to or inference from the terms of any other clauses, but
shall be regarded as independent purposes and powers; and nothing contained in
this clause shall be deemed in any way to limit or exclude any power, right, or
privilege given to this corporation by law or otherwise.
J. RICHARD MANNING
ATTORNEY AT LAW
925 LOGAN BUILDING
SEATTLE. WASHINGTON 98101
(206) 623-6302
FAX (206) 624-3865
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ARTICLE III.
REGISTERED & PRINCIPAL OFFICE/REGISTERED AGENT:
Section 1. For purposes of RCW 23B.05.010, the Registered Of f ice and the
Registered Agent of the corporation are: J. Richard Manning, 925 Logan Building,
500 Union Street, Seattle, Washington 98101, telephone (206)623-6302.
Section 2. The Principal Office of the corporation is 1769 Ocean Park Road,
White Rock, British Columbia V4A 2M1, telephone (604)541-0262.
ARTICLE IV.
AUTHORIZED STOCK: The authorized shares of stock of this corporation shall
consist of 1,000,000 shares of non-par voting stock, all one class. There shall
be no other class or shares of stock in this corporation.
ARTICLE V.
PRE-EMPTIVE RIGHTS: The shareholders of the corporation will be accorded
preemptive rights in the acquisition of unissued shares.
ARTICLE VI.
CUMULATIVE VOTING: Each shareholder entitled to vote at any election for
directors shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many persons as there are directors to be elected and
for whose election he has a right to vote, or cumulate his votes by giving as
many votes as the number of such directors multiplied by the number of his
shares shall equal, or by distributing such votes on the same principle among
any number of candidates.
ARTICLE VII.
CONTRACTS IN WHICH DIRECTORS HAVE INTEREST: Any contract or other
transaction between this corporation and any corporation, firm, association, or
other entity, of which one or more of its
J. RICHARD MANNING
ATTORNEY AT LAW
925 LOGAN BUILDING
SEATTLE. WASHINGTON 98101
(206) 623-6302
FAX (206) 624-3865
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directors are stockholders, members, directors, officers, or, employees, or in
which they are interested, shall be valid for all purposes, notwithstanding the
presence of such director or directors at the meeting of the Board of
Directors which acts upon or in reference to such contract or transaction
and notwithstanding his or their participation in such action, by voting or
otherwise, even though his or their presence or vote, or both, might have
been necessary to obligate this corporation upon such contract or transaction,
PROVIDED, that the fact of such interest shall be disclosed to or known by the
directors acting on such contract or transaction.
ARTICLE VIII.
DIRECTORS: The number of directors of this corporation shall be fixed by
the Bylaws and may be increased or decreased from time to time in the manner
specified. The initial Board of Directors shall consist of 2 directors who shall
be elected at the initial meeting of shareholders which shall be held
immediately following receipt of the filed Articles of Incorporation. Such
persons shall serve as directors until the first annual meeting of shareholders,
and until their successors are elected and qualified, unless they resign or are
removed.
ARTICLE IX.
GENERAL PROVISIONS: Section 1.The Board of Directors shall have full power
to adopt, alter, amend or repeal the Bylaws, or adopt new Bylaws. Nothing herein
shall deny the concurrent power of the shareholders to adopt, alter, amend, or
repeal the Bylaws.
Section 2. This corporation reserves the right to amend, alter, change or
repeal any provisions contained in its Articles of Incorporation in any manner
now or hereafter prescribed or permitted by statute. All rights of shareholders
of this corporation are granted subject to this reservation.
ARTICLE X.
CORPORATION DISTRIBUTIONS; CORPORATE DEALINGS IN OWN SHARES: The
corporation shall have the right to make distributions, in cash or property, and
to purchase, take, receive or otherwise acquire,
J. RICHARD MANNING
ATTORNEY AT LAW
925 LOGAN BUILDING
SEATTLE. WASHINGTON 98101
(206) 623-6302
FAX (206) 624-3865
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hold, own, pledge, transfer or dispose of its own shares, from capital surplus
available therefore to the extent that such surplus is not reserved or
restricted for some other purpose.
ARTICLE XI.
INDEMNIFICATION OF DIRECTORS AND OFFICERS: Each director or officer now or
hereafter -serving the corporation and each person who at the request of or on
behalf of the corporation is now serving or hereafter serves as a director or
officer of any other corporation, and the respective heirs, executors and
administrator of each of them, shall be indemnified by the corporation against
all costs, expenses, judgments, and liabilities, including attorney's fees,
reasonably incurred by or imposed upon him in connection with or resulting from
any action, suit or proceeding, civil or criminal, in which he is or may be made
a party by reason or his being or having been such director or officer of by
reason of any action alleged to have been taken or omitted by him as such
director or officer whether or not he is a director or officer at the time of
incurring such costs, expenses, judgments, and liabilities, except in relation
to matters as to which he shall be finally adjudged, without right of further
appeal in such action, suit or proceeding, to have been liable for willful
misconduct in the performance of his duty as such director or officer. Such
indemnification shall be made with respect to adjudications other than on the
merits and shall extend to settlements and compromises.
The foregoing right of indemnification shall not be exclusive of other
rights to which such director or officer may be entitled as a matter of law.
This right of indemnification may be either limited or expanded (prospectively
only) by the proper adoption, alteration, amendment or repeal of the Bylaws of
the corporation through proper action of the Board of Directors of the
corporation.
ARTICLE XII.
INCORPORATOR: The name and address of the Incorporator is:
James E. Billingsley
President & Incorporator
1769 Ocean Park Road
White Rock, B.C. V4A 3M1
J. RICHARD MANNING
ATTORNEY AT LAW
925 LOGAN BUILDING
SEATTLE. WASHINGTON 98101
(206) 623-6302
FAX (206) 624-3865
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IN WITNESS WHEREOF, the incorporator named hereinabove has set
his hand in duplicate this 16 day of February, 1995.
---- ------------
/S/James E. Billingsley
--------------------------------------
JAMES E. BILLINGSLEY, PRESIDENT
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this 27th day of March 1995, before me, the undersigned, a notary
Public in and for the State of Washington, duly commissioned and sworn,
personally appeared JAMES E. BILLINGSLEY, to me known to be the individual
described in and who executed the foregoing Articles of Incorporation, and
acknowledged to me that he signed and sealed the said instrument as his free
and voluntary act and deed for the uses and purposes therein mentioned.
WITNESS my hand and official seal hereto affixed the day and year in this
certificate above written.
/s/ J. Richard Manning
---------------------------------------
NOTARY PUBLIC in and for the State
Washington, residing at Seattle.
My commission expires:
J. RICHARD MANNING
ATTORNEY AT LAW
925 LOGAN BUILDING
SEATTLE. WASHINGTON 98101
(206) 623-6302
FAX (206) 624-3865
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CONSENT TO SERVE AS REGISTERED AGENT
------------------------------------
I, J. RICHARD MANNING, hereby consent to serve as Registered Agent, in the
State of Washington, for the following corporation: STRAND CAPITAL CORPORATION.
I understand that as agent for the corporation, it will be my responsibility to
receive service of process in the name of the corporation; to forward all mail
to the corporation; and to immediately notify the office of the Secretary of
State in the event of my resignation, or of any changes in the registered office
address of the corporation for which I am agent.
February 16, 1995 /s/J. Richard Manning
- ----------------- -------------------------------
J. RICHARD MANNING, Registered Agent
925 Logan Bldg., 500 Union Street
Seattle, WA 98101
J. RICHARD MANNING
ATTORNEY AT LAW
925 LOGAN BUILDING
SEATTLE. WASHINGTON 98101
(206) 623-6302
FAX (206) 624-3865
<PAGE>
