U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities
of Small Business Issuers
Under Section 12(b) or (g) of
the Securities Exchange Act of 1934
VERTICAL SOLUTIONS INC.
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(Name of Small Business Issuer)
Delaware 98-0336084
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(State or Other Jurisdiction of I.R.S. Employer Identification Number
Incorporation or Organization)
#280-815 West Hastings Street, Vancouver, BC, V6C 1B4, Canada
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(Address of Principal Executive Offices including Zip Code)
(604) 608-1500
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(Issuer's Telephone Number)
Securities to be Registered Under Section 12(b) of the Act: None
Securities to be Registered Under Section 12(g) of the Act: Common Stock, No
Par Value
(Title of Class)
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TABLE OF CONTENTS
PART I
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ITEM 1. BUSINESS 4
History and Organization 4
Proposed Business 4
Risk Factors 5
ITEM 2. PLAN OF OPERATION 10
General Business Plan 10
Structure of Acquisition 12
No Dividend 14
Employees 14
Competition 14
Liquidity and Capital Resources 14
ITEM 3. DESCRIPTION OF PROPERTY 14
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 14
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTER AND CONTROL PERSONS 15
ITEM 6. EXECUTIVE COMPENSATION 17
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 17
ITEM 8. DESCRIPTION OF SECURITIES 17
PART II
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ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 18
ITEM 2. LEGAL PROCEEDINGS 19
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND
FINANCIAL DISCLOSURE 19
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES 19
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS 20
PART F/S
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FINANCIAL STATEMENTS 21
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PART III
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ITEMS 1& 2 INDEX TO AND DESCRIPTION OF EXHIBITS 22
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
HISTORY AND ORGANIZATION
Vertical Solutions Inc. (the "Company"), was organized under the laws of
the State of Delaware on November 1, 2000 under the name Vertical Solutions Inc.
The Company was organized for the purposes of creating a corporate vehicle
to locate and acquire an operating business entity which management believes is
a suitable acquisition candidate (a "target company"). The Company will not
restrict its search to any specific business, industry or geographical location.
The Company does not currently engage in any business activities that
provide any cash flow. The costs of identifying, investigating, and analyzing
business combinations will be paid with money in the Company's treasury or
loaned to the Company by management.
Although the Company was under no obligation to do so, it has voluntarily
filed this registration statement because it believes that it can better
facilitate its business goals if it were a "reporting issuer" under the
Securities Exchange Act of 1934 (the "Exchange Act").
PROPOSED BUSINESS
The Company will seek to locate and acquire a target company which, in the
opinion of the Company's management (sometimes referred to as the "Management"),
offers long term growth potential. The Company will not restrict its search to
any specific business, industry or geographical location. The Company may seek
to acquire a target company which has just commenced operations, or which works
to avail itself of the benefits of being a "reporting issuer" in order to
facilitate capital formation to expand into new products or markets.
There are certain perceived benefits to being a reporting company with a
class of publicly-traded securities. These are commonly thought to include the
following:
* the ability to use registered securities to make acquisitions of assets or
businesses;
* increased visibility in the financial community;
* the facilitation of borrowing from financial institutions;
* improved trading efficiency;
* shareholder liquidity;
* greater ease in subsequently raising capital;
* compensation of key employees through stock options;
* enhanced corporate image;
* a presence in the United States capital market.
A target company, if any, which may be interested in a business combination
with the Company may include the following:
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* a company for which a primary purpose of becoming public is the use of its
securities for the acquisition of assets or businesses;
* a company which is unable to find an underwriter of its securities or is
unable to find an underwriter of securities on terms acceptable to it;
* a company which wishes to become public with less dilution of its common
stock than would occur upon an underwriting;
* a company which believes that it will be able obtain investment capital on
more favorable terms after it has become public;
* a foreign company which may wish an initial entry into the United States
securities market;
* a special situation company, such as a company seeking a public market to
satisfy redemption requirements under a qualified Employee Stock Option
Plan;
* a company seeking one or more of the other perceived benefits of becoming
a public company.
There is no assurance that the Company will be able to effect an
acquisition of a target company. In addition, at this time, no specifics as to
an acquisition or as to the nature of the target company can be provided.
RISK FACTORS
The Company's business is subject to numerous risk factors, including the
following:
1. Anticipated Change in Control and Management. Upon the successful
completion of the acquisition of a target company, the Company anticipates
that it will have to issue to the target company or its shareholders some
authorized but unissued common stock which, when issued, will comprise a
majority of the Company's then issued and outstanding shares of common
stock. Therefore, the Company anticipates that upon the closing of the
acquisition of a target company, the Company will no longer be controlled
by the current shareholders. In addition, existing management and
directors may resign. The Company cannot give any assurance that the
experience or qualifications of new management, as it relates to either the
operation of the Company's activities or the operation of the business,
assets or property being acquired, will be adequate for such purposes.
2. Conflict of Interest - Management's Fiduciary Duties. A conflict of
interest may arise between management's personal financial benefit and
management's fiduciary duty to shareholders.
The Company's directors and three officers are or may become officers,
directors, controlling shareholders and/or partners of other entities
engaged in a variety of businesses. Messers Richard Silas, Nicolas Awde
and Bruce Jamieson are engaged in other business activities.
Accordingly, the amount of time they will devote to the Company's business
will vary. There exist potential conflicts of interest including
allocation of time between the Company and its management's other business
interests.
3. Experience of Management; Consultants. Although Management has general
business experience, it has limited experience in effecting business
combinations and may not have any significant experience in acquiring or
operating certain business interests that the company might choose to
acquire. Management does not have, nor does it presently intend to enter
into, any contracts or agreements with any consultants or advisors with
respect to possible business activities. Consequently, Management has not
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established the criteria that will be used to hire independent consultants
regarding their experience, the services to be provided, the term of
service, etc., and no assurance can be made that the Company will be able
to obtain such assistance on acceptable terms.
4. Potential Future Rule 144 Sales. Of the 100,000,000 shares of the
Company's Common Stock authorized, there are presently issued and
outstanding 26,000 shares; of which all 26,000 shares are "restricted
securities" as that term is defined under the Securities Act of 1933 (the
"Securities Act"), and in the future may be sold in compliance with Rule
144 of the Act, or pursuant to a Registration Statement filed under the
Act. Rule 144 provides, in essence, that a person holding restricted
securities for a period of 1 year may sell those securities in unsolicited
brokerage transactions of in transactions with a market maker, in an amount
equal to 1% of the Company's outstanding common stock every 3 months. Rule
144 also permits, under certain circumstances, the sale of shares by a
person who is not an affiliate of the Company and who has satisfied a two
(2) year holding period without any quantity limitation, whether or not
there is adequate current public information available. Investors should
be aware that sales under Rule 144, or pursuant to a registration statement
filed under the Securities Act, may have a depressive effect on the market
price of the Company's common stock in any market that may develop for such
shares.
5. Possible Issuance of Additional Shares. The Company's Board of Directors
has the power to issue any or all of such unissued but authorized shares
without stockholder approval for such consideration as it deems.
Management presently anticipates that it may choose to issue a substantial
amount of the Company's shares in connection with the acquisition of a
target business. Furthermore, the Company may engage in a share split or
may further increase its authorized capital in connection with the
acquisition of a target business.
6. Risks of Leverage. There are currently no limitations relating to the
Company's ability to borrow funds to increase the amount of capital
available to it to effect a business combination or otherwise finance the
operations of any acquired business. The amount and nature of any
borrowings by the Company will depend on numerous factors, including the
Company's capital requirements, the Company's perceived ability to meet
debt services on any such borrowings, and then-prevailing conditions in the
financial, if required or otherwise sought, will be available on terms
deemed to be commercially acceptable and in the best interest of the
Company's inability to borrow funds required to effect or facilitate a
business combination, or to provide funds for an additional infusion of
capital into an acquired business, may have a material adverse affect on
the Company's financial condition and future prospects.
Additionally, to the extent that debt financing ultimately proves to be
available, any borrowings may subject the Company to various risks
traditionally associated with incurring of indebtedness, including:
* if the Company's operating revenues after the acquisition were to be
insufficient to pay debt service, there would be a risk of default and
foreclosure on the Company's assets.
* if a loan agreement containing covenants is breached without a waiver or
renegotiation of the terms of that covenant, then the lender could have
the right to accelerate the payment of the indebtedness even if the
Company has made all principal and interest payments when due.
* if the interest rate on a loan fluctuated or the loan was payable on
demand, the Company would bear the risk of variations in the interest
rate or demand for payment.
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* if the terms of a loan did not provide for amortization prior to
maturity of the full amount borrowed and the "balloon" payment could not
be refinanced at maturity on acceptable terms, the Company might be
required to seek additional financing and, to the extent that additional
financing is not available on acceptable terms, to liquidate the
Company's assets.
7. Possible Need for Additional Financing. The Company cannot ascertain with
any degree of certainty the capital requirements for any particular
acquired business inasmuch as the Company has not yet identified any
acquisition candidates. If the target company requires additional
financing, such additional financing (which, among other forms, could be
derived from the public or private offering of securities or from the
acquisition of debt through conventional bank financing), may not be
available due to, among other things, the target company not having
sufficient:
* credit or operating history;
* income stream;
* profit level;
* asset base eligible to be collateralized; or
* market for its securities.
Since no specific business has been targeted for acquisition, it is not
possible to predict the specific reasons why conventional private or public
financing or conventional bank financing might not become available.
Although there are no agreements between the Company and any of its
officers and/or directors pursuant to which the Company may borrow and such
officers and/or directors are obligated to lend the Company monies, there
are no restrictions on the Company's right to borrow money from officers
and directors. No stockholder approval is required in connection with any
such loan.
8. Penny Stock Rules. Under Rule 15g-9, a broker or dealer may not sell a
"penny stock" (as defined in Rule 3a51-1) to effect the purchase of a penny
stock by any person unless:
(1) such sale or purchase is exempt from Rule 15g-9; or
(2) prior to the transaction the broker or dealer has (a) approved the
person's account for transaction in penny stocks in accordance with
Rule 15g-9 and (b) received from the person a written agreement to the
transaction setting forth the identity and quantity of the penny stock
to be purchased.
The United States Securities and Exchange Commission (the "Commission") has
adopted regulations that generally define a penny stock to be any equity
security other than a security excluded from such definition by Rule
3a51-1. Such exemptions include, but are not limited to (a) an equity
security issued by an issuer that has (i) net tangible assets of at least
$2,000,000, if such issuer has been in continuous operations for at least
three years; (ii) net tangible assets of at least $5,000,000, if such
issuer has been in continuous operation for less than three years; or
(iii) average revenue of at least $6,000,000 for the preceding three years;
(b) except for purposes of Section 7(b) of the Exchange Act and Rule 419,
any security that has a price of $5.00 or more; (c) and a security that is
authorized or approved for authorization upon notice of issuance for
quotation on the National Association of Securities ("NASD") Dealers
Automated Quotation System ("NASDAQ").
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It is likely that the Company's common stock will be subject to the
regulations on penny stocks; consequently, the market liquidity for the
Company's common stock may be adversely affected by such regulations.
This, in turn, may affect shareholder's ability to sell their shares
following the completion of an acquisition.
There is no current trading market for the Company's common stock (the
"Shares") and there can be no assurance that a trading market will develop,
or, if such a trading market does develop, that it will be sustained. The
Shares, to the extent that a market develops for the Shares at all, will
likely appear in what is customarily known as the "pink sheets" or on the
NASD over-the-counter Bulletin Board (the "OTCBB"), which may limit the
marketability and liquidity of the Shares.
To date, neither the Company nor anyone acting on behalf of the Company has
taken any affirmative steps to request or encourage any broker/dealer to
act as a market maker for the Company's common stock. The Company has had
no discussions or understandings with any "market makers" regarding the
participation of any such market maker in the future trading market, if
any, in the Company's common stock. Management expects that discussions in
this area will ultimately be initiated by the management in office after
completion of the acquisition of a target company, if ever or at all.
9. Risks Associated with Operations in Foreign Countries. The Company's
business plan is to seek to acquire a target company. Management's
discretion is unrestricted, and the Company may participate in any business
whatsoever that may in the opinion of Management meet the Company's
business objectives. The Company may acquire a business outside the United
States. The Company has not limited the scope of its search to a
particular region or country. Accordingly, if the Company acquires a
business located, or operating in a foreign jurisdiction, the Company's
operations may be adversely affected to the extent of the existence of
unstable economic, social and/or political conditions in such foreign
regions and countries.
10. No Operating History or Revenue and Minimal Assets. The Company has had no
operating history nor any revenues or earnings from operations. The
Company has no significant assets or financial resources. The Company
will, in all likelihood, sustain operating expenses without corresponding
revenues, at least until the consummation of a business combination. This
may result in the Company incurring a net operating loss which will
increase continuously until the Company can consummate a business
combination with a target company. There is no assurance that the Company
can identify such a target company and consummate such a business
combination.
11. Speculative Nature of the Company's Proposed Operations. The success of
the Company's proposed plan of operation will depend to a great extent on
the operations, financial condition and management of the identified target
company. While present management will prefer business combinations with
entities having established operating histories, there can be no assurance
that the Company will be successful in locating businesses meeting such
criteria. In the event the Company completes a business combination, of
which there can be no assurance, the success of the Company's operations
will be dependent upon management of the target company and numerous other
factors beyond the Company's control.
12. Scarcity of and Competition for Business Opportunities and Combinations.
The Company is and will continue to be an insignificant participant in the
business of seeking mergers with and acquisitions of business entities. A
large number of established and well-financed entities, including venture
capital firms, are active in mergers and acquisitions of companies which
may be merger or acquisition target candidates for the Company. Nearly all
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such entities have significantly greater financial resources, technical
expertise and managerial capabilities than the Company and, consequently,
the Company will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination.
Moreover, the Company will also compete with numerous other small public
companies in seeking merger or acquisition candidates.
13. No Agreement for Acquisition of a Target Company Combination. The Company
has no current arrangement, agreement or understanding with respect to
engaging in a merger with or acquisition of a specific business entity.
There can be no assurance that the Company will be successful in
identifying and evaluating suitable business opportunities or in concluding
a business combination. Management has not identified any particular
industry or specific business within an industry for evaluation by the
Company. There is no assurance that the Company will be able to negotiate
a business combination on terms favorable to the Company. The Company has
not established a specific length of operating history or a specified level
of earnings, assets, net worth or other criteria which it will require a
target company to have achieved, or without which the Company would not
consider a business combination with such business entity. Accordingly,
the Company may enter into a business combination with a business entity
having no significant operating history, losses, limited or no potential
for immediate earnings, limited assets, negative net worth or other
negative characteristics.
14. Reporting Requirements May Delay or Preclude Acquisition. Section 13 of
the Securities Exchange Act of 1934 (the "Exchange Act") requires companies
subject thereto to provide certain information about significant
acquisitions including certified financial statements for the company
acquired covering one or two years, depending on the relative size of the
acquisition. The time and additional costs that may be incurred by some
target companies to prepare such financial statements may significantly
delay or essentially preclude consummation of an otherwise desirable
acquisition by the Company. Acquisition prospects that do not have, or are
unable to obtain, the required audited statements may not be appropriate
for acquisition so long as the reporting requirements of the Exchange Act
are applicable.
15. Lack of Market Research or Marketing Organization. The Company has neither
conducted, nor have others made available to it, market research indicating
that demand exists for the transactions contemplated by the Company. Even
in the event demand exists for a merger or acquisition of the type
contemplated by the Company, there is no assurance the Company will be
successful in completing any such business combination.
16. Lack of Diversification. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a
business combination with only one business entity. Consequently, the
Company's activities will be limited to those engaged in by the business
entity which the Company merges with or acquires. The Company's inability
to diversify its activities into a number of areas may subject the Company
to economic fluctuations within a particular business or industry and
therefore increase the risks associated with the Company's operations.
17. Regulation under Investment Company Act. Although the Company will be
subject to regulation under the Exchange Act, management believes the
Company will not be subject to regulation under the Investment Company Act
of 1940, insofar as the Company will not be engaged in the business of
investing or trading in securities. In the event the Company engages in
business combinations which result in the Company holding passive
investment interests in a number of entities, the Company could be subject
to regulation under the Investment Company Act of 1940. In such event, the
Company would be required to register as an investment company and could be
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expected to incur significant registration and compliance costs. The
Company has obtained no formal determination from the Securities and
Exchange Commission as to the status of the Company under the Investment
Company Act of 1940 and, consequently, any violation of such Act could
subject the Company to material adverse consequences.
18. Probable Change In Control and Management. A business combination
involving the issuance of the Company's common stock will, in all
likelihood, result in shareholders of a target company obtaining a
controlling interest in the Company. Any such business combination may
require shareholders of the Company to sell or transfer all or a portion of
the Company's common stock held by them. The resulting change in control
of the Company will likely result in removal of the present officers and
directors of the Company and a corresponding reduction in or elimination of
their participation in the future affairs of the Company.
19. Taxation. Federal and state tax consequences will, in all likelihood, be
major considerations in any business combination the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so
as to minimize the federal and state tax consequences to both the Company
and the target company and their respective holders; however, there can be
no assurance that such business combination will meet the statutory
requirements of a tax-free reorganization or that the parties will obtain
the intended tax-free treatment upon a transfer of stock or assets. A non
-qualifying reorganization could result in the imposition of both federal
and state taxes which may have an adverse effect on both parties to the
transaction and their shareholders.
ITEM 2. MANAGEMENT'S DISCUSSION, ANALYSIS OR PLAN OF OPERATION
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire a target company which desires to seek the perceived
advantages of a corporation which has a class of securities registered under the
Exchange Act.
Management anticipates seeking out a target company through solicitation.
Such solicitation may include newspaper or magazine advertisements, mailings and
other distributions to law firms, accounting firms, investment bankers,
financial advisors and similar persons, the use of one or more World Wide Web
sites and similar methods. No estimate can be made as to the number of persons
who will be contacted or solicited. Management may engage in such solicitation
directly or may employ one or more other entities to conduct or assist in such
solicitation. Management and its affiliates pay referral fees to consultants
and others who refer target businesses for mergers into public companies in
which management and its affiliates have an interest. Payments are made if a
business combination occurs, and may consist of cash or a portion of the stock
in the Company retained by management and its affiliates, or both.
The Company will not restrict its search to any specific business,
industry, or geographical location and the Company may participate in a business
venture of virtually any kind or nature. Management anticipates that it will be
able to participate in only one potential business venture because the Company
has nominal assets and limited financial resources. Please refer to "ITEM F/S.
FINANCIAL STATEMENTS." This lack of diversification should be considered a
substantial risk to the shareholders of the Company because it will not permit
the Company to offset potential losses from one venture against gains from
another.
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The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company may acquire assets and establish wholly-owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Management believes
(but has not conducted any research to confirm) that there are business entities
seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, increasing the opportunity
to use securities for acquisitions, providing liquidity for shareholders and
other factors. Business opportunities may be available in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
difficult and complex.
The Company has, and may continue to have, no capital with which to provide
the owners of business entities with any cash or other assets.
The analysis of new business opportunities will be undertaken by, or under
the supervision of, the officers and directors of the Company and in some cases,
shareholders of the Company whose background makes them capable of assessing
such business opportunities, these persons are not professional business
analysts. In analyzing prospective business opportunities, management may
consider such matters as the available technical, financial and managerial
resources; working capital and other financial requirements; history of
operations, if any; prospects for the future; nature of present and expected
competition; the quality and experience of management services which may be
available and the depth of that management; the potential for further research,
development, or exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact the proposed activities of the Company; the
potential for growth or expansion; the potential for profit; the perceived
public recognition or acceptance of products, services, or trades; name
identification; and other relevant factors.
This discussion of the proposed criteria is not meant to be restrictive of
the Company's virtually unlimited discretion to search for and enter into
potential business opportunities.
The Exchange Act requires that any merger or acquisition candidate comply
with certain reporting requirements, which include providing audited financial
statements to be included in the reporting filings made under the Exchange Act.
The Company will not acquire or merge with any company for which audited
financial statements cannot be obtained at or within a reasonable period of time
after closing of the proposed transaction.
The Company may enter into a business combination with a business entity
that desires to establish a public trading market for its shares. A target
company may attempt to avoid what it deems to be adverse consequences of
undertaking its own public offering by seeking a business combination with the
Company. Such consequences may include, but are not limited to, time delays of
the registration process, significant expenses to be incurred in such an
offering, loss of voting control to public shareholders or the inability to
obtain an underwriter or to obtain an underwriter on satisfactory terms.
The Company will not restrict its search for any specific kind of business
entities, but may acquire a venture which is in its preliminary or development
stage, which is already in operation, or in essentially any stage of its
business life. It is impossible to predict at this time the status of any
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business in which the Company may become engaged, in that such business may need
to seek additional capital, may desire to have its shares publicly traded, or
may seek other perceived advantages which the Company may offer.
Management of the Company, which in all likelihood will not be experienced
in matters relating to the business of a target company, will rely upon its own
efforts in accomplishing the business purposes of the Company. Outside
consultants or advisors may be utilized by the Company to assist in the search
for qualified target companies. If the Company does retain such an outside
consultant or advisor, any cash fee earned by such person will need to be
assumed by the target company, as the Company has limited cash assets with which
to pay such obligation. No such consultant or advisor has been retained.
Following a business combination the Company may benefit from the services
of others in regard to accounting, legal services, underwriting and corporate
public relations. If requested by a target company, management may recommend
one or more underwriters, financial advisors, accountants, public relations
firms or other consultants to provide such services.
A potential target company may have an agreement with a consultant or
advisor providing that services of the consultant or advisor be continued after
any business combination. Additionally, a target company may be presented to
the Company only on the condition that the services of a consultant or advisor
be continued after a merger or acquisition. Such preexisting agreements of
target companies for the continuation of the services of attorneys, accountants,
advisors or consultants could be a factor in the selection of a target company.
STRUCTURE OF ACQUISITION
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with a target company. It may also acquire
stock or assets of a target company. Upon consummation of an acquisition, it is
likely that the present management and shareholders of the Company will no
longer be in control of the Company. In addition, it is likely that the
Company's officers and director will, as part of the terms of the acquisition
transaction, resign and be replaced by one or more new officers and directors.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, of which there can be
no assurance, it will be undertaken by the surviving entity after the Company
has entered into an agreement for a business combination or has consummated a
business combination and the Company is no longer considered a blank check
company. The issuance of additional securities and their potential sale into
any trading market which may develop in the Company's securities may depress the
market value of the Company's securities in the future if such a market
develops, of which there is no assurance.
While the terms of a business transaction to which the Company may be a
party cannot be predicted, it is expected that the parties to the business
transaction will desire to avoid the creation of a taxable event and thereby
structure the acquisition in a "tax-free" reorganization under Sections 351 or
368 of the Internal Revenue Code of 1986, as amended (the "Code").
With respect to any merger or acquisition negotiations with a target
company, management expects to focus on the percentage of the Company which
target company shareholders would acquire in exchange for their shareholdings in
the target company. Depending upon, among other things, the target company's
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assets and liabilities, the Company's shareholders will in all likelihood hold a
substantially lesser percentage ownership interest in the Company following any
merger with or acquisition of a target company. The percentage of ownership may
be subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's shareholders at such time.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require certain
representations and warranties of the parties thereto, will specify certain
events of default, will detail the terms of closing and the conditions which
must be satisfied by the parties prior to and after such closing and will
include miscellaneous other terms.
The Company will not acquire or merge with any entity which cannot provide
audited financial statements at or within a reasonable period of time after
closing of the proposed transaction. The Company is subject to all of the
reporting requirements included in the Exchange Act. Included in these
requirements is the duty of the Company to file audited financial statements as
part of or within 60 days following its Form 8-K to be filed with the Securities
and Exchange Commission upon consummation of a merger or acquisition, as well as
the Company's audited financial statements included in its annual report on Form
10-K (or 10-KSB, as applicable). If such audited financial statements are not
available at closing, or within time parameters necessary to insure the
Company's compliance with the requirements of the Exchange Act, or if the
audited financial statements provided do not conform to the representations made
by the target company, the closing documents may provide that the proposed
transaction will be voidable at the discretion of the present management of the
Company.
NO DIVIDENDS
The Company has not paid any dividends on its common stock; nor does the
Company intend to declare and pay dividends prior to the consummation of an
acquisition. The payment of dividends after any acquisition will be within the
discretion of the Company's then Board of Directors.
EMPLOYEES
The Company presently has no employees. The Company has three officers and
two directors. Mr. Richard Silas is the President and a Director of the
Company, Mr. Nicolas Awde is the Secretary and a Director of the Company and Mr.
Bruce Jamieson is the Treasurer of the Company. Messrs. Silas, Awde and
Jamieson are all engaged in other business activities, and the amount of time
they will both devote to the Company's business will vary. Upon completion of
the public offering, it is anticipated that management will devote such time to
the Company's affairs each month as may be necessary to carry on the Company's
business plans.
COMPETITION
The Company will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many established
venture capital and financial concerns which have significantly greater
financial and personnel resources and technical expertise than the Company. In
view of the Company's combined extremely limited financial resources and limited
<PAGE>
Page 14
management availability, the Company will continue to be at a significant
competitive disadvantage compared to the Company's competitors.
LIQUIDITY AND CAPITAL RESOURCES
The Company has limited working capital and a deficit. The ability of the
Company to continue as a going concern is dependent upon its ability to obtain
adequate financing to reach profitably levels of operation. It is not possible
to predict whether financing efforts will be successful or if the Company will
attain profitable levels of operations.
ITEM 3. DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no agreements to acquire
any properties. The Company is presently using as a mailing address, at no
cost, the office of its Corporate Counsel, Heenan Blaikie, 2200-1055 West
Hastings Street, Vancouver, B.C., Canada. See "Item 4. Security Ownership of
Certain Beneficial Owners and Management."
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth each person known by the Company to be the
beneficial owner of five percent or more of the Company's Common Stock, all
directors individually and all directors and officers of the Company as a group.
Unless otherwise noted, each person has sole voting and investment power with
respect to the shares shown.
================================================================================
NAME AND ADDRESS OF SHARES OF ATTRIBUTED APPROXIMATE
BENEFICIAL OWNER COMMON STOCK BENEFICIAL PERCENTAGE
BENEFICIALLY OWNERSHIP OWNED
--------------------------------------------------------------------------------
Richard Silas 2,000 N/A 0.00002%
#1202-1516 Davie Street
Vancouver, BC V6G 1V6
--------------------------------------------------------------------------------
Pacific Empire Venture Ltd. 2,200 N/A 0.000022%
#702-1489 Marine Drive
West Vancouver, BC V7T 1B8
Beneficial Owner: Nicolas Awde
--------------------------------------------------------------------------------
Bruce Jamieson 2,450 N/A 0.0000245%
3582 Rockview Place
West Vancouver, BC V7V 3H3
--------------------------------------------------------------------------------
Officers and Directors as
a Group (3 people) 6,650 N/A 0.0000665%
================================================================================
<PAGE>
Page 15
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Set forth below is the name of each of the directors and officers of the
Company, all positions and offices with the Company held, the period during
which such person has never served as such, and the business experience during
at least the last five years:
Name Age Positions and Offices Held
---- --- --------------------------
Richard Silas 29 President and Director (since inception)
Nicolas Awde 27 Secretary and Director (since inception)
Bruce Jamieson 54 Treasurer (since inception)
There are no agreements or understandings for the officers or directors to
resign at the request of another person and the above-named officers and
directors are not acting on behalf of nor will act at the direction of any other
person.
Mr. Richard Silas - Mr. Silas has served as an Officer and Director with private
and public trading companies. Over the last 5 years he has assisted in securing
financing up to CDN$5,000,000 He has worked in a variety of capacities such as
management, corporate communications, and marketing for a variety of industries
such as mining, oil and gas, and the Hi-tech sector.
Mr. Nicolas Awde - President of Pacific Empire Ventures Ltd., a Internet
Consulting group out of Vancouver, BC, Canada. Mr. Awde brings more than 2 years
of private company experience providing capital funding, investor relations,
corporate development & corporate communications in various business sectors.
Mr. Bruce Jamieson - Mr. Jamieson has been a Certified General Accountant since
1978. Until November 1998 Mr. Jamieson was the principal of Bruce F. Jamieson
Inc., CGA (a public accounting firm in Vancouver) with the majority of his
practice focussing on assisting public companies in all aspects of business
including audits and filing of regulatory documents. For the last 6 years,
Bruce Jamieson has been a voluntary director and chair of the finance committee
for a large healthcare organization in the Vancouver area. He also holds a
Bachelor's degree with honors in mathematics.
Conflicts of Interest.
The Company's officers and directors may organize other companies of a
similar nature and with a similar purpose as the Company. Consequently, there
are potential inherent conflicts of interest in acting as an officer and
director of the Company. Insofar as the officers and the sole director are
engaged in other business activities, he will devote only a minor amount of time
to the Company's affairs. The Company does not have a right of first refusal
pertaining to opportunities that come to management's attention insofar as such
opportunities may relate to the Company's proposed business operations.
A conflict may arise in the event that another blank check and/or blind
pool company (a "blind pool company") with which management is affiliated is
formed and actively seeks a target company. It is anticipated that target
companies will be located for the Company and other blind pool companies in
chronological order of the date of formation of such blind pool companies or by
lot. However, any blank check companies that may be formed may differ from the
Company in certain items such as place of incorporation, number of shares and
shareholders, working capital, types of authorized securities, or other items.
It may be that a target company may be more suitable for or may prefer a certain
blind pool company formed after the Company. In such case, a business
<PAGE>
Page 16
combination might be negotiated on behalf of the more suitable or preferred
blind pool company regardless of date of formation or choice by lot. The
directors will be responsible for seeking, evaluating, negotiating and
consummating a business combination with a target company which may result in
terms providing benefits to the directors.
The Company may agree to pay finder's fees, as appropriate and allowed, to
unaffiliated persons who may bring a target company to the Company where that
reference results in a business combination. No finder's fee of any kind will
be paid by the Company to management or promoters of the Company or to their
affiliates. No loans of any type have, or will be, made by the Company to
management or promoters of the Company or to any of their associates or
affiliates.
Management has not adopted policies involving possible conflicts of
interest.
There are no binding guidelines or procedures for resolving potential
conflicts of interest. Failure by Management to resolve conflicts of interest
in favor of the Company could result in liability of Management to the Company.
However, any attempt by shareholders to enforce a liability of Management to the
Company would most likely be prohibitively expensive and time consuming.
Investment Company Act of 1940.
Although the Company will be subject to regulation under the Securities Act
of 1933 (the "Securities Act") and the Exchange Act, management believes the
Company will not be subject to regulation under the Investment Company Act of
1940 insofar as the Company will not be engaged in the business of investing or
trading in securities. In the event the Company engages in business
combinations which result in the Company holding passive investment interests in
a number of entities the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be required to
register as an investment company and could be expected to incur significant
registration and compliance costs. The Company has not obtained a formal
determination from the Commission as to the status of the Company under the
Investment Company Act of 1940. Any violation of such Investment Company Act
would subject the Company to material adverse consequences.
ITEM 6. EXECUTIVE COMPENSATION.
The Company's officers and directors do not receive any compensation for
their services rendered to the Company, have not received such compensation in
the past, and are not accruing any compensation pursuant to any agreement with
the Company.
No retirement, pension, profit sharing, stock option or insurance programs
or other similar programs have been adopted by the Company for the benefit of
its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has no properties and at this time no agreements to acquire any
properties. The Company is presently using the office of it's Corporate Counsel,
Heenan Blaikie, located at 2200-1055 West Hastings Street, Vancouver, B.C.
Canada, at no cost as the Company's office and mailing address. Such arrangement
is expected to continue until completion of the acquisition of a target company.
<PAGE>
Page 17
ITEM 8. DESCRIPTION OF SECURITIES.
The Company is currently authorized to issue one hundred million
(100,000,000) shares of common stock at a par value of one thousandth of one
cent ($0.001) per share of which 26,000 shares were issued and outstanding as of
the date of this Registration Statement. Each outstanding share of common stock
entitles the holder to one vote, either in person or by proxy, on all matters
that may be voted upon by the owners thereof at meetings of the stockholders.
The holders of common stock (i) have equal rights to dividends from funds
legally available therefor, when, as and if declared by the Board of Directors
of the Company; (ii) are entitled to share ratably in all of the assets of the
Company available for distribution to holders of common stock upon liquidation,
dissolution or winding up of the affairs of the Company; (iii) do not have
preemptive, subscription or conversion rights, and (iv) are entitled to one
non-cumulative vote per share on all matters on which stockholders may vote at
all meetings of stockholders.
Reports to Stockholders.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements as soon as practicable after the end of
each fiscal year. The Company's fiscal year ends on December 31 of each year.
In addition, the Company intends to issue unaudited interim reports and
financial statements on a quarterly basis.
Dividends.
The Company has not declared any dividends since inception, and has no
present intention of paying any cash dividends on its common stock in the
foreseeable future. The payment by the Company of dividends, if any, in the
future, rests within the discretion of its Board of Directors and will depend,
among other things, upon its earnings, capital requirements and financial
condition, as well as other relevant factors.
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
There is no trading market for the Company's Common Stock at present and
there has been no trading market to date. There is no assurance that a trading
market will ever develop or, if such a market does develop, that it will
continue.
The National Securities Market Improvement Act of 1996 limited the
authority of states to impose restrictions upon sales of securities made
pursuant to Sections 4(1) and 4(3) of the Securities Act of 1933, as amended
(the "Securities Act") and of companies which file reports under Sections 13 or
15(d) of the Securities Exchange Act. The Company intends to file such reports.
As a result, sales of the Company's common stock in the secondary trading market
by the holders thereof may be made pursuant to Section 4(1)of the Securities Act
(sales other than by an issuer, underwriter or broker).
The Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks and (ii) the broker or dealer receive from the
<PAGE>
Page 18
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (I) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (I)
sets forth the basis on which the broker or dealer made the suitability
determination and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stocks in both public offerings and
in secondary trading, and about commissions payable to both the broker-dealer
and the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
If, after a merger or acquisition, the Company does not meet the
qualifications for listing on the NASDAQ Stock Market Inc.'s SmallCap Market
("NASDAQ-SCM"), the Company's securities may be traded on the OTCBB. The OTCBB
market differs from national and regional stock exchanges in that it (1) is not
sited in a single location but operates through communication of bids, offers
and confirmations between broker-dealers and (2) securities admitted to
quotation are offered by one or more broker-dealers rather than the "specialist"
common to stock exchanges. The Company may seek to have its securities quoted
on the OTCBB or may offer its securities in what are commonly referred to as the
"pink sheets" of the National Quotation Bureau, Inc.
In order to qualify for listing on the NASDAQ-SCM, a company must have at
least (i) net tangible assets of $4,000,000 or market capitalization of
$50,000,000 or net income for two of the last three years of $750,000; (ii)
public float of 1,000,000 shares with a market value of $5,000,000; (iii) a bid
price of $4.00; (iv) three market makers; (v) 300 shareholders and (vi) an
operating history of one year or, if less than one year, $50,000,000 in market
capitalization. For continued listing on the Nasdaq SmallCap Market, a company
must have at least (i) net tangible assets of $2,000,000 or market
capitalization of $35,000,000 or net income for two of the last three years of
$500,000; (ii) a public float of 500,000 shares with a market value of
$1,000,000; (iii) a bid price of $1.00; (iv) two market makers; and (v) 300
shareholders.
If the Company is unable initially to satisfy the requirements for
quotation on the NASDAQ-SCM or becomes unable to satisfy the requirements for
continued quotation thereon, and trading, if any, is conducted in the OTCBB, a
shareholder may find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, the Company's securities.
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company has not changed accountants since its formation and there are
no disagreements with the findings of its accountants.
<PAGE>
Page 19
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
Other than to its founding shareholders, the Company has not sold any
securities.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Constitution of the State of Delaware, Title 8, Corporations,
subchapter IV, section 145, provides that a Delaware corporation has the power,
under specified circumstances, to indemnify its directors, officers, employees
and agents, against judgements, penalties, fines, settlements, and reasonable
expenses incurred in any action, suit or proceeding: but if the person is found
liable to the company or is found liable on the basis that personal benefit was
improperly received by the person, the indemnification is limited to reasonable
expenses actually incurred by the person and shall not be made in respect of any
proceeding in which the person shall have been found liable for willful or
intentional misconduct in the performance of his duty to the company. The
Articles of the Company may restrict the circumstances under which a company is
required or permitted to indemnify a person.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS
CONTROLLING THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION
OF THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST
PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
<PAGE>
Page 20
PART F/S
FINANCIAL STATEMENTS
Index
Auditors Report dated December 14, 2000
Audited Balance Sheets as of November 30, 2000
Audited Statement of Operations for the period from November 1, 2000
(inception) to November 30, 2000
Audited Statement of Stockholders' Equity (Deficit) for the period
from November 1, 2000 (inception) to November 30, 2000
Statement of Cash Flows for the period from November 1, 2000 (inception)
to November 30, 2000
Notes to Financial Statements
<PAGE>
VERTICAL SOLUTIONS INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
NOVEMBER 30, 2000
<PAGE>
VERTICAL SOLUTIONS INC.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
NOVEMBER 30, 2000
AUDITORS' REPORT - Comments by Auditors for
U.S. Readers on Canada - United States Reporting Difference
BALANCE SHEET
STATEMENT OF OPERATIONS
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIENCY)
STATEMENT OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS
<PAGE>
Page F-2
AUDITORS' REPORT
--------------------------------------------------------------------------------
To the Board of Directors of Vertical Solutions Inc.
We have audited the balance sheet of Vertical Solutions Inc. (A Development
Stage Company) as at November 30, 2000 and the statements of operations, changes
in shareholders' equity (deficiency) and cash flows for the period from November
1, 2000, date of incorporation, to November 30, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at November 30, 2000 and the
results of its operations and the changes in shareholders' equity and cash flows
for the period from November 1, 2000, date of incorporation, to November 30,
2000 in accordance with generally accepted accounting principles in Canada.
/s/ Jones, Richards & Company
CERTIFIED GENERAL ACCOUNTANTS
December 14, 2000
Vancouver, British Columbia
COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-UNITED STATES REPORTING
-----------------------------------------------------------------------
DIFFERENCES
-----------
In the United States, reporting standards for auditors' would require the
addition of an explanatory paragraph following the opinion paragraph when the
financial statements are affected by a significant uncertainty such as referred
to in Note 1 regarding the Company's ability to continue as a going concern.
Our report to the Directors dated December 14, 2000 is expressed in accordance
with Canadian reporting standards which do not permit a reference to such
uncertainties in the auditors' report when the uncertainties are adequately
disclosed in the financial statements.
/s/ Jones, Richards & Company
CERTIFIED GENERAL ACCOUNTANTS
December 14, 2000
Vancouver, British Columbia
<PAGE>
Page F-3
VERTICAL SOLUTIONS INC.
(A Development Stage Company)
BALANCE SHEET
NOVEMBER 30, 2000
================================================================================
ASSETS
------
CURRENT ASSETS
Cash $ 22
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 1,666
--------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
-----------------------------------------
Capital stock
Authorized: 100,000,000 shares with
a par value of $0.001 per share
Issued: 26,000 common shares 26
Deficit accumulated during development stage (1,670)
--------------------------------------------------------------------------------
(1,644)
--------------------------------------------------------------------------------
$ 22
================================================================================
Approved on Behalf of the Board:
/s/Richard Silas /s/Nicolas Awde
---------------------------------- ----------------------------------
Director Director
The accompanying notes are an integral part of these financial statements
<PAGE>
Page F-4
VERTICAL SOLUTIONS INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR THE PERIOD NOVEMBER 1, 2000, DATE OF INCORPORATION, TO
NOVEMBER 30, 2000
================================================================================
GENERAL AND ADMINISTRATIVE EXPENSES
Office and general $ 1,670
--------------------------------------------------------------------------------
NET LOSS FOR THE PERIOD $ (1,670)
================================================================================
BASIC NET LOSS PER SHARE $ (0.06)
================================================================================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 26,000
================================================================================
The accompanying notes are an integral part of these financial statements
<PAGE>
Page F-5
VERTICAL SOLUTIONS INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD NOVEMBER 1, 2000, DATE OF INCORPORATION, TO
NOVEMBER 30, 2000
Deficit
Accumulated
Common Stock During
Number of shares Amount Development
Stage Total
================================================================================
Common stock issued for cash
November 1, 2000 2,000 $ 2 $ - $ 2
November 2, 2000 24,000 24 - 24
Net loss for the period November
1, 2000, date of incorporation,
to November 30, 2000 - - (1,670) (1,670)
--------------------------------------------------------------------------------
Balance, November 30, 2000 26,000 $ 26 $ (1,670) $(1,644)
================================================================================
The accompanying notes are an integral part of these financial statements
<PAGE>
Page F-6
VERTICAL SOLUTIONS INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD NOVEMBER 1, 2000, DATE OF INCORPORATION, TO
NOVEMBER 30, 2000
Cash Generated By:
Operating Activities:
Net loss for the period $ (1,670)
Change in non-cash working capital items 1,666
--------------------------------------------------------------------------------
(4)
--------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds on sale of common stock 26
--------------------------------------------------------------------------------
Investing Activities: -
--------------------------------------------------------------------------------
Increase In Cash 22
Cash, Beginning Of Period -
--------------------------------------------------------------------------------
Cash, End Of Period $ 22
================================================================================
The accompanying notes are an integral part of these financial statements
<PAGE>
Page F-7
VERTICAL SOLUTIONS INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2000
================================================================================
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
--------------------------------------------------------------------------------
The Company was incorporated on November 1, 2000 in the State of Delaware. To
date the Company has had no business operations and was organized for the
purpose of creating a corporate vehicle to locate and acquire an operating
business. The ability of the Company to continue as a going concern is
dependent on raising capital to acquire a business venture and to fund future
operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Company's management to make estimates and
assumptions that affect the amounts reported in the financial statements and
related notes to the financial statements. Actual results may differ from those
estimates.
Foreign Currency Translation
The financial statements are presented in United States dollars. In accordance
with Statement of Financial Accounting Standards No. 52, "Foreign Currency
Translation", foreign denominated monetary assets and liabilities are translated
to their United States dollar equivalents using foreign exchange rates which
prevailed at the balance sheet date. Revenue and expenses are translated at
average rates of exchange during the period. Related translation adjustments
are reported as a separate component of shareholders' equity, whereas gains or
losses resulting from foreign currency transactions are included in results of
operations.
Fair Value of Financial Instruments
In accordance with the requirements of SFA No. 107, the Company has determined
the estimated fair value of financial instruments using available market
information and appropriate valuation methodologies. The fair value of
financial instruments classified as current assets or liabilities approximate
carrying value due to the short-term maturity of the instruments.
<PAGE>
Page F-8
Net Loss per Common Share
Basic earnings (loss) per share includes no dilution and is computed by dividing
income available to common shareholders by the weighted average number of common
shares outstanding for the period. Dilutive earnings (loss) per share reflects
the potential dilution of securities that could share in the earnings (losses)
of the Company. Because the Company does not have any potentially dilutive
securities, the accompanying presentation is only of basic loss per share.
NOTE 3 - INCORPORATION
--------------------------------------------------------------------------------
The Company was incorporated under the laws of the State of Delaware, United
States, on November 1, 2000.
<PAGE>
PART III
--------
ITEMS 1 & 2 INDEX TO AND DESCRIPTION OF EXHIBITS
------------------------------------------------
Exhibit
-------
(1) Certificate of Incorporation
--- ----------------------------
(2) By-Laws
--- -------
<PAGE>
Exhibit 1
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF COPPORATIONS
FILED 09:00 AM 11/01/2000
001550361 - 3310295
CERTIFICATE OF INCORPORATION
OF
Vertical Solutions Inc.
-----------------------
FIRST: The name of this corporation is: Vertical Solutions Inc.
SECOND: The address of its registered office in the State of Delaware and
the name of its registered agent is Agents and Corporations, Inc., 1201 Orange
Street, Suite 600, Wilmington, New Castle County, Delaware 19801.
THIRD: The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares which the corporation is authorized to
issue is 100,000,000 shares of common voting stock with a par value of $.001.
FIFTH: The name and mailing address of the incorporator is: David N.
Williams, Esquire, 1201 Orange Street, Suite 600, Wilmington, DE 19801
SIXTH: The corporation is to have perpetual existence.
SEVENTH: The directors shall have concurrent power with the stockholders to
make, alter, amend, change, add to or repeal the By-Laws of the corporation.
EIGHTH: No director shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
Notwithstanding the foregoing sentence, a director shall be liable to the extent
provided by applicable law, (i) for breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing Violation of law,
(iii) under Section 174 of the General Corporation Law of Delaware; or (iv) for
any transaction from which the director derived an improper personal benefit.
This Article Eighth shall not eliminate or limit the liability of a director for
any act or omission occurring prior to the date when this Article Eighth became
effective.
I, the undersigned, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this Certificate, hereby declaring and certifying
that this is my act and deed, and the facts therein stated are true and,
accordingly, I have hereunto set my hand and seal lat day of November, 2000.
/s/ David N. Williams
-------------------------------
David N. Williams, Esquire
Incorporator
<PAGE>
Exhibit 2
BY-LAWS
OF
Vertical Solutions Inc.
-----------------------
ARTICLE I - OFFICES
-------------------
Section 1. The registered office shall be in the City of Wilmington, New
---------
Castle County, Delaware.
Section 2. The corporation may also have offices at such other places both
---------
within and without the State of Delaware as the Board of Directors may from time
to time determine, or the business of the corporation may require.
ARTICLE II - MEETINGS OF STOCKHOLDERS
-------------------------------------
Section 1. All meetings of the stockholders for election of directors
---------
shall be held in Wilmington, Delaware, at such place as may be fixed from time
to time by the Board of Directors, or at such other place, either within or
without Delaware as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting. Meetings of stockholders for
any other purpose may be held at such time and place, within or without
Delaware, as shall be stated in the notice of meeting or in a duly executed
waiver of notice thereof.
Section 2. Annual meetings of the stockholders commencing with the year
---------
2000 shall be held on the thirty-first of December in each year.
If the designated day is a legal holiday, then the annual meeting shall be
held on the next secular day following or at such other date and time as shall
be designated from time to time by the Board of Directors and stated in the
notice of meeting, at which they shall elect by a plurality vote by written
ballot a Board of Directors, and transact other business as may properly be
brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date
---------
and hour of the meeting, shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than fifty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
---------
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to examination by any stockholder for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
<PAGE>
meeting is to be held, which place shall be specified in the notice of the
meeting or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
---------
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
---------
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten nor more than fifty days before the date of the
meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
---------
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
---------
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time without notice other than announcement at the meeting,
until a quorum shall be present or represented. At such adjourned meeting at
which a quorum shall be present or represented any business may be transacted
which might have been transacted at the meeting as originally notified. If the
adjournment is for more than thirty 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 on record entitled to vote at the
meeting.
Section 9. When a quorum is present at any meeting, the vote of the
---------
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Each stockholder shall at every meeting of the stockholders be
----------
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date unless the proxy provides for a longer period.
<PAGE>
Section 11. Whenever the vote of stockholders at a meeting thereof is
----------
required or permitted to be taken for or in connection with any corporate
action, by any provision of the statutes, the meeting and vote of stockholders
may be dispensed with if all of the stockholders who would have been entitled to
vote upon the action if such meeting were held shall consent in writing to such
corporate action being taken-, or if the certificate of incorporation authorized
the action to be taken with the written consent of the holders of less than all
the stock who would have been entitled to vote upon the action if a meeting were
held, then on the written consent of the stockholders having not less than such
percentage of the number of votes as may be authorized in the certificate of
incorporation; provided that in no case shall the written consent be by the
holders of stock having less than the minimum percentage of the vote required by
statute for the proposed corporate action; and provide that prompt notice must
be given to all stockholders of the taking of corporate action without a meeting
and by less than unanimous written consent.
ARTICLE III - DIRECTORS
-----------------------
Section 1. The number of directors which shall constitute the whole board
---------
shall be two. A director shall be elected at the annual meeting of the
stockholders, except as provided in Section 2 of this Article, and any director
elected shall hold office until his successor is elected and qualified. A
director need not be a stockholder.
Section 2. Vacancies and newly created directorships resulting from any
---------
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery of the State of
Delaware may, upon application of any stockholder or stockholders holding at
least ten percent of the total number of shares at the time outstanding having
the right to vote for such directors, summarily order an election to be held to
fill any such vacancies or newly created directorships, or to replace the
directors chosen by the directors then in office.
Section 3. The business of the corporation shall be managed by its Board
---------
of Directors which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
Section 4. A director of the corporation may resign at any time by giving
---------
notice to the Board, the president or secretary of the corporation. Such
resignation shall take effect on the date of receipt of such notice or at any
later time specified therein; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
<PAGE>
Section 5. A director or directors may be removed with or without cause by
---------
the affirmative vote of the holders of a majority of all the shares of stock
outstanding entitled to vote, at a special meeting of the stockholders called
for such purposes.
Meetings of the Board of Directors
----------------------------------
Section 6. The Board of Directors of the corporation may hold meetings,
---------
both regular and special, either within or without the State of Delaware.
Section 7. The first meeting of each newly elected Board of Directors
---------
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting, and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum is present. In the event of the failure of
stockholders to fix the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 8. Regular meetings of the Board of Directors may be held without
---------
notice at such time and at such place as shall from time to time be determined
by the Board.
Section 9. Special meetings of the Board of Directors may be called by the
---------
president on three days' notice to each director, either personally or by mail
or by telegram; special meetings shall be called by the president or secretary
in like manner and on like notice on the written request of two directors.
Section 10. At all meetings of the Board, a majority of the directors
----------
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting until a quorum shall be present.
Section 11. Unless otherwise restricted by the certificate of
----------
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
<PAGE>
Committees of Directors
-----------------------
Section 12. The Board of Directors may, upon resolution passed by a
----------
majority of the whole Board, designate one or more committees, each committee to
consist of two or more of the directors of the corporation. The Board 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. Any
such committee, to the extent provided in the resolution, shall have and may
exercise the powers of the Board of Directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; provided, however, that, in the
absence or disqualification of any member of such committee or committees, 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. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Directors.
Section 13. Each committee shall keep regular minutes of its meetings and
----------
report the same to the Board of Directors when required.
Compensation of Directors
-------------------------
Section 14. The directors may be paid their expenses, if any, of
----------
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV - NOTICES
--------------------
Section 1. Whenever, under the provisions of the statutes or the
---------
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
---------
provisions of the statutes or of the certificate of incorporation or of these by
-laws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V - OFFICERS
--------------------
Section 1. The officers of the corporation shall be chosen by the Board of
---------
Directors and shall consist of a president, a secretary and a treasurer. The
Board of Directors may also choose one or more vice presidents, assistant
<PAGE>
secretaries and assistant treasurers. Any number of offices may be held by the
same person, unless the certificate of incorporation or these by-laws otherwise
provide.
Section 2. The Board of Directors at its first meeting after each annual
---------
meeting of stockholders shall choose, a president, a secretary and a treasurer.
Section 3. The Board of Directors may appoint such other officers and
---------
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board.
Section 4. The salaries of all officers and agents of the corporation
---------
shall be fixed by the Board of Directors.
Section 5. The officers of the corporation shall hold office until their
---------
successors are chosen and qualify. Any officer elected or appointed by the Board
of Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of the corporation
shall be filled by the Board of Directors.
The President
-------------
Section 6. The president shall be the chief executive officer of the
---------
corporation, shall preside at all meetings of the stockholders and the Board of
Directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect.
Section 7. The president shall execute bonds, mortgages, and other
---------
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed, and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the corporation.
The Vice Presidents
-------------------
Section 8. In the absence of the president, or in the event of his
---------
inability or refusal to act, the vice president (or in the event there be more
than one vice president, the vice presidents in the order designated, or in the
absence of any designation, then in the order of their election) shall perform
the duties of the president, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the president. The vice presidents
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
The Secretary and Assistant Secretary
-------------------------------------
Section 9. The secretary shall attend all meetings of the Board of
---------
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the Board of Directors in a book to be
kept for that purpose, and shall perform like duties for the standing committees
<PAGE>
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the corporation, and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more than one, the
----------
assistant secretary in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary, and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe.
The Treasurer and Assistant Treasurers
--------------------------------------
Section 11. The treasurer shall have the custody of the corporate funds
----------
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors.
Section 12. The treasurer shall disburse the funds of the corporation as
----------
may be ordered by the Board of Directors taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the Board of Directors, the treasurer shall
----------
give the corporation a bond (which shall be renewed every six years) in such sum
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
Section 14. The assistant treasurer, or if there shall be more than one,
----------
the assistant treasurers in the order determined by the Board of Directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the treasurer and shall
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.
<PAGE>
ARTICLE VI - CERTIFICATES OF STOCK
----------------------------------
Section 1. 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,
or vice chairman of the Board of Directors, or the president or a vice president
and the treasurer or an assistant treasurer or the secretary or an assistant
secretary of the corporation, certifying the number of shares owned by him in
the corporation.
Section 2. Where a certificate is countersigned (a) by a transfer agent
---------
other than the corporation or its employee; or (b) by a registrar other than the
corporation or its employee, any other signature on the certificates may be a
facsimile. 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 by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
Lost Certificates
-----------------
Section 3. The Board of Directors may direct a new certificate or
---------
certificates to 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 the fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum 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.
Transfer of Stock
-----------------
Section 4. Upon surrender to the corporation or transfer agent of the
---------
corporation or a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction upon its books.
Transfer Agent and Registrar
----------------------------
Section 5. The corporation may, if and whenever the Board of Directors
---------
shall so determine, maintain one or more transfer offices or agencies within or
without the State of Delaware, each in charge of a transfer agent or agents
designated by the Board of Directors, where the shares of the corporation shall
be directly transferable, and also one or more registry offices, each in charge
of a registrar or registrars designated by the Board of Directors, where such
shares shall be so registered, and no certificate for shares of the corporation
in respect of which a transfer agent or registrar shall have been designated
shall be valid unless countersigned by such transfer agent and registered by
such registrar. The Board of Directors may also make such additional rules and
regulations as it may deem expedient concerning the issue, transfer and
<PAGE>
registration of share certificates of the corporation.
Fixing Record Date
------------------
Section 6. 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, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
lawful action, the Board of Directors may fix, in advance, a record date, which
shall not be more than sixty days prior to any other action. 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.
Registered Stockholders
-----------------------
Section 7. 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 to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or in 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
Delaware.
ARTICLE VII - GENERAL PROVISIONS
--------------------------------
Dividends
---------
Section 1. Dividends upon the capital stock of the corporation, subject to
---------
the provisions of the Certificate of Incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation.
Section 2. 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
directors from time to time, in their 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
directors shall think conducive to the interest of the corporation, and the
directors may modify or abolish any such reserve in the manner in which it was
created.
Annual Statement
----------------
Section 3. The Board of Directors shall present at each annual meeting,
---------
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
<PAGE>
Checks
------
Section 4. All checks or demands for money and notes of the corporation
---------
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
Fiscal Year
-----------
Section 5. The fiscal year of the corporation shall be fixed by resolution
---------
of the Board of Directors.
Seal
----
Section 6. The corporate seal shall have inscribed thereon the name of the
---------
corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII - AMENDMENTS
-------------------------
Section 1. These by-laws may be altered, amended or repealed or new by-
---------
laws may be adopted by the stockholders or by the Board of Directors, when such
power is conferred upon the Board of Directors by the Certificate of
Incorporation at any regular meeting of the stockholders or of the Board of
Directors, or at any special meeting of the stockholders or of the Board of
Directors if notice of such alteration, amendment, repeal or adoption of new by-
laws be contained in the notice of such special meeting.
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Act of 1934, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form 10SB and has duly caused this
Registration Statement to be signed on its behalf by the undersigned hereunto
duly authorized in the City of Vancouver, on the 20th day of December, 2000.
VERTICAL SOLUTIONS INC.
(Registrant)
By: /s/ Richard Silas
Richard Silas, President and Director
--------------------------------
<PAGE>
