U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ABILITY COM, INC.
(Name of Small Business Issuer in its charter)
Nevada 8700 88-0448520
(State or Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Classification Code Number) Identification No.)
Organization)
3360 West Sahara Avenue, Suite 200, Las Vegas, Nevada 89102; (702) 732
2253.
(Address and telephone number of Registrant's principal executive
offices and principal place of business)
Shawn F. Hackman, Esq., 3360 West Sahara Avenue, Suite 200, Las Vegas,
Nevada 89102; (702) 732-2253, fax: (702) 732-2253
(Name, address, and telephone number of agent for service)
Approximate date of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective.
If this Form is filed to
register additional
securities for an offering
pursuant to Rule 462(b)
under the Securities Act,
please check the following
box and list the
Securities Act
registration number of the
earlier effective
registration statement for
the same offering.
If this Form is a post-
effective amendment filed
pursuant to Rule 462(c)
under the Securities Act,
check the following box
and list the Securities
Act registration statement
number of the earlier
effective registration
statement for the same
offering.
If this Form is a post-
effective amendment filed
pursuant to Rule 462(d)
under the Securities Act,
check the following box
and list the Securities
Act registration statement
number of the earlier
effective registration
statement for the same
offering.
If the delivery of the
prospectus is expected to
be made pursuant to Rule
434, check the following
box.
CALCULATION OF REGISTRATION FEE
Title of each class of
securities to
be registered Common Shares
Amount to be
registered 2,000,000
Proposed maximum
offering price per
unit $0.05
Proposed maximum
aggregate offering
price $100,000
Amount of
registration fee $26.40
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
Initial Public Offering
Prospectus
ABILITY.COM
2,000,000 shares of Common Stock
$0.05 per share
Registrant
Ability.com
3360 W. Sahara, Suite 200
Las Vegas, NV 89102
Registrant's Attorney
Shawn F. Hackman
3360 W. Sahara, Suite 200
Las Vegas, NV 89102
_________________________
The Offering
Per Share Total
Public Price $0.05 $100,000
Proceeds to
Ability $0.05 $100,000
This is our initial public offering, and no public market currently
exists for our shares. The offering price may not reflect the market
price of our shares after the offering.
________________________
The title of each class of securities to be registered is Common
Shares.
The amount to be registered is 2,000,000 shares.
Not traded on any national securities exchange or the Nasdaq Stock
Market.
This investment involves a high degree of Risk. You should purchase
shares
only if you can afford a complete loss. Please consider carefully the
risk factors contained in this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Information contained herein is subject to completion or
amendment. The registration statement relating to the
securities has been filed with the Securities and Exchange
Commission. The securities may not be sold nor may offers
to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any sale of these securities in
any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such State.
Subject to Completion, Dated _______________, 2000.
The shares being offered by Ability.com, Inc. are subject to
prior sale, acceptance of the subscriptions by Ability.com, Inc.
and approval of certain legal matters by counsel to
Ability.com, Inc.
This is our initial public offering of common stock.
The initial offering price per share is .05. We will apply
to list our common stock on the OTC:BB. No public market
currently exists for the shares of common stock.
Ability.com, Inc.. has the right to accept or reject any
subscriptions, in whole or in part, for any reason. Until
______ 2000, all dealers effecting transactions in
registered securities may be required to deliver a
prospectus This is true whether or not the dealer is
participating in this distribution. Dealers also have an
obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or
subscriptions.
Ability is conducting a "Blank Check" offering subject
to Rule 419 of Regulation C as promulgated by the U.S. Securities and
Exchange Commission (the "S.E.C.") under the securities act of 1933, as
amended (the "Securities Act").The net offering proceeds, after
deduction for offering expenses (estimated at $20,000) and sales commissions,
and the securities to be issued to investors must be deposited in an escrow
account (the "deposited funds" and "deposited securities," respectively). While
held in the escrow account, the deposited securities may not be traded or
transferred. Except for an amount up to 10% of the deposited funds
otherwise releasable under rule 419, the deposited funds and the deposited
securities may not be released until an acquisition meeting certain specified
criteria has been consummated and a sufficient number of investors reconfirm
their investment in accordance with the procedures set forth in rule 419.
Pursuant to these procedures, a new prospectus, which describes an acquisition
candidate and its business and includes audited financial statements,
will be delivered to all investors. Ability must return the pro rata portion of
the deposited funds to any investor who does not elect to remain an
investor.
Unless a sufficient number of investors elect to remain investors, all
investors will be entitled to the return of a pro rata portion of the
deposited funds (plus interest) and none of the deposited
securities will be issued to investors. In the event an acquisition is
not consummated within 18 months of the effective date of this prospectus,
the deposited funds will be returned on a pro rata basis to all investors.
See "risk factors" and "release of deposited securities and deposited
funds."
Until 90 days after the date funds and securities are
released from the escrow or trust account pursuant to Rule
419, all dealers effecting transactions in the registered
securities, whether or not participating in this
distribution, may be required to deliver a prospectus.
This prospectus is not an offer to sell or a solicitation to buy the
securities offered. It is unlawful to make such an offer or
solicitation.
The delivery of this prospectus, nor a sale of the mentioned securities
shall create an implication that there has been no change in the information
in this prospectus. If a material change does occur, however, this
prospectus will be amended or supplemented accordingly for all existing
shareholders and prospective investors.
This prospectus does not intentionally contain a false statement or
material fact, nor does it intentionally omit a material fact. No person or
entity has been authorized by Ability.com, Inc.. to give any information or
make a representation, warranty, covenant, or agreement
which is not expressly provided for or continued in this
prospectus. Any such information that is given should not
be relied upon as having been authorized.
This Company is not a Reporting Company. Upon written
or oral request, any person who receives a prospectus will
have an opportunity to meet with representatives of
Ability.com, Inc. to verify any of the information included
in the prospectus and to obtain additional information.
Such a person shall also, upon written or oral request,
receive a copy of any information that is incorporated by
reference in the prospectus and the address (including title
or department) and telephone number. Such information shall
be provided without charge.
All offerees and subscribers will be asked to
acknowledge in the subscription agreement that they have
read this prospectus carefully and thoroughly, they were
given the opportunity to obtain additional information;
and they did so to their satisfaction.
A maximum of 2,000,000 shares may be sold on a direct participation
offering basis. All of the proceeds from the sale of shares will be
placed in an interest-bearing escrow account by 12 o'clock noon of the
fifth business day after receipt thereof, until the sum of the minimum
offering, is received. If less than $20,000, is received from the sale
of the shares within 240 days of the date of this prospectus, all
proceeds will be refunded promptly to purchasers with interest and
without deduction for commission or other expenses. Subscribers will
not be able to obtain return of their funds while in escrow. No
commissions are anticipated.. There will be a minimum purchase of 5000
shares at $250.00.
No commissions are anticipated. No sales commission will be paid in
connection with the sales of these shares. The net proceeds to Ability
are after the payment of certain expenses in connection with this
offering. See "Use of Proceeds."
TABLE OF CONTENTS PAGE
PROSPECTUS SUMMARY 1
RISK FACTORS 2
INVESTORS RIGHTS AND SUBSTANTIVE
PROTECTION UNDER RULE 419 3
USE OF PROCEEDS 4
DETERMINATION OF OFFERING PRICE 5
DILUTION 6
PLAN OF DISTRIBUTION 7
LEGAL PROCEEDINGS 8
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 10
DESCRIPTION OF SECURITIES 11
INTEREST OF NAMED EXPERTS AND COUNSEL 12
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES 13
ORGANIZATION WITHIN LAST FIVE YEARS 14
DESCRIPTION OF BUSINESS 15
PLAN OF OPERATION 16
DESCRIPTION OF PROPERTY 17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 18
MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS 19
EXECUTIVE COMPENSATION 20
FINANCIAL STATEMENTS 21
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 22
Prospectus Summary
The following summary is qualified in its entirety by
detailed information appearing elsewhere in this prospectus
("Prospectus"). Each prospective investor is urged to read
this Prospectus, and the attached Exhibits, in their
entirety.
Ability
Ability.com, Inc., was incorporated on
January 18th, 2000, under the laws of the State of Nevada,
to engage in any lawful corporate undertaking, including,
but not limited to, selected mergers and acquisitions. The
Company has been in the developmental stage since inception
and has no operations to date. Other than issuing shares to
its original shareholders, Ability never commenced any
operational activities.
Ability was formed by Lynde Russell, the initial
director, for the purpose of creating a corporation which
could be used to consummate a merger or acquisition. Ms.
Russell serves as President and Director. Ms. Russell
determined next to proceed with filing a Form SB-2.
Ms. Russell, the President and Director, elected to
commence implementation of Ability's principal business
purpose, described below under "Item 2, Plan of Operation".
As such, Ability can be defined as a "shell" company,
whose sole purpose at this time is to locate and consummate
a merger or acquisition with a private entity.
The proposed business activities described herein
classify Ability as a "blank check" company. Many
states have enacted statutes, rules and regulations limiting
the sale securities of "blank check" companies in their
prospective jurisdictions. Management does not intend to
undertake any efforts to cause a market to develop in the
Company's securities until such time as Ability has
successfully implemented its business plan described herein.
Accordingly, each shareholder of Ability will execute
and deliver a "lock-up" letter agreement, affirming that
his/her respective shares of Ability's common stock
until such time as Ability has successfully consummated
a merger or acquisition and Ability is no longer
classified as a "blank check" company. In order to provide
further assurances that no trading will occur in the
Ability's securities until a merger or acquisition has been
consummated, each shareholder will place his/her
respective certificates until such time as legal counsel has
confirmed that a merger or acquisition has been successfully
consummated. However, while management believes that the
procedures established to preclude any sale of Ability's
securities prior to closing of a merger or acquisition will
be sufficient, there can be no assurances that the
procedures established herein will unequivocally limit any
shareholder's modern to sell their respective securities
before such closing.
The Offering.
Shares of Ability will be offered at $.05 per Share. See
"Plan of Distribution, page. The minimum purchase required
of an investor is $250.00. If all the Shares offered are
sold the net proceeds to Ability will be $100,000
less certain costs associated with this offering. See "Use
of Proceeds." This balance will be used as working capital
for Ability..
Liquidity of Investment.
Although the Shares will be "free trading," there is no
established market for the Shares and there may not be in
the future. Therefore, an investor should consider his
investment to be long-term. See "Risk Factors, page 6."
RISK FACTORS
The securities offered are highly speculative in nature and
involve a high degree of risk. They should be purchased only by persons
who can afford to lose their entire investment. Therefore, each
prospective investor should, prior to purchase, consider very carefully
the following risk factors among other things, as well as all other
information set forth in this prospectus.
Rule 419 contains restrictive provisions on the sale of shares.
Rule 419 generally requires that the securities to be issued
and the funds received in a blank check offering be deposited and held
in an escrow account until an acquisition meeting specified criteria is
completed.
Before the acquisition can be completed and before the funds and
securities can be released, the issuer in a blank check offering is required
to update its registration statement with a post-effective amendment.
After the effective date of any such post-effective
amendment, Ability is required to furnish investors with the
prospectus produced thereby containing information, including
audited financial statements, regarding the proposed acquisition
candidate and its business. Investors must be given no fewer than
20 and no more than 45 business days from the effective date of
the post-effective amendment to decide to remain investors or
require the return of their investment funds. Any investor not
making a decision within said period is automatically to receive
a return of his investment funds.
Although investors may request the return of their investment
funds in connection with the reconfirmation offering required by Rule 419,
Ability's shareholders will not be afforded an opportunity specifically to
approve or disapprove any particular transaction involving the purchase
of shares from management.
Investors are prohibited from selling or offering to sell shares held
in escrow.
According to Rule15g-8 as promulgated by the S.E.C. under the amended
Securities Exchange Act of 1934, it shall be unlawful for any person to
sell or offer to sell shares or any interest in or related to the shares held
in the Rule 419 escrow account other than pursuant to a qualified domestic
relations order or by will or the laws of descent and distribution. As a
result, contracts for sale to be satisfied by delivery of the deposited
securities are prohibited, for example contracts for sale on a when, as, and
if issued basis.
Because this is a blank check offering, investors will not be able to
evaluate the specific merits or risks of business combinations
As a result of management's broad discretion with respect to the
specific application of the net proceeds of this offering, this offering can be
characterized as a blank check offering. Although substantially all of the net
proceeds of this offering are intended generally to be applied toward
effecting a business combination, such proceeds are not otherwise being
designated for any more specific purposes.
Accordingly, prospective investors will invest in Ability without an
opportunity to evaluate the specific merits or risks of any one or more
business combinations. Determinations ultimately made by Ability relating to
the specific allocation of the net proceeds of this offering do not
guarantee Ability will achieve its business objectives.
The ability to register shares is limited.
The ability to register or qualify for sale the shares for both initial
sale and secondary trading is limited because a number of states have
enacted regulations pursuant to their securities or "blue sky" laws
restricting or, in some instances, prohibiting, the sale of
securities of blank check issuers, such as Ability, within that state.
In addition, many states, while not specifically prohibiting or
restricting blank check companies, may not register the shares for sale in
their states. Because of such regulations and other restrictions, Ability's
selling efforts, and any secondary market which may develop, may only be
conducted in those jurisdictions where an applicable exemption is available
or a blue sky application has been filed and accepted or where the shares
have been registered.
Ability has had no operating revenue to date and may not become
profitable.
Ability has had no operating history nor any revenues or earnings from
operations. Ability has no significant assets or financial resources.
Ability will, in all likelihood, sustain operating expenses without
corresponding revenues, at least until the consummation of a business
combination. This may result in Ability incurring a net operating loss
which will increase continuously until Ability can consummate a
business combination with a profitable business opportunity. Ability
may not be able to identify such a business opportunity and consummate
such a business combination. Additionally, because
Success of Ability's business operations may depend on management
outside of Ability's control.
The success of Ability'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 combinations with entities having established operating
histories, there can be no assurance that Ability will be successful in
locating candidates meeting such criteria. In the event Ability
completes a business combination, the success of Ability's operations
may be dependent upon management of the successor firm or venture
partner firm and numerous other factors beyond Ability's control.
Ability is at a competitive disadvantage and in a highly competitive
market searching for business combinations and opportunities.
Ability is and will continue to be an insignificant participant in the
business of seeking mergers with, joint ventures with 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 Ability. Nearly all such entities have significantly
greater financial resources, technical expertise and managerial
capabilities than Ability and, consequently, Ability will be at a
competitive disadvantage in identifying possible business opportunities
and successfully completing a business combination. Moreover, Ability
will compete in seeking merger or acquisition candidates with numerous
other small public companies.
Ability has no agreement for a merger nor any standards set for
acceptable candidates for merger.
Ability has no arrangement, agreement or understanding with respect to
engaging in a merger with, joint venture with or acquisition of, a
private entity. Ability may not 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 evaluations. Ability has been
in the developmental stage since inception and has no operations to
date. Other than issuing shares to its original shareholders, Ability
never commenced any operational activities. Ability may not be able to
negotiate a business combination on terms favorable to Ability.
Ability 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 Ability would not consider a business combination in any
form with such business opportunity. Accordingly, Ability 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.
Ability's management lack certain business skills and will be devoting
only part-time work hours.
While seeking a business combination, management anticipates devoting
up to twenty hours per month to the business of Ability. Ability's two
officers have not entered into written employment agreements with
Ability and are not expected to do so in the foreseeable future.
Ability has not obtained key man life insurance on either of its
officers or directors. Notwithstanding the combined limited experience
and time commitment of management, loss of the services of any of these
individuals would adversely affect development of Ability's business
and its likelihood of continuing operations.
Furthermore, Ability's officers and directors are not professional
business analysts. Lack of experience will be a detriment to Ability's
efforts.
Ability may, on occasion, enter into business agreements that have a
conflict of interest.
Currently, Ability's officers and directors have no conflict of
interest. However, changes in officers and directors or business
agreements entered into could potentially show conflicts of interest.
In such instance that Ability's officers or directors are involved in
the management of any firm with which Ability transacts business.
Ability's board of directors will adopt a resolution which
prohibits Ability from completing 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. Management is not aware of any circumstances under which this
policy could be changed while current management is in control of
Ability.
Potential merger or acquisition candidates must meet SEC requirements
that may delay or preclude Ability's business plan.
Section 13 of the Securities Exchange Act of 1934, requires companies
falling under Section 13 of the Securities Exchange Act of 1934 to
provide certain information about significant acquisitions, including
certified financial statements for Ability acquired, covering one or
two years, depending on the relative size of the acquisition. The time
and additional costs that may be incurred by some target entities to
prepare such statements may significantly delay or essentially preclude
consummation of an otherwise desirable acquisition by Ability.
Acquisition prospects that do not have or are unable to obtain the
required audited statements may not be appropriate for acquisition so
long as the reporting requirements of the 1934 Act are applicable.
Ability is at a competitive disadvantage because it lacks any market
research or marketing organization.
Ability has neither conducted, nor have others made available to it,
results of market research indicating that market demand exists for the
transactions contemplated by Ability. Moreover, Ability 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
Ability, there is no assurance Ability will be successful in completing
any such business combination.
Ability will limited to the business opportunities of any company
Ability's proposed operations, even if successful, will in all
likelihood result in Ability engaging in a business combination with
only one business opportunity. Consequently, Ability's activities will
be limited to those engaged in by the business opportunity which
Ability merges with or acquires. Ability's inability to diversify its
activities into a number of areas may subject Ability to economic
fluctuations within a particular business or industry and therefore
increase the risks associated with Ability's operations.
Potential determination by the SEC that Ability is an investment
company could cause material adverse consequences.
Although Ability will be regulated under the Securities Exchange Act of
1933, management believes Ability will not be regulated under the
Investment Company Act of 1940, insofar as Ability will not be engaged
in the business of investing or trading in securities. In the event
Ability engages in business combinations which result in Ability
holding passive investment interests in a number of entities, the
Ability could be under regulation of the Investment Company Act of
1940. In such event, Ability would be required to register as an
investment company and could be expected to incur significant
registration and compliance costs Ability has obtained no formal
determination from the Securities and Exchange Commission as to the
status of Ability under the Investment Company Act of 1940 and,
consequently, any violation of such Act would subject Ability to
material adverse consequences.
Any business combination will probably result loss of management and
control by Ability shareholders.
A business combination involving the issuance of Ability's common stock
will, in all likelihood, result in shareholders of a private company
obtaining a controlling interest in Ability. Any such business
combination may require management of Ability to sell or transfer all
or a portion of Ability's common stock held by them, or resign as
members of the board of directors of Ability. The resulting change in
control Ability could result in removal of one or more present officers
and directors of Ability and a corresponding reduction in or
elimination of their participation in the future affairs of Ability.
Should Ability meet its business plan of merging, shareholders in
Ability will most likely suffer a reduction in percentage share
ownership of the newly formed company.
Ability's primary plan of operation is based upon a business
combination with a private concern which, in all likelihood, would
result in Ability issuing securities to shareholders of such private
company. The issuance of previously authorized and unissued common
stock of Ability would result in reduction in percentage of shares
owned by present and prospective shareholders of Ability and would most
likely result in a change in control or management of Ability.
Potential acquisition or merger candidates may wish to avoid potential
adverse consequences of merging with Kesser.
Ability 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 Ability.
Such consequences may include, but are not limited to, time delays of
the registration process, significant expenses to be incurred in such
an offering, loss of voting control to public shareholders and the
inability or unwillingness to comply with various federal and state
securities laws enacted for the protection of investors. These
securities laws primarily relate to provisions regarding the
registration of securities which require full disclosure of Ability's
business, management and financial statements.
Many business decisions made by Ability can have major tax consequences
and many associated risks.
Federal and state tax consequences will, in all likelihood, be major
considerations in any business combination Ability 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. Ability intends to structure any business combination
so as to minimize the federal and state tax consequences to both
Ability 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 the transaction.
The requirement of audited financial statements of potential merging
entities may cause some potential merger candidates to forego merging
with Ability.
Management of Ability believes that any potential business opportunity
must provide audited financial statements for review, and for the
protection of all parties to the business combination. One or more
attractive business opportunities may choose to forego the possibility
of a business combination with Ability, rather than incur the expenses
associated with preparing audited financial statements.
Ability securities may be limited to only a few markets because of blue
sky laws.
Because the securities registered hereunder have not been registered
for resale under the blue sky laws of any state, and Ability has no
current plans to register or qualify its shares in any state, the
holders of such shares and persons who desire to purchase them in any
trading market that might develop in the future, should be aware that
there may be significant state blue sky restrictions upon the ability
of new investors to purchase the securities which could reduce the size
of the potential market. As a result of recent changes in federal law,
non-issuer trading or resale of Ability's securities is exempt from
state registration or qualification requirements in most states.
However, some states may continue to attempt to restrict the trading or
resale of blind-pool or blank-check securities. Accordingly, investors
should consider any potential secondary market for Ability's securities
to be a limited one.
Certain officers, directors, principal shareholders or affiliates may
purchase shares, thereby increasing their percentage share.
Certain officers, directors, principal shareholders and affiliates may
purchase, for investment purposes, a portion of the shares offered
hereby, which could, upon conversion, increase the percentage of the
shares owned by such persons. The purchases by these control persons
may make it possible for the offering to meet the escrow amount.
Ability may not be able to sale enough shares to follow through with
the business plan.
The 2,000,000 common shares are to be offered directly by Ability, and
no individual, firm, or corporation has agreed to purchase or take down
any of the shares. It is not know whether Ability will be able to sell
any shares.
Ability's offering price is arbitrary and the value of Ability
securities may never actually reach the offering price.
The offering price of the shares bears no relation to book value,
assets, earnings, or any other objective criteria of value. They have
been arbitrarily determined by Ability. There can be no assurance that,
even if a public trading market develops for Ability's securities, the
shares will attain market values commensurate with the offering price.
Ability shares are to be offered based on a direct participation
offering basis.
The shares are offered by Ability on a direct participation offering
basis, and no individual, firm or corporation has agreed to purchase or
take down any of the offered shares. Ability cannot and does not make
any statement guaranteeing that shares will be sold. Provisions have
been made to deposit in escrow the funds received from the purchase of
shares sold by Ability.
Ability's shares may never actually be traded and therefore purchasers
may never be able to resale.
Prior to the offering, there has been no public market for the shares
being offered. An active trading market may not develop.
Consequently, purchasers of the shares may not be able to resell their
securities at prices equal to or greater than the respective initial
public offering prices. The market price of the shares may be affected
significantly by factors such as announcements by Ability or its
competitors, variations in Ability's results of operations, and market
conditions in the retail, electron commerce, and internet industries in
general. Movements in prices of stock may also affect the market price
in general. As a result of these factors, purchasers of the shares
offered hereby may not be able to liquidate an investment in the shares
readily or at all.
Shares sold in the future may have to comply with Rule 144.
All of the 3,000,000 shares, which are held by management, have been
issued in reliance on the private placement exemption under the amended
Securities Act of 1933. Such shares will not be available for sale in
the open market without separate registration except in reliance upon
Rule 144 under the Act.
In general, under Rule 144 a person (or persons whose shares are
aggregated) who has beneficially owned shares acquired in a non-public
transaction for at least one year, including persons who may be deemed
affiliates of Ability (as that term is defined under the Act) would be
entitled to sell within any three-month period a number of shares that
does not exceed the greater of 1% of the then outstanding shares of
common stock, or the average weekly reported trading volume on all
national securities exchanges and through NASDAQ during the four
calendar weeks preceding such sale, provided that certain current
public information is then available. If a substantial number of the
shares owned by management were sold pursuant to Rule 144 or a
registered offering, the market price of the common stock could be
adversely affected.
Ability faces uncertainty with regard to the Y2K issue.
The Year 2000 issue arises because many computerized systems use two
digits rather than four to identify a year. Date sensitive systems may
recognise the year 2000 as 1900 or some other date, resulting in errors
when information using the year 2000 date is processed. The effects of
the Year 2000 issue may be experienced before, on, or after January 1,
2000, and if not addressed, the impact on operations and financial
reporting may range from minor errors to significant system failure
which could affect Ability's ability to conduct normal business
operations. This creates potential risk for all companies, even if
their own computer systems are Year 2000 compliant. It is not possible
to be certain that all aspects of the Year 2000 issue affecting
Ability, including those related to the efforts of customers,
suppliers, or other third parties, will be fully resolved.
Ability's Year 2000 plans are based on management's best estimates.
Based on currently available information, management does not believe
that the Year 2000 issues will have a material adverse impact on
Ability's financial condition or results of operations; however,
because of the uncertainties in this area, assurance cannot be given in
this regard.
Investors' rights and substantive protection under rule 419.
Deposit of offering proceeds and securities.
Rule 419 requires that the net offering proceeds, after
deduction for underwriting compensation and offering costs, and all
securities to be issued be deposited into an escrow or trust account
(the "Deposited Funds" and "Deposited Securities," respectively)
governed by an agreement which contains certain terms and provisions
specified by the rule. Under Rule 419, the Deposited Funds and Deposited
Securities will be released to Ability and to investors, respectively, only
after the Company has met the following three conditions:
First, Ability must execute an agreement for an acquisition(s) meeting
certain prescribed criteria; second, Ability must successfully complete
a reconfirmation offering which includes certain prescribed terms and
conditions; and third, the acquisition(s) meeting the prescribed criteria
must be consummated.
Prescribed acquisition criteria.
Rule 419 requires that before the Deposited Funds and the
Deposited Securities can be released, Ability must first execute an
agreement(s) to acquire an acquisition candidate(s) meeting certain
specified criteria. The agreement must provide for the acquisition of a
business(es) or assets valued at not less than 80% of the maximum offering
proceeds, but excluding underwriting commissions, underwriting expenses
and dealer allowances payable to non-affiliates. Once the acquisition
agreements meeting the above criteria have been executed, Ability must
successfully complete the mandated reconfirmation offering and consummate the
acquisitions(s).
Post-effective amendment.
Once the agreement(s) governing the acquisition(s) of a business(es)
meeting the above criteria has (have) been executed, Rule 419 requires
Ability to update the registration statement of which this prospectus
is a part with a post-effective amendment. The post-effective amendment must
contain information about: the proposed acquisition candidate(s) and
its business(es), including audited financial statements; the results of
this offering; and the use of the funds disbursed from the escrow account.
The post-effective amendment must also include the terms of the
reconfirmation offer mandated by Rule 419. The offer must include certain
prescribed conditions which must be satisfied before the Deposited Funds and
Deposited Securities can be released from escrow.
Reconfirmation offering.
The reconfirmation offer must commence within five business
days after the effective date of the post-effective amendment. Pursuant
to Rule 419, the terms of the reconfirmation offer must include the
following conditions:
(1) The prospectus contained in the post-effective amendment will be
sent to each investor whose securities are held in the escrow account within
five business days after the effective date of the post-effective amendment;
2) Each investor will have no fewer than 20, and no more than 45,
business days from the effective date of the post-effective amendment to notify
the Company in writing that the investor elects to remain an investor;
(3) If Ability does not receive written notification from any investor
within 45 business days following the effective date, the pro rata
portion of the Deposited Funds (and any related interest or dividends) held
in the escrow account on such investor's behalf will be returned to the
investor within five business days by first class mail or other equally
prompt means;
(4) The acquisition(s) will be consummated only if investors having
contributed 80% of the maximum offering proceeds elect to reconfirm their
investments; and
(5) If a consummated acquisition(s) has not occurred within 18
months from the date of this prospectus, the Deposited Funds
held in the escrow account shall be returned to all investors on a pro
rata basis within five business days by first class mail or other equally
prompt means.
Release of deposited securities and deposited funds.
The Deposited Funds and Deposited Securities may be released to Ability
and the investors, respectively, after:
(1) The Escrow Agent has received written certification from Ability
and any other evidence acceptable by the Escrow Agent that Ability has
executed an agreement for the acquisition(s) of a business(es) the
value of which represents at least 80% of the maximum offering proceeds and has
filed the required post-effective amendment, the post-effective amendment has
been declared effective, the mandated reconfirmation offer having the
conditions prescribed by Rule 419 has been completed, and Ability has satisfied
all of the prescribed conditions of the reconfirmation offer; and
(2) The acquisition(s) of the business(es) the value of which
represents at least 80% of the maximum offering proceeds is (are) consummated.
Escrowed funds not to be used for salaries or reimbursable expenses.
No funds (including any interest earned thereon) will be
disbursed from the escrow account for the payment of salaries or
reimbursement of expenses incurred on Ability's behalf by Ability's officers and
directors. Other than the foregoing, there is no limit on the amount of
such reimbursable expenses, and there will be no review of the
reasonableness of such expenses by anyone other than Ability's board of
directors, both of whom are officers. In no event will the escrowed funds
(including any interest earned thereon) be used for any purpose other than
implementation of a business combination.
See "Risk Factors," "Use Of Proceeds" and "Certain Transactions."
Use of Proceeds.
Following the sale of the 2,000,000 Shares Offered by
Ability, there will be net proceeds of $100,000. The net proceeds are
calculated as $100,000 minus sales commission costs, which are zero.
Net proceeds do not include any legal or accounting fees. These
proceeds will be used to provide start-up and working capital for the
Company.
The following table sets forth the use of proceeds from
this offering (based on the minimum and maximum offering
amounts):
Use of Proceeds Minimum Offering Maximum Offering
Amount Percent Amount Percent
Working Capital $ 20,000 100 % $100,000 100 %
Total $ 20,000 100 % $100,000 100 %
Management anticipates expending these funds for the
purposes indicated above. To the extent that expenditures
are less than projected, the resulting balances will be
retained and used for general working capital purposes or
allocated according to the discretion of the Board of
Directors. Conversely, to the extent that such expenditures
require the utilization of funds in excess of the amounts
anticipated, supplemental amounts may be drawn from other
sources, including, but not limited to, general working
capital and/or external financing. The net proceeds of this offering
that are not expended immediately may be deposited in interest or non-
interest bearing accounts, or invested in government obligations,
certificates of deposit, commercial paper, money market mutual funds,
or similar investments.
Management may advance money to the Company or on behalf of the
Company.
There are no set limits to the maximum amount that management will
advance or loan to the Company. However, the amount is obviously
limited by the resources of the officers and directors. Management
anticipates that repayment would come from the acquisition of a target
company. The advances would be expected to be in an amount well below
the minimum expected from any viable operating business target.
Determination of offering price.
The offering price is not based upon Ability's net
worth, total asset value, or any other objective measure of
value based upon accounting measurements. The offering
price is determined by the Board of Directors of Ability
and was determined arbitrarily based upon the amount of
funds needed by Ability to start-up the business, and
the number of shares that the initial shareholders were
willing to allow to be sold.
Dilution.
"Net tangible book value" is the amount that results
from subtracting the total liabilities and intangible assets
of an entity from its total assets. "Dilution" is the
difference between the public offering price of a security
and its net tangible book value per Share immediately after
the Offering, giving effect to the receipt of net proceeds
in the Offering. As of January 18, 2000, the net tangible
book value of Ability was $3000 or $.001 per Share.
Giving effect to the sale by Ability of all offered
Shares at the public offering price, the pro forma net
tangible book value of Ability would be $100,000 or $.02
per Share, which would represent an immediate increase of
$.02 in net tangible book value per Share and $.03 per Share
dilution per share to new investors. Dilution of the book
value of the Shares may result from future share offerings
by Ability.
The following table illustrates the pro forma per Share
dilution:
Assuming
Maximum
Shares Sold
Offering Price (1) $.05
Net tangible book value per
share before Offering (2) $.001
Increase Attributable to purchase
of stock by new investors (3) $.02
Net tangible book value per
Share after offering (4) $.02
Dilution to new investors (5) $.03
Percent Dilution to new investors (6,7) 60%
(1) Offering price before deduction of offering expenses,
calculated on a "Common Share Equivalent" basis.
(2) The net tangible book value per share before the
offering ($0.001) is determined by dividing the number of
Shares outstanding prior to this offering into the net
tangible book value of Ability.
(3) The net tangible book value after the offering is
determined by adding the net tangible book value before the
offering to the estimated proceeds to the Corporation from
the current offering (assuming all the Shares are
subscribed), and dividing by the number of common shares
outstanding.
(4) The net tangible book value per share after the
offering ($103,000) is determined by dividing the number of
Shares that will be outstanding, assuming sale of all the
Shares offered, after the offering into the net tangible
book value after the offering as determined in note 3 above.
(5) The Increase Attributable to purchase of stock by new
investors is derived by taking the net tangible book value
per share after the offering ($.02) and subtracting from it
the net tangible book value per share before the offering
($.001) for an increase of $.02.
(6) The dilution to new investors is determined by
subtracting the net tangible book value per share after the
offering ($.02) from the offering price of the Shares in
this offering ($.05), giving a dilution value of ($.03).
(7) The Percent Dilution to new investors is determined by
dividing the Dilution to new investors ($.03) by the
offering price per Share ($.05) giving a dilution to new
investors of 60%.
Plan of distribution.
Ability will sell a maximum of 2,000,000 shares of its
common stock, par value $.001 per Share to the public on a
"best efforts" basis. The minimum purchase required of an
investor is $250.00. There can be no assurance that any of
these shares will be sold.
The net proceeds to Ability will be $100,000, minus associated costs,
if all the shares offered are sold. No commissions or other fees will
be paid, directly or indirectly, by Ability, or any of its principals,
to any person or firm in connection with solicitation of sales of the
shares, certain costs are to be paid in connection with
the offering (see "Use of Proceeds").
The public offering price of the shares will be modified, from time to
time, by amendment to this prospectus, in accordance with changes in
the market price of Ability's common stock. These securities are offered by
Ability subject to prior sale and to approval of certain legal matters by
counsel.
The officers and directors of Ability will be offering and selling
shares on behalf of Ability. President and director Lynde Russell and
secretary and director Brian McGrath will be offering and selling
shares on behalf of Ability.
Those officers and directors offering the securities on behalf of
Ability.com will be relying on the safe harbor from broker-dealer
registration rule set out in Rule 3a4-1.
We have been informed by these officers and directors that:
they are not subject to statutory disqualification as
defined in Section 3(a)(39) of the Securities Exchange Act of
1934,
these officers and directors are not compensated in connection
with their participation by the payment of commissions or other
remuneration based either directly or indirectly on transactions
in securities,
and,
these officers and directors are not an associated person of a
broker or dealer.
Additionally, the officers and directors offering and selling
securities in Ability meet the conditions of part (a)(4)(iii) where
participation will be restricted to:
(A) Preparing any written communication or delivering such
communication through the mails or other means that does
not involve oral solicitation by the associated person of a
potential purchaser; provided, however, that the content of
such communication is approved by a partner, officer or
director of the issuer;
(B) Responding to inquiries of a potential purchaser in a
communication initiated by the potential purchaser;
provided, however, that the content of such responses are
limited to information contained in a registration
statement filed under the Securities Act of 1933 or other
offering document; or
(C) Performing ministerial and clerical work involved in
effecting any transaction.
Limited State Registration.
Ability anticipates that there will be no State registration of its
securities. Any sale of its securities will depend on exemptions under
the Blue Sky laws of states in which the securities are sold.
Opportunity To Make Inquires.
Ability will make available to each Offeree, prior to
any sale of the Shares, the opportunity to ask questions and
receive answers from Ability concerning any aspect of
the investment and to obtain any additional information
contained in this Memorandum, to the extent that Ability
possesses such information or can acquire it without
unreasonable effort or expense.
Execution of Documents.
Each person desiring to subscribe to the Shares must
complete, execute, acknowledge, and delivered to Ability
a Subscription Agreement, which will contain, among other
provisions, representations as to the investor's
qualifications to purchase the common stock and his ability
to evaluate and bear the risk of an investment in the
Company.
By executing the subscription agreement, the
subscriber is agreeing that if the Subscription Agreement it
is excepted by Ability, such a subscriber will be, a
shareholder in Ability and will be otherwise bound by
the articles of incorporation and the bylaws of Ability
in the form attached to this Prospectus.
Promptly, upon receipt of subscription documents by the
Company, it will make a determination as to whether a
prospective investor will be accepted as a shareholder in
Ability. Ability may reject a subscriber's
Subscription Agreement for any reason. Subscriptions will be
rejected for failure to conform to the requirements of this
Prospectus (such as failure to follow the proper
subscription procedure), insufficient documentation, over
subscription to Ability, or such other reasons other as
Ability determines to be in the best interest of the
Company.
If a subscription is rejected, in whole or in
part, the subscription funds, or portion thereof, will be
promptly returned to the prospective investor without
interest by depositing a check (payable to said investor) in
the amount of said funds in the United States mail,
certified returned-receipt requested. Subscriptions may not
be revoked, cancelled, or terminated by the subscriber,
except as provided herein.
Legal Proceedings
Ability is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such
action by or against Ability has been threatened.
Directors, Executive Officers, Promoters,
and Control Persons
The names, ages, and respective positions of the
directors, officers, and significant employees of the
Company are set forth below. All these persons have held
their positions since January, 2000. Each director and officer shall
serve for a term ending on the date of the third Annual Meeting. There
are no other persons which can be classified as a promoter or controlling
person of Ability.
Lynde Russell. President/Director, Age 32. Ms. Russell owns and
operates a spa.
Brian McGrath, Secretary/Director, Age 25. B.A. Business San Diego
State. Mr. McGrath works as a city planner for the city Irive, CA.
None of the Officers and Directors have been involved in legal
proceedings that impair their ability to perform their duties as
Officers and Directors.
There is no family relationship between any of the officers or
directors.
Security Ownership of Certain
Beneficial Owners and Management
The following table sets forth, as of the date of this
Prospectus, the outstanding Shares of common stock of the
Company owned of record or beneficially by each person who
owned of record, or was known by Ability to own
beneficially, more than 5% of Ability's Common Stock,
and the name and share holdings of each officer and director
and all officers and directors as a group.
Title of Class Name of Beneficial Amount and Nature Percent
Owner (1) of Beneficial Of Class
Owner(2)
Common Stock Lynde Russell 1,500,000 50%
Common Stock Brian McGrath 1,500,000 50%
None of the Officers, Directors or existing shareholders have
the right to acquire any amount of the Shares within sixty days from options,
warrants, rights, conversion privilege, or similar obligations.
Principal Shareholder(s).
The addresses for the principal shareholders are as follows:
President Lynde Russell: 25002 Hidden Hills Road Apt. B, Laguna Beach,
CA 92677
Secretary Brian McGrath: 2027 North Coast Hwy. Apt. #12, Laguna Beach,
CA 92651.
Both shareholders have sole voting and investment power.
Description of securities.
General description.
The securities being offered are shares of common stock.
The Articles of Incorporation authorize the issuance of
25,000,000 shares of common stock, with a par value of
$.001. The holders of the Shares: (a) have equal ratable
rights to dividends from funds legally available therefore,
when, as, and if declared by the Board of Directors of the
Company; (b) are entitled to share ratably in all of the
assets of Ability available for distribution upon
winding up of the affairs of Ability; (c) do not have
preemptive subscription or conversion rights and there are
no redemption or sinking fund applicable thereto; and (d)
are entitled to one non-cumulative vote per share on all
matters on which shareholders may vote at all meetings of
shareholders. These securities do not have any of the
following rights: (a) cumulative or special voting rights;
(b) preemptive rights to purchase in new issues of Shares;
(c) preference as to dividends or interest; (d) preference
upon liquidation; or (e) any other special rights or
preferences. In addition, the Shares are not convertible
into any other security. There are no restrictions on
dividends under any loan other financing arrangements or
otherwise. See a copy of the Articles of Incorporation, and
amendments thereto, and Bylaws of Ability, attached as
Exhibit 3.1 and Exhibit 3.2, respectively, to this Form SB-
2. As of the date of this Form SB-2, Ability has
3,000,000 Shares of common stock outstanding.
Non-cumulative voting.
The holders of Shares of Common Stock of Ability do not
have cumulative voting rights, which means that the holders
of more than 50% of such outstanding Shares, voting for the
election of directors, can elect all of the directors to be
elected, if they so choose. In such event, the holders of
the remaining Shares will not be able to elect any of the
Company's directors.
Dividends.
Ability does not currently intend to pay cash dividends.
Ability's proposed dividend policy is to make
distributions of its revenues to its stockholders when the
Company's Board of Directors deems such distributions
appropriate. Because Ability does not intend to make
cash distributions, potential shareholders would need to
sell their shares to realize a return on their investment.
There can be no assurances of the projected values of the
shares, nor can there be any guarantees of the success of
Ability.
A distribution of revenues will be made only when, in the
judgment of Ability's Board of Directors, it is in the
best interest of Ability's stockholders to do so. The
Board of Directors will review, among other things, the
investment quality and marketability of the securities
considered for distribution; the impact of a distribution of
the investee's securities on its customers, joint venture
associates, management contracts, other investors, financial
institutions, and Ability's internal management, plus
the tax consequences and the market effects of an initial or
broader distribution of such securities.
Possible anti-takeover effects of authorized but unissued stock.
Upon the completion of this Offering, Ability's
authorized but unissued capital stock will consist of
20,000,000 shares (assuming the entire offering is sold) of
common stock. One effect of the existence of authorized but
unissued capital stock may be to enable the Board of
Directors to render more difficult or to discourage an
attempt to obtain control of Ability by means of a
merger, tender offer, proxy contest, or otherwise, and
thereby to protect the continuity of Ability's
management.
If, in the due exercise of its fiduciary obligations, for example,
the Board of Directors were to determine that a takeover
proposal was not in Ability's best interests, such shares could be
issued by the Board of Directors without stockholder approval in one or more
private placements or other transactions that might prevent,
or render more difficult or costly, completion of the
takeover transaction by diluting the voting or other rights
of the proposed acquirer or insurgent stockholder or
stockholder group, by creating a substantial voting block in
institutional or other hands that might undertake to support
the position of the incumbent Board of Directors, by
effecting an acquisition that might complicate or preclude
the takeover, or otherwise.
Transfer Agent
Ability intends to engage the services of Pacific Stock
Transfer Company, P.O. Box 93385 Las Vegas, Nevada 89193
(702) 361-3033 Fax (702) 732-7890.
Interest of named experts and counsel.
No named expert or counsel was hired on a contingent
basis. No named expert or counsel will receive a direct
or indirect interest in the small business issuer. No named
expert or counsel was a promoter, underwriter,
voting trustee, director, officer, or employee of the small
business issuer.
Disclosure of commission position on indemnification for securities act
liabilities.
No director of Ability will have personal liability to
Ability or any of its stockholders for monetary damages
for breach of fiduciary duty as a director involving any act
or omission of any such director since provisions have been
made in the Articles of Incorporation limiting such
liability.
The foregoing provisions shall not eliminate or
limit the liability of a director (i) for any breach of the
director's duty of loyalty to Ability or its
stockholders, (ii) for acts or omissions not in good faith
or, which involve intentional misconduct or a knowing
violation of law, (iii) under applicable Sections of the
Nevada Revised Statutes, (iv) the payment of dividends in
violation of Section 78.300 of the Nevada Revised Statutes
or, (v) for any transaction from which the director derived
an improper personal benefit.
The By-laws provide for indemnification of the directors,
officers, and employees of Ability in most cases for any
liability suffered by them or arising out of their
activities as directors, officers, and employees of the
Company if they were not engaged in willful misfeasance or
malfeasance in the performance of his or her duties;
provided that in the event of a settlement the
indemnification will apply only when the Board of Directors
approves such settlement and reimbursement as being for the
best interests of the Corporation. The Bylaws, therefore,
limit the liability of directors to the maximum extent
permitted by Nevada law (Section 78.751).
The officers and directors of Ability are accountable to
Ability as fiduciaries, which means they are required to
exercise good faith and fairness in all dealings affecting
Ability. In the event that a shareholder believes the
officers and/or directors have violated their fiduciary
duties to Ability, the shareholder may, subject to
applicable rules of civil procedure, be able to bring a
class action or derivative suit to enforce the shareholder's
rights, including rights under certain federal and state
securities laws and regulations to recover damages from and
require an accounting by management..
Shareholders who have suffered losses in connection
with the purchase or sale of their interest in
Ability in connection with such sale
or purchase, including the misapplication by any such
officer or director of the proceeds from the sale of these
securities, may be able to recover such losses from the
Company.
The registrant undertakes the following:
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 (the "Act") may be
permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
Organization within last five years.
The names of the promoters of the registrant are the
officers and directors as disclosed elsewhere in this Form
SB-2. None of the promoters have received anything of value
from the registrant.
Description of Business.
1. Company/Business Summary.
Ability.com, Inc.. was incorporated on
January 18, 2000, under the laws of the State of Nevada, to
engage in any lawful corporate undertaking, including, but
not limited to, selected mergers and acquisitions. The
Company has been in the developmental stage since inception
and has no operations date. Other than issuing shares to
its original shareholders, Ability never commenced any
operational activities.
Ability was formed by Lynde Russell, the initial
director, for the purpose of creating a corporation which
could be used to consummate a merger or acquisition. Ms.
Russell serves as President and Director. Ms. Russell
determined next to proceed with filing a Form SB-2.
Ms. Russell, the President and Director, elected to
commence implementation of Ability's principal business
purpose, described below under "Item 2, Plan of Operation".
As such, Ability can be defined as a "shell" company,
whose sole purpose at this time is to locate and consummate
a merger or acquisition with a private entity.
The proposed business activities described herein
classify Ability as a "blank check" company. Many
states have enacted statutes, rules and regulations limiting
the sale of securities of "blank check" companies in their
respective jurisdictions. Management does not intend to
undertake any efforts to cause a market to develop in the
Company's securities until such time as Ability has
successfully implemented its business plan described herein.
Accordingly, each shareholder of Ability has executed
and delivered a "lock-up" letter agreement, affirming that
he/she will not sell his/her respective shares of the
Company's common stock until such time as Ability has
successfully consummated a merger or acquisition and the
Company is no longer classified as a "blank check" company.
In order to provide further assurances that no trading will
occur in Ability's securities until a merger or
acquisition has been consummated, each shareholder has
agreed to place his/her respective stock certificate with
Ability's legal counsel, who will not release these
respective certificates until such time as legal counsel has
confirmed that a merger or acquisition has been successfully
consummated.
However, while management believes that the procedures
established to preclude any sale of Ability's securities prior
to closing of a merger or acquisition will be sufficient, there can be
no assurances that the procedures established herein will unequivocally
limit any shareholder's ability to sell their respective securities before
such closing.
Item 2. Plan of Operation.
The Registrant intends to seek to acquire assets or
shares of an entity actively engaged in business which
generates revenues, in exchange for its securities. The
Registrant has no particular acquisitions in mind and has
not entered into any negotiations regarding such an
acquisition. None of Ability's officers, directors,
promoters or affiliates have engaged in any preliminary
contact or discussions with any representative of any other
company regarding the possibility of an acquisition or
merger between Ability and such other company as of the
date of this registration statement.
While Ability will attempt to obtain audited
financial statements of a target entity, there is no
assurance that such audited financial statements will be
available. The Board of Directors does intend to obtain
certain assurances of value of the target entity's assets
prior to consummating such a transaction, with further
assurances that an audited statement would be
provided within seventy-five days after closing of such a
transaction. Closing documents relative thereto will
include representations that the value of the assets
conveyed to or otherwise so transferred will not materially
differ from the representations included in such closing
documents.
The Registrant has no full time employees. The
Registrant's two officers have agreed to allocate a portion
of their time to the activities of the Registrant, without
compensation. Management anticipates that the business plan
of Ability can be implemented by each officer devoting
approximately 10 hours per month to the business affairs of
Ability and, consequently, conflicts of interest may
arise with respect to the limited time commitment by
such officers. See "Item 5. Directors, Executive Officers, Promoters,
and Control Persons."
Ability is filing this registration statement on a
voluntary basis because the primary attraction of the
Registrant as a merger partner or acquisition vehicle will
be its status as an SEC reporting company. Any business
combination or transaction will likely result in a
significant issuance of shares and substantial dilution to
present stockholders of the Registrant.
The Articles of Incorporation of Ability
provides that Ability may indemnify officers and/or
directors of Ability for liabilities, which can include
liabilities arising under the securities laws. Therefore,
assets of Ability could be used or attached to satisfy
any liabilities subject to such indemnification. See "Item 12,
Indemnification of directors and officers."
General Business Plan.
Ability's purpose is to seek, investigate and,
if such investigation warrants, acquire an interest in
business opportunities presented to it by persons or firms
who or which desire to seek the perceived advantages of an
Exchange Act registered corporation. Ability will not
restrict its search to any specific business, industry, or
geographical location and Ability may participate in a business
venture of virtually any kind or nature.
This discussion of the proposed business is purposefully
general and is not meant to be restrictive of
Ability's virtually unlimited discretion to search for
and enter into potential business opportunities. Management
anticipates that it will be able to participate in only one
potential business venture because Ability has nominal assets and
limited financial resources. See Item F/S, "Financial Statements." This lack
of diversification should be considered a substantial risk
to shareholders of Ability because it will not permit
Ability to offset potential losses from one venture
against gains from another.
Ability may seek a business opportunity with
entities which have recently commenced operations, or which
wish to utilize the public marketplace in order to raise
additional capital in order to expand into new products or
markets, to develop a new product or service, or for other
corporate purposes. Ability may acquire assets and
establish wholly-owned subsidiaries in various businesses or
acquire existing businesses as subsidiaries.
The primary method Ability will use to find
potential merger or acquisition candidates will be to run
classified ads in the Wall Street Journal periodically
seeking companies which are looking to merge with a public
shell.
Ability anticipates that the selection of a
business opportunity in which to participate will be complex
and extremely risky. Due to general economic conditions,
rapid technological advances being made in some industries
and shortages of available capital, management believes that
there are numerous firms seeking the perceived benefits of a
publicly registered corporation. Such perceived benefits may
include facilitating or improving the terms on which
additional equity financing may be sought, providing
liquidity for incentive stock options or similar benefits to
key employees, providing liquidity (subject to restrictions
of applicable statutes) for all shareholders and other
factors. Business opportunities may be available in many
different industries and at various stages of development,
all of which will make the task of comparative investigation
and analysis of such business opportunities extremely
difficult and complex.
Ability has, and will continue to have, no capital with
which to provide the owners of business opportunities with
any significant cash or other assets. However, management
believes Ability will be able to offer owners of
acquisition candidates the opportunity to acquire a
controlling ownership interest in a publicly registered
company without incurring the cost and time required to
conduct an initial public offering.
The owners of the business opportunities will, however,
incur significant legal and accounting costs in connection with the
acquisition of a business opportunity, including the costs
of preparing Form 8-K's, 10-K's or 10-KSB's, agreements and
related reports and documents. The Securities Exchange Act
of 1934 (the "34 Act"), specifically requires that any
merger or acquisition candidate comply with all
applicable reporting requirements, which include providing
audited financial statements to be included within the
numerous filings relevant to complying with the 34 Act.
Nevertheless, the officers and directors of Ability have
not conducted market research and are not aware of
statistical data which would support the perceived benefits
of a merger or acquisition transaction
for the owners of a business opportunity.
The analysis of new business opportunities will be
undertaken by, or under the supervision of, the officers and
directors of Ability, none of whom is a professional
business analyst. Management intends to concentrate on
identifying preliminary prospective business opportunities
which may be brought to its attention through present
associations of Ability's two officers, or by the
Company's shareholders.
In analyzing prospective business opportunities, management
will consider such matters as:
the available technical, financial and managerial resources,
working capital and other financial requirements,
history of operations, if any,
prospects for the future,
nature of present and expected competition;,
the quality and experience of management services which may be
available and
the depth of that management,
the potential for further research, development, or
exploration,
specific risk factors not now foreseeable but which may be
anticipated to
impact the proposed activities of Ability;
the potential for growth or expansion; the potential for
profit;
the perceived public, recognition or acceptance of products,
services, or trades;
name identification; and other relevant factors.
Management will meet personally with management and key
personnel of the business opportunity as part of their investigation.
To the extent possible, Ability intends to utilize written
reports and personal investigation to evaluate the above
factors. Ability will not acquire or merger with any
company for which audited financial statements cannot be
obtained within a reasonable period of time after closing of
the proposed transaction.
Management of Ability, while not especially
experienced in matters relating to the new business of the
Company, will rely upon their own efforts and, to a much
lesser extent, the efforts of Ability's shareholders, in
accomplishing the business purposes of Ability. It is
not anticipated that any outside consultants or advisors will be
utilized by Ability to effectuate its business purposes described
herein.
However, if Ability does retain such an outside consultant or
advisor, any cash fee earned by such party will need to be paid by the
prospective merger/acquisition candidate, as Ability has no cash assets
with which to pay such obligation. There have been no discussions,
understandings, contracts or agreements with any outside consultants
and none are anticipated in the future. In the past, the
Company's management has never used outside consultants or
advisors in connection with a merger or acquisition.
Ability will not restrict its search for any
specific kind of firms, but may acquire a venture which is
in its preliminary or development stage, which is already in
operation, or in essentially any stage of its corporate
life. It is impossible to predict at this time the status
of any business in which Ability may become engaged, in
that such business may need to seek additional capital, may desire
to have its shares publicly traded, or may seek other perceived
advantages which Ability may offer.
However, Ability does not intend to
obtain funds in one or more private placements to finance
the operation of any acquired business opportunity until
such time as Ability has successfully consummated such a
merger or acquisition. Ability also has no plans to
conduct any offerings under Regulation S.
Acquisition of opportunities.
In implementing a structure for a particular
business acquisition, Ability may become a party to a
merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. It
may also acquire stock or assets of an existing business.
On the consummation of a transaction, it is probable that
the present management and shareholders of Ability will
no longer be in control of Ability. In addition, the
Company's directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new
directors without a vote of Ability's shareholders.
It is anticipated that Ability's principal
shareholders may actively negotiate or otherwise consent to
the purchase of a portion of their common stock as a
condition to, or in connection with, a proposed merger or
acquisition transaction. Any terms of sale of the shares
presently held by officers and/or directors of Ability
will be also afforded to all other shareholders of the
Company on similar terms and conditions.
The policy set forth in the preceding sentence is based on an
Understanding between the two members of management, and these
two persons are not aware of any circumstances under which this policy
would change while they are still officers and directors of
Ability. Any and all such sales will only be made in
compliance with the securities laws of the United States and
any applicable state.
It is anticipated that any securities issued in
any such reorganization would be issued in reliance upon
exemption from registration under applicable federal and
state securities laws. In some circumstances, however, as a
negotiated element of its transaction, Ability may agree
to register all or a part of such securities immediately
after the transaction is consummated or at specified times thereafter.
If such registration occurs, of which there can be no assurance, it
will be
undertaken by the surviving entity after Ability has
successfully consummated a merger or acquisition and the
Company is no longer considered a "shell" company. Until
such time as this occurs, Ability will not attempt to
register any additional securities. The issuance of substantial
additional securities and their potential sale into any trading
market which may develop in Ability's securities may have a depressive
effect on the value of Ability's securities in the future, if such a
market develops, of which there is no assurance.
While the actual terms of a transaction to which
Ability may be a party cannot be predicted, it may be
expected that the parties to the business transaction will
find it desirable to avoid the creation of a taxable event
and thereby structure the acquisition in a so-called "tax-
free" reorganization under Sections 368a or 351 of the
Internal Revenue Code (the "Code").
With respect to any merger or acquisition,
negotiations with target company management is expected to
focus on the percentage of Ability which target company
shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among
other things, the target company's assets and liabilities,
Ability's shareholders will in all likelihood hold a
substantially lesser percentage ownership interest in the
Company following any merger or acquisition.
The percentage ownership may be subject to significant reduction in the
event Ability acquires a target company with substantial
assets. Any merger or acquisition effected by Ability
can be expected to have a significant dilutive effect on the
percentage of shares held by Ability's then shareholders.
Ability will participate in a business
opportunity only after the negotiation and execution of
appropriate written agreements. Although the terms of such
agreements cannot be predicted, generally such agreements
will require some 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 and
after such closing, will outline the manner of bearing
costs, including costs associated with Ability's
attorneys and accountants, will set forth remedies on
default and will include miscellaneous other terms.
As stated here-in-above, Ability will not
acquire or merge with any entity which cannot provide
independent audited financial statements within a reasonable
period of time after closing of the proposed transaction.
Ability is subject to all of the reporting requirements
included in the 34 Act. Included in these requirements is
the affirmative duty of Ability to file independent audited
financial statements as part of its Form 8-K to be filed with the
Securities and Exchange Commission upon consummation of a merger or
acquisition, as well as Ability's audited financial statements included
in its annual report on Form 10-K (or 10-KSB, as applicable).
If such audited financial statements are not available at closing, or
within time parameters necessary to insure Ability's compliance with
the requirements of the 34 Act, or if the audited financial
statements provided do not conform to the representations
made by the candidate to be acquired in the closing
documents, the closing documents may provide that the
proposed transaction will be voidable, at the discretion of
the present management of Ability.
Ability's officers and shareholders have
verbally agreed that they will advance to Ability any
additional funds which Ability needs for operating
capital and for costs in connection with searching for or
completing an acquisition or merger. These persons have
further agreed that such advances will be made in proportion
to each person's percentage ownership of Ability. These
persons have also agreed that such advances will be made
interest free without expectation of repayment unless the
owners of the business which Ability acquires or merges
with agree to repay all or a portion of such advances.
There is no dollar cap on the amount of money which such
persons will advance to Ability. Ability will not
borrow any funds from anyone other than its current
shareholders for the purpose of repaying advances made by
the shareholders, and Ability will not borrow
any funds to make any payments to Ability's promoters,
management or their affiliates or associates.
The Board of Directors has passed a resolution
which prohibits Ability from completing an acquisition
or merger with any entity in which any of Ability's
Officers, Directors, principal shareholders or their
affiliates or associates serve as officer or director or
hold any ownership interest. Management is not aware of any
circumstances under which this policy, through their own initiative may
be changed.
There are no arrangements, agreements or
understandings between non-management shareholders and
management under which non-management management of the
Company's affairs. There is no agreement that non-
management shareholders will exercise their voting rights to
continue to re-elect the current directors, however, it is
expected that they will do so based on the existing friendship among
such persons.
Competition.
Ability will remain an insignificant participant among
the firms which engage in the acquisition
of business opportunities. There are many established
venture capital and financial concerns which have
significantly greater financial and personnel resources and
technical expertise than Ability. In view of the
Company's combined extremely limited financial resources and
limited management availability, Ability will continue
to be at a significant competitive disadvantage compared to the
Company's competitors.
Year 2000 compliance.
Ability is aware of the issues associated with
the programming code in existing computer systems through the
year 2000. Ability has assessed these issues
as they relate to Ability, and since Ability
currently has no operating business and does not use any
computers, and since it has no customers, suppliers or other
constituents, it does not believe that there are any
material year 2000 issues to disclose in this Form 10-SB.
Description of property.
Ability has retained Shawn F. Hackman, a P.C., as a resident agent.
The address is 3360 W. Sahara, Suite 200 Las Vegas, NV 89102. Mr.
Hackman has no involvement with the day to day activities of Ability.
A copy of the resident agent agreement is attached.
Ability currently owns no property. President Lynde Russell shall
provide the space for the Company's meetings at 25002 Hidden Hills Road
Apt. B, Laguna Beach, CA 92677.
Certain relationships and related transactions.
There are no relationships, transactions, or proposed
transactions to which the registrant was or is to be a
party, in which any of the named persons set forth in Item
404 of Regulation SB had or is to have a direct or indirect
material interest.
Shawn F. Hackman, Esq., the Company's resident agent, incorporated the
Company in an administrative capacity. Mr. Hackman currently hold no
position in the Company.
Market for common equity and related stockholder matters.
The Shares have not previously been traded on any
securities exchange. At the present time, there are no
assets available for the payment of dividends on the Shares.
Executive compensation.
(a) No officer or director of Ability is receiving any
remuneration at this time.
(b) There are no annuity, pension or retirement benefits
proposed to be paid to officers, directors, or employees of
the corporation in the event of retirement at normal
retirement date pursuant to any presently existing plan
provided or contributed to by the corporation or any of its
subsidiaries.
(c) No remuneration is proposed to be in the future
directly or indirectly by the corporation to any officer or
director under any plan which is presently existing.
Financial statements.
ABILITY.COM
(A Development Stage Company)
FINANCIAL STATEMENTS
February 11, 2000
TABLE OF CONTENTS PAGE #
INDEPENDENT AUDITORS REPORT 1
ASSETS 2
LIABILITIES AND STOCKHOLDERS' EQUITY 2
STATEMENT OF OPERATIONS 3
STATEMENT OF STOCKHOLDERS' EQUITY 4
STATEMENT OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6-9
INDEPENDENT AUDITORS' REPORT
Board of Directors February 14, 2000
ABILITY.COM
Las Vegas, Nevada
I have audited the accompanying Balance Sheets of ABILITY.COM (A
Development Stage Company), as of February 11, 2000 and the related
statements of operations, stockholders' equity and cash flows for the
period January 18, 2000 (inception) to February 11, 2000. These
financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that 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. I believe that my audit provides a reasonable basis for
my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of ABILITY.COM
(A Development Stage Company), as of February 11, 2000, and the results
of its operations and cash flows for the period January 18, 2000
(inception) to February 11, 2000, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note #5
to the financial statements, the Company has suffered recurring losses
from operations and has no established source of revenue. This raises
substantial doubt about its ability to continue as a going concern.
Management's plan in regard to these matters is described in Note #5.
These financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
___________________________
Barry L. Friedman
Certified Public Accountant
1582 Tulita Drive
Las Vegas, NV 89123
(702) 361-8414
ABILITY.COM
(A Development Stage Company)
February 11, 2000
<TABLE>
BALANCE SHEET
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 0
TOTAL CURRENT ASSETS $ 0
OTHER ASSETS $ 0
TOTAL OTHER ASSETS $ 0
TOTAL ASSETS $ 0
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES $ 0
TOTAL CURRENT LIABILITIES $ 0
STOCKHOLDERS' EQUITY (Note #4)
Common stock
Par value $0.001
Authorized 25,000,000 shares
Issued and outstanding at
February 11, 2000 -
3,000,000 shares $ 3,000
Additional Paid-In Capital 0
Deficit accumulated during
The Development stage -3,000
TOTAL STOCKHOLDERS' EQUITY $ 0
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 0
</TABLE>
The accompanying notes are an integral part of these financial statements
- - 2 -
ABILITY.COM
(A Development Stage Company)
January 18, 2000 (inception), to February 11, 2000
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
<S> <C>
INCOME
Revenue $ 0
EXPENSES
General and
Administrative $ 3,000
TOTAL EXPENSES $ 3,000
NET PROFIT/LOSS (-) $ -3,000
Net Profit/Loss(-)
per weighted share
(Note #1) $ -.001
Weighted average
Number of common
shares outstanding 3,000,000
</TABLE>
The accompanying notes are an integral part of these financial statements
- - 3
<TABLE>
ABILITY.COM
(A Development Stage Company)
<CAPTION>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Additional Accumu-
Common Stock paid-in lated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
January 18, 2000
Issued for Services 3,000,000 $ 3,000 $ 0
Net loss January 18,
2000 (inception) to
February 11, 2000 -3,000
Balance,
February 11, 2000 3,000,000 $ 3,000 $ 0 $ -3,000
</TABLE>
The accompanying notes are an integral part of these financial statements
- - 4
ABILITY.COM
(A Development Stage Company)
January 18, 2000 (inception), to February 11, 2000
<TABLE>
<CAPTION>
<S> <C>
STATEMENT OF CASH FLOWS
Cash Flows from
Operating Activities
Net Loss $ -3,000
Adjustment to
Reconcile net loss
To net cash provided
by operating
Activities
Issue Common Stock
For Services +3,000
Changes in assets and
Liabilities 0
Net cash used in
Operating activities $ 0
Cash Flows from
Investing Activities 0
Cash Flows from
Financing Activities 0
Net Increase (decrease) $ 0
Cash,
Beginning of period 0
Cash, End of Period $ 0
</TABLE>
The accompanying notes are an integral part of these financial statements
- - 5 -
ABILITY.COM
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
February 11, 2000
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized January 18, 2000, under the laws of the
State of Nevada as ABILITY.COM The Company currently has no
operations and in accordance with SFAS #7, is considered a
development company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The Company records income and expenses on the accrual
method.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and equivalents
The Company maintains a cash balance in a non-interest-
bearing bank that currently does not exceed federally
insured limits. For the purpose of the statements of cash
flows, all highly liquid investments with the maturity of
three months or less are considered to be cash equivalents.
There are no cash equivalents as of February 11, 2000.
- - 6
ABILITY.COM
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 11, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
Income taxes are provided for using the liability method of
accounting in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS #109) "Accounting for
Income Taxes". A deferred tax asset or liability is
recorded for all temporary difference between financial and
tax reporting. Deferred tax expense (benefit) results from
the net change during the year of deferred tax assets and
liabilities.
Reporting on Costs of Start-Up Activities
Statement of Position 98-5 ("SOP 98-5"), "Reporting on the
Costs of Start-Up Activities" which provides guidance on
the financial reporting of start-up costs and organization
costs. It requires most costs of start-up activities and
organization costs to be expensed as incurred. SOP 98-5 is
effective for fiscal years beginning after December 15,
1998. With the adoption of SOP 98-5, there has been little
or no effect on the company's financial statements.
Loss Per Share
Net loss per share is provided in accordance with Statement
of Financial Accounting Standards No. 128 (SFAS #128)
"Earnings Per Share". Basic loss per share is computed by
dividing losses available to common stockholders by the
weighted average number of common shares outstanding during
the period. Diluted loss per share reflects per share
amounts that would have resulted if dilative common stock
equivalents had been converted to common stock. As of
February 11, 2000, the Company had no dilative common stock
equivalents such as stock options.
Year End
The Company has selected December 31st as its fiscal year-
end.
- - 7 -
ABILITY.COM
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 11, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Policy in Regards to Issuance of Common Stock in a Non-Cash
Transaction
The Company's accounting policy for issuing shares in a
non-cash transaction is to issue the equivalent amount of
stock equal to the fair market value of the assets or
services received.
NOTE 3 - INCOME TAXES
There is no provision for income taxes for the period ended
February 11, 2000, due to the net loss and no state income tax in
Nevada, the state of the Company's domicile and operations. The
Company's total deferred tax asset as of February 11, 2000 is as
follows:
Net operation loss carry forward $ 0
Valuation allowance $ 0
Net deferred tax asset $ 0
NOTE 4 - STOCKHOLDERS' EQUITY
Common Stock
The authorized common stock of the corporation consists of
25,000,000 shares with a par value $.001 per share.
Preferred Stock
The corporation has no preferred stock.
On January 18, 2000, the Company issued 3,000,000 shares of its
$0.001 par value common stock to its directors for services of
$3,000.00.
- - 8 -
ABILITY.COM
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
February 11, 2000
NOTE 5 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern,
which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the
Company does not have significant cash or other material assets,
nor does it have an established source of revenues sufficient to
cover its operating costs and to allow it to continue as a going
concern. The stockholders/officers and or directors have
committed to advancing the operating costs of the Company
interest free.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal
property. An officer of the corporation provides office services
without charge. Such costs are immaterial to the financial
statements and accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other
business activities and may in the future, become involved in
other business opportunities. If a specific business opportunity
becomes available, such persons may face a conflict in selecting
between the Company and their other business interests. The
Company has not formulated a policy for the resolution of such
conflicts.
NOTE 7 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any
additional shares of common stock.
- - 9 -
To Whom It May Concern: February 14, 2000
The firm of Barry L. Friedman, P.C., Certified Public Accountant
consents to the inclusion of their report of February 14, 2000, on the
Financial Statements of ABILITY.COM, as of February 11, 2000, in any
filings that are necessary now or in the near future with the U.S.
Securities and Exchange Commission.
Very truly yours,
___________________________
Barry L. Friedman
Certified Public Accountant
Part II. Information not required in prospectus.
Indemnification of officers and directors.
Information on this item is set forth in Prospectus under
the heading "Disclosure of Commission Position on
Indemnification for Securities Act Liabilities."
Other expenses of issuance and distribution.
Information on this item is set forth in the Prospectus
under the heading "Use of Proceeds."
Recent sales of unregistered securities.
On January 18, 2000, 1,500,000 shares were issued to
Lynde Russell and 1,500,000 to Brian McGrath under Rule
4(2).
Exhibits.
The Exhibits required by Item 601 of Regulation S-B, and an
index thereto, are attached.
Undertakings.
The undersigned registrant hereby undertakes to:
(a) (1) File, during any period in which it offers or
sells securities, a post-effective amendment to this
registration statement to:
(i) Include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement; and
Notwithstanding the forgoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation From the low or high end of
the estimated maximum offering range may be reflected in the
form of prospects filed with the Commission pursuant to Rule
424.
(b) if, in the aggregate, the changes in the volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement.
(iii) Include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act,
treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide
offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the
end of the offering.
Provide to the underwriter at the closing specified in the
underwriting agreement certificates in such denominations
and registered in such names as required by the underwriter
to permit prompt delivery to each purchaser.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 (the pursuant to the
foregoing provisions, or otherwise, the small business
issuer has been advised "Act") may be permitted to
directors, officers and controlling persons of the small
business issuer that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the
small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the small business issuer will,
unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final
adjudication of such issue.
Signatures
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form SB-2/A and authorized
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorize, in the City ofLas Vegas, State of Nevada.
Ability.Com, Inc.
By:/s/ Lynde Russell
EXHIBIT LIST
3.1 Articles of Incorporation
3.2 By-Laws
24.1 Power of Attorney
99.1 Acceptance of Resident Agent
99.2 Lock-up agreement
Articles Of Incorporation
Of
ABILITY.COM
Know all men by these present that the undersigned have this day
voluntarily associated ourselves together for the purpose of forming a
corporation under and pursuant to the provisions of Nevada Revised
Statutes 78.010 to Nevada Revised Statues 78.090 inclusive as amended
and state and certify that the articles of incorporation are as
follows:
First: Name
The name of the corporation is ABILITY.COM, (The "Corporation").
Second: Registered Office and Agent
The address of the registered office of the corporation in the State Of
Nevada is 3360 West Sahara Ave., Suite 200, in the city of Las Vegas,
County of Nevada 89102. The name and address of the corporation's
registered agent in the State of Nevada is
Shawn F. Hackman, Esq.,3360 West Sahara Ave., Suite 200, Las Vegas, NV
89102 ,
at said address, until such time as another agent is duly authorized
and appointed by the corporation.
Third: Purpose and Business
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may now or hereafter be organized under
the Nevada Revised Statutes of the State of Nevada, including, but not
limited to the following:
(a) The Corporation may at any time exercise such rights,
privileges, and powers, when not inconsistent with the purposes
and object for which this corporation is organized;
(b) The Corporation shall have power to have succession by its
corporate name in perpetuity, or until dissolved and its affairs
wound up according to law;
(c) The Corporation shall have power to sue and be sued in any
court of law or equity;
(d) The Corporation shall have power to make contracts;
(e) The Corporation shall have power to hold, purchase and convey
real and personal estate and to mortgage or lease any such real
and personal estate with its franchises. The power to hold real
and personal estate shall include the power to take the same by
devise or bequest in the State of Nevada, or in any other state,
territory or country;
(f) The corporation shall have power to appoint such officers and
agents as the affairs of the Corporation shall requite and allow
them suitable compensation;
(g) The Corporation shall have power to make bylaws not
inconsistent with the constitution or laws of the United States, or
of the State of Nevada, for the management, regulation and
government of its affairs and property, the transfer of its stock,
the transaction of its business and the calling and holding of
meetings of stockholders;
(h) The Corporation shall have the power to wind up and dissolve
itself, or be wound up or dissolved;
(i) The Corporation shall have the power to adopt and use a
common seal or stamp, or to not use such seal or stamp and if
one is used, to alter the same. The use of a seal or stamp by
the corporation on any corporate documents is not necessary.
The Corporation may use a seal or stamp, if it desires, but such
use or non-use shall not in any way affect the legality of the
document;
(j) The Corporation Shall have the power to borrow money and
contract debts when necessary for the transaction of its
business, or for the exercise of its corporate rights, privileges or
franchises, or for any other lawful purpose of its incorporation; to
issue bonds, promissory notes, bills of exchange, debentures
and other obligations and evidence of indebtedness, payable at
a specified time or times, or payable upon the happening of a
specified event or events, whether secured by mortgage, pledge
or otherwise, or unsecured, for money borrowed, or in payment
for property purchased, or acquired, or for another lawful object;
(k) The Corporation shall have the power to guarantee, purchase,
hold, sell, assign, transfer, mortgage, pledge or otherwise
dispose of the shares of the capital stock of, or any bonds,
securities or evidence in indebtedness created by any other
corporation or corporations in the State of Nevada, or any other
state or government and, while the owner of such stock, bonds,
securities or evidence of indebtedness, to exercise all the rights,
powers and privileges of ownership, including the right to vote, if
any;
(l) The Corporation shall have the power to purchase, hold, sell
and transfer shares of its own capital stock and use therefor its
capital, capital surplus, surplus or other property or fund;
(m) The Corporation shall have to conduct business, have one or
more offices and hold, purchase, mortgage and convey real and
personal property in the State of Nevada and in any of the
several states, territories, possessions and dependencies of the
United States, the District of Columbia and in any foreign
country;
(n) The Corporation shall have the power to do all and everything
necessary and proper for the accomplishment of the objects
enumerated in its articles of incorporation, or any amendments
thereof, or necessary or incidental to the protection and benefit
of the Corporation and, in general, to carry on any lawful
business necessary or incidental to the attainment of the
purposes of the Corporation, whether or not such business is
similar in nature to the purposes set forth in the articles of
incorporation of the Corporation, or any amendment thereof;
(o) The Corporation shall have the power to make donations for the
public welfare or for charitable, scientific or educational
purposes;
(p) The Corporation shall have the power to enter partnerships,
general or limited, or joint ventures, in connection with any
lawful activities.
Forth: Capital Stock
1. Classes and Number of Shares. The total number of shares of all
classes of stock, which the corporation shall have authority to issue
Twenty Five Million (25,000,000) shares of Common Stock, par value of
$0.001 per share (The "Common Stock") and no Preferred Stock.
2. Powers and Rights of Common Stock
(a) Preemptive Right. No shareholders of the Corporation holding
common stock shall have any preemptive or other right to subscribe for
any additional un-issued or treasury shares of stock or for other
securities of any class, or for rights, warrants or options to purchase
stock, or for scrip, or for securities of any kind convertible into
stock or carrying stock purchase warrants or privileges unless so
authorized by the Corporation;
(b) Voting Rights and Powers. With respect to all matters upon which
stockholders are entitled to vote or to which stockholders are entitled
to give consent, the holders of the outstanding shares of the Common
Stock shall be entitled to cast thereon one (1) vote in person or by
proxy for each share of the Common Stock standing in his/her name;
(c) Dividends and Distributions
(i) Cash Dividends. Subject to the rights of holders of Preferred
Stock, holders of Common Stock shall be entitled to receive
such cash dividends as may be declared thereon by the
Board of Directors from time to time out of assets of funds of
the Corporation legally available therefor;
(ii) Other Dividends and Distributions. The Board of Directors
may issue shares of the Common Stock in the form of a
distribution or distributions pursuant to a stock dividend or
split-up of the shares of the Common Stock;
(iii) Other Rights. Except as otherwise required by the Nevada
Revised Statutes and as may otherwise be provided in these
Articles of Incorporation, each share of the Common Stock
shall have identical powers, preferences and rights, including
rights in liquidation;
3. Preferred Stock The powers, preferences, rights, qualifications,
limitations and restrictions pertaining to the Preferred Stock, or any
series thereof, shall be such as may be fixed, from time to time, by
the Board of Directors in its sole discretion,
authority to do so being hereby expressly vested in such board.
4. Issuance of the Common Stock and the Preferred Stock. The Board of
Directors of the Corporation may from time to time authorize by
resolution the issuance of any or all shares of the Common Stock and
the Preferred Stock herein authorized in accordance with the terms and
conditions set forth in these Articles of Incorporation
for such purposes, in such amounts, to such persons, corporations, or
entities, for such consideration and in the case of the Preferred
Stock, in one or more series, all as the Board of Directors in its
discretion may determine and without any vote or other action by the
stockholders, except as otherwise required by law. The Board of
Directors, from time to time, also may authorize, by resolution,
options, warrants and other rights convertible into Common or Preferred
stock (collectively "securities.")
The securities must be issued for such consideration, including cash,
property, or services, as the Board or Directors may deem appropriate,
subject to the requirement that the value of such consideration be no
less than the par value if the shares issued. Any shares issued for
which the consideration so fixed has been paid or delivered shall be
fully paid stock and the holder of such shares shall not be liable
for any further call or assessment or any other payment thereon,
provided that the actual value of such consideration is not less that
the par value of the shares so issued. The Board of Directors may issue
shares of the Common Stock in the form of a distribution or
distributions pursuant to a stock divided or split-up of the shares
of the Common Stock only to the then holders of the outstanding shares
of the Common Stock.
5. Cumulative Voting. Except as otherwise required by applicable law,
there shall be no cumulative voting on any matter brought to a vote of
stockholders of the Corporation.
Fifth: Adoption of Bylaws.
In the furtherance and not in limitation of the powers conferred
by statute and subject to Article Sixth hereof, the Board of Directors
is expressly authorized to adopt, repeal, rescind, alter or amend in
any respect the Bylaws of the Corporation (the "Bylaws").
Sixth: Shareholder Amendment of Bylaws.
Notwithstanding Article Fifth hereof, the bylaws may also be
adopted, repealed, rescinded, altered or amended in any respect by the
stockholders of the Corporation, but only by the affirmative vote of
the holders of not less than fifty-one percent (51%) of
the voting power of all outstanding shares of voting stock, regardless
of class and voting together as a single voting class.
Seventh: Board of Directors
The business and affairs of the Corporation shall be managed by
and under the direction of the Board of Directors. Except as may
otherwise be provided pursuant to Section 4 or Article Forth hereof in
connection with rights to elect additional directors under specified
circumstances, which may be granted to the holders of any class or
series of Preferred Stock, the exact number of directors of the
Corporation shall be determined from time to time by a bylaw or
amendment thereto, providing that the number of directors shall not be
reduced to less that two (2). The directors holding office
at the time of the filing of these Articles of Incorporation shall
continue as directors until the next annual meeting and/or until their
successors are duly chosen.
Eighth: Term of Board of Directors.
Except as otherwise required by applicable law, each director
shall serve for a term ending on the date of the third Annual Meeting
of Stockholders of the Corporation (the "Annual Meeting") following the
Annual Meeting at which such director was elected.
All directors, shall have equal standing.
Not withstanding the foregoing provisions of this Article Eighth
each director shall serve until his successor is elected and qualified
or until his death, resignation or removal; no decrease in the
authorized number of directors shall shorten the term of any incumbent
director; and additional directors, elected pursuant to Section 4 or
Article Forth hereof in connection with rights to elect such additional
directors under specified circumstances, which may be granted to the
holders of any class or series of Preferred Stock, shall not be
included in any class, but shall serve for such term or terms and
pursuant to such other provisions as are specified in the resolution of
the Board or Directors establishing such class or series
Ninth: Vacancies on Board of Directors
Except as may otherwise be provided pursuant to Section 4 of
Article Forth hereof in connection with rights to elect additional
directors under specified circumstances, which may be granted to the
holders of any class or series of Preferred Stock, newly created
directorships resulting from any increase in the number of
directors, or any vacancies on the Board of Directors resulting from
death, resignation, removal, or other causes, shall be filled solely by
the quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the
remainder of the full term of directors in which the new directorship
was created or the vacancy occurred and until such director's successor
shall have been elected and qualified or until such director's death,
resignation or removal, whichever first occurs.
Tenth: Removal of Directors
Except as may otherwise be provided pursuant to Section 4 or
Article Fourth hereof in connection with rights to elect additional
directors under specified circumstances, which may be granted to the
holders of any class or series of Preferred Stock, any director may be
removed from office only for cause and only by the affirmative vote of
the holders of not less than fifty-one percent (51%) of the voting
power of all outstanding shares of voting stock entitled to vote in
connection with the election of such director, provided, however, that
where such removal is approved by a majority of the Directors, the
affirmative vote of a majority of the voting power of all
outstanding shares of voting stock entitled to vote in connection with
the election of such director shall be required for approval of such
removal. Failure of an incumbent director to be nominated to serve an
additional term of office shall not be deemed a removal from office
requiring any stockholder vote.
Eleventh: Stockholder Action
Any action required or permitted to be taken by the stockholders
of the Corporation must be effective at a duly called Annual Meeting or
at a special meeting of stockholders of the Corporation, unless such
action requiring or permitting stockholder approval is approved by a
majority of the Directors, in which case such action may be
authorized or taken by the written consent of the holders of
outstanding shares of Voting Stock having not less than the minimum
voting power that would be necessary to authorize or take such action
at a meeting of stockholders at which all shares entitled to vote
thereon were present and voted, provided all other requirements of
applicable law these Articles have been satisfied.
Twelfth: Special Stockholder Meeting
Special meetings of the stockholders of the Corporation for any
purpose or purposes may be called at any time by a majority of the
Board of Directors or by the Chairman of the Board or the President.
Special meeting may not be called by any other person or persons. Each
special meeting shall be held at such date and time as is requested by
the person or persons calling the meeting, within the limits fixed by
law.
Thirteenth: Location of Stockholder Meetings.
Meetings of stockholders of the Corporation may be held within or
without the State of Nevada, as the Bylaws may provide. The books of
the Corporation may be kelp (subject to any provision of the Nevada
Revised Statutes) outside the State of Nevada at such place or places
as may be designated from time to time by the Board of Directors or in
the Bylaws.
Fourteenth: Private Property of Stockholders.
The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever and the
stockholders shall not be personally liable for the payment of the
corporation's debts.
Fifteenth: Stockholder Appraisal Rights in Business
Combinations.
To the maximum extent permissible under the Nevada Revised
Statutes of the State of Nevada, the stockholders of the Corporation
shall be entitled to the statutory appraisal rights provided therein,
with respect to any business Combination involving the Corporation and
any stockholder (or any affiliate or associate of any stockholder),
which required the affirmative vote of the Corporation's stockholders.
Sixteenth: Other Amendments.
The Corporation reserves the right to adopt, repeal, rescind,
alter or amend in any respect any provision contained in these Articles
of Incorporation in the manner now or hereafter prescribed by
applicable law and all rights conferred on stockholders herein granted
subject to this reservation.
Seventeenth: Term of Existence.
The Corporation is to have perpetual existence.
Eighteenth: Liability of Directors.
No director of this Corporation shall have personal liability to
the Corporation or any of its stockholders for monetary damages for
breach of fiduciary duty as a director or officers involving any act or
omission of any such director or officer. The foregoing provision shall
not eliminate or limit the liability of a director (i) for any breach
of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or, which
involve intentional misconduct or a knowing violation of law,
(iii) under applicable Sections of the Nevada Revised Statutes, (iv)
the payment of dividends in violation of Section 78.300 of the Nevada
Revised Statutes or, (v) for any transaction from which the director
derived an improper personal benefit. Any repeal or modification of
this Article by the stockholders of the Corporation shall be
prospective only and shall not adversely affect any limitation on the
personaal liability of a director orofficer of the Corporation for acts
or omissions prior to such repeal or modification.
Nineteenth: Name and Address of first Directors and
Incorporators.
The name and address of the incorporators of the Corporation and
the first Directors of the Board of Directors of the Corporation which
shall be one (1) in number is as follows:
DIRECTOR #1
Lynde Russell
3360 West Sahara Ave
Suite 200
Las Vegas, NV 89102
I, Lynde Russell, being the first director and Incorporator herein
before named, for the purpose of forming a corporation pursuant to the
Nevada Revised Statutes of the State of Nevada, do make these Articles,
hereby declaring and certifying that this is my act and deed and the
facts herein stated are true and accordingly have hereunto set my
hand this 9th day of December, 1999.
By:
_____________________________
Verification
State Of Nevada )
)ss.
County Of Clark )
On this 9th day of December 1999, before me, the undersigned, a
Notary Public in and for said State, personally appeared Lynde Russell
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person who subscribed his name to the Articles of
Incorporation and acknowledged to me that he executed the same freely
and voluntarily and for the use and purposes therein mentioned.
By: _______________________________
Notary Public in and for said
County and State
BYLAWS
OF
Ability.com
Article I: Offices
The principal office of Ability.com ("Corporation") in the Sate
of Nevada shall be located in Las Vegas, County of Clark. The
Corporation may have such other offices, either within or without the
State of Nevada, as the Board of Directors my designate or as the
business of the Corporation my require from time to time.
Article II: Shareholders
Section 1. Annual Meeting. The annual meeting of the shareholders
shall be held during the first ten (10) days in the month of June in
each year, or on such other date during the calendar year as may be
designated by the Board of Directors. If the day fixed for the annual
meeting shall be a legal holiday in the Sate of Nevada, such meeting
shall be held on the next succeeding business day. If the election of
Directors shall be held on the day designated herein
for any annual meeting of the shareholders or at any adjournment
thereof, the Board of Directors shall cause the election to be held at
a special meeting of the shareholders as soon thereafter as
conveniently may be.
Section 2. Special Meetings. Special meetings of the shareholders,
for any purpose or purposes, unless otherwise prescribed by statute,
may be called by the President or by the Board of Directors, and shall
be called by the President at the request of the holders of not less
than ten percent (10%) of all the outstanding shares of the Corporation
entitled to vote at the meeting.
Section 3. Place of Meeting. The Board of Directors my designate any
place, either within our without the State of Nevada, unless otherwise
prescribed by statute, as the place of meeting for any annual meeting
or for any special meeting. A waiver of notice signed by all
shareholders entitled to vote at a meeting may designate any place,
either within our without the State of Nevada, unless otherwise
prescribed by statute, as the place for the holding of such
meeting. If no designation is made, the place of meeting shall be the
principal office of the Corporation.
Section 4. Notice of Meeting. Written notice stating the place, day
and hour of the meeting and, in case of a special meeting, the purpose
or purposes for which the meeting is called, shall unless otherwise
prescribed by statute, be delivered not less than ten (10) nor more
than sixty (60) days before the date of the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed,
such notice shall be deemed to be delivered when deposited in the
United States Mail, addressed to the shareholder at his address as it
appears on the stock transfer books of the Corporation, with postage
thereon prepaid.
Section 5. Closing of Transfer Books or Fixing of Record. For the
purpose of determining shareholders entitled to notice of or to vote at
any meeting of shareholders or any adjournment thereof, or shareholders
entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board
of Directors of the Corporation may provide that the stock transfer
books shall be closed for a stated period, but not
to exceed in any case fifty (50) days. If the stock transfer books
shall be closed for the purpose of determining shareholders entitled to
notice of or to vote at a meeting of shareholders, such books shall be
closed for at least fifteen (15) days immediately preceding such
meeting. In lieu of closing the stock transfer books, the Board of
Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more
than thirty (30) days and, in case of a meeting of shareholders, not
less than ten (10) days, prior to the date on which the particular
action requiring such determination of shareholders is to be taken.
If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote
at a meeting of shareholders, or shareholders entitled
to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date
on which the resolution of the Board of Directors declaring such
dividend is adopted, as the case may be, shall be the record date for
such determination of shareholders. When a determination
of shareholders entitled to vote at any meeting of shareholders has
been made as provided in this section, such determination shall apply
to any adjournment thereof.
Section 6. Voting Lists. The officer or agent having charge of the
stock transfer books for shares of the Corporation shall make a
complete list of shareholders entitled to vote at each
meeting of shareholders or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held
by each. Such lists shall be produced and kept open at
the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting for
the purposes thereof.
Section 7. Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders.
If less than a majority of the outstanding shares are represented at a
meeting, a majority of the shares so represented may adjourn the
meeting from time to time without further notice. At such
adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the
meeting as originally noticed. The shareholders present at a duly
organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum.
Section 8. Proxies. At all meetings of shareholders, a shareholder
may vote in person or by proxy executed in writing by the shareholder
or by his or duly authorized attorney-in-fact.
Such proxy shall be filed with the secretary of the Corporation before
or at the time of the meeting. A meeting of the Board of Directors my
be had by means of telephone conference or similar communications
equipment by which all persons participating in the meeting can hear
each other, and participation in a meeting under such circumstances
shall constitute presence at the meeting.
Section 10. Voting of Shares by Certain Holders. Shares standing in
the name of another Corporation may be voted by such officer, agent or
proxy as the Bylaws of such Corporation may prescribe or, in the
absence of such provision, as the Board of Directors of such
Corporation may determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by him either in person or by proxy, without a transfer of
such shares into his name. Shares standing in the name of a trustee
may be voted by him, either in person or by proxy, but no trustee shall
be entitled to vote shares held by him without a transfer of such
shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be
voted by such receiver without the transfer thereof
into his name, if authority to do so be contained in an appropriate
order of the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the
pledgee, and thereafter the pledgee shall be entitled to vote the
shares so transferred.
Shares of its own stock belonging to the Corporation shall not be voted
directly or indirectly, at any meeting, and shall not be counted in
determining the total number of outstanding shares at any given time.
Section 11. Informal Action by Shareholders. Unless otherwise
provided by law, any action required to be taken at a meeting of the
shareholders, or any other action which may be taken at a meeting of
the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of
the shareholders entitled to vote with respect to the subject matter
thereof.
Article III: Board of Directors
Section 1. General Powers. The business and affairs of the
Corporation shall be
managed by its Board of Directors.
Section 2. Number, Tenure and Qualifications. The number of Directors
of the Corporation shall be fixed by the Board of Directors, but in no
event shall be less than one ( 1 ). Each Director shall hold office
until the next annual meeting of shareholder and until his
successor shall have been elected and qualified.
Section 3. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw
immediately after, and at the same place as, the annual
meeting of shareholders. The Board of Directors may provide, by
resolution, the time and place for the holding of additional regular
meetings without notice other than such resolution.
Section 4. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the President or any
two Directors. The person or persons authorized to
call special meetings of the Board of Directors may fix the place for
holding any special meeting of the Board of Directors called by them.
Section 5. Notice. Notice of any special meeting shall be given at
least one (1) day previous thereto by written notice delivered
personally or mailed to each Director at his business
address, or by telegram. If mailed, such notice shall be deemed to be
delivered when deposited in the United Sates mail so addressed, with
postage thereon prepaid. If notice be given by telegram, such notice
shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Any Directors may waive notice of any meeting. The
attendance of a Director at a meeting shall constitute a waiver of
notice of such meeting, except where a Director
attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called
or convened.
Section 6. Quorum. A majority of the number of Directors fixed by
Section 2 of the Article III shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but
if less than such majority is present at a meeting, a majority of the
Directors present may adjourn the meeting from time to time without
further notice.
Section 7. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
Section 8. Action Without a Meeting. Any action that may be taken by
the Board of Directors at a meeting may be taken without a meeting if a
consent in writing, setting forth the action so to be taken, shall be
signed before such action by all of the Directors.
Section 9. Vacancies. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining
Directors though less than a quorum of the
Board of Directors, unless otherwise provided by law. A Director
elected to fill a vacancy shall be elected for the unexpired term of
his predecessor in office. Any Directorship to be filled by
reason of an increase in the number of Directors may be filled by
election by the Board of Directors for a term of office continuing only
until the next election of Directors by the shareholders.
Section 10. Compensation. By resolution of the Board of Directors,
each Director may be paid his expenses, if any, of attendance at each
meeting of the Board of Directors, and may be paid a stated salary as a
Director or a fixed sum for attendance at each meeting of the Board of
Directors or both. No such payment shall preclude any Director from
serving the Corporation in any other capacity and receiving
compensation thereof.
Section 11. Presumption of Assent. A Director of the Corporation who
is present at a meeting of the Board of Directors at which action on
any corporate matter is taken shall be presumed to have assented to the
action taken unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such
action with the person acting as the Secretary of the meeting before
the adjournment thereof, or shall forward such dissent by
registered mail to the Secretary of the Corporation immediately after
the adjournment of the meeting. Such right to dissent shall not apply
to a Director who voted in favor of such action.
Article IV: Officers
Section 1. Number. The officers of the Corporation shall be a
President, one or more Vice Presidents, a Secretary and a Treasurer,
each of whom shall be elected by the Board of Directors. Such other
officers and assistant officers as may be deemed necessary may be
elected or appointed by the Board of Directors, including a Chairman of
the Board. In its discretion, the Board of Directors may leave
unfilled for any such period as it may determine any office except
those of President and Secretary. Any two or more offices may be held
by the same person. Officers may be Directors or shareholders of the
Corporation.
Section 2. Election and Term of Office. The officers of the
Corporation to be elected by the Board of Directors shall be elected
annually by the Board of Directors at the first meeting
of the Board of Directors held after each annual meeting of the
shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified, or
until his death, or until he shall resign or shall have been
removed in the manner hereinafter provided.
Section 3. Removal. Any officer or agent may be removed by the Board
of Directors whenever, in its judgement, the best interests of the
Corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of
the person so removed.
Election or appointment of an officer or agent shall not of itself
create contract rights, and such appointment shall be terminable at
will.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by
the Board of Directors for the unexpired portion of the term.
Section 5. President. The President shall be the principal executive
officer of the Corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business
and affairs of the Corporation. He shall, when present, preside at all
meetings of the shareholders and of the Board of Directors, unless
there is a Chairman of the Board, in which case the Chairman shall
preside. He may sign, with the Secretary or any other
proper officer of the Corporation thereunto authorized by the Board of
Directors, certificates for shares of the Corporation, any deed,
mortgages, bonds, contract, or other instruments which the
Board of Directors has authorized to be executed, except in cases where
the signing and execution thereof shall be expressly delegated by the
Board of Directors or by there Bylaws to some other officer or agent of
the Corporation, or shall be required by law to be otherwise signed
or executed; and in general shall perform all duties incident to the
office of President and such other duties as may be prescribed by the
Board of Directors from time to time.
Section 6. Vice President. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice President
shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President.
The Vice President shall perform such other duties as from time to time
may be assigned to him by the President or by the Board of Directors,
If there is more than one Vice President, each Vice President shall
succeed to the duties of the President in order of rank as determined
by the Board of Directors. If no such rank has been determined, then
each Vice President shall succeed to the duties of the President in
order of date of election, the earliest date having the first rank.
Section 7. Secretary. The Secretary shall: (a) keep the minutes of
the Board of Directors in one or more minute books provided for the
purpose; (b) see that all notices are duly given in accordance with
the provisions of the Bylaws or as required by law; (c) be custodian
of the corporate records and of the seal of the Corporation and see
that the seal of the Corporation is affixed to all documents, the
execution of which on behalf of the Corporation under its seal is
duly authorized; (d) keep a register of the post office address of
each shareholder which shall be furnished to the Secretary by such
shareholder; (e) sign with the President certificates for share
of the Corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors; (f) have general charge of the
stock transfer books of the Corporation, and (g) in general perform all
duties incident to the office of the Secretary and such other duties as
from time to time may be assigned to him by the President or by the
Board of Directors.
Section 8. Treasurer. The Treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the
Corporation; (b) receive and give receipts for moneys due and payable
to the Corporation in such banks, trust companies or other depositories
as shall be selected in accordance with the provisions of Article VI of
these Bylaws; and (c) in general perform all of the duties incident to
the office of Treasurer and such other duties as from time to time may
be assigned to him by the President or by the Board of Directors. If
required by the Board of Directors, the Treasurer shall give a bond for
the faithful discharge of his duties in such sum and with such sureties
as the Board of Directors shall determine.
Section 9. Salaries. The salaries of the officers shall be fixed from
time to time by the Board of Directors, and no officer shall be
prevented from receiving such salary by reason of the fact that he is
also a Director of the Corporation.
Article V: Indemnity
Section 1. Definitions. For purposes of this Article, "Indemnitee"
shall mean each Director or Officer who was or is a party to, or is
threatened to be made a party to, or is otherwise involved in, any
Proceeding (as hereinafter defined), by reason of the fact that he or
she is or was a Director or Officer of this Corporation or is or was
serving in any capacity at the request of this Corporation as a
Director, Officer, employee, agent, partner, or fiduciary of, or in
any other capacity for, another corporation, partnership, joint
venture, trust, or other enterprise. The term "Proceeding" shall mean
any threatened, pending or completed action or suit (including, without
limitation, an action, suit or proceeding by or in the right of this
Corporation), whether civil, criminal, administrative or investigative.
Section 2. Indemnification. Each Indemnitee shall be indemnified and
held harmless by this Corporation for all actions taken by him or her,
and for all omissions (regardless of the date of any such action or
omission), to the fullest extent permitted by Nevada law, against all
expense, liability and loss (including, without limitation, attorney
fees, judgments, fines, taxes, penalties, and amounts paid or to be
paid in settlement) reasonably incurred or suffered by the
Indemnitee in connection with any Proceeding. Indemnification pursuant
to this Section shall continue as to an Indemnitee who has ceased to be
a Director or Officer and shall inure to the benefit of his or her
heirs, executors and administrators. This Corporation may, by action
of its Board of Directors, and to the extent provided in such action,
indemnify employees and other persons as though they were Indemnitees.
The rights to indemnification as provided in this Article shall be non-
exclusive of any other rights that any person may have or hereafter
acquire under an statute, provision of this Corporation's Articles of
Incorporation or Bylaws, agreement, vote of stockholders or Directors,
or otherwise.
Section 3. Financial Arrangements. This Corporation may purchase and
maintain insurance or make other financial arrangements on behalf of
any person who is or was a Director, Officer, employee or agent of this
Corporation, or is or was serving at the request of
this Corporation in such capacity for another corporation, partnership,
joint venture, trust or other enterprise for any liability asserted
against him or her and liability and expenses incurred by him
or her in such capacity, whether or not this Corporation has the
authority to indemnify him or her against such liability and expenses.
The other financial arrangements which may be made by this Corporation
may include, but are not limited to, (a) creating a trust fund; (b)
establishing a program of self-insurance; (c) securing its obligation
of indemnification by granting a security interest or other lien on any
of this Corporation's assets, and (d) establishing a letter of credit,
guarantee or surety. No financial arrangement made pursuant to this
section may provide protection for a person adjudged by a
court of competent jurisdiction, after exhaustion of all appeals
therefrom, to be liable for intentional misconduct, fraud, or a knowing
violation of law, except with respect to advancing expenses or
indemnification ordered by a court. Any insurance or other financial
arrangement made on behalf of a person pursuant to this section may be
provided by this Corporation or any other person approved by the Board
of Directors, even if all or part of the other person's stock or
other securities is owned by this Corporation.
In the absence of fraud:
(a) the decision of the Board of Directors as to the propriety of the
terms and conditions of any insurance or other financial arrangement
made pursuant to this section, and the choice of the person to provide
the insurance or other financial arrangement is
conclusive; and
(b) the insurance or other financial arrangement is not void or
voidable; does not subject any Director approving it to personal
liability for his action; and even if a Director approving the
insurance or other financial arrangement is a beneficiary of the
insurance or other financial arrangement.
Section 4. Contract of Indemnification. The provisions of this
Article relating to indemnification shall constitute a contract between
this Corporation and each of its Directors and Officers, which may be
modified as to any Director or Officer only with that person's consent
or as specifically provided in this section. Notwithstanding any other
provision of the Bylaws relating to their amendment generally, any
repeal or amendment of this Article which is adverse
to any Director or Officer shall apply to such Director or Officer only
on a prospective basis and shall not limit the rights of an Indemnitee
to indemnification with respect to any action or failure
to act occurring prior to the time of such repeal or amendment.
Notwithstanding any other provision of these Bylaws, no repeal or
amendment of these Bylaws shall affect any or all of this
Article so as to limit or reduce the indemnification in any manner
unless adopted by (a) the unanimous vote of the Directors of this
Corporation then serving, or (b) the stockholders as set
forth in Article XII hereof; provided that no such amendment shall have
retroactive effect inconsistent with the preceding sentence.
Section 5. Nevada Law. References in this Article to Nevada law or to
any provision thereof shall be to such law as it existed on the date
these Bylaws were adopted or as such law thereafter may be changed;
provided that (a) in the case of any change which expands the
liability of an Indemnitee or limits the indemnification rights or the
rights to advancement of expenses which this Corporation may provide,
the rights to limited liability, to indemnification
and to the advancement of expenses provided in this Corporation's
Articles of Incorporation, these Bylaws, or both shall continue as
theretofore to the extent permitted by law; and (b) if such
change permits this Corporation, without the requirement of any further
action by stockholders or Directors, to limit further the liability of
Indemnitees or to provide broader indemnification rights or rights to
the advancement of expenses than this Corporation was permitted to
provide prior to such change, liability thereupon shall be so limited
and the rights to indemnification and advancement of expenses shall be
so broadened to the extent permitted by law. The Corporation
shall indemnify its Directors, officers and employees as follows:
Article VI: Contracts, Loans, Checks, and Deposits
Section 1. Contracts. The Board of Directors may authorize any office
or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the Corporation,
and such authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its
name unless authorized by a resolution of the Board of Directors. Such
authority may be general or confined to specific instances.
Section 3. Checks, Drafts, etc. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness
issued in the name of the Corporation, shall be signed by such officer
or officers, agent or agents of the Corporation and in such manner as
shall from time to time be determined by resolution of the Board of
Directors.
Section 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies or other depositories as the
Board of Directors may select.
Article VII: Certificates for Shares and Their Transfer
Section 1. Certificates for Shares. Certificates representing shares
of the Corporation shall be in such form as shall be determined by the
Board of Directors. Such certificates shall be signed by the President
and by the Secretary or by such other officers authorized by law and by
the Board of Directors so to do, and sealed with the corporate seal.
All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to
whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books
of the Corporation. All certificates surrendered to the Corporation
for transfer shall be cancelled and no new certificate shall be issued
until the former certificate for a like number of shares shall have
been surrendered and cancelled, expect that in case of a lost,
destroyed or mutilated certificate a new one may be issued therefore
upon such terms and indemnity to the Corporation as the Board of
Directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by
the holder of record thereof or by his legal representative, who shall
furnish proper evidence of authority to transfer, or by his attorney
thereunto authorized by power of attorney duly executed and filed with
the Secretary of the Corporation, and on surrender for cancellation of
the certificate for such shares. The person in whose name shares stand
on the books of the Corporation shall be deemed by the Corporation to
be the owner thereof for all purposes, Provided, however, that upon any
action undertaken by the shareholder to elect S Corporation status
pursuant to Section 1362 of the Internal Revenue Code and upon any
shareholders agreement thereto restricting the transfer of said shares
so as to disqualify said S Corporation status, said restriction on
transfer shall be made a part of the Bylaws so long as said agreements
is in force and effect.
Article VIII: Fiscal Year
The fiscal year of the Corporation shall begin on the 1st day of
January and end on the 31st day of December of each year.
Article IX: Dividends
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in the manner
and upon the terms and condition provided by law and its Articles of
Incorporation.
Article X: Corporate Seal
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the
Corporation and the state of incorporation and the words "Corporate
Seal."
Article XI: Waiver of Notice
Unless otherwise provided by law, whenever any notice is required to be
given to any shareholder or Director of the Corporation under the
provision of the Articles of Incorporation or under the provisions of
the applicable Business Corporation Act, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the
giving of such notice.
Article XII: Amendments
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board of Directors at any regular or special meeting of
the Board of Directors, or by the shareholder as any regular or special
meeting of the shareholders.
The above Bylaws are certified to have been adopted by the Board of
Directors of the Corporation on the 18th day of January, 2000.
Lyndee Russell, Director
Special Power of Attorney
The undersigned constitute and appoint Lyndee Russell their true and
lawful attorney-in-fact and agent with full power of substitution, for
him and in his name, place, and stead, in any and all capacities, to
sign any and all amendments, including post-effective amendments, to
this Form SB-2 Registration Statement, and to file the same with all
exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting such attorney-in-fact the
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully
and to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that such attorney in-fact may
lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated:
Signature Title
__________________________________President_______________________
Lyndee Russell
__________________________________Secretary______________________
Brian McGrath
ACCEPTANCE OF RESIDENT AGENT
The undersigned , Shawn F. Hackman, Esq., 3360 West Sahara Avenue,
Suite 200, Las Vegas, Nevada 89102, hereby accepts appointment as the
resident agent for Ability.com, Inc., effective this date.
Dated on the 22nd day of December, 1999.
By:______________________
Shawn F. Hackman, Esq.
DATE
Company
Address
Ladies and Gentlemen:
The undersigned, a beneficial owner of common stock of
_______________ (the "Company") with a par value of $.001, understands
that the Company intends to file with the U. S. Securities and Exchange
Commission a registration statement on Form SB-2 (the "Registration
Statement"), for the registration of the Company's Common Stock. As
part of the disclosure included in the Registration Statement, the
Company has affirmatively stated that there will be no trading of the
Company's securities until such time as the Company successfully
implements its business plan as described in such Registration
Statement, consummating a merger or acquisition.
In order to insure that the aforesaid disclosure is adhered to,
the undersigned agrees, for the benefit of the Company, that he/she
will not offer to sell, assign, pledge, hypothecate, grant any option
for the sale of, or otherwise dispose of, directly or indirectly, any
shares of Common stock of the Company owned by him/her, or subsequently
acquired through the exercise of any options, warrants or rights, or
conversion of any other security or by reason of any stock split or
other distribution of stock, or grant options, warrants or rights, or
conversion of any other security or by reason of any stock split or
other distribution of stock, or grant options, rights or warrants with
respect to any such shares of Common Stock, until the Company
successfully closes a merger or acquisition. Furthermore, the
undersigned will permit all certificates evidencing his/her shares to
be endorsed with the appropriate stop transfer orders with the transfer
agent of the Company. Furthermore, the undersigned agrees that all
certificates evidencing his/her shares will be held by Shawn F. Hackman
a P.C., legal counsel for the Company, who will hold the certificates
until the Company has completed a merger or acquisition.
Very truly yours,
_________________
