U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
Registration Statement on Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
NATIONAL AIR CORPORATION
(Name of Small Business Issuer as specified in its charter)
NEVADA 87-0565948
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) ID. No.)
n/a
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(SEC File No.)
5525 South 900 East, Suite 110
Salt Lake City, Utah 84117
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(Address of Principal Executive Office)
Issuer's Telephone Number, including Area Code: (801) 262-8844
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
$0.001 par value common stock
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Title of Class
DOCUMENTS INCORPORATED BY REFERENCE: See the Exhibit Index herein.
PART I
Item 1. Description of Business.
Business Development.
National Air Corporation (the "Company") was organized under the laws of
the State of Nevada on January 9, 1985. The Company was incorporated to engage
in any lawful activity.
The Company was initially authorized to issue a total of 20,000,000 shares
of common stock having a par value of one mill ($0.001) per share, with
fully-paid stock not to be liable for further call or assessment. Copies of the
Company's initial Articles of Incorporation and Bylaws are attached as exhibits
to this Registration Statement and are incorporated herein by this reference.
See the Exhibit Index, Part III.
Following the Company's inception, the Board of Directors authorized the
issuance of 100,000 "unregistered" and "restricted" shares of its common stock
to directors, executive officers and persons who may be deemed to have been
promoters or founders of the Company for the total consideration of $1,000.
Commencing in February, 1985, and pursuant to an exemption provided by Rule
504 of Regulation D of the Securities Act of 1933, as amended (the "1933 Act"),
and the securities laws of the State of Nevada, the Company publicly offered and
sold an aggregate total of 2,000,000 Units to public investors who were
residents of the State of Nevada, at a price of 2 1/2 cents ($0.025) per Unit,
each unit consisting of one share of the Company's common stock par value $.001
per share and one common share purchase warrant. The offering was subsequently
completed, with the Company receiving aggregate gross proceeds of $50,000,
before payment of legal, accounting and printing expenses. None of the warrants
were exercised and are now void due to their expiration six months after the
offering, as outlined in the terms under the Offering Circular. A copy of the
Company's original Offering Circular is attached as an exhibit to this
Registration Statement and is incorporated herein by this reference. See the
Exhibit Index, Part III.
On September 26, 1985, the Company filed with the Secretary of State of the
State of Nevada a Certificate of Amendment to the Articles of Incorporation,
which (i) changed Article IV of the Articles of Incorporation to read as; "IV.
AUTHORIZATION OF CAPITAL STOCK: The amount of the total authorized capital stock
of the Corporation shall be Three Hundred and Seventy Thousand Dollars
($370,000.00) consisting of Twenty Million (20,000,000) shares of common stock
with a par value of one tenth of one cent ($0.001) per share; one million
(1,000,000) shares of Class A Preferred Stock with a par value of twenty five
cents ($0.25) per share each with designations, preferences, limitations and
relative rights described below and one million (1,000,000) Class B Preferred
Stock with a par value of ten cents ($0.10) per share each with designations,
preferences, limitations and relative rights described below. All shares of
common stock have identical rights and privileges in every respect." All rights
and preferences assigned to the preferred shares are outlined under the caption
"Description of Securities", Part I, Item 8, herein. A copy of the Amendment of
the Articles of Incorporation is attached as an exhibit to this Registration
Statement and is incorporated herein by this reference. See the Exhibit Index,
Part III.
From 1985 to approximately 1992 the Company engaged in the business of
leasing and/or chartering of aircraft to provide air transportation services.
These operations were unsuccessful and the Company ceased all activities in
1992. Due to the substantial lapse of time since the occurrence of these events,
management does not anticipate that they will have any adverse impact on any
future operations in which the Company may engage.
On April 25, 1995, the Board of Directors resolved to issue 750,000 shares
of "unregistered" and "restricted" common stock to the current officers and
directors. Accordingly, Jeff D. Jenson, President and Director; Jason R. Lewis,
Vice President and Director; and Wendy Moler-Lewis, Secretary / Treasurer and
Director; were each issued 250,000 shares of "unregistered" and "restricted"
common stock.
On July 14, 1996, the Board of Directors of the Company unanimously
resolved to opt out of the provisions of Sections 78.378 to 78.3793, Nevada
Revised Statutes, which relates to "control share acquisitions" (the
"Acquisitions Act").
Sections 78.378 to 78.3793, Nevada Revised Statutes, which apply only to
certain types of publicly-held corporations, provide that "control shares"
acquired under certain circumstances shall have the same voting rights as they
had before the acquisition only to the extent that the stockholders of the
corporation have approved such rights. The Nevada Revised Statutes also give
dissenter's rights to the stockholders in the event that full voting rights are
accorded to shares acquired in a "control share acquisition" and the acquiring
person has acquired "control shares" with at least a majority of all voting
power. Sections 78.738 to 78.3793 permit a corporation's articles of
incorporation or bylaws to provide for an exemption from the Acquisitions Act.
The net effect of the Company's exemption from the Acquisitions Act is to remove
the need for stockholder approval of acquisitions of controlling interests in
the Company. The Company will still be subject to the provisions of Regulation
14A of the Securities and Exchange Commission, regarding proxy solicitations.
However, these provisions deal with the nature and extent of disclosure required
when a matter is to be voted on, but not whether a matter is to be voted on;
accordingly, Regulation 14A in no way negates the effect of the exemption from
the Acquisitions Act. See the heading "Need for any Governmental Approval of
Principal Products or Services" under the caption "Business," herein.
Acting without a meeting, pursuant to Section 78.207(4) of the Nevada
Revised Statutes, on July 14, 1996, the Board of Directors of the Company
unanimously resolved: (i) to effect a 1 share for 20 reverse split of the
Company's 6,750,000 then-outstanding shares of common stock, effective as of the
close of business, on July 31, 1996, retaining the authorized capital at
20,000,000 shares and the par value at one mill ($0.001) per share, with
appropriate adjustments being made in the additional paid in capital and stated
capital accounts of the Company and with fractional shares to be rounded to the
nearest whole share. All shares referred to herein after this point reflect the
aforementioned reverse split. No change was made to the authorized number of
shares of preferred stock or the par value thereof.
On October 26, 1996, The Board of Directors, resolved to issue 400,000
post-split "unregistered" and "restricted" shares of the Company's common stock
to Jenson Services, Inc., consultant to the Company, in consideration of the sum
of $2,557.25. These funds were used by Jenson Services to pay costs associated
with legal fees and accounting costs, on behalf of the Company. Following the
issuance of the aforementioned shares, 737,505 post-split shares of common stock
are currently outstanding.
Business.
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The Company has had no business operations since approximately 1992. To the
extent that the Company intends to continue to seek the acquisition of assets,
property or business that may benefit the Company and its stockholders, the
Company is essentially a "blank check" company. Because the Company has no
assets, conducts no business and has no employees, management anticipates that
any such acquisition would require the Company to issue shares of its common
stock as the sole consideration for the acquisition. This may result in
substantial dilution of the shares of current stockholders. The Company's Board
of Directors shall make the final determination whether to complete any such
acquisition; the approval of stockholders will not be sought unless required by
applicable laws, rules and regulations, the Company's Articles of Incorporation
or Bylaws, or contract. Even if stockholder approval is sought, Jeff D. Jenson,
who is a director and the President of the Company, beneficially owns
approximately fifty-six percent (56%) of the outstanding shares of common stock
of the Company, and could approve any acquisition, reorganization or merger he
deemed acceptable. The Company makes no assurance that any future enterprise
will be profitable or successful.
The Company is not currently engaging in any substantive business activity
and has no plans to engage in any such activity in the foreseeable future. In
its present form, the Company may be deemed to be a vehicle to acquire or merge
with a business or company. The Company does not intend to restrict its search
to any particular business or industry, and the areas in which it will seek out
acquisitions, reorganizations or mergers may include, but will not be limited
to, the fields of high technology, manufacturing, natural resources, service,
research and development, communications, transportation, insurance, brokerage,
finance and all medically related fields, among others. The Company recognizes
that because of its total lack of resources, the number of suitable potential
business ventures which may be available to it will be extremely limited, and
may be restricted to entities who desire to avoid what these entities may deem
to be the adverse factors related to an initial public offering ("IPO"). The
most prevalent of these factors include substantial time requirements, legal and
accounting costs, the inability to obtain an underwriter who is willing to
publicly offer and sell shares, the lack of or the inability to obtain the
required financial statements for such an undertaking, limitations on the amount
of dilution public investors will suffer to the benefit of the stockholders of
any such entities, along with other conditions or requirements imposed by
various federal and state securities laws, rules and regulations. Any of these
types of entities, regardless of their prospects, would require the Company to
issue a substantial number of shares of its common stock to complete any such
acquisition, reorganization or merger, usually amounting to between 80 and 95
percent of the outstanding shares of the Company following the completion of any
such transaction; accordingly, investments in any such private entity, if
available, would be much more favorable than any investment in the Company.
Management intends to consider a number of factors prior to making any
decision as to whether to participate in any specific business endeavor, none of
which may be determinative or provide any assurance of success. These may
include, but will not be limited to an analysis of the quality of the entity's
management personnel; the anticipated acceptability of any new products or
marketing concepts; the merit of technological changes; its present financial
condition, projected growth potential and available technical, financial and
managerial resources; its working capital, history of operations and future
prospects; the nature of its present and expected competition; the quality and
experience of its management services and the depth of its management; its
potential for further research, development or exploration; risk factors
specifically related to its business operations; its potential for growth,
expansion and profit; the perceived public recognition or acceptance of its
products, services, trademarks and name identification; and numerous other
factors which are difficult, if not impossible, to properly analyze without
referring to any objective criteria.
Regardless, the results of operations of any specific entity may not
necessarily be indicative of what may occur in the future, by reason of changing
market strategies, plant or product expansion, changes in product emphasis,
future management personnel and changes in innumerable other factors. Further,
in the case of a new business venture or one that is in a research and
development mode, the risks will be substantial, and there will be no objective
criteria to examine the effectiveness or the abilities of its management or its
business objectives. Also, a firm market for its products or services may yet
need to be established, and with no past track record, the profitability of any
such entity will be unproven and cannot be predicted with any certainty.
Management will attempt to meet personally with management and key
personnel of the entity sponsoring any business opportunity afforded to the
Company, visit and inspect material facilities, obtain independent analysis or
verification of information provided and gathered, check references of
management and key personnel and conduct other reasonably prudent measures
calculated to ensure a reasonably thorough review of any particular business
opportunity; however, since the Company has no current assets or cash reserves,
these activities may be limited, and if undertaken, the cost and expense thereof
will be advanced by management, and may further dilute the interest of the
stockholders of the Company.
The Company is unable to predict the time as to when and if it may actually
participate in any specific business endeavor. The Company anticipates that
proposed business ventures will be made available to it through personal
contacts of directors, executive officers and principal stockholders,
professional advisors, broker dealers in securities, venture capital personnel,
members of the financial community and others who may present unsolicited
proposals. In certain cases, the Company may agree to pay a finder's fee or to
otherwise compensate the persons who submit a potential business endeavor in
which the Company eventually participates. Such persons may include the
Company's directors, executive officers, beneficial owners or their affiliates.
In this event, such fees may become a factor in negotiations regarding a
potential acquisition and, accordingly, may present a conflict of interest for
such individuals. See the caption "Conflicts of Interest; Related Party
Transactions," below.
Although the Company has not identified any potential acquisition target,
the possibility exists that the Company may acquire or merge with a business or
company in which the Company's executive officers, directors, beneficial owners
or their affiliates may have an ownership interest. Current Company policy does
not prohibit such transactions. Because no such transaction is currently
contemplated, it is impossible to estimate the potential pecuniary benefits to
these persons.
Although it currently has no plans to do so, depending on the nature and
extent of services rendered, the Company may compensate members of management in
the future for services that they may perform for the Company. Because the
Company currently has no resources, and is unlikely to have any resources until
it has completed a merger or acquisition, management expects that any such
compensation would take the form of an issuance of the Company's stock to these
persons; this would have the effect of further diluting the holdings of the
Company's other stockholders.
Further, substantial fees are often paid in connection with the completion
of these types of acquisitions, reorganizations or mergers, ranging from a small
amount to as much as $250,000. These fees are usually divided among promoters or
founders, after deduction of legal, accounting and other related expenses, and
it is not unusual for a portion of these fees to be paid to members of
management or to principal stockholders as consideration for their agreement to
retire a portion of the shares of common stock owned by them. Such fees may
become a factor in negotiations regarding any potential acquisition by the
Company and, accordingly, may present a conflict of interest for such
individuals. See the caption "Conflicts of Interest; Related Party
Transactions."
Involvement in Other "Blank Check" Companies.
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Jeff Jenson, President and Director. Other than the Company, Mr. Jenson was
appointed in February 1997 as President and Director of United States Mining and
Exploration, a Utah Corpoation, in which capacity he presently serves. United
States Mining and Exploration may be deemed to be a "blank check company". In
addition, Mr. Jenson was an interim Officer and Director of Blackwater, Inc., a
Nevada Corporation, from March 1993 until his resignation was accepted by the
Board of Directors in August of 1994. At that time, Blackwater, Inc. may have
been deemed to be a "blank check" company. In addition, Mr. Jenson was an
interim Officer and Director of Westcott Financial Corporation, a Delaware
Corporation, from November of 1993 until his resignation was accepted by the
Board of Directors in April of 1995. At that time, Westcott Financial
Corporation may have been deemed to be a "blank check" company. Mr. Jenson was
also an interim Officer and Director of Onasco, Inc., a Utah Corporation, from
June of 1994 until his resignation was accepted by the Board of Directors in May
of 1995. At that time, Onasco, Inc. may have been deemed to be a "blank check"
company. Mr. Jenson was an interim Officer and Director of Opell, Inc., a Nevada
Corporation, from November 1994 until his resignation was accepted by the Board
of Directors in October of 1996. At that time, Opell, Inc. may have been deemed
to be a "blank check" company. Mr. Jenson was an interim Officer and Director of
Summa Vest, Inc., a Utah Corporation, from December 1994 until his resignation
was accepted by the Board of Directors in December of 1996. At that time, Summa
Vest, Inc. may have been deemed to be a "blank check" company. Other than the
aforementioned, Mr. Jenson has been neither an Officer, Director or affiliate of
any "blank check" company in the past 10 years.
Nick Lovato, Vice President and Director. Other than the Company, Mr.
Lovato was an interim Officer and Director of Sun Tech Enterprises, a Nevada
Corporation, from May 4, 1996 until his resignation was accepted by the Board of
Directors on May 15, 1996. At that time, Sun Tech Enterprises may have been
deemed to be a "blank check" company. In addition, Mr. Lovato is currently a
Director of North American Sign Corporation. At this time, North American Sign
Corporation may be deemed to be a "blank check" company. Other than the
aforementioned, Mr. Lovato has been neither an Officer, Director or affiliate of
any "blank check" companies in the past 10 years.
Kirsten Lovato, Secretary, Treasurer and Director. Other than the Company,
Mrs. Lovato was an interim Officer and Director of Sun Tech Enterprises, a
Nevada Corporation, from May 4, 1996 until her resignation was accepted by the
Board of Directors on May 15, 1996. At that time, Sun Tech Enterprises may have
been deemed to be a "blank check" company. Other than the aforementioned, Mrs.
Lovato was neither an Officer, Director or affiliate of any "blank check"
companies in the past 10 years.
Risk Factors.
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The Company's auditor, Mantyla, McReynolds & Associates, has included a
"going concern" paragraph in the Company's audited financials for the year
ending December 31, 1996. The auditor states: "The accompanying financial
statements have been prepared assuming that National Air Corporation will
continue as a going concern. As discussed in note 2 to the financial statements,
the Company has accumulated losses from operations, has no assets, and has a net
working capital deficiency that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty." See the
Index to Financial Statements, Part F/S herein.
In any business venture, there are substantial risks specific to the
particular enterprise and which cannot be ascertained until a potential
acquisition, reorganization or merger candidate has been identified; however, at
a minimum, the Company's present and proposed business operations will be highly
speculative and subject to the same types of risks inherent in any new or
unproven venture, and will include those types of risk factors outlined below
and in the initial Offering Circular of the Company, a copy of which is attached
as an exhibit to this Registration Statement on Form 10-SB. See the Exhibit
Index, Part III.
No Assets; No Source of Revenue. The Company has no assets and has had no
revenue in either of its two most recent calendar years or to the date hereof.
Nor will the Company receive any revenues until it completes an acquisition,
reorganization or merger, at the earliest. The Company can provide no assurance
that any acquired business will produce any material revenues for the Company or
its stockholders or that any such business will operate on a profitable basis.
Discretionary Use of Proceeds; "Blank Check" Company. Because the Company
is not currently engaged in any substantive business activities, as well as
management's broad discretion with respect to the acquisition of assets,
property or business, the Company may be deemed to be a "blank check" company.
Although management intends to apply substantially all of the proceeds that it
may receive through the issuance of stock or debt to a suitable acquisition,
subject to the criteria identified above, such proceeds will not otherwise be
designated for any more specific purpose. The Company can provide no assurance
that any allocation of such proceeds will allow it to achieve its business
objectives.
Absence of Substantive Disclosure Relating to Prospective Acquisitions.
Because the Company has not yet identified any assets, property or business that
it may potentially acquire, potential investors in the Company will have
virtually no substantive information upon which to base a decision whether or
not to invest in the Company. Potential investors would have access to
significantly more information if the Company had already identified a potential
acquisition or if the acquisition target had made an offering of its securities
directly to the public. The Company can provide no assurance that any investment
in the Company will not ultimately prove to be less favorable than such a direct
investment.
Unspecified Industry and Acquired Business; Unascertainable Risks. To date,
the Company has not identified any particular industry or business in which to
concentrate its acquisition efforts. Accordingly, prospective investors
currently have no basis to evaluate the comparative risks and merits of
investing in the industry or business in which the Company may invest. To the
extent that the Company may acquire a business in a highly risky industry, the
Company will become subject to those risks. Similarly, if the Company acquires a
financially unstable business or a business that is in the early stages of
development, the Company will become subject to the numerous risks to which such
businesses are subject. Although management intends to consider the risks
inherent in any industry and business in which it may become involved, there can
be no assurance that it will correctly assess such risks.
Uncertain Structure of Acquisition. Management has had no preliminary
contact or discussions regarding, and there are no present plans, proposals or
arrangements to acquire any specific assets, property or business. Accordingly,
it is unclear whether such an acquisition would take the form of an exchange of
capital stock, a merger or an asset acquisition. However, because the Company
has no resources as of the date of this Registration Statement, management
expects that any such acquisition would take the form of an exchange of capital
stock. See Part I, Item 2 of this Registration Statement.
State Restrictions on "Blank Check" Companies. A total of 36 states
prohibit or substantially restrict the registration and sale of "blank check"
companies within their borders. Additionally, 36 states use "merit review
powers" to exclude securities offerings from their borders in an effort to
screen out offerings of highly dubious quality. See Paragraph 8221, NASAA
Reports, CCH Topical Law Reports, 1990. The Company intends to comply fully with
all state securities laws, and plans to take the steps necessary to ensure that
any future offering of its securities is limited to those states in which such
offerings are allowed. However, these legal restrictions may have a material
adverse impact on the Company's ability to raise capital because potential
purchasers of the Company's securities must be residents of states that permit
the purchase of such securities.
By regulation or policy statement, eight states (Idaho, Maryland, Missouri,
Nevada, New Mexico, Pennsylvania, Utah and Washington), some of which are
included in the group of 36 states mentioned above, place various restrictions
on the sale or resale of equity securities of "blank check" or "blind pool"
companies. These restrictions include, but are not limited to, heightened
disclosure requirements, exclusion from "manual listing" registration exemptions
for secondary trading privileges and outright prohibition of public offerings of
such companies.
In most jurisdictions, "blank check" and "blind pool" companies are not
eligible for participation in the Small Corporate Offering Registration ("SCOR")
program, which permits an issuer to notify the Securities and Exchange
Commission of certain offerings registered in such states by filing a Form D
under Regulation D of the Securities and Exchange Commission. All states (with
the exception of Alabama, Delaware, Florida, Hawaii, Illinois, Minnesota,
Nebraska and New York) have adopted some form of SCOR. States participating in
the SCOR program also allow applications for registration of securities by
qualification by filing a Form U-7 with the states' securities commissions.
Nevertheless, the Company does not anticipate making any SCOR offering or other
public offering in the foreseeable future, even in any jurisdiction where it may
be eligible for participation in SCOR despite its status as a "blank check" or
"blind pool" company. The National Securities Markets Improvement Act of 1996
provides an exemptin from state regulation of offerings of "covered securities".
"Covered Securities" include, among other things, transactions by persons other
than issuers, underwriters or dealers, and certain transactions by dealers, in
securities of issuers that file reports with the Securities and Exchange
Commission pursuant to Section 13 or 15(d) of the Exchange Act. Upon the
effectiveness of this Registration Statement, the Company will be subject to the
reporting requirements of Section 13 of the Exchange Act, and management
believes that such transactions will be exempt from state regulation, with the
possible exception of certain notice filings and payment of fees.
The net effect of the above-referenced laws, rules and regulations will be
to place significant restrictions on the Company's ability to register, offer
and sell shares of the Company's common stock in virtually every jurisdiction in
the United States.
Management to Devote Insignificant Time to Activities of the Company.
Members of the Company's management are not required to devote their full time
to the affairs of the Company. Because of their time commitments, as well as the
fact that the Company has no business operations, the members of management
anticipate that they will devote an insignificant amount of time to the
activities of the Company, at least until such time as the Company has
identified a suitable acquisition target.
Conflicts of Interest; Related Party Transactions. Although the Company has
not identified any potential acquisition target, the possibility exists that the
Company may acquire or merge with a business or company in which the Company's
executive officers, directors, beneficial owners or their affiliates may have an
ownership interest. Such a transaction may occur if management deems it to be in
the best interests of the Company and its stockholders, after consideration of
the above referenced factors. A transaction of this nature would present a
conflict of interest to those parties with a managerial position and/or an
ownership interest in both the Company and the acquired entity, and may
compromise management's fiduciary duties to the Company's stockholders. An
independent appraisal of the acquired company may or may not be obtained in the
event a related party transaction is contemplated. Furthermore, because
management and/or beneficial owners of the Company's common stock may be
eligible for finder's fees or other compensation related to potential
acquisitions by the Company, such compensation may become a factor in
negotiations regarding such potential acquisitions.
Voting Control. Due to his beneficial ownership of a majority of the shares
of the Company's outstanding common stock, Jeff D. Jenson has the ability to
elect all of the Company's directors, who in turn elect all executive officers,
without regard to the votes of other stockholders.
No Market for Common Stock; No Market for Shares. The Company's common
stock is not currently listed on the OTC Bulletin Board of the National
Association of Securities Dealers, Inc., (the "NASD"), and has not been listed
on the aforementioned market for the previous five years. Therefore, there is
currently no "established trading market" for such shares; there can be no
assurance that such a market will ever develop or be maintained. Any future
market price for shares of common stock of the Company is likely to be very
volatile, and numerous factors beyond the control of the Company may have a
significant effect. In addition, the stock markets generally have experienced,
and continue to experience, extreme price and volume fluctuations which have
affected the market price of many small capital companies and which have been
unrelated to the operating performance of these companies. These broad market
fluctuations, as well as general economic and political conditions, may
adversely affect the market price of the Company's common stock in any market
that may develop.
Risks of "Penny Stock." The Company's common stock may be deemed to be
"penny stock" as that term is defined in Reg. Section 240.3a51-1 of the
Securities and Exchange Commission. Penny stocks are stocks (i) with a price of
less than five dollars per share; (ii) that are not traded on a "recognized"
national exchange; (iii) whose prices are not quoted on the NASDAQ automated
quotation system (NASDAQ-listed stocks must still meet requirement (i) above);
or (iv) is an issuer with net tangible assets less than $2,000,000 (if the
issuer has been in continuous operation for at least three years) or $5,000,000
(if in continuous operation for less than three years), or with average revenues
of less than $6,000,000 for the last three years.
There has been no "established public market" for the Company's common
stock during the past five years. At such time as the Company completes a merger
or acquisition transaction, if at all, it may attempt to qualify for listing on
either NASDAQ or a national securities exchange. However, at least initially,
any trading in its common stock will most likely be conducted in the
over-the-counter market in the "pink sheets" or the "Electronic Bulletin Board"
of the National Association of Securities Dealers, Inc. (the "NASD").
Section 15(g) of the Securities Exchange Act of 1934, as amended, and Reg.
Section 240.15g-2 of the Securities and Exchange Commission require
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in a
penny stock for the investor's account. Potential investors in the Company's
common stock are urged to obtain and read such disclosure carefully before
purchasing any shares that are deemed to be "penny stock."
Moreover, Reg. Section 240.15g-9 of the Securities and Exchange Commission
requires broker-dealers in penny stocks to approve the account of any investor
for transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker-dealer to (i) obtain from the investor
information concerning his or her financial situation, investment experience and
investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the
investor has sufficient knowledge and experience as to be reasonably capable of
evaluating the risks of penny stock transactions; (iii) provide the investor
with a written statement setting forth the basis on which the broker-dealer made
the determination in (ii) above; and (iv) receive a signed and dated copy of
such statement from the investor, confirming that it accurately reflects the
investor's financial situation, investment experience and investment objectives.
Compliance with these requirements may make it more difficult for investors in
the Company's common stock to resell their shares to third parties or to
otherwise dispose of them.
Principal Products and Services.
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The limited business operations of the Company, as now contemplated,
involve those of a "blank check" company. The only activity to be conducted by
the Company is to seek out and investigate the acquisition of any viable
business opportunity by purchase and exchange for securities of the Company or
pursuant to a reorganization or merger through which securities of the Company
will be issued or exchanged.
Distribution Methods of the Products or Services.
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Management will seek out and investigate business opportunities through
every reasonably available fashion, including personal contacts, professionals,
securities broker dealers, venture capital personnel, members of the financial
community and others who may present unsolicited proposals; the Company may also
advertise its availability as a vehicle to bring a company to the public market
through a "reverse" reorganization or merger.
Status of any Publicly Announced New Product or Service.
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None; Not applicable.
Competitive Business Conditions.
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There are literally thousands of "blank check" companies engaged in
endeavors similar to those engaged in by the Company; many of these companies
have substantial current assets and cash reserves. Competitors also include
thousands of other publicly-held companies whose business operations have proven
unsuccessful, and whose only viable business opportunity is that of providing a
publicly-held vehicle through which a private entity may have access to the
public capital markets. There is no reasonable way to predict the competitive
position of the Company or any other entity in the strata of these endeavors;
however, the Company, having no assets and no cash reserves, will no doubt be at
a competitive disadvantage in competing with entities which have recently
completed IPO's, have cash resources and have limited operating histories when
compared with the history and past failures of the Company.
Sources and Availability of Raw Materials and Names of Principal Suppliers.
- --------------------------------------------------------------------------------
None; Not applicable.
Dependence on One or a Few Major Customers.
- --------------------------------------------------------
None; Not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements
or Labor Contracts.
- --------------------------------------------------------------------------------
None; Not applicable.
Need for any Governmental Approval of Principal Products or Services.
- --------------------------------------------------------------------------------
On the effectiveness of the Company's Registration Statement on Form 10-SB,
the Company will be subject to Regulation 14A regarding proxy solicitations
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended (the "1934 Act"). Section 14(a) of the 1934 Act
requires all companies with securities registered pursuant to Section 12(g)
thereof to comply with the rules and regulations of the Securities and Exchange
Commission regarding proxy solicitations outlined in Regulation 14A. Matters
submitted to stockholders of the Company at a special or annual meeting thereof
or pursuant to a written consent shall require the Company to provide its
stockholders with the information outlined in Schedules 14A or 14C of Regulation
14; preliminary copies of this information must be submitted to the Securities
and Exchange Commission at least 10 days prior to the date that definitive
copies of this information are forwarded to stockholders.
Management intends to conduct a full evaluation of the worthiness of any
business proposal presented to it; nonetheless, it believes this process may
provide additional time within which to evaluate any business proposal presented
to it, and may eliminate proposals from entities not willing to undergo the
public and agency scrutiny involved in providing and filing information required
under Regulation 14A. Management recognizes that this filing process may deter
other potential business venturers by reason of their inability to predict the
timeliness of their potential acquisition, reorganization or merger due to the
uncertainty related to the time involved in reviewing Regulation 14A filings by
the Securities and Exchange Commission; however, acquisitions or reorganizations
not requiring stockholder approval may be completed by management, in its sole
discretion, with the submission by management of an Information Statement
pursuant to Regulation 14C outlining any remedial proposals attendant to any
such acquisition or reorganization, including changing the name of the Company
or increasing or decreasing the number of authorized or outstanding shares of
the Company's common stock.
Prior to the completion of any merger or acquisition transaction, costs
associated with filings required by the Company under Section 12(g) of the 1934
Act and Regulation 14A of the Securities and Exchange Commission will have to be
advanced by management, the Company's principal stockholders or any potential
business venturer, and may further dilute the interest of the public
stockholders. In the case of a merger requiring prior stockholder approval and
the submission of financial statements of the Company and other party or parties
to the merger, legal and accounting costs will be significantly higher, even
though the adoption, ratification and the approval of any such merger will be
virtually assured if recommended by Jeff D. Jenson, the principal stockholder of
the Company.
Effect of Existing or Probable Governmental Regulations on Business.
- --------------------------------------------------------------------------------
Since the Company was initially incorporated, federal and state securities
laws, rules and regulations have made the participation in or the conducting of
an IPO substantially easier for certain small and developmental stage companies,
reducing the time constraints previously involved, the legal and accounting
costs and the financial periods required to be included in the financial
statements. Rule 504 of Regulation D of the Securities and Exchange Commission
no longer requires the filing of a Registration Statement with any state or
territory as a condition to its use; however, this Rule is no longer available
to "blank check" companies. Accordingly, because the Company is presently deemed
to be a "blank check" company, this method of raising funds is foreclosed to it.
Rule 504 is also not available to "reporting issuers," which the Company will
become on the effectiveness of this Registration Statement.
The integrated disclosure system for small business issuers adopted by the
Securities and Exchange Commission in Release No. 34-30968 and effective as of
August 13, 1992, substantially modified the information and financial
requirements of a "Small Business Issuer," defined to be an issuer that has
revenues of less than $25 million; is a U.S. or Canadian issuer; is not an
investment company; and if a majority owned subsidiary, the parent is also a
small business issuer; provided, however, an entity is not a small business
issuer if it has a public float (the aggregate market value of the issuer's
outstanding securities held by non-affiliates) of $25 million or more.
A number of state securities commissions have adopted the use of Form U-7
for SCOR, which also substantially simplifies the registration process for
IPO's; Form U-7 is primarily used in connection with offerings conducted
pursuant to Rule 504 of the Securities and Exchange Commission, but is not
limited to this use. To the extent that Rule 504 and the use of SCOR are
unavailable to the Company due to its status as a "blank check" company, the use
of Form U-7 will also be unavailable in this regard.
The Securities and Exchange Commission, state securities commissions and
the North American Securities Administrators Association, Inc., ("NASAA") have
expressed an interest in adopting policies that will streamline the registration
process and make it easier for a small business issuer to have access to the
public capital markets. The present laws, rules and regulations designed to
promote availability for the small business issuer to these capital markets and
similar laws, rules and regulations that may be adopted in the future will
substantially limit the demand for "blank check" companies like the Company, and
may make the use of these companies obsolete.
Research and Development.
- ---------------------------------
None; Not applicable.
Cost and Effects of Compliance with Environmental Laws.
- ---------------------------------------------------------------------
None; Not applicable. However, environmental laws, rules and regulations
may have an adverse effect on any business venture viewed by the Company as an
attractive acquisition, reorganization or merger candidate, and these factors
may further limit the number of potential candidates available to the Company
for acquisition, reorganization or merger.
Number of Employees.
- --------------------------
None; Not Applicable.
Item 2. Management's Discussion and Analysis or Plan of Operation.
- --------------------------------------------------------------------------------
Plan of Operation.
- ---------------------
The Company has not engaged in any material operations or had any revenues
from operations during the last four calendar years. The Company's plan of
operation for the next 12 months is to continue to seek the acquisition of
assets, property or business that may benefit the Company and its stockholders.
Because the Company has no resources, management anticipates that to achieve any
such acquisition, the Company will be required to issue shares of its common
stock as the sole consideration for such acquisition.
During the next 12 months, the Company's only foreseeable cash requirements
will relate to maintaining the Company in good standing or the payment of
expenses associated with reviewing or investigating any potential business
venture, which may be advanced by management or principal stockholders as loans
to the Company. Because the Company has not identified any such venture as of
the date of this Registration Statement, it is impossible to predict the amount
of any such loan. However, any such loan will not exceed $25,000 and will be on
terms no less favorable to the Company than would be available from a commercial
lender in an arm's length transaction. As of the date of this Registration
Statement, the Company has not begun seeking any acquisition.
Because the Company is not currently making any offering of its securities,
and does not anticipate making any such offering in the foreseeable future,
management does not believe that Rule 419 promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended, concerning
offerings by blank check companies, will have any effect on the Company or any
activities in which it may engage in the foreseeable future.
Item 3. Description of Property.
- -------------------------------------
The Company has no assets, property or business; its principal executive
office address and telephone number are the business office address and
telephone number of its President, Director, and principal shareholder, Jeff D.
Jenson, and are provided at no cost. Because the Company has no business, its
activities have been limited to keeping itself in good standing in the State of
Nevada and, recently, with preparing this Registration Statement and the
accompanying financial statements. These activities have consumed an
insignificant amount of management's time; accordingly, the costs to Mr. Jenson
of providing the use of his office and telephone have been minimal.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
- --------------------------------------------------------------------------------
Security Ownership of Certain Beneficial Owners.
The following table sets forth the shareholdings of those persons who own
more than five percent of the Company's common stock as of May 1, 1997:
<TABLE>
<CAPTION>
<S> <C> <C>
Number Percentage
Name and Address of Shares Beneficially Owned of Class
- ---------------------- ----------------------------------- --------
Michael Caswell 52,500 7%
3637 W. Alabama, Ste. 400
Houston, TX 77027
Jenson Services, Inc.* 400,000 54%
5525 S. 900 E. Suite 110
S.L.C., UT 84117
Jeff D. Jenson 12,500 1.6%
5525 S. 900 E. Suite 110
S.L.C., UT 84117
</TABLE>
*Jeff D. Jenson, President and Director may be deemed beneficial owner
these shares due to certain business relationships. Mr. Jenson is Vice-President
and Director of Jenson Services, Inc.
Security Ownership of Management.
- ---------------------------------
The following table sets forth the shareholdings of the Company's directors
and executive officers as of May 1, 1997.
<TABLE>
<CAPTION>
Number Percentage
Name and Address of Shares Beneficially Owned of Class
- ---------------------- ----------------------------------- ----------
<S> <C> <C>
Jeff D. Jenson 12,500 1.7%
5525 S. 900 E. #110
S.L.C., UT 84117
Jenson Services, Inc. 400,000 54%
Jeff D. Jenson*
5525 S. 900 E. #110
S.L.C., UT
Nick Lovato 0 0
8667 Snow Mountain Dr.
Sandy, Utah 84093
Kirsten Lovato 0 0
8667 Snow Mountain Dr.
Sandy, Utah 84093
All directors and executive 412,500 56%
officers as a group (3)
</TABLE>
*Jeff D. Jenson may be considered beneficial owner of these shares due to
certain business relationships. Mr. Jenson is Vice President and Director of
Jenson Services, Inc.
See Item 5, Part I, below, for information concerning the offices or other
capacities in which the foregoing persons serve with the Company.
Changes in Control.
- -------------------
There are no present arrangements or pledges of the Company's securities
which may result in a change in control of the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
- --------------------------------------------------------------------------------
Identification of Directors and Executive Officers.
- ---------------------------------------------------
The following table sets forth the names of all current directors and
executive officers of the Company. These persons will serve until the next
annual meeting of the stockholders (held in December of each year) or until
their successors are elected or appointed and qualified, or their prior
resignation or termination.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ------- ---------- --------------- ---------------
Jeff D. Jenson President 04-19-95 *
5525 S. 900 E. #110 & Director
S.L.C., UT 84117
Nick Lovato Vice President 05-04-96 *
8667 S. Snow Mtn. Dr. & Director
Sandy, UT 84093
Kirsten Lovato Secretary/ 05-04-96 *
8667 S. Snow Mtn. Dr. Treasurer
Sandy, UT 84093 & Director
</TABLE>
* These persons presently serve in the capacities indicated.
Business Experience.
- ------------------------
Jeff D. Jenson, President and Director. Mr. Jenson graduated form
Westminster College of Salt Lake City in September 1992, with degrees in
Business Management and Aviation Management. Prior to his graduation, Mr. Jenson
was the owner/operator of two small businesses in the Salt Lake area. Mr. Jenson
has been employed by Jenson Services from 1991 until present. In March 1993, Mr.
Jenson became Vice President and Director of Jenson Services. Jenson Services
specializes in the reorganization and recapitalization of public companies and
is a consultant to the Company.
Nick Lovato, Vice-President and director. Mr. Lovato graduated from the
University of Utah in June 1992, with a B.A. in Political Science. Prior to his
graduation, Mr. Lovato served as an Policy Intern with the United States Senate
in Washington DC. From May 1993 to August 1994, Mr. Lovato served as an Loan
Officer/Assistant Manager for Transamerica Financial and from August 1994 to
July 1995 was an Senior Loan Officer/Assistant Treasurer for American Investment
Bank, both companies are located in Salt Lake City, Utah. Currently, Mr. Lovato
is a Senior Underwriter for Franklin Capital Corporation, also of Salt Lake.
Kirsten Lovato, Secretary, Treasurer and Director. Mrs. Lovato graduated
from the University of Iowa in 1993 with a B.S. in Dental Hygiene. Mrs. Lovato
also attended the University of Utah and Salt Lake Community College. From July
1993 until present, Mrs. Lovato has worked as a dental hygienist in the greater
Salt Lake City area.
Significant Employees.
- ----------------------
The Company has no employees who are not executive officers, but who are
expected to make a significant contribution to the Company's business.
Family Relationships.
- ---------------------
Nick Lovato and Kirsten Lovato, Vice-President and Director and Secretary,
Treasurer and Director, respectively, are husband and wife. Other than the
aforementioned, there are no family relationships among the officers and
directors of the Company.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
During the past five years, no present or former director, executive
officer or person nominated to become a director or an executive officer of the
Company:
(1) was a general partner or executive officer of any business against
which any bankruptcy petition was filed, either at the time of the bankruptcy or
two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; or
(4) was found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended or vacated.
Item 6. Executive Compensation.
- ---------------------------------------
The following table sets forth the aggregate compensation paid by the
Company for services rendered during the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long Term Compensation
Annual Compensation Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Years or Other Restricted Option/ LTIP All
Principal Periods $ $ Annual Stock SAR's Payouts Other
Position Ended Salary Bonus Compen- Awards ($) (#) ($) Compensa-
1994, sation($) tion
1995 &
1996
Jeff D. Jenson 12/31/94 0 0 0 0 0 0 0
President, 12/31/95 0 0 0 12,500* 0 0 0
Director 12/31/96 0 0 0 0 0 0 0
Nick Lovato 12/31/94 0 0 0 0 0 0 0
Vice Pres., 12/31/95 0 0 0 0 0 0 0
Director 12/31/96 0 0 0 0 0 0 0
Kirsten Lovato 12/31/94 0 0 0 0 0 0 0
Sec./Treas., 12/31/95 0 0 0 0 0 0 0
Director 12/31/96 0 0 0 0 0 0 0
</TABLE>
*Reflects a one for 20 (1:20) reverse split of the Company's common stock
effective July 14, 1996. See Part I, Item 1 of this Registration Statement.
No cash compensation, deferred compensation or long-term incentive plan
awards were issued or granted to the Company's management during the calendar
years ended December 31, 1996, or 1995, or the period ending on the date of this
Registration Statement. Further, no member of the Company's management has been
granted any option or stock appreciation right; accordingly, no tables relating
to such items have been included within this Item.
Compensation of Directors.
- --------------------------
There are no standard arrangements pursuant to which the Company's
directors are compensated for any services provided as director. No additional
amounts are payable to the Company's directors for committee participation or
special assignments.
There are no arrangements pursuant to which any of the Company's directors
was compensated during the Company's last completed calendar year for any
service provided as director.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements.
- --------------------------------------------------------------------------------
There are no employment contracts, compensatory plans or arrangements,
including payments to be received from the Company, with respect to any director
or executive officer of the Company which would in any way result in payments to
any such person because of his or her resignation, retirement or other
termination of employment with the Company or its subsidiaries, any change in
control of the Company, or a change in the person's responsibilities following a
change in control of the Company.
Item 7. Certain Relationships and Related Transactions.
- --------------------------------------------------------
Transactions with Management and Others.
- ----------------------------------------
There have been no material transactions, series of similar transactions,
currently proposed transactions, or series of similar transactions, to which the
Company or any of its subsidiaries was or is to be a party, in which the amount
involved exceeded $60,000 and in which any director or executive officer, or any
security holder who is known to the Company to own of record or beneficially
more than five percent of the Company's common stock, or any member of the
immediate family of any of the foregoing persons, had a material interest.
However, on October 26, 1996, the Board of Directors of the Company resolved to
issue 400,000 post-split "unregistered" and "restricted" shares of common stock
to Jenson Services, Inc., a consultant to the Company, in consideration of
$2,557.25 in accounting and other expenses incurred by the Company and settled
by Jenson Services, Inc. Jeff D. Jenson, President and Director may be deemed a
beneficial owner of these shares due to certain business relationships. Mr.
Jenson is Vice-President and Director of Jenson Services, Inc. See Part I, Item
1 and Part II, Item 4 of this Registration Statement.
Certain Business Relationships.
- -------------------------------
Except as stated under the caption "Transactions with Management and
Others", above, there have been no material transactions, series of similar
transactions, currently proposed transactions, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be a
party, in which the amount involved exceeded $60,000 and in which any director
or executive officer, or any security holder who is known to the Company to own
of record or beneficially more than five percent of the Company's common stock,
or any member of the immediate family of any of the foregoing persons, had a
material interest. However, see Part I, Item 1 of this Registration Statement.
Indebtedness of Management.
- ---------------------------
Except as stated under the caption "Transactions with Management and
Others", above, there have been no material transactions, series of similar
transactions, currently proposed transactions, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be a
party, in which the amount involved exceeded $60,000 and in which any director
or executive officer, or any security holder who is known to the Company to own
of record or beneficially more than five percent of the Company's common stock,
or any member of the immediate family of any of the foregoing persons, had a
material interest. However, see Part I, Item 1 of this Registration Statement.
Parents of the Issuer.
- ----------------------
The Company has no parents, except to the extent that Jeff D. Jenson, the
principal stockholder, due to beneficial ownership, may be deemed to be a parent
of the Company. See Part I, Item 1 of this Registration Statement.
Transactions with Promoters.
- ----------------------------
Except as stated under the caption "Transactions with Management and
Others, above, there have been no material transactions, series of similar
transactions, currently proposed transactions, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be a
party, in which the amount involved exceeded $60,000 and in which any promoter
or founder, or any member of the immediate family of any of the foregoing
persons, had a material interest. See Part I, Item 1 and Part II, Item 4 of this
Registration Statement.
Item 8. Description of Securities.
- -----------------------------------
The amount of the total authorized capital stock of the Company is Twenty
Million (20,000,000) shares of common stock with a par value of one tenth of one
cent ($0.001) per share; one million (1,000,000) shares of Class A Preferred
tock with a par value of twenty five cents ($0.25) per share each with
designations, preferences, limitations and relative rights, and one million
(1,000,000) shares of Class B Preferred Stock with a par value of ten cents
($0.10) per share each with designations, preferences, limitations and relative
rights. A summary description of the Class A and Class B Preferred stock is
included as follows. For a detailed description of these securities as described
in the Certificate of Amendment of Articles of Incorporation of the Company, see
Part III, Item 1, Exhibit 3.2 of this Registration Statement.
(1) Liquidation Preference.
In the event of voluntary or involuntary liquidation of the
corporation, the holders of the Class A and Class B Preferred Stock, after
payment or provision for payment of debts, but before any distribution of
assets to the holders of Common Stock, at the rate of twenty cents ($.20)
per share plus cumulated and unpaid dividends thereon to the date fixed
for the liquidation. See Part III, Item 1, Exhibit 3.2.
(2) Redemption of Class A Preferred Stock
The Corporation, at the option of the board of directors, upon ten
days prior written notice to the holders of the Class A Preferred Stock,
may redeem all or any part of the Calass A Preferred Stock outstanding as
of the designated date of redemption (10 days after the date of Notice) at
a price of $.001 per share. See Part III, Item 1, Exhibit 3.2.
(3) Redemption of Class B Preferred Stock.
The Corporation, at the option of the board of directors, upon each
anniversary of the issuance of a share of Class B Preferred Stock may
redeem all of the Class B Preferred Stock then outstanding after payment in
cash of all cumulated and uppaid dividends up to the date fixed for
redemption and subject to additional terms as outlined in the Certificate
of Amendment of the Articles of Incorporation. See Part III, Item 1,
Exhibit 3.2.
(4) Voting if Dividends in Arrears.
If at any time the cumulated and unpaid dividends on the Class B
Preferred Stock equal or exceed $.05 a share (two quarterly dividends), the
holders of fifty-one percent (51%) of the Class B Preferred Stock will have
the right immediately to call a special meeting of the shareholders to
elect two directors of the Corporation, subject to approval by a majority
of the board of directors. Such voting rights will terminate only when all
cumulated and unpaid dividends on the then outstanding shares of Class B
Preferred Stock are paid and the full dividends thereon for the then
current quartely dividend period are paid. The directors elected by the
holders of Class B Preferred Stock may be removed only by vote of such
holders so long as their voting rights have not terminated. See Part III,
Item 1, Exhibit 3.2.
According to the Company's Transfer Agent, American Registrar and Transfer,
there has never been any type of capital stock, either issued or outstanding,
other than Common Voting Stock.
Stockholders of the Company have no pre-emptive rights to acquire
additional shares of common stock or other securities. The common stock is not
subject to redemption rights and carries no subscription or conversion rights.
In the event of liquidation of the Company, the shares of common stock are
entitled to share equally in corporate assets after satisfaction of all
liabilities. All shares of the common stock now outstanding are fully paid and
non-assessable.
There are no outstanding options, warrants or calls to purchase any of the
authorized securities of the Company.
There is no provision in the Company's Articles of Incorporation, as
amended, or Bylaws, as amended, that would delay, defer, or prevent a change in
control of the Company.
PART II
Item 1. Market Price of and Dividends on the Company's Common Equity and
Other Stockholder Matters.
- -------------------------------------------
Market Information.
- -----------------------
The Company's common stock is not currently listed on the OTC Bulletin
Board of the NASD or any other recognized securities market. There has been no
trading symbol or "established trading market" for shares of the Company's
common stock during the first two quarters of 1997, or at any point in 1996 or
1995, and management does not expect any such market to develop unless and until
the Company completes an acquisition or merger. In any event, no assurance can
be given that any "established trading market" for the Company's common stock
will develop or be maintained. If such a market ever develops in the future, the
sale of "unregistered" and "restricted" shares of common stock pursuant to Rule
144 of the Securities and Exchange Commission by Michael Caswell, Jeff D. Jenson
or Jenson Services, Inc., may have a substantial adverse impact on any such
public market. See the caption "Business" of Part I, Item 1 of this Registration
Statement.
Future sales of any of these securities or any securities of the Company
issued in any acquisition, reorganization or merger may have a future adverse
effect on any "public market" that may develop in the common stock of the
Company. See Part I, Item 1 of this Registration Statement.
Holders.
- --------
The number of record holders of the Company's common stock as of the date
of this Registration Statement is approximately 81.
Dividends.
- ----------
The holders of the Class B Preferred Stock will be entitled to receive,
when and as declared by the board of directors out of any funds legally
available therefor, cumulative preferential dividends in cash. Except as
otherwise provided herein such dividends will be paid at the annual rate of, but
not exceeding, $.10 per share, payable quarterly on November 30, February 28,
May 31 and August 31 in each year. Such dividends shall accrue on each share
from day to day from and after the date of initial issuance of such share
whether or not declared, and shall be cumulative so that if any accrued
dividends at said rate per share per annum shall not have been paid or declared
and set apart for all shares' of Class B preferred Stock at the time
outstanding, the deficiency shall be fully paid on or declared and set apart for
such shares before the Corporation declares or pays any dividends (except a
dividend in shares of the Corporation) on the Class A Preferred Stock or Common
Stock of the Corporation. As verified by the Company's Transfer Agent, American
Registrar and Transfer, the Company does not have any shares of its Class A or
Class B Preferred stock either issued or outstanding.
Item 2. Legal Proceedings.
- ---------------------------
The Company is not a party to any pending legal proceeding. No federal,
state or local governmental agency is presently contemplating any proceeding
against the Company. No director, executive officer or affiliate of the Company
or owner of record or beneficially of more than five percent of the Company's
common stock is a party adverse to the Company or has a material interest
adverse to the Company in any proceeding.
To date, Jenson Services, Inc. has provided all Company loans totaling
approximately $6,000. Management does not believe that the Company will incur an
additional $19,000 worth of expenses before entering into a merger or
acquisition. If the company does need additional funding, such funding will be
sought through an arms length transaction with a banking institution.
Item 3. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- -----------------------------------
Mantyla, McReynolds & Associates, Certified Public Accountants, were
engaged by the Company on June 3, 1996 to provide audited financial statements
for the fiscal year ending December 31, 1995. Mantyla, McReynolds & Associates
also completed the audited financial statement for the fiscal year ended
December 31, 1996. Prior to the engagement of Mantyla , McReynolds & Associates,
the Company had no independant auditor for approximately 12 years.
There were no disagreements between the Company and Mantyla, McReynolds &
Associates, whether resolved or not resolved, on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which, if not resolved, would have caused him to make reference to
the subject matter of the disagreement in connection with his reports.
The reports of Mantyla, McReynolds & Associates do not contain any adverse
opinion or disclaimer of opinion, and are not qualified or modified as to
uncertainty, audit scope or accounting principles.
During the Company's two most recent calendar years, and since then,
Mantyla, McReynolds & Associates has not advised the Company that any of the
following exist or are applicable:
(1) That the internal controls necessary for the Company to develop
reliable financial statements do not exist, that information has come to their
attention that has led them to no longer be able to rely on management's
representations, or that has made them unwilling to be associated with the
financial statements prepared by management;
(2) That the Company needs to expand significantly the scope of its audit,
no information has come to their attention that if further investigated may
materially impact the fairness or reliability of a previously issued audit
report or the underlying financial statements or any other financial
presentation, or cause them to be unwilling to rely with the Company's financial
statements for the foregoing reasons or any other reason; or
(3) That they have advised the Company that information has come to their
attention that they have concluded materially impacts the fairness or
reliability of either a previously issued audit report or the underlying
financial statements for the foregoing reasons or any other reason.
During the Company's two most recent calendar years and since then, the
Company has not consulted Mantyla, McReynolds & Associates regarding the
application of accounting principles to a specified transaction, either
completed or proposed; or the type of audit opinion that might be rendered on
the Company's financial statements or any other financial presentation
whatsoever.
Item 4. Recent Sales of Unregistered Securities.
- -------------------------------------------------
On April 25, 1995, the Board of Directors resolved to issue 12,500* shares
of "unregistered" and "restricted" common voting stock to Jeff D. Jenson,
President and Director, Jason Lewis, Vice President and Director and Wendy
Moler-Lewis, Secretary, Treasurer and Director, for services rendered to the
Comopany. On October 26, 1996, the Company's Board of Directors unanimously
voted to issue 400,000* "unregistered" and "restricted" shares of common stock
to Jenson Services, Inc., in consideration of $2,577.25 in accounting and other
expenses incurred by the Company and settled by Jenson. See Part I, Item 1 of
this Registration Statement. *These shares are represented in post-split values.
Management believes that Jenson Services, Inc. is an "accredited investor"
as that term is defined under applicable federal and state securities laws,
rules and regulations. Further, the Board of Directors and Jenson Services,
Inc., a consultant to the Company, had access to all material information
regarding the Company prior to the offer or sale of these securities. The offers
and sales of these securities are believed to have been exempt from the
registration requirements of Section 5 of the Securities Act of 1933 pursuant to
Section 4(2) thereof, and from similar states' securities laws, rules and
regulations requiring the offer and sale of securities by available state
exemptions from such registration.
Item 5. Indemnification of Directors and Officers.
- ----------------------------------------------------------
Section 78.751(1) of the Nevada Revised Statutes ("NRS") authorizes a
Nevada corporation to indemnify any director, officer, employee, or corporate
agent "who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by or in the right
of the corporation" due to his or her corporate role. Section 78.751(1) extends
this protection "against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful."
Section 78.751(2) of the NRS also authorizes indemnification of the
reasonable defense or settlement expenses of a corporate director, officer,
employee or agent who is sued, or is threatened with a suit, by or in the right
of the corporation. The party must have been acting in good faith and with the
reasonable belief that his or her actions were not opposed to the corporation's
best interests. Unless the court rules that the party is reasonably entitled to
indemnification, the party seeking indemnification must not have been found
liable to the corporation.
To the extent that a corporate director, officer, employee, or agent is
successful on the merits or otherwise in defending any action or proceeding
referred to in Section 78.751(1) or 78.751(2), Section 78.751(3) of the NRS
requires that he or she be indemnified "against expenses, including attorneys"
fees, actually and reasonably incurred by him in connection with the defense."
Section 78.751(4) of the NRS limits indemnification under Sections
78.751(1) and 78.751(2) to situations in which either (i) the stockholders; (ii)
the majority of a disinterested quorum of directors; or (iii) independent legal
counsel determine that indemnification is proper under the circumstances.
Pursuant to Section 78.751(5) of the NRS, the corporation may advance an
officer's or director's expenses incurred in defending any action or proceeding
upon receipt of an undertaking. Section 78.751(6)(a) provides that the rights to
indemnification and advancement of expenses shall not be deemed exclusive of any
other rights under any bylaw, agreement, stockholder vote or vote of
disinterested directors. Section 78.751(6) extends the rights to indemnification
and advancement of expenses to former directors, officers, employees and agents,
as well as their heirs, executors, and administrators.
Regardless of whether a director, officer, employee or agent has the right
to indemnity, Section 78.752 allows the corporation to purchase and maintain
insurance on his or her behalf against liability resulting from his or her
corporate role.
Article XI of the Company's Bylaws provides for the mandatory
indemnification and reimbursement of any director or executive officer for
actions or omissions in such capacity, except for claims or liabilities arising
out of his or her own negligence or willful misconduct.
PART F/S
Index to Financial Statements
Report of Certified Public Accountants
Financial Statements
- --------------------
(i) Audited Financial Statements
December 31, 1996 and 1995
--------------------------
Independent Auditors' Report
Balance Sheet, December 31, 1996 and 1995
Statements of Stockholders' Deficit
for the years ended December 31, 1996
and 1995
Statements of Operations for the
years ended December 31, 1996 and
1995
Statements of Cash Flows for the
years ended December 31, 1996 and
1995
Notes to Financial Statements
(ii) Unaudited Financial Statements
April 30, 1997
-----------------
Balance Sheet, April 30, 1997
Statements of Operations
for the four months ended April 30, 1997
Statements of Cash Flows for the
four months ended April 30, 1997
PART III
Item 1. Index to Exhibits.
- -------------------------------
The following exhibits are filed as a part of this Registration Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description*
- ------ ------------
<S> <C>
3.1 Articles of Incorporation,
filed on January 15, 1985*
3.2 Certificate of Amendment of Articles of
Incorporation, filed on September 26, 1985*
3.3 Bylaws*
4 Original Offering Circular* (Exhibits to the Original Offering
Circular are not included but are available upon request)
</TABLE>
* Summaries of all exhibits contained within this
Registration Statement are modified in their
entirety by reference to these Exhibits.
SIGNATURES
In accordance with Section 12 of the Securities
Exchange Act of 1934, the Registrant has caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto
duly authorized.
NATIONAL AIR CORPORATION
Date: 6-16-97 By /s/Jeff D. Jenson
------------------------
Jeff D. Jenson, Director
and President
Date: 6-16-97 By /s/Nick Lovato
------------------------
Nick Lovato,
Director and Vice
President
Date: 6-16-97 By /s/Kirsten Lovato
------------------------
Kirsten Lovato,
Director and
Secretary/Treasurer
<PAGE>
NATIONAL AIR CORPORATION
FINANCIAL STATEMENTS
December 31, 1996
[WITH INDEPENDENT AUDITORS' REPORT]
<PAGE>
National Air Corporation
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Page
Independent Auditors' Report. . . . . . . . . . . . . 1
Balance Sheet - December 31, 1996 . . . . . . . . . . 2
Statements of Operations for the
years ended December 31, 1996 and
December 31, 1995 . . . . . . . . . . . . . . . . . . 3
Statements of Stockholders' Deficit for
the years ended December 31, 1996 and
December 31, 1995 . . . . . . . . . . . . . . . . . . 4
Statements of Cash Flows for the
years ended December 31, 1996 and
December 31, 1995 . . . . . . . . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . 6-8
</TABLE>
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
National Air Corporation:
We have audited the accompanying balance sheet of National Air Corporation as of
December 31, 1996, and the related statements of operations, stockholders'
deficit, and cash flows for the years ended December 31, 1996 and December 31,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of National Air Corporation as
of December 31, 1996, and the results of their operations and their cash flows
for the years ended December 31, 1996 and December 31, 1995 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
National Air Corporation will continue as a going concern. As discussed in
note 2 to the financial statements, the Company has accumulated losses from
operations, has no assets, and has a net working capital deficiency that raise
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in note 2.
The financial statements do not include any adjustment that might result from
the outcome of this uncertainty.
MANTYLA, McREYNOLDS & ASSOCIATES
Salt Lake City, Utah By/s/ Mantyla, McReynolds &Associates
February 5, 1997
1
<PAGE>
National Air Corporation
Balance Sheet
December 31, 1996
<TABLE>
<CAPTION>
<S> <C>
ASSETS
------
Assets $ -0-
------
Total Assets $ -0-
======
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current Liabilities
Payable to Stockholders $ 2,119
-------
Total Current Liabilities 2,119
-----
Total Liabilities 2,119
Stockholders' Deficit: (Note 4)
Common stock, $.001 par value;
authorized 20,000,000 shares; issued
and outstanding 737,505 shares 738
Additional paid in capital 57,469
Accumulated deficit (60,326)
-------
Total Stockholders' Deficit (2,119)
------
Total Liabilities and
Stockholders Deficit $ -0-
======
</TABLE>
See accompanying notes to financial statements
2
<PAGE>
National Air Corporation
Statements of Operations
For the Years Ended December 31, 1996 and December 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
1996 1995
---- ----
Revenue:
Revenues from operations $ -0- $ -0-
------ -------
Total Revenue -0- -0-
General and Administrative Expenses 4,676 750
----- ---
Net Income Before Taxes (4,676) (750)
Income taxes -0- -0-
- -
Net income $ (4,676) $ (750)
========= =========
Loss per share $ (.01) $ (.01)
========= =========
Weighted Average Shares Outstanding 4,141,498 6,515,625
========= =========
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
National Air Corporation
Statements of Stockholders' Deficit
For the Years Ended December 31, 1996 and December 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Additional Net
Common Common Paid in Accumulated Stockholders'
Shares Stock Capital Deficit Deficit
------ ----- ------- ------- -------
Balance, December 31, 1994 6,000,000 $ 6,000 $ 48,900 $ (54,900) $ -0-
Issued 750,000 shares of common
stock to Directors for expenses,
April 25, 1995 750,000 750 750
Net loss for the year ended
December 31, 1995 (750) (750)
--------- ------- ------ -------- -----
Balance, December 31, 1995 6,750,000 $ 6,750 $ 48,900 $ (55,650) $ -0-
Reverse split (20 for 1 share)
July 31, 1996 (6,412,495) (6,412) 6,412 -0-
Issued 400,000 shares of common
stock to stockholder for expenses,
October 28, 1996 400,000 400 2,157 2,557
Net loss for the year ended
December 31, 1996 (4,676) (4,676)
------- ------ ------ ------- -------
Balance, December 31, 1996 737,505 $ 738 $ 57,469 $ (60,326) $ (2,119)
======= ======== =========== =========== ==========
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
National Air Corporation
Statements of Cash Flows
For the Years Ended December 31, 1996 and December 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
1996 1995
---- ----
Cash Flows Provide by/(Used for)
Operating Activities:
Net Loss $ (4,676) $ (750)
Adjustments to reconcile net income
to net cash used for operating
activities:
Issuance of common stock as
payment for services rendered
by stockholder 2,557 750
Expenses paid on behalf
of company by a
stockholder 2,119 -0-
------ ------
Net Cash Used for Operating
Activities -0- -0-
Net Increase in cash -0- -0-
------ ------
Beginning Cash -0- -0-
------ ------
Ending Cash $ -0- $ -0-
====== =======
Supplemental Disclosure of Cash Flow Information
- ------------------------------------------------
Cash paid during the periods for:
Interest $ -0- $ -0-
====== =======
Taxes $ -0- $ -0-
====== =======
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
National Air Corporation
Notes to Financial Statements
December 31, 1996
Note 1 Organization and Summary of Significant Accounting Policies
(a) Organization
National Air Corporation [Company] incorporated under the laws of
the State of Nevada on January 9, 1985. The Company was dormant
for several years but was revived March 1, 1996.
The Company was originally organized to engage in any lawful
activity. The Company entered the business of providing air
transportation services on a lease and/or charter basis, but was
unsuccessful in the endeavor.
(b) Income Taxes
Effective April 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109 [the
Statement], "Accounting for Income Taxes." The Statement requires
an asset and liability approach for financial accounting and
reporting for income taxes, and the recognition of deferred tax
assets and liabilities for the temporary differences between the
financial reporting bases and tax bases of the Company's assets
and liabilities at enacted tax rates expected to be in effect
when such amounts are realized or settled. The cumulative effect
of this change in accounting for income taxes as of December 31,
1996 is $0 due to the valuation allowance established as
described below.
(c) Net Loss Per Common Share
Net loss per common share is based on the weighted average number
of shares outstanding.
(d) Statement of Cash Flows
For purposes of the statements of cash flows, the Company
considers cash on deposit in the bank to be cash. The Company
has $0 cash at December 31, 1996.
6
<PAGE>
NATIONAL AIR CORPORATION
Notes to Financial Statements
December 31, 1996
[continued]
Note 2 Liquidity
The Company has accumulated losses through December 31, 1996
amounting to $60,326, has no assets, has no working capital at
December 31, 1996, and does not anticipate generating sufficient
cash flows from operations to meet the Company's cash
requirements. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
Management plans include finding a well-capitalized merger
candidate to commence operations. The financial statements do
not include any adjustments that might result from the outcome
of this uncertainty.
Note 3 Income Taxes
The Company adopted Statement No. 109 as of April 1, 1993. Prior
years' financial statements have not been restated to apply the
provisions of Statement No. 109. No provision has been made in
the financial statements for income taxes because the Company has
accumulated substantial losses from operations.
The tax effects of temporary differences that give rise to
significant portions of the deferred tax asset at December 31,
1996 have no impact on the financial position of the Company. A
valuation allowance is provided when it is more likely than not
that some portion of the deferred tax asset will not be realized.
Because of the lack of taxable earnings history, the Company has
established a valuation allowance for all future deductible
temporary differences.
7
<PAGE>
NATIONAL AIR CORPORATION
Notes to Financial Statements
December 31, 1996
[continued]
Note 4 Common of Stock
On April 25, 1995, the Board of Directors authorized the issuance
of 250,000 shares of common stock to each of three directors for
services rendered, on the basis of one mill ($.001) per share.
On July 14, 1996, the Board of Directors resolved to effect a 20
for one reverse split of the 6,750,000, then outstanding,
securities of the Company, while retaining the present authorized
capital and par value, and making appropriate adjustments in the
stated capital and additional paid-in-capital accounts.
Fractional shares were to be rounded to the nearest whole share.
The effective date of the reverse split was the close of
business, July 31, 1996.
On October 26, 1996 the Company issued 400,000 post reverse-split
shares of common stock to a shareholder for expenses incurred on
behalf of the company.
8
<PAGE>
NATIONAL AIR CORORATION
BALANCE SHEETS
April 30, 1997
<TABLE>
<CAPTION>
<S> <C>
4/30/97
----------------
[Unaudited]
ASSETS
Current Assets $ 0
TOTAL ASSETS $ 0
================
LIABILITIES & EQUITY
LIABILITIES
Current Liabilities
Loans from stockholders $ 3,835
Total Current Liabilities 3,835
----------------
----------------
TOTAL LIABILITIES 3,835
EQUITY
Common Stock 738
Paid-in Capital 57,469
Accumulated Deficit (62,042)
----------------
TOTAL EQUITY (3,835)
----------------
TOTAL LIABILITIES & EQUITY $ 0
================
</TABLE>
<PAGE>
NATIONAL AIR CORPORATION
STATEMENTS OF OPERATIONS
For the Four-Month Periods Ended April 30, 1997 and 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Four Months Four Months
Ended Ended
4/30/97 4/30/96
------------------ ------------------
[Unaudited] [Unaudited]
REVENUE
Income $ 0 $ 0
------------------ ------------------
NET REVENUE 0 0
OPERATING EXPENSES
Office Expenses 253 1,475
Professional Fees 1,463 0
------------------ ------------------
TOTAL OPERATING EXPENSES 1,716 1,475
------------------ ------------------
NET INCOME/(LOSS) $ (1,716) $ (1,475)
================== ==================
NET LOSS PER SHARE $ (0.01) (0.01)
================== ==================
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 737,505 6,412,495
================== ==================
</TABLE>
<PAGE>
NATIONAL AIR CORPORATION
STATEMENTS OF CASH FLOWS
For the Four-Month Periods Ended April 30, 1997 and 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Four Months Four Months
Ended Ended
4/30/97 4/30/96
------------------- ------------------
[Unaudited] [Unaudited]
Cash Flows Used For Operating Activities
- -------------------------------------------------------------------
Net Loss $ (1,617) $ (1,475)
Adjustments to reconcile net loss to net cash
used in operating activities:
Increase/(Decrease) in loans from shareholder 1,617 1,475
------------------- ------------------
Net Cash Used For Operating Activities 0 0
Cash Flows Provided by Financing Activities 0 0
- -------------------------------------------------------------------
Net Increase In Cash 0 0
Beginning Cash Balance 0 0
------------------- ------------------
Ending Cash Balance $ 0 $ 0
=================== ==================
</TABLE>
<PAGE>
ARTICLES OF INCORPORATION
OF
NATIONAL AIR CORPORATION
The undersigned, to form a Nevada corporation, CERTIFY THAT:
I. NAME: The name of the corporation is:
NATIONAL AIR CORPORATION
II. PRINCIPAL OFFICE: The location of the principal office of this
corporation within the State of Nevada is 6121 Lakeside Drive, Suite 240, Reno,
Nevada, 89511; this corporation may maintain an office or offices in such other
place within or without the State of Nevada as may be from time to time
designated by the Board of Directors or by the By-Laws of the corporation; and
this corporation may conduct all corporation business of every kind or nature,
including the holding of any meetings of Directors and Stockholders, within the
State of Nevada, as well as without the State of Nevada.
III. PURPOSE: The purpose for which this corporation is formed is:
To engage in any lawful activity.
IV. AUTHORIZATION OF CAPITAL STOCK: The amount of the total authorized
capital stock of the corporation shall be TWENTY THOUSAND DOLLARS ($20,000.00),
consisting of Twenty Million (20,000,000) shares of common stock with a par
value of ONE TENTH OF ONE CENT ($0.001) per share.
V. INCORPORATORS: The name and post office address of the in-corporator
signing these Articles of Incorporation are as follows:
10
NAME POST OFFICE ADDRESS
Suzy Frost 6555 Plumas Street, #117
Reno, Nevada 89509
VI. DIRECTORS: The governing board of this corporation shall be known as
directors, and the number of directors may from time to time be increased or
decreased in such manner as shall be specified by the By-Laws of the
corporation; provided, however, the number of directors shall not be reduced to
less than one(1).
The names and post office addresses of the Directors comprising the
first Board of Directors are as follows:
NAME POST OFFICE ADDRESS
Alec S. Hamilton 431 Dowling Blvd.
San Leandro, CA 94577
Gerald D. Hodges 21109 Gary Drive, #307
Castro Valley, CA 94546
Suzy Frost 6555 Plumas Street, #171
Reno, Nevada 89509
VII. STOCK NON-ASSESSABLE: The capital stock or the holders thereof, after
the amount of the subscription price has been paid in, shall not be subject to
any assessment whatsoever to pay the debts of the corporation.
VIII. TERM OF EXISTENCE: This corporation shall Have perpetual existence.
IX. CUMULATIVE VOTING: No cumulative voting shall be permitted in the
election of Directors.
X. PREEMPTIVE RIGHTS: Stockholders shall not be entitled to preemptive
rights.
9
THE UNDERSIGNED, being the incorporator hereinbefore named for the purpose
of forming a corporation pursuant to the General Corporation Laws of the State
of Nevada, does make and file these Articles of Incorporation, hereby declaring
and certifying the facts herein stated are true, and accordingly has hereunto
set her hand this By/s/ 3rd day of January, 1985.
By/s/ Suzy Frost
Suzy Frost
STATE OF NEVADA
ss.
COUNTY OF WASHOE
On this By/s/ 3rd day of January, 1985, before me, a Notary PubLic,
personally appeared Suzy Frost who acknowledged she executed the above
instrument.
By/s/ Glenda Lee Henry
Notary Public
8
<PAGE>
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
NATIONAL AIR CORPORATION
We, Thomas L. Cooper, President, and Jerrie Cooper, Secretary of National
Air Corporation, do hereby certify:
THAT, at a special meeting of the stockholders of said corporation, held in
accordance with the requirements of law, at 5553 N.W. 36th Street, Suite D,
Miami Springs, Florida 33166, on August 17, 1985, the following amendment to the
Articles of Incorporation of said corporation were passed by a majority of the
stockholders as more particularly set forth below.
1. Article IV of the Articles of Incorporation was amended by a vote of
1,656,223 for, -0- opposed and -0- abstain, to read as follows:
IV. AUTHORIZATION OF CAPITAL STOCK: The amount of the total authorized
Capital stock of the Corporation shall be Three Hundred and Seventy Thousand
Dollars ($370,000.00) consisting of Twenty Million (20,000,000) shares of common
stock with a par value of one tenth of one cent ($0.001) per share; one million
(1,000,000) shares of Class A Preferred Stock with a par value of twenty five
cents ($0.25) per share each with designations, preferences, limitations and
relative rights described below and one million (1,000,000) Class B Preferred
Stock with a par value of ten cents ($0.10) per share each with designations,
preferences, limitations and relative rights described below. All Shares of
common stock have identical rights and privileges in every respect.
(a) Designation. The Class A Preferred Stock, the Class B Preferred Stock
and the Common Stock will be so designated respectively.
(b) Dividends; Cumulativity. The holders of the Class B Preferred Stock
will be entitled to receive, when and as declared by the board of directors out
of any funds legally available therefor, cumulative preferential dividends in
cash. Except as otherwise provided herein such dividends will be paid at the
annual rate of but not exceeding, $.10 per share , payable quarterly on November
30, February 28, May 31 and August 31 in each year. Such dividends shall accrue
on each share from day to day from and after the date of initial issuance of
such share whether or not declared, and shall be cumulative so that if any
accrued dividends at said rate per share per annum shall not have been paid or
declared and set apart for all shares of Class B Preferred Stock at the time
outstanding, the deficiency shall be fully paid on or declared and set apart for
such shares before the Corporation declares or pays any dividend (except a
dividend in shares of the Corporation) on the Class A Preferred Stock or Common
Stock of the Corporation.
11
(c) Liquidation Preference. In the event of voluntary or involuntary
liquidation, dissolution or winding up of the corporation, the holders of the
Class A and Class B Preferred Stock will be entitled to receive, after payment
or provision for payment of debts, but before any distribution of assets to the
holders of Common Stock, at the rate of twenty cents ($.20) per share plus
cumulated and unpaid dividends thereon to the date fixed for the liquidation,
dissolution or winding up. After such payment has been made in full to the
holders of the outstanding Class A and Class B Preferred Stock, or funds
necessary for such payment have been set aside in trust for the account of such
holders so as to be and continue available therefor, the holders of the Class A
and Class B Preferred Stock will be entitled to no further distribution and the
remaining assets of the corporation will be divided and distributed among the
holders of the Common Stock then outstanding according to their respective
shares. If on liquidation, dissolution or winding up, the assets of the
corporation so distributable among the holders of the Class A and Class B
Preferred Stock are insufficient to permit full payment to them, the entire
assets will be distributed ratably among the holders of the Class A and Class B
Preferred Stock.
(d) A capital reorganization of the Common Stock or a consolidation or
merger of the Corporation or a sale of all or substantially all of the assets of
the Corporation shall be regarded as a liquidation, dissolution or winding up of
the affairs of the Corporation within the meaning of this Section (d); provided,
however, that each holder of the Preferred Stock shall have the right to elect
the benefits of the provisions of Section (m) thereof in lieu of receiving
payment in liquidation, dissolution or winding up of the Corporation pursuant to
this Section (d).
(e) Redemption of Class A Preferred Stock. The Corporation, at the option
of the board of directors, upon ten days prior notice to the holders of the
Class A Preferred Stock, may redeem all or any part of the Class A Preferred
Stock outstanding as of the designated date of redemption (10 days after the
date of notice) at a price of $.001 per share.
2
(f) Redemption of Class B Preferred Stock. The
Corporation, at the option of the board of directors, upon each anniversary
of the issuance of a share of Class B Preferred Stock may redeem all of the
Class B Preferred Stock then outstanding by completing those steps set forth
in paragraph (g) hereinbelow. Notice of redemption will be mailed, postage
prepaid, to the holders of record of the shares to be redeemed at their
addresses then appearing on the books of the Corporation not less than thirty
(30) and not more than fifty (50 days prior to the date fixed to the
redemption.
(g) Provision Price and Provision for Payment thereof. The Preferred Stock
shall be redeemable on in whole and not n part upon the Company' s or its wholly
owned subsidiaries (Caribbean Express, Inc.) (1) retirement of its line of
credit at the designated bank, Miami, Florida in the amount of $200,000 provided
through a guaranty and letter of credit from Houston Financial Services Partners
(the "Credit Line") and (2) payment in cash of all cumulated and unpaid
dividends up to the date fixed for redemption. Notice of Redemption or intent to
redeem shall be in writing to HFSP at 1200 Post Oak Blvd., Suite 200, Houston,
Texas 77056 which shall be deemed delivered upon receipt by HFSP at such
address. Such notice shall be delivered not less than thirty (30) days prior to
redemption and shall be accompanied by: (1) a current audited financial
Statement for CEI setting forth the amount owing on the Credit Line by CEI as of
the time of redemption; (2) a certificate from the president of CEI indicating
that repayment of the Credit Line shall be made on or before the time set forth
redemption and that such payment shall release any guaranty provided by HFSP;
and (3) a certified statement from an officer of the Corporation setting forth
dividends accrued but unpaid on the Class B Preferred Stock to be paid upon
redemption.
(h) Status of Redeemed Shares. Shares of Class A and Class B Preferred
Stock which are redeemed will be canceled and will be restored to the status of
authorized but unissued shares.
(i) Definition of "Cumulated and Unpaid". "Cumulated and unpaid dividends"
on a share of Class B Preferred Stock means $.10 per annum for the period from
the date when dividends thereon begin to cumulate which shall begin upon
issuance, to the date as of which cumulated and unpaid dividends are being
determined, less the dividends previously paid thereon.
3
(j) Voting if Dividends in Arrears. If at any time the cumulated and unpaid
dividends on the Class B Preferred Stock equal or exceed $.05 a share (two
quarterly dividends), the holders of fifty-one percent (51%) of the Class B
Preferred Stock will have the right immediately to call a special meeting of the
shareholders to elect two directors of the Corporation. The voting rights of the
holders of Class B Preferred Stock will continue at all meetings of the
shareholders for the election of directors held thereafter and before the voting
rights terminate. The directors so elected may not be a holder of Class B
Preferred Stock or an advisor of affiliate of such holder and must be approved
by a majority of the board of directors. A director so elected will hold office
until his successor is elected and will qualify, whether or not the voting
rights of the holders of the Class B Preferred Stock terminate before then. Such
voting rights will terminate only when all cumulated and unpaid dividends on the
then outstanding shares of Class B Preferred Stock are paid and the full
dividends thereon for the then current quarterly dividend period are paid.
Whenever the holders of Class B Preferred Stock have such voting rights, the
holders will receive notice of all meetings of shareholders. At a meeting of
shareholders at which the holders of Class B Preferred Stock have such voting
rights, the holders of Class B Preferred Stock will be entitled to one vote for
each share held and to vote as a class. A majority of the outstanding shares of
Class B Preferred Stock will be requisite and will constitute a quorum for the
election of the director to be elected by the holders of the Class B Preferred
Stock. A majority of any other class or classes or shares that are entitled to
vote for directors will be required to constitute a quorum for the election of
directors by such other class or classes. the election of directors to be
elected by the holders of any class or classes of shares at a meeting of the
holders of the shares entitled to vote for such directors will be by a majority
of the outstanding shares in person or by proxy at such meeting. The directors
elected by the holders of Class B Preferred Stock may be removed only by vote of
such holders so long as their voting rights have not terminated.
(k) Other Voting. The holders of the Class A and Class B Preferred Stock
will have the right to vote as a class at any shareholders meeting upon the
following corporate actions or events:
(1) an amendment of the Articles of Incorporation which
would alter, modify or otherwise effect the rights of the holders
of such Class A and/or Class B Preferred Stock;
(2) a plan of merger or consolidation of the
Corporation with another corporation, organization
or other entity regardless of whether the
Corporation is the surviving entity;
(3) a resolution to voluntarily dissolve or liquidate
the corporation;
(4) a sale, lease, exchange or other disposition (not
including any pledges, mortgage, deed of trust or trust
indenture) of all or substantially all of the
Corporation's assets, if not made in the ordinary course
of its business;
(5) the creation, incurrence or assumption of any
indebtedness by the Corporation or its guarantee or endorsement
of or otherwise subjection to a liability other than in the
ordinary course of its business;
(6) The issuance of any shares of Common Stock, or options,
warrants or similar rights to acquire such shares to Thomas or
Jerrie Cooper.
(7) An increase in the number of members of the Board of
Directors beyond three.
(1) Conversion Rights. The holders of the Class A and Class B Preferred
Stock shall have the following conversion rights:
(l) General. Subject to and in compliance with the provisions
of this Section (1), any shares of the Class A or Class
B Preferred Stock may, at the option of the holder, be
converted at any time or from time to time into fully-paid
and nonassessable shares (calculated as to each
conversion to the largest whole share) of Common Stock.
The number of shares of Common Stock to which a holder of
the Class A and Class B Preferred Stock shall be entitled
upon conversion shall be the product obtained by
multiplying the Applicable Conversion Rate (determined as
provided in Sections 5(b) and 5(c) by the number of shares
of the Preferred Stock being converted.
(2) Applicable Conversion Rate - Class A Preferred Stock.
Each Share of Class A Preferred stock shall be convertible
into two Shares of the Corporation's Common Stock upon
the terms specified in section 5(d) hereinbelow.
5
(3) Applicable Conversion Rate - Class B Preferred Stock
Each share of Class B Preferred Stock shall be convertible
into the following number of shares of the Corporation's
Common Stock at the following times:
during the first period of 365 days from the date of
issuance of the Class B Preferred Stock one share of Class
B Preferred Stock shall be convertible into one share of
Common Stock; during the second period of 365 days from
the date of issuance of the Class B Preferred Stock one
share of Class B Preferred Stock shall be convertible into
1.25 shares of Common Stock; during the third period of
365 days from the date of issuance of the Class B
Preferred Stock one share of Class B Preferred Stock shall
be convertible into 1.50 shares of Common Stock; during
the fourth period of 365 days from the date of issuance
of the Class B Preferred Stock one share of Class B
Preferred Stock shall be convertible into 1.75 shares of
Common Stock ; during the fifth period of 365 days from
the date of issuance of the Class B Preferred Stock one
share of Class B Preferred Stock shall be convertible into
2.0 shares of Common Stock.
(4) Exercise of Conversion Privilege - Class A Preferred Stock.
To exercise its conversion privilege, a holder of the Class A
Preferred Stock shall (1) tender cash or a cashier's check in
the amount of $.50 per share of Common Stock
to be acquired upon conversion; (2) surrender the certificate or
certificates representing the shares being converted to the
Corporation at its principal office, and (3) shall give written
notice to the Corporation at such office at least ten days prior
to such conversion that such holder elects to convert such
shares. Such notice shall also state the name or names
(with address or addresses) in which the certificate or
certificates for shares of Common Stock issuable upon such
conversion shall be issued. The certificate or certificates for
shares of the Class A Preferred Stock surrendered for
conversion shall be accompanied by proper assignment thereof to
the Corporation or in blank. The date when such written notice
is received by the Corporation, together with the certificate or
certificates representing the shares of the Class A Preferred
Stock being converted. Shall be the
6
"Conversion Date". As promptly as practicable after
the Conversion Date, the Corporation shall issue and
shall deliver to the holder of the shares of the
Class A Preferred Stock being converted, or on its
written order, such certificate or certificates as it
may request for the number of whole shares of Common
Stock issuable upon the conversion of such shares of
the Class A Preferred Stock in accordance with the
provisions of this Section 5. Such conversion shall
be deemed to have been effected immediately prior to
the close of business on the Conversion Date, and at
such time the rights of the holder as holder of the
converted shares of the Class A Preferred Stock shall
cease and the person or persons in whose name or
names any certificate or certificates for shares of
Common Stock shall be issued upon such conversion
shall be deemed to have become the holder or holders
of record of the shares of Common Stock represented
thereby.
(5) Exercise of Conversion Privilege_- Class B Preferred
Stock. To exercise its conversion privilege, a
holder of the Class B Preferred Stock shall surrender
the certificate or certificates representing the
shares being converted to the Corporation at its
principal office, and shall give written notice to
the Corporation at such office at least ten days
prior to such conversion that such holder elects to
convert such shares. Such notice shall also state
the name or names (with address or addresses) in
which the certificate or certificates for shares of
Common Stock issuable upon such conversion
shall be issued. The certificate or certificates for
shares of the Class B Preferred Stock surrendered for
conversion shall be accompanied by proper assignment
thereof to the Corporation or in blank. The date
when such written notice is received by the
Corporation, together with the certificate or
certificates representing the shares of the Class B
Preferred Stock being converted, shall be the
"Conversion Date". As promptly as practicable after
the Conversion date, the Corporation shall issue and
shall deliver to the holder of the shares of the
Class B Preferred Stock being converted, or on its
written order, such certificate or certificates as it
may request for the number of whole shares of Common
Stock issuable upon the conversion of such shares of
the Class B Preferred Stock in accordance with the
provisions of this Section 5, cash in the amount
7
of all accrued and unpaid dividends on such shares of
the Class B Preferred Stock, whether or not earned or
declared, but only to the extent funds are legally
available for the payment of such dividends, up to
and including the Conversion Date. Such conversion
shall be deemed to have been effected immediately
prior to the close of business on the Conversion
Date, and at such time the rights of the holder as
holder of the converted shares of the Class B
Preferred Stock shall cease and the person or persons
in whose name or names any certificate or
certificates for shares of Common Stock shall be
issuable upon such conversion shall be deemed to have
become the holder or holders of record of the shares
of common Stock represented thereby.common stock
represented thereby.
(6) Cash in Lieu of Fractional Shares. No fractional
shares of Common Stock or scrip representing
fractional shares shall be issued upon the conversion
of shares of the Class A or Class B Preferred Stock.
Instead of any fractional shares of Common Stock
which would otherwise be issuable upon conversion of
the Class A or Class B Preferred Stock, the
Corporation shall pay to the holder of the shares of
the Class A or Class B Preferred Stock
which were converted a cash adjustment in respect of
such fractional shares in an amount equal to the same
fraction of the market price per share of the Common
Stock (as determined in a reasonable manner
prescribed by the Board of Directors of the
Corporation) at the close of business on the
Conversion Date. The determination as to whether any
fractional shares are issuable shall be based upon
the total number of shares of the Class A or Class B
PreferredStockk being converted at any one time by
any holder thereof, not upon each share of the Class
A or Class B Preferred Stock being converted. As to
whether or not any fractional shares are issuable
shall be based upon the total number of shares of the
Class A or Class B Preferred stock being converted at
any one time by any holder thereof, not upon each
share of the Class A or Class B Preferred Stock being
converted.
(a) Partial Conversion. In the event some but not
all of the shares of the Class A or Class B
Preferred Stock represented by a certificate or
certificates surrendered by a holder are
converted, the Corporation shall execute and
deliver to or on the order of the holder, at the
expense of the Corporation, a new certificate
representing the number of shares of the
Preferred Stock which were not converted.
8
(7) Reservation of Common Stock. The Corporation shall
at all times reserve and keep available out of its
authorized but unissued shares of Common Stock,
solely for the purpose of effecting the conversion
of the shares of the Class A and Class B Preferred
Stock, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Class A
and Class B Preferred Stock, and if any at any time
the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of the
Class A and Class B Preferred Stock, the
Corporation shall take such corporate action as may
be necessary to increase its authorized but
unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
(m) Conversion into Parent Company. If the Corporation enters into an
agreement of reorganization with another corporation and thereby becomes a
subsidiary of such other corporation, it shall obtain covenants and
undertakings from such other corporation that such parent corporation
shall, at the election of the holders of the Class B Preferred Stock, issue
its Common Stock to the such Class B Preferred Stock holders upon their
conversion of the Class B Preferred Stock, or in lieu thereof, issue its
Class B Preferred Stock in exchange for the Class B Preferred Stock which
shall possess the same rights and preferences as the Class B Preferred
Stock including right to vote.
2. Prior to the adoption of these amendments, there were 2,100,000
shares of the Corporation's one mill ($0.001) par value common voting stock
and 2,000,0000 common stock purchase warrants to purchase 2,000,000 one
mill ($0.001) par value common voting stock outstanding. At the
stockholders' meeting, the stockholders adopted resolutions effecting a
1.25 for 1 forward split of the Corporation's issued and outstanding one
mill ($0.001) par value common voting stock and the common stock purchase
warrants, (excluding 100,000 shares which were returned to the
Corporation's treasury) with the common stock retaining the par value of
one mill ($0.001) per share, thereby increasing the stated capital account
of the Corporation from $2,100 to $2,500.
9
DATED this By/s/ 18 day of By/s/ Aug , 1985.
NATIONAL AIR CORPORATION
By/s/ Thomas L. Cooper
President
By/s/ Jerry Cooper
Secretary
STATE OF By/s/ FL ) ss:
County of By/s/ Dade )
On this By/s/ 18 day of By/s/ Aug, 1985, before me, a Notary Public in
and for said County and State, duly commissioned and sworn, personally
appeared By/s/ T.L. Cooper known to me to be the President of National Air
Corporation, a Nevada corporation, that executed the within instrument as
such President, and who acknowledge to me that he executed the same freely
and voluntarily and for the uses and purposes therein mentioned.
By/s/ Notary Public
Notary Public
STATE OF By/s/ Fl ) ss:
County of By/s/ Dade )
On this By/s/ 18 day of By/s/ Aug, 1985, before me, a Notary Public in
and for said County and State, duly commissioned and sworn, personally
appeared By/s/ Jerrie Cooper, known to me to be the Secretary of National
Air Corporation, a Nevada corporation, that executed the within instrument
as such Secretary, and who acknowledged to me that she executed the same
freely and voluntarily and for the used and purposes therein mentioned.
By/s/ Notary Public
Notary Public
10
<PAGE>
BY-LAWS
OF
NATIONAL AIR CORPORATION
ARTICLE I
Name of Corporation
Section 1: This corporation shall be known as National Air Corporation.
ARTICLE II
Offices
Section 1: The principal office of the corporation will be
located at 6121 Lakeside Drive, Suite 240, Reno, Nevada 89511. The corporation
may maintain such other offices as the Board of Directors may designate from
time to time.
ARTICLE III
Stockholders
Section 1: The annual meeting of the stockholders shall be held in
December of each year, at a date and time to be specified by the Board of
Directors. Said meeting shall be for the purpose of electing directors for the
ensuing year and for the transaction of such other business as may come before
the meeting. If the election of directors shall not be held on the day
designated for the annual meeting of the stockholders, or at any adjournment
thereof, the Board of Directors shall cause the election to be held at a special
meeting of the stockholders as soon thereafter as possible.
Section 2: Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by Statute, may be called by the President or by the
Board of Directors and shall be called by the President at the request of the
holders of not less than one-tenth of all the outstanding shares of the
corporation entitled to vote at the meeting.
Section 3: The Board of Directors may designate any place within or without the
State of Nevada as the site for any annual or special stockholders meeting.
A waiver of notice signed by all stockholders entitled to vote at a meeting may
designate any place, either within or without the State of Nevada, as the site
for any meeting hereinabove authorized. If no designation is made, the place of
the meeting shall be the principal office of the corporation in the State of
Nevada.
Section 4: Written or printed notice stating the site, date and time of the
meeting and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) days nor more than
sixty (60) days before the date of the meeting, either personally or by mail, by
or at the direction and over the signature of the President, or the Secretary,
or the officer or person calling the meeting, to each stockholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to the stockholder
at his address as it appears on the stock transfer books of the corporation,
with postage thereon prepaid.
Section 5: For the purpose of determining stockholders entitled to notice
of or to vote at any meeting of stockholders, or any adjournment thereof, or
stockholders entitled to receive payment of any dividend, or in order to make a
determination of stockholders for any other proper purpose, the Board of
Directors of the corporation may provide that the stock transfer books shall be
closed for a stated period, not to exceed twenty (20) days. In lieu of closing
the stock transfer books, the Board of Directors may fix in advance a date as
the record date for any such determination of stockholders, such date in any
case to be not more than sixty (60) days and, in case of a meeting of
stockholders, not less than fifteen (15) days prior to the date on which the,
particular action requiring such determination of stockholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of stockholders entitled to notice of or to vote, or entitled to
receive payment of a dividend, the date on which notice of the meeting is mailed
or the date on which the resolution of the Board of Directors declaring such
dividend is adopted, as the case may be, shall be the record date for such
determination of stockholders. When a determination of stockholders entitled to
vote at any meeting of stockholders has been made as provided in this section,
such determination shall apply to any adjournment thereof, except where the
determination has been made through the closing of the stock transfer books and
the stated period of closing has expired.
Section 6: The officer or agent having charge of the stock transfer books for
shares of the corporation shall make, at least ten (10) days before each meeting
of stockholders, a complete list of the stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of, and the number of shares held by, each, which list, for a period of
ten (10) days prior to such meeting, shall be kept on file at the principal
office of the corporation and shall be subject to the inspection of any
stockholder during the meeting.
Section 7: A majority of the outstanding shares of the corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum at a meeting
of stockholders. If less than a majority of the outstanding shares are
represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At such adjourned Meeting
at which a quorum shall be present or
2
represented, any business may be transacted which might have been
transacted at the meeting as originally notified. The stockholders present
at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave
less than a quorum.
Section 8: At all meetings of stockholders, a stockholder may vote by
proxy which shall be executed in writing by the stockholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the Secretary
of the corporation before or at the time of the meeting. No proxy shall be
valid after six (6) months from the date of its execution, unless otherwise
provided in the proxy or coupled with an interest.
Section 9: Each outstanding share otherwise entitled to vote shall be
entitled to one (1) vote upon each matter submitted to a vote at a meeting
of stockholders. A majority vote of those shares present and voting at a
duly organized meeting shall suffice to defeat or enact any proposal unless
the Statutes of the State of Nevada require a greater-than-majority vote,
in which event the higher vote shall be required for the action to
constitute the action of the corporation.
Section 10: Shares held by an administrator, executor, guardian or
conservator may be voted by him, either in person, or by proxy, without the
transfer of such shares into his name. Shares standing in the name of a
trustee may be voted by him, either in person or by proxy, but no trustee
shall be entitled to vote shares sold by him without a transfer of such
shares into his name.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority to do so
be contained in an appropriate order of the Court by which such receiver
was appointed.
A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares are transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any
meeting, and shall not be counted in determining the total number of
outstanding shares at any given time.
Section 11: An action required to be taken at a meeting of the
stockholders, or any other action which may be taken at a meeting of the
stockholders, may be taken without a meeting, if a consent in writing,
setting forth the action so taken, shall be signed by a majority of the
stockholders entitled to vote with respect to the subject matter thereof,
unless a greater-than-majority vote would be required at a duly organized
meeting, in which event said greater-than-majority stockholder approval
must be obtained. Such consent shall be filed with the Minutes of
Proceedings.
3
Section 12: The following order of business shall be observed at all
meetings of the stockholders, so far as practicable:
(a) Calling the roll;
(b) Reading, correcting and approving of minutes of previous
meeting;
(c) Reports of officers;
(d) Reports of Committees;
(e) Election of Directors,
(f) Unfinished business;
(g) New business; and
(h) Adjournment.
ARTICLE IV
Board of Directors
Section 1: The business and affairs of the corporation shall be managed by
its Board of Directors.
Section 2: As provided in the Articles of Incorporation, the Board of
Directors shall consist of three (3) persons, but may be increased or
decreased by resolution of the Board of Directors. The directors shall hold
office until the next annual meeting of stockholders and until their
successor shall have been elected and qualified. Directors need not be
residents of the State of Nevada or stockholders of the corporation.
Section 3: Directors shall be elected at an annual or special
stockholders' meeting by secret ballot of those stockholders present and
entitled to vote, a plurality of the vote being cast being required to
elect. Each stockholder shall be entitled to one (1) vote for each share
of stock owned. If there is but one (1) nominee for any office, it shall
be in order to move that the Secretary cast the elective ballot to elect
the nominee.
Section 4: A regular meeting of the Board of Directors shall be held
without notice, other than this By-Law immediately after, and at the same
place as, the annual meeting of stockholders. The Board of Directors may
provide, by resolution, the day, time and place for the holding of
additional regular meetings without other notice than such resolution. The
Secretary of the corporation shall serve as Secretary for the Board of
Directors and shall issue notices for all meetings as required by the By-
Laws; shall keep a record of the minutes of the proceedings of the meetings
of directors; and shall perform such other duties as may be properly
required of him by the Board of Directors.
4
Section 5: Special meetings of the Board of Directors may be called by or
at the request of the President or any director. The person or persons
authorized to call special meetings of the Board of Directors may fix any place,
within or without the State of Nevada, as the place for holding any special
meeting of the Board of Directors called by them.
Section 6: Notice of any special meeting shall be given at least two (2) days
prior thereto by written notice delivered personally or mailed to each director
at his business address, or by telegram. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail so addressed, with
postage prepaid thereon. If notice be given by telegram, such notice shall be
deemed to be delivered when the telegram is delivered to the telegraph company.
Any director may waive notice of any meeting. The attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of such meeting.
Section 7: A majority of the number of directors fixed according to Section
2 of this Article IV shall constitute a quorum for the transaction of business
at any meeting of the Board of Directors, but if less than such majority is
present at a meeting, a majority of the directors present may adjourn the
meeting from time to time without further notice. Once a quorum has been
established at a duly organized meeting, the Board of Directors may continue to
transact corporate business until adjournment, notwithstanding the withdrawal of
enough members to leave less than a quorum.
Section 8: The act of the majority of the Directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors unless the
Statutes of the State of Nevada require a greater-than-majority vote, in which
case, such greater vote shall be required for the act to be that of the Board of
Directors.
Section 9: Any vacancy occurring in the Board of Directors may be filled by
the affirmative vote of a majority of the remaining directors, though less than
a quorum of the Board of Directors. A director elected to fill a vacancy shall
be elected for the unexpired term of his predecessor in office. Any directorship
to be filled by reason of an increase in the number of directors shall be filled
by election at an annual meeting or at a special meeting of the stockholders
called for that purpose.
Section 10: By resolution of the Board of Directors, 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.
5
Section 11: A director of the corporation who is present at a meeting of
the Board of Directors at which action on any corporate matter is taken
shall be presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
Written dissent to such action with the Secretary of the meeting before the
adjournment thereof or shall express such dissent by written notice sent by
registered mail to the Secretary of the corporation within one (1) day
after the adjournment of the meeting. Such right to dissent shall not
apply to a director who voted in favor of such action.
Section 12: Any action required to be taken at a meeting of the Board of
Directors, or any other action which may be taken at a meeting of the Board
of Directors, may be taken without a meeting if a written consent thereto
is signed by all the members of the Board. Such written consent shall be
filed with the minutes of proceedings of the Board. Any meeting of the
Board of Directors may be held by conference telephone call, with minutes
thereof duly prepared and entered into the Minute Book.
ARTICLE V
Officers
Section 1: The officers of the corporation shall be a President, a Vice-
President, a Secretary, a Treasurer, and a Resident Agent, each of whom
shall be elected by the Board of Directors. Other officers and assistant
officers may be authorized and elected or appointed by the Board of
Directors. Any two (2) or more offices may be held by the same person.
Section 2: The officers of the corporation shall be elected annually by
the Board of Directors at the first meeting of the Board of Directors held
after each annual meeting of the stockholders. If the election of officers
shall not be held at such meeting, such election shall be held as soon
thereafter as convenient. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified or until
his death or until he shall resign or shall have been removed in the manner
hereinafter provided. Each officer shall serve for a term of one (1) year,
or until his successor is chosen and qualified.
Section 3: Any officer or agent elected or appointed by the Board of
Directors may be removed by the Board of Directors whenever in its judgment
the best interests of the corporation would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed.
Section 4: A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by majority vote of the Board
of Directors for the unexpired portion of the term of such office.
Section 5: The President shall preside at all meetings of the directors
and the stockholders and shall have general charge and control over the
affairs of the corporation subject to the Board of Directors. He shall
sign or countersign all certificates, contracts and other instruments of
the corporation as authorized by the Board of Directors and shall perform
such other duties as are incident to his office or are required of him by
the Board of Directors.
Section 6: The Vice-President shall exercise the functions of the
President, in the President's absence, and shall have such powers and
duties as may be assigned to him from time to time by the Board of
Directors.
Section 7: The Secretary shall issue notices for all meetings as required
by the By-Laws, shall keep a record of the minutes of the proceedings of
the meetings of stockholders and directors, shall have charge of the Seal
and of the corporate books, and shall make such reports and perform such
other duties as are incident to his office, or properly required of him by
the Board of Directors.
Section 8: The Treasurer shall have the custody of all monies and
securities of the corporation and shall keep regular books of account. He
shall disburse the funds of the corporation in payment of the just demands
against the corporation, or as may be ordered by the Board of Directors,
taking proper vouchers for such disbursements, and shall render to the
Board of Directors, from time to time as may be required of him, an account
of all his transactions as Treasurer and of the financial condition of the
corporation. He shall perform all duties incident to his office or which
are properly required of him by the Board of Directors.
Section 9: The Resident Agent shall be in charge of the corporation's
registered office, upon whom process against the corporation may be served,
and shall perform all duties required of him by statute.
Section 10: The salaries of all officers shall be fixed by the Board of
Directors, and may be changed from time to time by a majority vote of the
Board of Directors.
ARTICLE VI
Agreements and Finances
Section 1: The Board of Directors may authorize any officer or officers,
agent, or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2: No loans shall be contracted on behalf of the corporation and
no evidences of indebtedness shall be issued in its name unless authorized
by a resolution of the Board of Directors. Such authority may be general
or confined to specific instances.
Section 3: All checks, drafts or other orders for the payment of money,
notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such duly authorized officer or officers,
7
or agent or agents of the corporation and in such manner as shall from time
to time be determined by resolution of the Board of Directors.
Section 4: All funds of the corporation not otherwise employed shall be
deposited from time to time to the credit of the corporation in such banks,
trust companies or other depositories as the Board of Directors may select.
ARTICLE VII
Certificate of Shares
Section 1: Certificates representing shares of the corporation shall be in
such form as shall be determined by the Board of Directors. Such
certificates shall be signed by the President and by the Secretary. All
certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the corporation.
All certificates surrendered to the corporation for transfer shall be
canceled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
canceled, except in case of a lost, destroyed or mutilated certificate, a
new one may be issued therefor upon such terms and indemnity to the
corporation as the Board of Directors may prescribe.
Section 2: Transfer of shares of the corporation shall be made only on the
stock transfer books of the corporation by the holder of record thereof or
by his legal representative, who shall furnish proper evidence of authority
to transfer, or by his attorney authorized by power of attorney duly
executed and filed with the Secretary of the corporation, and on surrender
for cancellation of the certificate for such shares. The person in whose
name shares stand on the books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes, unless otherwise
notified by such person in writing.
Section 3: In the event a stockholder desires to sell his shares of stock,
he must first offer them for sale to all the other stockholders, it being
the intention hereof to give them a preference in the purchase of such
shares, and any attempted or actual sale in violation of this provision is
null and void.
A stockholder desiring to sell his shares shall file notice in writing of
such desire with the Secretary of the corporation, who shall, within three
(3) days after receipt of such notice, give written notice thereof to each
stockholder. The stockholders shall have an option to purchase such shares
at a price equal to the book value thereof and unless the option is
exercised by any or all of the other stockholders within thirty (30) days
after the Secretary gives written notice thereof, they shall be deemed to
have waived their option to purchase and the stockholder desiring to sell
his shares to third parties shall be at liberty to do so at any time
thereafter. Stockholders may exercise their options only in writing, all
as more particularly designated in the written notice to be
8
sent by the Secretary. Failure of any or all the other stockholders to
exercise said option in regard to any share or shares, and the subsequent
sale or transfer thereof to any other persons, shall not, as to any future
sale or transfer of said share or shares, discharge any such share or
shares from any of the restrictions herein contained.
ARTICLE VIII
Fiscal Year
Section 1: The fiscal year of the corporation shall be fixed by resolution
of the Board of Directors.
ARTICLE IX
Seal
Section 1: The corporation may or may not have a corporate seal, as may
from time to time be determined by resolution of the Board of Directors.
If a corporate seal is adopted, it shall have inscribed thereon the name of
the corporation and the words "Corporate Seal" and "Nevada". The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
in any manner reproduced.
ARTICLE X
Amendments
Section 1: These By-Laws may be amended by a majority vote of all the
stock issued and outstanding and entitled to vote at any annual or special
meeting of the stockholders, provided notice of intention to amend shall
have been contained in the notice of the meeting.
Section 2: The Board of Directors, by a majority vote of the entire Board
at any meeting, may amend these By-Laws, including By-Laws adopted by the
stockholders.
ARTICLE XI
Indemnification of Directors and Officers
Section 1: Every person who was or is a party to, or is threatened to be
made a party to, or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact
that he or a person of whom he is the legal representative is or was a
director or officer of the corporation or is or was serving at the request
of the corporation as a director or officer of another corporation, or as
its representative in a partnership, joint venture, trust or other
enterprise, shall be indemnified and held harmless to the fullest extent
legally permissible under the laws of the State of Nevada from time to time
against all expenses, liability and loss, including attorneys' fees,
judgments, fines and amounts paid or to be paid in settlement, reasonably
incurred or suffered by him in connection
9
therewith, pursuant to NRS 78.751. Such right of indemnification shall be a
contract right which may be enforced in any manner desired by such person.
This indemnification is intended to provide at all times the fullest
indemnification permitted by the laws of the State of Nevada and the
corporation may purchase and maintain insurance on behalf of any person who
is or was a director or officer of the corporation, or is or was serving at
the request of the corporation as a director or officer of another
corporation, or as its representative in a partnership, joint venture, trust
or other enterprise against any liability asserted against such person and
incurred in any such capacity or arising out of such status, whether or not
the corporation would have the power to indemnify such person.
CERTIFICATE OF SECRETARY
I hereby certify that I am the Secretary of National Air Corporation,
and that the foregoing By-Laws, consisting of ten (10) pages, constitutes the
Code of National Air Corporation, as duly adopted by the Board of Directors
of the Corporation effective this 21st day
of January, 1985.
IN WITNESS WHEREOF, I have hereunto subscribed my name this 21st
day of January, 1985.
By/S/ Suzy Frost
Suzy Frost, Secretary
<PAGE>
NATIONAL AIR CORORATION
(A Nevada Corporation)
2,000,000 Units
Offering Price $0.025 Per Unit
A maximum of 2,000,000 Units. Offering price $.025 per Unit, each Unit
consisting of one share of the Company's common stock par value $.001 per share
(the "common stock") and one common share purchase warrant (the "warrants").
Each share purchase Warrant is detachable ten days after completion of this
Offering and may be traded separately in the over the counter market on the
basis of one Warrant evidencing the right to purchase one share of the Company's
Common Stock at a price of $0.15 per share. The Warrants are exercisable for a
period of 6 months commencing on the latter of 30 days after the successful
completion of this offering or upon the Company's successful registration of the
shares underlying the Warrants under the Securities Act of 1933, as amended, and
the applicable state securities statutes. The Warrants shall be redeemable by
the Company, at a price of $.025 per Warrant redeemed, at any time upon 20 days
prior written notice to the Warrant holders. Only those Warrants that remain
unexercised on the redemption date, which shall be 20 days after notice of
intent to redeem is given by the Company to Warrant holders, will be redeemed
THE UNITS OFFERED HEREBY INVOLVE A HIGH DEGREE OF FISK TO THE PUBLIC
INVESTORS AND SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE
THEIR ENTIRE INVESTMENT. (SEE "RISK FACTORS" AND "DILUTION". THE COMPANY WAS
RECENTLY ORGANIZED AND PRIOR TO THIS OFFERING THERE HAS BEEN NO PUBLIC MARKET
FOR THE UNITS, COMMON STOCK OR WARRANTS OF THE COMPANY AND THERE CAN BE NO
ASSURANCE THAT A PUBLIC MARKET WILL RESULT FOLLOWING THE SALE OF THE UNITS
OFFERED HEREBY OR THAT THE COMMON STOCK, WARRANTS OR UNITS CAN BE SOLD AT OR
NEAR THE OFFERING PRICE. THE INITIAL PUBLIC OFFERING PRICE HAS BEEN
ARBITRARILY DETERMINED BY THE COMPANY BASED UPON WHAT IT BELIEVES PURCHASERS
OF SUCH SPECULATIVE ISSUES WOULD BE WILLING TO PAY FOR THE SECURITIES OF THE
COMPANY AND BEARS NO RELATIONSHIP WHATSOEVER TO ASSETS, EARNINGS BOOK VALUE
OR ANY OTHER ESTABLISHED CRITERIA OF VALUE.
The units are being offered pursuant to an exemption provided by Rule 504
of Regulation D under the Securities Act of 1933, as amended. The Units are
registered for sale under the securities laws of the State of Nevada.
THESE SECURITIES ARE OFFERED ONLY IN THE STATE OF NEVADA.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR THE SECURITIES DIVISION OF ANY STATE NOR HAS THE
COMMISSION OR ANY STATE PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFERING
MEMORANDUM. NEITHER THE SECRETARY OF THE STATE OF NEVADA AS ADMINISTRATOR OF THE
NEVADA SECURITIES ACT NOR ANY OFFICER OF THE STATE OF NEVADA HAS PASSED UPON THE
MERITS OF THESE SECURITIES OR UPON THE ACCURACY OR COMPLETENESS OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
<S> <C> <C>
Offering Proceeds to the
Price Company (1)(2)
Per Unit $.025 $.025
Total 2,000,000
Units (3) $50,000 $50,000
</TABLE>
(See Footnotes on Following Page)
The date of this Offering Memorandum is February 19, 1985
1. Before deduction for filing, printing, legal, accounting and
miscellaneous expenses relating to the Offering to be paid by the Company
out of proceeds of this Offering estimated at $7,500.
2. The Units are being offered by the Company directly to
prospective investors without the services of an underwriter.
Therefore, the Company is not incurring any underwriting
commissions.
3. The 2,000,000 Warrants being offered hereby represent part of this
Unit offering (See "Description of Units". Each Warrant is non-detachable
for a period of 10 days after successful completion of this offering.
Thereafter, each Warrant becomes detachable and may also be traded
separately on the over-the-counter market on the basis of one Warrant
evidencing the right to purchase one share of Common Stock (assuming a
market exists of which there can be no assurance). The holder of each
Warrant is entitled to purchase one share of the Company's Common Stock
for the exercise price of $.15 per share for a period of six months
commencing on the latter of 30 days after successful completion of this
offering or upon the Company's successful registration of the shares
underlying the Warrants under the Securities Act of 1933, as amended and
applicable states securities statutes. The exercise price of the Warrants
as described above is wholly arbitrary and there is no
assurance whatsoever that the price of the Company's Common Stock will rise
to a level where exercise of the Warrant would be of any value. (See
"Description of Units"). Accordingly, the possible maximum proceeds to the
Company from exercise of the Warrants may never be received by the Company
(in whole or in part) and , therefore, the Warrant portion of the Unit
offering may be without any value whatsoever to either the Company or the
holders thereof. See "Risk Factors Exercisability of Warrants"
The Units are offered by the Company subject to prior sale acceptance of
the subscriptions by the Company and approval of certain legal matters by
counsel to the Company.
OFFEREES AND SUBSCRIBERS ARE URGED TO READ THIS MEMORANDUM CAREFULLY. All
offerees and subscribers will have an opportunity to meet with representatives
of the Company to verify any of the information included herein and to obtain
additional information regarding the Company. Copies of all documents,
contracts, financial statements and other Company records will be made available
for inspection at any such meeting or during normal business hours upon request
to the Company. Offerees and subscribers will be asked to acknowledge in the
Subscription Confirmation Letter that they have read this Memorandum carefully,
that they were given the opportunity to obtain additional information and that
they did so to their satisfaction.
No person is authorized to give any information or to make any
representation not contained in this Memorandum and if given or Made, such
information or representation must not be relied upon as having been authorized.
This Memorandum does not constitute an offer to sell or the solicitation of an
offer to buy any securities to any person in any jurisdiction where such offer
or solicitation would be unlawful . The delivery of this Memorandum at any time
does not imply that the information contained herein is correct as of any
subsequent to its date .
THE COMPANY HAS THE RIGHT TO ACCEPT OR REJECT SUBSCRIPTIONS IN WHOLE OR IN PART.
THE COMPANY HAS TAKEN NO STEPS TO CREATE AN AFTERMARKET FOR THE UNITS, THE
COMMON STOCK OR THE WARRANTS COMPRISING THE UNITS OFFERED HEREBY AND HAS MADE
NO ARRANGEMENTS WITH BROKERS OR OTHERS TO TRADE OR MAKE A MARKET IN THE UNITS,
THE COMMON STOCK OR WARRANTS COMPRISING THE UNITS. AT SOME TIME IN THE FUTURE,
THE COMPANY MAY ATTEMPT TO ARRANGE FOR INTERESTED BROKERS To TRADE OR MAKE A
MARKET IN THESE SECURITIES AND To QUOTE THE UNITS, THE COMMON STOCK AND THE
WARRANTS COMPRISING THE UNITS OF THE COMPANY IN A PUBLISHED QUOTATION MEDIUM.
HOWEVER, NO SUCH ARRANGEMENTS HAVE BEEN COMMENCED AND NO ASSURANCE IS OFFERED
THAT ANY BROKERS WILL HAVE SUCH AN INTEREST IN THE UNITS, THE COMMON STOCK OR
THE WARRANTS COMPRISING THE UNITS.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C>
Page
MEMORANDUM SUMMARY........................................................................1
The Company.......................................................................1
The Offering......................................................................1
Certain Risk Factors..............................................................2
HOW TO SUBSCRIBE..........................................................................2
SELECTED FINANCIAL INFORMATION............................................................2
THE COMPANY...............................................................................2
RISK FACTORS..............................................................................3
Contemplated Subsequent Rule 504 Offering ........................................4
Lack of Final Leases or Charters..................................................4
Dependent Upon Offering-Insignificant Working
Capital..........................................................................4
Likely Need For Additional-Financing..............................................4
Start-Up Company..................................................................4
Reliance Upon Officers............................................................5
Limited Management Experience.....................................................5
Potential Disaster Liability......................................................5
Possible Unforeseeable Mechanical Failures........................................5
Conflicts of Interest.............................................................6
No Full-Time Employees-Limited Staff For
Operations.......................................................................6
Competition.......................................................................6
Regulations.......................................................................6
No Market for Securities..........................................................6
Exercisability of Warrants........................................................7
Common Stock and Warrants Not Immediately
Separately Tradeable.............................................................7
Arbitrary Determination of Offering Price.........................................7
No Dividends and None Anticipated.................................................7
Possible Depressive Effect of Future Sales by
Present Shareholders.............................................................8
Possible Warrant Redemption.......................................................8
DILUTION..................................................................................8
Shares Eligible For Future Sale..................................................10
USE OF PROCEEDS..........................................................................10
CAPITALIZATION...........................................................................11
PROPOSED BUSINESS OF THE COMPANY.........................................................11
General..........................................................................11
The Aircraft.....................................................................12
Operation of the Aircraft........................................................12
Regulation.......................................................................13
InterWest Leasing................................................................13
The MU2 Lease Purchase 0ption Agreement..........................................13
Facilities.......................................................................14
Employees........................................................................14
Competition......................................................................14
MANAGEMENT...............................................................................15
Directors and Executive Officers.................................................15
PRESENT SHAREHOLDERS.....................................................................16
Contemplated Subsequent Rule 504 Offering. . . . ................................17
Future Sales by Present Shareholders.............................................17
DESCRIPTION OF UNITS.....................................................................18
General..........................................................................18
Units............................................................................18
Non-Cumulative Voting............................................................18
Dividends........................................................................19
Reports..........................................................................19
Transfer Agent...................................................................19
OFFERING.................................................................................19
Offering Being Made Directly by the Company......................................19
Limitation of Offering to State of Nevada . . ...................................20
Opportunity to Make Inquiries....................................................21
Procedures for Subscribing.......................................................21
Restrictions on Transferability of Securities....................................21
EXPERTS..................................................................................21
LEGAL MATTERS............................................................................21
SCHEDULE OF EXHIBITS.....................................................................22
</TABLE>
MEMORANDUM SUMMARY
The following summary information is qualified in its entirety by the
detailed information and financial statements appearing elsewhere in
thiMemorandadu.
THE COMPANY
National Air Corporation (the "Company"), a newly formed Nevada
corporation, located at 6555 Plumas, Suite 171, Reno, Nevada 89509, intends to
provide air transport services on a lease and charter basis. At the present
time, the Company has entered into a lease purchase agreement, effective upon
successful completion of this offering, for the use and possible purchase of a
Mitsubishi MU2F turbo prop aircraft and an operating agreement for operation of
the aircraft in a lease/charter business. See "Proposed Business of the
Company".
THE OFFERING
Securities Offering Units each consisting of one share of Common Stock
and one Warrant to purchase one share of Common
Stock exercisable for a period of six months
commencing on the latter of 30 days after successful
completion of this Offering
of upon the Company's successful registration
of the shares of Common Stock underlying the
Warrants under the Securities Act of 1933, as
amended, and applicable states statutes. Each Warrant
is detachable ten days after successful completion of
this offering and will be exercisable at a price of
$0.15 per share of Common Stock acquired upon exercise.
Each Warrant is redeemable by the Company, at a price
of $0.25 per Warrant redeemed, at any time upon 20
days following redemption date, which is 20 days
following such notice by the Company, will be
redeemed. See "Description of Units" and "Offering".
Offering Price
Per Unit $.025
Offering The Units are being offered directly by the Company
for a period not to exceed 30 days on an "all-or-none"
basis. See "Offering".
Net Proceeds Approximately $42,500. See "Use of Proceeds".
Use of Proceeds To be added to the Company' s general funds and to be
used for working capital to meet the Company's current
expenses.
Number of Shares
Outstanding Before the Offering: 100,000 Shares
After the Offering: 2,100,000 Shares
After Exercise of
the Warrants: 4,100,000 Shares
CERTAIN RISK FACTORS
An investment in the Units offered hereby involves a high degree of risk.
See "Risk Factors".
HOW TO SUBSCRIBE
See "Offering" for information regarding the procedure for purchasing the
Units offered hereby and for information as to limitation of the offering within
the State of Nevada.
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
<S> <C>
BALANCE SHEET DATE: January 23, 1985
Current Assets $1,500
Current Liabilities $ 500
Total Assets $1,500
Shareholders Equity $1,000
</TABLE>
THE COMPANY
National Air Corporation, a Nevada corporation was incorporated January 9,
1985 and has been in business for only a short period of time. To date, the
Company has principally been engaged in obtaining the use of the Aircraft
through a lease purchase option agreement, and in obtaining an operator for the
Aircraft through an aircraft operating agreement, both effective
2
upon successful completion of this offering and in preparing this offering
material. The Company intends to engage in the business of providing air
transport services on both a lease and charter basis. The Company has acquired a
lease with purchase option, effective upon successful completion of this
offering, on a Mitsubishi MU2F turbo prop aircraft, which it intends to employ
in providing air transport services. In addition, the Company has entered into
an Aircraft Operating Agreement with InterWest Leasing which will conduct the
charter and lease operations for the Company. See "Proposed Business of the
Company."
Alec S. Hamilton, Gerald Hodges and Suzy Frost, the Company's current
officers, directors and shareholders may be deemed to be parents and promoters
of the Company. See "Management" and "Principal Shareholders".
The Company maintains its principal executive offices at 6555 Plumas, No.
171, Reno, Nevada 89509 (702) 826-3806.
RISK FACTORS
Purchase of the Units involves a high degree of risk. In analyzing the
offering, prospective investors should carefully consider, among other factors,
the following:
1. Contemplated Subsequent Rule 504 Offering.
The Company anticipates selling an additional 1,000,000 shares of Common
Stock at a price of $.10 per share as soon as possible after successful
completion of this offering. Such offering (the "subsequent Rule 504 offering")
will be made pursuant to Rule 504 ("Rule 504") of Regulation D of the Rules and
Regulations of the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Act"). See "DILUTION - Shares eligible for Future
Sale" and "PRESENT SHAREHOLDERS -- Contemplated Subsequent Rule 504 Offering,
Future Sales by Present Shareholders". there is no assurance that such
subsequent offering will be successful or, because the Company intends to
reserve the right to sell as few as 500,000 shares in the subsequent Rule 504
Offering, that the Company will sell all 1,000,000 shares to be offered therein,
particularly since the Company does not intend to engage an underwriter in
connection with such offering. The Company believes that it could possibly
operate without the proceeds of the subsequent Rule 504 offering. If, however,
the subsequent offering is not successful, the Company is unsuccessful in
generating revenues and the Warrants remain unexercised, the Company will be
able to operate for only six months.
3
2. Lack of Final Leases or Charters.
Although the Company's management believes that it will be able to
eventually generate sufficient leases and/or charters to profitably operate the
Aircraft the Company has acquired through the lease purchase option agreement,
at present, management is only in negotiation with potential customers and has
obtained no legally binding commitments for revenue producing leases or charters
of the Aircraft. Consequently, the Company must initially rely solely upon the
funds made available through this offering to meet obligations and carry out
operations.
3. Dependent Upon Offering - Insignificant Working Capital.
The Company presently has only insignificant working capital and its
ability to begin its proposed operations and operate as a going concern is
wholly contingent upon the successful conclusion of this offering and the
receipt of the net proceeds therefrom.
4. Likely Need For Additional Financing.
The Company's management believe that the proceeds of this offering will be
sufficient to enable the Company to meet its current expenses for the next six
months. In addition, the Company's management believes that the proceeds of this
offering along with leases and charters of the Aircraft which can be generated
over the next six months and funds from the subsequent rule 504 offering (if
such offering is undertaken and successfully completed of which there can be no
assurance) will provide sufficient funds to operate at a breakeven cash flow in
month six of operation or approximately July of 1985. If, however, the Company
is unable to successfully generate revenues from leases or charters as planned
or encounters unforseen expenses in connection with operation of the Aircraft,
it will require additional financing. There can, however, be no assurance that
such financing will be available in needed.
5. Start-Up Company.
Although the Company's management has had significant experience in the
operation of aircraft, the Company was only recently formed and began operations
on January 9, 1985. Consequently, the Company has had limited time to develop
potential customers which the Company's management and InterWest Leasing may
identify.
4
6. Reliance Upon Officers.
The Company is wholly dependent, at present, upon the personal efforts and
abilities of its officers and directors , who are all engaged full time in other
activities, endeavors and professions and will thus devote extremely limited
time to the Company's activities. Accordingly, while the Company will solicit
business through its officers and InterWest Leasing, the operator with whom it
has contracted, there can be no assurances to the volume of business, if any,
which the Company may succeed in obtaining, or that its proposed operations will
prove to be profitable . As of the date hereof, the Company has received no
commitments from any corporation, individual, firm or business entity regarding
any of its proposed operations and there can be no assurance that any such
commitments will be forthcoming in the future. The officers and directors will
not be paid for services rendered on behalf of the Company except for the
reimbursement of any expenses they may incur on behalf of the Company and a
monthly fee of $500.00 payable to Suzy Frost, the Company's Secretary for
bookkeeping and general administrative services.
7. Limited Management Experience.
While the Company's management has had significant experience in operating
aircraft, they have not spent significant time operating businesses such as that
in which the Company intends to engage. The Company's management has contracted
with InterWest Leasing as operator of the Aircraft and intends to hire
professional assistance where deemed appropriate to provide services such as
legal, accounting and Aircraft maintenance
8. Potential Disaster Liability.
Because the Company will be operating an air transport business, it will be
exposed to risks associated with potential large claims in the event of
accidents. The Company intends to protect against such liability through
insurance policies to the fullest extent possible. However, in the event that a
claim were to exceed the amount of insurance coverage provided by third party
insurers, the Company's capital would be depleted in the settlement
9. Possible Unforeseeable Mechanical Failures.
Although the Company intends to follow a scheduled maintenance program in
maintaining the Aircraft, there can be no assurance that an unforeseen
mechanical failure will not occur.
5
The Aircraft is not new and, therefore, is not covered by any warranties.
In the Event of a failure of a major component requiring repair the Company's
capital may significantly depleted .
10. Conflicts of Interest.
Management of the Company may devote time to other companies or projects
which may compete, directly or indirectly with the Company. An attempt will be
made with regard to any conflicts of interest between the Company and management
to resolve such conflicts in favor of the Company.
11. No Full-Time Employees-Limited Staff For Operations.
At the present, the Company has no employees. Even upon completion of this
offering, the present intention of the Company is to limit its employees to
pert- time secretarial and clerical help. The present directors of the Company
are engaged in full-time in other activities and endeavors and will thus devote
extremely limited time to the activities of thee Company. (See "Management").
12. Competition.
The Company's management is familiar with several companies in the general
vicinity in which the Company intends to initially operate that are providing
substantially identical services to those which the Company intends to provide.
13. Regulations.
As an operator of Aircraft for lease or charter, the Company will be
subject to a number of federal and state government regulations concerning the
maintenance and operation of the Aircraft. Compliance with such regulations may
prove expensive and the failure to comply may result in the grounding of the
Aircraft, thereby rendering the Company unable to generate revenues from their
use.
14. No Market for Securities.
There is no present market for the Company's securities. In view of the
fact that there is no underwriter involved in this offering and that the Company
does not intend to engage an underwriter in connection with the subsequent Rule
504 offering there can be no assurance that such market will develop. In the
6
event a public trading market does not develop, any investment in the Company's
Units, Common Stock and/or Warrants will be highly illiquid and without a market
value.
15. Exercisability of Warrants.
The Warrants will be exercisable for a period of 6 months commencing upon
the latter of 30 days after the successful completion of this offering or the
Company's registration of the Common Stock underlying the Warrants. The Company
will attempt to register the Common Stock underlying the Warrants with the
Securities and Exchange Commission and to qualify such Common Stock in all
states in which the Units or Warrants are held. If the Company is unable to
qualify the Stock underlying the Warrants for sale in particular states, the
holders of Warrants in those states will be unable to exercise their Warrants
and will have no choice but to either sell, assign or convey such Warrants or to
allow them to expire.
16. Common Stock and Warrants Not Immediately Separately Tradeable.
The Common Stock and Warrants included in the Units offered hereby will be
separately tradeable ten days after the termination of this offering, which
termination may be as long as 30 days from the date of this Offering Memorandum.
17. Arbitrary Determination of Offering Price.
The offering price of the Units offered hereby was established arbitrarily
by the Company so that the Company can raise a net amount of approximately
$42,500 in this offering and the present shareholders of the Company will retain
approximately 4.8% of the Company's outstanding shares at the conclusion of this
offering. (The present shareholders may, however, purchase a portion of the
Units offered hereby, which would increase the percentage of the Company's
Common Stock owned by such present shareholders at the conclusion of this
offering). The offering price bears no relationship to the Company's assets,
book value, earnings, net worth or any other criteria of value. The offering
price is substantially in excess of the book value of the shares offered hereby.
See "dilution".
18. No Dividends and None Anticipated.
No dividends have been paid on the shares of the Company. It is anticipated
that any income received from operations will be devoted to the Company's future
operations and/or to
7
expansion. See "Description of Units-Dividends".
19. Possible Depressive Effect of Future Sales by Present Shareholders.
100,000 shares of the Company's Common Stock are held by present
shareholders. Under Rule 144 of the Securities and Exchange Commission (the
"SEC"), all such shares are expected to be able to be publicly sold or otherwise
transferred, subject to the volume restriction, two years from acquisition of
such shares. The holders of such 100,000 shares acquired them on January 124,
1985. Further, upon exercise of the Warrants, the shares received by Warrant
holders will be freely tradable. The Company plans to sell, in addition to the
2,000,000 Units offered hereby, an additional 1,000,000 shares in the subsequent
Rule 504 offering as soon as possible after completion of this offering, though
there can be no assurance that saidsubsequent offering will be successful. All
such shares will be able to be publicly sold or otherwise transferred subject in
certain cases to volume restriction under Rule 144. Any sales of the Company's
stock owned by present shareholders after applicable restrictions, if any,
expire and any sales of shares sold in this offering and in the subsequent 504
offering (all of which, except for shares purchased by present shareholders,
will be immediately resalable) along with the shares underlying the Warrants,
upon their exercise, could have a depressive effect on the market price for the
shares being offered hereby. (See "DILUTION - Shares eligible for Future Sale"
and "PRESENT SHAREHOLDERS - Future Sales by Present Shareholders.")
20. Possible Warrant Redemption.
The Company has reserved the right to redeem all or part of the Warrants,
at any time, upon 20 days prior written notice to the Warrant holders. The
redemption price per Warrant shall be $.025 per Warrant redeemed. The Company
will redeem only those Warrants that remain unexercised at the redemption date
which is 20 days from the date notice is given to the Warrant holders by the
Company of its intent to redeem the Warrants.
DILUTION
As of January 23, 1985, net tangible book value of the shares of the
Company (total assets, excluding intangible assets, $1,000, or approximately
$.01 per share (based upon 100,000 shares outstanding).
8
Upon completion of this offering, but without taking into account any
change in such net tangible book value after completion of this offering, other
than that resulting from the sale of the shares offered hereby and services in
bringing about the formation of the Company, the net tangible book value of the
2,100,000 shares to be outstanding will be $43,500, or approximately $.021 per
share without giving effect to the exercise of the Warrants. Accordingly, the
net tangible book value of the shares held by the present shareholders of the
Company (i.e., 100,000 shares) will be increased by $.011 per share without any
additional investment on their part, and the purchasers of the Units offered
hereby will incur immediate dilution (a reduction in net tangible book value per
share from the offering price of $.025 per unit) of approximately $.004 per
share.
After completion of this offering, the purchasers of the Units offered
hereby will own 95.2% of the total number of shares then outstanding, for which
they will have made a cash investment of $50,000 or $.025 per share. the current
shareholders of the Company (without taking into account any shares which they
may purchase pursuant to this offering) will own approximately 4.8% of the total
number of shares then outstanding, for which they have made contributions of
cash and property totaling $1,000 or approximately $.01 per share.
The following table sets forth a comparison of the respective investments
of the current shareholders and the public investors. The following material and
the material previously discussed does not give effect to the exercise of the
Warrants offered hereby:
<TABLE>
<CAPTION>
<S> <C> <C>
Current Present
Shareholders Investors
Price per share $.01 $.025
Net tangible book value per
share before Offering $.01 $--0--
Net tangible book value per
Share after offering $.021 $.021
Increase to current shareholders
in net tangible book value per
share due to offering $.011 $--0--
Dilution per share to present
investors $--0-- $.004
</TABLE>
9
Shares Eligible for Future Sale
All of the Company's currently outstanding shares are "restricted
securities" that in the future may be sold pursuant to Rule 144 currently
provides, in essence, that persons holding restricted securities for a period of
two years may each sell every three months in brokerage transactions a number of
shares equal to one percent of the aggregate number of the Company's outstanding
shares and that after three years persons other than "affiliates" of the Company
may sell shares without any volume restriction.
The 2,000,000 shares of Common Stock being offered hereby are offered
pursuant to Rule 504. Under Rule 504 these shares may be sold without regard to
compliance with Rule 144, subject in certain cases to volume restriction under
Rule 144. the shares of Common Stock underlying the Warrants, upon registration
and exercise, and the 1,000,000 shares which the Company hopes to sell in the
subsequent Rule 504 offering would also be immediately resalable.
USE OF PROCEEDS
The Company estimates that the net proceeds form this offering will be
approximately $42,500, after deducting the offering expenses payable by the
Company. The net proceeds of this offering will be added to the Company's
general funds and are intended to be used for working capital. Upon successful
completion of the offering, the Company will have the following monthly fixed
commitments:
<TABLE>
<CAPTION>
<S> <C>
Monthly Administrative
Fee *................ $ 500
Lease Payment
MU2F**................. $5,300
Operators Agreement $1,500
------
$7,300
</TABLE>
10
*Payable to the Company's Secretary, Suzy Frost.
**$10,600 payable in advance upon successful completion of this offering.
While the Company currently intends to utilize the proceeds of this
offering substantially in the manner set forth above, the Company reserves the
right to alter such use if in the judgment of the Board of Directors such
changes are advisable.
Pending utilization of all of the proceeds of this offering, the Company
will invest the unused proceeds in short term interest-bearing investments
selected by the Company's management.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
January 23, 1985 and as adjusted to reflect the sale of the shares offered
hereby and the application of the net proceeds therefrom.
<TABLE>
<CAPTION>
<S> <C> <C>
Present As Adjusted
Shareholders equity:
Common Stock
20,000,000 shares authorized,
$.001 par value;
issued and outstanding 100,000 2,100,000
Shareholders' equity $1,000 $43,500
</TABLE>
PROPOSED BUSINESS OF THE COMPANY
General
The Company was incorporated on January 9, 1985 to engage in the business
of providing air transport services on a lease and charter basis. At present,
the Company has entered into a lease purchase option agreement, effective upon
successful completion of this offering, to lease and/or acquire a Mitsubishi
MU2F turbine propeller aircraft which it will base in Reno, Nevada. In addition,
the Company has entered into an aircraft operating
11
agreement with InterWest Leasing, Reno, Nevada, effective upon successful
completion of this offering, which will supply the flight crew and operational
support for the Company's Aircraft. The Company, to date, has not entered into
any revenue generating lease or charter agreements for use of the Aircraft but
will upon successful completion of this offering, commence negotiating leases
and charter agreements with potential customers.
The Aircraft
The Company has entered into a lease/purchase option agreement, effective
upon successful completion of this offering, for the lease and possible purchase
of a used Mitsubishi Model MU2F aircraft serial number 136 manufactured by
Mitsubishi Aircraft International, Inc. (the "MU2 Aircraft"). The MU2 Aircraft
is powered by twin Garrett TPE331-1-151A turbine propeller engines and is
pressurized, thereby allowing it to fly at altitudes of up to 25,000 feet.
Exhibit A hereto sets forth specifications of the MU2 Aircraft. The Company's
management have selected the MU2 Aircraft for operation by the Company in its
proposed business due to the speed at which the MU2 Aircraft is capable of
flying and its relatively low fuel consumption. The MU2 Aircraft is capable of
flying at speeds of up to 285 miles per hour and on a usual stage length of 500
miles, uses average of 70 gallons of fuel per hour, making it one of the most
economical turbine propeller aircraft to operate. the MU2 Aircraft with a single
pilot is capable of carrying up to 6 passengers and approximately 300 pounds of
baggage. In addition, due to its factory design, the Aircraft has superior
capabilities in flying into and out of short airstrips. The Company estimates
that it will be able to operate the Aircraft at a cost of $250, per hour
including fuel, reserves for avionics, engines and inspections, excluding
unforeseen repairs and fixed lease payments for the Aircraft, fixed operating
fees, pilot fees, and hangar space. The Company anticipates that it will lease
or charter the Aircraft at rates varying from 150% to 200% of the cost of
operations.
Operation of The Aircraft
The Company has entered into an agreement with InterWest Leasing, effective
upon successful completion of this offering, which provides in part that
InterWest Leasing shall operate the Aircraft for the Company . InterWest
Leasing's responsibilities shall include leasing and chartering , piloting and
maintaining and repairing the Aircraft through an authorized aircraft mechanic
and providing hangar space for storage of the Aircraft. InterWest Leasing shall
report all operations information to the Company. In consideration for its
services, the Company shall
12
pay InterWest Leasing a monthly fee of $1,500, a pilot fee of $75 per hour
of flight time and $25 per hour for standby time up to a maximum of 8 hours
standby and 5% of all net operating profits generated from operation of the
Aircraft. In addition, the Company will either directly pay for or reimburse
InterWest Leasing for any and all fuel and maintenance or repair work performed
on the Aircraft. (See "Aircraft Operating Agreement, Exhibit C hereto"). the
Company anticipates that approximately $5,000 will be immediately expended in
order to perform repair work in the Aircraft to qualify it for operation in the
contemplated business of providing air transport.
Regulation
The Company will be subject to government regulations regarding the
maintenance and operation of the Aircraft in its contemplated business. Pursuant
to such regulations, the Company will be required to perform routing inspections
of the Aircraft at fifty hour intervals. The Company must also assure that only
qualified individuals pilot the Aircraft. InterWest Leasing has assured the
Company that the Aircraft will be maintained and operated in compliance with
applicable government regulations. In the event that the Company is unable to
comply with such requirements, it will be unable to operate the Aircraft as
planned.
InterWest Leasing
InterWest Leasing is a subsidiary of Lemmons & Associates, which operates a
two person flight department. InterWest Leasing's chief pilot is Mr. Gerald D.
Gardener. Mr. Gardener, age 47, has a total of 23,491 flight hours, 3,212 hours
under instrument flight rules, 7,000 hours of night flights and 930 hours of
flight in Aircraft similar to the Aircraft. Mr. Stephen Vonderheide serves as a
[art-time pilot and operations officer and copilot for InterWest Leasing. Mr.
Vonderheide, age 38, has a total of 3,839 flight hours, 930 hours under
instrument flight rules, 1,100 hours of night flight.
The MU2 Lease Purchase Option Agreement
The Company has entered into a lease purchase option agreement, effective
upon successful completion of this offering, with PSJ International I, an
Arizona General Partnership for lease and possible purchase of the MU2 Aircraft.
The lease is month to month, cancelable be lessor or lessee upon 30 days 13
13
prior written notice, for a period of 36 months at the rate of $5,300 per
month with the first and last months payable in advance. The Company has an
option to acquire the Aircraft at any time upon 30 days prior notice to PSJ
International I at a price of $175,000. The Company during the term of the lease
will be responsible for insuring, maintaining and operating the Aircraft and
will provide its own fuel and pilots. In addition, the Company has agreed to
indemnify PSJ International I and its partners from and against any and all
liabilities that may arise as a result of its use of the Aircraft.
Facilities
The Company will be provided hangars and office facilities for its
operation of the Aircraft by InterWest Leasing which includes space in the Jet
West hangar with an adjoining 300 square foot office located at Cannon
International Airport, Reno, Nevada.
Suzy Frost, the Company's secretary will provide the Company with an
office, rent free, until such time as management determines additional space is
required.
Employees
The Company will not employ any full time personnel. All leasing and
operating services will be provided by InterWest Leasing. All reports of
operations will be provided to Suzy Frost, the Company's Secretary, who will
report the results of operations to the Company's other officers.
Competition
The Company is aware of a total of three companies located in the Reno,
Nevada area conducting businesses similar to that which the Company intends to
conduct. Due to more rigorous maintenance and operating requirements imposed by
regulations, only a limited number of the total number of aircraft located in
Reno are available for such services. Nevertheless, because the Company has not
commenced operations, there can be no assurance that customers will be
identified and time sold on the Aircraft. The Company will encounter competition
fro both local lease charter operation sand operations located within nearby
areas including major cities in California. In many cases, the Company will be
competing with national organizations possessing far greater resources than the
Company's resources. There can be no assurance that the Company will be able to
maintain profitable
14
lease or charter rates in light of such potential competition.
MANAGEMENT
Directors and Executive Officers
The names, ages and respective position of the current directors and
executive officers of the Company are:
<TABLE>
<CAPTION>
<S> <C> <C>
Name Age Position
Alec S. Hamilton 35 Chairman of the Board
of Directors, President
Gearld Hodges 47 Director,
Vice President
Suzy Frost 48 Director, Secretary,
Treasurer
</TABLE>
Alec S. Hamilton, Chairman and President
Mr. Hamilton, age 35, is a professional pilot employed by AirCal, Inc. (the
Company is in no way connected with AirCal, Inc.). Mr. Hamilton has been
involved in various aspects of both national and international aviation
including: piloting, flight department operations, sales, leasing, chartering
and maintenance since 1965. Mr. Hamilton holds an FAA ATR flight certificate and
ratings in single and multiengine land and sea fixed wing aircraft including
various transport category aircraft. Mr. Hamilton has been directly involved,
over his years of experience in the start up of air taxi, flight training and
commercial transport operations.
Geared Hedges, Director and Vice President
Mr. Hedges, age 47, is a professional pilot and is presently employed as an
aviation consultant. Mr. Hedges has been involved in various aspects of both
national and international aviation including: piloting, flight department
operations, sales, leasing, chartering and maintenance since 1960. Mr. Hedges
holds an FAA AT flight certificate and is rated in single and multiengine land
fixed wing aircraft including various transport category aircraft.
Suzy Frost, Director, Secretary and Treasurer
15
Ms. Frost, age 48, has been employed for the past 9 years as Secretary and
Treasurer of Lucky Chance Mining Company, Inc. of Reno, Nevada, a public company
engaged in the development of gold mining properties.
Remuneration of Directors and Officers
Suzy Frost, the Company's Secretary and Treasurer, will serve as a part
time employee of the Company and will be compensated $500 per month. In
addition, all directors and officers will be compensated for all reasonable
expenses they may incur in conducting the Company's business affairs including
travel and lodging.
PRESENT SHAREHOLDERS
The following table sets forth as of the date of this Offering Memorandum,
the number of shares owned beneficially by each of the Company's officers and
directors, individually and as a group, and the present owners of %5 or more of
the Company's Common Stock. The table also reflects what such ownership will be
assuming completion of the present offering by the Company of 2,000,000 Units
without giving effect to the exercise of the Warrants.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Percent of
Name and Address Number Common Stock Percent of
of Beneficial of Before Common
Owner Shares Offering Stock After
Offering*
Alec S. Hamilton 33,333 33% 1.6%
431 Dowling Blvd.
San Leandro, CA 94577
Geared Hedges 33,333 33% 1.6%
21109 Gary Drive, #307
Castro Village, CA 94546
Suzy Frost 33,334 33% 4.8%
6555 Plumas, #171
Reno, Nevada 89509
Al1 0fficers and
Directors as a Group 100,000 100% 4.8%
</TABLE>
*Assumes that none of the present shareholders purchase any Units
16
in the present offering. In the event that any of the present shareholders
purchase Units in this offering, their percentage will increase accordingly.
Contemplated Subsequent Rule 504 Offering
The Company anticipates selling an additional 1,000,000 shares of Common
Stock at a price of $. 10 per share as soon as possible after completion of this
offering. Such offering ("the subsequent Rule 504 offering") will be made
pursuant to Rule 504. There is no assurance that said subsequent offering will
be successful or, because the Company intends to reserve the right to sell as
few as 500,000 shares therein, that all of the shares offered therein will be
sold . If such offering is not successful, the Company's ability to grow beyond
its current operations would be seriously impaired, unless it was able to secure
alternative financing, the availability of which cannot be assured.
Future Sales by Present Shareholders
The aggregate of 100,000 shares of Common Stock originally issued to the
present Shareholders are "restricted stock" within the meaning of Rule 144
("Rule 144") of the Rules and Regulations of the SEC under the Act. Under Rule
144, such shares can be publicly sold, subject to volume restrictions and to
certain restrictions on the manner of sale, commencing two years after their
acquisition. The 2,000,000 shares offered hereby are not restricted stock under
Rule 144 and can be publicly sold, subject to volume restrictions and certain
restrictions on the manner of sale pertaining to such parties as "affiliates" of
the Company within the meaning of Rule 144. The balance of the shares to be sold
in this offering as well as the 1,000,000 shares which the Company anticipates
selling the subsequent Rule 504 offering, may be immediately publicly resold by
the holders thereof pursuant to applicable provisions of Rule 504. In addition
shares underlying the Warrants, upon registration and exercise will be sellable.
Sales of the shares which will be immediately resalable and Sales of other
shares after applicable restrictions expire could have a depressive effect on
the market for the shares offered hereby.
17
DESCRIPTION OF UNITS
General
The authorized capital stock of the Company consists of 20,000,000 shares
of common stock, par value $.001 per share. The holders of common stock (i) have
equal ratable rights to dividends from funds 1egally available therefore, 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 there are no redemption or sinking fund provisions applicable
thereto; and (iv) are entitled to one non-cumulative vote per share, on all
matters which stockholders may vote on at all meetings of shareholders. All
shares of common stock now outstanding are fully paid for and non-assessable and
all shares of common stock which are the subject of this offering when issued
will be fully paid for and non-assessable.
Units
Each Unit consists of one share of the Company's Common Stock, par value
$.001 per share and one Common Stock Purchase Warrant. Each Common Stock
Purchase Warrant is detachable ten days after the successful completion of this
offering and may be traded separately in the over-the-counter market on the
basis of one Warrant evidencing the right to purchase one share of Common Stock
Each Warrant entitles the holder to purchase one share of Common Stock (par
value $.001) at the price of $.15 for a period of six months, commencing on the
latter of 30 days after successful completion of this offering or upon the
Company's successful completion of a registration of the common stock underlying
the Warrants under the Securities Act of 1933, as amended and applicable state
securities statutes.
All or part of the Warrants are redeemable by the Company, at a price of
$.025 per warrant redeemed upon 20 days prior written notice by the Company to
the Warrant Holders. Only those Warrants that are unexercised as of the
redemption date, which shall be 20 days from the date the Company provides such
notice of redemption, shall be redeemed by the Company.
Non-Cumulative Voting
The holders of shares of common stock of the Company do not have cumulative
voting rights which means that the holders of
18
more than 50% of such outstanding shares, voting for the election of
directors, can elect all of the directors to be elected, if they so choose, and,
in such event, the holders of the remaining shares will not be able to elect any
of the Company's directors. After the present offering is completed, the public
shareholders will own 95.2% of the outstanding shares, (See "Present
Shareholders").
Dividends
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 the Company's earnings, its capital requirements and its financial
condition, as well as other relevant factors. The Company has not paid or
declared any dividends due to its present financial status and due to its
contemplated financial requirements, does not contemplate of anticipate paying
any dividends upon its common stock in the foreseeable future. (See "Risk
Factors - No Dividends and None Anticipated").
Reports
The Company will furnish to shareholders annual reports certified by its
independent accountants and may furnish unaudited quarterly reports.
Transfer Agent
The Company has appointed American Registrar and Transfer Co., P.O. Box
1798, Salt Lake City, Utah 84110, (801) 363-9065 as the transfer agent for its
Common Stock and Warrants.
OFFERING
Offering Being Made Directly by the Company
The Company is offering the Units directly to prospective investors without
availing itself of the services of an underwriter. the Company presently intends
to offer the Units at a single meeting (the "Meeting") of prospective investors
to be held within the State of Nevada. At that meeting this Offering Memorandum
will be presented to the prospective investors; the prospective investors will
have the opportunity to met with representatives of the Company, to verify any
of the information included herein and to obtain additional information
regarding the Company; and the prospective investors will be asked to
19
decide as to whether or not they wish to make an investment in the Units, and
if so, to pay for the Units at such meeting.
If all of the Units offered hereby are not subscribed for and paid for at
such meeting, the Company does not intend to accept any subscriptions for any of
the Units.
The Units are offered by the Company subject to prior sale and subject to
approval of certain legal matters by counsel. the Company reserves the right to
reject any order in whole or in part.
Prior to this offering there has been no market for the Company's Warrants
or Common Stock. Consequently, the offering price has been determined
arbitrarily by the Company and should not be considered an indication of the
actual value of the Company's shares. No assurance can be given that any public
market for the Company's Units, Warrants or Common Stock will develop,
particularly inasmuch as the Company is not using services of an underwriter in
connection with this offering and does not intend to use the services of an
underwriter in connection with the subsequent rule 504 offering.
Limitation of Offering to State of Nevada
The Units offered hereby are being registered for sale in the State of
Nevada. Sales of such Units in such state may not be made until registration has
been completed. Investment in such Units will be limited to persons who are bona
fide residents of Nevada (that is, persons who are domiciled (have their
principal residence in Nevada) or to persons all of whose dealings with respect
to this offering have taken place with Nevada (that is, persons who (except for
having been invited to the meeting) have received this Offering Memorandum and
all other verbal or written information as to the substance of the offering only
within Nevada; who have had all discussions, whether by telephone or verbally,
with respect to the substance of this offering only within such state; all of
whose correspondence relating to the substance of this offering has taken place
solely within such state; and who have paid for the Units and received delivery
thereof solely within such state). Each investor will be required to represent
in the Subscription confirmation Letter that he is a resident of Nevada or that
all of his dealings with respect to this offering have so taken place solely
within such state and that he is not purchasing the Units for the account of, or
for the beneficial interest of, or with the intent to transfer
20
to, any person not named therein.
Opportunity to Make Inquiries
The Company will make available to each offeree prior to any sale of Units
the opportunity to ask questions and receive answers from the Company concerning
any aspect of the investment and to obtain any additional information necessary
to verify the accuracy of the information contained in this Memorandum to the
extent that the Company possesses such information or can acquire it without
unreasonable effort or expense.
Procedures for Subscribing
Each investor purchasing any of the Units offered hereby will be required
to execute a Subscription confirmation Letter, which, among other provisions,
will contain representations as to the investor's qualifications to purchase the
Units and his ability to evaluate and bear the risk of an investment in the
ability to evaluate and bear the risk of an investment in the Company, and will
contain an acknowledgment of the receipt of the opportunity to make inquiries
and obtain additional information.
Restrictions on Transferability of Securities
The Units offered hereby have been registered in the State of Nevada but
have not been registered under the Securities Act of 1933, as amended or the
laws of any other state or jurisdiction. Resales of the Units, Warrants or
shares of Common Stock in any state other than Nevada may be subject to
restrictions imposed by such states.
EXPERTS
The balance sheet of the Company, as of January 23, 1985, included in this
Memorandum, has been examined by Roger E. Hildahl, 350 South Center, Suite 590,
Reno, Nevada 89501 (702) 786-3360, independent certified public accountants,
whose report thereon appears elsewhere herein, and is included in reliance upon
such report and upon the authority of such firm as experts in auditing and
accounting.
LEGAL MATTERS
The legality of the Units offered hereby will be passed upon
21
for the law firm of Haase, Harris & Morrison, 6121 Lakeside Drive, Suite 240,
Reno, Nevada 89570-0250 (702) 825-4300.
SCHEDULE OF EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
Exhibit* Description
A Specifications of MU2 Aircraft
B MU2-Lease Purchase Option Agreement
C Aircraft Operating Agreement
D Company Audited Financial Statement
Dated January 23, 1985
</TABLE>
*These Exhibits have not been included in this Registration Statement,
but are available upon request.
22
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000768216
<NAME> NATIONAL AIR CORPORATION
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<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 4-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
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0 0
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</TABLE>
