SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS UNDER THE 1934 ACT
Aswan Investments, Inc.
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(Name of Small Business Issuer in Its Charter)
Nevada 87-0643635
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1403 East 900 South Salt Lake City, Utah 84105
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(Address of Principal Executive Offices) (Zip Code)
(801) 582-9609
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(Issuer's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Exchange Act: None
Securities to be registered under Section 12(g) of the Exchange Act:
Title of Each Class to be so registered:
Common Stock ($0.001 Par Value)
Name of Each Exchange on Which Each Class is to be Registered: N/A
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TABLE OF CONTENTS
PART I
Page No.
Item 1. Description of Business..........................................2
Item 2. Management's Discussion and Analysis or Plan of Operation........9
Item 3. Description of Property.........................................10
Item 4. Security Ownership of Certain Beneficial Owners and Management..10
Item 5. Directors, Executive Officers, Promoters and Control Persons....11
Item 6. Executive Compensation..........................................13
Item 7. Certain Relationships and Related Transactions..................14
Item 8. Description of Securities.......................................14
PART II
Item 1. Market for Common Equity and Related Stockholder Matters........15
Item 2. Legal Proceedings...............................................16
Item 3. Changes in and Disagreements with Accountants...................16
Item 4. Recent Sales of Unregistered Securities.........................16
Item 5. Indemnification of Directors and Officers.......................17
PART F/S
Consolidated Financial Statements - December 31, 1999 and 1998........F-1 to F-9
PART III
Item 1. Index to Exhibits...............................................21
Signatures....................................................................22
Item 2. Description of Exhibits.........................................23
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
History
Aswan Investments, Inc. (the "Company") was formed as a Nevada corporation on
December 10,1999, to engage in any lawful undertaking, including but not limited
to, transacting mergers and acquisitions. The Company has been in the
developmental stage since inception and has never engaged in any operational
activities, other than issuing shares to its shareholders. Accordingly, the
Company may be defined as a "shell" company whose sole purpose at this time is
to identify and complete a merger or acquisition with a private entity.
The Company is filing this registration statement on a voluntary basis since the
primary attraction of the Company as a merger partner or acquisition vehicle
will be its status as a reporting public company.
General
The Company is a shell corporation that seeks to identify and complete a merger
or acquisition with a private entity whose business presents an opportunity for
Company shareholders. The Company's management will review and evaluate business
ventures for possible mergers or acquisitions. The Company has not yet entered
into any agreement, nor does it have any commitment or understanding to enter
into or become engaged in a transaction, as of the date of this filing. Further,
the business objectives discussed herein are extremely general and are not
intended to restrict the discretion of the Company's management.
A decision to participate in a specific business opportunity will be made based
upon a Company analysis of the quality of the prospective business opportunity's
management and personnel, asset base, the anticipated acceptability of business'
products or marketing concepts, the merit of a business plan, and numerous other
factors which are difficult, if not impossible, to analyze using any objective
criteria.
The Company has no plans or arrangements proposed or under consideration for the
issuance or sale of additional securities, as of the filing date, prior to the
identification of a business opportunity. Consequently, management anticipates
that it will initially be able to participate in only one business opportunity,
due primarily to the Company's limited capital. The resultant lack of
diversification should be considered a substantial risk, as the Company will not
be able to offset potential losses from one venture against gains from another.
Selection of a Business
The Company anticipates that potential business opportunities will be referred
from various sources, including its officers and directors, professional
advisors, securities broker-dealers, venture capitalists, persons involved in
the financial community, and others who may present unsolicited proposals. The
Company will not engage in any general solicitation or advertising for a
business opportunity, and will rely on the personal contacts of its officers and
directors and their affiliates, as well as indirect associations with other
business and professional people. Management's reliance on "word of mouth" may
limit the number of potential business opportunities identified. While it is not
presently anticipated that the Company will engage unaffiliated professional
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firms specializing in business acquisitions or reorganizations, such firms may
be retained if management deems it in the best interest of the Company. Finder's
fees paid to professional acquisition firms could involve one-time cash
payments, payments based on a percentage of the business opportunity's revenues
or product sales volume, payments involving issuance of securities (including
those of the Company), or any combination of these or other compensation
arrangements. Consequently, the Company is unable to predict the cost of
utilizing such services.
The Company will not restrict its search to any particular business, industry,
or geographical location. Management reserves the right to evaluate and enter
into any type of business in any location. In seeking a business venture, the
decision of management will not be controlled by an attempt to take advantage of
any anticipated or perceived appeal of a specific industry, management group,
product, or industry, but will be based on the business objective of seeking
long-term capital appreciation. The Company may participate in a newly organized
business venture or in a more established business. Participation in a new
business venture entails greater risks since, in many instances, management of
such a venture may not have a proven track record; the eventual market for such
venture's product or services will likely not be established; and the
profitability of the venture will be untested and impossible to accurately
forecast. Should the Company participate in a more established venture that is
experiencing financial difficulty, risks may stem from the Company's inability
to generate sufficient funds to manage or reverse the circumstances causing such
financial problems.
The analysis of new businesses will be undertaken by or under the supervision of
the Company's officers and directors. In analyzing prospective businesses,
Company's management will consider, to the extent applicable, the available
technical, financial and managerial resources of any given business venture.
Management will also consider the nature of present and expected competition;
potential advances in research and development or exploration; the potential for
growth and expansion; the likelihood of sustaining a profit within given time
frames; the perceived public recognition or acceptance of products, services,
trade or service marks; name identification; and other relevant factors. The
Company anticipates that the results of operations of a specific business
venture may not necessarily be indicative of the potential for future earnings,
which may be impacted as the result of transitioning marketing approaches,
business expansion, modifying product emphasis, changing or substantially
augmenting management, and other factors.
The Company will analyze all pertinent factors and make a determination based on
a composite of available information, without reliance on any single factor. The
period within which the Company will decide to participate in a given business
venture cannot be predicted and will depend on certain factors, including the
time involved in identifying businesses, the time required for the Company to
complete its analysis of such businesses, the time required to prepare
appropriate documentation to effect a merger or acquisition, and other
circumstances.
Acquisition of a Business
The implementing of a structure that will effect any given business transaction,
may cause the Company to become party to a merger, consolidation, purchase and
sale of assets, purchase or sale of stock, or other reorganization involving
another corporation, joint venture, partnership or licensee. The exact structure
of the anticipated business transaction cannot yet be determined.
Notwithstanding the above, the Company does not intend to participate in a
business through the purchase of minority stock positions. Upon the completion
of a transaction, it is likely that the Company's present management will no
longer control Company affairs. Further, a majority or all of the Company's
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present directors may, as part of the terms of a prospective business
transaction, resign and be replaced by new directors without a vote of the
Company's shareholders. In connection with the Company's merger or acquisition
of a business venture, the present shareholders of the Company, including
officers and directors, may, as a negotiated part of the transaction, sell a
portion or all of the Company's Common Stock held by them at a significant
premium over their original investment in the Company. As a result of such
sales, affiliates of the entity participating in the business reorganization
with the Company would acquire a higher percentage of equity ownership in the
Company. Management does not intend to actively negotiate for or otherwise
require the purchase of all or any portion of its stock as a condition to or in
connection with any proposed merger or acquisition. Although the Company's
present shareholders did not acquire their shares of Common Stock with a view
towards any subsequent sale in connection with a business reorganization, it is
not unusual for affiliates of the entity participating in the reorganization to
negotiate to purchase shares held by the present shareholders in order to reduce
the amount of shares held by persons no longer affiliated with the Company and
thereby reduce the potential adverse impact on the public market in the
Company's common stock that could result from substantial sales of such shares
after the business reorganization. Public investors will not receive any portion
of the premium that may be paid in the foregoing circumstances. Furthermore, the
Company's shareholders may not be afforded an opportunity to approve or consent
to any particular stock buy-out transaction.
In the event sales of shares by present shareholders of the Company, including
officers and directors, is a negotiated part of a future merger or acquisition,
a conflict of interest may arise since directors will be negotiating for the
merger or acquisition on behalf of the Company and for the sale of their shares
for their own respective accounts. Where a business opportunity is well suited
for merger or acquisition by the Company, but affiliates of the prospective
business opportunity impose a condition that management sell their shares at a
price which is unacceptable to them, management may not sacrifice their
financial interest for the Company to complete the transaction. Where the
business opportunity is not well suited, but the price offered management for
their shares is high, management may be inclined to effect the acquisition in
order to realize a substantial gain on their shares in the Company. Management
has not adopted any policy for resolving the foregoing potential conflicts,
should they arise, and does not intend to obtain an independent appraisal to
determine whether any price that may be offered for their shares is fair.
Shareholders must rely, instead, on the obligation of management to fulfill its
fiduciary duty under state law to act in the best interests of the Company and
its shareholders.
The Company anticipates that any securities issued in any reorganization would
be issued in reliance on exemptions from registration under applicable federal
and state securities laws. However, in certain circumstances, as a negotiated
part of the transaction, the Company may agree to register securities either at
the time a given transaction is completed, or at specified time thereafter.
Although the terms of any registration rights and the number of securities, if
any, which may be registered cannot be determined at this time, it may be
expected that any registration of securities by the Company would entail
substantial expense to the Company.
The issuance of substantial additional securities and their potential sale into
any trading market which may develop in the Company's securities may have a
depressive effect on such market.
While the actual terms of a transaction to which the Company may be a party
cannot be determined at this time, it may be expected that the parties to any
business transaction will find it desirable to structure the merger or
acquisition as a so-called "tax-free" event under sections 351 or 368(a) of the
Internal Revenue Code of 1986 (the "Code"). In order to obtain tax-free
treatment under section 351 of the Code, it would be necessary for the owners of
the acquired business to own 80% or more of the voting stock of the surviving
entity. In such event, the shareholders of the Company would retain less than
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20% of the issued and outstanding shares of the surviving entity. Section
368(a)(1) of the Code provides for tax- free treatment of certain business
reorganizations between corporate entities where one corporation is merged with
or acquires the securities or assets of another corporation. Generally, the
Company expects to be the acquiring corporation in such a business
reorganization, and the tax-free status of the transaction will not depend on
the issuance of any specific amount of the Company's voting securities under
Section 368. The acquiring corporation will issue securities in such an amount
that the shareholders of the acquired corporation will hold 50% or more of the
voting stock of the surviving entity. Consequently, there is a substantial
possibility that the shareholders of the Company immediately prior to the
transaction would retain less than 50% of the issued and outstanding shares of
the surviving entity. Therefore, regardless of the form of the business
acquisition, it may be anticipated that stockholders immediately prior to the
transaction will experience a significant reduction in their percentage of
ownership in the Company.
Notwithstanding the fact that the Company is technically the merging or
acquiring entity in the foregoing circumstances, generally accepted accounting
principles will ordinarily require that such transaction be accounted for as if
the Company had been acquired by the other entity owning the business and,
therefore, will not permit a write-up in the carrying value of the assets of the
other company.
The manner in which the Company participates in a business will depend on the
nature of the business, the respective needs and desires of the Company and
other parties, the management of the business, and the relative negotiating
strength of the Company and such other management.
The Company will participate in a business only after the negotiation and
execution of appropriate written agreements. Although the terms of such
agreements cannot be determined at this time, generally such agreements will
require specific representations and warranties by all of the parties thereto,
will specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to such closing,
will outline the manner of bearing costs if the transaction is not closed, will
set forth remedies on default, and will include miscellaneous other terms.
Operation of Business After Acquisition
The Company's operation following its merger or acquisition of a business will
be dependent on the nature of the business and the interest acquired. The
Company is unable to determine at this time whether the Company will be in
control of the business or whether present management will be in control of the
Company following the acquisition. It may be expected that the business will
present various risks, which cannot be predicted at the present time.
Government Regulation
It is impossible to anticipate government regulations, if any, to which the
Company may be subject until it has acquired an interest in a business. The use
of assets to conduct a business which the Company may acquire could subject it
to environmental, public health and safety, land use, trade, or other
governmental regulations and state or local taxation. In selecting a business in
which to acquire an interest, management will endeavor to ascertain, to the
extent of the limited resources of the Company, the effects of such government
regulation on the prospective business of the Company. In certain circumstances,
however, such as the acquisition of an interest in a new or start-up business
activity, it may not be possible to predict with any degree of accuracy the
impact of government regulation. The inability to ascertain the effect of
government regulation on a prospective business activity will make the
acquisition of an interest in such business a higher risk.
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Competition
The Company will be involved in intense competition with other business
entities, many of which will have a competitive edge over the Company by virtue
of their stronger financial resources and prior experience in business. There is
no assurance that the Company will be successful in obtaining suitable business
opportunities.
Employees
The Company is a development stage company and currently has no employees.
Executive officers will devote only such time to the affairs of the Company as
they deem appropriate, which is estimated to be approximately 20 hours per month
per person. Management of the Company expects to use consultants, attorneys, and
accountants as necessary, and does not anticipate a need to engage any full-time
employees so long as it is identifying and evaluating businesses. The need for
employees and their availability will be addressed in connection with a decision
whether or not to acquire or participate in a specific business venture.
RISK FACTORS
No Operating History, Revenue And Assets
The Company has no operating history nor any revenues or earnings from
operations. The Company has little or no tangible assets or financial resources.
The Company will, in all likelihood, continue to 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 profitable business opportunity. There is no assurance that
the Company can identify such a business opportunity or consummate such a
business combination.
Speculative Nature Of 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
business opportunity. While management intends to seek business combination(s)
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 may be
dependent upon management of the successor business and numerous other factors
presently beyond the Company's control.
State Blue Sky Registration; Restricted Resales Of The Securities
Transferability of the shares of Common Stock of the Company is very limited
because a significant number of states have enacted regulations pursuant to
their securities or so-called "blue sky" laws restricting or, in many instances,
prohibiting, the initial sale and subsequent resale of securities of "blank
check" companies such as the Company within that state. In addition, many
states, while not specifically prohibiting or restricting "blank check"
companies, would not register the securities of the Company for sale or resale
in their states. Because of these regulations, the Company currently has no plan
to register any securities of the Company with any state. To ensure that any
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state laws are not violated through the reales of the securities of the Company,
the Company will refuse to register the transfer of any securities of the
Company, to residents of any state, which prohibit such resale or if no
exemption is available for such resale. It is not anticipated that a secondary
trading market for the Company's securities will develop in any state until the
completion of a business combination, if at all.
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, joint ventures and acquisitions of small private
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 desirable 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 in seeking merger or acquisition candidates with numerous other small
public companies.
No Agreement For Business Combination Or Other Transaction - No Standards For
Business Combination
The Company has no arrangement, agreement or understanding with respect to
engaging in a merger with, joint venture with or acquisition of, a private or
public entity. There can be no assurance 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 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 business opportunity to have achieved,
and without which the Company would not consider a business combination in any
form with such business opportunity. Accordingly, the Company may enter into a
business combination with a business opportunity having no significant operating
history, losses, limited or no potential for earnings, limited assets, negative
net worth or other negative characteristics.
Continued Management Control, Limited Time Availability
While seeking a business combination, Ruairidh Campbell, President of the
Company and Richard Surber, Secretary and Treasurer of the Company anticipate
devoting up to twenty hours each per month to the business of the Company.
Ruairidh Campbell and Richard Surber will be the only individuals responsible
for conducting the day to day operations of the company including searches,
evaluations, and negotiations with potential merger or acquisition candidates.
The Company has not entered into any written employment agreement with Ruairidh
Campbell or Richard Surber and is not expected to do so in the foreseeable
future. The Company has not obtained key man life insurance on Ruairidh Campbell
or Richard Surber. The loss of the services of Ruairidh Campbell or Richard
Surber would adversely affect development of the Company's business and its
likelihood of continuing operations.
Conflicts Of Interest - General
Ruairidh Campbell and Richard Surber may participate in business ventures which
could be deemed to compete directly with the Company. Ruairidh Campbell and
Richard Surber are serving as officers and directors of a number of other blank
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check companies. Additional conflicts of interest and non-arms length
transactions may also arise in the future in the event the Company's current and
future officers or directors are involved in the management of any firm with
which the Company transacts business. Management has adopted a policy that the
Company will not seek a merger with, or acquisition of, any entity in which
management serve as officers, directors or partners, or in which they or their
family members own or hold any ownership interest.
Lack Of Market Research Or Marketing Organization
The Company has neither conducted, nor have others made available to it, results
of market research indicating that market demand exists for the business
strategy contemplated by the Company. Moreover, the Company does not have, and
does not plan to establish, a marketing organization. Even in the event demand
is identified for a merger or acquisition contemplated by the Company, there is
no assurance the Company will be successful in completing any such business
combination.
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 a business
opportunity. Consequently, the Company's activities may be limited to those
engaged in by the business opportunity with which the Company merges 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.
Regulation
Although the Company will be subject to regulation under the Securities Exchange
Act of 1934, 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 would subject the Company to material
adverse consequences.
Probable Change In Control And Management
A business combination involving the issuance of the Company's Common Shares
will, in all likelihood, result in shareholders of a private company obtaining a
controlling interest in the Company. Any such business combination may require
management of the Company to sell or transfer all or a portion of the Company's
Common Shares held by them, or resign as members of the Board of Directors of
the Company. The resulting change in control of the Company could result in the
removal of Ruairidh Campbell and Richard Surber and a corresponding reduction in
or elimination of his participation in the future affairs of the Company.
Potential Reduction Of Percentage Share Ownership Following Business Combination
The Company's primary plan of operation is based upon a business combination
with a private concern which, depending on the terms of merger or acquisition,
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may result in the Company issuing securities to shareholders of any such private
company. The issuance of previously authorized and unissued Common Shares of the
Company would result in reduction in percentage of shares owned by present and
prospective shareholders of the Company and may result in a change in control or
management of the Company.
Disadvantages Of Blank Check Offering
The Company may enter into a business combination with an entity that desires to
establish a public trading market for its shares. A business opportunity 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 adverse
consequences may include, but are not limited to, time delays of the
registration process, the significant expenses incurred in a public offering,
loss of voting control to public shareholders.
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 entity;
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 a transaction.
Requirement Of Audited Financial Statements May Disqualify Business
Opportunities
Section 13 and 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), require companies subject thereto to provide certain information about
significant acquisitions, including audited financial statements for the
company acquired, covering one, two or three years, depending on the relative
size of the acquisition. The time and additional costs that may be incurred by
some target entities to prepare such statements may preclude consummation of an
otherwise desirable acquisition by the Company. Acquisition prospects that do
not have or are unable to obtain the required audited financial statements may
not be appropriate for acquisition so long as the reporting requirements of the
1934 Act are applicable.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operations
The Company's plan of operation for the coming year, as discussed above, is to
identify and acquire a favorable business opportunity. The Company does not plan
to limit its options to any particular industry, but will evaluate each
opportunity on its merits. The Company anticipates that its owners, affiliates,
and consultants will provide it with sufficient capital to continue operations
until the end of the first quarter of 2000, but there can be no assurance that
this expectation will be fully realized.
Results of Operations
Fiscal Year ending December 31, 1999.
The Company had no revenue from continuing operations for the period from
inception through period ended December 31, 1999.
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General and administrative expenses for the period ended December 31, 1999 were
$910. General and administrative expenses for 1999 consisted of expenses to keep
the Company in good corporate standing, fees to Transfer Agents, and minimal
expenses for office and bank account administration.
The Company had a net loss of $910 for the period ended December 31, 1999. The
Company's net losses for fiscal 1999 were attributable to general and
administrative expenses.
The Company does not expect to generate any meaningful revenue or incur
operating expenses unless and until it acquires an interest in an operating
company.
Liquidity and Capital Resources
As of February 3, 2000 the Company had no major assets. The Company is currently
authorized to issue 45,000,000 shares of common stock, of which 6,044,500 shares
are issued and outstanding, and 5,000,000 shares of preferred stock, none of
which is outstanding as of February 3, 2000. Management is hopeful that becoming
a reporting company will increase the number of prospective business ventures
that may be available to the Company. Management believes that the Company has
sufficient resources to meet the anticipated needs of the Company's operations
through at least the calendar year ending December 31, 2000. The Company
anticipates that its major shareholders will contribute sufficient funds to
satisfy the cash needs of the Company through calendar year ending December 31,
2000. However, there can be no assurances to that effect, as the Company has no
revenues and the Company's need for capital may change dramatically if it
acquires an interest in a business opportunity during that period.
ITEM 3. DESCRIPTION OF PROPERTY
The Company currently maintains its offices at 1403 East 900 South, Salt Lake
City, Utah 84105. The Company pays no rent for the use of this address. The
Company does not believe that it will need to maintain an office at any time in
the foreseeable future in order to carry out the plan of operation described
herein.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of January 31, 2000, the number and
percentage of outstanding shares of common stock which, according to the
information supplied to the Company, were beneficially owned by (i) each current
director of the Company, (ii) each current executive officer of the Company,
(iii) all current directors and executive officers of the Company as a group,
and (iv) each person who, to the knowledge of the Company, is the beneficial
owner of more than 5% of the Company's outstanding common stock. Except as
otherwise indicated, the persons named in the table below have sole voting and
dispositive power with respect to all shares beneficially owned, subject to
community property laws (where applicable).
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
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<TABLE>
<CAPTION>
Title of Class Name And Address of Amount And Nature of Percent of Class
Beneficial Owner Beneficial Ownership
<S> <C> <C> <C>
Common Ruairidh Campbell, President 3,000,000 49.7%
Stock 3310 Werner Avenue
Austin, Texas 78722
Common Richard Surber, Secretary and 3,000,000 49.7%
Stock Treasurer
268 West 400 South, Suite 300
Salt Lake City, Utah 84101
Common All Executive Officers and 6,000,000 99.4%
Stock Directors as a Group
</TABLE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
The following individuals constitute all of the Company's Executive Officers and
Directors as of February 3, 2000:
Name Age Position
Ruairidh Campbell 36 President and Director
Richard D. Surber 26 Secretary, Treasurer and Director
All executive officers are elected by the Board and hold office until the next
Annual Meeting of stockholders and until their successors are elected and
qualify.
Ruairidh Campbell, 36, President/CEO and Director. Mr. Campbell began
his one year term as the Company's President and a Director at its inception in
1999. Mr. Campbell also performs the duties typically performed by the Chief
Financial Officer. Mr. Campbell has a depth of experience managing and financing
public companies, particularly through start-up phases. Mr Campbell earned a
B.A. in History from the University of Texas at Austin and a Doctor of
Jurisprudence from the University of Utah College of Law. Mr. Campbell is also
the President, CEO and Chairman of the Board of NovaMed, Inc, Bren-Mar
Resources, Inc, and Allied Resources, Inc. all of which are publicly traded
companies. Further, Mr. Campbell is the President and Director of certain
private shell companies that intend to become fully reporting public companies.
Richard Surber, 26, Secretary, Treasurer and Director. Mr. Surber began
his one year term as the Company's Secretary and a Director at its inception in
1999. Mr. Surber has substantial experience as a professional consultant to both
public and private companies. Mr. Surber's experience includes managing and
financing public companies, particularly through start-up phases. Mr. Surber
earned a B.S. in Finance from the University of Utah and earned a Doctor of
Jurisprudence from the University of Utah College of Law. Mr. Surber is also the
President, CEO and a Director of CyberAmerica Corporation and Golden Opportunity
Development Corporation (a wholly owned subsidiary of CyberAmerica Corporation)
which owns and operates a motel. All of these are publicly traded companies.
Further, Mr. Surber is the President and a Director of several private shell
companies who intend to become fully reporting public companies.
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The SEC reporting shell companies that Ruairidh Campbell is serving as President
and Director are listed in the following table:
CORPORATION NAME FORM TYPE FILE NUMBER DATE OF FILING
Alexandria Holdings, Inc. 10-SB None as of 2/3/00 February 3, 2000
Aswan Investments, Inc. 10-SB None as of 2/3/00 February 3, 2000
Cairo Acquisitions, Inc. 10-SB None as of 2/3/00 February 3, 2000
The SEC reporting shell companies that Richard Surber is serving an Officer and
Director are listed in the following table:
CORPORATION NAME FORM TYPE FILE NUMBER DATE OF FILING
Alexandria Holdings, Inc. 10-SB None as of 2/3/00 February 3, 2000
Aswan Investments, Inc. 10-SB None as of 2/3/00 February 3, 2000
Cairo Acquisitions, Inc. 10-SB None as of 2/3/00 February 3, 2000
Cyberbotanical, Inc. 10-SB None as of 2/3/00 February 3, 2000
Vaxcel, Inc. S-4 333-19125 March 26, 1997
Kelly's Coffee, Inc. S-18 33-2128-D September 16, 1988
Conflicts Of Interest
Members of the Company's management are associated with other firms involved in
a range of business activities. Consequently, there are potential inherent
conflicts of interest in their acting as Officers and Directors of the Company.
Insofar as the Officers and Directors are engaged in other business activities,
management anticipates it will devote only a relatively minor amount of time to
the Company's affairs.
The Officers and Directors of the Company are and may in the future become
shareholders, officers or directors of other companies that may be formed for
the purpose of engaging in business activities similar to those conducted by the
Company. Accordingly, additional direct conflicts of interest may arise in the
future with respect to such individuals acting on behalf of the Company or other
entities. Moreover, additional conflicts of interest may arise with respect to
opportunities which come to the attention of such individuals in the performance
of their duties or otherwise. The Company does not currently 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.
The Officers and Directors are, so long as they are Officers or Directors of the
Company, subject to the restriction that all opportunities contemplated by the
Company's plan of operation which come to their attention, either in the
performance of their duties or in any other manner, will be considered
opportunities of, and made available to the Company and the companies that they
are affiliated with on an equal basis. A breach of this requirement will be a
breach of the fiduciary duties of the officer or director. If the Company or the
companies in which the Officers or Directors are affiliated with both desire to
take advantage of an opportunity, then such Officer or Director would abstain
12
<PAGE>
from negotiating and voting upon the opportunity. However, the Officer and
Director may still take advantage of an opportunity if the Company should
decline to do so. Except as set forth above, the Company has not adopted any
other conflict of interest policy with respect to such transactions.
Ruairidh Campbell, President of the Company and Richard Surber, Secretary of the
Company will be compensated in the form of shares of common stock of the Company
upon completion of an acquisition or merger. It is possible that such
compensation may become a factor in negotiations and present a conflict of
interest. Ruairidh Campbell and Richard Surber will use their best efforts to
resolve equitably any conflicts that might result during negotiations for an
acquisition or merger.
There are no agreements or understandings for Ruairidh Campbell or Richard
Surber to resign at the request of another person. Ruairidh Campbell and Richard
Surber are not acting on behalf of or will act at the direction of any other
person, except at the time of a acquisition or merger and at the request of the
controlling persons of the acquisition or merger candidate. The Company expects
that the controlling persons of a acquisition or merger candidate would ask all
of the current Officers and Directors to resign at the time of the acquisition
or merger as any such transaction would change control of the Company.
ITEM 6. EXECUTIVE COMPENSATION
No cash compensation was paid to any of the Company's executive officers during
the fiscal year ended December 31, 1999. No cash compensation has been paid to
any of the executive officers since the beginning of 2000, and it is not
expected any such compensation will be paid during the remainder of 2000.
The Company has no agreement or understanding, express or implied, with any
officer, director, or principal stockholder, or their affiliates or associates,
regarding employment with the Company or compensation for services. The Company
has no plan, agreement, or understanding, express or implied, with any officer,
director, or principal stockholder, or their affiliates or associates, regarding
the issuance to such persons of any shares of the Company's authorized and
unissued common stock. There is no understanding between the Company and any of
its present stockholders regarding the sale of a portion or all of the common
stock currently held by them in connection with any future participation by the
Company in a business. There are no other plans, understandings, or arrangements
whereby any of the Company's officers, directors, or principal stockholders, or
any of their affiliates or associates, would receive funds, stock, or other
assets in connection with the Company's participation in a business. No advances
have been made or contemplated by the Company to any of its officers, directors,
or principal stockholders, or any of their affiliates or associates.
There is no policy that prevents management from adopting a plan or agreement in
the future that would provide for cash or stock based compensation for services
rendered to the Company.
Upon the merger or acquisition of a business, it is possible that current
management will resign and be replaced by persons associated with the business
acquired, particularly if the Company participates in a business by effecting a
stock exchange, merger, or consolidation as discussed under the "BUSINESS"
heading above. In the event that any member of current management remains after
effecting a business acquisition, that member's time commitment and compensation
will likely be adjusted based on the nature and location of such business and
the services required, which cannot now be foreseen.
13
<PAGE>
Compensation of Directors
The Company's Directors are not compensated for their services as Directors of
the Company.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 10, 1999 the Company issued 1,000,000 shares of Common Stock to
Ruairidh Campbell (500,000) and Richard Surber (500,000), Officers and Directors
of the Company, at par value of $0.001 for a total of $1,000.
On January 12, 2000, the Company issued 5,000,000 shares of Common Stock to
Ruairidh Campbell (2,500,000) and Richard Surber (2,500,000) valued at par
($0.001) in exchange for services rendered.
ITEM 8. DESCRIPTION OF SECURITIES
The Company is authorized to issue 45,000,000 shares of common stock, par value
$0.001 per share, of which 6,044,500 shares are issued and outstanding as of
February 3, 2000. The Company is also authorized to issue 5,000,000 shares of
preferred stock, par value $0.001 per share, of which none of shares are issued
and outstanding as of February 3, 2000. Holders of both the common and preferred
stock are entitled to one vote per share on each matter submitted to a vote at
any meeting of stockholders. Neither the holders of common stock nor of
preferred stock have cumulative voting rights. The Company's Board of Directors
has authority, without action by the Company's stockholders, to issue all or any
portion of the authorized but unissued shares of common stock, which would
reduce the percentage ownership in the Company of its stockholders and which may
dilute the book value of the common stock. Likewise, the Company's Board of
Directors has authority, without action by the holders of preferred stock, to
issue all or any portion of the authorized but unissued shares of preferred
stock so long as such shares are on a parity with or junior to the rights of the
preferred stock, which would reduce the percentage ownership of the preferred
stock holders and which may dilute the book value of the stock.
Holders of either the Company's common or preferred stock have no pre-emptive
rights to acquire additional shares of stock. The common stock is not subject to
redemption and carries no subscription or conversion rights. In the event of
liquidation of the Company, the shares of common stock are entitled to share
equally in corporate assets after satisfaction of all liabilities. Additional
rights, if any, for holders of preferred stock, in the event of liquidation are
yet to be determined by the Board of Directors.
Holders of the common stock are entitled to receive such dividends as the Board
of Directors may from time to time declare out of funds legally available for
the payment of dividends. The rights of holders of the preferred stock to
receive dividends, if any, are yet to be determined by the Board of Directors.
The Company has not paid dividends on either its common stock or its preferred
stock, and it does not anticipate that it will pay dividends in the foreseeable
future.
Dividend, Voting and Preemption Rights
The Company has two classes of authorized shares: $.001 par value common stock
and $.001 par value preferred stock. Holders of common stock are entitled to
receive ratably such dividends as may be declared by the Board of Directors out
of funds legally available therefor. The rights of holders of preferred stock,
14
<PAGE>
if any, to receive a dividend, are yet to be determined by the Board of
Directors. The Company has not paid dividends on either its common stock or its
preferred stock, and it does not anticipate that it will pay dividends in the
foreseeable future. For more information on the Company's dividend policy, see
APart II. Item 1, Market Price of and Dividends on the Registrant's Common
Equity and Other Shareholder Matters."
Holders of both the Company's common are entitled to one vote for each share
held of record on all matters submitted to a vote of the security holders. The
rights of holders of preferred stock, if any, to vote on all matters submitted
to a vote of the security holders is yet to be determined by the Board of
Directors. The holders of common stock are not entitled to cumulative voting
rights.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS
The Company currently has no public trading market. The Company intends to file
a Form 15c-(2)(11) in an effort to obtain a listing on the NASD over the counter
bulletin board to create a public market upon this Form 10SB becoming effective.
Management believes that the creation of a public trading market for the
Company's securities would make the Company a more attractive acquisition or
merger candidate. However, there is no guarantee that the Company will obtain a
listing on the NASD over the counter bulletin board or that a public market for
the Company' securities will develop or, if such a market does develop, that it
will continue, even if a listing on the NASD over the counter bulletin board is
obtained.
Record Holders
As of February 3, 2000 there were seventy nine (79) shareholders of record
holding a total of 6,044,500 shares of Common Stock. The holders of the Common
Stock are entitled to one vote for each share held of record on all matters
submitted to a vote of stockholders. Holders of the Common Stock have no
preemptive rights and no right to convert their Common Stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
Common Stock.
Dividends
The Company has not declared any dividends since inception and does not
anticipate paying any dividends in the foreseeable future. The payment of
dividends is within the discretion of the Board of Directors and will depend on
the Company's earnings, capital requirements, financial condition, and other
relevant factors. There are no restrictions that currently limit the Company's
ability to pay dividends on its Common Stock other than those generally imposed
by applicable state law.
Penny Stock
Until the Company's shares qualify for inclusion in the Nasdaq system, the
trading of the Company's securities, if any, will be in the over-the-counter
markets which are commonly referred to as the "pink sheets" or on the OTC
Bulletin Board. As a result, an investor may find it more difficult to dispose
of, or to obtain accurate quotations as to the price of the securities offered.
Effective August 11, 1993, the Securities and Exchange Commission adopted Rule
15g-9, which established the definition of a "penny stock," for purposes
15
<PAGE>
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 stock in both public offering 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.
ITEM 2. LEGAL PROCEEDINGS
The Company is currently not a party to any legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Since inception, the Company has had no disagreements with its independent
accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On December 10, 1999 the Company issued 1,000,000 shares of Common Stock to
Ruairidh Campbell (500,000) & Richard Surber (500,000), Officers and Directors
of the Company, at par value of $0.001for a total of $1,000. The Company relied
on exemptions provided by Section 4(2) of the Securities Act of 1933, as
amended. The Company made this offering based on the following factors: (1) the
issuance was an isolated private transaction by the Company which did not
involve a public offering; (2) there were only two offerees who were a Officers
and Directors of the Company; (3) the offerees will not resell the stock but
will continue to hold it for at least one year; (4) there were no subsequent or
contemporaneous public offerings of the stock; (5) the stock was not broken down
into smaller denominations; and (6) the negotiations for the sale of the stock
took place directly between the offerees and the Company.
On December 16, 1999, the Company completed a private placement of 37,500 shares
of Common Stock to seventy five (75) non-U.S. persons at a purchase price of
$0.01 per share. The Company relied on exemptions provided by Regulation S of
the Securities Act of 1933, as amended, for the issuance of the 37,500 shares of
Common Stock to these non-U.S. persons. All of these shares are "restricted"
shares as defined by Regulation S under the Securities Act of 1933, as amended
(the "Act"). The 37,500 shares will only be eligible for sale in a public market
in compliance with the limitations imposed by Regulation S, Rule 144, or
otherwise, pursuant to the Act.
On January 12, 2000 the Company issued 5,007,000 shares of Common Stock to
Ruairidh Campbell (2,500,000), Richard Surber (2,500,000), Susan Santage (5000)
and Kevin Schillo (2000) valued at par ($0.001) for services rendered. The
16
<PAGE>
Company relied on the following facts in determining that Rule 701 was
available: (a) the shares were issued pursuant to a written compensatory benefit
plan issued by the Company, (b) the individual listed rendered bonafide services
not in connection with the offer or sale of securities in a capital raising
transaction, (c) the shares were issued pursuant to a written contract relating
to the issuance of shares paid as compensation for services rendered, and (d)
the amount of shares offered and sold in reliance on Rule 701 did not exceed
$500,000 and all securities sold in the last 12 months have not exceeded
$5,000,000.
In general, under Rule 144, a person (or persons whose shares are aggregated)
who has satisfied a one year holding period, under certain circumstances, may
sell within any three-month period a number of shares which does not exceed the
greater of one percent of the then outstanding Common Stock or the average
weekly trading volume during the four calendar weeks prior to such sale. Rule
144 also permits, under certain circumstances, the sale of shares without any
quantity limitation by a person who has satisfied a two- year holding period and
who is not, and has not been for the preceding three months, an affiliate of the
Company.
Regulation S provides generally that any offer or sale that occurs outside of
the United States is exempt from the registration requirements of the Securities
Act of 1933, provided that certain conditions are met. Regulation S has two safe
harbors. One safe harbor applies to offers and sales by issuers, securities
professionals involved in the distribution process pursuant to contract, their
respective affiliates, and persons acting on behalf of any of the foregoing (the
"issuer safe harbor"), and the other applies to resales by persons other than
the issuer, securities professionals involved in the distribution process
pursuant to contract, their respective affiliates (except certain officers and
directors), and persons acting on behalf of any of the forgoing (the "resale
safe harbor"). An offer, sale or resale of securities that satisfied all
conditions of the applicable safe harbor is deemed to be outside the United
States as required by Regulation S. The distribution compliance period for
shares sold in reliance on Regulation S is one year.
The Company has complied with the requirements of Regulation S by having no
directed selling efforts made in the United States, ensuring that each persons
is a non-U.S. person with address in a foreign country and having each persons
made representation to the Company certifying that he or she is not a U.S.
person and is not acquiring the Securities for the account or benefit of a U.S.
person other than persons who purchased Securities in transactions exempt from
the registration requirements of the Securities Act; and also agrees only to
sell the Securities in accordance with the registration provisions of the
Securities Act or an exemption therefrom, or in accordance with the provisions
of the Regulation.
The Company has obligations to ensure that any state laws are not violated
through the sale and resale of its securities. Ruairidh Campbell, President of
the Company, and Richard Surber, Secretary and Treasurer of the Company,
understood and agreed that the securities of the Company issued to them are
unregistered and restricted securities and may not be sold, transferred or
otherwise disposed of unless registered or qualified under applicable state
securities laws or an exemption therefrom is available.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws and section 78.751 of the Nevada Revised Statutes provide
for indemnification of the Company's officers and directors in certain
situations where they might otherwise personally incur liability, judgments,
penalties, fines and expenses in connection with a proceeding or lawsuit to
which they might become parties because of their position with the Company.
Section 78.751. Indemnification of officers, directors, employees and agents;
advancements of expenses, states the following:
17
<PAGE>
1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation,
by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good
faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal
action or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
2. A corporation may indemnify an person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him
in connection with the defense or settlement of the action or suit if
he acted in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to
which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable
to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the
action or suit was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances of
the case, the person is fairly and reasonable entitled to indemnity
for such expenses as the court deems proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in
subsections 1 and 2, or in defense of any claim, issue or
matter therein, he must be indemnified by the corporation
against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered
by a court or advanced pursuant to subsection 5, must be made
by the corporation only as authorized in the specific case
upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances. The
determination must be made:
(a) By the stockholders; (b) By the board of directors by
majority vote of a quorum consisting of directors who
were not parties to the act, suit or proceeding;
18
<PAGE>
(c) If a majority vote of a quorum consisting of directors
who were not parties to the act, suit or proceeding so
orders, by independent legal counsel in a written
opinion; or;
(d) If a quorum consisting of directors who were not
parties to the act, suit or proceeding cannot be
obtained, by independent legal counsel in a written
opinion.
5. The articles of incorporation, the bylaws or an agreement made by
the corporation may provide that the expenses of officers and
directors incurred in defending a civil or criminal action, suit
or proceeding must be paid by the corporation as they are
incurred and in advance of the final disposition of the action,
suit or proceeding, upon receipt of an undertaking by or on
behalf of the director or officer to repay the amount if it is
ultimately determined by a court of competent jurisdiction that
he is not entitled to be indemnified by the corporation. The
provision of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than
directors or officers may be entitled under any contract or
otherwise by law.
6. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled
under the articles of incorporation or any bylaw, agreement,
vote of stockholders or disinterested directors or
otherwise, for either an action in his official capacity or
an action in another capacity while holding his office,
except that indemnification, unless ordered by a court
pursuant to subsection 5, may not be made to or on behalf of
any director or officer if a final adjudication establishes
that his acts or omissions involved intentional misconduct,
fraud or a knowing violation of the law and was material to
the cause of action.
(b) Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the
heirs, executors and administrators of such a person.
To the extent that indemnification may be related to liability arising under the
Securities Act, the Securities and Exchange Commission takes the position that
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
19
<PAGE>
PART F/S
The Company's audited financial statements since inception for the fiscal year
ended December 31, 1999 are attached hereto as F-1 through F-9.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
20
<PAGE>
Aswan Investments, Inc
(A Development Stage Company)
Audited Financial Statements
December 31, 1999
<PAGE>
CONTENTS
Page
Independent Auditors' Report.................................................F-2
Balance Sheet................................................................F-3
Statement of Operations......................................................F-4
Statement of Stockholders' Equity............................................F-5
Statement of Cash Flows......................................................F-6
Notes to Financial Statements................................................F-7
F-1
<PAGE>
TANNER +CO.
675 EAST 500 SOUTH, SUITE 640
SALT LAKE CITY, UTAH 84102
PHONE: 801-532-7444
FAX: 801-532-4911
EMAIL [email protected]]
INDEPENDENT AUDITORS' REPORT
To the Stockholders' and
Board of Directors of
Aswan Investments, Inc
We have audited the accompanying balance sheet of Aswan Investments, Inc (a
development stage company), as of December 31, 1999 and the related statements
of operations and stockholders' equity, and cash flows for the period from
December 7, 1999 (date of inception) to December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Aswan Investments, Inc (a
development stage company), as of December 31, 1999 and the results of its
operations and its cash flows for the period from December 7, 1999 (date of
inception) to December 31, 1999, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's revenue generating activities are not in
place and the Company has incurred a loss. These conditions raise substantial
doubt about its ability to continue as a going concern. Management's plans
regarding those matters also are described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/
Tanner+Co.
Salt Lake City, Utah
January 19, 2000
F-2
<PAGE>
Aswan Investments, Inc
(A Development Stage Company)
Balance Sheet
December 31, 1999
- --------------------------------------------------------------------------------
Assets
Current assets - stock subscription receivable 465
------------------
- --------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current liabilities $ -
----------
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares
authorized, no shares issued or outstanding -
Common stock, $.001 par value, 45,000,000 shares
authorized, 1,035,500 shares issued and outstanding 1,038
Additional paid-in capital 337
Accumulated deficit (910)
----------
Total stockholders' equity 465
----------
$ 465
----------
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-3
<PAGE>
Aswan Investments, Inc
(A Development Stage Company)
Statement of Operations
December 7, 1999 (Date of Inception) to December 31, 1999
- --------------------------------------------------------------------------------
Revenues $ -
General and administrative costs 910
------------------
Net loss before income taxes (910)
Provision for income taxes -
------------------
Net loss $ (910)
------------------
Loss per common share - basic and diluted $ -
------------------
Weighted average common shares - basic and diluted 1,037,000
------------------
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-4
<PAGE>
Aswan Investments, Inc
(A Developmental Stage Company)
Statement of Stockholders' Equity
December 7, 1999 (Date of Inception) to December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional
----------------------------------------------------------------- Paid-in Accumlated
Shares Amount Shares Amount Capital Deficit Total
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 7, 1999 (date
of inception) - $ - - $ - $ - $ - $ -
Issuance of common stock for:
Cash - - 572,500 573 337 - 910
Stock subscription
receivable - - 465,000 465 - - 465
Net loss - - - - - (910) (910)
----------------------------------------------------------------------------------------------
Balance at December 31, 1999 - $ - 1,037,500 $ 1,038 $ 337 $ (910) $ 465
================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-5
<PAGE>
Aswan Investments, Inc
(A Development Stage Company)
Statement of Cash Flows
December 7, 1999 (Date of Inception) to December 31, 1999
- --------------------------------------------------------------------------------
Cash flows from operating activities -
net loss $ (910)
----------
Cash flows from investing activities -
----------
Cash flows from financing activities-
issuance of common stock 910
----------
Net increase in cash -
Cash, beginning of period -
----------
Cash, end of period $ -
==========
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-6
<PAGE>
Aswan Investments, Inc
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
- -------------------------------------------------------------------------------
1. Organization and Summary of Significant Accounting Policies
Organization
The Company was organized under the laws of the State of Nevada on
December 7, 1999 (date of inception). The Company has not commenced
planned principal operations. The Company proposes to seek business
ventures which will allow for long-term growth. Further, the Company is
considered a development stage company as defined in SFAS No. 7 and has
not, thus far, engaged in business activities of any kind. The Company
has, at the present time, not paid any dividends and any dividends that
may be paid in the future will depend upon the financial requirements
of the Company and other relevant factors.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less to be
cash equivalents.
Income Taxes
Deferred income taxes are provided in amounts sufficient to give effect
to temporary differences between financial and tax reporting,
principally related to net operating loss carryforwards.
Earnings Per Share
The computation of basic earning per common share is based on the
weighted average number of shares outstanding during each period.
The computation of diluted earnings per common share is based on the
weighted average number of shares outstanding during the period plus
the common stock equivalents which would arise form the exercise of
stock options and warrants outstanding using the treasury stock method
and the average market price per share during the period. The Company
did not have any stock options or warrants outstanding at December 31,
1999.
Concentration of Credit Risk
The Company maintains its cash in bank deposit accounts which, at
times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts and believes it is not exposed
to any significant credit risk on cash and cash equivalents.
F-7
<PAGE>
Aswan Investments, Inc
(A Development Stage Company)
Notes to Financial Statements
Continued
- -------------------------------------------------------------------------------
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
2. Going Concern
As of December 31, 1999, the Company's revenue generating activities
are not in place, and the Company has incurred a loss for the period
then ended. These factors raise substantial doubt about the Company's
ability to continue as a going concern.
Management intends to seek additional funding through business
ventures. There can be no assurance that such funds will be available
to the Company, or available on terms of acceptable to the Company.
3. Income Taxes
The difference between income taxes at statutory rates and the amount
presented in the financial statements is a result of an increase in the
valuation allowance to offset the deferred tax asset related to the net
operating loss carryforward.
The Company has net operating loss carryforwards of approximately $900,
which begin to expire in the year 2019. The amount of net operating
loss carryforward that can be used in any one year will be limited by
significant changes in the ownership of the Company and by the
applicable tax laws which are in effect at the time such carryforwards
can be utilized.
F-8
<PAGE>
Aswan Investments, Inc
(A Development Stage Company)
Notes to Financial Statements
Continued
- -------------------------------------------------------------------------------
4. Supplemental Cash Flow Information
No amounts were paid for interest or income taxes during the period
ended December 31, 1999.
During the period ended December 31, 1999, the Company issued common
stock in exchange for a stock subscription receivable. The stock
subscription receivable was collected subsequent to December 31, 1999.
5. Preferred Stock
The Company has authorized up to 5,000,000 shares of preferred stock
with a par value of $.001 per share. The preferred stock can be issued
in various series with varying dividend rates and preferences.
6. Recent Accounting Pronouncements
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective date of
FASB Statements No. 133." SFAS 133 establishes accounting and reporting
standards of all derivatives as assets or liabilities in the statement
of financial position and measurement of those instruments at fair
value. SFAS 133 is now effective for fiscal years beginning after June
15, 2000. The Company believes that the adoption of SFAS 133 will not
have any material effect on the financial statements of the Company.
7. Subsequent Event
On January 12, 2000, the Company issued 5,007,000 shares of common
stock in exchange for services.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
F-9
<PAGE>
PART III
ITEM 1. EXHIBITS
(a) Exhibits. Exhibits required to be attached are listed in the Index to
Exhibits beginning on page 33 of this form 10-SB under "Item 2.
Description of Exhibits."
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
21
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, this 3rd day of February, 2000.
Aswan Investments, Inc
/s/ Ruairidh Campbell
------------------------
Name: Ruairidh Campbell
Title: President/CEO and Director
Signature Title Date
/s/ Ruairidh Campbell
- -----------------------
Ruairidh Campbell President and Director February 3, 2000
/s/ Richard Surber
- ---------------------
Richard Surber Secretary and Director February 3, 2000
22
<PAGE>
ITEM 2. DESCRIPTION OF EXHIBITS.
INDEX TO EXHIBITS
Exhib. Page
No. No. Description
3(i) 24 Articles of Incorporation of Aswan Investments, Inc, a
Nevada corporation, filed with the State of Nevada on
February 15, 1996.
3(ii) 26 By-laws of the Company adopted on April 9, 1996
4 37 Employee Benefit Plan adopted on December 14 , 1999
27 41 Financial Data Schedule "CE"
23
ARTICLES OF INCORPORATION OF
ASWAN INVESTMENTS, INC.
FIRST. The name of the Company shall be ASWAN INVESTMENTS, INC
SECOND. The registered agent in the State of Nevada is:
LaVonne Frost
711 South Carson Street Suite 1
Carson City, Nevada 89701
THIRD. The purpose for which this corporation is to transact any lawful
business, or to promote or conduct any legitimate object or purpose, under and
subject to the laws of the State of Nevada.
FOURTH. The stock of the corporation is divided into two classes: (1)
common stock in the amount of Forty Five Million (45,000,000) shares having par
value of $0.001 each, and (2) preferred stock in the amount of Five Million
(5,000,000) shares having par value of $0.001 each. The Board of Directors shall
have the authority, by resolution or resolutions, to divide the preferred stock
into more than one class of stock or more than one series of any class, to
establish and fix the distinguishing designation of each such series and the
number of shares thereof (which number, by like action of the Board of Directors
from time to time thereafter may be increased, except when otherwise provided by
the Board of Directors in creating such series, or may be decreased, but not
below the number of shares thereof then outstanding) and, within the limitations
of applicable law of the State of Nevada or as otherwise set forth in this
article, to fix and determine the relative voting powers, designations,
preferences, limitations, restrictions and relative rights of the various
classes or stock or series thereof and the qualifications, limitations or
restrictions of such rights of each series so established prior to the issuance
thereof There shall be no cumulative voting by shareholders.
FIFTH. The Company, by action of its directors, and without action by
its shareholders, may purchase its own shares in accordance with the provisions
of Nevada Revised Statutes. Such purchases may be made either in the open market
or at public or private sale, in such manner and amounts, from such holder or
holders of outstanding shares of the Company, and at such prices as the
directors shall from time to time determine.
SIXTH. No holder of shares of the Company of any class, as such, shall
have any preemptive right to purchase or subscribe for shares of the Company, of
any class, whether now or hereafter authorized.
SEVENTH. The Board of Directors shall consist of no fewer that one
member and no more than seven members. The initial Board of Directors will
consist ofRuairidh Campbell and Richard D. Surber with addresses as follows:
Ruairidh Campbell Richard D. Surber
3310 Werner Avenue 1448 South Roberta Street
Austin, Texas 78722 Salt Lake City, Utah 84101
24
<PAGE>
EIGHTH. No officer or director shall be personally liable to the
corporation or its shareholders for money damages except as provided in Section
78.07, Nevada Revised Statutes.
NINTH. The name and address of the incorporator of the Corporation is
as follows:
Richard D. Surber
268 West 400 South Suite 300
Salt Lake City, Utah 84101
IN WITNESS WHEREOF, these Articles of Incorporation are hereby executed
this 7th day of December, 1999.
ASWAN INVESTMENTS, INC
/s/
- ------------------------
Richard D. Surber, Director and Incorporator
/s/
- -----------------------
Ruairidh Campbell, Director
NOTARIZATION OF SIGNATURE OF Richard D. Surber
State of Utah )
)
County of Salt Lake )
On this 7th day of December, 1999, before me BonnieJean C. Tippets, a notary
public, personally appeared Richard D. Surber, personally known to me to be the
person whose name is subscribed to this instrument, and acknowledged that she
executed the same as Director and Incorporator of ASWAN INVESTMENTS, INC and
was fully authorized by said company to so act.
/s/
-------------------
BonnieJean C. Tippets, Notary Public
April 14, 2001
My commission Expires
25
BYLAWS
FOR THE REGULATION, EXCEPT AS OTHERWISE
PROVIDED BY STATUTE OR ITS ARTICLES OF INCORPORATION
OF
ASWAN INVESTMENTS, INC
ARTICLE I
Offices
Section 1.01 -- Principal And Registered Office.
The principal and registered office for the transaction of the business of the
Corporation is hereby fixed and located at: c/o Oasis Country Store State Route
233 and Interstate 80, P.O. Box 2004, Wells, Nevada 89835. Corporation may have
such other offices, either within or without the State of Nevada as the
Corporation's board of directors (the "Board) may designate or as the business
of the Corporation may require from time to time.
Section 1.02 -- Other Offices.
--------------
Branch or subordinate offices may at any time be established by the Board at any
place or places wherein the Corporation is qualified to do business.
ARTICLE 2
Meetings of Shareholders
Section 2.01 -- Meeting Place.
All annual meetings of shareholders and all other meetings of shareholders shall
be held either at the principal office or at any other place within or without
the State of Nevada which may be designated either by the Board, pursuant to
authority hereinafter granted, or by the written consent of all shareholders
entitled to vote thereat, given either before or after the meeting and filed
with the secretary of the Corporation.
Section 2.02 -- Annual Meetings.
A. The annual meetings of shareholders shall be held on the anniversary date of
the date of incorporation at the hour of 2:00 o'clock p.m., commencing with the
year 1996, provided, however, that should the day of the annual meeting fall
upon a legal holiday, then any such annual meeting of shareholders shall be held
at the same time and place on the next business day thereafter which is not a
legal holiday.
B. Written notice of each annual meeting signed by the president or vice
president, or the secretary, or an assistant secretary, or by such other person
or persons as the Board may designate, shall be given to each shareholder
entitled to vote thereat, either personally or by mail or other means of written
communication, charges prepaid, addressed to such shareholder at his address
appearing on the books of the Corporation or given by him to the Corporation for
the purpose of notice. If a shareholder gives no address, notice shall be deemed
to have een given to him if sent by mail or other means of written communication
addressed to the place where the principal office of the Corporation is
situated, or if published at least once in some newspaper of general circulation
in the county in which said office is located. All such notices shall be sent to
each
26
<PAGE>
shareholder entitled thereto, or published, not less than ten (10) nor more than
sixty (60) days before each annual meeting, and shall specify the place, the day
and the hour of such meeting, and shall also state the purpose or purposes for
which the meeting is called.
C. Failure to hold the annual meeting shall not constitute dissolution or
forfeiture of the Corporation, and a special meeting of the shareholders may
take the place thereof.
Section 2.03 -- Special Meetings.
Special meetings of the shareholders, for any purpose or purposes whatsoever,
may be called at any time by the president or by the Board, or by one or more
shareholders holding not less that ten percent (10%) of the voting power of the
Corporation. Except in special cases where other express provision is made by
statute, notice of such special meetings shall be given in the same manner as
for annual meetings of shareholders. Notices of any special meeting shall
specify in addition to the place, day and hour of such meeting, the purpose or
purposes for which the meeting is called.
Section 2.04 -- Adjourned Meetings And Notice Thereof.
A. Any shareholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of a majority of the
shares, the holders of which are either present in person or represented by
proxy thereat, but in the absence of a quorum, no other business may be
transacted at any such meeting.
B. When any shareholders' meeting, either annual or special, is adjourned for
thirty (30) days or more, notice of the adjourned meeting shall be given as in
the case of an original meeting. Otherwise, it shall not be necessary to give
any notice of an adjournment or of the business to be transacted at an adjourned
meeting, other than by announcement at the meeting at which such adjournment is
taken.
Section 2.05 -- Entry Of Notice.
---------------
Whenever any shareholder entitled to vote has been absent from any meeting of
shareholders, whether annual or special, an entry in the minutes to the effect
that notice has been duly given shall be conclusive and incontrovertible
evidence that due notice of such meeting was given to such shareholder, as
required by law and these bylaws.
Section 2.06 -- Voting.
At all annual and special meetings of shareholders, each shareholder entitled to
vote thereat shall have one vote for each share of stock so held and represented
at such meetings, either in person or by written proxy, unless the Corporation's
articles of incorporation ("Articles") provide otherwise, in which event, the
voting rights, powers and privileges prescribed in the Articles shall prevail.
Voting for directors and, upon demand of any shareholder, upon any question at
any meeting, shall be by ballot. If a quorum is present at a meeting of the
shareholders, the vote of a majority of the shares represented at such meeting
shall be sufficient to bind the corporation, unless otherwise provided by law or
the Articles.
Section 2.07 -- Quorum.
The presence in person or by proxy of the holders of a majority of the shares
entitled to vote at any meeting shall constitute a quorum for the transaction of
business. The shareholders present at a duly called or held
27
<PAGE>
meeting at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum.
Section 2.08 -- Consent Of Absentees.
--------------------
The transactions of any meeting of shareholders, either annual or special,
however called and notice given thereof, shall be as valid as though done at a
meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before of after the meeting, each of the
shareholders entitled to vote, not present in person or by proxy, sign a written
Waiver of Notice, or a consent to the holding of such meeting, or an approval of
the minutes thereof. All such waivers, consents or approvals shall be filed with
the corporate records or made a part of the minutes of such meeting.
Section 2.09 -- Proxies.
Every person entitled to vote or execute consents shall have the right to do so
either in person or by an agent or agents authorized by a written proxy executed
by such person or his duly authorized agent and filed with the secretary of the
Corporation; provided however, that no such proxy shall be valid after the
expiration of eleven (11) months from the date of its execution, unless the
shareholder executing it specifies therein the length of time for which such
proxy is to continue in force, which in no case shall exceed seven (7) years
from the date of its execution.
Section 2.10 -- Shareholder Action Without A Meeting.
Any action required or permitted to be taken at a meeting of the shareholders
may be taken without a meeting if a written consent thereto is signed by
shareholders holding at least a majority of the voting power, except that if a
different proportion of voting power is required for such an action at a
meeting, then that proportion of written consents is required. In no instance
where action is authorized by this written consent need a meeting of
shareholders be called or notice given. The written consent must be filed with
the proceedings of the shareholders.
ARTICLE 3
Board of Directors
Section 3.01 -- Powers.
Subject to the limitations of the Articles, these bylaws, and the provisions of
Nevada corporate law as to action to be authorized or approved by the
shareholders, and subject to the duties of directors as prescribed by these
bylaws, all corporate powers shall be exercised by or under the authority of,
and the business and affairs of the corporation shall be controlled by, the
Board. Without prejudice to such general powers, but subject to the same
limitations, it is hereby expressly declared that the directors shall have the
following powers:
A. To select and remove all the other officers, agents and employees of the
Corporation, prescribe such powers and duties for them as are not inconsistent
with law, with the Articles, or these bylaws, fix their compensation, and
require from them security for faithful service.
B. To conduct, manage and control the affairs and business of the Corporation,
and to make such rules and regulations therefore not inconsistent with the law,
the Articles, or these bylaws, as they may deem best.
28
<PAGE>
C. To change the principal office for the transaction of the business if such
change becomes necessary or useful; to fix and locate from time to time one or
more subsidiary offices of the Corporation within or without the State of
Nevada, as provided in Section 1.02 of Article 1 hereof; to designate any place
within or without the State of Nevada for the holding of any shareholders'
meeting or meetings; and to adopt, make and use a corporate seal, and to
prescribe the forms of certificates of stock, and to alter the form of such seal
and of such certificates from time to time, as in their judgment they may deem
best, provided such seal and such certificates shall at all times comply with
the provisions of law.
D. To authorize the issuance of shares of stock of the Corporation from time to
time, upon such terms as may be lawful, in consideration of money paid, labor
done or services actually rendered, debts or securities canceled, or tangible or
intangible property actually received, or in the case of shares issued as a
dividend, against amounts transferred from surplus to stated capital.
E. To borrow money and incur indebtedness for the purposes of the Corporation,
and to cause to be executed and delivered therefore, in the corporate name,
promissory notes, bonds, debentures, deeds of trust, mortgages, pledges,
hypothecation or other evidences of debt and securities therefore.
F. To appoint an executive committee and other committees and to delegate to the
executive committee any of the powers and authority of the Board in management
of the business and affairs of the Corporation, except the power to declare
dividends and to adopt, amend or repeal bylaws. The executive committee shall be
composed of one or more directors.
Section 3.02 -- Number And Qualification Of Directors.
The authorized number of directors of the Corporation shall not be less than one
(1) nor more than twelve (12).
Section 3.03 -- Election And Term Of Office.
---------------------------
The directors shall be elected at each annual meeting of shareholders, but if
any such annual meeting is not held, or the directors are not elected thereat,
the directors may be elected at any special meeting of shareholders. All
directors shall hold office until their respective successors are elected.
Section 3.04 -- Vacancies.
A. Vacancies in the Board may be filled by a majority of the remaining
directors, though less than a quorum, or by a sole remaining director, and each
director so elected or appointed shall hold office until his successor is
elected at an annual or a special meeting of the shareholders.
B. A vacancy or vacancies in the Board shall be deemed to exist in case of the
death, resignation or removal of any director, or if the authorized number of
directors be increased, or if the shareholders fail at any annual or special
meeting of shareholders at which any director or directors are elected to elect
the full authorized number of directors to be voted for at that meeting.
C. The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors.
29
<PAGE>
D. No reduction of the authorized number of directors shall have the effect of
removing any director unless also authorized by a vote of the shareholders.
ARTICLE 4
Meetings of the Board of Directors
Section 4.01 -- Place Of Meetings.
Regular meetings of the Board shall be held at any place within or without the
State of Nevada which has been designated from time to time by resolution of the
Board or by written consent of all members of the Board. In the absence of such
designation, regular meetings shall be held at the principal office of the
Corporation. Special meetings of the Board may be held either at a place so
designated, or at the principal office. Failure to hold an annual meeting of the
Board shall not constitute forfeiture or dissolution of the Corporation.
Section 4.02 -- Organization Meeting.
Immediately following each annual meeting of shareholders, the Board shall hold
a regular meeting for the purpose of organization, election of officers, and the
transaction of other business. Notice of such meeting is hereby dispensed with.
Section 4.03 -- Other Regular Meetings.
Other regular meetings of the Board shall be held, whether monthly or quarterly
or by some other schedule, at a day and time as set by the president; provided
however, that should the day of the meeting fall upon a legal holiday, then such
meeting shall be held at the same time on the next business day thereafter which
is not a legal holiday. Notice of all such regular meetings of the Board is
hereby required.
Section 4.04 -- Special Meetings.
A. Special meetings of the Board may be called at any time for any purpose or
purposes by the president, or, if he is absent or unable or refuses to act, by
any vice president or by any two directors.
B. Written notice of the time and place of special meetings shall be delivered
personally to each director or sent to each director by mail (including
overnight delivery services such as Federal Express) or telegraph, charges
prepaid, addressed to him at his address as it is shown upon the records of the
Corporation, or if it is not shown upon such records or is not readily
ascertainable, at the place in which the regular meetings of the directors are
normally held. No such notice is valid unless delivered to the director to whom
it was addressed at least twenty-four (24) hours prior to the time of the
holding of the meeting. However, such mailing, telegraphing, or delivery as
above provided herein shall constitute prima facie evidence that such director
received proper and timely notice.
Section 4.05 -- Notice Of Adjournment.
Notice of the time and place of holding an adjourned meeting need not be given
to absent directors, if the time and place be fixed at the meeting adjourned.
30
<PAGE>
Section 4.06 -- Waiver Of Notice.
The transactions of any meeting of the Board, however called and noticed or
wherever held, shall be as valid as though a meeting had been duly held after
regular call and notice, if a quorum be present, and if, either before or after
the meeting, each of the directors not present sign a written waiver of notice
or a consent to holding such meeting or an approval of the minutes thereof. All
such waivers, consents or approvals shall be filed with the corporate records or
made a part of the minutes of the meeting.
Section 4.07 -- Quorum.
If the Corporation has only one director, then the presence of that one director
constitutes a quorum. If the Corporation has only two directors, then the
presence of both such directors is necessary to constitute a quorum. If the
Corporation has three or more directors, then a majority of those directors
shall be necessary to constitute a quorum for the transaction of business,
except to adjourn as hereinafter provided. A director may be present at a
meeting either in person or by telephone. Every act or decision done or made by
a majority of the directors present at a meeting duly held at which a quorum is
present, shall be regarded as the act of the Board, unless a greater number be
required by law or by the Articles.
Section 4.08 -- Adjournment.
A quorum of the directors may adjourn any directors' meeting to meet again at a
stated day and hour; provided however, that in the absence of a quorum, a
majority of the directors present at any directors' meeting, either regular or
special, may adjourn such meeting only until the time fixed for the next regular
meeting of the Board.
Section 4.09 -- Fees And Compensation.
Directors shall not receive any stated salary for their services as directors,
but by resolution of the Board, a fixed fee, with or without expenses of
attendance, may be allowed for attendance at each meeting. Nothing stated herein
shall be construed to preclude any director from serving the Corporation in any
other capacity as an officer, agent, employee, or otherwise, and receiving
compensation therefore.
Section 4.10 -- Action Without A Meeting.
Any action required or permitted to be taken at a meeting of the Board, or a
committee thereof, may be taken without a meeting if, before or after the
action, a written consent thereto is signed by all the members of the Board or
of the committee. The written consent must be filed with the proceedings of the
Board or committee.
ARTICLE 5
Officers
Section 5.01 -- Executive Officers.
The executive officers of the Corporation shall be a president, a secretary, and
a treasurer/chief financial officer. The corporation may also have, at the
direction of the Board, a chairman of the Board, one or more vice presidents,
one or more assistant secretaries, one or more assistant treasurers, and such
other officers as may be appointed in accordance with the provisions of Section
5.03 of this Article. Officers other than the
31
<PAGE>
president and the chairman of the board need not be directors. Any one person
may hold two or more offices, unless otherwise prohibited by the Articles or by
law.
Section 5.02 -- Appointment.
The officers of the corporation, except such officers as may be appointed in
accordance with the provisions of Sections 5.03 and 5.05 of this Article, shall
be appointed by the Board, and each shall hold his office until he resigns or is
removed or otherwise disqualified to serve, or his successor is appointed and
qualified.
Section 5.03 -- Subordinate Officers.
The Board may appoint such other officers as the business of the Corporation may
require, each of whom shall hold office for such period, have such authority,
and perform such duties as are provided in these bylaws or as the Board may from
time to time determine.
Section 5.04 -- Removal And Resignation.
A. Any officer may be removed, either with or without cause, by a majority of
the directors at the time in office, at any regular or special meeting of the
Board.
B. Any officer may resign at any time by giving written notice to the Board or
to the president or secretary. Any such resignation shall take effect on the
date such notice is received or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 5.05 -- Vacancies.
A vacancy in any office because of death, resignation, removal, disqualification
or any other cause shall be filled in the manner prescribed in these bylaws for
regular appointments to such office.
Section 5.06 -- Chairman Of The Board.
The Chairman of the Board, if there be such an officer, shall, if present,
preside at all meetings of the Board, and exercise and perform such other powers
and duties as may be from time to time assigned to him by the Board or
prescribed by these bylaws.
Section 5.07 -- President.
Subject to such supervisory powers, if any, as may be given by the Board to the
Chairman of the Board (if there be such an officer), the president shall be the
chief executive officer of the Corporation and shall, subject to the control of
the Board, have general supervision, direction and control of the business and
officers of the Corporation. He shall preside at all meetings of the
shareholders and, in the absence of the Chairman of the Board, or if there be
none, at all meetings of the Board. He shall be an ex-officio member of all the
standing committees, including the executive committee, if any, and shall have
the general powers and duties of management usually vested in the office of
president of a corporation, and shall have such other powers and duties as may
be prescribed by the Board or these bylaws.
32
<PAGE>
Section 5.08 -- Vice President.
In the absence or disability of the president, the vice presidents, in order of
their rank as fixed by the Board, or if not ranked, the vice president
designated by the Board, shall perform all the duties of the president and when
so acting shall have all the powers of, and be subject to all the restrictions
upon, the president. The vice presidents shall have such other powers and
perform such other duties as from time to time may be prescribed for them
respectively by the Board or these bylaws.
Section 5.09 -- Secretary.
A. The secretary shall keep, or cause to be kept, at the principal office or
such other place as the Board may direct, a book of (i) minutes of all meetings
of directors and shareholders, with the time and place of holding, whether
regular or special, and if special, how authorized, the notice thereof given,
the names of those present and absent at directors' meetings, the number of
shares present or represented at shareholders' meetings, and the proceedings
thereof, and (ii) any waivers, consents, or approvals authorized to be given by
law or these bylaws.
B. The secretary shall keep, or cause to be kept, at the principal office, a
share register, or a duplicate share register, showing (i) the name of each
shareholder and his or her address; (ii) the number and class or classes of
shares held by each, and the number and date of certificates issued for the
same; and (iii) the number and date of cancellation of every certificate
surrendered for cancellation.
C. The secretary shall give, or cause to be given, notice of all the meetings of
the shareholders and of the Board required by these bylaws or by law to be
given, and he shall keep the seal of the Corporation, if any, in safe custody,
and shall have such other powers and perform such other duties as may be
prescribed by the Board or these bylaws.
Section 5.10 -- Treasurer/Chief Financial Officer.
A. The treasurer/chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct accounts of the properties and
business transactions of the Corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, surplus and
shares. Any surplus, including earned surplus, paid-in surplus and surplus
arising from a reduction of stated capital, shall be classified according to
source and shown in a separate account. The books of account shall at all times
be open to inspection by any director.
B. The treasurer/chief financial officer shall deposit all monies and other
valuables in the name and to the credit of the Corporation with such
depositories as may be designated by the Board. He shall disburse the funds of
the Corporation as may be ordered by the Board, shall render to the president
and directors, whenever they request it, an account of all of his transactions
as treasurer and of the financial condition of the Corporation, and shall have
such other powers and perform such other duties as may be prescribed by the
Board or these bylaws.
ARTICLE 6
Miscellaneous
Section 6.01 -- Record Date And Closing Stock Books.
The Board may fix a time in the future, for the payment of any dividend or
distribution, or for the allotment of rights, or when any change or conversion
or exchange of shares shall go into effect, as a record date for
33
<PAGE>
the determination of the shareholders entitled to notice of and to vote at any
such meeting, or entitled to receive any such dividend or distribution, or any
such allotment of rights, or to exercise the rights in respect to any such
change, conversion or exchange of shares, and in such case only shareholders of
record on the date so fixed shall be entitled to notice of and to vote at such
meetings, or to receive such dividend, distribution or allotment of rights, or
to exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the Corporation after any record date fixed as herein set
forth. The Board may close the books of the Corporation against transfers of
shares during the whole, or any part, of any such period.
Section 6.02 -- Inspection Of Corporate Records.
The share register or duplicate share register, the books of account, and
records of proceedings of the shareholders and directors shall be open to
inspection upon the written demand of any shareholder or the holder of a voting
trust certificate, at any reasonable time, and for a purpose reasonably related
to his interests as a shareholder or as the holder of a voting trust
certificate, and shall be exhibited at any time when required by the demand of
ten percent (10%) of the shares represented at any shareholders' meeting. Such
inspection may be made in person or by an agent or attorney, and shall include
the right to make extracts. Demand of inspection other than at a shareholders'
meeting shall be made in writing upon the president, secretary, or assistant
secretary, and shall state the reason for which inspection is requested.
Section 6.03 -- Checks, Drafts, Etc.
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the Corporation,
shall be signed or endorsed by such person or persons and in such manner as,
from time to time, shall be determined by resolution of the Board.
Section 6.04 -- Annual Report.
The Board shall cause to be sent to the shareholders not later than one hundred
twenty (120) days after the close of the fiscal or calendar year an annual
report.
Section 6.05 -- Contracts: How Executed.
The Board, except as otherwise provided in these bylaws, may authorize any
officer, officers, agent, or agents, to enter into any contract, deed or lease,
or execute any instrument in the name of and on behalf of the Corporation, and
such authority may be general or confined to specific instances; and unless so
authorized by the Board, no officer, agent, or employee shall have any power or
authority to bind the Corporation by any contract or engagement or to pledge its
credit or render it liable for any purpose or for any amount.
Section 6.06 -- Certificates Of Stock.
A certificate or certificates for shares of the capital stock of the Corporation
shall be issued to each shareholder when any such shares are fully paid up. All
such certificates shall be signed by the president or a vice president and the
secretary or an assistant secretary, or be authenticated by facsimiles of the
signature of the president and secretary or by a facsimile of the signatures of
the president and the written signature of the secretary or an assistant
secretary. Every certificate authenticated by a facsimile of a signature must be
countersigned by a transfer agent or transfer clerk.
34
<PAGE>
Section 6.07 -- Representations Of Shares Of Other Corporations.
The president or any vice president and the secretary or assistant secretary of
this Corporation are authorized to vote, represent, and exercise on behalf of
this Corporation, all rights incident to any and all shares of any other
corporation or corporations standing in the name of this Corporation. The
authority herein granted to said officers to vote or represent on behalf of this
Corporation or corporations may be exercised either by such officers in person
or by any person authorized so to do by proxy or power of attorney duly executed
by said officers.
Section 6.08 -- Inspection Of Bylaws.
The Corporation shall keep in its principal office for the transaction of
business the original or a copy of these bylaws, as amended or otherwise altered
to date, certified by the secretary, which shall be open to inspection by the
shareholders at all reasonable times during office hours.
Section 6.09 -- Indemnification.
A. The Corporation shall indemnify its officers and directors for any liability
including reasonable costs of defense arising out of any act or omission of any
officer or director on behalf of the Corporation to the full extent allowed by
the laws of the State of Nevada, if the officer or director acted in good faith
and in a manner the officer or director reasonably believed to be in, or not
opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe the conduct
was unlawful.
B. Any indemnification under this section (unless ordered by a court) shall be
make by the corporation only as authorized in the specific case upon a
determination that indemnification of the director or officer is proper in the
circumstances because the officer or director has met the applicable standard of
conduct. Such determination shall be made by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or, regardless of whether or not such a quorum is
obtainable and a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or by the stockholders.
ARTICLE 7
Amendments
Section 7.01 -- Power Of Shareholders.
New bylaws may be adopted, or these bylaws may be amended or repealed, by the
affirmative vote of the shareholders collectively having a majority of the
voting power or by the written assent of such shareholders.
Section 7.02 -- Power Of Directors.
------------------
Subject to the rights of the shareholders as provided in Section 7.01 of this
Article, bylaws other than a bylaw, or amendment thereof, changing the
authorized number of directors, may also be adopted, amended, or repealed by the
Board.
35
<PAGE>
Certificate
The undersigned does hereby certify that the undersigned is the President of the
Corporation as named at the outset in these bylaws, a corporation duly organized
and existing under and by virtue of the laws of the State of Nevada; that the
above and foregoing bylaws of said corporation were duly and regularly adopted
as such by the board of directors of the Corporation at a meeting of said Board,
which was duly held on the 7th day of December, 1999, that the above and
foregoing bylaws are now in full force and effect.
DATED this 7th day of December, 1999.
/s/
- ------------------
Ruairidh Campbell
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
36
THE 1999 BENEFIT PLAN
OF
ASWAN INVESTMENTS, INC
37
<PAGE>
THE 1999 BENEFIT PLAN OF ASWAN INVESTMENTS, INC
Aswan Investments, Inc, a Nevada corporation (the "Company"), hereby
adopts The 1999 Benefit Plan of Aswan Investments, Inc employees (the
"Plan") this 14th day of December 1999. Under the Plan, the Company may issue
shares of the Company's common stock or grant options to acquire the Company's
common stock, par value $0.001 (the "Stock"), from time to time to employees,
directors, officers, consultants or advisors of the Company or its subsidiaries,
all on the terms and conditions set forth herein. In addition, at the discretion
of the Board of Directors, Shares may from time to time be granted under this
Plan to other individuals, including consultants or advisors, who contribute to
the success of the Company or its subsidiaries but are not employees of the
Company or its subsidiaries, provided that bona fide services shall be rendered
by consultants and advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.
1. Purpose of the Plan. The Plan is intended to aid the Company in maintaining
and developing a management team, attracting qualified officers and employees
capable of assuring the future success of the Company, and rewarding those
individuals who have contributed to the success of the Company. The Company has
designed this Plan to aid it in retaining the services of executives and
employees and in attracting new personnel when needed for future operations and
growth and to provide such personnel with an incentive to remain employees of
the Company, to use their best efforts to promote the success of the Company's
business, and to provide them with an opportunity to obtain or increase a
proprietary interest in the Company. It is also designed to permit the Company
to reward those individuals who are not employees of the Company but who
management perceives to have contributed to the success of the Company or who
are important to the continued business and operations of the Company. The above
goals will be achieved through the granting of Shares.
2. Administration of this Plan. Administration of this Plan shall be determined
by the Company's Board of Directors (the "Board"). Subject to compliance with
applicable provisions of the governing law, the Board may delegate
administration of this Plan or specific administrative duties with respect to
this Plan on such terms and to such committees of the Board as it deems proper
(hereinafter the Board or its authorized committee shall be referred to as "Plan
Administrators"). The interpretation and construction of the terms of this Plan
by the Plan Administrators thereof shall be final and binding on all
participants in this Plan absent a showing of demonstrable error. No member of
the Plan Administrators shall be liable for any action taken or determination
made in good faith with respect to this Plan. Any shares approved by a majority
vote of those Plan Administrators attending a duly and properly held meeting
shall be valid. Any shares approved by the Plan Administrators shall be approved
as specified by the Board at the time of delegation.
3. Shares of Stock Subject to this Plan. The total value of shares issues
pursuant to this Plan shall not exceed a value of greater then Five Hundred
Thousand dollars ($500,000). If any right to acquire Stock granted under this
Plan is exercised by the delivery of shares of Stock or the relinquishment of
rights to shares of Stock, only the net shares of Stock issued (the shares of
stock issued less the shares of Stock surrendered) shall count against the total
number and value of shares reserved for issuance under the terms of this Plan.
4. Reservation of Stock on Granting of Rights. At the time any right is granted
under the terms of this Plan, the Company will reserve for issuance the number
of shares of Stock subject to such right until that right is exercised or
expires. The Company may reserve either authorized but unissued shares or issued
shares reacquired by the Company.
38
<PAGE>
5. Eligibility. The Plan Administrators may grant shares to employees, officers,
and directors of the Company and its subsidiaries, as may be existing from time
to time, and to other individuals who are not employees of the Company or its
subsidiaries, including consultants and advisors, provided that such consultants
and advisors render bona fide services to the Company or its subsidiaries and
such services are not rendered in connection with the offer or sale of
securities in a capital-raising transaction. In any case, the Plan
Administrators shall determine, based on the foregoing limitations and the
Company's best interests, which employees, officers, directors, consultants and
advisors are eligible to participate in this Plan. Shares shall be in the
amounts, and shall have the rights and be subject to the restrictions, as may be
determined by the Plan Administrators, all as may be within the provisions of
this Plan.
6. Terms of Grants and Certain Limitations on Right to Exercise.
-------------------------------------------------------------
a. Each right to shares may its terms established by the Plan
Administrators at the time the right is granted.
b. The terms of the right, once it is granted, may be reduced only as
provided for in this Plan and under the express written provisions of
the grant.
c. Unless otherwise specifically provided by the written provisions of
the grant or required by applicable disclosure or other legal
requirements promulgated by the Securities and Exchange Commission
("SEC"), no participant of this Plan or his or her legal
representative, legatee, or distributee will be, or shall be deemed to
be, a holder of any shares subject to any right unless and until such
participant exercises his or her right to acquire all or a portion of
the Stock subject to the right and delivers any required consideration
to the Company in accordance with the terms of this Plan and then only
as to the number of shares of Stock acquired. Except as specifically
provided in this Plan or as otherwise specifically provided by the
written provisions of any grant, no adjustment to the exercise price
or the number of shares of Stock subject to the grant shall be made
for dividends or other rights for which the record date is prior to
the date on which the Stock subject to the grant is acquired by the
holder.
d. Rights shall vest and become exercisable at such time or times and
on such terms as the Plan Administrators may determine at the time of
the grant of the right.
e. Grants may contain such other provisions, including further lawful
restrictions on the vesting and exercise of the grant as the Plan
Administrators may deem advisable.
f. In no event may an grant be exercised after the expiration of its
term.
g. Grants shall be non-transferable, except by the laws of descent and
distribution.
7. Exercise Price. The Plan Administrators shall establish the exercise
price payable to the Company for shares to be obtained pursuant to any purchase
options which exercise price may be amended from time to time as the Plan
Administrators shall determine.
8. Payment of Exercise Price. The exercise of any option s hall be
contingent on receipt by the Company of the exercise price paid in either cash,
certified or personal check payable to the Company.
39
<PAGE>
9. Withholding. If the grant or exercise of any right is subject to withholding
or other trust fund payment requirements of the Internal Revenue Code of 1986,
as amended (the "Code"), or applicable state or local laws, the Company will
initially pay the recipient's liability and will be reimbursed by that person no
later than six months after such liability arises and such person hereby agrees
to such reimbursement terms.
10. Dilution or Other Adjustment. The shares of Common Stock subject to this
Plan and the exercise price of outstanding options are subject to proportionate
adjustment in the event of a stock dividend on the Common Stock or a change in
the number of issued and outstanding shares of Common Stock as a result of a
stock split, consolidation, or other recapitalization. The Company, at its
option, may adjust the grants and rights made hereunder, issue replacements, or
declare grants void.
11. Options to Foreign Nationals. The Plan Administrators may, in order to
fulfill the purpose of this Plan and without amending this Plan, grant Options
to foreign nationals or individuals residing in foreign countries that contain
provisions, restrictions, and limitations different from those set forth in this
Plan and the Options made to United States residents in order to recognize
differences among the countries in law, tax policy, and custom. Such grants
shall be made in an attempt to give such individuals essentially the same
benefits as contemplated by a grant to United States residents under the terms
of this Plan.
12. Listing and Registration of Shares. Each grant shall be subject to the
requirement that if at any time the Plan Administrators shall determine, in
their sole discretion, that it is necessary or desirable to list, register, or
qualify the shares covered thereby on any securities exchange or under any state
or federal law, or obtain the consent or approval of any governmental agency or
regulatory body as a condition of, or in connection with, the granting of such
rights or the issuance or purchase of shares thereunder, such right may not be
exercised in whole or in part unless and until such listing, registration,
consent, or approval shall have been effected or obtained free of any conditions
not acceptable to the Plan Administrators.
13. Expiration and Termination of this Plan. This Plan may be abandoned or
terminated at any time by the Plan Administrators except with respect to any
rights then outstanding under this Plan. This Plan shall otherwise terminate on
the earlier of the date that is five years from the date first appearing in this
Plan or the date on which the 1.5 millionth share is issued hereunder.
14. Amendment of this Plan. This Plan may not be amended more than once during
any six month period, other than to comport with changes in the Code or the
Employee Retirement Income Security Act or the rules and regulations promulgated
thereunder. The Plan Administrators may modify and amend this Plan in any
respect; provided, however, that to the extent such amendment or modification
would cause this Plan to no longer comply with the applicable provisions of the
Code governing incentive stock options as they may be amended from time to time,
such amendment or modification shall also be approved by the shareholders of the
Company.
ATTEST:
/s/
- --------------------------
Ruairidh Campbell, President
40
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
AUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED DECEMBER 31, 1999 THAT
WERE FILED WITH THE COMPANY'S ANNUAL REPORT ON FORM 10-SB AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0001104672
<NAME> Aswan Investments, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Dec-7-1999
<PERIOD-END> Dec-31-1999
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 465
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 465
<PP&E> 0
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<TOTAL-ASSETS> 465
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,038
<OTHER-SE> (573)
<TOTAL-LIABILITY-AND-EQUITY> 465
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 910
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (910)
<INCOME-TAX> 0
<INCOME-CONTINUING> (910)
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<EXTRAORDINARY> 0
<CHANGES> 0
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<EPS-BASIC> 0.00
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</TABLE>
