SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended: March 31, 1991
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number: 0-17304
CNH Holdings Company, f/k/a Coral Companies, Inc.
(Exact name of registrant as specified in its charter)
Nevada 11-2867201
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
4221 E. Pontatoc Canyon Dr., Tucson, AZ 85718
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (520) 577-6611
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant
to Rule 405 of Regulation S-K is not contained herein and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by
non-affiliates of the registrant. The aggregate market value shall
be computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a
specified date within 60 days prior to the date of filing: There is
presently no market in registrant's stock; thus, there is no market
value.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date: As of July 31, 1996, there were approximately 400,000 shares
outstanding.
Registrant has had no revenues since fiscal 1990.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the documents if incorporated by reference and the
Part of this Form 10-KSB into which the document is incorporated:
None.
<PAGE>
Item 1. Description of Business
CNH Holdings Company, a Nevada corporation, f/k/a Coral Companies,
Inc., a Delaware corporation (the "Company"), was incorporated on
April 15, 1987, under the name of I.S.B.C. Corp. On January 28,
1988, the Company completed an initial public offering of unit
consisting of one share of the common stock of the Company ("Common
Stock") and one Class A Warrant, all of the latter of which have
either expired or been exercised. On June 27, 1988, the Company
acquired all of the outstanding shares of Coral Group, Inc., a
privately-held Colorado corporation ("Coral Group") formed in 1984
and then principally engaged in the development and marketing of
computer software programs. During fiscal 1990, the Company formed
two additional subsidiaries, Coral Telesystems, Inc ("CTI"), and
Coral Pacific, Inc. ("Pacific"), both of which were Colorado
corporations. Through fiscal 1991, the business of the Company was
conducted solely through Coral Group, CTI and Pacific.
During fiscal 1991, the Company defaulted on all of its outstanding
obligations to its financial institution, which was secured by all
of the assets of the Company, including the shares of Coral Group,
CTI and Pacific. The Company voluntarily transferred all of the
security for this debt to the financial institution in exchange for
an acknowledgment of full and complete satisfaction of all
remaining liabilities of the Company to the institution. All
licenses which the Company had regarding its software were
terminated without liability and returned to the original licensor,
and all leases which the Company had were similarly terminated
without liability. Finally, all tax and accounts payable owed by
the Company were paid in full. The Company then ceased operations
in the computer software field.
In April, 1996, the Company held a special meeting of its board of
directors (the "Board of Directors"). The purpose of the meeting
was to (i) discuss and take action on all corporate matters which
had taken place since the date of the last meeting of the board,
including the filing of all delinquent reports by the Company with
the U.S. Securities and Exchange Commission (the "Commission"),
(ii) appoint independent Certified Public Accountants to audit the
books and records of the Company since 1990, (iii) discuss the
financial condition of the Company and implement an appropriate
course of action and (iv) discuss all other matters then pending
before the Company. At the meeting, the Board of Directors adopted
a new plan of business for the Company, that being to begin a
search for a new business opportunity. In order to implement this
new plan of business, however, the Board of Directors had to
implement a number of curative measures. Firstly, an attorney was
engaged to assist in general corporate matters and the filing of
all delinquent reports with the Commission. Secondly, a new
auditor was engaged to audit the books and records of the Company
since 1990, prepare and file all necessary federal and state income
tax forms and compile the financial information necessary for the
filing of all quarterly reports by the Company with the Commission.
Thirdly, in order to pursue its business plan, the Company elected
to (i) change its name, (ii) change its domicile; (iii) reverse
split its Common Stock, (iv) bring itself current in the filing of
reports with the Commission and (v) file all the reports required
by federal and state regulatory and taxing authorities. On May 31,
1996, the Company changed its name to CNH Holdings Company and its
domicile to Nevada, and reverse split its Common Stock on a one for
one thousand (1:1,000) basis. The foregoing resulted in the
incurrence by the Company of obligations which were satisfied
through the issuance of Common Stock, which resulted in a change of
control of the Company. The Company is now current in its reports
with the Commission, all tax filings have been made with the
appropriate federal and state agencies and all information
concerning the foregoing has been disseminated to the public.
Item 2. Description of Property
The Company, as of the date of this report, owned no real or
personal property, tangible or intangible. Conversely, the Company
had no liabilities which had not either been paid in their entirety
or fully provided for. The executive offices of the Company are
being provided free of charge by its attorney on a month-to-month
basis. These offices are located at 4221 East Pontatoc Canyon
Drive, Tucson, Arizona 85718. The telephone number at this address
is (520) 577-6611.
Item 3. Legal Proceedings
No material legal proceedings to which the Company (or any officer
or director of the Company, or any affiliate or owner of record or
beneficially of more than five percent of the Common Stock, to
management's knowledge) is a party or to which the property of the
Company is subject is pending, and no such material proceeding is
known by management of the Company to be contemplated.
Item 4. Submission of Matters to a Vote of Security Holders
There were no meetings of security holders during the period
covered by this report; thus, this item is not applicable. The
shareholders of the Company did, however, act by consent, as
allowed by state law, on one occasion subsequent to the period
covered by this report. These actions are described in their
entirety under Item 1, above.
Item 5. Market for Common Equity and Related Shareholder Matters
There is no active trading market for the Common Stock. The Common
Stock is not listed on any exchange and is not quoted or traded on
the over-the-counter market. Currently, no broker maintains a
position or deals in the Common Stock and no bid or asked prices
are quoted in the pink sheets or any local newspaper.
On May 3, 1996, the Company effected a reverse one for one thousand
(1:1,000) capital share split. Concurrently, the authorized
capitalization of the Company was increased to 10,000,000 common
shares, $.001 par value per share, and 1,000,000 preferred shares,
$.01 par value. As of July 31, 1996, there were approximately
400,000 shares of Common Stock issued and outstanding, held of
record by approximately 1,000 shareholders. There were no
preferred shares outstanding.
The Company has paid no dividends on the Common Stock since
inception and does not expect to pay dividends in the foreseeable
future. There are, however, no restrictions on the payment of
dividends.
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
The Company's had no revenues, operating or otherwise, during the
fiscal years ended March 31, 1996, March 31, 1995, March 31, 1994,
March 31, 1993, March 31, 1992, or March 31, 1991.
Correspondingly, all expenses during these periods were
administrative in nature and immaterial in amount. Thus, no
meaningful comparison can be made between these fiscal years.
Liquidity and Capital Resources
The Company has had no liquidity sources since fiscal 1990. A
capital infusion subsequent to the period covered by this report
provided for the payment of all administrative expenses incurred.
Compliance with Beneficial Ownership Reporting Rules
Section 16(a) of the Securities Act of 1934, as amended ("Exchange
Act"), requires the executive officers and directors of the
Company, and persons who beneficially own more than 10% of the
Common Stock, to file initial reports of ownership and reports of
changes in ownership with the Commission. These officers,
directors and shareholders are also required to furnish the Company
with copies of certain of these reports. Based solely on a review
of copies of reports furnished to the Company during its fiscal
year ended December 31, 1995, and thereafter, or written
representations, if any, received by the Company from these persons
that no other reports were required, the Company believes that,
during fiscal 1991, 1992, 1993, 1994, 1995 and 1996 all applicable
Section 16(a) filing requirements were satisfied.
Item 7. Financial Statements
<PAGE>
Halliburton, Hunter& Associates, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
Coral Companies, Inc. and Consolidated Subsidiaries.
We have audited the balance sheet of Coral Companies, Inc. and
Consolidated Subsidiaries as of March 31, 1991, and the related
statements of income (loss), stockholders' equity and cash flows
for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
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 audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Coral
Companies, Inc. and Consolidated Subsidiaries as of March 31, 1991,
and the results of its operations and its cash flows for the year
then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements reflect the operations of the
Company through December 31, 1990, at which time the Company
discontinued operations.
Littleton, Colorado
June 18, 1996
Laventhol & Horwath 370-17th Street
Certified Public Accountants Suite 2100
Denver, CO 80202
(303) 595-4000
Independent Auditors' Report
Board of Directors
Coral Companies, Inc.
Denver, Colorado
We have audited the accompanying consolidated balance sheet of
Coral Companies, Inc., and subsidiaries as of March 31, 1990, and
the related consolidated statements of operations, stockholder's
equity and cash flows for the year then ended. The 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 consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Coral Companies, Inc., and subsidiaries as of March 31,
1990, and the results of their operations and their cash flows for
the year ended, conformity with generally accepted accounting
principles.
June 5, 1990<PAGE>
Independent Auditors Report
Board of Directors
Coral Companies, Inc.
Denver, Colorado
We have audited the accompanying consolidated balance sheets of
Coral Companies, Inc., and Consolidated Subsidiary as of March 31,
1989 and March 31, 1988, and the related consolidated statements of
operations and cash flows for the years ended March 31, 1989 and
March 31, 1988 and the consolidated statements of changes in
stockholders' equity for the years ended March 31, 1989 and March
31, 1988. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards required that we plan and
perform the audits 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 the assessing the of the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentations. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Coral Companies, Inc., and Consolidated Subsidiary as
of March 31, 1989 and March 31, 1988, and its changes in
stockholder equity for the years ended March 31, 1989 and March 31,
1988, in conformity with generally accepted accounting principles.
SCHUMACHER, BEICHLE & ASSOCIATES, INC.
13111 East Briarwood Avenue, Suite 340
Englewood, Colorado 80112
June 2, 1989<PAGE>
CORAL COMPANIES, INC., AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31,
1991 1990
ASSETS
Current Assets:
Cash $ ----- 2,000
Accounts receivable, net
of allowance for
doubtful accounts
of $34,000 at March 31, 1990 ----- 1,553,692
Lease receivable, current
portion (Note 8) ----- 394,152
Notes receivable, current portion ----- 4,500
Contract receivables, (Note 2) ----- 437,000
Prepaid royalties, related party
(Note 3) ----- 206,592
Inventory (Note 2)
----- 178,492
Prepaid expenses and other current
assets ----- 232,247
Total current assets ----- 3,008,675
Other Assets:
Leases receivable, excluding current
portion (Note 8) ----- 696,665
Advances to officers (Notes 2 and 14) ----- 20,000
Purchased software and capitalized software
development costs, net of accumulated
amortization of $319,000 at
March 31, 1990 ----- 1,956,607
Property and equipment, at cost net of
accumulated depreciation and amortization
of $280,000 and March 31, 1990
(Notes 2 and 4) ----- 983,136
Deferred charges and other (Note 2) ----- 97,935
$ ----- 6,763,018
See accompanying notes to consolidated financial statements.
March 31,
1991 1990
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ ---- 690,895
Accrued salaries ---- 156,943
Short-term borrowings (Note 5) ---- 225,000
Notes payable, current portion (Note 5) ---- 117,809
Current portion of obligations under
capitalized leases (Note 6) ---- 228,993
Unearned revenue, current portion ---- 97,793
Total Current Liabilities ---- $1,731,108
Obligations under capital leases, excluding
current portion (Note 6) ---- 362,509
Unearned revenue, excluding current
portion ---- 92,754
Total Liabilities ---- 2,186,371
Commitments (Notes 6, 15, and 16) ---- ----
Stockholders' Equity: Notes 3, 11,
12, and 13)
Preferred Stock, $.001 par value,
50,000,000 shares authorized,
11,000,000 shares issued
and outstanding at
March 31, 1991 ($220,000
liquidation preference) 220,000 220,000
Common Stock, $.0005 par value,
50,000,000 shares authorized,
18,560,744 and 19,061,245
shares issued and outstanding
at March 31, 1991 and 1990 9,531 9,281
Additional paid-in capital 4,483,453 4,483,203
Accumulated deficit (4,712,984) (135,837)
Total Stockholders' Equity ---- 4,576,647
$ ---- 6,763,018
See accompanying notes to consolidated financial statements.
CORAL COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended March 31,
1991 1990 1989
Revenue (Notes 2 and 10)
Hardware sales $891,008 4,832,670 4,215,877
Software sales 312,453 1,745,466 396,600
Consulting and other revenue 1,510,598 1,388,245 980,628
Total operating revenue 2,714,059 7,966,381 5,593,105
Cost of Revenue:
Hardware sales 669,405 3,548,892 3,062,498
Software sales (Note 3) 353,261 649,801 164,388
Consulting and other revenue 820,000 768,419 825,825
1,842,666 4,967,112 4,052,711
Gross margin 871,393 2,999,269 1,540,394
Operating Expenses:
Selling, general and
administrative expenses 2,607,507 2,462,302 1,385,553
Depreciation and
amortization (Note 2) 299,139 147,854 115,396
Provision for doubtful accounts 423,619 301,611 201,168
Total operating expenses 3,330,265 2,911,767 1,702,117
Operating (loss) income (2,458,872) 87,502 (161,723)
Other Income (Expenses):
Interest income 36,836 49,478 50,319
Interest expense (188,868) ---- (79,803)
Gain (loss) on disposition of
property and equipment (40,165) ---- 10,965
Income (loss) before income tax
and extraordinary item (2,651,069) 136,980 (180,242)
Income tax expense 1,991 51,000 ----
Income (loss) before
extraordinary item (2,653,060) 85,980 (180,242)
Extraordinary Items:
Loss on termination of
business operations (1,924,087) ---- ----
Utilization of NOL
carryover ---- 51,000 ----
Net income (loss) $(4,577,147) 136,980 (180,242)
Per share data:
Income (loss) before
extraordinary item $ (.14) .01 (.01)
Extraordinary items (.10) ---- ----
Net income (loss) $ (.24) .01 (.01)
Weighted average shares outstanding
(Note 1) $18,810,995 16,946,679 23,307,099
See accompanying notes to consolidated financial statements.<PAGE>
CORAL COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended March 31,
1991 1990 1989
Cash flows from operating activities:
Net income (loss) $(4,577,147) 136,980 (180,242)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 299,139 337,976 205,734
Decrease (increase) in
receivables 3,106,009 (1,290,724) (336,403)
Decrease (increase) in
prepaid royalties 206,592 (130,412) (76,180)
Decrease (increase) in
inventory 178,492 (128,036) 148,857
Decrease (increase) in prepaid expenses
and other current assets 232,247 (99,452) 5,401
(Decrease) increase
in accounts payable
and accrued expenses (1,001,513) 115,905 174,007
(Decrease) increase in
unearned revenue (190,547) 157,047 33,500
Other, net ---- ---- (16,457)
Total adjustments 2,830,419 (1,037,696) 138,459
Net cash used in
operating activities (1,746,728) (900,716) (41,783)
Cash flows from investing activities:
Decrease (increase) in
capitalized software
and property and
equipment 2,640,604 (2,716,388) (380,752)
Decrease (increase) in
deferred charges and other 97,935 (99,143) ----
Net cash used in
investing activities 2,738,539 (2,815,531) (380,752)
Cash flows from financing activities:
Issuance of stock and
exercise of warrants 500 3,152,912 934,572
(Decrease) increase in notes
and leases payable (994,311) 546,531 (549,552)
Net cash provided by
financing activities (993,811) 3,699,443 385,020
(Decrease) in cash (2,000) (16,804) (37,515)
Cash, beginning of period 2,000 18,804 56,319
Cash, end of period $ ---- 2,000 18,804
Cash paid during the year for:
Interest (net of
amount capitalized) $ ---- ---- 79,803
See accompanying notes to consolidated financial statements.<PAGE>
CORAL COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
THREE YEARS ENDED MARCH 31, 1991
Preferred Stock Common Stock Additional
Shares Amount Shares Amount Paid-in-
Capital
Balance at March
31, 1988 ---- ---- 21,000,000 10,500 614,500
Shares issued
in exchange ---- ---- 3,677,000 1,838 451,031
Shares issued for
warrants
exercised ---- ---- 937,197 469 481,234
Net Loss ---- ---- ---- ---- ----
Balance at March
31, 1989 ---- ---- 25,614,197 12,807 1,546,765
Stock exchange,
common for
preferred 11,000,000 220,000 (11,000,000) (5,500) (214,500)
Shares issued for
services
rendered ---- ---- 360,000 180 8,820
Shares issued for
warrants
exercised ---- ---- 711,547 356 627,886
Common stock
issued ---- ---- 2,875,000 1,438 3,448,562
Stock issuance
costs ---- ---- ---- ---- (934,330)
Net income ---- ---- ---- ---- ----
Balance at March
31, 1990 11,000,000 220,000 18,560,744 9,281 4,483,203
Common stock
purchased ---- ---- 500,501 250 250
Net (loss) ---- ---- ---- ---- ----
Balance at
March 31,
1991 11,000,000 $220,000 19,061,245 $9,531 4,485,453
See accompanying notes to consolidated financial statements.<PAGE>
CORAL COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Continued)
THREE YEARS ENDED MARCH 31, 1991
Treasury Stock Accumulated Total
Shares Amount Deficit
Balance at March
31, 1988 --- --- (92,575) $532,425
Shares issued
in exchange --- --- 452,869
Shares issued for
warrants
exercised --- --- 481,869
Net Loss --- --- (180,242) (180,242)
Balance at March
31, 1989 --- --- (272,817) 1,286,755
Stock exchange,
common for
preferred ---
Shares issued for
services
rendered --- --- --- 9,000
Shares issued for
warrants
exercised --- --- --- 628,242
Common stock
issued
Stock issuance --- --- --- 3,450,000
costs --- --- --- (934,330)
Net income --- --- --- 136,980
Balance at March
31, 1990 --- --- (135,980) 4,576,647
Common stock
purchased --- --- --- 500
Net (loss) --- --- (4,576,647) (4,577,147)
Balance at
March 31,
1991 --- $--- $(4,712,984) $ ---
See accompanying notes to consolidated financial statements.<PAGE>
1.
Organization and Principles of Consolidation
The consolidated financial statements of Coral Companies, Inc,
and Consolidated Subsidiaries as of March 31, 1991, include the
accounts of Coral Companies, Inc., formerly I.S.B.C. Corp., and its
wholly-owned subsidiaries, Coral Group, Inc. and Coral TeleSystems,
Inc., and its majority owned subsidiary Coral Pacific, Inc. All
significant intercompany balances and transactions have been
eliminated.
The Company specializes in the marketing of software solution
systems to companies involved primarily in the direct marketing and
telemarketing industries.
I.S.B.C. Corp. was incorporated in Delaware on April 15, 1987.
All references to shares of common stock and amounts are
retroactively adjusted to give effect to the 1 for 50 reverse stock
split, change in par value and decrease in authorized shares as
described in Note 12.
On January 29, 1988, I.S.B.C. Corp. completed a public
offering of 800,000 units at a price of $.50 per unit. Each unit
consisted on one share of common stock ($.0005 par value) and three
redeemable warrants. Each Class A redeemable warrant entitled to
holder to purchase one additional share of common stock at $.625
per share through December 4, 1988. Each class B warrant entitled
the holder to purchase one share of common stock at an exercise
price of $.875 per share through December 4, 1989. Each Class C
redeemable warrant entitled the holder to purchase one share of
common stock at an exercise price of $1.125 per share through
December 4, 1990. During the year ended March 31, 1989, 782,424 A
warrants, 100,675 B warrants and 54,099 C warrants were exercised
for a total of 937,197 additional shares issued and total capital
contribution of $481,703. On May 25, 1989, the Company called the
outstanding Class B warrants for redemption. Approximately 99% of
the Class B warrants were exercised prior to the June, 26, 1989
redemption date. During the period ended March 31, 1990, 690,416
Class B warrants and 21,131, Class C warrants were exercised for a
total of 711,547 additional shares issued and a total capital
contribution of $565,438 after expenses. The Company may call the
remaining Class C warrants for redemption at $.0005 per warrant
upon thirty days notice. Warrant holders then have 30 days within
which to exercise their warrants, after which time the warrants are
void (Note 12).
On June 27, 1988, I.S.B.C. Corp. issued 21,000,000 shares of
its common stock in exchange for all of the outstanding shares of
Coral Group, Inc. Subsequent to the exchange of stock, I.S.B.C.
Corp. changed its name to Coral Companies, Inc. Coral Group, Inc.
was incorporated on March 12, 1984, and commenced operations in
November 1984, Coral Group, Inc.'s primary business is the
marketing of computer hardware and software as well as providing
consulting services, installation support,training programs and
software maintenance for its customers. Since the shareholders of
Coral Group, Inc. owned approximately 85% of Coral Companies, Inc.
immediately after the exchange, the stock exchange has been
accounted for as a reverse acquisition of Coral Companies, Inc. by
Coral Group, Inc. The outstanding shares of Coral Group, Inc.
prior to the exchange have been adjusted to reflect the subsequent
recapitalization and the 1 for 50 reverse stock split which was
effective July 20, 1989. The net tangible book value of Coral
Companies, Inc. (I.S.B.C. Corp.) was $452,869 as of the date of the
exchange.
The Company ceased operations as of December 31, 1990, and has
not resumed operations since that time. Operations reported for
March 31, 1991 are those reported through December 31, 1990, with
no subsequent activity.
2. Significant Accounting Policies
Software Development Costs
Computer software development costs are expensed until
technological feasibility has been established. Costs incurred
from that time until the product is available for general release
to customers are capitalized. Technological feasibility for the
Company's computer software products is based upon achievement of
a detail program design free of high-risk development issues. The
establishment of technological feasibility and the ongoing
assessment of recoverability of capitalized computer software
development costs requires considerable judgment by management with
respect to certain external factors, including, but not limited
to,
technological feasibility, anticipated future gross revenues,
estimated economic life and changes in software and hardware
technology.
Capitalized software costs are amortized on a
product-by-product basis. The annual amortization is the greater
of: a. the ratio that current gross revenue for a products bears to
the total of current and anticipated future gross revenue for that
product; or b. the straight-line method over five years. Routine
maintenance of existing products is charged to expense as incurred.
During the year ended March 31, 1990, the Company increased
the estimated useful lives of its original software product to
reflect the significant enhancements that were made to the product
during fiscal years 1989 and 1990. The change had the effect of
decreasing amortization expense and increasing income before
extraordinary item and net income for 1990, by approximately
$80,000($.005 per share).
Inventory
Inventory consists primarily of computer hardware components
and is accounted for at the low of cost (first-in, first-out) or
market.
Revenue Recognition
Revenue from the sale of computer hardware is recognized upon
transfer of risk of loss to the customer. Revenue from the sale of
computer software is recognized upon physical delivery of the
software to the end user if there are no significant program
modifications required. In the event the software requires
significant modification before installation by the user, revenue
on the sale, including revenue from performing the modification is
recognized on the percentage of completion method over the period
required to complete the modification.
Revenue from consulting services is recognized as the services
are performed if the services are provided on an hourly basis, or
on
the percentage of completion basis over the period of the contract
if the contract specifies a fixed price for the service.
Development contract costs in excess of contract revenue are
capitalized if, in management's opinion, the software product
developed has future sales potential which allows the Company to
realize its cost. If revenues exceed contract costs, they are
recognized upon completion of the contract (Note 7).
Depreciation and Amortization
Property and equipment are recorded at cost. Depreciation and
amortization is computed on the straight-line method based on an
estimated useful life of five years.
Deferred Charges
Costs incurred to acquire marketing rights for software
products are deferred until the product acquired is ready for sale.
Once it is determined that the product is ready for sale, the costs
incurred are amortized on a straight line basis over the life of
the
marketing right agreement. To date, no deferred charges have been
expensed or amortized.
Income Taxes
The Company and its subsidiaries file a consolidated federal
income tax return. At March 31, 1991, the Company has available
net
operating loss (NOL) carryforwards of approximately $4,700,000 for
income tax reporting purposes which will expire between 2001 and in
2005. The NOL for financial reporting purposes differs from that
for
tax purposes primarily due to differences resulting in the use of
accelerated methods of depreciation for tax purposes and from
software development costs being deducted for tax purposes.
The extraordinary item reported in the statements of
operations
represents the income tax benefit arising from the utilization of
net operating loss carryforwards to offset 1990 income.
In December, 1987, the Financial Accounting Standards Board
issued a new standard on accounting for income taxes. The Company
is required to adopt the new accounting and disclosure rules for
years beginning after December 15, 1991, although earlier
implementation is permitted. Adoption of the new standard may
result in a catch-up adjustment that may be reported in the year
the
standard is implemented or in an earlier year if the Company elects
retroactive application. A decision as to the timing of adoption
and the selection of the alternative methodologies in implementing
this new standard will be made based on a comprehensive analysis of
this complex area. The Company anticipates that the adoption of
this standard will not have a significant effect on its financial
position and results of operations.
3 . Related Parties
Advances to Officers
During the year ended March 31, 1988, the Company loaned
$10,000 each to two officers of the Company. The advances bear no
interest and have not stated repayment terms and have therefore
been classified as noncurrent assets. The balance of $20,000 was
outstanding at March 31, 1991.
License Agreement
Holding and Management Company (Caribs), N.V. ("Caribs"), a
company controlled by two directors of the Company entered into an
exclusive license agreement with Coral Group, Inc. covering two
products with an initial terms of twenty years, renewable at Coral
Group, Inc.'s option for an indefinite period. The Company was to
market the products. This original agreement stipulated that
royalties would be payable to Caribs in the amount of 35 % of the
sub-license fees received by the Coral Group, Inc. until $500,000
has been paid. Royalties would then be reduced to 25% of the
license fees until cumulative payments equal $1,000,000 and 16% of
the license fees thereafter. The agreement was amended to provide
for royalties of 15% until cumulative payments equalled $2,000,000
and then Coral Group, Inc. would own the rights royalty-free.
4. Property and Equipment
Property and equipment is summarized as follows:
Property and equipment under capitalized lease is summarized
as follows (Note 6)
Year ended March 31,
1991 1990 1989
Computer equipment $ --- 617,017 174,333
Office equipment --- 173,686 40,020
Leasehold improvements --- 38,343 13,220
Less accumulated depreciation --- 829,046 227,573
Property and equipment under capitalized lease is summarized as
follows (Note 6).
5 . Short-Term Borrowings and Long-Term Debt
The Company had a line of credit with a bank that bears
interest at prime rate plus 1.5%, payable monthly, collateralized
by
accounts receivable and inventory. The line of credit agreement
requires the Company to maintain certain financial covenants.
Draws are limited o the lesser of $750,000 or the borrowing base
defined as 75% of accounts receivable. Borrowings outstanding at
March 31, 1990, were $225,000. The maximum borrowings outstanding
for the year ended March 31, 1990 was $600,000. The average
outstanding balances on the line during the year ended March 31,
1990 was $121,250 and the average interest rate was 12.34 %. The
loan agreement expired July 1, 1990. Total interest expense for
the year ending March 31, 1990, was $52,000 and was capitalized
with software development costs.
At March 31, 1991, and March 31, 1990, notes payable consisted
of the following:
1991 1990
Note payable to bank, interest at approximately
11%, payable in monthly installments of
approximately $12,000, collateralized by a
computer, principal payable upon sale thereof,
final payment due January 1991 $ --- 117,809
Less current portion --- 117,809
Notes payable, net of current portion --- ---
6. Commitments
The Company leases computer and office equipment under capital
leases that were to expire during the next three years (Note 4),
and
office space under noncancellable operating leases that expire
during the next four years. The minimum annual rental of real
property is subject to escalation for increases in taxes,
utilities, and other operating costs. Interest rates on the
capital leases range from 7.75 % to 15%. The leases were
derminated upon the Company's discontinuation of operations.
7. Development Contracts
The Company has entered into and completed various software
development contracts with unrelated third parties for enhancements
to the Company's software products. The enhancements were
determined by the Company to have continuing benefits to the
existing products and therefore the Company agreed to pay part of
the development costs. The Company's share of the cost to develop
these enhancements was capitalized in accordance with the Company's
capitalization policy as described in Note 2.
8. Computer Hardware and Software Under Sales-Type Leases
The Company had leases with customers accounted for as
sales-type leases. All leases were terminated when the Company
ceased operations.
9. Accounts Receivable
Included in accounts receivable at March 31, 1989, is $275,338
related to an agreement by the Company to take a trade in of
certain computer equipment. During fiscal year 1990, the equipment
was received by the Company. One of the computers was taken in as
inventory at the trade-in value which approximated current market
value. The remaining equipment was recorded by the Company as a
fixed asset at the trade-in value.
10. Major Customers
During the year ended March 31, 1989, the Company had sales to
two customers of approximately $2,630,000 and $1,120,000, which
represented 47% and 20% respectively of the total revenue. During
the year ended March 31, 1990, the Company had sales to two
customers which comprised 32% and 26% of total revenue, or
approximately $2,500,000 and 2,070,000 respectively. The Company
generally has major customers within a given year, however, the
Company is not dependent on these customers for future operating
revenue.
11. Stock Issued for Services
During the year ended March 31, 1989, the Company authorized
the issuance of 360,000 shares of the Company's stock for services
rendered by a consultant. The total price of the shares was $180
based upon the par value of the shares. The Board of Directors
valued these restricted shares at $9,000 and the Company recorded
the difference between the cost and the value as an expense in the
financial statements. These shares were issued during April 1989.
12. Recapitalization
On June 12, 1989, the Company announced a plan to
recapitalized the Company. Under the recapitalization plan,
effective July 20, 1989, the Company reverse split its common stock
on a 1 for 50 basis, changed the par value to $.0005 per share,
decreased the authorized common shares to 50,000,000 and authorized
50,000,000 of preferred stock. Also management and certain other
shareholders deposited 11,000,000 of their shares, representing
approximately 41.2% of the outstanding shares, in escrow until the
Company achieved certain earnings levels. Effective August 1,
1989, the 11,000,000 shares held in escrow were exchanged for a new
series of redeemable preferred stock on a one-for-one basis, and
the escrow was dissolved. Upon the effectiveness of the
recapitalization plan, each 50 Class C warrants of the Company
become exercisable for one share of new common stock at a price of
$1.125. The financial statements have been adjusted retroactively
to give effect to the reverse split, change in par value and
decrease in authorized shares.
13. Redeemable Preferred Stock
The preferred stock is entitled to one vote per share, is not
entitled to receive any dividends that may be declared and has a
liquidation preference of $.02 per share. The liquidation
preference of $220,000 has been reclassified from common
stockholders' equity to preferred stock. The preferred stock is
convertible into common stock on a one-for-one basis upon the
achievement by the Company of certain specified pre-tax earnings,
commencing with the year ending March 31, 1990, The preferred stock
is mandatorily redeemable by the Company on June 30, 1999, at the
price of $.001 per share, $11,000 for all preferred stock currently
outstanding.
14. Profile 2000
During the fourth quarter ending March 31, 1990, the Company's
subsidiary, Coral TeleSystems, Inc. ("CTI") (whose sole business
currently consists of Profile 2000) exercised the termination
clause in a Purchase Agreement with a company which allowed CTI to
retain rights to the software acquired as part of the Purchase
Agreement. This agreement allowed CTI to terminate the agreement
and retain the rights to the product if CTI's incurred liabilities
and costs exceeded $250,000. The Company exercised the termination
clause on February 28, 1990. The liabilities and costs by CTI
through February 18, 1990, were approximately $605,000 and have
been capitalized as purchased software. A portion of these costs
was previously expensed by the Company prior to February 18, 1990.
15. Stock Option Plan
During fiscal 1990, the Company adopted a stock option plan
(the "Plan") to attract, retain and reward key managerial employees
by offering them an opportunity to have a greater proprietary
interest in the Company. Options granted under the Plan may be
"incentive stock options" within the meaning of that term in
Section 422A of the Internal Revenue Code of 1954, as amended, or
"non-incentive stock options" and may be accompanied by stock
appreciation rights (SARs). Options may be granted for a number of
shares not to exceed, in aggregate, 2,900,000 shares of Common
Stock. The Compensation Committee (the "Committee") of the Board
of Directors shall determine, within the limits of the Plan, those
employees to whom and the time or times at which options shall be
granted. The Committee shall also determine the number of shares
to be subject to each option, the duration of each option,
(however, the maximum term is five years from each option), the
time or times within which all or portions of each option may be
exercised, whether an option shall include SARs and the other
property that may be accepted in full or partial payment upon
exercise of the stock option. The option price of each Incentive
Stock Option to purchase stock shall be at least 100% of the fair
market value at the time the option is granted. Non-incentive
Stock Options may be at a price less than the fair market value at
the time the option is granted as determined by the Committee. As
of March 31, 1990, no options were granted under the Plan.
16. Subsequent Event
In June 1990, the Company issued 500,000 shares of Common
Stock to Tradux Corp. ("Tradux") pursuant to an exclusive marketing
rights agreement (the "Agreement") as consideration for a software
product being developed by them. Pursuant to the agreement, these
shares will be held in escrow and not delivered to Tradux until
there is a mutual determination that a marketable product has been
produced for sale by the Company. Tradux does not have any voting
rights while the shares are in escrow. In the event that the
product is not completed by August 1, 1990, subject to an extension
of ninety days through November 1, 1990, the Company has the right
to cancel its obligations under the Agreement and all consideration
given to Tradux is required to be returned to the Company.
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
The former auditors of the Company, Laventhol & Horwath, went out
of business during 1993. The Company, therefore, retained the
services of Halliburton, Hunter & Associates, P.C. The decision to
change was approved by the board governing the Company, which has
no standing audit or similar committee. The Company has had no
disagreement with its accountants on any matter of accounting
principal or practice, financial statement disclosure or auditing
scope or procedure which would have caused either of the
accountants to make reference in the irrespective reports upon the
subject matter of the disagreement. Further, the principal
accountants' respective reports on the financial statements does
not contain an adverse opinion or a disclaimer of opinion or
qualification as to audit scope or accounting principle.
PART III
Item 9. Directors and Executive Officers of the Company
The following table sets forth all current directors and executive
officers of the Company, as well as their ages:
NAME AGE POSITION WITH COMPANY *
Paul M. Lionti 48 Sole Director, President,
Chief Executive,
Financial and
Accounting Officer,
Treasurer
* No current director has any arrangement or understanding whereby
they are or will be selected as a director or nominee.
The executive officer will hold office until the next annual
meeting of shareholders and until his successor has been duly
elected and qualified. The officers are elected by the Board of
Directors at its annual meeting immediately following the
shareholders' annual meeting and hold office until their death or
until they earlier resign or are removed from office. There are no
written or other contracts providing for the election of directors
or term of employment of executive officers, all of whom serve on
an "at will" basis.
The Board of Directors currently consists of one member, Mr. Paul
M. Lionti. The Company does not have any standing audit,
nominating or compensation committees, or any committees performing
similar functions. The board will meet periodically throughout the
year as necessity dictates. Since 1990, the board has had one
meeting, which occurred subsequent to fiscal 1996.
Executive Profiles
Mr. Lionti has been a private businessman in Dallas, Texas, during
the last five years. He became a Director and the President and
Chief Executive Officer of the Company in 1989. In 1996, he became
Chief Financial and Accounting Officer and Treasurer of the Company
as well.
Item 10. Executive Compensation
No compensation has been paid since 1990 to the Board of Directors
or executive officers of the Company in their capacities as such.
Item 11. Security Ownership of Management and Certain Others
Based upon information which has been made available to the Company
by its stock transfer agent, the following table sets forth, as of
July 31, 1996, the shares of Common Stock owned by each current
director, by directors and executive officers as a group and by
each person known by the Company to own more than 5% of the
outstanding
Common Stock:
Title of Class Name and Address Number of Percent of
of Beneficial Owner Shares Class (1)
Common Stock Paul M. Lionti 1,595 (2)
Directors and Executive Officers
as a Group 1,595 (2)
(one in number):
(1) Based on 400,000 shares of common stock issued and outstanding
on July 31, 1996.
(2) Less than 1%.
Item 12. Certain Transactions
No disclosure is required under this item.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Articles of Incorporation and Amendments (Nevada)
3.2 Bylaws (Nevada).
4 Specimen stock certificate.*
10 *
*Filed as exhibits to the Registration Statements on Form S-18 (No.
33-17008-NY) and Form S-1
(No. 33-29899).
(b) Forms 8-K: None.
<PAGE>
SIGNATURES
In accordance with the requirements of the Section 13 or 15(d) of
the Securities Exchange Act of 1934, registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver, State of Colorado
on the 6th day of August, 1996.
CNH HOLDINGS COMPANY
(Registrant)
By: /s/ Paul M. Lionti
Paul M. Lionti, Chief Executive Officer
By: /s/ Paul M. Lionti
Paul M. Lionti, Chief Financial
and Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of
1934,
this report has been signed below by the following person on behalf
of the registrant in the capacity on this 6th day of August, 1996.
/s/ Paul M. Lionti
Paul M. Lionti, Director
<PAGE>
EXHIBIT INDEX
3.1 ARTICLES OF INCORPORATION AND AMENDMENTS (NEVADA)
3.2 BYLAWS (NEVADA)<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION AND AMENDMENTS (NEVADA)<PAGE>
ARTICLES OF INCORPORATION
OF
CNH HOLDINGS COMPANY
Know All Men By These Presents That: the undersigned incorporator,
being a natural person of the age of eighteen (18) years or more
and desiring to form a body corporate under the laws of the State
of Nevada, does hereby sign, verify and deliver in duplicate to the
Secretary of State for the State of Nevada the following Articles
of Incorporation.
ARTICLE I
NAME
The name of the Corporation shall be CNH Holdings Company (the
"Corporation").
ARTICLE II
PERIOD OF DURATION
The Corporation shall exist in perpetuity from and after the date
of filing these Articles of Incorporation with the Secretary of
State for the State of Nevada, unless and until dissolved according
to law.
ARTICLE III
PURPOSE AND POWERS
The purpose for which the Corporation has been formed and the
powers
to effectuate this purpose are as follows:
Section 3.1 Purpose. The purpose for which the Corporation has
been formed is to transact any and all lawful business for which
corporations may be formed under the laws of the State of Nevada.
Section 3.2 Powers. The Corporation shall have and may exercise
all rights, powers, and privileges now and hereafter conferred upon
corporations formed under the laws of the State of Nevada and may
do
everything necessary, lawful, suitable, and proper for the
accomplishment of its corporate purpose, including, without
limitation, the right, power, and privilege to:
(a) Acquire, construct, maintain, develop, improve, rent,
use,
mortgage, and dispose of real property and interests, estates, and
rights therein;
(b) Guarantee, purchase or otherwise acquire, hold, assign,
transfer, mortgage, create a security interest in, transfer to
trust
by deed or otherwise, pledge, exchange, or sell or otherwise
dispose
of shares or other evidence of the equity of, or debt created by,
other corporations and, while the holder thereof, exercise all
rights and privileges of ownership, including, without limitation,
the right to vote to the same extent as a natural person might or
could do;
(c) Draw, make, accept, endorse, discount, execute, and issue
promissory notes, drafts, bills of exchange, warrants, debentures,
and other negotiable, non-negotiable, transferable, and
non-transferable instruments or writings evidencing indebtedness of
the Corporation;
(d) Enter into, make, perform, and rescind contracts of every
kind, without limitation as to amount, for any lawful purpose and
with any person, firm, association or corporation, town, city,
county, state, territory, government, or other entity or person or
persons;
(e) Borrow money by issuing bonds, debentures, or any other
evidence of indebtedness and secure the same by mortgage, pledge,
deed of trust, or otherwise;
(f) Purchase, hold, sell, and transfer the shares or other
evidence of equity in the Corporation;
(g) Have one or more of its officers or agents conduct any or
all of its operations and business and promote its objects within
or
without the State of Nevada without restriction as to place or
amount;
(h) Do any or all of the things set forth in this article as
principal, agent, broker, contractor, trustee, or otherwise, either
alone, in company with others, or both;
(i) Guarantee, purchase or otherwise acquire, hold, assign,
transfer, mortgage, create a security interest in, transfer to
trust
by deed or otherwise, pledge, exchange, or sell or otherwise
dispose
of securities (as defined, without limitation, in section 2(1), or
otherwise, of the Securities Act of 1933, as amended, and/or in
section 3(a)(10), or otherwise, of the Securities Exchange Act of
1934, as amended, and as otherwise defined in any federal or state
act regulating the offering, issuance, and sale of securities and
the interpretation of said term thereunder), whether created or
issued by any person, firm, association, corporation, or
government,
or subdivision thereof; make payment therefor in any lawful manner;
and exercise, as owner or holder, any and all rights, powers, and
privileges in respect thereof;
(j) Purchase or otherwise acquire the equity, goodwill,
rights, property, and franchises and take over as a going concern
or
otherwise the whole or any part of the assets and liabilities of
any
person, firm, association, or corporation and hold or in any manner
dispose of the whole or any part of the property so acquired; merge
or consolidate with or into any corporation in such manner as may
be
permitted by law; and continue to conduct the whole or any part of
any business acquired insofar as a corporation of this character
may
lawfully do so with the right to exercise all powers necessary or
convenient in and about the conduct and management of such
business;
and
(k) Enter into any partnership, limited or general, as a
limited or general partner, or both; enter into any other
arrangement for sharing profits, union of interest, unitization or
farmout agreements, reciprocal concessions; and cooperate with any
corporation, association, partnership, syndicate, entity, person,
or
governmental, municipal, or public authority, domestic or foreign,
for the purpose of carrying on any business which the Corporation
is
authorized to carry on or any business or transaction deemed
necessary, convenient, or incidental to carrying out the purpose
for
which the Corporation has been formed.
ARTICLE IV
Capital
Section 4.1 Classes of Shares. The proprietary interest of the
Corporation shall hereafter be divided into two classes of stock,
which are collectively referred to herein as "Shares." The first
is
a class of common stock, par value $.001 per share, and the second
a class of preferred stock, par value $.01 per share. (An
individual share within the respective classes of stock shall be
referred to appropriately as either a "Common Share" or a
"Preferred
Share.") The Corporation has the authority to issue 10,000,000
Common Shares and 1,000,000 Preferred Shares. The authority of the
Corporation to issue shares may be limited by resolution of the
board of directors of the Corporation (the "Board of Directors").
Shares may be issued from time to time for such consideration in
money or property (tangible or intangible) or labor or services
actually performed as the Board of Directors may determine in their
sole judgment and without the necessity of action by the holders of
Shares. Common Shares may be issued in series. Shares may not be
issued until paid for and, when issued, are nonassessable.
Fractional Shares may not be issued by the Corporation and, in the
event fractional shares are or may become outstanding, the
Corporation shall redeem said shares at the then market price.
Section 4.2 Preferred Shares. The Board of Directors is
authorized
to act by resolution, subject to limitations prescribed by the laws
of the State of Nevada, these Articles of Incorporation, the Bylaws
of the Corporation (the "Bylaws"), and previous resolutions by the
Board of Directors limiting this authorization, to provide for the
issuance of Preferred Shares in series. To exercise this authority
the Board of Directors must first designate the series so
established, and, secondly, fix and determine the relative rights,
preferences, and limitations of the Preferred Shares in the series
established to the extent not fixed and determined by these
Articles
of Incorporation. The extent of this authority, with respect to
each series established, is to be determined by reference to the
"Nevada Corporation Code," articles 1 through 10, inclusive, of
title 7, Nevada Revised States, as amended. Without limiting the
generality of the foregoing, this authority includes fixing and
determining the following:
(a) The number of Preferred Shares which may be issued under
the series established, and the designation of such series;
(b) The rate of dividend on Preferred Shares of that series,
if any, the time of payment of dividends, whether dividends shall
be
cumulative, and, if cumulative, the date from which dividends shall
begin accruing;
(c) Whether Preferred Shares of that series may be redeemed,
and, if redeemable, the redemption price, terms, and conditions of
redemption;
(d) Whether to establish a sinking fund or make other
provisions for the redemption or purchase of Preferred Shares of
that series;
(e) The amount payable per Preferred Share of that series in
the event of the dissolution, liquidation, or winding up of the
Corporation, whether voluntarily or involuntarily;
(f) Voting powers, if any, of the series; and
(g) Whether the series shall have conversion privileges, and,
if convertible, the terms and conditions upon which Preferred
Shares
of that series shall be convertible, including, without limitation,
the provision, if any, for adjustment of the conversion rate and
the
payment of additional amounts by holders of such shares upon the
exercise of this privilege.
Irrespective of the limitations set forth in subsection (a) of this
section, the Board of Directors may, at any time after the number
of
Preferred Shares authorized under a series has been established,
authorize the issuance of additional Preferred Shares of the same
series or reduce the number of Preferred Shares authorized under
such series. All Preferred Shares shall be identical to each other
in all respects, except as to those relative rights, preferences,
and limitations established by the Board of Directors pursuant to
its authority as determined by reference to the Nevada Corporation
Code and as established in subsections (a) through (g), inclusive,
of this section, as to which there may be variations between
series.
Section 4.3 Voting. Each record holder of Common Shares (and to
the extent, if any, provided by the laws of the State of Nevada or
by the Board of Directors acting pursuant to the authority set
forth
in Section 4.2(f). of this article each record holder of Preferred
Shares) shall have one vote on each matter submitted to a vote for
each Share standing in his name on the books of the Corporation.
Unless otherwise required under the laws of the State of Nevada,
these Articles of Incorporation, the Bylaws, or the resolution of
the Board of Directors creating any series of Preferred Shares, no
matter submitted to a Shareholder vote shall require the approval
of
a class or series of Shares voting separately.
Section 4.4 Quorum. At all meetings of Shareholders, one-third
(1/3) of the Shares entitled to vote at such meeting, whether
represented in person or by proxy, shall constitute a quorum and at
any meeting at which a quorum is present the affirmative vote of a
majority of the Shares represented at such meeting and entitled to
vote on the subject matter shall be the act of the Shareholders.
ARTICLE V
RIGHTS OF SHAREHOLDERS
Section 5.1 Cumulative Voting. Shareholders are not entitled to
cumulative voting unless expressly provided to the contrary by
resolution of the Board of Directors in establishing a series
within
a class of Shares.
Section 5.2 Preemptive Rights. Shareholders shall not be entitled
to any preemptive or similar rights, including, without limitation,
any preemptive or similar right to purchase, subscribe for, or
otherwise acquire unissued or treasury Shares of the Corporation
that may be issued at any time, or to purchase, subscribe for, or
otherwise acquire any options, warrants, or privileges to purchase,
subscribe for, or otherwise acquire any such unissued or treasury
Shares, or to purchase, subscribe for, or otherwise acquire bonds,
notes, debentures, or other securities convertible into or carrying
options, warrants, or privileges to purchase, subscribe for, or
otherwise acquire any such unissued or treasury Shares unless
expressly provided to the contrary by resolution of the Board of
Directors in establishing a series within a class of Shares.
ARTICLE VI
REGISTERED OFFICER AND REGISTERED AGENT
The registered office of the Corporation is One East First Street,
Reno, Nevada 89501, and the name of the registered agent of the
Corporation at such address is The Corporation Trust Corporation of
Nevada.
ARTICLE VII
BOARD OF DIRECTORS
Section 7.1 Exercise of Corporate Powers. The corporate powers
shall be exercised by the Board of Directors. The number of
directors shall be set under the Bylaws or by resolution of the
Board of Directors, either of which shall meet the requirements set
forth under the Nevada Corporation Code, and subject to the
limitation that the initial Board of Directors shall consist of one
person, whose name and address is as follows: Paul M. Lionti; 17659
Sun Meadow, Dallas, Texas 75252.
Section 7.2 Limitation of Liability. To the fullest extent
permitted by the Nevada Corporation Code, as the same exists or may
hereafter be amended, a director of the corporation shall not be
liable to the Corporation or to the Shareholders for breach of
fiduciary duty as a director.
Section 7.3 Delegation to Bylaws. All other provisions relating
to the governance of the Board of Directors shall be set forth in
the Bylaws, or established by resolutions of the Board of Directors
in accordance with authority granted thereby.
ARTICLE VIII
TRANSACTIONS WITH CERTAIN INTERESTED PARTIES
Section 8.1 Directors and Officers. No contract or other
transaction between the Corporation and one or more of its
directors
or officers or any other corporation, firm, association,
or entity in which one or more directors of the Corporation are
directors or officers or are financially interested shall be either
void or voidable solely because of such relationship or interest,
or
solely because such directors are present at the meeting of the
Board of Directors or a committee thereof which authorized,
approved, or ratified such contract or transaction, or solely
because their votes were counted for such purpose if: (a) the
fact
of such relationship or interest is disclosed or known to the Board
of Directors or committee which authorizes, approves, or ratifies
the contract or transaction by a vote or consent sufficient for the
purpose without counting the votes or consents of such interested
persons; (b) the fact of such relationship or interest is disclosed
to or known by the Shareholders entitled to vote and they
authorize,
approve, or ratify such contract or transaction by vote or written
consent; or (c) the contract or transaction is fair and
reasonable
to the Corporation. Common or interested directors may be counted
in determining the presence of a quorum at a meeting of the Board
of Directors or a committee thereof which authorizes, approves, or
ratifies such contract or transaction.
Section 8.2 Certain Other Persons. No contract or other
transaction between the Corporation and one or more of its
employees, fiduciaries, or agents or between the Corporation and
any
corporation, firm, association, or entity of which one of the
employees, fiduciaries, or agents of the Corporation is a director,
officer, member, employee, trustee or shareholder, or otherwise has
a direct or indirect financial interest is void or voidable solely
because of such relationship or interest or solely because such
persons were present at the meeting of the Board of Directors or a
committee thereof which authorizes, approves, or ratifies such
contract or transaction or solely because their votes are counted
for such purpose if: (a) the fact of such relationship or
interest
is disclosed to or known by the Board of Directors or committee
which authorizes, approves, or ratifies the contract or transaction
by a vote or consent sufficient for the purpose without counting
the
votes or consents of such interested persons; or (b) the fact of
such relationship or interest is disclosed to or known by the
Shareholders entitled to vote and they authorize, approve, or
ratify
such contract or transaction by vote or written consent.
<PAGE>
ARTICLE IX
CORPORATE OPPORTUNITY AND INDEMNIFICATION
Section 9.1 Corporate Opportunity. The officers, directors, and
other members of management of the Corporation shall be subject to
the doctrine of "corporate opportunities" only insofar as this
doctrine applies to business opportunities in which the Corporation
has expressed an interest as determined from time to time by the
Board of Directors through resolutions appearing in the minutes of
the Corporation. Once such areas of interest are delineated, all
business opportunities within such areas of interest which come to
the attention of the officers, directors, and other members of
management of the Corporation shall be disclosed promptly to the
Corporation and made available to it. The Board of Directors may
reject any business opportunity. Until such time as the
Corporation, through its Board of Directors, has designated an area
of interest, the officers, directors, and other members of
management of the Corporation shall be free to engage in such areas
of interest on their own. This doctrine shall not limit the right
of any officer, director, or other member of management of the
Corporation to continue a business existing prior to the time that
an area of interest is designated by the Corporation. This
provision shall not be construed to release any employee of the
Corporation (other than an officer, director, or other member of
management) from any duties which he may have to the Corporation;
additionally, an agreement between the Corporation and an officer,
director, or other member of the management of the Corporation may
expressly modify this article to such extent as the Board of
Directors in its sole discretion may determine.
Section 9.2 Indemnification. The Bylaws shall set forth the
indemnification rights available to officers, directors, employees
and agents.
ARTICLE X
MAJORITY VOTE
When, with respect to any action to be taken by Shareholders of the
Corporation, the Nevada Corporation Code requires the vote or
concurrence of the holders of two-thirds of the outstanding Shares
entitled to vote thereon, or of any class or series, such action
may
be taken by the vote or concurrence of a majority of such Shares or
class or series thereof.
ARTICLE XI
TRANSFER RESTRICTIONS ON SHARES
The Corporation has the right, by appropriate action, to impose
restrictions upon the transfer of any of its Shares, or any
interest
therein; provided, however, that such restrictions or the substance
thereof shall be set forth upon the face or back of the
certificates
representing such Shares.
ARTICLE XIII
AMENDMENTS; BYLAWS
The Bylaws of the Corporation may contain any provision for the
regulation and management of the affairs of the Corporation not
inconsistent with the laws of the State of Nevada or these Articles
of Incorporation. The Board of Directors, in addition to the
Shareholders, shall have the power to alter, amend, or repeal the
Bylaws or to adopt new Bylaws.
<PAGE>
IN WITNESS WHEREOF, the undersigned incorporator has signed these
Articles of Incorporation this 20th day of May, 1996.
Mark S. Pierce, Incorporator
4221 East Pontatoc Canyon Drive
Tucson, Arizona 85718
State of Arizona )
) SS
County of Pima )
On this 20th day of May, 1996, before me personally appeared
Mark S. Pierce, whose identity was proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to
this instrument, and acknowledged that he/she executed the same.
Notary Public
Residing at
My commission expires:
The undersigned, The Corporation Trust Company of Nevada, does
hereby sign these articles for the express and sole purpose of
accepting its appointment as registered agent.
THE CORPORATION TRUST COMPANY OF NEVADA
By:
,
Date:
<PAGE>
EXHIBIT 3.2
BYLAWS (NEVADA)<PAGE>
BYLAWS
CNH HOLDINGS COMPANY
ARTICLE I
(Offices)
Section 1.1. Principal Office. The principal office of the
corporation shall be located at such place as the board shall
designate. The corporation may have such other offices and places
of business, either within or outside of Nevada, as the board may
designate or as the affairs of the corporation may require.
Section 1.2. Registered Office. The registered office required by
the Nevada Corporation Code may, but need not, be identical with
the
principal office if in Nevada, and the address of the registered
office may be changed from time to time by the board. The board
shall also appoint and maintain a registered agent, or agents if
necessary.
ARTICLE II
(Shareholders)
Section 2.1. Annual Meeting. Unless otherwise designated by the
board, the annual meeting of shareholders shall be held during the
month of April, at a time and date fixed by the board, or at such
other time as may be determined by the board, for the purpose of
electing directors and for the transaction of such other business
as
may lawfully and properly come before the meeting. If the election
of directors shall not be held at the annual meeting, or at any
adjournment thereof, the board shall cause the election to be held
at a special meeting as soon thereafter as convenient.
Section 2.2. Special Meetings. Special meetings may be called as
set forth in the Nevada Corporation Code.
Section 2.3. Place of Meeting. The board may designate any place,
either within or outside of Nevada, as the place for any annual
meeting or any special meeting called by the board. If no
designation is made, or if a special meeting shall be called
otherwise than by the board, the place of the meeting shall be the
registered office.
Section 2.4. Notice of Meeting; Waiver. Written notice or waiver
thereof shall be made in accordance with the Nevada Corporation
Code.
Section 2.5. Conduct of Meeting. The president shall call
meetings
to order and act as chairman. In the absence of the president, any
shareholder entitled to vote at that meeting, or any proxy of such
shareholder, may call the meeting to order and a chairman shall be
elected by a majority of the shareholders entitled to vote at that
meeting. Any person appointed by the chairman shall act as
secretary of such meeting.
Section 2.6. Closing of Transfer Books or Fixing of Record Date.
The Nevada Corporation Code shall govern the closing of transfer
books or the fixing of a record date for purposes of shareholders'
meetings or for the purpose of determining shareholders entitled to
receive payment of any dividend, or in order to make a
determination
of shareholders for any other proper purpose.
Section 2.7. Quorum. Unless otherwise provided by the articles of
incorporation, one-third of the outstanding shares entitled to
vote,
represented in person or by proxy, shall constitute a quorum at a
meeting. If a quorum is not represented at a meeting, a majority
of
the shares present may adjourn the meeting without further notice
for a period not to exceed sixty days at any one adjournment. At
any adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally notified. The shareholders
present at a duly convened meeting may continue to transact
business
until adjournment, notwithstanding the withdrawal of shareholders
so
that less than a quorum remains. If a quorum is present, the
affirmative vote of a majority of the shares represented and
entitled to vote on the subject matter shall be the act of the
shareholders, unless the vote of a greater number or voting by
classes is required by law or the articles of incorporation.
Section 2.8. Proxies. At all meetings, a shareholder may vote by
proxy executed in writing by the shareholder or his duly authorized
attorney-in-fact. Such proxy shall be filed with the secretary of
the meeting before or at the time of the meeting. No proxy shall
be
valid after eleven (11) months from the date of its execution
unless otherwise provided in the proxy.
Section 2.9. Informal Action by Shareholders. Any action required
or allowed to be taken at a meeting may be taken without a meeting;
provided, however, that a consent in writing executed by the
shareholders so acting shall be signed by the shareholders
representing that number as shall allow for the passage of the
action being taken under the provisions of the articles of
incorporation or the Nevada Corporation Code. This consent shall
have the same force and effect as a vote of the shareholders, and
may be stated as such in any articles or document filed with the
Secretary of State for the State of Nevada under the Nevada
Corporation Code.
ARTICLE III
(Board of Directors)
Section 3.1. General Powers. The property, business and affairs
of the corporation shall be managed by the board, except as
otherwise provided in the Nevada Corporation Code or the articles
of incorporation. The board shall have all powers to act as set
forth in the laws of Nevada.
Section 3.2. Performance of Duties. A director shall perform his
duties in good faith, including his duties as a member of any
committee upon which he may serve, and in a manner reasonably
believed to be in the best interests of the corporation, and with
such care as an ordinarily prudent person in a like position would
use under similar circumstances. Each directors' actions shall be
subject to the business judgment rule and each director shall be
free from liability to the full extent provided by the Nevada
Corporation Code.
Section 3.3. Number, Tenure and Qualifications. The number of
directors shall initially be set at the organizational meeting
therefor, or unanimous consent in lieu thereof. The number of
directors shall not exceed seven (7), nor be less than three (3),
unless there are fewer then three (3) shareholders in number, in
which event the number of directors may equal the number of
shareholders. The directors shall be elected at each annual
meeting
of shareholders. Each director shall hold office until the next
annual meeting of shareholders and thereafter until his successor
shall have been elected and qualified. Directors shall be 18 years
of age or older, but need not be residents of Nevada or
shareholders. Directors shall be removable in the manner provided
by the Nevada Corporation Code.
Section 3.4. Resignation. Any director may resign at any time by
giving notice (either oral or written) of his resignation to the
board, the president or the secretary. The resignation shall take
effect at the date of receipt of such notice or at any later time
specified therein and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it
effective.
Section 3.5. Removal. Except as otherwise provided in the
articles
of incorporation or in these bylaws, any director may be removed,
either with or without cause, at any time by the affirmative vote
of
the holders of a majority of the issued and outstanding shares of
stock entitled to vote for the election of directors at a special
meeting of the shareholders called and held for such purpose.
Section 3.6. Vacancies. Any vacancy occurring in the board may be
filled by the affirmative vote of a majority of the remaining
directors though less than a quorum.
Section 3.7. Regular Meetings. A regular meeting of the board
shall be held without other notice than this bylaw immediately
after
and at the same place as the annual meeting of shareholders. The
board may provide by resolution the time and place, either within
or outside of Nevada, for the holding of additional regular
meetings
without other notice than such resolution.
Section 3.8. Notice. Notice of any special meeting shall be given
at least 3 days previous thereto by written notice delivered
personally or mailed to each director at his business address.
Such
notice shall be deemed to be delivered when deposited in the United
States mail so addressed, with postage thereon prepaid.
Section 3.9. Quorum. A majority of the number of directors in
office at the time of the meeting shall constitute a quorum for
the
transaction of business, but if less than such a majority is
present, a majority of the directors present may adjourn the
meeting
from time to time without further notice.
Section 3.10. Manner of Acting. If a quorum is present, the
affirmative vote of a majority present and entitled to vote on that
particular matter shall be the act of the board, unless the vote of
a greater number is required by law or the articles of
incorporation.
Section 3.11. Compensation. By resolution of the board, any
director may be reimbursed for all reasonable expenses incurred in
attending any meeting and may be paid a fixed sum for attendance at
such meeting, or receive a stated salary as director. No such
payment shall preclude any director from serving the corporation in
any other capacity and receiving compensation therefor.
Section 3.12. Committees. The board, by resolution adopted by a
majority elected and qualified at the time of the resolution, may
designate two or more directors to constitute an executive or any
other committee, which shall have and may exercise all of the
authority of the board or such lesser authority as may be set forth
in said resolution. No such delegation of authority shall operate
to relieve the board or any director from any responsibility
imposed
by law. The board shall at any time have the power to fill
vacancies in, to change the size or constituent membership of and
to
discharge any committee in whole or in part. Each committee shall
keep a written record of its acts and proceedings and shall submit
this record to the board at each regular meeting thereof and at
such
other times as may be requested by the board. Failure to submit
this record or of the board to approve any action set forth therein
shall not invalidate any action taken by the committee to the
extent
the action was carried out prior to the time it was or should have
been submitted to the board.
Section 3.13. Informal Action by Directors. Any action required
or permitted to be taken at a meeting of directors, or at any
meeting of any committee of directors, may be taken without a
meeting if a consent in writing setting forth the action so taken
shall be signed by a majority of those directors entitled to vote
with respect to the subject matter thereof. This consent shall
have
the same force and effect as a vote of the directors, and may be
stated as such in any articles or documents filed with the
Secretary
of State for the State of Nevada under the Nevada Corporation Code.
Section 3.14. Meetings by Telephone. Members of the board or any
committee may participate in a meeting by means of conference
telephone or similar communications equipment by which all persons
participating in the meeting can hear each other at the same time.
Such participation shall constitute presence in person.
ARTICLE IV
(Officers and Agents)
Section 4.1. General. The officers shall initially be a
president,
a secretary and a treasurer, each of whom shall be elected by the
board. The board may also appoint one or more vice presidents and
such other officers, assistant treasurers, and assistant
secretaries
as may be necessary, each of whom shall be chosen in such manner
and
hold office for such terms and have such authority and duties as
from time to time may be determined by the board, or which may
otherwise be commensurate with their position. The salaries of
all
the officers shall be fixed by the board. One person may hold any
two offices, except that no person may simultaneously hold the
offices of president and secretary. The officers shall be 18 years
of age or older. In all cases where the duties of any officer,
agent or employee are not prescribed by the bylaws or by the board,
such officer, agent or employee shall follow the orders and
instructions of (a) the president, or if a chairman of the board
has been elected, then (b) the chairman.
Section 4.2. Election and Term in Office. The officers shall be
elected by the board annually at the first meeting held after each
annual meeting of the shareholders. If the election of officers
shall not be held at such meeting, such election shall be held as
soon thereafter as may be convenient. Each officer shall hold
office until the first of the following occurs: until his successor
shall have been duly elected and shall have qualified; until his
death; until he shall resign; or until he shall have been removed
in
the manner hereinafter provided.<PAGE>
Section 4.3. Removal. Any officer, agent or
employee may be removed by the board or by an executive committee, if any,
whenever in its judgement the best interests of the corporation will be
served thereby, but such removal shall be without prejudice to the
contracts rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not of itself create
contract rights.
Section 4.4. Vacancies. A vacancy in any office, however
occurring, may be filled by the board for the unexpired portion of
the term.
Section 4.5. Bonds. If the board by resolution shall so require,
any officer or agent of the corporation shall give bond to the
corporation in such amount and with such surety as the board, may
deem sufficient, conditioned upon the faithful performance of that
officer's or agent's duties and offices.
ARTICLE V
(Stock)
Section 5.1. Certificates. The shares of stock shall be
represented by consecutively numbered certificates signed in the
name of the corporation by its president or a vice president and by
the treasurer or an assistant treasurer or by the secretary or an
assistant secretary, and shall be sealed with the seal of the
corporation, if any. Certificates of stock shall be in such form
consistent with law as shall be prescribed by the board. No
certificate shall be issued until the shares represented thereby
are
fully paid. Once issued, shares shall be nonassessable.
Section 5.2. Record. A record shall be kept of the name of each
person or other entity holding the stock represented by each
certificate for shares of the corporation issued, the number of
shares represented by each such certificate, the date of issuance
and, in the case of cancellation, the date of cancellation. The
person or other entity in whose name shares of stock stand on the
books of the corporation shall be deemed the owner thereof, and
thus
the holder of record of such shares of stock for all purposes.
ARTICLE VI
(Indemnification of Officers and Directors)
The corporation has the power to indemnify current or former
directors, officers, employees, and agents to the fullest extent
provided in its Articles of Incorporation and by the Nevada
Corporation Code as amended and in effect on the date of the
adoption of this article.
ARTICLE VII
(Instruments; Loans; Checks; Deposits; Proxies)
Section 7.1. Execution of Instruments. The president shall have
the power to execute and deliver on behalf of and in the name of
the
corporation any instrument requiring the signature of an officer of
the corporation, except as otherwise provided in the articles of
incorporation or these bylaws or where the execution and delivery
thereof shall be expressly delegated by the board to some other
officer or agent of the corporation. Unless authorized to do so by
these bylaws or by the board, no officer, agent or employee shall
have any power or authority to bind the corporation in any way, to
pledge its credit or to render it liable pecuniarily for any
purpose
or in any amount.
Section 7.2. Loans. The corporation may lend money to, guarantee
the obligations of and otherwise assist directors, officers and
employees of the corporation, or directors of another corporation
of
which the corporation owns a majority of the voting stock, only
upon compliance with the requirements of the Nevada Corporation
Code. No loans shall be contracted for on behalf of the
corporation
and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the board. Such authority may be
general or confined to specific instances.
ARTICLE VIII
(Miscellaneous)
Section 8.1. Amendments. The board shall have the power to alter,
amend or repeal the bylaws or adopt new bylaws of the corporation
at
any regular meeting of the board or at any special meeting called
for that purpose, subject to repeal or change by action of the
shareholders.
Section 8.2. Emergency Bylaws. Subject to repeal or change by
action of the shareholders, the board may adopt emergency bylaws in
accordance with and pursuant to the provisions of the Nevada
Corporation Code.
The above and foregoing constitute the true, correct and complete
bylaws of CNH Holdings Company, a Nevada corporation, as adopted by
its directors on the date of its incorporation.
Mark S. Pierce, Secretary
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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