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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ENCOUNTER.COM INC.
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(Exact name of Company as specified in its charter)
COLORADO 84-1027606
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5001 Cabrillo Point
Discovery Bay, California 94514
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(Address of principal executive offices)
Registrant's telephone number, including area code 925-634-2116
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Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
50,000,000 Shares of Common Stock
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(Title of class)
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TABLE OF CONTENTS
Page
COVER PAGE 1
TABLE OF CONTENTS 2
PART I 3
DESCRIPTION OF BUSINESS 3
DESCRIPTION OF PROPERTY 23
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES 23
REMUNERATION OF DIRECTORS AND OFFICERS 23
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS 23
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS 24
SECURITIES BEING REGISTERED 25
PART II 27
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS 27
LEGAL PROCEEDINGS 27
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 28
RECENT SALES OF UNREGISTERED SECURITIES 28
INDEMNIFICATION OF DIRECTORS AND OFFICERS 28
PART F/S 30
FINANCIAL STATEMENTS F-1
PART III 31
INDEX TO EXHIBITS 31
SIGNATURES 32
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PART I
The issuer has elected to follow Form 10-SB, Disclosure Alternative
2.
Item 6. Description of Business
The Company is in the business of providing Internet products
including Internet access, web site hosting and web site development.
The Company's products are in the development stage. The Company
plans to begin marketing and selling its products upon completion of
the development stage scheduled for approximately April 2000.
Incorporation
Encounter.com was incorporated under the laws of the state of
Colorado on June 4, 1986, as Sure Hair, Inc. The Company later
changed its name to Palmer Medical, Inc. on September 26, 1997, and
then to Edatenow.com Inc. on February 3, 1999 as its primary business
pursuits changed. On May 31,1999, the Company changed it's name to
Encounter.com, Inc. and pursued various Internet business projects
until February 4, 2000 when it consummated an agreement with
Encounter.com Acquisition Corp. for the sale of 24,726,198 of it's
common shares (75% of the company) in exchange for the business plan
and Internet technology that currently makes up the business of the
Company.
Previous Status as Reporting Company
Sure Hair, Inc., the predecessor name to Encounter.com, Inc. was a
reporting company under United States securities laws until September
1, 1994 when it voluntarily terminated it's reporting status upon
filing with the Securities and Exchange Commission.
Subsidiaries
The Company does not have any subsidiaries.
Principal Products and Services
The Company is developing Internet products and services including
Internet access, Web site hosting and Web site publishing.
Dial-up Internet Access
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Dial-up Internet access (ISP) is a telephone service, whereby
subscribers are connected to the Internet through local and other
toll-free telephone numbers. The Company plans to contract with a
major telephone company to provide national Internet dial-up access
on a bulk-purchase, wholesale basis for resale by the Company under
the Company's brand name. This system will provide the Company's
subscribers worldwide connectivity. A contract has not yet been
consummated with any supplier of Internet access for resale, although
negotiations are underway with several companies.
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Web Page Publishing
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The Company will provide its ISP subscribers with resources for
creating, editing and publishing personal web pages on the Internet.
These resources include computer enabled web page publishing,
content, photo and graphics capabilities, audio and online technical
assistance. The resources are designed to be powerful but easy to
use for all skill levels.
The basic software engine for the Company's Web Page Publishing
product was acquired from WebSuite.com, a Seattle, Washington
company, through a Technology License Agreement. WebSuite.com
developed the software over a five-year period to provide web pages
for real estate brokers and agents. The Technology License Agreement
grants the Company the right to use WebSuites's technology to create
web pages. Among other things, WebSuite.com was transferred one
million shares of the Company's common stock in exchange for these
rights.
Improvements to the WebSuite software were completed on February 29,
2000 under a contract with Down 2 Biz, a software development company
headquartered in Seattle, Washington. Part of the cost of these
improvements were paid in exchange for the transfer of the technology
rights. The Company is negotiating an extended contract with Down 2
Biz for further improvements to this basic technology.
The Company is developing content and new technology that utilizes
the licensed technology to allow its ISP subscribers to publish
personal web pages. Web pages are offered in three main categories:
Personal, Business & Professional, and Home & Family. The Company
believes that by offering its ISP subscribers free content and
feature rich web pages, it will create loyalty and mitigate attrition
from competitors.
Web Page Hosting
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The Company, in addition to providing subscribers free web pages,
will provide free hosting service. Hosting will be on computer
equipment either owned or controlled by the Company. The Company is
presently negotiating a contract with Down 2 Biz to provide a hosting
service from their San Diego, California facility.
Advertising and Links
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As an Internet Service Provider, the Company anticipates having a
large population of subscribers generating many "hits" on the
Internet. This Internet traffic is attractive to advertisers and
certain web sites that will pay the Company fees to gain access to
these potential customers. In fact, some companies offer free ISP
service with a view toward generating lucrative profits just from
these sources. The Company is cognizant of this potential but is also
aware that excessive advertising and links can detract from customer
satisfaction. Accordingly, it will seek an appropriate balance in
developing this potential profit center.
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Technology
The core technology for the Company's web site publishing product was
acquired from Websuite.com, Seattle, Washington, through a license
agreement. Websuite's product was tailored to the real estate
industry and needs to be converted by the Company for general use.
Under the terms of the license agreement, the Company and Websuite
agreed to share costs of a professional review and documentation of
it's product. This project was conducted by Down 2 Biz under a
contract that was completed February 29, 2000.
The Company transferred one million shares of the Company's common
stock to Websuite.com in exchange for the technology rights to
Websuite's Web Page Publishing product.
Sales and Marketing
The Internet market is large and growing. According to Nielsen/Net
Ratings, Inc., there were 122.6 million Web users in January 2000.
The world market is approximately double the US market. Access to the
Internet in the U.S. is provided by about 200 ISP's with a presence
in 25 or more area codes and a large growing number of small,
specialized ISP's.
Currently, a small number of very large Internet Service Providers,
promoted by software and hardware companies, control the vast
majority of the ISP market. These ISP's are subscription based,
charging, on average, $20 per month, and offering basic web site
design and hosting. The developing trend, however, is for ISP's to
offer free access when they offer little in the way of enhanced
service or differentiation. Such free ISP services depend on
advertising revenue for profits.
The Company believes that the trend to heavily discounted or free ISP
service will drive smaller ISP's with subscription income based
business models to consolidate. This will create an opportunity to
acquire existing customer bases through mergers and acquisitions.
The Company intends to vigorously seek out such opportunities.
Although consumer ISP's now generate more revenue than those
marketing to businesses, according to a report by Cahners In-Stat
Group, this is currently changing. Cahners also reported "By 2002,
the U.S. business ISP market will be worth more than $63 billion and
will be providing higher margins than the cut-throat consumer
segment." The Company believes these trends will materialize as
reported and will be developing products to compete in the business
ISP market.
The Company intends to utilize outside sales contractors and
compensate them on a success fee basis to the extent possible.
Advertising and Promotion
The Company does not intend to solicit sales through expensive
advertising in mass market campaigns. Rather, the Company will direct
its advertising and promotional resources to committed Internet users
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that will abandon their current ISP in favor of the Company's content
and feature-rich hosted web site program.
Competition
The Internet services market in which the Company will operate is
extremely competitive, and the Company expects competition in this
market to intensify in the future. The Company's current and
prospective competitors include many large companies that have
substantially greater market presence and financial, technical,
marketing and other resources. The Company competes (or in the future
is expected to compete) directly or indirectly with the following
categories of companies: (i) national and regional ISPs such as
MindSpring Enterprises, Inc., Netcom On-line Communication Services,
Inc., PSINet, Inc. and UUNET; (ii) established online services
companies such as America Online, Inc.; (iii) computer software and
technology companies such as Microsoft Corporation; (iv) national
telecommunication companies such as AT&T Corp., MCI Communications
Corporation , and Sprint Corporation; (v) regional Bell operating
companies; (vi) cable operators such as Comcast Corporation and Time
Warner, Inc.; and (vii) nonprofit or educational Internet service
providers.
Many established online services companies and telecommunication
companies have introduced or plan to expand their Internet services.
The Company expects that a significant number of major
telecommunication, cable, media, software and hardware companies, as
well as all of the major online services companies, will eventually
compete fully in the Internet services market, and that their entry
into this market will result in substantially greater competition for
the Company. The ability of these competitors or others to bundle
services and products with Internet connectivity services could place
the Company at a significant competitive disadvantage. In addition,
competitors in the telecommunication industry may be able to provide
customers with reduced communication costs in connection with their
Internet access services, reducing the overall cost of Internet
access and significantly increasing pricing pressures on the Company.
There can be no assurance that the Company will be able to offset
the effects of any necessary price reductions resulting from such
pricing pressures with an increase in the number of its customers,
higher revenue from enhanced services, cost reductions or otherwise.
The Company believes that its ability to compete successfully in the
Internet services market depends on a number of factors, including
market presence; the adequacy of the Company's customer support
services; the capacity, reliability and security of its network
infrastructure; the ease of access to and navigation of the Internet
provided by the Company's services; the pricing policies of the
Company, its competitors and its suppliers; the timing of
introductions of new services and products by the Company and its
competitors; the Company's ability to support existing and emerging
industry standards; and industry and general economic trends. There
can be no assurance that the Company will have the financial
resources, technical expertise or marketing and support capabilities
to compete successfully.
Research and Development
The Company is in an industry known for rapid evolution and
proliferation of new products. Therefore, it believes it must
maintain a competitive level of technology. Whenever possible, new
product
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technology will be purchased, licensed or acquired through
strategic relationships. A contract is being negotiated with Down 2
Biz, a Seattle, Washington company, for technology development, web
page hosting and maintenance.
Presently, the Company is developing graphics and content on its web
site as well as converting the Websuite software for its use. This
project, which includes a billing system and hosting considerations,
is scheduled for completion in mid-April 2000. At that time, the
Company's web site will go "live". A demonstration site is operative
at this time.
Immediately upon completion of this conversion process, the Company
will begin developing software to improve the capability and
efficiency of the basic Websuite software.
As mentioned previously, the Company will out-source software
development on a fixed price basis, whenever possible.
Employees
As of February 29, 2000, the Company had no employees other than its
officers.
The Company's one officer is Mr. Dennis J. Hinton, who is President,
CEO and CFO of the Company. Mr Hinton is acting as Chief Financial
Officer on an interim basis only. Mr. Hinton provides his services
as required for the business of the Company. The Company presently
does not pay Mr. Hinton any salary or consulting fee. The Company
anticipates that it will pay compensation to Mr. Hinton sometime
after the inception of operations. Mr. Hinton is also the sole
director of the Company at this time.
The Company does not pay to its sole director any compensation for
serving as a director on the Company's board of directors.
The Company conducts its business through agreements with consultants
and arms-length third parties whenever possible.
Operations
The Company has only recently begun its web site development
business, and, to date, has been involved primarily in organization
and product development. The Company does not have any present
business operations.
Intellectual Property And Other Proprietary Rights
The Company does not have any patents or trademarks, but does intend
to file for appropriate protection of its proprietary assets as they
are developed.
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Industry Background
Growth of the Internet
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The emergence of the Internet has fundamentally changed how millions
of people worldwide share information, communicate and conduct
business. The growth in Internet usage is being driven by a number of
factors, including:
- - A large and growing installed base of personal computers;
- - Easier, faster, and more reliable access to the Internet;
- - Improvements in network security, infrastructure and bandwidth;
- - The rapidly expanding availability of online content and commerce
sites; and
- - An increasing amount of offline advertising promoting the Internet.
Traditional Internet Access
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There are more than 6,000 Internet service providers in the United
States today, varying widely in geographic coverage, user focus and
the nature and quality of services provided to users. With the
exception of a few large providers, the vast majority of Internet
service providers do not offer branded nationwide coverage. A number
of Internet service providers are beginning to supplement their basic
access with services such as electronic commerce and
Telecommunications.
Internet service providers generally charge users monthly access fees
and fees for additional services, such as hosting users' Web sites.
Telecommunications costs associated with providing dial-up Internet
access have declined in recent years with the emergence of wholesale
providers that resell capacity to Internet service providers. These
providers have built and continue to build networks on a large scale
and are able to spread the cost of their networks over multiple
Internet service providers. Though access fees charged to users have
declined over time, they have not fallen as quickly as the costs of
personal computers or telecommunications. The Company believes that
while users are generally focused on speed and reliability as they
evaluate Internet access services, they are also increasingly
focusing on cost, particularly as their other computing costs decline
and since the rest of their online experience is generally free.
Growth of Internet Advertising
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Traditional television, radio and print advertising have focused on
building awareness -- repeating a branded message with high frequency
to a large audience. The Internet has emerged as an attractive new
medium for advertising because it offers features that are
unavailable in traditional media. For example, the Internet enables
advertisers to target specific types of users, receive direct
feedback on their advertisements, and capture valuable data on user
preferences while reaching a broad, global audience.
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The Internet also represents an attractive medium for direct
marketing, which has traditionally been conducted through direct mail
and telemarketing. The interactive nature of the Internet enables
direct marketers to deliver targeted promotions to users. The success
of any direct marketing campaign is generally measured by the
response rate of users. The Internet has the potential to enable
direct marketers to increase user response rates and decrease costs
per transaction by targeting campaigns to particular users based on
their demographic profile, interests and online behavior.
Government Regulation
The law relating to the Internet business and operations is evolving
and no clear precedents have been established. In addition, a number
of legislative and regulatory proposals under consideration by
federal, state, local and foreign governmental organizations may lead
to laws or regulations concerning online content, user privacy,
taxation, parental consent for access by their minor children, access
charges, liability for third-party activities, bulk e-mail or "spam",
encryption standards, online sales of goods and services, domain name
registration and use, copyright infringement, and other intellectual
property issues.
Regulation of Content and Access
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A variety of restrictions on content and access, primarily as they
relate to children, have been enacted or proposed. The Children's
Online Privacy Protection Act of 1998 prohibits and imposes criminal
penalties and civil liability on anyone engaged in the business of
selling or transferring, by means of the World Wide Web, material
that is harmful to minors, unless access to this material is blocked
to persons under 17 years of age. In addition, the Federal
Telecommunications Act of 1996 imposes fines on any entity that
knowingly permits any telecommunications facility under such entity's
control to be used to make obscene or indecent material available to
minors via an interactive computer service. Numerous states have
adopted or are currently considering similar types of legislation. In
addition, laws have been proposed which would require Internet
service providers to supply, at cost, filtering technologies to limit
or block the ability of minors to access unsuitable materials on the
Internet. Because of these content restrictions and the potential
liability for materials carried on or disseminated through ISP
systems, the Company may be required to implement measures to reduce
its exposure to liability.
User Privacy Issues
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Internet user privacy has become an issue both in the United States
and abroad. Some commentators, privacy advocates and government
bodies have recommended or taken actions to limit the use of personal
profiles or other personal information by those collecting such
information, particularly as it relates to children. For example, the
Children's Online Privacy Protection Act of 1998 requires, among
other things, that online operators obtain verifiable parental
consent for the collection, use, or disclosure of personal
information from children. The Act further mandates that the Federal
Trade Commission publish regulations for the collection of data from
children by commercial Web-site operators.
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Internet Taxation
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The tax treatment of activities on or relating to the Internet is
currently unsettled. A number of proposals have been made at the
federal, state and local levels and by foreign governments that could
impose taxes on the online sale of goods and services and other
Internet activities. Recently, the Internet Tax Information Act was
signed into law, placing a three-year moratorium on new state and
local taxes on Internet commerce. However, there can be no assurance
that future laws imposing taxes or other regulations on commerce over
the Internet would not substantially impair the growth of Internet
commerce and as a result make it cost-prohibitive to operate our
business.
Telecommunications Regulation
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Currently, Internet Service Providers are not directly regulated by
the Federal Communications Commission or by any other agency, other
than regulations applicable to businesses generally. In a report to
Congress adopted on April 10, 1998, the FCC reaffirmed that Internet
service providers should be classified as unregulated "information
service providers", rather than regulated "telecommunications
providers" under the terms of the Telecommunications Act of 1996.
This finding is important because it means that regulations that
apply to telephone companies and similar carriers do not apply to the
Company and its business. The Company is also not required to
contribute a percentage of its gross revenues to support "universal
service" subsidies for local telephone services and other public
policy objectives, such as enhanced communications systems for
schools, libraries, and some health care providers. The FCC action is
also likely to discourage states from regulating Internet service
providers as telecommunications carriers or imposing similar subsidy
obligations.
Nevertheless, Internet-related regulatory policies are continuing to
develop, and it is possible that the Company could be exposed to such
regulation in the future. For example, in the same report to
Congress, the FCC stated its intention to consider whether to
regulate voice and fax telephony services provided over the Internet
as "telecommunications" even though Internet access itself would not
be regulated.
The Company could also be affected by any change in the ability of
users to reach its network through a dial-up telephone call without
any additional charges. The FCC has ruled that connections linking
end users to their Internet service providers are jurisdictionally
interstate rather than local, but the FCC did not subject such
calling to the access charges that apply to traditional
telecommunications companies. Local telephone companies assess access
charges to long distance companies for the use of the local telephone
network to originate and terminate long distance calls, generally on
a per-minute basis. The Company could be adversely affected by any
regulatory change that would result in the application of access
charges to Internet service providers because this would
substantially increase the cost of using the Internet. Since one of
the largest components of the Company's operating costs is
telecommunications costs, any increase in such costs would have a
material adverse effect on it's gross margins and revenues.
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State public utility commissions generally have declined to regulate
enhanced or information services. Some states, however, have
continued to regulate particular aspects of enhanced services in
limited circumstances, such as where they are provided by incumbent
local exchange carriers that operate telecommunications networks.
Moreover, the public service commissions of some states continue to
review potential regulation of these services. There can be no
assurance that state regulatory authorities will not seek to regulate
aspects of these activities as telecommunications services.
The Workforce Investment Act of 1998
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Section 508 of the Workforce Investment Act of 1998 requires that all
web sites operated by a federal agency, as well as those operated by
anyone doing business with the federal government, modify their web
sites to make them accessible to those who are handicapped. There are
proposals to extend this Act to all web sites, which could increase
our costs and make our service less attractive to the non-
handicapped.
RISK FACTORS
The Company faces substantial risks in executing its business plan
and achieving revenues. The following risks are material risks which
the Company faces. If any of the following risks occur, the business
of the Company and its operating results and financial condition
could be seriously harmed:
Need for Additional Financing
The Company will not be able to expand its operations as planned
without obtaining additional financing in the near future. If this
financing is not available or obtainable, investors may lose a
substantial portion or all of their investment. The Company has no
immediate means for obtaining additional financing. There can be no
assurance that such additional financing, when necessary, will be
available to the Company on acceptable terms, or at all.
Limited Operating History; Risks of a New Business Venture
The Company has only recently begun its web site development
business, and, to date, has been involved primarily in organization
and product development. Potential investors should be aware that
there is a substantial risk of failure associated with new businesses
as a result of problems encountered in connection with their
formation and commencement. These include, but are not limited to,
unanticipated problems relating to the marketing and sale of the
Company's products and services in a highly competitive marketplace
of Internet services, the entry of new competition and unknown or
unexpected additional costs and expenses that may exceed current
estimates.
There is only a limited operating history upon which to base any
projection as to the likelihood that the Company will prove
successful, and thus there can be no assurance that the Company will
achieve profitable operations or even generate any operating
revenues.
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Management of Potential Growth
To manage any future growth, the Company must continue to implement
and improve its operational and financial systems and to expand,
train and manage its employee base. There can be no assurance that
the Company will be able to effectively manage the expansion of its
operations, or that the Company's infrastructure, facilities,
systems, procedures or controls will be adequate to support the
Company's operations. The inability of the Company to effectively
manage its future growth could have a material adverse effect on the
Company's business, financial condition and results of operations.
There can be no assurance that the Company's infrastructure,
technical staff and resources will be adequate to facilitate the
Company's growth. In addition, delays may occur in establishing
Internet accounts for the Company's customers, and customers may
experience significant delays in contacting, and in receiving
responses from, the Company's customer and technical support
personnel. There can be no assurance that the Company will be able to
establish accounts or provide customer support on a timely basis, or
that any delays will not result in a loss of customers. The Company
believes that its ability to provide timely access for customers and
adequate customer support will largely depend on its ability to
attract, identify, train, integrate and retain qualified personnel.
Failure to provide adequate customer support services will adversely
affect the Company's ability to increase its customer base and
establish and maintain a low customer cancellation rate, and could
therefore have a material adverse effect on the Company's business,
financial condition and results of operations.
The sales and marketing and other costs to the Company of acquiring
new customers are substantial relative to the monthly fees derived
from such customers. Accordingly, the Company's ability to establish
and sustain sufficient operating margins depends in part on its
ability to retain its existing customers, while continuing to attract
new customers. The novelty of the market for Internet services may
adversely affect the Company's ability to retain new customers.
Because the Internet services market is new and the variety of
available services is not well understood by new and potential
customers, it is difficult, if not impossible, for the Company to
predict future customer retention rates.
Internet Growth
The Company's future success is substantially dependent on continued
growth in the use of the Internet. Rapid growth in the use of and
interest in the Internet, and in particular the World Wide Web, is a
recent phenomenon and there can be no assurance that Internet usage
will become widespread or that extensive content will continue to be
provided over the Internet. The Internet may not prove to be viable
for a number of reasons, including potentially inadequate development
of the necessary infrastructure, such as a reliable network backbone,
or timely development of performance improvements. To the extent that
the Internet continues to experience significant growth in the number
of users and level of use, there can be no assurance that the
Internet infrastructure will be able to support the demands placed on
it by such potential growth. If use of the Internet does not continue
to grow, or if the Internet infrastructure does not effectively
support growth that may occur, the Company's business, results of
operations and financial condition would be materially and adversely
affected.
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Rapid Technological Change
The market for Internet services is characterized by rapidly changing
technology, evolving industry standards, changes in customer needs
and frequent new service and product introductions. The Company's
future success will depend, in part, on its ability to use leading
technologies effectively, to develop its technical expertise, to
enhance its services and to develop new services that meet changing
customer needs on a timely and cost-effective basis. There can be no
assurance that the Company will be successful in using new
technologies effectively, developing new services or enhancing
existing services on a timely basis, or that such new technologies or
enhancements will achieve market acceptance. Any failure on the part
of the Company to use new technologies effectively, develop new
services or enhance existing services on a timely basis would have a
material adverse effect on the Company's business, financial
condition and results of operations.
Market risks
Any time a new business is introduced into a market, there is a
substantial risk that revenues will not meet expectations or even
cover the cost of operations. General market conditions might be
such that sales will be slow or even non-existent, and/or the product
itself might not fit the needs of buyers enough to induce sales.
While the Company anticipates the ability to sell the products it
develops, there is no way to predict the volume of sales that will
occur or even if sales will be sufficient to support the future
operations of the Company. Numerous factors beyond the control of the
Company may affect the marketability of the products offered and
developed. These factors include consumer demand, market
fluctuations, the proximity and capacity of suppliers and government
regulations, including regulations relating to prices, taxes,
royalties, importing and exporting of products and newly legislated
controls. The exact effect of these factors cannot be accurately
predicted, but it's possible they may result in the Company not
receiving an adequate return on its invested capital.
Competitiveness of Industry
The Internet industry is, in general, intensely competitive. There
can be no assurance that any competitors will not develop and offer
services similar, or even superior, to the products to be developed
and offered by the Company. Such competitiveness is likely to bring
both strong price and quality competition to the sale of the
Company's products, among others things, which will likely mean
increased costs in the form of R&D, marketing, manufacture and
customer services, along with a reduction in product pricing.
Generally, this will have a significant negative effect on any bottom
line profits of the Company.
The Company believes that its ability to compete successfully in the
Internet services market depends on a number of factors, including
market presence; the adequacy of the Company's customer support
services; the capacity, reliability and security of its network
infrastructure; the ease of access to and navigation of the Internet
provided by the Company's services; the pricing policies of the
Company, its competitors and its suppliers; the timing of
introductions of new services and products by the Company and its
competitors; the Company's ability to support existing and emerging
industry standards; and
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industry and general economic trends. There can be no assurance that
the Company will have the financial resources, technical expertise or
marketing and support capabilities to compete successfully.
Competitors
The Company currently competes or expects to compete for users with
the following types of companies that provide access services:
1. Established online service and content providers, such as
America Online and The Microsoft Network;
2. Independent national Internet service providers, such as
EarthLink, MindSpring and Prodigy;
3. National long-distance carriers, such as AT&T, GTE and MCI
WorldCom;
4. Local telephone companies and regional Bell operating companies,
such as Pacific Bell;
5. Numerous regional and local commercial Internet service
providers;
6. Computer hardware and software and other technology companies,
such as IBM and Microsoft;
7. Cable operators and online cable services, such as Excite@Home;
8. Internet portals and search engines such as Yahoo!;
9. free Internet service providers such as NetZero; and
10. nonprofit or educational Internet service providers.
The Company expects that competition for users will continue to
intensify for the foreseeable future. Increased competition could
result in additional sales and marketing expenses and user-
acquisition costs and could also result in increased user turnover
and decreased advertising revenues. The Company may not be able to
offset the effects of these increased costs by raising monthly access
fees, and may not have the resources to continue to compete
successfully. The ability of competitors to acquire other Internet
service providers or to enter into strategic alliances or joint
ventures could also put the Company at a significant competitive
disadvantage.
In addition, new competitors for Internet users, including major
computer manufacturers and software, media and telecommunications
companies, are likely to continue to enter the Internet access
market. Existing competitors may take steps such as reducing their
subscriber fees, offering promotions for access services or bundling
free access services with other product offerings. For example,
AltaVista, a leading portal and search engine, offers a free Internet
access solution to strengthen its relationship with its users, and
both Microsoft and CompuServe partner with personal computer makers
and consumer electronics retailers to offer consumers substantial
rebates on computer equipment when the consumer signs long term
contracts (e.g., three years) for their Internet access services. As
awareness of the Internet grows, existing competitors are likely to
further increase their emphasis on their Internet access services,
resulting in even greater competition.
Moreover, telecommunications companies with far greater resources,
distribution channels and brand awareness offer or have announced
that they will offer, their own Internet access services to users.
Since these companies have their own telecommunications network
infrastructure, they have lower communications costs than the
Company. These advantages reduce the overall cost of Internet access
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for such companies and may significantly increase competitive
pressures. In addition, each of the Company's telecommunications
providers supplies network access to competitors, and could choose to
grant those competitors preferential network access, potentially
limiting the Company's users' ability to access the Internet. If
telecommunications service providers were to decrease the levels of
service or access provided to the Company, or if they were to
terminate their relationships with the Company for competitive or
other reasons, and it was not able to develop alternate sources of
supply, the Company would not be able to provide Internet access to
its customers, which could ultimately result in a significant loss of
users and revenues. At this time, the Company is searching for
telecommunications service providers for its business.
The Company also faces competition from companies that provide
broadband Internet access, including local and long-distance
telephone companies, cable television companies, electric utility
companies, wireless communications companies and other Internet
service providers. Broadband technologies enable users to transmit
and receive print, video, voice and data in digital form at
significantly faster access speeds.
The telephone, cable and other companies that own broadband networks
may prevent the Company from offering broadband Internet access
through the wire and cable networks that they own. The Company's
ability to compete with telephone and cable television companies that
are able to support broadband transmission may depend on future
regulation to guarantee open access to their broadband networks.
However, in January 1999, the Federal Communications Commission
declined to take any action to mandate or otherwise regulate access
by Internet service providers to broadband cable facilities at this
time.
In addition to competing directly in the Internet access market, both
cable and telephone companies are also aligning themselves with
Internet service providers who would receive preferential or
exclusive use of broadband local connections to users. If broadband
Internet access becomes the preferred mode by which users access the
Internet and the Company is unable to gain access to broadband
networks on reasonable terms, its ability to compete could be
materially and adversely affected.
Advertising
If the Company is not able to demonstrate to advertisers that its
registered users are actively using its service, advertisers may
choose not to advertise with the Company and its advertising revenues
could be materially and adversely affected.
The Company may decide to generate advertising revenues from a
variety of different arrangements including sales of banner
advertising, sponsorships, performance-based arrangements and
referrals to third party web sites. The Company has limited
experience marketing and pricing these types of arrangements, and has
limited actual experience with respect to the performance of such
arrangements. As such, it will not know if it is appropriately
pricing, marketing or structuring these arrangements, or whether it
will perform under these arrangements to the satisfaction of the
other parties. The Company's failure to appropriately price, market
or structure these arrangements could impact its ability to enter
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into and perform under these arrangements, or to renew these
arrangements on similar or acceptable terms. In addition, the success
of some of these arrangements will depend on the Company's ability to
effectively target users based on demographic and other information.
The Company may encounter technical and other limitations on this
ability. In light of these factors, the Company cannot provide no
assurance that it will be able to attract sufficient advertising
revenues to justify such operations.
In addition, competition for Internet-based advertising revenues is
intense and the amount of available standard banner advertising space
on the Internet is increasing at a significant rate. These factors
are causing Internet advertising rates to decline, and it is possible
that rates will continue to decline in the future.
The Company's advertising competitors will have longer operating
histories, greater name recognition, larger user bases, significantly
greater financial, technical, sales and marketing resources and more
established relationships with advertisers. These advantages may
allow such competitors to respond more quickly than the Company can
to new or emerging technologies and changes in advertiser
requirements. They may also be able to devote greater resources to
develop, promote and sell their products and services. Such
competitors may also engage in more extensive research and
development, undertake more far-reaching marketing campaigns, adopt
more aggressive pricing policies and make more attractive offers to
existing and potential employees, strategic partners, advertisers and
Web publishers. In addition, competitors have established or may
establish cooperative relationships among themselves or with third
parties to increase the ability of their products or services to
address the needs of prospective customers.
The Company must also compete with television, radio, cable and print
media for a share of advertisers' total advertising budgets.
Advertisers may be reluctant to devote a significant portion of their
advertising budget to Internet advertising if they perceive the
Internet to be a limited or ineffective advertising medium.
Telecommunications Carriers
The Company's business substantially depends on the capacity,
affordability, reliability and security of its telecommunications
networks. Only a small number of telecommunications providers offer
the network services required. There has been significant
consolidation in the telecommunications industry, and there is a
significant risk that further consolidation would make the Company
reliant on an even smaller number of providers. Most
telecommunications services are provided pursuant to short-term
agreements that the providers can terminate or elect not to renew. As
a result, any or all of the Company's potential telecommunications
service providers could decide not to provide it with service at
acceptable rates, or at all, in which event, the Company may not be
able to provide Internet access to its users.
In addition, the Company is subject to potential disruptions in these
telecommunication services and may have no means of replacing these
services, on a timely basis or at all, in the event of such
disruption.
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Further, the Company is dependent on certain third-party suppliers of
hardware components. Certain components used by the Company in
providing its network services are likely to be acquired from limited
sources. Failure of the Company's suppliers to provide components
and products in the quantities, at the quality levels or at the times
required by the Company, or an inability by the Company to develop
alternative sources of supply if required, could result in delays in
and/or increased costs of expansion of the Company's network
infrastructure.
The Company's suppliers and telecommunication carriers also sell or
lease services and products to the Company's competitors and may be,
or in the future may become, competitors of the Company. There can be
no assurance that the Company's suppliers and telecommunication
carriers will not enter into exclusive arrangements with the
Company's competitors or stop selling or leasing their services or
products to the Company.
The Company may also from time to time experience increases in
telecommunications usage which exceed its then-available
telecommunications capacity and the capacity of its internal servers.
As a result, users may be unable to register or log on to its
service, may experience a general slow-down in their Internet access
or may be disconnected from their sessions. Excessive user demand
could also result in system failures of the Company's internal server
networks, which would prevent the Company from generating advertising
revenues. Inaccessibility, interruptions or other limitations on the
ability to access service due to excessive user demand, or any
failure of servers to handle user traffic, would have a material
adverse effect on the Company's reputation and revenues.
Moreover, if third-party telecommunications service providers deliver
unacceptable service, the quality of the Company's Internet access
service would suffer. In this event, the Company would likely lose
users who are dissatisfied with its service. Since the Company does
not have direct control over its telecommunications carriers' network
reliability and the quality of their service, it cannot provide any
assurance that it will be able to provide consistently reliable
Internet access for its users.
The Company's margins are highly sensitive to variations in prices
for its telecommunications services. Its business could be harmed if
minimum connection charges increase or become more prevalent. In
addition, the availability and pricing of telecommunications services
varies geographically, and the Company may not be able to obtain new
or substitute telecommunications services in certain geographic areas
on commercially reasonable terms, if at all.
Technology
The Company relies upon third parties to help it develop technologies
that enhance its current product and service offerings. If the
Company's relationships with these third parties are impaired or
terminated, then it would have to find other developers on a timely
basis or develop technology completely on its own. Failure to
successfully do so could materially effect the Company's results of
operations.
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In addition, others ISPs may develop services or technologies that
render the Company's services or technology noncompetitive or
obsolete. For instance, a number of companies are offering broadband
and other high speed Internet access services, which allow users to
access the Internet at much faster speeds than the access services
the Company intends to initially provide. The Company's ability to
remain technologically competitive may require substantial
expenditures and lead time. If the Company is unable to respond in a
timely manner to technological advances, it may not be able to
compete effectively for users, which could cause its revenues to
decrease.
Moreover, the software and hardware used to operate and provide our
services is complex and, accordingly, may contain undetected errors
or failures. This could result in such adverse consequences as:
1. users being disconnected from our service or being unable to
access our service;
2. loss of data or revenue;
3. injury to reputation; and
4. diversion of development resources.
Security Breach, Virus or Inappropriate Use By Internet Users
The Company's future success will depend, in part, on the security of
its network and, in part, on the security of the network
infrastructures of its third-party telecommunications service
providers, over which it has no control. Computer viruses or
problems caused by users or other third parties, such as the sending
of excessive volumes of unsolicited bulk e-mail or "spam", could lead
to interruptions, delays, or cessation in service. In addition, the
sending of "spam" through the Company's network could result in third
party claims against the Company. Users or other third parties could
also potentially jeopardize the security of confidential information
stored in the Company's computer systems or its users' computer
systems by their inappropriate use of the Internet, including
breaking into the Company's computer network, which could cause
losses to the Company or its users. Users or third parties may also
potentially expose the Company to liability by "identity theft", or
posing as another Encounter.com user. Unauthorized access by current
and former employees or others could also potentially jeopardize the
security of confidential information stored in the Company's computer
systems and those of its users.
The Company expects that its users will increasingly use the Internet
for commercial transactions in the future. Any network malfunction or
security breach could cause these transactions to be delayed, not
completed at all, or completed with compromised security. Users or
others may assert claims of liability against the Company as a result
of any failure to prevent these network malfunctions and security
breaches, and may deter others from using its services. Although the
Company intends to use Industry-standard security measures, such
measures have been circumvented in the past, and there can be no
assurance that these measures will not be circumvented in the future.
In addition, to alleviate problems caused by computer viruses or
other inappropriate uses or security breaches, the Company may have
to interrupt, delay, or temporarily cease service to its users, which
could have a material adverse effect on revenues and could also
result in increased user turnover.
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Integration of Future Acquisitions Into Operations
In the future, the Company may make acquisitions or undertake other
business combinations that can complement its current or planned
business activities. Such acquisitions may not be available at the
times or on acceptable terms, or at all. In addition, acquiring a
business involves many risks, including:
1. disruption of ongoing business and diversion of resources and
management time;
2. unforeseen obligations or liabilities;
3. difficulty assimilating the acquired operations and personnel;
4. risks of entering markets in which the Company has little or no
direct prior experience;
5. potential impairment of relationships with employees or users as
a result of changes in management; and
6. potential dilutive issuances of equity, large and immediate
write-offs, the incurrence of debt, and amortization of goodwill
or other intangible assets.
Potential Legal, Regulatory and/or Compliance Risk
The Company may be subject to United States and international laws
and regulations regarding the development, use and/or sale of the
products or services it sells. The Company may, with regard to
governmental and/or regulatory agencies, be required to comply with
certain regulations, and/or potential future regulations, rules,
and/or directives. Due to the nature of the industry, there is no
guarantee that certain regulations may not, in the future, be
imposed. Moreover, potential regulatory conditions and/or compliance
therewith and the effects of such on the Company, may have a
materially adverse affect upon the Company, its business operations,
prospects and/or financial condition.
The law relating to the Company's business and operations is evolving
and no clear legal precedents have been established. The adoption of
new laws or the application of existing laws may decrease the growth
in the use of the Internet, affect telecommunications costs or
increase the likelihood or scope of competition from regional
telephone companies. These results could decrease the demand for the
Company's services or increase its cost of doing business, each of
which would cause gross margins and revenues to fall. In particular,
the following risks could occur:
1. Regulation of Content and Access Could Limit the Company's
Ability To Generate Revenues And Expose it to Liability;
2. The Company Could Be Exposed to Liability for Defamation,
Negligence, and Infringement;
3. Telecommunications Regulation Could Make It More Expensive For
Us To Do Business.
Domain Names
The Company currently holds the web site domain name relating to our
brand, CyberCastingCorp.com, as well as other web site domain names.
The acquisition and maintenance of domain names generally is
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regulated by governmental agencies and their designees. The
regulation of domain names in the United States and in foreign
countries is subject to change in the near future. As a result, the
Company may be unable to acquire or maintain relevant domain names in
the countries in which it conducts, or plans to conduct, business.
Furthermore, the relationship between regulations governing domain
names and laws protecting trademarks and similar proprietary rights
is unclear. Therefore, the Company may be unable to prevent third
parties from acquiring domain names that are similar to, infringe
upon, dilute or otherwise decrease the value of its trademarks and
other proprietary rights.
The Company depends on its key persons and/or suppliers
Due to the highly technical nature of the Company's business, having
certain key personnel will be essential to the web site development
process and thus to the entire business itself. Consequently, the
loss of any of those individuals once hired may have a substantial
effect on the Company's future success or failure.
Moreover, the Company is dependent on the principal members of its
management staff, the loss of any of whom could impair the
development of the Company's products and projects. The Company's
success will be largely dependent on the decisions made by members of
management. Furthermore, the Company may depend on its ability to
attract and retain additional qualified personnel to manage certain
business interests. The Company may have to recruit qualified
personnel with competitive compensation packages, equity
participation and other benefits which may affect the working capital
available for the Company's operation(s). Management may seek to
obtain outside independent professionals to assist them in assessing
the merits and risks of any business proposals as well as assisting
in the development and operation of any projects. No assurance can
be given that the Company will be able to obtain such needed
assistance on terms acceptable to the Company.
Limited Assets of the Company
The Company has limited assets and will require significant capital
to complete its research and development programs. The Company does
not know the exact specific financial requirements of the projects,
products or ventures in which it may eventually participate, and
therefore does not know what its exact capital needs will be. In
addition, the Company may incur substantial costs in connection with
any research and/or negotiations for business opportunities, which
may deplete the assets of the Company.
Trademarks and Protection of Proprietary Technology
The Company's success may depend in part on its ability to obtain and
enforce intellectual property protection for its technology in both
the United States and other countries. To date, the Company has not
filed any trademark applications in the United States Trademark
Office.
No assurance can be given that trademarks, when applied for, will
issue. In addition, no assurance can be given that any trademarks
acquired by the Company will not be challenged, invalidated or
circumvented, that the rights granted under trademarks will provide
competitive advantages to the
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Company, or that the Company's competitors will not independently
develop or trademark products that are substantially equivalent or
superior to the Company's products. Furthermore, the possibility
exists that the Company could be found to infringe on trademarks held
by others. The Company may have to go to court to defend its trademarks,
to prosecute infringements, or to defend itself from infringement claims
by others.
Trademark litigation is expensive and time-consuming, and can be used
by well-funded adversaries as a strategy for depleting the resources
of a small company such as the Company. There is no assurance that
the Company will have sufficient resources to successfully prosecute
its interests in any litigation which may be brought.
The Company's Short Operating History makes its business difficult to
evaluate
The Company has only just begun developing its business under its
current business plan, and, accordingly, has no operating history
upon which to base an evaluation of its business and prospects.
Consequently, the Company's business and prospects must be considered
in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development,
particularly companies in new and rapidly evolving markets such as
the Internet. To address these risks, the Company must successfully
implement its business plan and marketing strategies, although both
strategies are currently under development. The Company may not
successfully implement all or any of its business strategies or
successfully address the risks and uncertainties that it encounters.
The Company has no revenues
The Company has no revenues and no products or services which it can
sell at the present time. Future revenues will depend on the
Company's ability to develop a product and thereafter to market the
product. There is no assurance that the Company will meet its
objectives or attain revenues. The Company is engaged in business
for profit but cannot predict future profitability.
Operating results are difficult to predict
The Company's future financial results are uncertain due to a number
of factors, many of which are outside the Company's control. These
factors include:
1. The fact that the Company has not finalized development of its
product;
2. The fact that the Company is a new venture which has not begun
to market its product;
3. The amount and timing of costs relating to development of the
Company's product;
4. The announcement or introduction of competing products of
competitors; and
5. General economic conditions and economic conditions specific to
the Internet Service Provider industry.
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Additional Financing
The Company will require additional financing in order to complete
its business plan. The Company has no agreements for additional
financing and there can be no assurance that additional funding will
be available to the Company on acceptable terms in order to enable
the Company to complete its plan of operations.
The Company's capital requirements depend on numerous factors,
including the rate of market acceptance of the Company's services,
the Company's ability to maintain and expand its customer base, the
level of resources devoted to developing and expanding the Company's
marketing and sales organization and the Company's research and
development activities, the availability of hardware and software
provided by third-party vendors, the rate of expansion of the
Company's network infrastructure and other factors. The timing and
amount of such capital requirements cannot accurately be predicted.
If capital requirements vary materially from those currently planned,
the Company may require additional financing. The Company has no
commitments for any additional financing, and there can be no
assurance that any such commitments can be obtained on favorable
terms, if at all. Any additional equity financing may dilute the
interest of the Company's stockholders, and debt financing, if
available, may involve restrictive covenants with respect to
dividends, raising future capital and other financial and operational
matters. If the Company is unable to obtain additional financing as
needed, the Company may be required to reduce the scope of its
operations or its anticipated expansion, which could have a material
adverse effect on the Company's business, financial condition and
results of operations.
The Company will not be able to continue operations if additional
financing is not obtained.
The Company carries no insurance policies.
The Company currently carries no policies of insurance to cover any
type of risk to its business.
Compliance
The Company is delinquent with respect to the requirement of the OTC
Bulletin Board requirement of registering with the Securities and
Exchange Commission. Although the Company is in the process of
registering its stock with the SEC, it has been delisted from the
Bulletin Board and will need to re-apply in order to re-gain its
listed status at a later date.
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Liquidity
The Company is a development stage enterprise that has not, to date,
earned any revenues and is dependent on related parties for financial
support in the short term. The Company needs to obtain new equity
financing for the development of its business.
Item 7. Description of Property
The Company is presently negotiating for leased space in Las Vegas,
Nevada and has no real property.
Item 8. Directors, Executive Officers and Significant Employees
The following information sets forth the names of the officers and
directors of the Company, their present positions with the Company,
and their biographical information.
Name Age Office(s) Held
- ---- --- --------------
Dennis Hinton 64 President, CEO & CFO
Dennis J. Hinton - President, CEO and Chief Financial Officer
Mr. Hinton for the past twenty years has conducted investment banking
in his own firm, specializing in high growth companies with IPO
potential. He has experience in mergers and acquisitions, roll-ups
and public companies. Mr. Hinton's background also includes general
and financial management in major corporations, such as R. J.
Reynolds, Yardley of London, Inc. and Gulf Oil Corporation. Over the
past five years, Mr. Hinton has worked for several of his own
company's including Extra Equity, Inc. and Delta Leasing. Mr. Hinton
received his BS from Gustavus Adolphus College with a major in
Business Administration in 1957.
Directors of the Company are appointed for one year terms to hold
office until the next annual general meeting of the holders of the
Company's Common Stock or until removed from office in accordance
with the Company's by-laws. Officers of the Company are appointed by
the Company's board of directors and hold office until removed by the
board.
Significant Employees
The Company does not have any significant employees other than its
President.
Item 9. Remuneration of Directors and Officers
The Company did not pay any remuneration to its officers or directors
during 1999. As indicated in Item 6 - Description of Business -
Employees, the Company does not presently pay any compensation to its
sole officer and director, Dennis Hinton. The Company may during the
course of the current year decide to compensate Mr. Hinton for his
services.
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Item 10. Security Ownership of Management and Certain Security
Holders
The following table sets forth, as of March 1, 2000, the beneficial
ownership of the Company's Common Stock by each officer and director
of the Company, by each person known by the Company to beneficially
own more than 10% of the Company's Common Stock outstanding and by
the officers and directors of the Company as a group. Except as
otherwise indicated, all shares are owned directly.
Name and address Number of Shares Percentage of
Title of class of beneficial owner of Common Stock Common Stock(1)
- -------------- ------------------- ---------------- ---------------
Common Stock Dennis J. Hinton(2) 12,363,099 37.5%
5001 Cabrillo Point
Discovery Bay,
CA 94514
Common Stock Dave Cleveland(2) 12,363,099 37.5%
8981 NE Highway
Number 104
Kingston, WA 98346
Common Stock All Officers and
Directors
as a Group
(1 person) 12,363,099 37.5%
- ------------
(1) Based on 32,968,264 Common shares outstanding as of March 1, 2000.
(2) 24,726,198 shares of Common Stock are held by Encounter Acquisition
Corp. which is equally beneficially owned by Dennis Hinton and Dave
Cleveland. These shares were acquired in consideration of the
Company's acquisition of certain software and a business plan relating
to the development of the Company as an Internet Service Provider in
February 2000. Dennis Hinton is the Company's current President, CEO
and CFO; Dave Cleveland does not hold a position in the Company.
Share Purchase Warrants
The Company has not issued and does not have outstanding any warrants
to purchase shares of its Common Stock.
Options
There are no options to purchase securities of the Company
outstanding.
Registration Rights
None of the holders of the Company's common shares or warrants or
options to purchase common shares have any right to require the
Company to register its common shares pursuant to the Securities Act
of 1933.
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Convertible Securities
The Company has not issued and does not have outstanding any
securities convertible into shares of Common Stock or any rights
convertible or exchangeable into shares of Common Stock
Item 11. Interest of Management and Others in Certain Transactions
Except as disclosed below, none of the following persons has any
direct or indirect material interest in any transaction to which the
Company is a party in any proposed transaction to which the Company
is proposed to be a party:
(A) Any director or officer of the Company;
(B) Any proposed nominee for election as a director of the
Company;
(C) Any person who beneficially owns, directly or indirectly,
shares carrying more than 10% of the voting rights attached
to the Company's Common Stock; or
(D) Any relative or spouse of any of the foregoing persons, or
any relative of such spouse, who has the same house as such
person or who is a director or officer of any parent or
subsidiary of the Company.
The Company currently does not have any policies about entering into
transactions with affiliated parties.
Item 12. Securities Being Registered
The securities being registered are the shares of the Company's
common stock, par value $0.001 per share. Under the Company's
Articles of Incorporation, the total number of shares of all classes
of stock that the Company has authority to issue is 50,000,000 shares
of common stock, par value $0.001 per share (the " Common Stock").
As of March 1, 2000, a total of 32,968,264 shares of Common Stock
were issued and outstanding. All issued and outstanding shares of
the Common Stock are fully paid and non-assessable.
Common Stock
Holders of Common Stock have the right to cast one vote for each
share held of record on all matters submitted to a vote of holders of
Common Stock, including the election of directors. Holders of Common
Stock do not have cumulative voting rights in the election of
directors. Holders of a majority of the voting power of the capital
stock issued and outstanding and entitled to vote, represented in
person or by proxy, are necessary to constitute a quorum at any
meeting of the Company's stockholders, and the vote by the holders of
a majority of such outstanding shares is required to effect certain
fundamental corporate changes such as liquidation, merger or
amendment of the Company's Articles of Incorporation.
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Holders of Common Stock are entitled to receive dividends pro rata
based on the number of shares held, when, as and if declared by the
Board of Directors, from funds legally available therefor. In the
event of the liquidation, dissolution or winding up of the affairs of
the Company, all assets and funds of the Company remaining after the
payment of all debts and other liabilities shall be distributed, pro
rata, among the holders of the Common Stock. Holders of Common Stock
are not entitled to pre-emptive or subscription or conversion rights,
and there are no redemption or sinking fund provisions applicable to
the Common Stock. All outstanding shares of Common Stock are fully
paid and non-assessable.
Transfer Agent
American Securities Transfer and Trust, Inc. of Lakewood, Colorado is
the transfer agent for the Shares.
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PART II
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Stockholder Matters
The Company's Common Stock was trading on the OTC Bulletin Board
under the symbol "ENCRE" before being listed for not timely
registering its common stock with the US Securities and Exchange
Commission.
As of March 1, 2000, there were 418 registered shareholders in the
Company.
None of the holders of the Company's Common Stock have any right to
require the Company to register any shares of the Company's Common
Stock pursuant to the Securities Act of 1933 (the "1933 Act").
The Company has not declared any dividends on its Common Stock over
the last two years. There are no dividend restrictions that limit the
Company's ability to pay dividends on its Common Stock and the
Company does not plan to issue any dividends.
Item 2. Legal Proceedings
The Company entered into a Letter of Intent dated February 5, 1999,
to acquire 100% of the shares of SA Interactive Information
Technology, Inc. ("Interactive") (Note 3 (I). The acquisition was
not consummated.
Interactive and its shareholders filed a Statement of Claim in the
Supreme Court of British Columbia (Canada) on April 23, 1999, against
the Company, related companies and individuals.
The Claim pertains to the termination of the proposed acquisition of
Interactive and the continued development of businesses by the
Company in the same or similar fields as Interactive. The Plaintiff
seeks various injunctions restricting the Company from competing
against Interactive, damages for breach of contract and breach of
fiduciary duty, punitive damages and interest.
The Company has filed Statements of Defense responding that the
actions of the Plaintiff in attempting to renegotiate the terms of
the Letter of Intent abrogated all agreements between them, that the
Company has no fiduciary duties to the Plaintiff and that the
Plaintiff has no exclusive rights to the businesses being developed
by the Company.
The Company intends to defend itself vigorously against this action.
The probable outcome of this action is not determinable at this
time.
The Company is also continuing with its Action against the plaintiffs
identified above for the return of funds advanced to them ($40,333)
towards the proposed acquisition.
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Item 3. Changes in and Disagreements with Accountants
The Company has had no changes in or disagreements with its
accountants over the past two years.
Item 4. Recent Sales of Unregistered Securities
Within the past twelve months the Company had sales of
unregistered securities as follows:
In February of 1999, the Company completed the sale of 8,000,000
shares of Common Stock to 20 investors for $0.01 per share pursuant
to Rule 504 of Regulation D of the Securities Act. The offering was
completed solely to non-U.S. investors. No sales commissions were
paid.
In April of 1999, 80,000 shares of common stock were sold at $2.50
per share to "574125 B.C.LTD." pursuant to Rule 504 of Regulation D
of the Securities Act. The offering was completed to persons known
to the Company's officers and directors. No sales commissions were
paid.
In February of 2000, 24,726,198 shares of common stock were sold
to Encounter.com Acquisition Corp. in exchange for the technology
rights and business plan described herein. These shares were sold
pursuant to Section 4(2) of the Securities Act and have been
marked "restricted."
As of March 10, 2000, the Company sold 1,000,000 shares of common
stock to 4 investors for $0.25 per share pursuant to Rule 504 of
Regulation D of the Securities Act. The offering was completed to
persons known to the Company's officers and directors. No sales
commissions were paid. All investors were accredited investors.
All Company stock has been purchased for investment purposes in each
of the offerings. No shares were purchased with a view toward
resale.
Item 5. Indemnification of Directors and Officers
The officers and directors of the Company are indemnified as provided
under the Colorado Revised Statutes (the "CRS") and the Bylaws of the
Company.
The By-laws of the Company provide that the Company will indemnify
its directors and officers to the fullest extent not prohibited by
the Colorado Revised Statutes; provided, however, that the Company
may modify the extent of such indemnification by individual contracts
with its directors and officers; and, provided, further, that the
Company shall not be required to indemnify any director or officer in
connection with any proceeding (or part thereof) initiated by such
person unless (i) such indemnification is expressly required to be
made by law, (ii) the proceeding was authorized by the Board of
Directors of the Company, (iii) such indemnification is provided by
the Company, in its sole discretion, pursuant to the powers vested in
the Company under the CRS or (iv) such indemnification is required to
be made pursuant to the By-laws.
28
<PAGE>
The By-laws of the Company provide that the Company will advance to
any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director or officer, of the Company,
or is or was serving at the request of the Company as a director or
executive officer of another Company, partnership, joint venture,
trust or other enterprise, prior to the final disposition of the
proceeding, promptly following request therefor, all expenses
incurred by any director or officer in connection with such
proceeding upon receipt of an undertaking by or on behalf of such
person to repay said amounts if it should be determined ultimately
that such person is not entitled to be indemnified under the By-laws
of the Company or otherwise.
The By-laws of the Company provide that no advance shall be made by
the Company to an officer of the Company (except by reason of the
fact that such officer is or was a director of the Company in which
event this paragraph shall not apply) in any action, suit or
proceeding, whether civil, criminal, administrative or investigative,
if a determination is reasonably and promptly made (i) by the Board
of Directors by a majority vote of a quorum consisting of directors
who were not parties to the proceeding, or (ii) if such quorum is not
obtainable, or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written
opinion, that the facts known to the decision-making party at the
time such determination is made demonstrate clearly and convincingly
that such person acted in bad faith or in a manner that such person
did not believe to be in or not opposed to the best interests of the
Company.
29
<PAGE>
PART F/S
FINANCIAL STATEMENTS
The Company's audited Financial Statements, as described below, are
attached hereto.
1. Audited financial statements for the year ended May 31, 1998 and
1999 and interim unaudited financial statements for the six month
period ended November 30, 1998 and 1999, including:
(a) Balance Sheet;
(b) Statement of Operations;
(c) Statement of Stockholders' Deficiency;
(d) Statement of Cash Flows;
(e) Notes to the Financial Statements.
2. Consent of Telford Sadovnick, P.L.L.C., Certified Public
Accountants
30
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
FINANCIAL STATEMENTS
MAY 31, 1999 and 1998
<PAGE>
TELFORD SADOVNICK, P.L.L.C.
CERTIFIED PUBLIC ACCOUNTANTS
- ---------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Encounter.com, Inc.
We have audited the accompanying balance sheets of Encounter.com,
Inc. (a development stage enterprise) as at May 31, 1999 and 1998
and the related statements of operations, stockholders' deficiency
and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Encounter.com, Inc. at May 31, 1999 and May 31, 1998, and the
results of its operations and its cash flows for the years then
ended 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
1 to the financial statements the Company is a development stage
enterprise, has to date not established any revenues, is dependent
upon related parties for financial support in the short term, and
needs to obtain new equity financing for the development of its
business. These factors, together raise substantial doubt about
its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Telford Sadovnick, P.L.L.C.
CERTIFIED PUBLIC ACCOUNTANTS
Bellingham, Washington
December 17, 1999
- ---------------------------------------------------------------------
114 West Magnolia Street, Suite 423, Bellingham, Washington 98225
Telephone: (360) 392-2886 Facsimile:(360) 392-2887
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
BALANCE SHEET
May 31,
-----------------
Note 1999 1998
ASSETS
CURRENT
Cash $ - $ 6,287
========= =========
LIABILITIES
CURRENT
Bank indebtedness $ 12 $ -
Accounts payable and accrued liabilities 11,600 -
Due to related party 5 82,434 -
--------- ---------
94,046 -
--------- ---------
STOCKHOLDERS' DEFICIENCY
PREFERRED STOCK
Authorized: 5,000,000 shares, $1.00 par value - -
Issued and outstanding: nil
COMMON STOCK
Authorized: 50, 000,000 shares, $0.001 par value
Issued and outstanding:
May 31, 1999 - 8,242,066 shares 8,242 3,240
May 31, 1998 - 3,240,280 shares
ADDITIONAL PAID-IN CAPITAL 889,169 619,171
DEFICIT ACCUMULATED PRIOR TO JUNE 1, 1998 (616,124) (616,124)
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (375,333) -
-------- --------
(94,046) 6,287
-------- --------
$ - $ 6,287
======== ========
CONTINGENCY - Note 7
See accompanying Notes to the Financial Statements
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
Cumulative
from
Inception of
Development
Year Ended May 31, Stage
on June 1, 1998
Note 1999 1998 to May 31, 1999
---------------
(Development Stage)
GENERAL AND ADMINISTRATIVE EXPENSES
Administrative and
shareholder relations fees $ 163,692 $ - $ 163,692
Audit and accounting 9,459 - 9,459
Legal fees 28,876 - 28,876
Office supplies and services 2,719 923 2,719
Promotion and entertainment 28,628 50 28,628
Telephone 9,997 9,997
Transfer agent and filing fees 6,278 1,594 6,278
Travel and accommodation 55,351 - 55,351
-------- ------- ---------
305,000 2,567 305,000
COSTS INCURRED TOWARDS BUSINESS
ACQUISITION NOT PROCEEDED WITH 3 70,333 - 70,333
MEDICAL PRODUCT PROJECT COSTS
WRITTEN OFF 3 - 130,000 -
GAIN ON SETTLEMENT OF LIABILITIES 5 - (4,546) -
---------- -------- ----------
NET LOSS FOR THE YEAR $ 375,333 $128,021 $ 375,333
========== ======== ==========
BASIC LOSS PER SHARE $ 0.146 $ 0.046
WEIGHTED AVERAGE NUMBER OF SHARES 2,563,162 2,808,773
See accompanying Notes to the Financial Statements
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF STOCKHOLDERS' DEFICIENCY
Deficit
Accumu-
lated Total
Addit- During Stock-
ional Develop- holders'
Common Stock Pain-In ment Equity
------------
Number Amount Capital Deficit Stage (Deficiency)
Balance,
May 31,
1997
(Note 4) 45,136,200 $ 45,136 $437,775 $(488,103) $ - $ (5,192)
Reverse
split:
1 new for
each 500
existing
issued
shares (45,045,920) (45,046) 45,046 - - -
Issued for
cash: $ 0.05
per share 3,150,000 3,150 154,350 - - 157,500
Share issue
costs -
legal fees - - (18,000) - - (18,000)
Net loss-year
ended May
31, 1998 - - - (128,021) - (128,021)
---------- ------- -------- --------- ------ ----------
Balance,
May 31,
1998 3,240,280 3,240 619,171 (616,124) - 6,287
Reverse
split:
1 new for
each 20
existing
issued
shares (3,078,214) (3,078) 3,078 - - -
Issued
for cash:
$0.01 per
share 8,000,000 8,000 72,000 - - 80,000
Issued
for cash:
$2.50 per
share 80,000 80 199,920 - - 200,000
Share
issue
costs -
legal
fees - - (5,000) - - (5,000)
Net loss -
year
ended
May 31,
1999 - - - - (375,333) (375,333)
---------- ------- -------- --------- ------- ----------
Balance,
May 31,1999 8,242,066 $ 8,242 $889,169 $(616,124)$(375,333) $ (94,046)
========= ====== ======== ========= ========= ==========
See accompanying Notes to the Financial Statements
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
Cumulative
from
Inception of
Development
Year Ended May 31, Stage
-----------------
on June 1, 1998
Note 1999 1998 to May 31, 1999
---------------
(Development Stage)
OPERATING ACTIVITIES
Net loss for the year $(375,333) $(128,021) $ (375,333)
Changes in operating assets and
liabilities providing net cash
Accounts payable and
accrued liabilities 11,600 - 11,600
Due to related party 82,434 (5,192) 82,434
--------- --------- ------------
Net cash used by operating activities (281,299) (133,213) (281,299)
--------- --------- ------------
FINANCING ACTIVITIES
Issuance of common stock for cash 280,000 157,500 280,000
Stock offering costs (5,000) (18,000) (5,000)
--------- --------- -----------
275,000 139,500 275,000
--------- --------- -----------
(DECREASE) INCREASE IN CASH (6,299) 6,287 (6,299)
CASH AT BEGINNING OF YEAR 6,287 - 6,287
--------- --------- -----------
(BANK INDEBTEDNESS) CASH
AT END OF YEAR $ (12) $ 6,287 $ (12)
========= ========= ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid for interest $ - $ - $ -
Cash paid for income taxes $ - $ - $ -
SUPPLEMENTAL NON-CASH INVESTING
AND FINANCING ACTIVITIES $ - $ - $ -
See accompanying Notes to the Financial Statements
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1999 AND 1998
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The Company was organized June 4, 1986 under the laws of Colorado
as "Sure Hair, Inc.". Its original business was in the cosmetic
and beauty care products field, and was abandoned. The Company
remained dormant until September 1997, when its issued stock was
reorganized by a 500:1 reverse split, and an equity financing of
$157,500 was completed. Effective September 26, 1997 the name of
the Company was changed to "Palmer Medical, Inc." to reflect its
new business in the field of medical device manufacturing and
sales. This business did not materialize and the Company was again
dormant at the end of its 1998 fiscal year.
In January 1999 the company undertook a 20:1 reverse split of its
issued stock. Effective February 3, 1999 its name was changed to
"Edatenow.com, Inc.". Equity financings for a total of $280,000
were completed in February and April 1999 to finance a portion of
the acquisition costs of a private company in the voice personals
industry, and to commence the development of an Internet dating
program building upon newspaper voice personals. The acquisition
of the private company was not completed, and effective May 31,
1999 the Company's name was changed to "Encounter.com, Inc."
The Company is a development stage enterprise commencing June 1,
1998 with respect to its Internet business. To date, the Company
has not established any revenues, is dependent upon related parties
for financial support in the short term, and needs to obtain new
equity financing for the development of its business.
The Company's financial statements were prepared using generally
accepted accounting principles applicable to a going concern which
contemplate the realization of assets and liquidation of
liabilities in the normal course of business. Management intends
to seek shareholder approval for the issuance of stock and the
proposed merger with a Nevada corporation being formed to finance
and begin business as an Internet Service Provider offering
subscribers free websites. (Note 8).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(i) Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
(ii) Financial instruments and financial risk
The Company's financial instruments consist of bank
indebtedness, accounts payable and accrued liabilities and
amounts due to a related party. The fair value of the current
assets and liabilities approximate the carrying amounts due to
the short-term nature of these instruments.
(iii) Loss per share
Basic loss per common share has been calculated based on the
weighted average number of shares of common stock outstanding
during the period. Where reverse splits have been completed in the
year, for the purpose of calculating the weighted average number of
shares outstanding, these reverse stock splits have been considered
effective at the beginning of the fiscal year.
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1999 AND 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
(iv) Translation of Foreign Currencies
The Company's foreign operations are of an integrated nature
and accordingly, the re-measurement method of foreign currency
translation is used for conversion into United States dollars,
as follows:
Revenues and expenses arising from foreign currency
translations are translated into United States dollars at the
average rate for the period. Monetary assets and liabilities
are translated into United States dollars at the rates
prevailing on the balance sheet date. Other assets and
liabilities are translated into United States dollars at the
rates prevailing on the transaction dates. Exchange gains and
losses are recorded as income or expense in the period in which
they occur.
(v) Income Taxes
The Company accounts for income taxes under an asset and
liability approach that requires the recognition of deferred
tax assets and liabilities for the expected future tax
consequences of events that have been recognized in the
Company's financial statements or tax returns. In estimating
future tax consequences, all expected future events other than
enactment of changes in the tax laws or rates are considered.
NOTE 3 - PROJECTS NOT PROCEEDED WITH
(i) 1999: Voice personals and Internet dating program
The Company advanced $40,333 under a Letter of Intent to acquire
100% of the shares of SA Interactive Information Technology,
Inc., a private British Columbia, Canada corporation. The
Letter of Intent also required the Company to issue 9,000,000
common shares, advance a further $140,000, raise a total of
$2,500,000 in financing within 18 months of closing, and issue
options to the vendors of the private company to acquire 750,000
shares at a price of $0.10 per share exercisable within 2 years
of closing. The proposed acquisition, which was not proceeded
with, was intended to provide the Company with an entry into the
field of voice personals, upon which to develop an Internet
presence.
An additional $30,000 was advanced for development costs towards
an Internet presence for the above business. These costs,
together with the $40,333 advanced under the Letter of Intent
have been charged to operations in the 1999 fiscal year (Note 7
- - Contingency).
(ii) 1998: Non-reusable syringe rights
The Company paid $130,000 towards the acquisition of
distribution rights and related costs of a non-reusable medical
syringe. This project was not proceeded with and all costs
incurred have been charged to operations in the 1998 fiscal
year.
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1999 AND 1998
NOTE 4 - COMMON STOCK
(i) Common Stock Issued to May 31,1997
The issued common stock was subject to reverse splits on a 500:1
basis in fiscal 1998, and a 20:1 basis in fiscal 1999. All
transactions affecting the common stock of the Company in fiscal
1998 and 1999 are detailed in the Statement of Stockholders'
Deficiency. Common stock transactions from organization of the
Company to May 31, 1997 are as follows:
Warrants
To Acquire Additional
Number of Common Subscription Paid-in
Shares Amount Shares Receivable Capital
--------- ------ ---------- ------------ ----------
Balance at inception
- June 4, 1986 - $ - $ - $ - $ -
Issued for cash
$0.001 -
$0.05 per share 1,950,000 1,950 - - 67,400
$0.10 per share 5,000,000 5,000 100 - 495,000
Issued for services:
$0.001 per share 1,850,000 1,850 - - -
Issued for
distribution rights:
$0.001 per share 1,400,000 1,400 - - (1,400)
Share issue costs - - - - (135,418)
---------- ------ ----- ------ ---------
Balance,
May 31, 1987 10,200,000 10,200 100 - 425,582
Issued for cash:
$0.02 per share 100,000 100 - - 1,900
---------- ------ ----- ------ ---------
Balance,
May 31, 1988 10,300,000 10,300 100 - 427,482
Warrants expired
in year - - (100) - 100
---------- ------ ----- ------ ---------
Balance, May 31,
1989 and 1990 10,300,000 10,300 - - 427,582
Issued for services:
$0.002 per share 15,178,000 15,178 - - 13,296
---------- ------ ----- ------ ---------
Balance,
May 31, 1991 25,478,000 25,478 440,878
---------- ------ ----- ------ ---------
Issued for services:
$0.002 per share 6,522,000 6,522 - - 6,061
---------- ------ ----- ------ ---------
Balance,
May 31, 1992 32,000,000 32,000 - - 446,939
Issued in
settlement of
liabilities 13,136,200 13,136 - (2,407) (6,757)
---------- ------ ----- ------ ---------
Balance,
May 31, 1993 45,136,200 45,136 - (2,407) 440,182
Subscription
Settled - - - 2,407 (2,407)
---------- ------ ----- ------ ---------
Balance,
May 31, 1994,
1995, 1996
and 1997 45,136,200 $ 45,136 $ - $ - $ 437,775
========== ====== ===== ====== =========
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1999 AND 1998
NOTE 4 - COMMON STOCK (Cont'd)
(ii) Stock Option Plan
The Company has adopted a Stock Option Plan (the "Plan") to be
administrated by a Compensation Committee of the Board of
Directors. The purpose of the Plan is to provide incentive stock
options as a means to attract and retain key corporate personnel
and consultants. The shares to be offered under the Plan consist
of authorized but unissued common shares of the Company. The
aggregate number of shares subject to options under the Plan at any
one time shall not exceed 2,500,000 shares. The maximum number of
shares for which an option may be granted to any optionee during
any calendar year shall not exceed 500,000 shares. The exercise
price of the options when granted shall not be less than 85% of the
fair market value of the shares on the date the option is granted.
The term of the options granted may not extend beyond 10 years,
and are subject to earlier cancellation on termination of
employment. The Plan stipulates vesting of stock option rights at
the rate of at least 20% per year, and it is intended that options
when granted will vest on a cumulative basis as to 1/3 of the
shares under option annually, unless otherwise provided by the Plan
administrator.
To date there have been no stock options granted under the Plan.
NOTE 5 - RELATED PARTY TRANSACTIONS
(i) General and administrative expenses include the total of
$247,725 for administrative and shareholder relations fees,
promotion, entertainment, travel and accomodation expenses to
574125 B.C. Ltd., a shareholder of the Company. Under the
terms of a Management Agreement dated March 18, 1999, 574125
B.C. Ltd. provides administrative and shareholder relations
services for a monthly fee of $20,000 plus reimbursement of
all costs incurred. The Management Agreement is cancellable
by the Company on payment of a 1 year penalty.
(ii) The amount of $82,434 is due to 574125 B.C. Ltd. at May 31,
1999.
(iii) The Company in the 1999 fiscal year issued 80,000 shares to
574125 B.C. Ltd. at a price of $2.50 per share for total
consideration of $200,000.
(iv) Gain on settlement of liabilities totalling $4,546 in the 1998
fiscal year respresents amounts owing to the former Directors
and shareholders settled on transfer of control to the
Company.
(v) A shareholder was a significant participant in the medical
project which was funded by the Company in the 1998 fiscal
year (Note 3).
NOTE 6 - INCOME TAXES
At May 31, 1999, the Company has tax operating losses carryforwards
of approximately $370,000 (May 31, 1998 - Nil) expiring in fiscal
2014. Due to ownership and business purpose changes, the net
operating loss carryforwards at May 31, 1998 of approximately
$600,000 are subject to restriction under tax laws and any tax
benefit is expected to be minimal.
The tax benefit of the cumulative tax loss carryforwards has been
offset by a valuation allowance of the same amount.
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1999 AND 1998
NOTE 7 - CONTINGENCY
The Company entered into a Letter of Intent dated February 5, 1999
to acquire 100% of the shares of SA Interactive Information
Technology, Inc. ("Interactive") (Note 3(i)). The acquisition was
not proceeded with.
Interactive and its shareholder filed a Statement of Claim in the
Supreme Court of British Columbia (Canada) on April 23, 1999
against the Company, related companies and individuals.
The Claim pertains to the termination of the proposed acquisition
of Interactive, and the continued development of businesses by the
Company in the same or similar fields as Interactive. The
Plaintiff seeks various injunctions restricting the Company from
competing against Interactive, damages for breach of contract and
breach of fiduciary duty, punitive damages and interest.
The Company has filed Statements of Defense responding that the
actions of the Plaintiff in attempting to renegotiate the terms of
the Letter of Intent abrogated all agreements between them, and
that the Company has no fiduciary duties to the Plaintiff and that
the Plaintiff has no exclusive rights to the businesses being
developed by the Company.
The Company intends to defend itself vigorously against this
action. The probable outcome of this action is not determinable at
this time.
The Company is also continuing with its Action against the
plaintiffs above for the return of the funds advanced ($40,333)
towards the proposed acquisition.
NOTE 8 - SUBSEQUENT EVENT
Subsequent to the balance sheet date, the company agreed to acquire
certain software and a business plan relating to the development of
the Company as an Internet Service Provider offering subscribers
free websites. The consideration to be paid by the Company for
this acquisition is the issuance of 24,726,198 shares of its
capital stock.
The Company has agreed to pay the sum of $100,000 to Woodstock
Products Inc. ("Woodstock"), commencing with quarterly payments of
$20,000 beginning June 30, 2000 and continuing each and every three
months thereafter in the same amount until paid in full, together
with interest at the rate of 1% per month on any unpaid balance.
Woodstock is a private company related to 574125 B.C. Ltd. The
payments agreed to be made to Woodstock include the settlement of
amounts due to 574125 B.C. Ltd. (Note 5), together with additional
fees and costs incurred subsequent to May 31, 1999.
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1999 AND 1998
NOTE 9 - UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use
two digits rather than four to identify a year. Date-sensitive
systems may recognize the year 2000 as 1900 or some other date,
resulting in errors when information using year 2000 dates is
processed. In addition, similar problems may arise in some systems
which use certain dates in 1999 to represent something other than a
date. The Company's own financial accounting functions are not
technologically dependent. Although the change in date has
occurred, it is not possible to conclude that all aspects of the
Year 2000 Issue that may affect the entity, including those related
to customers, suppliers, or other third parties, have been fully
resolved.
<PAGE>
ENCOUNTER.COM, INC.
INTERIM FINANCIAL STATEMENTS
SIX MONTH PERIOD ENDED NOVEMBER 30, 1999 and 1998
(Unaudited - See Review Engagement Report)
<PAGE>
TELFORD SADOVNICK, P.L.L.C.
CERTIFIED PUBLIC ACCOUNTANTS
- ---------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
REVIEW ENGAGEMENT REPORT
To the Board of Directors and Shareholders of
Encounter.com, Inc.
We have reviewed the accompanying interim balance sheets of
Encounter.com, Inc. (a development stage enterprise) as of November
30, 1999 and 1998 and the related interim statements of operations,
stockholders' deficiency and cash flows for the six month periods
ended November 30, 1999 and 1998 in accordance with Statements on
Standards for Accounting and Review Services issued by the American
Institute of Certified Public Accountants. All information
included in these interim financial statements is the
representation of the management of the Company.
A review consists principally of inquiries of company personnel and
analytical procedures applied to financial data. It is
substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying interim financial
statements in order for them to be in conformity with generally
accepted accounting principles.
/s/ Telford Sadovnick, P.L.L.C.
CERTIFIED PUBLIC ACCOUNTANTS
Bellingham, Washington
December 17, 1999
- ---------------------------------------------------------------------
114 West Magnolia Street, Suite 423, Bellingham, Washington 98225
Telephone: (360) 392-2886 Facsimile:(360) 392-2887
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
INTERIM BALANCE SHEET
(Unaudited - See Review Engagement Report)
November, 30
-----------------
Note 1999 1998
ASSETS
CURRENT
Cash $ 1,206 $ 3,512
========== ==========
LIABILITIES
CURRENT
Accounts payable and
accrued liabilities $ 10,942 $ 1,643
Due to related party 5 275,221 -
---------- ----------
286,163 1,643
---------- ----------
STOCKHOLDERS' DEFICIENCY
PREFERRED STOCK
Authorized: 5,000,000 shares, $1.00 par value - -
Issued and outstanding: nil
COMMON STOCK
Authorized: 50,000,000 shares, $0.001 par value
Issued and outstanding: 8,242,066 shares
(1998 - 3,240,280 shares) 8,242 3,240
ADDITIONAL PAID-IN CAPITAL 889,169 619,171
DEFICIT ACCUMULATED PRIOR TO JUNE 1, 1998 (616,124) (616,124)
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (566,244) (4,418)
---------- ----------
(284,957) 1,869
---------- ----------
$ 1,206 $ 3,512
========== =========
CONTINGENCY - Note 7
See accompanying Notes to the Interim Financial Statements
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
INTERIM STATEMENT OF OPERATIONS
(Unaudited - See Review Engagement Report)
Cumulative
from
Inception of
Six Months Ended Development
November 30, Stage on
------------ June 1, 1998 to
1999 1998 November 30,1999
----------------
GENERAL AND ADMINISTRATIVE EXPENSES
Administrative and shareholder
relations fees $ 162,667 $ - $ 326,359
Audit and accounting 2,025 - 11,484
Legal fees 6,029 1,000 34,905
Office supplies and services 2,343 5,062
Promotion and entertainment 6,626 35,254
Telephone 4,845 410 14,842
Transfer agent and filing fees 629 3,008 6,907
Travel and accomodation 5,747 - 61,098
--------- ---------- -----------
190,911 4,418 495,911
COSTS INCURRED TOWARDS BUSINESS
ACQUISITION NOT PROCEEDED WITH 3 - - 70,333
--------- ---------- -----------
NET LOSS FOR THE PERIOD $ 190,911 $ 4,418 $ 566,244
========= ========== ===========
BASIC LOSS PER SHARE $0.023 $0.027
WEIGHTED AVERAGE NUMBER OF SHARES 8,242,066 162,066
See accompanying Notes to the Interim Financial Statements
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
INTERIM STATEMENT OF STOCKHOLDERS' DEFICIENCY
(Unaudited - See Review Engagement Report)
Deficit
Accumu-
lated Total
Addit- During Stock-
ional Develop- holders'
Common Stock Pain-In ment Equity
------------
Number Amount Capital Deficit Stage (Deficiency)
Balance, May
31, 1997
(Note 4) 45,136,200 $ 45,136 $437,775 $(488,103) $ - $ (5,192)
Reverse split:
1 new for
each 500
existing
issued
shares (45,045,920) (45,046) 45,046 - - -
----------
90,280
Issued for
cash:
$ 0.05 per
share 3,150,000 3,150 154,350 - - 157,500
Share issue
costs -
legal fees - - (18,000) - - (18,000)
Net loss-year
ended May
31, 1998 - - - (128,021) - (128,021)
--------- ------- ------- -------- ------- --------
Balance, May
31, 1998 3,240,280 3,240 619,171 (616,124) - 6,287
Net loss-
period ended
November 30,
1998 - - - - (4,418) (4,418)
--------- ------- ------- -------- ------- --------
Balance,
November 30,
1998 3,240,280 $ 3,240 $619,171 $(616,124) $(4,418) $ 1,869
--------- ------- ------- -------- ------- --------
See accompanying Notes to the Interim Financial Statements
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
INTERIM STATEMENT OF STOCKHOLDERS' DEFICIENCY (Cont'd)
(Unaudited - See Review Engagement Report)
Deficit
Accumu-
lated Total
Addit- During Stock-
ional Develop- holders'
Common Stock Pain-In ment Equity
------------
Number Amount Capital Deficit Stage (Deficiency)
Balance
forward,
November 30,
1998 3,240,280 $ 3,240 $619,171 $(616,124) $(4,418) $ 1,869
Reverse
split:
1 new for
each 20
existing
issued shares (3,078,214) (3,078) 3,078 - - -
----------
162,066
Issued for
cash:
$0.01 per
share 8,000,000 8,000 72,000 - - 80,000
Issued for
cash:
$2.50 per
share 80,000 80 199,920 - - 200,000
Share issue
costs -
legal fees - - (5,000) - - (5,000)
Net loss -
period
December 1,
1998 to May
31, 1999 - - - - (370,915) (370,915)
Balance, May
31, 1999 8,242,066 8,242 889,169 (616,124)(375,333) (94,046)
Net loss-
period ended
November 30,
1999 - - - - (190,911) (190,911)
Balance,
November 30,
1999 8,242,066 $ 8,242 $889,169$(616,124)$(566,244) $(284,957)
========= ========= ======== ======== ======= ========
See accompanying Notes to the Interim Financial Statements
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
INTERIM STATEMENT OF CASH FLOWS
(Unaudited - See Review Engagement Report)
Cumulative
from
Inception of
Six Months Ended Development
November 30, Stage on
------------ June 1, 1998 to
1999 1998 November 30,1999
----------------
OPERATING ACTIVITIES
Net loss for the period $ (190,911) $ (4,418) $ (566,244)
Changes in operating assets
and liabilities (using)
providing net cash
Accounts payable and
accrued liabilities (658) 1,643 10,942
Due to related party 192,787 - 275,221
--------- ---------- -------------
Net cash used by operating
Activities 1,218 (2,775) (280,081)
--------- ---------- -------------
FINANCING ACTIVITIES
Issuance of common
stock for cash - - 280,000
Stock offering costs - - (5,000)
--------- ---------- -------------
- - 275,000
--------- ---------- -------------
INCREASE (DECREASE) IN CASH 1,218 (2,775) (5,081)
(BANK INDEBTEDNESS) CASH AT
BEGINNING OF PERIOD (12) 6,287 6,287
--------- ---------- -------------
CASH AT END OF PERIOD $ 1,206 $ 3,512 $ 1,206
========= ========== =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ - $ - $ -
Cash paid for income taxes $ - $ - $ -
SUPPLEMENTAL NON-CASH INVESTING AND
FINANCING ACTIVITIES $ - $ - $ -
See accompanying Notes to the Interim Financial Statements
<PAGE>
ENCOUNTER.COM, INC.
(A Development Stage Enterprise)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 1999 AND 1998
(Unaudited - See Review Engagement Report)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The Company was organized June 4, 1986 under the laws of Colorado
as "Sure Hair, Inc.". Its original business was in the cosmetic
and beauty care products field, and was abandoned. The Company
remained dormant until September, 1997, when its issued stock was
reorganized by a 500:1 reverse split, and an equity financing of
$157,500 was completed. Effective September 26, 1997 the name of
the Company was changed to "Palmer Medical, Inc." to reflect its
new business in the field of medical device manufacturing and
sales. This business did not materialize and the Company was again
dormant at the end of its 1998 fiscal year.
In January 1999 the company undertook a 20:1 reverse split of its
issued stock. Effective February 3, 1999 its name was changed to
"Edatenow.com, Inc.". Equity financings for a total of $280,000
were completed in February and April 1999 to finance a portion of
the acquisition costs of a private company in the voice personals
industry, and to commence the development of an Internet dating
program building upon newspaper voice personals. The acquisition
of the private company was not completed, and effective May 31,
1999 the name of the Company was changed to "Encounter.com, Inc."
The Company is a development stage enterprise commencing June 1,
1998 with respect to its Internet business. To date, the Company
has not established any revenues, is dependent upon related parties
for financial support in the short term, and needs to obtain new
equity financing for the development of its business.
The Company's financial statements were prepared using generally
accepted accounting principles applicable to a going concern which
contemplate the realization of assets and liquidation of
liabilities in the normal course of business. Management intends
to seek shareholder approval for the issuance of stock and the
proposed merger with a Nevada corporation being formed to finance
and begin business as an Internet Service Provider offering
subscribers free websites. (Note 8).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(i) Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
(ii) Financial instruments and financial risk
The Company's financial instruments consist of cash, accounts
payable and accrued liabilities and amounts due to a related
party. The fair value of the current assets and liabilities
approximate the carrying amounts due to the short-term nature
of these instruments.
<PAGE>
ENCOUNTER. COM, INC.
(A Development Stage Enterprise)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 1999 AND 1998
(Unaudited - See Review Engagement Report)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
(iii) Loss per share
Basic loss per common share has been calculated based on the
weighted average number of shares of common stock outstanding
during the period. Where reverse splits have been completed in the
year, for the purpose of calculating the weighted average number of
shares outstanding these reverse stock splits have been considered
effective at the beginning of the fiscal year.
(iv) Translation of Foreign Currencies
The Company's foreign operations are of an integrated nature
and accordingly, the re-measurement method of foreign currency
translation is used for conversion into United States dollars,
as follows:
Revenues and expenses arising from foreign currency
translations are translated into United States dollars at the
average rate for the period. Monetary assets and liabilities
are translated into United States dollars at the rates
prevailing on the balance sheet date. Other assets and
liabilities are translated into United States dollars at the
rates prevailing on the transaction dates. Exchange gains and
losses are recorded as income or expense in the period in which
they occur.
(v) Income Taxes
The Company accounts for income taxes under an asset and
liability approach that requires the recognition of deferred
tax assets and liabilities for the expected future tax
consequences of events that have been recognized in the
Company's financial statements or tax returns. In estimating
future tax consequences, all expected future events other than
enactment of changes in the tax laws or rates are considered.
NOTE 3 - PROJECTS NOT PROCEEDED WITH
Voice personals and Internet dating program
The Company advanced $40,333 under a Letter of Intent to acquire
100% of the shares of SA Interactive Information Technology,
Inc., a private British Columbia, Canada corporation. The
Letter of Intent also required the Company to issue 9,000,000
common shares, advance a further $140,000, raise a total of
$2,500,000 in financing within 18 months of closing, and issue
options to the vendors of the private company to acquire 750,000
shares at a price of $0.10 per share exercisable within 2 years
of closing. The proposed acquisition, which was not proceeded
with, was intended to provide the Company with an entry into the
field of voice personals, upon which to develop an Internet
presence.
An additional $30,000 was advanced for development costs towards
an Internet presence for the above business. These costs,
together with the $40,333 advanced under the Letter of Intent
have been charged to operations in the 1999 fiscal year (Note 7
- -Contingency).
<PAGE>
ENCOUNTER. COM, INC.
(A Development Stage Enterprise)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 1999 AND 1998
(Unaudited - See Review Engagement Report)
NOTE 4 - COMMON STOCK
(i) Common Stock Issued to May 31, 1997
The issued common stock was subject to reverse splits on a 500:1
basis in fiscal 1998, and a 20:1 basis in fiscal 1999. All
transactions affecting the common stock of the Company in fiscal
1998 and 1999 are detailed in the Statement of Stockholders'
Deficiency. Common stock transactions from organization of the
Company to May 31, 1997 are as follows:
Warrants
To Acquire Additional
Number of Common Subscription Paid-in
Shares Amount Shares Receivable Capital
--------- ------ ---------- ------------ ----------
Balance at inception
- June 4, 1986 - $ - $ - $ - $ -
Issued for cash
$0.001 -
$0.05 per share 1,950,000 1,950 - - 67,400
$0.10 per share 5,000,000 5,000 100 - 495,000
Issued for services:
$0.001 per share 1,850,000 1,850 - - -
Issued for
distribution rights:
$0.001 per share 1,400,000 1,400 - - (1,400)
Share issue costs - - - - (135,418)
---------- ------ ----- ------ ---------
Balance,
May 31, 1987 10,200,000 10,200 100 - 425,582
Issued for cash:
$0.02 per share 100,000 100 - - 1,900
---------- ------ ----- ------ ---------
Balance,
May 31, 1988 10,300,000 10,300 100 - 427,482
Warrants expired
in year - - (100) - 100
---------- ------ ----- ------ ---------
Balance, May 31,
1989 and 1990 10,300,000 10,300 - - 427,582
Issued for services:
$0.002 per share 15,178,000 15,178 - - 13,296
---------- ------ ----- ------ ---------
Balance,
May 31, 1991 25,478,000 25,478 440,878
Issued for services:
$0.002 per share 6,522,000 6,522 - - 6,061
---------- ------ ----- ------ ---------
Balance,
May 31, 1992 32,000,000 32,000 - - 446,939
Issued in
settlement of
liabilities 13,136,200 13,136 - (2,407) (6,757)
---------- ------ ----- ------ ---------
Balance,
May 31, 1993 45,136,200 45,136 - (2,407) 440,182
Subscription
Settled - - - 2,407 (2,407)
---------- ------ ----- ------ ---------
Balance,
May 31, 1994,
1995, 1996
and 1997 45,136,200 $ 45,136 $ - $ - $ 437,775
========== ====== ===== ====== =========
<PAGE>
ENCOUNTER. COM, INC.
(A Development Stage Enterprise)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 1999 AND 1998
(Unaudited - See Review Engagement Report)
NOTE 4 - COMMON STOCK (Cont'd)
(ii) Stock Option Plan
The Company has adopted a Stock Option Plan (the "Plan") to be
administrated by a Compensation Committee of the Board of
Directors. The purpose of the Plan is to provide incentive stock
options as a means to attract and retain key corporate personnel
and consultants. The shares to be offered under the Plan consist
of authorized but unissued common shares of the Company. The
aggregate number of shares subject to options under the Plan at any
one time shall not exceed 2,500,000 shares. The maximum number of
shares for which an option may be granted to any optionee during
any calendar year shall not exceed 500,000 shares. The exercise
price of the options when granted shall not be less than 85% of the
fair market value of the shares on the date the option is granted.
The term of the options granted may not extend beyond 10 years,
and are subject to earlier cancellation on termination of
employment. The Plan stipulates vesting of stock option rights at
the rate of at least 20% per year, and it is intended that options
when granted will vest on a cumulative basis as to 1/3 of the
shares under option annually, unless otherwise provided by the Plan
administrator.
To date there have been no stock options granted under the Plan.
NOTE 5 - RELATED PARTY TRANSACTIONS
(i) General and administrative expenses include the total of
$174,846 for administrative and shareholder relations fees,
promotion, entertainment, travel and accomodation expenses to
574125 B.C. Ltd., a shareholder of the Company. Under the
terms of a Management Agreement dated March 18, 1999, 574125
B.C. Ltd. provides administrative and shareholder relations
services for a monthly fee of $20,000 plus reimbursement of
all costs incurred. The Management Agreement is cancellable
by the Company on payment of a 1 year penalty.
(ii) The amount of $275,221 is due to 574125 B.C. Ltd. at
November 30, 1999.
NOTE 6 - INCOME TAXES
At November 30, 1999, the Company has tax operating losses
carryforwards of approximately $565,000 (November 30, 1998 -
$4,000) expiring in fiscal 2015. Due to ownership and business
purpose changes, the net operating loss carryforwards at May 31,
1998 of approximately $600,000 are subject to restriction under tax
laws and any tax benefit is expected to be minimal.
The tax benefit of the cumulative tax loss carryforwards has been
offset by a valuation allowance of the same amount.
<PAGE>
ENCOUNTER. COM, INC.
(A Development Stage Enterprise)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
NOVEMBER 30, 1999 AND 1998
(Unaudited - See Review Engagement Report)
NOTE 7 - CONTINGENCY
The Company entered into a Letter of Intent dated February 5, 1999
to acquire 100% of the shares of SA Interactive Information
Technology, Inc. ("Interactive") (Note 3(i)). The acquisition was
not proceeded with.
Interactive and its shareholder filed a Statement of Claim in the
Supreme Court of British Columbia (Canada) on April 23, 1999
against the Company, related companies and individuals.
The Claim pertains to the termination of the proposed acquisition
of Interactive, and the continued development of businesses by the
Company in the same or similar fields as Interactive. The
Plaintiff seeks various injunctions restricting the Company from
competing against Interactive, damages for breach of contract and
breach of fiduciary duty, punitive damages and interest.
The Company has filed Statements of Defense responding that the
actions of the Plaintiff in attempting to renegotiate the terms of
the Letter of Intent abrogated all agreements between them, and
that the Company has no fiduciary duties to the Plaintiff and that
the Plaintiff has no exclusive rights to the businesses being
developed by the Company.
The Company intends to defend itself vigorously against this
action. The probable outcome of this action is not determinable at
this time.
The Company is also continuing with its Action against the
plaintiffs above for the return of the funds advanced ($40,333)
towards the proposed acquisition.
NOTE 8 - SUBSEQUENT EVENT
Subsequent to the balance sheet date, the Company agreed to acquire
certain software and a business plan relating to the creation of an
Internet Service Provider offering subscribers free websites. The
consideration to be paid by the Company for this acquisition is the
issuance of 24,726,198 shares of its capital stock.
The Company has agreed to pay the sum of $100,000 to Woodstock
Products Inc. ("Woodstock"), commencing with quarterly payments of
$20,000 beginning June 30, 2000, and continuing each and every
three months thereafter in the same amount until paid in full,
together with interest at the rate of 1% per month on any unpaid
balance. Woodstock is a private company related to 574125 B.C.
Ltd. The payments agreed to be made to Woodstock include the
settlement in full of all amounts due to 574125 B.C. Ltd. (Note 5),
which will result in recognition of a gain on settlement of
liabilities of $175,221 in the fiscal year 2000.
NOTE 9 - UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use
two digits rather than four to identify a year. Date-sensitive
systems may recognize the year 2000 as 1900 or some other date,
resulting in errors when information using year 2000 dates is
processed. In addition, similar problems may arise in some systems
which use certain dates in 1999 to represent something other than a
date. The Company's own financial accounting functions are not
technologically dependent. Although the change in date has
occurred, it is not possible to conclude that all aspects of the
Year 2000 Issue that may affect the entity, including those related
to customers, suppliers, or other third parties, have been fully
resolved.
<PAGE>
TELFORD SADOVNICK, P.L.L.C.
CERTIFIED PUBLIC ACCOUNTANTS
- ---------------------------------------------------------------------
Consent to inclusion of financials
CONSENT OF INDEPENDENT AUDITOR
We hereby consent to the inclusion of our audit report dated December 17, 1999,
on the financial statements of Encounter.com, Inc. for the period
ended May 31, 1999 in the Company's Form 10-SB. We also consent to the
application of such report to the financial information in the Form 10-SB,
when such financial information is read in conjunction with the financial
statements referred to in our report.
Bellingham, Washington /S/ Telford Sadovnick
March 16, 2000 Certified Public Accountants
- ---------------------------------------------------------------------
114 West Magnolia Street, Suite 423, Bellingham, Washington 98225
Telephone: (360) 392-2886 Facsimile:(360) 392-2887
<PAGE>
PART III
INDEX TO EXHIBITS
Exhibit 3.1: Articles of Incorporation
Exhibit 3.2: Articles of Amendment of Articles of Incorporation
(Addition of Article 11)
Exhibit 3.3: Articles of Amendment of Articles of Incorporation
(Name Change to Palmer Medical, Inc.)
Exhibit 3.4: Restated Articles of Incorporation with Amendments
(Name Change to edatenow.com, Inc.)
Exhibit 3.5: Articles of Amendment of the Articles of Incorporation
(Name Change to Encounter.com, Inc.)
Exhibit 3.6: By-Laws
Exhibit 10.1: Technology License Agreement
31
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: March 16, 2000
ENCOUNTER.COM INC.
/s/ Dennis J. Hinton
By: _______________________________
Dennis J. Hinton
Director, Chief Executive Officer and Chairman of the Board
32
<PAGE>
ARTICLES OF INCORPORATION
of
SURE HAIR, INC.
I, the undersigned natural person of the age of eighteen years
or more, acting as incorporator of a corporation under the
Colorado Corporation Act, adopt the following Articles of
Incorporation for such corporation:
FIRST: The name of the corporation is:
SUREHAIR, INC.
SECOND: The period of its duration is perpetual.
THIRD: The nature of the business of this
corporation and the objects and purposes to be transacted,
promoted and carried on by it are all lawful business for which
corporations may be incorporated pursuant to the Colorado
Corporation Code.
FOURTH: The aggregate number of shares of all
classes of Capital Stock which the corporation shall have the
authority to issue is 55,000,000 shares, which shall be divided
into two classes as follows:
(1) 50,000,000 shares of the par value of
$.001 per share, all of which shares
shall be of one class and shall be
designated as "Common Stock"; and
<PAGE>
(2) 5,000,000 shares of Preferred Stock, of
the par value of $1.00 per share.
Shares may be issued for money, property or services rendered
and the directors may issue said stock for such consideration as
in their sole discretion they shall deem reasonable and all
shares so issued shall be deemed full paid and nonassessable.
The preferred stock shall be classified, divided and issued in
series. Each series of preferred stock may be issued as
determined from time to time by the directors and stated in the
resolutions or resolutions providing for the issuance of such
stock adopted by the directors. Each series is to be
appropriately designated prior to the issue of any shares
thereof by some distinguishable letter, number or title. All
shares of preferred stock shall be of equal rank and have the
same rights and preferences, and shall be subject to the same
qualifications, limitations and restrictions, without
distinction between shares of different series thereof, except
in regard to the full wing particulars, which may be different
in different series.
(a) The rate of dividends, the time of payment of dividends,
whether dividends are cumulative and the date from which
any dividend may accrue;
-2-
<PAGE>
(b) Whether shares may be redeemed and, if so, the redemption
price and the terms and conditions of redemption;
(c) The amount payable upon share shares in the event of
voluntary or involuntary liquidation;
(d) Sinking fund or other provisions, if any, for the
redemption or purchase of shares;
(e) The terms and conditions on which shares may be converted
if the shares of any series are issued with the privilege
of conversion; and,
(f) Voting powers, if any.
If specified in the resolution of directors establishing the
rights of a series of preferred stock, the holders of such
series of preferred stock which may, without limiting the
generality of the foregoing, be given the right, voting as a
series by itself or with other series or all other series of
preferred stock, to elect one or more directors of the
corporation if there shall have been a default in the payment of
dividends on any one or more series of preferred stock or under
other circumstances and on such conditions as the directors may
determine.
-3-
<PAGE>
The directors may from time to time increase the number of
shares of any series of preferred stock already created by
providing that any unissued shares of preferred stock already
created by providing that any unissued shares of preferred stock
shall constitute part of such series or may decrease (but not
below the number of shares thereof then outstanding) the number
of shares of any series of preferred stock already created
providing that any unissued shares previously assigned to such
series shall no longer constitute a part thereof. The Board is
hereby empowered to classify or reclassify any unissued
preferred stock by fixing or altering the terms thereof in
respect to the above mentioned particulars and by assigning the
same to an existing or newly created series from time to time
before the issuance of such stock.
The Board of Directors shall have the authority to impose
restrictions upon the transfer of the capital stock of the
corporation as they deem necessary in the best interests of the
corporation or as required by law.
FIFTH: Cumulative voting for the election of directors
shall be permitted.
SIXTH: Shareholders shall not have the preemptive right
to acquire additional or treasury shares of the corporation.
-4-
<PAGE>
SEVENTH: The Address of the initial registered office of
the corporation is Suite 2300, First Interstate Tower South, 621
Seventh Street, Denver, Colorado 80293. The name of the
registered agent at said address is Jack R. Viders.
EIGHTH: The governing and of this corporation shall be
known as directors, and the number of directors may from time to
time be increased or decreased in such manner as shall be
provided by the Bylaws of this corporation, provided, however,
that the initial Board of Directors shall consist of one person.
So long as the number of directors shall be less than three, no
shares of this corporation may be issued and held of record by
more shareholders than there are directors. Any shares issued
in violation of this paragraph shall be null and void. In the
event there are less than three directors, this provisions shall
also constitute a restriction on the transfer of shares and a
legend shall be conspicuously placed on each certificate
respecting shares preventing transfer of the shares to more
shareholders than there are directors.
The name and post office address of the original Board of
Directors is as follows.:
Donald L. Reed 6960 So. Harrison Street
Littleton, CO 80122
-5-
<PAGE>
NINTH: When, with respect to any action to be taken
by shareholders of this corporation, the Colorado Corporation
Code required (unless a different percentage is provided in the
Articles of Incorporation) the vote or concurrence of the
holders of two-thirds of the outstanding shares, of the shares
entitled to vote thereon, or of any class or series, such action
may be taken by the vote or concurrence of a majority of such
shares or class or series thereof.
TENTH: The name and address of the incorporator is:
Name: Address:
Donald L. Reed 6960 So. Harrison Street
Littleton, CO 80122
Dated: June 3, 1986
/s/ Donald L. Reed
________________________
Donald L. Reed
STATE OF COLORADO )
CITY AND ) ss.
COUNTY OF DENVER )
I, the undersigned notary public, hereby certify that on the 3rd
day of June, 1986, personally appeared before, Donald L. Reed,
who being by me first duly sworn, severally declared that he is
the person who signed the foregoing document as incorporator,
and that the statements therein contained are true.
-6-
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 3rd
day of June, 1986.
My Commission Expires:
___________________________
Notary Public
<PAGE>
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Corporation Code, the
undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
FIRST: The name of the corporation is Sure Hair, Inc.
SECOND: The following amendment was adopted by the
shareholders of the corporation on March 15, 1988, in the manner
prescribed by the Colorado Corporation Code:
The following Article is added to the Articles of
Incorporation:
ARTICLE ELEVENTH
The personal liability of a director of this corporation to this
corporation or its shareholders for any loss or damage suffered
on account of any act or omission by a director shall be
eliminated to the fullest extent permitted by the Colorado
Corporation Code. If the Code is hereafter amended to authorize
the further elimination or limitation of the liabilities of a
director or an officer of this corporation shall be eliminated
or limited to the fullest extent permitted by the Code, as so
amended.
THIRD: The number of shares of the corporation
outstanding at the time of such adoption was 10,300,000 and the
number of shares entitled to vote thereon was 10,300,000.
FOURTH: The designation and number of outstanding shares
of each class entitled to vote thereon as a class were as
follows:
NONE
-1-
<PAGE>
FIFTH: The number of shares voted for such amendment was
5,733,200 and the number of shares voted against such amendment
was 1,478,050.
SIXTH: The number of shares of each class entitled to
vote thereon as a class voted for and against such amendment,
repsectively, was:
NONE
SEVENTH: The manner, if not set forth in such amendment,
in which any exchange, reclassification, or cancellation of
issued shares provided for in the amendment shall be effected,
is as follows:
No Change
EIGHTH: The manner in which such amendment effects a
change in the amount of state capital, and the stated capital as
chaged by such amendment, are as follows:
No Change
SURE HAIR, INC.
/s/ Donald L. Reid
By:___________________________
(President)
/s/ Jack R. Viders
and___________________________
(Assistant Secretary)
<PAGE>
STATE OF COLORADO )
) ss
COUNTY OF ARAPHOE )
Before me Pamelin K. Albright, a Notary Public appeared in
and for the County and State, personally appeared Donald L.
Reed, who acknowledged before me that he is the President of
Sure Hair, Inc., a Colorado corporation and that he signed the
foregoing Articles of Amendment as his free and voluntary act
and deed for the uses and purposes therein are true.
In witness thereof, I have hereunto set my hand and seal
this 15th day of March, A.D. 1988.
My commission expires 1-21-89
/s/ Pamela K. Albright
______________________
Address of Notary
12655 W. Bayaud # 44
Lakewood, CO 80228
<PAGE>
Mail to: Secretary of State For office use only 002
Corporations Section
1560 Broadway, Ste 200
Denver, CO 80202
Tel: (303) 804-2251
MUST BE TYPED Fax: (303) 894-2242
FILING FEE: $25,00
MUST SUBMIT TWO 19971139702 M
COPIES DPC 19871676075 $ 25.00
SECRETARY OF STATE
ARTICLES OF AMENDMENT 09-03-97 11:44:45
Please include a OF THE
typed ARTICLES OF INCORPORATION
self-addressed
envelope
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is SURE HAIR, INC.
SECOND: The following amendment to the Articles of Incorporation was
adopted on July 15, 1997, as prescribed by the Colorado Business Corporation
Act. In the manner marked with an X below:
_______ No shares have been issued or Directors Elected -Action by
Incorporators
_______ No shares have been issued but Directors Elected -
Action by Directors
_______ Such amendment was adopted by the board of directors where
shares have been issued and shareholder action was not required.
X Such amendment was adopted by a vote of the shareholders. The number
_______ of shares voted for the amendment was sufficient for approval.
THIRD: If changing corporate name, the new name of the corporation is:
PALMER MEDICAL, INC.
FOURTH- The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided for
in the amendment shall be affected, is as follows:
If these amendments are to have a delayed effective date, please list that
date:
July 16, 1997
_________________(Not to exceed ninety (90) clays from the date of filing)
PALMER MEDICAL, INC. (Formerly Sure Hair, Inc.)
-----------------------------------------------
/s/ Bill Edwards
Signature_______________________________
Title BILL EDWARDS, PRESIDENT & DIRECTOR
___________________________________
Revised 7/95
<PAGE>
CHANGE OF NAME
Mail to: Secretary of State For office use only 008
Corporations Section
1560 Broadway, Suite 200 19991021149 C
Please include Denver, CO 80202 $ 75.00
a typed self- (303) 894-2251 SECRETARY OF STATE
addressed envelope Fax (303) 894-2242 02-03-1999 11:30:55
MUST BE TYPED FILED
FILING FEE: $60.00 VICTORIA BUCKLEY
MUST SUBMIT TWO COPIES COLORADO SECRETARY OF STATE
RESTATED ARTICLES OF
INCORPORATION WITH AMENDMENTS
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts t1he following amended and restated Articles
of Incorporation. These articles correctly set forth the provisions of the
Articles of Incorporation, as amended, and supersede the original Articles
of Incorporation and all amendments thereto.
FIRST: The name of the corporation is PALMER MEDICAL. INC.
SECOND: The following amended and restated Articles of Incorporation
were adopted in the manner marked with an "X" below:
______ The amended and restated Articles of Incorporation were adopted
by the board of director where no shares have been issued, or no
shareholder action required.
X The amended and restated Articles of Incorporation were adopted by
______ a vote of the shareholders. The number of shares voted for the
amended and restated Articles of Incorporation was sufficient for
approval.
______ The amended and restated Articles of Incorporation were adopted
by the incorporators where no shares have been issued or directors
elected, or no shareholder action required.
THIRD: The name of the corporation as amended is EDATENOW.COM, INC.
ATTACH A COPY OF YOUR AMENDED AND RESTATED ARTICLES OF
INCORPORATION
________________________________
/s/ Frank Demitro
Signature ________________________________
Title Frank Demitro, President
________________________________
Revised 7/95
<PAGE>
RESTATED ARTICLES OF
INCORPORATION WITH AMENDMENTS OF
PALMER MEDICAL, INC.
Pursuant to the provisions of the Colorado Business Corporation Act,
the undersigned corporation adopts the following amended and restated
Articles of Incorporation. These articles correctly set forth the
provisions of the Articles of Incorporation, as amended, and supersede the
original Articles of Incorporation and all amendments thereto.
ARTICLE I - NAME OF THE CORPORATION
The name of the Corporation shall be Edatenow.com, Inc.
ARTICLE II - DURATION OF THE CORPORATION
The period of this Corporation's duration is perpetual.
ARTICLE III - BUSINESS OF THE CORPORATION
The nature of the business of this Corporation and the objects and purposes
to be transacted, promoted and carried on by it are all lawful business for
which corporations may be incorporated pursuant to the Colorado Business
Corporation Act.
ARTICLE IV - AUTHORIZED CAPITAL
The aggregate number of shares of all classes of Capital Stock which the
corporation shall have the authority to issue is 55,000,000 shares, which
shall be divided into two classes as follows:
(1) 50,000,000 shares of the par value of 5.001 per share, all of which
shares shall be of one class and shall be designated as "Common
Stock"; and
(2) 5,000,000 shares of Preferred Stock, of the par value of S1.00 per
share.
Shares may be issued for money, property or services rendered and the
directors may issue said stock for such consideration as in their sole
discretion they shall deem reasonable and all shares so issued shall be
deemed fully paid and non-assessable.
The Preferred Stock shall be classified, divided and issued in series. Each
series of preferred stock may be issued as determined from time to time by
the directors and stated in the resolution or resolutions providing for the
issuance of such stock adopted by the directors. Each series is to be
appropriately designated prior to the issue of any shares thereof by some
distinguishable letter, number, or title. All shares of preferred stock
shall be of equal rank and have the same rights and preferences, and shall
be subject to the same qualifications, limitations and restrictions,
without distinction between the shares of
Page 1 of 3
<PAGE>
different series thereof, except in regard to the following particulars,
which may be different in different series.
(a) The rate of dividends, the time of payment of dividends, whether
dividends are cumulative and the date from which any dividend shall accrue;
(b) Whether shares may be redeemed and, if so, the redemption price and
the terms and conditions of redemption;
(c) The amount payable upon shares in the event of voluntary or
involuntary;
(d) Sinking fund or other provisions, if any, for the redemption or
purchase of shares;
(e) The terms and conditions on which shares may be converted if the
shares of any series are issued with the privilege of conversion; and
(f) Voting powers, if any.
If specified in the resolution of directors establishing the rights of a
series of preferred stock, the holders of such series of preferred stock
which may, without limiting the generality of the foregoing, be given the
right, voting as a series by itself or with other series or all other
series of preferred stock, to elect one or more directors of the
corporation if there shall have been a default in the payment of dividends
on any one or more series of preferred stock or under other circumstances
and on such conditions as the directors may determine.
The directors may from time to time increase the number of shares of any
series of preferred stock already created by providing that any unissued
shares of preferred stock shall constitute part of such series of may
decrease (but not below the number of shares thereof then outstanding) the
number of shares of any series of preferred stock created providing that
any unissued shares previously assigned to such series shall no longer
constitute a part thereof The Board is hereby empowered to classify or
reclassify any unissued preferred stock by fixing or altering the terms
thereof in respect to the above mentioned particulars and by assigning the
same to an existing or newly created series from time to time before the
issuance of such stock.
ARTICLE V - CUMULATIVE VOTING
Cumulative voting for the election of directors shall not be
permitted.
ARTICLE VI - PREEMPTIVE RIGHTS
Shareholders shall not have the preemptive right to acquire additional or
treasury shares of the Corporation.
Page 2 of 3
<PAGE>
ARTICLE VII - GOVERNING BOARD
The governing board of this Corporation shall be known as directors,
and the number of the directors may form time to time be increased or
decreased in such manner as shall be permitted by the bylaws of this
Corporation.
ARTICLE VIII - QUORUM FOR VOTING
When, with respect to any action to be taken by shareholders of this
Corporation, the Colorado Business Corporation Act requires (unless a
different percentage is provided in the Articles of Incorporation) the vote
or concurrence of the holders of a majority of the outstanding shares, of
the shares entitled to vote thereon, or of any class or series, such action
may be taken by the vote or concurrence of two-thirds- of such shares or
class or series thereof.
ARTICLE IX - IINDEMINIFICATION OF DIRECTORS
The personal liability of a director of this Corporation to this
Corporation or to its shareholders for any loss or damage suffered on
account of any act or omission by a director shall be eliminated to the
fullest extent permitted by the Colorado Business Corporation Act. If the
Act is hereafter amended to authorize the further elimination or
limitation of the liabilities of a director of the elimination or
limitation of the liabilities of an officer, then the liability of a
director or an officer of this Corporation shall be eliminated or limited
to the fullest extent permitted by the Act, as so amended.
The forgoing restated and amended Articles of Incorporation were adopted by
a vote of the shareholders on January 19, 1999. The number of shares voted
for the amended and restated Articles of Incorporation were sufficient for
approval.
Dated this 29th Day of January, 1999.
/s/ Frank Demitro
________________________________
Frank Demitro, President
Page 3 of 3
<PAGE>
Mail to: Secretary of State For office use only
Corporations Section
1560 Broadway, Ste 200 FILED - CUSTOMER COPY
Denver, CO 80202 VICTORIA BUCKLEY
Tel: (303) 804-2251 Secretary of State
MUST BE TYPED Fax: (303) 894-2242
FILING FEE: $25,00
MUST SUBMIT TWO 19991103362 M
COPIES $ 40.00
SECRETARY OF STATE
ARTICLES OF AMENDMENT 06-01-1999 12:51:46
Please include a OF THE
typed ARTICLES OF INCORPORATION
self-addressed
envelope CHANGE OF NAME
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is eDatenow.com, Inc.
SECOND: The following amendment to the Articles of Incorporation was
adopted on May 26, 1999, as prescribed by the Colorado Business Corporation
Act. In the manner marked with an X below:
_______ No shares have been Issued or Directors Elected -Action by
Incorporators
_______ No shares have been Issued but Directors Elected -
Action by Directors
_______ Such amendment was adopted by the board of directors where
shares have been issued and shareholder action was not required.
X Such amendment was adopted by a vote of the shareholders. The number
_______ of shares voted for the amendment was sufficient for approval.
THIRD: If changing corporate name, the new name of the corporation is:
Encounter.com Inc.
FOURTH- The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided for
in the amendment shall be affected, is as follows:
If these amendments are to have a delayed effective date, please list that
date:
5/31/99
_________________(Not to exceed ninety (90) clays from the date of filing)
/s/ Jack D. MacDonald
_______________________________
Signature
Title: President
<PAGE>
SCHEDULE "A"
BYLAWS
OF
EDATENOW.COM, INC.
(A COLORADO CORPORATION)
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation
in the State of Nevada shall be in the City of Las Vegas, State of Nevada.
Section 2. Other Offices. The corporation shall also have and maintain
an office or principal place of business at such place as may be fixed by
the Board of Directors, and may also have offices at such other places,
both within and without the State of Colorado as the Board of Directors may
from time to time determine or the business of the corporation may require,
ARTICLE II
CORPORATE SEAL
Section 3. Corporate Seal. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate Seal"
Said seal may be used by causing it or a facsimile thereof to be impressed
or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS'MEETINGS
Section 4. Place of Meetings. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State
of Colorado, as may be designated from time to time by the Board of
Directors, or, if not so designated, then at the office of the corporation
required to be maintained pursuant to Section 2 hereof
Section 5. Annual Meeting.
(a) The annual meeting of the stockholders of the corporation, for the
purpose of election of directors and for such other business as may
lawfully come before it, shall be held on such date and at such time as may
be designated from time to time by the Board of Directors.
(b) At an annual meeting of the stockholders, only such business shall
be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be: (A) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the Board of Directors, (B) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (C)
otherwise properly brought before the meeting a stockholder. For business
to be properly brought before an annual meeting
<PAGE>
by a stockholder, the stockholder must have given timely notice thereof in
writing to the Secretary of the corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the corporation not later than the close of business on the sixtieth
(60th) day nor earlier than the close of business on the ninetieth (90th) day
prior to the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that no annual meeting was held in the
previous year or the date of the annual meeting has been changed by more
than thirty (30) days from the date contemplated at the time of the previous
year's proxy statement, notice by the stockholder to be timely must be so
received not earlier than the close of business on the ninetieth (90th) day
prior to such annual meeting and not later than the close of business on the
later of the sixtieth (60th) day prior to such annual meeting or, in the event
public announcement of the date of such annual meeting is first made by the
corporation fewer than seventy (70) days prior to the date of such, annual
meeting, the close of business on the tenth (10th) day following the day on
which public announcement of the date of such meeting is first made by the
corporation. A stockholder's notice to the Secretary shall set forth as to
each matter the stockholder proposes to bring before the annual meeting:
(i) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and address, as they appear on the corporation's
books, of the stockholder proposing such business, (iii) the class and
number of shares of the corporation which are beneficially owned by the
stockholder, (iv) any material interest of the stockholder in such business
and (v) any other Information that is required to be provided by the
stockholder pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (the "1934 Act"), in his capacity as a proponent to a
stockholder proposal. Notwithstanding the foregoing, in order to include
information with respect to a stockholder proposal in the proxy statement
and form of proxy for a stockholder's meeting, stockholders must provide
notice as required by the regulations promulgated under the 1934 Act.
Notwithstanding anything in these Bylaws to the contrary, no business shall
be conducted at any annual meeting except in accordance with the procedures
set forth in this paragraph (b). The chairman of the annual meeting
shall, if the facts warrant, determine and declare at the meeting that
business was not properly brought before the meeting and in accordance with
the provisions of this paragraph (b), and, if he should so determine, he
shall so declare at the meeting that any such business not properly brought
before the meeting shall not be transacted.
(c) Only persons who are confirmed in accordance with the procedures
set forth in this paragraph (c) shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of
the corporation may be made at a meeting of stockholders by or at the
direction of the Board of Directors or by any stockholder of the
corporation entitled to vote in the election of directors at the meeting
who complies with the notice procedures set forth in this paragraph (c).
Such nominations, other than those made by or at the direction of the Board
of Directors, shall be made pursuant to timely notice in writing to The
Secretary of the corporation in accordance with the provisions of paragraph
(b) of this Section 5. Such stockholder's notice shall set forth (i) as to
each person, if any, whom the stockholder proposes to nominate for election
or re-election as a director' (A) the name, age, business address and
residence address of such person, (B) the principal occupation or
employment of such person, (c) the class and number of shares of the
corporation which are beneficially owned by such person, (D) a description
of all arrangements or understandings between the stockholder and each
nominee and any other person or persons (naming such person or persons)
pursuant to which the nominations are to be made by the stockholder, and
(E) any other
2
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise
required, In each case pursuant to Regulation 14A under the 1934 Act
(including without limitation such person's written consent to being named
in the proxy statement, if any, as a nominee and to serving as a director
if elected); and (ii) as to such stockholder giving notice, the information
required to be provided pursuant to paragraph (b) of this Section 5. At the
request of the Board of Directors, any person nominated by a stockholder
for election as a director shall furnish to the Secretary of the
corporation that information required to be set forth in the stockholder's
notice of nomination which pertains to the nominee. No person shall be
eligible for election as a director of the corporation unless nominated in
accordance with the procedures set forth in this paragraph (c). The
chairman of the meeting shall, if the facts warrant, determine and declare
at the meeting that a nomination was not made in accordance with the
procedures prescribed by these Bylaws, and if he should so determine, he
shall so declare at the meeting, and the defective nomination shall be
disregarded.
(d) For purposes of this Section 5, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
Section 6. Special Meetings.
(a) Special meetings of the stockholders of the corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, or (iii) the Board of
Directors pursuant to a resolution adopted by a majority of the total
number of authorized directors (whether or not there exist any vacancies in
previously authorized directorships at the time any such resolution is
presented to the Board of Directors for adoption), and shall be held at
such place, on such date, and at such time as the Board of Directors, shall
determine.
(b) If a special meeting is called by any person or persons other
than the Board of Directors, the request shall be in writing, specifying
the general nature of the business proposed to be transacted, and shall be
delivered personally or sent by registered mail or by telegraphic or other
facsimile transmission to the Chairman of the Board of Directors, the Chief
Executive Officer, or the Secretary of the corporation. No business may be
transacted at such special meeting otherwise than specified in such notice.
The Board of Directors shall determine the time and place of such special
meeting, which shall be held not less than thirty-five (35) nor more than
one hundred twenty (120) days after the date of the receipt of the request.
Upon determination of the time and place of the meeting, the officer
receiving the request shall cause notice to be given to the stockholders
entitled to vote, in accordance with the provisions of Section 7 of these
Bylaws. If the notice is not given within sixty (60) days after the receipt
of the request, the person or persons requesting the meeting may set the
time and place of the meeting and give the notice. Nothing contained in
this paragraph (b) shall be construed as limiting, fixing, or affecting the
time when a meeting of stockholders called by action of the Board of
Directors may be held.
Section 7. Notice of Meetings. Except as otherwise provided by law or
the Articles of Incorporation, written notice of each meeting of
stockholders shall be given not less than ten (10) nor more than sixty (60)
days before the date of the meeting to each stockholder entitled to vote at
such
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<PAGE>
meeting, such notice to specify the place, date and hour and purpose or
purposes of the meeting. Notice of the time, place and purpose of any
meeting of stockholders may be waived in writing, signed by the person
entitled to notice thereof either before or after such meeting, and will be
waived by any stockholder by his attendance thereat in person or by proxy,
except when the stockholder attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Any
stockholder so waiving notice of such meeting shall be bound by the
proceedings of any such meeting in all respects as if due notice thereof
had been given.
Section S. Quorum. At all meetings of stockholders, except where
otherwise provided by statute or by the Articles of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holder or holders of not less than one percent (1%) of the outstanding
shares of stock entitled to vote shall constitute a quorum for the
transaction of business. In the absence of a quorum, any meeting of
stockholders may be adjourned, from time to time, either by the chairman of
the meeting or by vote of the holders of a majority of the shares
represented thereat, but no other business shall be transacted at such
meeting. The stockholders present at a duly called or convened meeting, at
which a quorum is present, may continue to transact business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave
less than a quorum. Except as otherwise provided by law, the Articles of
Incorporation or these Bylaws, all action taken by the holders of a
majority of the votes cast, excluding abstentions, at any meeting at which
a quorum is present shall be valid and binding upon the corporation;
provided, however, that directors shall be elected by a plurality of the
votes of the shares present in person or represented by proxy at the
meeting and entitled to vote on the election of directors. Where a separate
vote by a class or classes or series is required, except where otherwise
provided by the statute or by the Articles of Incorporation or these
Bylaws, a majority of the outstanding shares of such class or classes or
series, present in person or represented by proxy, shall constitute a
quorum entitled to take action with respect to that vote on that matter
and, except where otherwise provided by the statute or by the Articles of
Incorporation or these Bylaws, the affirmative vote of the majority
(plurality, in the case of the election of directors) of the votes cast,
including abstentions, by the holders of shares of such class or classes or
series shall be the act of such class or classes or series.
Section 9. Adjournment and Notice of Adjourned Meetings. Any meeting
of stockholders, whether annual or special, may be adjourned from time to
time either by the chairman of the meeting or by the vote of a majority of
the shares casting votes, excluding abstentions. When a meeting is
adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken. At the adjourned meeting, the
corporation may transact any business which might have been transacted at
the original meeting. If the adjournment is for more than thirty (30) days
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 10. Voting Rights. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the
stock records of the corporation on the record date, as provided in Section
12 of these Bylaws, shall be entitled to vote at any meeting of
stockholders. Every person entitled to vote shall have the right to do so
either in person or by an agent or agents authorized by
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<PAGE>
a proxy granted in accordance with Colorado law. An agent so appointed need
not be a stockholder. No proxy shall be voted after three (3) years from
its date of creation unless the proxy provides for a longer period
Section 11. Joint Owners of Stock. If shares or other
securities having voting power stand of record in the names of two (2) or
more persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, tenants by the entirety, or otherwise, or if two (2) or
more persons have the same fiduciary relationship respecting the same
shares, unless the Secretary is given written notice to the contrary and is
furnished with a copy of the instrument or order appointing them or
creating the relationship wherein it is so provided, their acts with
respect to voting shall have the following effect: (a) if only one (1)
votes, his act binds all; (b) if more than one (1) votes, the act of the
majority so voting binds all; (c) if more than one (1) votes, but the vote
is evenly split on any, particular matter, each faction may vote the
securities in question proportionally.
Section 12. List of Stockholders. The Secretary shall prepare
and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at said meeting,
arranged in alphabetical order, showing the address of each stockholder and
the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not specified, at the place
where the meeting is to be held. The list shall be produced and kept at
the time and place of meeting during the whole time thereof and may be
inspected by any stock-holder who is present
Section 13. Action Without Meeting. No action shall be taken by the
stockholders except at an annual or special meeting of stockholders called
in accordance with these Bylaws, or by the written consent stockholders.
Section 14. Organization.
(a) At every meeting of stockholders, the Chairman of the Board of
Directors, or, if a Chairman has not been appointed or is absent, the
President, or, if the President is absent, a chairman of the meeting chosen
by a majority in interest of the stockholders entitled to vote, present in
person or by proxy, shall act as chairman. The Secretary, or, in his
absence, an Assistant Secretary directed to do so by the President, shall
act as secretary of the meeting.
(b) The Board of Directors of the corporation shall be entitled to
make such rules or regulations for the conduct of meetings of stockholders
as it shall deem necessary, appropriate or convenient. Subject to such
rules and regulations of the Board of Directors, if any, the chairman of
the meeting shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of
such chairman, are necessary, appropriate or convenient for the proper
conduct of the meeting, including, without limitation, establishing an
agenda or order of business for the meeting, rules and procedures for
maintaining order at the meeting and the safety of those present,
limitations on participation in such meeting to stockholders of record of
the corporation and their duly authorized and constituted proxies and such
other persons as the chairman
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shall permit, restrictions on entry to the meeting after the time fixed for
the commencement thereof, limitations an the time allotted to questions or
comments by participants and regulation of the opening and closing of the
polls for balloting on matters which are to be voted on by ballot. Unless
and to the extent determined by the Board of Directors or the chairman of
the meeting, meetings of stockholders shall not be required to be held in
accordance with rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
Section 15. Number and Qualification. The authorized number of
directors of the corporation shall be not less than one (1) nor more than
twelve (12) as fixed from time to time by resolution of the Board of
Directors; provided that no decrease in the number of directors shall
shorten the term of any incumbent directors. Directors need not be
stockholders unless so required by the Articles of Incorporation. If for
any cause, the directors shall not have been elected at an annual meeting,
they may be elected as soon thereafter as convenient at a special meeting
of the stockholders called for that purpose in the manner provided in these
Bylaws.
Section 16. Powers The powers of the corporation shall be
exercised, its business conducted and its property controlled by the Board
of Directors, except as may be otherwise provided by statute or by the
Articles of Incorporation.
Section 17. Election and Term of Off-ice of Directors. Members of
the Board of Directors shall hold office for the terms specified in the
Articles of Incorporation., as it may be amended from time to time, and
until their successors have been elected as provided in the Articles of
Incorporation.
Section 18. Vacancies. Unless otherwise provided in the Articles
of Incorporation, any vacancies on the Board of Directors resulting from
death, resignation, disqualification, removal or other causes and any newly
created directorships resulting from any increase in the number of
directors, shall unless the Board of Directors determines by resolution
that any such vacancies or newly created directorships shall be filled by
stockholder vote, be filled only by the affirmative vote of a majonity of
the directors then in office, even though less than a quorum of the Board
of Directors. Any director elected in accordance with the preceding
sentence shall hold office for the remainder of the full term of the
director for which the vacancy was created or occurred and until such
director's successor shall have been elected and qualified. A vacancy in
the Board of Directors shall be deemed to exist under this Bylaw in the
case of the death, removal or resignation of any director.
Section 19. Resignation. Any director may resign at any time by
delivering his written resignation to the Secretary, such resignation to
specify whether it will be effective at a particular time, upon receipt by
the Secretary or at the pleasure of the Board of Directors. If no such
specification is made, it shall be deemed effective at the pleasure of the
Board of Directors. When one or more directors shall resign from the Board
of Directors, effective at a future date, a majority of the directors then
in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall
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become effective, and each director so chosen shall hold office for the
unexpired portion of the term of the director whose place shall be vacated
and until his successor shall have been duly elected and qualified.
Section 20. Removal. Subject to the Articles of Incorporation, any
director may be removed by:
(a) the affirmative vote of the holders of a majority of the
outstanding shares of the Corporation then entitled to vote, with or
without cause; or
(b) the affirmative and unanimous vote of a majority of the
directors of the Corporation, with the exception of the vote of the
directors to be removed, with or without cause.
Section 21. Meetings.
(a) Annual Meetings. The annual meeting of the Board of Directors
shall be held immediately after the annual meeting of stockholders and at
the place where such meeting is held. No notice of an annual meeting of the
Board of Directors shall be necessary and such meeting shall be held for
the purpose of electing officers and transacting such other business as may
lawful.ly come before it.
(b) Regular Meetings. Except as hereinafter otherwise provided,
regular meetings of the Board of Directors shall be held in the office of
the corporation required to be maintained pursuant to Section 2 hereof
Unless otherwise restricted by the Articles of Incorporation, regular
meetings of the Board of Directors may also be held at any place within or
without the state of Colorado which has been designated by resolution of
the Board of Directors or the written consent of all directors.
(c) Special Meetings. Unless otherwise restricted by the Articles
of Incorporation, special meetings of the Board of Directors may be held at
any time and place within or without the State of Colorado whenever called
by the Chairman of the Board, the President or any two of the directors,
(d) Telephone Meetings. Any member of the Board of Directors, or of
any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting by such means shall constitute presence in person at such meeting.
(e) Notice of Meetings. Not-ice of the time and place of all
special meetings of the Board of Directors shall be orally or in writing,
by telephone, facsimile, telegraph or telex, during normal business hours,
at least twenty-four (24) hours before the date and time of the meeting, or
sent in writing to each director by first class mail, charges prepaid, at
least three (3) days before the date of the meeting. Notice of any meeting
may be waived in writing at any time before or after the meeting and will
be waived by any director by attendance thereat except when the director
attends the meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is
not lawfully called or convened.
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(f) Waiver of Notice. The transaction of all business at any meeting
of the Board of Directors, or any committee thereof, however called or
noticed, or wherever held, shall be as valid as though had at a meeting
duly held after regular call and notice, if a quorum be present and if,
either before or after the meeting, each of the directors not present shall
sign a written waiver of notice. All such waivers shall be filed with the
corporate records or made a part of the minutes of the meeting.
Section 22. Quorum and Voting.
(a) Unless the Articles of Incorporation requires a greater number
and except with respect to indemnification questions arising under Section
43 hereof, for which a quorum shall be one-third of the exact number of
directors fixed from time to time in accordance with the Articles of
Incorporation, a quorum of the Board of Directors shall consist of a
majority of the exact number of directors fixed from time to time by the
Board of Directors in accordance with the Articles of Incorporation
provided, however, at any meeting whether a quorum be present or otherwise,
a majority of the directors present may adjourn from time to time until the
time fixed for the next regular meeting of the Board of Directors, without
notice other than by announcement at the meeting.
(b) At each meeting of the Board of Directors at which a quorum is
present, all questions and business shall be determined by the affirmative
vote of a majority of the directors present, unless a different vote be
required by law, the Articles of Incorporation or these Bylaws.
Section 23. Action Without Meeting. Unless otherwise restricted by
the Articles of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
conunittee thereof may be taken without a meeting, if all members of the
Board of Directors or committee, as the case may be, consent thereto 'in
writing, and such writing or writings are filed with the minutes of
proceedings of the Board of Directors or committee.
Section 24. Fees and Compensation. Directors shall be entitled to
such compensation for their services as may be approved by the Board of
Directors, including, if so approved, by resolution of the Board of
Directors, a fixed sum and expenses of attendance, if any, for attendance
at each regular or special meeting of the Board of Directors and at any
meeting of a committee of the Board of Directors. Nothing herein contained
shall be construed to preclude any director from serving the corporation in
any other capacity as an officer, agent, employee, or otherwise and
receiving compensation therefor.
Section 25. Committees.
(a) Executive Committee. The Board of Directors may by resolution
passed by a majority of the whole Board of Directors appoint an Executive
Committee to consist of one (1) or more members of the Board of Directors.
The Executive Committee, to the extent permitted by law and provided in the
resolution of the Board of Directors shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, including without limitation the
power or authority to declare a dividend, to authorize the issuance of
stock and to adopt a certificate of ownership and merger, and may authorize
the seal of the corporation to be affixed to all papers which may require
it, but no such committee shall have
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the power or authority in reference to amending the Articles of
Incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock
adopted by the Board of Directors fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the
conversion into, or the exchange of such shares for, shares of any other
class or classes or any other series of the same or any other class or
classes of stock of the corporation or fix the number of shares of any
series of stock or authorize the increase or decrease of the shares of any
series), adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of
the corporations property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or
amending the bylaws of the corporation.
(b) Other Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board of Directors, from time to time
appoint such other committees as may be permitted by law. Such other
committees appointed by the Board of Directors shall consist of one (1) a r
more members of the Board of Directors and shall have such powers and
perform such duties as may be prescribed by the resolution or resolutions
creating such committees, but in no event shall such committee have the
powers denied to the Executive Committee in these Bylaws.
(c) Term. Each member of a committee of the Board of Directors
shall serve a term on the committee coexistent with such member's term on
the Board of Directors. The Board of Directors, subject to the provisions
of subsections (a) or (b) of this Bylaw may at any time increase or
decrease the number of members of a committee or terminate the existence of
a committee. The membership of a committee member shall terminate on the
date of his death or voluntary resignation from the committee or from the
Board of Directors. The Board of Directors may at any time for any reason
remove any individual committee member and the Board of Directors may fill
any committee vacancy created by death, resignation, removal or increase
in the number of members of the committee. The Board of Directors may
designate one or more directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of the
committee, and, in addition, in the absence or disqualification of any
member of a committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or
disqualified member.
(d) Meetings. Unless the Board of Directors shall otherwise provide,
regular meetings of the Executive Committee or any other committee
appointed pursuant to this Section 25 shall be held at such times and
places as are determined by the Board of Directors, or by any such
committee, and when notice thereof has been given to each member of such
committee, no further notice of such regular meetings need be given
thereafter. Special meetings of any such committee may be held at any place
which has been determined from time to time by such committee, and may be
called by any director who is a member of such committee, upon written
notice to the members of such committee of the time and place of such
special meeting given in the manner provided for the giving of written
notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting
of any committee may be waived in writing at any time before or after the
meeting and will be waived by any director by attendance thereat, except
when the director attends such special meeting for the express purpose of
objecting, at the beginning of the
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meeting, to the transaction of any business because the meeting is not
lawfully called or convened. A majority of the authorized number of members
of any such committee shall constitute a quorum for the transaction of
business, and the act of a majority of those present at any meeting at
which a quorum is present shall be the act of such committee.
Section 26. Organization. At every meeting of the directors, the
Chairman of the Board of Directors, or, if a Chairman has not been
appointed or is absent, the President, or if the President is absent, the
most senior Vice President, or, in the absence of any such officer, a
chairman of the meeting chosen by a majority of the directors present, shall
preside over the meeting. The Secretary, or in his absence, an Assistant
Secretary directed to do so by the President, shall act as secretary of the
meeting.
ARTICLE V
OFFICERS
Section 27. Officers Designated, The officers of the corporation
shall include, if and when designated by the Board of Directors, the
Chairman of the Board of Directors, the Chief Executive Officer, the
President, one or more Vice Presidents, the Secretary, the Chief Financial
Officer, the Treasurer, the Controller, all of whom shall be elected at the
annual organizational meeting of the Board of Direction. The Board of
Directors may also appoint one or more Assistant Secretaries, Assistant
Treasurers, Assistant Controllers and such other officers and agents with
such powers and duties as it shall deem necessary. The Board of Directors
may assign such additional titles to one or more of the officers as it
shall deem appropriate. Any one person may hold any number of offices of
the corporation at any one time unless specifically prohibited therefrom
by law. The salaries and other compensation of the officers of the
corporation shall be fixed by or in the mariner designated by the Board of
Directors.
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Section 28. Tenure and Duties of Officers.
(a) General. All officers shall hold office at the pleasure of the
Board of Directors and until their successors shall have been duly elected
and qualified, unless sooner removed. Any officer elected or appointed by
the Board of Directors may be removed at any time by the Board of
Directors. If the office of any officer becomes vacant for any reason, the
vacancy may be filled by the Board of Directors.
(b) Duties of Chairman of the Board of Directors. The Chairman of
the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of
Directors shall perform other duties commonly incident to his office and
shall also perform such other duties and have such other powers as the
Board of Directors shall designate from time to time. If there is no
President, then the Chairman of the Board of Directors shall also serve as
the Chief Executive Officer of the corporation and shall have the powers
and duties prescribed in paragraph (c) of this Section 28,
(c) Duties of President. The President shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors,
unless the Chairman of the Board of Directors has been appointed and is
present. Unless some other officer has been elected Chief Executive Officer
of the corporation, the President shall be the chief executive officer of
the corporation and shall, subject to the control of the Board of
Directors, have general supervision, direction and control of the business
and officers of the corporation. The President shall perform other duties
commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors shall designate from
time to time.
(d) Duties of Vice Presidents. The Vice Presidents may assume and
perform the duties Of the President in the absence or disability of the
President or whenever the office of President is vacant. The Vice
Presidents shall perform other duties commonly incident to their office and
shall also perform such other duties and have such other powers as the
Board of Directors or the President shall designate from time to time,
(e) Duties of Secretary. The Secretary shall attend a meetings of the
stockholders and of the Board of Directors and shall record all acts and
proceedings thereof in the minute book of the corporation. The Secretary
shall give notice in conformity with these Bylaws of all meetings of the
Stockholders and of all meetings of the Board of Directors and any
committee thereof requiring notice. The Secretary shall perform all other
duties given him in these Bylaws and other duties commonly incident to his
office and shall also perform such other duties and have such other powers
as the Board of Directors shall designate from time to time. The President
may direct any Assistant Secretary to assume and perform the duties of the
Secretary in the absence or disability of the Secretary, and each Assistant
Secretary shall perform other duties commonly incident to his office and
shall also perform such other duties and have such other powers as the
Board of Directors or the President shall designate from time to time.
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(f) Duties of Chief Financial Officer. The Chief Financial Officer
shall keep or cause to be kept the books of account of the corporation in a
thorough and proper manner and shall render statements of the financial
affairs of the corporation in such form and as often as required by the
Board of Directors or the President. The Chief Financial Officer, subject
to the order of the Board of Directors, shall have the custody of all funds
and securities of the corporation. The Chief Financial Officer shall
perform other duties commonly incident to his office and shall also perform
such other duties and have such other powers as the Board of Directors or
the President shall designate from time to time. The President may direct
the Treasurer or any Assistant Treasurer, or the Controller or any
Assistant Controller to assume and perform the duties of the Chief
Financial Officer in the absence or disability of the Chief Financial
Officer, and each Treasurer and Assistant Treasurer and each Controller and
Assistant Controller shall perform other duties commonly incident to his
office and shall also perform such other duties and have such other powers
as the Board of Directors or the President shall designate from time to
time,
Section 29. Delegation of Authority. The Board of Directors may
from time to time delegate the powers or duties of any officer to any other
officer or agent, notwithstanding any provision hereof
Section 30. Resignations. Any officer may resign at any time by
giving written notice to the Board of Directors or to the President or to
the Secretary. Any such resignation shall be effective when received by the
person or persons to whom such notice is given, unless a later time is
specified therein, in which event the resignation shall become effective at
such later time. Unless otherwise specified in such notice, the acceptance
of any such resignation shall not be necessary to make it effective. Any
resignation shall be without prejudice to the rights, if any, of the
corporation under any contract with the resigning officer,
Section 31. Removal. Any officer may be removed from office at any
time, either with or without cause, by the affirmative vote of a majority
of the directors in office at the time, or by the unanimous written consent
of the directors in office at the time, or by any committee or superior
officers upon whom such power of removal may have been conferred by the
Board of Directors.
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING
OF SECURITIES OWNED BY THE CORPORATION
Section 32. Execution of Corporate Instrument. The Board of
Directors may, in its discretion, determine the method and designate the
signatory officer or officers, or other person or persons, to execute on
behalf of the corporation any corporate instrument or document, or to sign
on behalf of the corporation the corporate name without limitation, or to
enter into contracts on behalf of the corporation, except where otherwise
provided by law or these Bylaws, and such execution or signature shall be
binding upon the corporation.
Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages
and other evidences of indebtedness of the corporation, and other corporate
instruments or documents requiring the corporate seal, and
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certificates of shares of stock owned by the corporation, shall be
executed, signed or endorsed by the Chairman of the Board of Directors, or
the President or any Vice President, and by the Secretary or Treasurer or
any Assistant Secretary or Assistant Treasurer. All other instruments and
documents requiting the corporate signature, but not requiring the
corporate seal, may be executed as aforesaid or in such other manner as may
be directed by the Board of Directors.
All checks and drafts drawn on banks or other depositaries on funds
to the credit of the corporation or in special accounts of the corporation
shall be signed by such person or persons as the Board of Directors shall
authorize so to do,
Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any
power or authority to bind the corporation by any contract or engagement or
to pledge its credit or to render it liable for any purpose or for any
amount.
Section 33. Voting of Securities Owned by the Corporation. All stock
and other securities of other corporations owned or held by the corporation
for itself or for other parties in any capacity, shall be voted, and all
proxies with respect thereto shall be executed, by the person authorized so
to do by resolution of the Board of Directors, or, in the absence of such
authorization, by the Chairman of the Board of Directors, the Chief
Executive Officer, the President, or any Vice President.
ARTICLE VII
SHARES OF STOCK
Section 34. Form and Execution of Certificates. Certificates for
the shares of stock of the corporation shall be in such form as is
consistent with the Articles of Incorporation and applicable law. Every
holder of stock in the corporation shall be entitled to have a certificate
signed by or in the name of the corporation by the Chairman of the Board
of Directors, or the President or any Vice President and by the Treasurer
or Assistant Treasurer or the Secretary or Assistant Secretary, certifying
the number of shares owned by Wm in the corporation- Any or all of the
signatures on the certificate may be facsimiles. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent, or registrar before such certificate is issued, it may be
issued with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue. Each certificate shall state upon the face
or back thereof, in full or in summary, all of the powers, designations,
preferences, and rights, and the limitations or restrictions of the shares
authorized to be issued or shall, except as otherwise required by law, set
forth on the face or back a statement that the corporation will furnish
without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional, or other
special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or
rights, Within a reasonable time after the issuance or transfer
of uncertificated stock, the corporation shall send to the registered owner
thereof a written notice containing the information required to be set
forth or stated on certificates pursuant to this section or otherwise
required by law or with respect to this section a statement that the
corporation will furnish without charge to each stockholder who
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so requests the powers, designations, preferences and relative
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
r)references and/or rights. Except as otherwise expressly provided by law,
the rights and obligations of the holders of certificates representing
stock of the same class and series shall be identical.
Section 35. Lost Certificates. A new certificate or certificates
shall be issued in place of any certificate or certificates theretofore
issued by the corporation alleged to have been lost, stolen, or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen, or destroyed. The corporation may
require, as a condition precedent to the issuance of a new certificate or
certificates, the owner of such lost, stolen, or destroyed certificate or
certificates, or Ns legal representative, to advertise the same in such
manner as it shall require or to give the corporation a surety bond in such
form and amount as it may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate alleged to
have been lost, stolen, or destroyed.
Section 36. Transfers.
(a) Transfers of record of shares of stock of the corporation shall be
made only upon its books by the holders thereof, in person or by attorney
duly authorized, and upon the surrender of a properly endorsed certificate
or certificates for a like number of shares.
(b) The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of
stock of the corporation to restrict the transfer of shares of stock of the
corporation of any one or more classes owned by such stockholders in any
manner not prohibited by the General Corporation Law of Colorado.
Section 37. Fixing Record Dates.
(a) In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof the Board of Directors may fix, in advance, a record
date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date shall not be more than sixty (60) nor less than ten (10)
days before the date of such meeting. If no record date is fixed by the
Board of Directors, the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close
of business on the day next preceding the day on which notice is given or
if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
(b) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or
allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which record date shall not precede the date upon
which the resolution fixing the record date is adopted, and which record
date shall be not more than sixty (60) days prior to such action, If no
record date is filed, the
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record date for determining stockholders for any such purpose shall be at
the close of business on the day on which the Board of Directors adopts the
resolution relating thereto
Section 38. Registered Stockholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall
not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person whether or not it
shall have express or other notice thereof, except as otherwise provided by
the laws of Colorado.
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
Section 39. Execution of Other Securities. All bonds, debentures
and other corporate securities of the corporation, other than stock
certificates (covered in Section 34), may be signed by the Chair-man of the
Board of Directors, the President or any Vice President, or such other
person as may be authorized by the Board of Directors, and the corporate
seal impressed thereon or a facsimile of such seal imprinted thereon and
attested by the signature of the Secretary or an Assistant Secretary, or
the Chief Financial Officer or Treasurer or an Assistant Treasurer
provided, however, that where any such bond, debenture or other corporate
security shall be authenticated by the manual signature, or where
permissible facsimile signature, of a trustee under an indenture pursuant
to which such bond, debenture or other corporate security shall be issued,
the signatures of the persons signing and attesting the corporate seal on
such bond, debenture or other corporate security may be the imprinted
facsimile of the signatures of such persons. Interest coupons appertaining
to any such bond, debenture or other corporate security, authenticated by a
trustee as aforesaid, shall be signed by the Treasurer or an Assistant
Treasurer of the corporation or such other person as may be authorized by
the Board of Directors, or bear imprinted thereon the facsimile signature
of such person. In case any officer who shall have signed or attested any
bond, debenture or other corporate security, or whose facsimile signature
shall appear thereon or on any such interest coupon, shall have ceased to
be such officer before the bond, debenture or other corporate security so
signed or attested shall have been delivered, such bond, debenture or other
corporate security nevertheless may be adopted by the corporation and
issued and delivered as though the person who signed the same of whose
facsimile signature shall have been used thereon had not ceased to be such
officer of the corporation.
ARTICLE IX
DIVIDENDS
Section 40. Declaration of Dividends. Dividends upon the capital
stock of the corporation, subject to the provisions of the Articles of
Incorporation, if any, may be declared by the Board of Directors pursuant
to law at any regular or special meeting. Dividends may be paid in cash, in
property, or in shares of the capital stock, subject to the provisions of
the Articles of Incorporation.
Section 41. Dividend Reserve. Before payment of any dividend,
there may be set aside out of any funds of the corporation available for
dividends such sum or sums as the Board of Directors
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from time to time, in their absolute discretion, think proper as a reserve
or reserves to meet contingencies, or for equalizing dividends, or for
repairing, or maintaining any property of the corporation, or for such
other purpose as the Board of Directors shall think conducive to the
interests of the corporation, and the Board of Directors may modify or
abolish any such reserve in the manner in which it was created
ARTICLE X
FISCAL YEAR
Section 42. Fiscal Year. The fiscal year of the corporation shall
be fixed by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
Section 43. Indemnification of Directors, Executive Officers, Other
Officers, Employees and Other Agents.
(a) Directors Officers. The corporation shall indemnify its directors
and officers to the fullest extent not prohibited by the Colorado General
Corporation Law; provided, however, that the corporation may modify the
extent of such indemnification by individual contracts with its directors
and officers; and, provided, further, that the corporation shall not be
required to indemnify any director or officer in connection with any
proceeding (or part thereof) initiated by such person unless (1) such
indemnification is expressly required to be made by law, (ii) the
proceeding was authorized by the Board of Directors of the corporation
(iii) such indemnification is provided by the corporation, in its sole
discretion, pursuant to the powers vested in the corporation under the
Colorado General Corporation Law or (1v) such indemnification is required
to be made under subsection (d).
(b) Employees and Other Agents. The corporation shall have power to
indemnify its employees and other agents as set forth in the Colorado
General Corporation Law.
(c) Expense. The corporation shall advance to any person who was or
is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director or officer, of the corporation, or is or was serving at the
request of the corporation as a director or executive officer of another
corporation, partnership, joint venture, trust or other enterprise, prior
to the final disposition of the proceeding, promptly following request
therefor, all expenses incurred by any director or officer in connection
with such proceeding upon receipt of an undertaking by or on behalf of such
person to repay said mounts if it should be determined ultimately that
such person is not entitled to be indemnified under this Bylaw or
otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (e) of this Bylaw, no advance shall be made by the corporation to
an officer of the corporation (except by reason of the fact that such
officer is or was a director of the corporation in which event this
paragraph shall
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not apply) In any action, suit or proceeding, whether civil, criminal,
administrative or investigative, if a determination is reasonably and
promptly made (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding, or (ii) if
such quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, that the facts known to the decision-making party at the
time such determination is made demonstrate clearly and convincingly that
such person acted in bad faith or in a manner that such person did not
believe to be in or not opposed to the best interests of the corporation.
(d) Enforcement. Without the necessity of entering into an express
contract, all rights to indemnification and advances to directors and
officers under this Bylaw shall be deemed to be contractual rights and be
effective to the same extent and as if provided for in a contract between
the corporation and the director or officer. Any right to indemnification
or advances granted by this Bylaw to a director or officer shall be
enforceable by or on behalf of the person holding such right in any court
of competent jurisdiction if (i) the claim for indemnification or advances
is denied, in whole or in part, or (11) no disposition of such claim is
made within ninety (90) days of request therefor. The claimant in such
enforcement action, if successful in whole or in part, shall be entitled to
be paid also the expense of prosecuting his claim. In connection with any
claim for indemnification, the corporation shall be entitled to raise as a
defense to any such action that the claimant has not met the standard of
conduct that make it permissible under the Colorado General Corporation Law
for the corporation to indemnify the claimant for the amount claimed. In
connection with any claim by an officer of the corporation (except in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such officer is or was a director
of the corporation) for advances, the corporation shall be entitled to raise
a defense as to any such action clear and convincing evidence that such
person acted in bad faith or in a manner that such person did not believe
to be in or not opposed in the best interests of the corporation, or with
respect to any criminal action or proceeding that such person acted without
reasonable cause to believe that his conduct was lawful. Neither the
failure of the corporation (including its Board of Directors, independent
legal counsel or its stockholders) to have made a determination prior to
the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the Colorado General Corporation Law, nor an actual
determination by the corporation (including its Board of Directors,
independent legal counsel or its stockholders) that the claimant has not
met such applicable standard of conduct, shall be a defense to the action
or create a presumption that claimant has not met the applicable standard
of conduct. In any suit brought by a director or officer to enforce a right
to indemnification or to an advancement of expenses hereunder, the burden
of proving that the director or officer is not entitled to be indemnified,
or to such advancement of expenses, under this Article XI or otherwise
shall be on the corporation.
(e) Non-Exclusivity of Rights. The rights conferred on any person
by this Bylaw shall not be exclusive of any other right which such person
may have or hereafter acquire under any statute, provision of the Articles
of Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as
to action in another capacity while holding office. The corporation is
specifically authorized to enter -Into individual contracts with any or all
of its directors, officers, employees or agents respecting indemnification
and advances, to the fullest extent not prohibited by the Colorado General
Corporation Law.
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(f) Survival of Rights. The rights conferred on any person by this
Bylaw shall continue as to a person who has ceased to be a director,
officer, employee or other agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(g) Insurance. To the fullest extent permitted by the Colorado
General Corporation Law, the corporation, upon approval by the Board of
Directors, may purchase insurance on behalf of any person required or
permitted to be indemnified pursuant to this Bylaw.
(h) Amendments. Any repeal or modification of this Bylaw shall only
be prospective and shall not affect the rights under this Bylaw in effect
at the time of the alleged occurrence of any action or omission to act
that is the cause of any proceeding against any agent of the corporation.
(i) Saving Clause. If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction., then the
corporation shall nevertheless indemnify each director and officer to the
full extent not prohibited by any applicable portion of this Bylaw that
shall not have been invalidated, or by any other applicable law.
(j) Certain Definitions. For the purposes of this Bylaw, the
following definitions shall apply:
(i) The term "proceeding" shall be broadly construed and shall
include, without limitation, the investigation, preparation,
prosecution, defense, settlement, arbitration and appeal of, and the
giving of testimony in, any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative.
(ii) The term "expenses" shall be broadly construed and shall
include, without limitation, court costs, attorneys' fees, witness
fees, fines, amounts paid in settlement or judgment and any other
costs and expenses of any nature or kind incurred in connection with
any proceeding.
(iii) The term the "corporation" shall include, in addition to
the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger
which, if its separate existence had continued, would have had power
and authority to indemnify its directors, officers, and employees or
agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent or another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position
under the provisions of this Bylaw with respect to the resulting or
surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(iv) References to a "director," "executive officer," "officer,"
"employee," or "agent" of the corporation shall include, without
limitation, situations where such person is serving at the request of
the corporation as, respectively, a director, executive officer,
officer, employee, trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
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(v) References to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on a
person with respect to an employee benefit plan, and references to "serving
at the request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee, or agent with
respect to an employee benefit plan~ its participants, or beneficiaries;
and a person who acted in good faith and in a manner he reasonably believed
to be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the
best interests of the corporation" as referred to in this Bylaw
ARTICLE X1I
NOTICES
Section 44. Notices.
(a) Notice to Stockholders. Whenever, under any provisions of these
Bylaws, notice is required to be given to any stockholder, it shall be
given in writing, timely and duly deposited in the United States mail,
postage prepaid, and addressed to his last known post office address as
shown by the stock record of the corporation or its transfer agent.
(b) Notice to directors. Any notice required to be given to any
director may be given by the meth6d stated in subsection (a), or by
facsimile, telex or telegram, except that such notice other than one which
is delivered personally shall be sent to such address as such director
shall have filed in writing with the Secretary, or, in the absence of such
filing, to the last known post office address of such director.
(c) Affidavit of Mailing. An affidavit of mailing, executed by
a duly authorized and competent employee of the corporation or its transfer
agent appointed with respect to the class of stock affected, specifying the
name and address or the names and addresses of the stockholder or
stockholders, or director or directors, to whom any such notice or no6ces
was or were given, and the time and method of giving the same, shall in the
absence of fraud, be prima facie evidence of the facts therein contained.
(d) Time Notices Deemed Given. All notices given by mail, as above
provided, shall be deemed to have been given as at the time of mailing, and
all notices given by facsimile, telex or telegram shall be deemed to have
been given as of the sending time recorded at time of transmission.
(e) Methods of Notice. It shall not be necessary that the same method
of giving notice be employed in respect of all directors, but one
permissible method may be employed in respect of any one or more, and any
other permissible method or methods may be employed in respect of any other
or others.
(f) Failure to Receive Notice. The period or limitation of time
within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any director
may exercise any power or night, or enjoy any privilege, pursuant to any
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notice sent him ill the manner above provided, shall not be affected or
extended in any manner by the failure of such stockholder or such director
to receive such notice.
(g) Notice to Person with Whom Communication Is Unlawful. Whenever
notice is required to be given, under any provision of law or of the
Articles of Incorporation or Bylaws of the corporation, to any person
with whom communication is unlawful, the giving of such notice to such
person small not be require and there shall be no duty to apply to any
governmental authority or agency for a license or permit to give such
notice to such person. Any action or meeting which shall be taken or
held without notice to any such person with whom communication is
unlawful shall have the same force and effect as if such notice had
been duly given. In the event that the action taken by the corporation
is such as to require the filing of a certificate under any provision
of the Colorado General Corporation Law, the certificate shall state,
if such is the fact and if notice is required, that notice was given
to all persons entitled to receive notice except such persons with whom
communication is unlawful.
(h) Notice to Person with Undeliverable Address. Whenever notice is
required to be given under any provision of law or the Articles of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or
of the taking of action by written consent without a meeting to such
person during the period between such two consecutive annual meetings,
or (ii) all, and at least two, payments (if sent by first class mail) of
dividends or interest on securities during a twelve-month period, have
been mailed addressed to such person at his address as shown on the
records of the corporation and have been returned undeliverable, the
giving of such notice to such person shall not be required. Any action
or meeting which shall be taken or held without notice to such person
shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the corporation a written
notice setting forth his then current address, the requirement that
notice be given to such person shall be reinstated. In the event that
the action taken by the corporation is such as to require the
filing of a certificate under any provision of the Colorado General
Corporation Law, the certificate need not state that notice was not given
to persons to whom notice was not required to be given pursuant to this
paragraph.
ARTICLE XII
AMENDMENTS
Section 45. Amendments.
The Board of Directors shall also have the power to adopt, amend, or
repeal Bylaws as set forth -in the Articles of Incorporation.
ARTICLE XIV
LOANS TO OFFICERS
Section 46. Loans to Officers. The corporation may lend money to,
or guarantee any obligation of, or otherwise assist any officer or other
employee of the corporation or of its
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subsidiaries, including any officer or employee who is a Director of the
corporation or its subsidiaries, whenever, in the judgment of the Board of
Directors, such loan, guarantee or assistance may reasonably be expected to
benefit the corporation. The loan, guarantee or other assistance may be
with or without interest and any be unsecured, or secured in such manner as
the Board of Directors shall approve, including, without limitation, a
pledge of shares of stock of the corporation. Nothing in these Bylaws
shall be deemed to deny, limit or restrict the powers of guaranty or
warranty of the corporation at common law or under any statute.
Declared as the By-Laws of EDATENOW-COM, INC. as amended, as of the 10th
day of May, 1999.
Signature of Officer: /s/ Jack D. MacDonald
----------------------
Name of Officer: Jack D. MacDonald
Position of Officer: President and Director
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EXHIBIT A
TECHNOLOGY LICENSE AGREEMENT
WHEREAS, DENNIS J. HINTON (DJH) has, or will acquire,
controlling interest in a public company, ENCOUNTER.COM,
INC. (OTCBB:ENCR) and desires to use technology created by
WEBSUITE.COM (WSC) to provide its subscribers with personal
websites and WSC desires to license such technology to
DJH/ENCR in exchange for valuable consideration, the
parties agree as follows:
1. WSC will License to DJH/ENCR a license for all
technology currently available under WSC's AgentSuite
Internet/Intranet product and will assist DJH in
converting such technology for use by ENCR.
2. DJH/ENCR agree that as a term of the License
Agreement, DJH/ENCR shall prominently display the logo
"Powered by WebSuite", or such other logo as may be
mutually agreed by DJH/ENCR and WSC, on the Internet
sites and Intranets of ENCR's customers Internet
products.
3. DJH and ENCR will restrict the use of the licensed WSC
technology and WSC's license will be limited to the
business of providing personal websites or web pages
to individuals for personal use, as contemplated by
ENCR's business plan.
4. DJH shall provide one qualified technician and WSC
shall provide one qualified technician for the
conversion of WSC's technology to ENCR's
specifications. DJH/ENCR shall pay all expenses of
the two technicians. Payment for WSC's technician
shall be paid at regularly scheduled WSC pay periods,
at a mutually agreeable rate. WSC will assist in
facilitating transfer of the technology.
5. DJH/ENCR will deliver one million shares of ENCR
Common Stock, fully paid and non-assessable, in
exchange for the technology license. The
aforementioned shares shall be subject to SEC Rule 144
restrictions, and shall be delivered to WSC on or
before February 15, 2000 (the "Shares").
6. DJH/ENCR contemplates a secondary offering of ENCR
shares as soon as possible but within twelve (12)
months of this Agreement's execution. DJH/ENCR agrees
to register the one million Shares described in
Paragraph 4 for WSC and include those shares for sale
in its secondary public offering with the proceeds
going directly to WSC upon sale, if WSC elects to sell
the Shares at the offering.
7. DJH/ENCR will issue to WSC a right to demand
registration of the aforementioned one million shares
following expiration of two (2) years from the date of
this Agreement.
8. The parties agree to execute a definitive agreement
setting forth the terms of the transaction
contemplated herein with terms and conditions
substantially conforming to those in this Agreement.
Dated this 8th day of December, 1999
/s/ Dennis J. Hinton
_______________________________
DENNIS J. HINTON
WEBSUITE.COM
/s/ Keith A. Klinkhammer
_______________________________
Keith A. Klinkhammer, CEO
