U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB/12g
GENERAL FORM FOR REGISTRATION OF SECURITES
OF SMALL BUSINESS ISSUERS
Under Section 12 (b) or (g) of the Securities Exchange Act of 1934
PROLOGUE
(Name of Small Business Issuer in its charter)
Utah 87-0412110
(State or Other Jurisdiction of (IRS Employer ID Number)
Incorporation or Organization)
3340 East Del Verde Avenue, Salt Lake City, Utah 84109
(Address of Principal Executive Offices and Zip Code)
Issuer's telephone number : (801) 484-0930
Securities to be registered under Section 12 (b) of the Act:
Title of each class to be so registered: Not Applicable
Name of each exchange on which each class is to be registered: Not Applicable
Securities to be registered under Section 12(g) of the Act: Common, Par Value
$0.001
Common Stock, Par Value $0.001
(Title of Class)
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TABLE OF CONTENTS
PART I
ITEM NUMBER AND CAPTION PAGE
ITEM 1. DESCRIPTION OF BUSINESS 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS OR PLAN
OF OPERATIONS 10
ITEM 3. DESCRIPTION OF PROPERTY 11
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT 11
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 12
ITEM 6. EXECUTIVE COMPENSATION 13
ITEM 7. CERTAIN RELATIONSHIPS & RELATED TRANSACTIONS 13
ITEM 8. DESCRIPTION OF SECURITIES 13
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS 14
ITEM 2. LEGAL PROCEEDINGS 14
ITEM 3. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS 14
ITEM 4. RECENT SALES OF UNREGISTARED SECURITIES 14
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS 14
PART F/S
AUDITED FINANCIAL STATEMENTS 15
PART EXHIBITS
EXHIBIT #1: BY-LAWS OF PROLOGUE
EXHIBIT #2: ARTICLE OF PROLOGUE
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ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Prologue (the Company) was incorporated under the laws of the State of
Utah on October 14, 1982, and was previously engaged in the sales and
marketing business. The Company has no current operations or employees
and owns no real estate.
The Company's current business plan is to seek, investigate, and acquire
a business opportunity representing assets or business intended to
enhance shareholder value. The Company is deemed to be a new or start-up
venture with all of the unforeseen costs, expenses, problems, and
difficulties to which such ventures are subject.
At the present time neither the Company nor its officers, directors or
affiliates has identified any business opportunities to acquire or
pursue, nor has the Company reached any agreement or understanding with
any person concerning a transaction of any kind. The Company is unable
to predict when it may participate in a business opportunity. It
expects, however, that the analysis and selection of a business
opportunity may take several months or more.
Because an opportunity has not been identified, it is impossible to
predict or disclose the specific risks and hazards of such opportunity.
There is no assurance that the Company will acquire a favorable business
opportunity or that such opportunity will generate revenues or profits,
or that shareholder value will be increased thereby. As such, any
potential business opportunity is expected to be highly speculative and
therefore risky. Such opportunity may be highly illiquid and could
result in a total loss to the Company and its stockholders.
The Company has limited capital which may not be adequate to take
advantage of many business opportunity. This lack of diversification may
prevent the Company from pursuing future opportunities if its first one
proves to be unsuccessful. Moreover, a significant portion of the
Company's available funds may be expended for investigative expenses
without any guarantee that a transaction will be consummated. The
Company's long term success may therefore depend upon its ability to
raise additional capital. However, the Company has not investigated the
availability, source, or terms for additional capital and will not do so
until it determines such a need. Additionally, there is no assurance
that funds will be available from any source or, if available, obtainable
on terms acceptable to the Company. If not available, the Company's
operations will be limited to those that can be financed with its limited
capital.
Another effect of the Company's limited capital is that its analysis and
investigation of potential opportunities will also be limited which could
increase the company' risk. Management decisions will likely be made
without detailed feasibility studies, independent analysis and market
survey. The Company will likely be making decisions upon information
provided by the owner, sponsor, or others associated with the business
opportunity. Such information may not always be objective.
The Company is filing this Form 10-SB on a voluntary basis in order to
become a 12 (g) registered company under the Securities Exchange Act of
1934. As a "reporting company", the Company believes it may be more
attractive to a potential business opportunity because it will be able to
list its shares for trading on the National Association of Securities
Dealers ("NASD") Over-The-Counter Bulletin Board ("OTCBB"). Company
management believes that various opportunities may also be attracted to
the Company because of their desire to eventually develop a public market
in the Company's stock in order to enhance liquidity for current and
future shareholders; to implement potential plans for raising capital
through the public sale of securities; and to acquire additional assets
through issuance of securities rather than for cash.
The acquisition of a business opportunity may be made by purchase,
merger, exchange of stock, or otherwise, and may encompass assets or a
business entity, such as a corporation, joint venture, or partnership.
The final structure, which is currently impossible to predict, will be
the result of negotiations, consultation from legal counsel, and the
needs of the specific business
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GENERAL - [CONTINUE]
opportunity. Although it is likely, there is no assurance that the
Company would be the surviving entity.
There is also a possibility that the Company may finance the acquisition
of the business opportunity by borrowing against the assets or against
the projected future revenues or profits of the business opportunity to
be acquired. This could increase the Company's exposure to larger
losses. A business opportunity acquired through a heavily financed
("leveraged") transaction is profitable only if it generates enough
revenues to cover the related debt and expenses. Failure to make
payments on the debt incurred could result in the loss of a portion or
all of the assets acquired. There is no assurance that any business
opportunity acquired through a leveraged transaction will generate
sufficient revenues to cover the related debt and expenses. There are
currently no loan arrangements or arrangements for any financing
whatsoever relating to any business opportunities.
Although the terms and structure of a transaction with the Company cannot
be predicted, it is anticipated that the transaction would be a "tax
free" reorganization under the Internal Revenue Code of 1986. Such a
transaction normally requires the issuance to the stockholders of the
acquired entity, a controlling interest (i.e. 80% or more) of the common
stock of the combined entities immediately following the reorganization.
If a transaction were structured to take advantage of these provisions
rather than other "tax free" provisions provided under the Internal
Revenue Code, the Company's current stockholders would retain, in the
aggregate, 20% or less of the total issued and outstanding shares. This
could result in substantial dilution in the equity of stockholders of the
Company prior to such reorganization.
It is likely that any business combination entered into by the Company
will result in a change of control as a result of stock issuance by the
Company or shares purchased from the current principal shareholders of
the Company by the acquiring entity or its affiliates. If stock is
purchased from the current shareholders, the transaction is very likely
to result in substantial gains to them relative to their purchase price
for such stock. Such sale may occur at a price not relative to or
reflective of any value of the shares held by such parties, and at a
price which may not be achieved by other individual shareholders of the
Company remain subject to restrictions on the transfer of their shares.
The Company does not believe its officers and directors would become an
"underwriter" within the meaning of the Section 2 (11) of the Securities
Act of 1933, as amended, with regards to such sales as such sales would
likely be made in non-public transactions.
The Company anticipates that any new securities issued in a
reorganization would be issued in reliance upon exemptions, if any are
available, from registration under applicable federal and state
securities laws. Any securities which the Company might acquire in
exchange for its Common Stock will likely be "restricted securities"
within the meaning of the Securities Act of 1933, as amended (the "Act").
Sales of such securities, cannot proceed unless a registration statement
has been declared effective by the Securities and Exchange Commission or
an exemption from registration is available. The Company would be
required to comply with the provisions of the Act to effect any resale.
In the event of a resale, the Company may rely on Section 4(1) of the
Act, which exempts sales of securities not involving a public offering.
Also, the Company may agree to register such securities sometime after
the transaction is consummated. The issuance of additional securities
and their potential sale into any trading market that might develop in
the Company's securities could have a depressive effect upon the price of
the Company's stock.
Utah Business Corporation Act vests authority in the Board of Directors
with written consent to decide and approve the issuance of stock. While
in some instances a proposed participation in a business opportunity may
be submitted to the stockholders for their consideration, it is unlikely
that the Company's minority shareholders will be furnished with financial
statements, or any other documentation, concerning a target opportunity,
It is also emphasized that management of the Company could effect
transactions having a potentially adverse impact upon the Company's
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GENERAL - [CONTINUE]
shareholders. A shareholder may have no right of at dissent under Utah
law, if a majority of shareholders consent in writing to the transaction.
Depending upon the nature of the transaction, the current officers and
directors of the Company will likely resign their positions with the
Company upon completion of a transaction. In the event of such a
resignation, the Company's current management would not have any control
over the conduct of the Company's business following the Company's
combination with a business opportunity.
The Company does not foresee that it would enter into any business
opportunity with which its officers or directors are currently
affiliated. Should the Company determine in the future, contrary to
foregoing expectations, that a transaction with an affiliate would be in
the best interests of the Company and its stockholders, the Company may
enter into such a transaction only if: a) The material facts as to the
relationship or interest of the affiliate are disclosed to the board of
directors and shareholders, and the Board and/or majority of
disinterested shareholders in good faith authorizes the transaction by
the affirmative vote even though disinterested parties constitute less
than a quorum; b) The contract or transaction is fair as to the Company
as of the time it is authorized, approved or ratified, by the Board of
Directors or the stockholders.
SOURCES OF OPPORTUNITES
Business opportunities may come to the Company's attention from various
sources, including its officers and directors, its stockholders,
professional advisors such as attorneys and accountants, securities
broker-dealers, venture capitalists, members of the financial community,
and others who may present unsolicited proposals. The Company has no
plans, understanding agreements, or commitments with any individual to
act as a finder of opportunities for the Company. The analysis of
business opportunities will be undertaken by or under the supervision of
the Company's president, who is not a professional business analyst. See
"Management". Although there are no current plans to do so, Company
management may hire an outside consultant to assist in the investigation
and selection of business opportunities, and may pay a finder's fee. No
policies have been adopted regarding use of such consultants or advisors,
the criteria to be used in selecting such consultants or advisors, the
services to be provided, the term of service, or the total amount of fees
that may be paid. And, because of the limited resources of the Company,
it is likely that any fee the Company agrees to pay would be in stock
instead of cash.
It is possible that the range of business opportunities available for
consideration by the Company could be limited by the impact of Securities
and Exchange Commission regulations regarding purchase and sale of "penny
stocks." The regulations would affect, and possibly impair, any market
that might develop in the Company's securities until such time as they
qualify for listing on NASDAQ or on another exchange which would make
them exempt form applicability of the "penny stock" regulations.
INVESTIGATION AND SELECTION OF BUSINESS OPPORTUNITIES
Management will make a decision to participate in a specific business
opportunity based on an analysis of quality of the opportunity's business
plan, its management and personnel, the anticipated market acceptability
of new products or marketing concepts, the merit of technological
changes, the entity, and numerous other factors which are difficult, if
not impossible, to analyze through the application of any objective
criteria. It is likely that the historical operations of a specific
business opportunity may not be indicative of its future potential
because of possible future changes in marketing approaches, expansion
plans, product emphasis, management, or other changes.
The Company will be dependent upon the owners of a business opportunity
to identify any potential future problems and to implement necessary
changes. Because the Company may participate in a business opportunity
with a newly organized firm or with a firm which is entering a new phase
of growth, the Company may incur further risks because management and the
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INVESTIGATION AND SELECTION OF BUSINESS OPPORTUNITIES - [CONTINUE]
Company's products or services may be unproven and unprofitable when
acquired. Business opportunities presented to the Company may (i) be
recently organized with no operating history, or a history of losses
attributable to under-capitalization or other factors; (ii) be
experiencing financial or operating difficulties; (iii) be in need
of funds to develop a new product or service or to expand into a new
market; (iv) be relying upon an untested product or marketing concept; or
(v) have a combination of the characteristics mentioned in (i) though
(iv). The Company intends to concentrate its acquisition efforts on
properties of businesses that it believes to be undervalued. Given the
above factors, investors should expect that any acquisition candidate may
have a history of losses or low profitability.
The Company's search will be directed primarily towards small and medium
sized business opportunities with or without revenues and earnings which
desire to become public corporations and which are able to satisfy, the
minimum asset requirements in order to qualify shares for trading on
NASDAQ or a stock exchange. The Company intends to seek opportunities
demonstrating the potential of long growth.
The Company's investigation of business opportunities will not be
restricted to any particular geographical area, industry, or stage of
growth and may, therefore, engage in essentially any business, to the
extent of its limited resources. No specific factors described herein
will be controlling in the selection of a business opportunity.
Management will attempt to analyze the factors it deems appropriate to
each opportunity and make a determination based upon a reasonable
investigation of available data.
Prior to making a decision to participate in a business opportunity, the
Company will generally request that it be provided with a business plan
regarding the business opportunity containing such items as a description
of products, services and company history; management resumes; financial
information; available projection, with related assumptions upon which
they are based; an explanation of proprietary products and services;
evidence of existing patents, trademarks, or services marks, or rights
thereto; present and proposed forms of compensation to management; a
description of transactions between such company and its affiliates
during relevant periods; a description of present and required
facilities; an analysis of risks and competitive conditions and estimated
capital requirements.
As part of the Company's investigation, the Company's executive officers
and directors may meet personally with management and key personnel, may
visit and inspect material facilities, obtain independent analysis or
verification of certain information provided, check references of
management and key personnel, and take other reasonable investigative
measures, to the extent of the Company's limited financial resources and
management expertise. However, it is also possible that an investigation
of such opportunities may be exclusively by phone, mail, facsimile, email
or other methods not involving a physical meeting or inspection with such
opportunities.
The Company will likely require audited financial statements from
opportunities with which it proposes to acquire or merge because the
Company will be subject to the reporting provisions of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and thus will be
required to furnish audited financial statements for any opportunity in
which it engages. Failure to do so could expose the Company to
enforcement actions by the Securities and Exchange Commission which could
result in penalties, legal fees and/or injunctive action, which would
have a material adverse effect on the Company and its operations.
In the event that audited financial statements are not available, the
Company may still engage in such an opportunity if it believes that
audited financial statements will be provided within a reasonable time
after the company enters into a transaction with such opportunity.
However, without audited financial information, the Company will not have
the benefit for full and accurate information provided by independent
verification about the financial condition and recent interim operating
history of the target company. This could substantially increase the
risk of a potential transaction.
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INVESTIGATION AND SELECTION OF BUSINESS OPPORTUNITIES - [CONTINUE]
The Company will participate in a business opportunity only after the
negotiation and execution of a written agreement. Although the terms of
such agreement cannot be predicted, generally such an agreement would
require specific representations and warranties by all the parties
thereto, specify certain event of default, detail the terms of closing
and the conditions which must be
satisfied by each of the parties thereto prior to such closing, outline
the manner of bearing costs if the transaction is not closed, set forth
remedies upon default, and include miscellaneous other terms. Even after
a definitive agreement is executed, it is possible that the acquisition
would not be consummated should any party elect to exercise any right
provided in the agreement to terminate it on specified grounds.
COMPETITION
The Company expects to encounter substantial competition in its efforts
to locate attractive opportunities, primarily from business development
companies, venture capital partnerships and corporations, venture capital
affiliates of large industrial and financial companies, small investment
companies, and wealthy individuals. Many of these entities will have
significantly greater experience, resources and managerial capabilities
than the Company and will therefore be in a better position than the
Company to obtain access to attractive business opportunities. The
Company also will possibly experience competition from other public
companies seeking such opportunities, some of which may have more funds
available than does the Company.
REGULATION
The Company may acquire an opportunity that is subject to regulation or
licensing by federal, state, or local authorities which may be a time-
consuming, expensive process and may limit other investment opportunities
of the Company.
The Company may participate in a business opportunity by purchasing,
trading or selling the securities of such business. The Company does
not, however, intend to engage primarily in such activities, and
therefore intends to avoid being classified as an "investment company"
under the Investment Company Act of 1940 (the "Investment Act"). Such a
classification could subject the Company to a costly registration
process. Section 3(a) of the Investment Act excludes from the definition
of an "investment company," any entity that does not engage primarily in
the business of investing, reinvesting or trading in securities, or that
does not engage in the business of investing, owning, holding or trading
"investment securities" (defined as "all securities other than government
securities or securities of majority-owned subsidiaries") the value of
which exceeds 40% of the value of its total assets (excluding government
securities, cash or cash items.) Since the Company will not register as
an investment company, stockholders will not be afforded certain
protections under the Investment Act.
Regulation of Penny Stocks. The Company's securities, when available for
trading, will be subject to a Securities and Exchange Commission rule
that imposes special sales practice requirements upon broker-dealers who
sell such securities to persons other than established customers or
accredited investors. For purposes of the rule, the phrase "accredited
investors" means, in general terms, institutions with assets in excess of
$5,000,000, or individuals having a net worth in excess of $1,000,000 or
having an annual income that exceeds $200,000 (or that, when combined
with a spouse's income, exceeds $300,000). For transactions covered by
the rule, the broker-dealer must make a special suitability determination
for the purchaser and receive the purchaser's written consent prior to
the sale of a security. Consequently, the rule may affect the ability of
broker-dealers to sell the Company's securities in an offering or in any
market that might develop thereafter.
In addition, the Securities and Exchange Commission has adopted a number
of rules to regulate "penny stocks." Such rules include Rules 3a51-1,
15g-1, 15g2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the
Securities Exchange Act of 1934, as amended. Because the securities of
the Company may constitute "penny stocks" within the meaning of the
rules, the rules would
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REGULATION - [CONTINUE]
apply to the Company and to its securities. The rules may further affect
the ability of owners of Shares to sell the securities of the Company in
any market that might develop for them.
Shareholders should be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such
patterns include (i) control of the market for the security by one or a
few broker-dealers that are often related to the promoter or issuer; (ii)
manipulation of prices through prearranged matching of purchases and
sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and
undisclosed bid-ask differentials and markups by selling broker-dealers;
and (v) the wholesale dumping of the securities by promoters and broker-
dealers after prices have been manipulated to a desired level, along with
the resulting inevitable collapse of
those prices and with consequent investor losses. The Company's
management is aware of the abuses that have occurred historically in the
penny stock market. Although the Company does not expect to be in a
position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being
established with respect to the Company's securities.
Blue Sky Consideration. Because the securities to be registered
hereunder have not been registered for resale under the blue sky laws of
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 law restrictions upon
the ability of investors to sell the securities and of purchaser to
purchase the securities. Warning is hereby given that the shares may be
"restricted" from resale. In the event of a violation of state laws
regarding resale of the shares, the Company could be liable for civil and
criminal penalties which would be a substantial impairment to the
Company.
At the date of this registration statement, the Company has no intention
of offering further shares in a private offering to anyone. Further, the
policy of the Board of Directors is that any future offering of shares
will only be made after an acquisition has been made and can be disclosed
in appropriate 8-K filings.
Rule 144 Sales. Shares of the Company's Common Stock that are held by
officers, directors, and any stockholder owing greater than 10% of the
total issued and outstanding shares are "restricted securities" within
the meaning of Rule 144 under the Securities Act of 1933, as amended. As
restricted shares, these shares may be resold only pursuant to an
effective registration statement or under the requirements of Rule 144 or
other applicable exemptions from registration under the Act and as
required under applicable state securities laws. Rule 144 provides in
essence that a person who has held three months, in brokerage
transactions, a number of shares that does not exceed the greater of 1.0%
of a company's outstanding common stock or the average weekly trading
volume during the four calendar weeks prior to the sale. There is no
limit on the amount of restricted securities that may be sold by a non-
affiliated after the restricted securities have been held by the owner
for a period of two years. A sale under Rule 144 or under any other
exemption from the Act, if available, or pursuant to subsequent
registration of shares of Common Stock of present stockholders, may have
a depressive effect upon the price of the Common Stock in any market that
may develop. Of the total shares outstanding, 41,990,000 shares are
available for resale (subject to volume limitations for affiliates) under
Rule 144.
ADMINISTRATIVE OFFICES
The Company currently maintains a mailing address at the home of its
president at 3340 Del Verde Avenue, Salt Lake City, Utah 84109. Other
than this mailing address, the Company does not currently maintain any
other office facilities, and does not anticipate the need for maintaining
office facilities at any time in the foreseeable future. The Company
pays no rent or other fees for the use of this mailing address.
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EMPLOYEES
The Company is a development stage company and currently has no employees
and does not anticipate a need to engage any full-time employees so long
as it is seeking and evaluating business opportunities.
The Company currently has three individuals who are serving as its
officers and directors on a part time basis. The Company will be heavily
dependent upon their skills, talents, and abilities to implement its
business plan, and may, from time to time, find that the inability of
these persons to devote full time attention to the business of the
Company may result in a delay in progress toward implementing its
business plan. Additionally, conflicts of interest may arise that can be
resolved only through exercise of good judgement as is consistent with
fiduciary duties to the Company. Such conflicts may require that the
Company attempt to employ additional personnel. There is no assurance
that the services of such persons will be available or that they can be
obtained upon
terms favorable to the Company. Certain of the officers and directors of
the Company may be directors and/or principal shareholders of other
companies and, therefore, could face conflicts of interest with respect
to potential acquisitions. In addition, officers and directors of the
Company may in the future participate in business ventures which could be
deemed to compete directly with the Company. Additional conflicts of
interest and non-arms length transactions may also arise in the future in
the event the Company's officers or directors are involved in the
management of any firm with which the Company transacts business. The
Company's Board of Directors has adopted a policy that the Company will
not seek a merger with, or acquisition of, any entity in which management
serve as officers or directors, or in which family members own or hold a
controlling ownership interest. Although the Board of Directors could
elect to change this policy, the Board of Directors has no present
intention to do so. In addition, if the Company and other companies with
which the Company's officers and directors are affiliated both desire to
take advantage of a potential business opportunity, then the Board of
Directors has agreed that potential business opportunity, then the Board
of Directors has agreed that said opportunity should be available to each
such company in the order in which such companies registered or became
current in the filing of annual reports under the Exchange Act subsequent
to January 1, 2000.
The Company's officers and directors or majority 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. It is anticipated that a substantial
premium over the initial cost of such shares may be paid by the purchaser
in conjunction with any sale of shares by the Company's officers and
directors which is made as a condition to, or in connection with, a
proposed merger or acquisition transaction. The fact that a substantial
premium may be paid to the Company's officers and directors to acquire
their shares creates a potential conflict of interest for them in
satisfying their fiduciary duties to the Company and its profit to them,
they would be legally required to make the decision based upon the best
interests of the Company and the Company's other shareholders, rather
than their own personal pecuniary benefit.
Because investors will not be able to evaluate the merits of possible
business acquisitions by the Company, they should critically assess the
information concerning the Company's officers and directors.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
OR PLAN OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES FOR THE YEAR ENDED DECEMBER 31, 1999
(UNAUDITED)
The Company remains in the development stage and has no revenues.
Current expenses are being paid by the president, Allen Avery, including
the costs of becoming a reporting company under the Securities Exchange
Act of 1934. Management is hopeful that becoming a reporting company
will increase the quality and number of prospective business ventures
that may be available to the Company. Net losses for 1999 ($195.00) and
1998 ($115.00) are general and administrative expenses. Such losses will
continue unless a business opportunity with revenues and profits can be
acquired by the Company. There is no assurance that revenues or
profitability will ever be achieved by the Company.
The Company will carry out its plan of business as discussed above. The
Company cannot predict to what extent its lack of liquidity and capital
resources will impair the consummation of a business combination or
whether it will incur further operating losses through any business
entity which the Company may eventually acquire.
RESULT OF OPERATIONS
Calendar year ended December 31, 1999 and 1998 and from inception on
October 14, 1982 (audited).
Net losses for the years 1999 and 1998 have been less than $0.001 per
share. For the current fiscal year, the President has agreed to pay the
expenses associated with the registration under the Securities Exchange
Act of 1934. The Company anticipates that until a business combination
is completed with an acquisition candidate, it will not generate revenues
and may continue to operate at a loss after completing a business
combination, depending upon the performance of the acquired business.
NEED FOR ADDITIONAL FINANCING
Management believes that the Company has sufficient cash to meet the
anticipated needs of the Company's operations through at least the first
calendar quarter of 2001. However, there can be no assurances to that
effect, as the Company has no revenues and the Company's need for capital
may change dramatically if it acquires an interest in a business
opportunity during that period. In the event the Company requires
additional funds, the Company will have to seek loans or equity
placements to cover such cash needs. There is no assurance additional
capital will be available to the Company on acceptable terms. In the
event the Company is able to complete a business combination during this
period, lack of its existing capital may be a sufficient impediment to
prevent it from accomplishing the goal of completing a business
combination. There is no assurance, however, that without funds it will
ultimately allow registrant to complete a business combination. Once a
business combination is completed, the Company's needs for additional
financing are likely to increase substantially.
Other than previously stated, no commitments to provide additional funds
have been made by management or other stockholders. Accordingly, there
can be no assurance that any additional funds will be available to the
Company to allow it to cover its expenses as they may be incurred.
Irrespective of whether the Company's cash assets prove to be adequate to
meet the Company's operational needs, the Company might seek to
compensate providers of services by issuance's of stock in lieu of cash.
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YEAR 2000 ISSUES
Year 2000 problems result primarily from the inability of some computer
software to properly store, recall, or use data after December 31, 1999.
These problems may affect many computers and other devices that contain
embedded computer chips. The Company's operations, however, do not rely
on information technology (IT) systems. Accordingly, the Company does
not believe it will be material affected by Year 2000 problems.
The Company relies on non-IT systems that may suffer from Year 2000
problems, including telephone systems and facsimile and other office
machines. Moreover, the Company relies on third-parties that may suffer
from Year 2000 problems that could affect the Company's operations,
including banks, oil field operators, and utilities. In light of the
Company's substantially reduced operations, the Company does not believe
that such non-IT systems or third-party Year 2000 problems will affect
the Company in a manner that is different or more substantial than such
problems affect other similarly situated companies or industry generally.
Consequently, the Company does not currently intend to conduct a
readiness assessment of Year 2000 problems or to develop a detailed
contingency plan with respect to Year 2000 problems that may affect the
Company.
ITEM 3. DESCRIPTION OF PROPERTY
The Company has no property. The Company does not currently maintain an
office or any other facilities. It does currently maintain a mailing
address at the home of its resident and director at 3340 East Del Verde
Avenue, Salt Lake City, Utah 84109. The Company pays no rent for the use
of this mailing address. The Company does not believe that it will need
to maintain an office at any time in the foreseeable future in order to
carry out its plan of operations described herein.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of the date of this Registration
Statement, the number of shares of Common Stock owned of record and
beneficially be executive officers, directors and persons who hold 5.0%
or more of the outstanding Common Stock of the Company. Also included
are the shares held by all executive officers and directors as a group.
SHARE HOLDERS AND NUMBER OF OWNERSHIP
BENEFICIAL OWNERS (1) SHARES PERCENTAGE
_____________________ __________ ____________
Allen Avery
3340 East Del Verde Ave.
Salt Lake City, Utah 84109 40,400,000 80.8%
Bill Ross
2306 Richard Court
Henderson , Nevada 89014 1,500,000 3.0%
Stan Adams
680 East 6th South
Salt Lake City, Utah 84102 90,000 .2%
All directors and executive
officers as a group 41,990,000
(1) Except as otherwise indicated, all shares are directly owned.
11
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS
The directors and executive officers currently serving the Company are as
follows:
NAME AGE POSITION SINCE
ALLEN AVERY 63 DIRECTOR 1994
BILL ROSS 53 DIRECTOR 1986
STAN ADAMS 53 DIRECTOR 1999
ALLEN AVERY PRESIDENT 1999
BILL ROSS VICE PRESIDENT 1999
STAN ADAMS SECRETARY/TREASURER 1999
Mr. Avery is a graduate of the University of Utah and has been self-
employed for 25 years managing his own investments and management
consulting.
Mr. Ross is a graduate of the University of Illinois and for the past 5
years has been self-employed as owner of an advertising specialties
business.
Mr. Adams is a member of the Utah State Bar Association and a practicing
attorney for the past 25 years.
All of the Directors have been officers and directors of publicly traded
companies over 10 years ago and Mr. Adams was an officer and director of
Investestate, a reporting company during his tenure.
Directors serve one year terms until annual meetings, and officers serve
at the board of directors discretion.
The directors named above will serve until the next annual meeting of the
Company's stockholders. Thereafter, directors will be elected for
positions as directed by the board of directors. Currently, none of the
Company's officers nor directors have any employment agreement with the
Company, nor is any currently contemplated. There is no arrangement or
understanding between the directors and officers of the Company and any
other Person pursuant to which any director or officer was or is to be
selected as a director officer.
The directors and officers of the Company will devote such time to the
Company's affairs on an "as needed' basis, but less than 20 hours per
month. As a result, the actual amount of time which they will devote to
the Company's affairs is unknown and is likely to vary substantially from
month to month.
While it is unexpected, it is possible that after the Company consummates
a transaction with an unaffiliated business opportunity, that entity may
employ or retain a member of the Company's management for future
services. However, the Company has adopted a policy whereby the offer of
any post-transaction compensation to members of management will not be a
consideration in the Company's decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the
Company's Board of Directors any discussions concerning possible
compensation to be paid to them by any entity which proposes to undertake
a transaction with the Company and further, to abstain from voting on
such transaction.
12
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS - [CONTINUE]
It is possible that persons associated with or known to management may be
responsible for introducing a potential business opportunity to the
Company and may therefore be compensated with a finder's fee in cash or
stock. The amount of such finders fee, if applicable, cannot be
determined as of the date of filing this report, but is expected to be
comparable to consideration paid in similar transactions. No member of
management of the Company will receive any finders fee, either directly
or indirectly, as a result of their respective efforts to implement the
Company's business plan herein.
EXCLUSION OF LIABILITY
The Utah Business Corporation Act exclude personal liability for its
directors for monetary damages based upon any violation of their duties
as directors, except as to liability for any breach of the duty of
loyalty, acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, acts in violation of the Utah
Business Corporation Act, or any transaction from which a director
receives an improper personal benefit. This exclusion of liability does
not limit any right which a director may have to be indemnified and does
not affect any director's liability under federal or applicable state
securities laws.
ITEM 6. EXECUTIVE COMPENSATION
No officer or director has received any other remuneration in the two
year period prior to the filing of this registration statement. Although
there is no current plan in existence, it is possible that the Company
will adopt a plan to pay or accrue compensation to its officers and
directors for services related to seeking business opportunities and
completing a merger or acquisition transaction. The Company has no stock
option, retirement, pension, or profit-sharing programs for the benefit
of directors, officers or other employees, but the Board of Directors may
recommend adoption of one or more such programs in the future.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
ITEM 8. DESCRIPTION OF SECURITIES
COMMON STOCK
The Company's Articles of Incorporation authorized the issuance of
50,000,000 shares of Common Stock $.001 par value. Each record holder of
Common Stock is entitled to one vote for each share hold on all matters
properly submitted to the stockholders for their vote. Cumulative voting
for the election of directors is not permitted by the Articles of
Incorporation.
Holders of outstanding shares of Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors
out of legally available funds; and, in the event of liquidation,
dissolution or winding up of the affairs of the Company, holders are
entitled to receive, ratably, the net assets of the Company available to
stockholders. Holders of outstanding shares of Common Stock have no
preemptive, conversion or redemptive rights. All of the issued and
outstanding shares of Common Stock are, and all unissued shares when
offered and sold will be, duly authorized, validly issued, fully paid,
and nonassessable. To the extent that additional shares of the Company's
Common Stock are issued, the relative interests of then existing
stockholders may be diluted.
SHAREHOLDERS
Each shareholder has sole investment power and sole voting power over the
shares owned by such shareholder. No shareholder has entered into or
delivered any lock up agreement or letter agreement regarding their
shares or options thereon.
13
<PAGE>
TRANSFER AGENT
American Registrar and Transfer Company, 705 Newhouse Bldg, Salt Lake
City, Utah 84111.
REPORTS TO STOCKHOLDERS
The Company plans to furnish its stockholders with an annual report for
each fiscal year containing financial statements audited by its
independent certified public accountants. In the event the Company
enters into a business combination with another company, it is the
present intention of management to continue furnishing annual reports to
stockholders. The Company intends to comply with the periodic reporting
requirements of the Securities Exchange Act of 1934 for so long as it is
subject to those requirements, and to file unaudited quarterly reports
and annual reports with audited financial statements as required by the
Securities Exchange Act of 1934.
PART II
ITEM 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
The Company has an unpriced listing on the OTCBB which under current
NASD rules may result in delisting without IOSB clearance by the
Securities and Exchange Commission.
As of March 2, 2000 the Company had approximately 408 shareholders of
record. No dividends have been paid to date and the Company's Board of
Directors does not anticipate paying dividends in the foreseeable future.
There is no public market for the Company's stock.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceeding, and no such
proceeding are known to be contemplated.
No director, officer or affiliate of the Company, and no owner of record
or beneficial owner of more than 5% of the securities of the Company, or
any associate of any such director, officer or security holder is a party
adverse to the Company or has a material interest adverse to the Company
in reference to any litigation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Not applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
None.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Utah Statutes, the Company may indemnify its directors
and officers against expenses and liabilities they incur to defend,
settle, or satisfy any civil or criminal action brought against them on
account of their being or having been Company directors or officers
unless, in any such action, they are adjudged to have acted with gross
negligence or willful misconduct. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that, in the opinion
of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in that Act and is, therefore,
unenforceable.
14
<PAGE>
PART F/S
Filed herewith are the Company's audited financial statements for the
periods from inception and for the calendar years ended December 31, 1999
and 1998.
PROLOGUE
[A Development Stage Company]
FINANCIAL STATEMENTS
DECEMBER 31, 1999
PRITCHETT, SILER & HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
15
<PAGE>
PROLOGUE
[A Development Stage Company]
CONTENTS
PAGE
- Independent Auditors' Report 17
- Balance Sheet, December 31, 1999 18
- Statements of Operations, for the
years ended December 31, 1999
and 1998 and for the period from
inception on October 14, 1982 through
December 31,1999 19
- Statement of Stockholders' Equity (Deficit),
from inception on October 14, 1982 through
December 31, 1999 20 - 21
- Statements of Cash Flows, for the years
ended December 31, 1999 and 1998
and for the period from inception on
October 14, 1982 through December 31,
1999 22
- Notes to Financial Statements 23 - 25
16
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
PROLOGUE
Salt Lake City, Utah
We have audited the accompanying balance sheet of Prologue [a development
stage company] at December 31, 1999, and the related statements of operations,
stockholders' equity (deficit) and cash flows for the years ended December 31,
1999 and 1998 and for the period from inception on October 14, 1982 through
December 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits. The financial statements as of and
for the period ended July 31, 1997 and for the period from inception on
October 14, 1982 through July 31, 1997 were audited by other auditors whose
report, dated September 2, 1997, expressed an unqualified opinion on these
financial statements. The financial statements for the period from inception
on October 14, 1982 through July 31, 1997 reflect a net loss of $51,359 of the
total net loss. The other auditors' report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for such prior periods,
is based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements audited by us present fairly, in all material respects,
the financial position of Prologue as of December 31, 1999, and the results of
its operations and its cash flows for the years ended December 31, 1999 and
1998 and for the period from inception through December 31, 1999, 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 7 to the financial
statements, the Company has incurred losses since inception, has insufficient
working capital and has no on-going operations, raising substantial doubt
about its ability to continue as a going concern. Management's plans in
regards to these matters are also described in Note 7. The financial
statements do not include any adjustments that might result from the outcome
of these uncertainties.
/s/ Pritchett, Siler & Hardy, P.C.
PRITCHETT, SILER & HARDY, P.C.
February 23, 2000
Salt Lake City, Utah
17
<PAGE>
PROLOGUE
[A Development Stage Company]
BALANCE SHEET
ASSETS
December 31,
1999
___________
CURRENT ASSETS:
Cash in bank $ 20
___________
Total Current Asset 20
___________
$ 20
____________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ -
___________
Total Current Liabilities -
___________
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $.001 par value,
50,000,000 shares authorized,
50,000,000 shares issued and
outstanding 50,000
Capital in excess of par value 1,689
Deficit accumulated during the
development stage (51,669)
___________
Total Stockholders' Equity (Deficit) 20
___________
$ 20
____________
The accompanying notes are an integral part of this financial statement.
18
<PAGE>
PROLOGUE
[A Development Stage Company]
STATEMENTS OF OPERATIONS
For the From Inception on
Year Ended October 14,
December 31, 1982 Through
__________ __________ December 31,
1999 1998 1999
__________ __________ ________________
REVENUE $ - $ - $ -
COST OF SALES - - -
__________ __________ ________________
GROSS PROFIT - - -
EXPENSES:
General and Administrative 195 115 4,090
__________ __________ ________________
LOSS FROM OPERATONS
BEFORE INCOME TAXES - - -
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
__________ __________ ________________
(LOSS) FROM CONTINUING
OPERATIONS (195) (115) (4,090)
DISCONTINUED OPERATIONS:
(Loss) From operation of
discontinued operations - - (47,579)
__________ __________ ________________
LOSS FROM DISCONTINUED
OPERATIONS - - (47,579)
__________ __________ ________________
NET LOSS $ (195) $ (115) $ (51,669)
__________ __________ ________________
LOSS PER COMMON SHARE:
Continuing operations $ (.00) $ (.00) $ (.00)
Discontinued operations (.00) (.00) (.00)
__________ __________ ________________
Loss Per Common Share $ (.00) $ (.00) $ (.00)
__________ __________ ________________
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
PROLOGUE
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM THE DATE OF INCEPTION ON OCTOBER 14, 1982
THROUGH DECEMBER 31, 1999
Deficit
Accumulated
Common Stock Capital in During the
_____________________ Excess of Development
Shares Amount Par Value Stage
__________ __________ __________ _____________
BALANCE, October 14, 1982 - $ - $ - $ -
Issuance of 1,500,000 shares
common stock for cash at
$0.003 per share October,
1982 1,500,000 1,500 3,500 -
Issuance of 5,000,000 shares
common stock for cash at
$0.01 per share May, 1983 5,000,000 5,000 45,000 -
Stock offering costs - - (11,921) -
Issuance of 1,500,000 shares
common stock for service at
$0.001 per share June 14,
1987 1,500,000 1,500 - -
Issuance of 600,000 shares
common stock for equipment
and solvent at $0.005 per
share November 23, 1987 600,000 600 2,400 -
Net loss from inception
through December 31, 1993 - - - (47,579)
__________ __________ __________ _____________
BALANCE, December 31, 1992 8,600,000 8,600 38,979 (47,579)
Net loss for the year ended
December 31, 1993 - - - 790
__________ __________ __________ _____________
BALANCE, December 31, 1993 8,600,000 8,600 38,979 (48,369)
Issuance of 41,400,000
shares common stock for
services at $0.00003 per
share December , 1994 41,400,000 41,400 (40,365) -
Net loss for the year ended
December 31, 1994 - - - (245)
__________ __________ __________ _____________
BALANCE, December 31, 1994 50,000,000 50,000 (1,386) (48,314)
Contribution of capital - - 1,925 -
Net loss for the year ended
December 31, 1995 - - - (1,925)
__________ __________ __________ _____________
BALANCE, December 31, 1995 50,000,000 50,000 539 (50,539)
Contribution capital - - 110 -
Net loss for the year ended
December 31, 1996 - - - (110)
__________ __________ __________ _____________
BALANCE, December 31, 1996 50,000,000 50,000 649 (50,649)
[Continued]
20
<PAGE>
PROLOGUE
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM THE DATE OF INCEPTION ON OCTOBER 14, 1982
THROUGH DECEMBER 31, 1999
[Continued]
Deficit
Accumulated
Common Stock Capital in During the
_____________________ Excess of Development
Shares Amount Par Value Stage
__________ __________ __________ _____________
Contribution of capital - - 710 -
Net loss for the year ended
December 31, 1997 - - - (710)
__________ __________ __________ _____________
BALANCE, December 31, 1997 50,000,000 50,000 1,359 (51,359)
Contribution of capital - - 115 -
Net loss for the year ended
December 31, 1998 - - - (115)
__________ __________ __________ _____________
BALANCE, December 31, 1998 50,000,000 50,000 1,474 (51,474)
Contribution of capital - - 215 -
Net loss for the year ended
December 31, 1999 - - - (195)
__________ __________ __________ _____________
BALANCE, December 31, 1999 50,000,000 $ 50,000 $ 1,689 $ (51,669)
__________ __________ __________ _____________
The accompanying notes are an integral part of this financial statement.
21
<PAGE>
PROLOGUE
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
For the From Inception on
Year Ended October 14,
December 31, 1982 Through
__________ __________ December 31,
1999 1998 1999
__________ __________ ________________
Cash Flows From Operating Activities:
Net loss $ (195) $ (115) $ (51,669)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Contribution of capital 115 115 2,975
Loss on investment - - 10,000
Change in assets and liabilities:
Accounts payable - - -
__________ __________ ________________
Net Cash Flows (Used) by
Operating Activities (80) - (38,694)
__________ __________ ________________
Cash Flows From Investing Activities:
Purchase of investment - - (10,000)
__________ __________ ________________
Net Cash Flows (Used) by
Investing Activities - - (10,000)
__________ __________ ________________
Cash Flows From Financing Activities:
Proceeds from common stock issuance - - 60,535
Stock offering costs - - (11,921)
Contribution of capital 100 - 100
__________ __________ ________________
Net Cash Flows Provided by
Financing Activities 100 - 48,714
__________ __________ ________________
Net Increase (Decrease) in Cash 20 - 20
Cash at Beginning of Period - - -
__________ __________ ________________
Cash at End of Period $ 20 $ - $ 20
__________ __________ ________________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the period ended December 31, 1999:
An officer/shareholder of the Company paid expense totaling $115 on behalf
of the Company.
For the period ended December 31, 1998:
An officer/shareholder of the Company paid expense totaling $115 on behalf
of the Company.
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
PROLOGUE
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized under the laws of the State of Utah
on October 14, 1982 and was previously engaged in the sales and marketing
business. The Company currently has no ongoing operations and is considered a
development stage company as defined in SFAS No. 7. The company is currently
seeking business opportunities or potential business acquisitions.
Loss Per Share - The computation of loss per share of common stock is based on
the weighted average number of shares outstanding during the periods
presented, in accordance with Statement of Financial Accounting Standards No.
128, "Earnings Per Share" [See Note 6].
Cash and Cash Equivalents - For purposes of the statement of cash flows, the
Company considers all highly liquid debt investments purchased with a maturity
of three months or less to be cash equivalents.
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards (SFAS) No. 132, "Employer's Disclosure about Pensions and Other
Postretirement Benefits", SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities", SFAS No. 134, "Accounting for Mortgage-Backed
Securities." and SFAS No. 135, "Rescission of FASB Statement No. 75 and
Technical Corrections" were recently issued. SFAS No. 132, 133, 134 and 135
have no current applicability to the Company or their effect on the financial
statements would not have been significant.
Accounting 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, the disclosures of contingent assets and liabilities at the date
of the financial statements and the reported amount of revenues and expenses
during the reported period. Actual results could differ from those estimated.
NOTE 2 -DISCONTINUED OPERATIONS
Discontinued Operations - The accompanying financial statements as of December
31, 1999 and 1998 have been reclassified to reflect management's decision to
discontinue the Company's operations in sales and marketing on May 1, 1991.
Revenue for the years ended December 31, 1999, and 1998 and for the period
from inception through December 31, 1999 relating to these discontinued
operations were $0, $0, and $30,871, respectively.
NOTE 3 - CAPITAL STOCK
During 1983 Prologue filed a Registration Statement with the Utah
Securities Commission and completed a public sale of 5,000,000 shares of
stock. In 1987 a wholly owned subsidiary named Bio-Clean was formed. On
November 23, 1987 600,000 shares of Prologue stock was issued to Kapitol
Klean-All of Phoenix, AZ as partial consideration for some equipment and
solvent. Because of latent defects in the equipment all activities were
terminated and Bio-Clean was dissolved on May 1, 1991. On June 14, 1988,
1,500,000 shares of Prologue stock was issued to an officer of Prologue in
lieu of wages for services rendered in behalf of the Company.
23
<PAGE>
PROLOGUE
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - CAPITAL STOCK
On December 19, 1994, 41,400,000 shares of stock were issued to an
individual in exchange for payment of the current and back taxes due the
state of Utah along with other reinstatement fees. As a result of the
stock issuance control of the corporation changed hands and the individual
became an officer of the Company. This agreement also includes the payment
of all necessary accounting and attorney fees and the production of an
information package on Prologue to be used in promoting the Company's
future business activities.
NOTE 4 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". FASB
109 requires the Company to provide a net deferred tax asset/liability equal
to the expected future tax benefit/expense of temporary reporting differences
between book and tax accounting methods and any available operating loss or
tax credit carryforwards. At December 31, 1999, the Company has available
unused operating loss carryforwards of approximately $4,000, which may be
applied against future taxable income and which expire in various years
through 2019.
The amount of and ultimate realization of the benefits from the operating loss
carryforwards for income tax purposes is dependent, in part, upon the tax laws
in effect, the future earnings of the Company, and other future events, the
effects of which cannot be determined. Because of the uncertainty surrounding
the realization of the loss carryforwards the Company has established a
valuation allowance equal to the tax effect of the loss carryforwards and,
therefore, no deferred tax asset has been recognized for the loss
carryforwards. The net deferred tax assets are approximately $1,360 as of
December 31, 1999 with an offsetting valuation allowance of the same amount
resulting in a change in the valuation allowance of approximately $60 during
1999.
NOTE 5 - RELATED PARTY TRANSACTIONS
Management Compensation - During the periods ended December 31, 1999 and 1998
the Company did not pay any compensation to any officer/directors of the
Company.
Office Space - The Company has not had a need to rent office space. An
officer/shareholder of the Company is allowing the Company to use his home as
a mailing address, as needed, at no expense to the Company.
Expenses - An officer has paid certain expenses on behalf of the corporation.
The amounts of these payments are shown as contributions to capital in excess
of par value.
24
<PAGE>
PROLOGUE
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per share and the
effect on income and the weighted average number of shares of dilutive
potential common stock for the year ended December 31, 1999 and 1998 and from
inception on October 14, 1982 through December 31, 1999:
For the From Inception on
Year Ended October 14,
December 31, 1982 Through
__________ __________ December 31,
1999 1998 1999
__________ __________ ________________
Loss from continuing operations
available to common stock
holders (numerator) $ (195) $ (115) $ (4,090)
__________ __________ ________________
Loss from discontinued operations
(numerator) $ - $ - $ (47,579)
__________ __________ ________________
Weighted average number of
common shares outstanding
used in earnings per share
during the period 50,000,000 50,000,000 41,750,000
__________ __________ ________________
Dilutive earnings per share was not presented, as the Company had no common
equivalent shares for all periods presented that would effect the computation
of diluted earnings (loss) per share.
NOTE 7 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. However, the Company, has incurred losses
since its inception has insufficient working capital, and has no on-going
operations. These factors raise substantial doubt about the ability of the
Company to continue as a going concern. In this regard, management is seeking
potential business opportunities and is proposing to raise any necessary
additional funds not provided by operations through loans and/or through
additional sales of its common stock. There is no assurance that the Company
will be successful in raising additional capital or achieving profitable
operations. The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
25
<PAGE>
PART III
Exhibits
SEC Ref. Exhibit Description
No. No.
_______ _______ _____________
EX-3.1 1 By-Laws
EX-3.2 2 Articles of Incorporation
EX-27 Financial Data Schedule
SIGNATURES:
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated: March 8, 2000 Prologue
By: /s/ Allen Avery
Allen Avery, President
26
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
financial statements for the year ended December 31, 1999, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 20
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 20
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 50,000
<OTHER-SE> (49,980)
<TOTAL-LIABILITY-AND-EQUITY> 20
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 195
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (195)
<INCOME-TAX> 0
<INCOME-CONTINUING> (195)
<DISCONTINUED> 0
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BY-LAWS
OF
PROLOGUE
The principal office of the corporation in the State of Utah shall be located
in Salt Lake City, Utah. The corporation may have such other offices, either
within or without the State of Utah, as the Board of Directors may designate
or as the business of the Corporation may require from time to time.
The registered office of the Corporation required by the Utah Business
Corporation Act to be maintained in the State of Utah may be, but need not be,
identical with the principal office in the State of Utah, and the address of
the registered may be changed from time to time by the Board of Directors.
ARTICLE II. SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders shall be
held on such date and at such time as the Board of Directors shall determine
which is within 90 days after the end of the year, beginning with the year
next following the year of its incorporation, for the purpose of electing
Directors and for the transaction of such other business as may come before
the meeting. The day fixed for the annual meeting shall not be a legal
holiday in the State of Utah. If the election of Directors shall not be held
on the day designated herein or 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.
<PAGE>
Section 2. Special Meetings. Special meetings for the shareholders, for any
purpose of 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 one-tenth of all
outstanding shares of the Corporation entitled to vote at the meeting.
Section 3. Place of Meeting. The Board of Directors may designate any place,
either within or without the State of Utah, as the place of meeting for any
annual meeting or for any special meeting called by the Board of Directors. A
waiver of notice signed by all shareholders entitled to vote at a meeting may
designate any place either within or without the State of Utah, as the place
for the holding of such meeting. If no designation is made, or if a special
meeting by otherwise called, the place of meeting shall be the principal
office of the corporation in the State of Utah.
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 of purposes for
which the meeting is called, shall, unless otherwise prescribed by statute, be
delivered no less than ten nor more than fifty days before the date of the
meeting, either personally or by mail, by or at the direction of the
president, or the Secretary, or the persons calling the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed, such
<PAGE>
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 Date. 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 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 ten 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 fifty days and, in case of a meeting
of shareholders, not less than ten 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
<PAGE>
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 the
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 list 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
<PAGE>
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 duly
authorized attorney-in-fact. Such proxy shall be filed with the Secretary of
the corporation before or at the time of the meeting. No proxy shall be valid
after eleven months from the date of its execution, unless otherwise provided
in the proxy.
Section 9. Voting of Shares. Subject to the provisions of the Articles of
Incorporation, each outstanding share entitled to vote shall be entitle to one
vote upon each matter submitted to a vote at a meeting of shareholders.
Section 10. Voting of Shares by Certain Holders. Shares outstanding in the
name of another corporation may be voted by such officer, agent or proxy and
the by-laws 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
<PAGE>
receiver without the transfer thereof into his name if authority so to do
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.
Neither shares of its own stock held by the corporation, nor those held by
another corporation if a majority of the shares entitled to vote for the
election of directors of such other corporation are held by the corporation,
shall be voted at any meeting or counted in determining the total number of
outstanding shares at any given time for purposes of any meeting.
Section 11. Informal Action by Shareholders. Any action required to be taken
at a meeting of the shareholders, or any 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 not less than three (3) or more than nine (9) as
<PAGE>
determined, from time to time, by the Board of Directors. The number of
original directors shall be as set forth in the Articles of Incorporation.
Each Director shall hold office until the next annual meeting of shareholders
and until his successor shall have been elected and qualified. Directors need
not be residents of the State of Utah or shareholders of the corporation.
Section 3. Regular Meetings. A regular meeting of the Board of Directors
shall be called without other notice than this by-law 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, either within or
without the State of Utah, for the holding of additional regular meetings
without other notice than such resolution.
Section 4. Special Meetings. Special meetings of the Board of Directors may
be 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 any place, either within or without the State of Utah, as
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 two
days previously thereto by written notice delivered personally 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 States mail, so
addressed, with postage thereon prepaid. If notice be given by telegram, such
<PAGE>
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Any Director 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. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the Board of Directors
need be specified in the notice or waiver of notice of such meeting.
Section 6. Quorum. A majority of the number of Directors fixed by section of
this 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. Any action which may be taken at a meeting of the
directors may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the directors.
Section 8. 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. A Director elected to fill a
<PAGE>
vacancy shall be elected for the unexpired term of his predecessor in office.
Any directorship to 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 9. 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 or both. No such payment shall preclude any Director
from serving the corporation in any other capacity and receiving compensation
therefor.
Section 10. 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, or
more Vice-Presidents (the number thereof to be determined by the Board of
Directors), a Secretary, and a Treasurer, each of who shall be elected by the
<PAGE>
Board of Directors. Such other officers and assistant officers as may be
deemed necessary may be elected or appointed by the Board of Directors. Any
two or more offices may be held by the same person, except the offices of
President and Secretary.
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 judgment, 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.
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.
<PAGE>
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 meeting of the
shareholders and of the Board of Directors. He may sign, with the Secretary
or any other proper officer of the corporation thereunto authorized by the
Board of Directors, certificates for the shares of the corporation, any deeds,
mortgages, bonds, contracts, 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 these By-
Laws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 6. The Vice-Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice-President (or in the
event there be more than one Vice-President, the Vice-President in the order
designated at the time of their election, or in the absence of any
designation, then in the order of their election) 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. Any Vice-President may sign, with
<PAGE>
the Secretary or an Assistant Secretary, certificates for shares of the
corporation; and shall perform such other duties as from time to time may be
assigned to him by the President or by the Board of Directors.
Section 7. The Secretary. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders and of the Board of Directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these By-Laws 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; (e) sign with the
President, or a Vice-President, certificates for shares 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
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. The 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 money due and payable to the corporation from
any source whatsoever, and deposit all such money in the name of the
corporation in such banks, trust companies or other depositaries as shall be
<PAGE>
selected in accordance with the provisions of Article V of these By-Laws; 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 surety or sureties as the Board of Directors
shall determine.
Section 9. Assistant Secretaries and Assistant Treasurers. The Assistant
Secretaries, when authorized by the Board of Directors, may sign with the
President or a Vice-President certificates for shares of the corporation the
issuance of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall respectively if required by the
Board of Directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the Board of Directors shall determine.
The Assistant Secretaries and Assistant Treasurers, in general, shall perform
such duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the president or the Board of Directors.
Section 10. 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.
<PAGE>
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the corporation
and no evidences of indebtedness shall be issued in its name unless authorized
by a resolution of the 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 of 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 depositaries as the Board of Directors may
select.
ARTICLE VI. 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 or a Vice-
<PAGE>
President and by the Secretary or an Assistant Secretary and sealed with the
corporate seal or a facsimile thereof. The signatures of such officers upon a
certificate may be facsimile if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or one
of its employees. 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 certification shall be issued until the former certificate for a
like number of shares shall have been surrendered and cancelled, except that
in case of a lost, destroyed or mutilated certificate a new one may be issued
therefor 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.
<PAGE>
ARTICLE VII. FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of January and
end on the thirty-first day of December in each year.
ARTICLE VIII. DIVIDENDS
The Board of Directors may, from time to time, declare the Corporation may pay
dividends on its outstanding shares in the manner, and upon the terms and
conditions provided by law and its Articles of Incorporation.
ARTICLE IX. CORPORATE SEAL
The Board of Directors shall provide a corporate seal.
ARTICLE X. WAIVER OF NOTICE
Whenever notice is required to be given to any shareholder or director of the
Corporation under the provisions of these By-Laws or under the provisions of
the Articles of Incorporation or under the provisions of the Utah 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 XI. AMENDMENTS
These By-Laws may be altered, amended or repealed and new By-Laws may be
adopted by the Board of Directors at any regular or special meeting of the
Board of Directors.
ARTICLE XII. PROCEDURE FOR CONDUCTING MEETINGS
All shareholder and director meetings shall be conducted in accordance with
the rules and procedures set forth in the most current edition of Roberts'
Rules of Order.
PROLOGUE:
By: ______________________
Allen Avery, President
<PAGE>
ARTICLES OF INCORPORATION
OF
PROLOGUE
WE, THE UNDERSIGNED natural persons of the age of twenty one
years or more, acting as incorporators of a corporation under the Utah
Business Corporation Act, adopt the following Articles of Incorporation for
such corporation:
ARTICLE I - NAME
The name of this corporation is Prologue.
ARTICLE II - DURATION
The duration of this corporation is perpetual.
ARTICLE III - PURPOSES
The purpose or purposes for which this corporation is
organized are:
a. To engage in exploration, drilling and production on petroleum
properties.
b. To purchase, buy, sell, exchange, produce, manufacture, process, market,
export, import, handle, store, distribute, and otherwise generally deal
in any and all articles of all kinds to establish, construct, maintain,
conduct and operate wholesale and retail outlets of any and all kinds,
nature, and descriptions.
c. To establish, construct, maintain, conduct, and operate wholesale and
retail outlets of all kinds, including petroleum outlets of every kind,
nature, and description; to purchase, buy, sell, exchange, produce,
manufacture, process market, export, import, handle, store, distribute,
and otherwise generally deal in any and all articles and petroleum
products of all kinds.
d. To acquire by purchase, lease, or otherwise; to hold, own, deal in, and
otherwise manage and operate, to sell, transfer, rent, lease, mortgage,
pledge, and otherwise dispose of or encumber any and all classes or
property whatsoever, whether real or personal, or any interest therein,
as principal, agent, or broker.
<PAGE>
e. To acquire by purchase, assignment, grant, license, or
otherwise, to apply for, secure, lease or in any manner
obtain to develop, hold, own, use, exploit, operate, enjoy
and introduce, rights of all kinds in respect of, or
otherwise dispose of to secure to it the payment of agreed
royalties or other consideration, and generally to deal in
and with and turn to account for any or all purposes,
either for itself or as nominee or agent for others:
(1) Any and all inventions, devices, processes, discoveries, and formulas,
and improvements and modifications thereof and rights and interest
therein;
(2) Any and all letters patent or applications for
letters patent of the United States of America or any
other country, state, or locality, and privileges
connected therewith or incidental or appertaining
thereto;
(3) Any and all copyrights granted by the United States or any other
country, state, locality, or authority, and any and all rights,
interest, and privileges connected therewith or appertaining thereto;
and
(4) Any and all trademarks, trade names, trade symbols, labels, designs
and other indicates of origin and ownership granted by or recognized
under the laws or the United States of America or any other country,
state, locality, or authority connected therewith or incidental or
appertaining thereto, and
f. To acquire by purchase, subscription, or otherwise, and to receive, hold,
own, guarantee, sell, assign, transfer, mortgage, pledge, or otherwise
dispose of or deal in and with any of the shares of the capital stock, or
any voting trust certificates in respect of the shares of capital stock,
script, warrants, rights, bonds, debentures, notes, trust receipts, and
other securities, obligations, chooses in action, and evidences of
indebtedness orinterest issued or created by any corporations, joint stock
companies, syndicates, associations, firms, trusts or persons, public or
private, or by the government, or by any state, territory, province,
municipality, or other political subdivision or by any government agency,
and as owner thereof to possess and exercise all the rights, powers, and
privileges of ownership, including the right to execute consents and
vote thereon, and to do any and all acts and things necessary or advisable
<PAGE>
for the preservation, protection, improvement and enhancement in value
thereof.
g. To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, and the good will, rights, assets and property, and to undertake
or assume the whole or any part of the obligations or liabilities of any
person, firm association or corporation.
h. To borrow or raise monies for any of the purposes of the
corporation and, from time to time without limit as to
amount, to draw, make, accept, endorse, execute, and
issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures, and other negotiable or
nonnegotiable instruments and evidences of indebtedness,
and to secure the payment of any thereof or the interest
thereon by mortgage upon, or pledge, conveyance, or
assignment in trust of the whole or any part of the
property of the corporation, whether at the time owned
or thereafter acquired, and to sell, pledge, or
otherwise dispose of such bonds or other obligations of
the corporation for its corporate purposes.
i. To loan to any person, firm or corporation any of its
surplus funds, either with or without security.
j. To purchase, hold, sell, and transfer the shares of its own capital
stock; provided it shall not use its funds or property for the purchase
of its own shares of capital stock when such use would cause any
impairment of its capital except as otherwise permitted by law, and
provided further that shares of its own capital stock belonging to it
shall not be voted upon directly or indirectly.
k. To have one or more offices, to carry on all of, or any of its operations
and business and without restriction or limit as to amount, to purchase or
otherwise restriction or limit as to amount, to purchase or otherwise
acquire, hold, own, mortgage, sell, convey, or otherwise dispose of, real
and personal property of every class and description in any of the states,
districts, or territories of the United States, in any and all foreign
countries subject to the laws of such state, district, territory, or
country.
l. To enter into joint venture and partnerships with individuals,
associations and/or other corporations.
<PAGE>
m. In general to do any and all things that are incidental and conductive to
the attainment of any above object and purpose, to the same extent as
natural persons might or could do, which now or hereafter may be
authorized by the laws of the United States and the State of Utah, as
the Board of Directors may deem to the advantage of the corporation.
ARTICLE IV - STOCK
The aggregate number of shares which this corporation shall
have authority to issue is 50,000,000 shares of $0.001 par. All stock of the
corporation shall be of the same class, common, and shall have the same rights
and preference. Fully paid stock of this corporation shall not be liable to
any further call or assessment.
ARTICLE V - AMMENDMENT
These Articles of Incorporation may be amended by the
affirmative vote of a majority of the shares entitled to vote on each such
amendment.
ARTICLE VI - SHAREHOLDER RIGHTS
The authorized and treasury stock of this corporation may be
issued at such time, upon such terms and conditions and for such consideration
as the Board of Directors shall determine. Shareholders shall not have pre-
emptive rights to acquire unissued shares of the stock of this corporation.
ARTICLE VII - CAPITALIZATION
This corporation will not commence business until
consideration of a value of at least $1,000 has been received for the issuance
of shares.
ARTICLE VIII - INITIAL OFFICE AND AGENT
The address of this corporation's initial registered office
and the name of its original registered agent at such address is:
STANLEY S. ADAMS
50 West Broadway, Suite 900
Salt Lake City, UT 84101
<PAGE>
ARTICLE IX - DIRECTORS
The number of Directors constituting the initial Board of
Directors of this corporation is three. The name and addresses of persons who
are to serve as Directors until the first annual meeting of stockholders, or
until their successors are elected and qualify, are:
NAME, STREET ADDRESS, CITY AND STATE:
1. William Leslie Bailey, 1970 Emigration Canyon, S.L.C., UT 84108
2. Thomas R. Bertoch, 3326 Elgin Drive, S.L.C., UT 84109
3. Marilyn R. Furlong, 3340 East Del Verde, S.L.C., 84109
ARTICLE X - INCORPORATORS
The name and address of each Incorporator is:
NAME, STREET ADDRESS, CITY AND STATE:
1. William Leslie Baily, 1970 Emigration Canyon , S.L.C., UT 84108
2. Thomas R. Bertoch, 3326 Elgin Drive, S.L.C., UT 84109
3. Marilyn R. Furlong, 3340 East Del Verde, S.L.C., UT 84109
ARTICLE XI
COMMON DIRECTORS - TRANSACTION BETWEEN CORPORATIONS
No contract or other transaction between this corporation
and one or more of its Directors or any other corporation, firm, association
or entity in which one or more of its Directors are directors or officers or
are financially interested, shall be either void or voidable because of such
relationship or interest, or because such Director or Directors are present at
the meeting of the Board of Directors, or committee thereof which authorizes,
approves or ratifies such contract or transaction or because his or their
votes are counted for such purpose I: (a) the fact of such relationship or
interest is disclosed or known to the Board of Directors or committee which
authorizes, approves or ratifies the contract or transaction by vote or
consent sufficient for the purpose without counting the votes or consents of
such interest Director; or (b) the fact of such relationship or interest is
disclosed or known to the shareholders entitled to vote and they authorize,
approve or ratify such contract or transaction by vote or written consent; or
(c) the contract or transaction is fair and reasonable to the corporation.
Common or interested Directors may be counted in determining
the presence of a quorum at a meeting of the Board of Directors or committee
thereof which authorizes, approves or ratifies such contract or transaction.
<PAGE>
ARTICLE XII - INDEMNIFICATION
Any person made a party or involved in any civil, criminal,
or administrative action, suit, or proceeding by reason of the fact that he or
his testator or intestate is or was a director, officer, or employee of the
corporation, or of any corporation which he, the testator, or intestate served
as such at the request of the corporation shall be indemnified by the
corporation against expenses reasonably incurred by him or imposed on him in
connection with or resulting from the defense of such action, suit, or
proceeding and in connection with or resulting from any appeal therein, except
with respect to matters as to which it is adjudged in such action, suit or
proceeding that such officer, director or employee was liable to the
corporation, or to such other corporation, for negligence or misconduct in the
performance of his duty. As used herein, the term "expense" shall include all
obligations incurred by such person for the payment of money, including
without limitation attorney's fees, judgments, awards, fines, penalties, and
amounts paid in satisfaction of judgment or in settlement of any such action,
suit or proceeding, except amounts paid to the corporation or such other
corporation by him. A judgment or conviction whether based on a plea of
guilty or nolocontendre or its equivalent or after trial shall not of itself
by deemed an adjudication that such director, officer, or employee is liable
to the corporation, or such other corporations, for negligence of misconduct
in the performance of his duties. Determination of the rights of such
indemnification and the amount thereof may be made at the option of the person
to be indemnified pursuant to procedure set forth from time to time in the By-
Laws or by any of the following procedures:
a. Order of the court or administrative body or agency having jurisdication
of the action, suit or proceeding;
b. Resolution adopted by a majority of the quorum of Board of Directors of
the corporation without counting in such majority as quorum any directors
who have incurred expenses in connection with such action, suit, or
proceeding;
c. If there is no quorum of directors who have not incurred expenses in
connection with such action, suit, or proceeding, then by resolution
adopted by a majority of the committee of stockholders and directors who
have not incurred such expenses appointed by the Board of Directors;
d. Resolution adopted by a majority of the quorum of the Directors entitled
to vote at any meeting; or
<PAGE>
e. Order of any court having jurisdiction over the
corporation. Any such determination that a payment by
way of indemnity should be made will be binding upon the
corporation, such right of indemnification shall not be
exclusive of any other right, which such directors,
officers, and employees of the corporation and the other
persons above-mentioned may have or hereafter acquire
and, without limiting the generality of such statement,
they shall be entitled to their respective rights of
indemnification under By-Laws, Agreement, vote of
stockholder, provision of law, or otherwise as well as
their rights under this article. The provisions of this
article shall apply to any member of any committee
appointed by the Board of Directors as fully as though
such persons had been a director, officer, or employee
of the corporation.
DATED this _______day of __________________, 1982.
_________________________
_________________________
_________________________
(SIGNATURES OF INCORPORATORS)
STATE OF UTAH )
: ss
COUNTY OF SALT LAKE)
I, __________________________, a Notary Public, hereby certify that on
the ________ day of __________________, 1982, William Leslie Bailey,
Thomas R. Bertoch, and Marilyn R. Furlong personally appeared before me who,
being by me first duly sworn, severally declared that they are the persons
who signed the foregoing document as incorporators and that the statements
therein contained are true.
DATED this ________ day of ____________, 1982,
________________________________
NOTARY PUBLIC
Salt Lake County, Utah
My commission expires:
___________________
