AMENDED FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Mark One
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE OF 1934
FOR THE FISCAL YEAR ENDED: June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO N/A
COMMISSION FILE NUMBER: 33-21239
TRAVEL DYNAMICS, INC.
---------------------
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
(Formerly known as
Greenway Environmental Systems, Inc.)
NEVADA 87-0462569
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STATE OF INCORPORATION (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
7525 East Camelback Road, Ste. 202
SCOTTSDALE, AZ 85251
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code:
(602) 949-9500
Attorney for Registrant - Julian D. Jensen: (801) 531-6600
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registration (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 files such reports), and (2) has been subject to such
filing requirements for the past 90 days. (1) X NO as to filing; (2) X Yes as to
requirement.
As of June 30, 1998, and extended to the filing date of this Report, the
aggregate value of the voting stock held by non-affiliates of the Registrant,
computed by reference to the average of the bid and ask price on such date was
$0.00 as the Registrant has no current trading market.
As of June 30, 1998, the Registrant had outstanding approximately 24,159,895
shares of common stock ($.001 par value). As of the date of this filing, and
pursuant to a reverse split and reorganization, the Company has outstanding
4,040,080 shares.
An index of the documents incorporated herein by reference and/or annexed as
exhibits to the signed originals of this report appears on page 24.
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NOTICE OF DEFERRED FILING
=========================
Prior to filing the following Annual Report on SEC Form 10-KSB, the
Company last filed an Annual Report (10-K) and Quarterly Report (10-Q) as of
June 1992. These Reports were filed incident to a terminated and fully rescinded
reorganization in which the Registrant acquired the name Greenway Environmental
Systems, Inc. ("Greenway") and changed its corporate domicile to Nevada in 1991.
No business was conducted as Greenway and the Company has remained inactive from
1991 to 1998 when the Company entered into the Reverse Acquisition with Travel
Dynamics, Inc. as reported in this filing.
The Company has not timely filed the required periodic reports under
the Securities and Exchange Act of 1934 after the second quarter of 1992,
because it did not have any revenues or other funds to complete filings. Prior
management represents there has occurred no material event or transaction in the
Company since the last filed Report, except for the termination of the prior
Greenway Environmental Systems, Inc. reverse acquisition in 1992 and the
recently concluded Reverse Acquisition Reorganization with Travel Dynamics, Inc.
as reported in this filing. The Company has attempted to detail fully in this
Report all transactions and events since the last filed Report in the same
manner as if the required interim reports had been filed. ACCORDINGLY, THIS
REPORT WILL ATTEMPT TO REPORT ALL EVENTS AND TRANSACTIONS THROUGH THE DATE OF
FILING AND WILL NOT LIMIT ITS DISCLOSURE TO THE FISCAL YEAR ENDING JUNE 30,
1998.
The Company cannot warrant what position the Securities and Exchange
Commission ("SEC") may take with regard to delinquent filings; but the Company's
position is the within Report is a complete and comprehensive disclosure since
the last report filed with the SEC.
NOTICE OF AMENDMENT
===================
The Company's retained Edgar Filer inadvertently filed a draft copy of
this Form 10-KSB on Thursday October 15, 1998 as a non-test filing. Primarily,
such filing did not contain, either in its narrative or accounting sections, a
description of the Consulting Agreement with Mackenzie- Shea. THAT PRIOR FILING
SHOULD BE FULLY DISREGARDED.
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PART I.
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ITEM 1. BUSINESS
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A. THE REGISTRANT
Historical Data
Travel Dynamics, Inc. was known as Greenway Environmental Systems, Inc.
("Greenway") from 1991 through September, 1998. The Registrant filed its last
prior periodic report with the Securities and Exchange Commission (SEC) in 1992
after 1991 the Reverse Acquisition of a private Texas Company, also known as
Greenway Environmental Systems, Inc. ("Greenway") by the inactive predecessor
public company to Registrant known as Centra Corporation with a resulting name
change of the public company to Greenway.
No active business was conducted by the reorganized Greenway, but the
Company did complete a name change and change of domicile to Nevada incident to
the Reorganization. The Reverse Acquisition was fully rescinded in 1992 when it
was determined that no assets had been transferred and the private operating
subsidiary, Greenway/Texas, had no capacity to conduct business. All shares
issued pursuant to this earlier terminated reorganization have also been
cancelled of record.
As part of the terminated reverse acquisition in 1992, the Company
physically obtained all of the shares issued pursuant to that reorganization,
except for one block which was last known to be in the physical possession of a
Mr. Gregory Dean Cambron and who retained physical possession of 775,600
Greenway pre-reverse split shares (39,750 of the present reverse split shares
and sometimes described as "Cambron Shares"). While the Company has cancelled
these shares of record, there does remain some possibility that a holder in due
course and without notice of adverse claims may be able to present a claim
arising under these shares which the Company may be required to recognize. As
part of the present reorganization of the Company into Travel Dynamics, Inc.,
(hereafter sometimes "TDI") an agreement has been entered with a certain prior
principal shareholders of the Company to escrow 40,000 of their reverse split
TDI shares in a stock indemnity fund for a period of one year which would be
returned to the Company in the event that the Company, during that period, was
required to recognize any adverse claim arising under the Cambron of shares
described above. The Company does not anticipate, but cannot warrant, there will
be any claims asserted under or from the Cambron shares.
Further, the Company does not have any knowledge of any debts or
obligations in the Company existing from the reorganization period in 1991-1992,
but can make no absolute warranty or assurance that some claim may not be
asserted arising out of that period as incurred by prior management. The Company
has obtained from its corporate counsel, who also represented prior management
of the Company from 1992 to present, a representation that he believes that most
claims which could arise or be asserted from the 1991-1992 period would now be
barred by applicable statutes of limitations or under a doctrine of laches and
could not be successfully prosecuted against the Company.
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Other than the Cambron shares described above, and the remote
possibility of third party creditor claims arising from this earlier period, the
Company knows of no remaining adverse consequence or results of the terminated
reverse acquisition in 1992.
After the rescission of the reverse acquisition in 1992, the management
of the Company that was in place prior to assumption of the management by the
Cambron Group in the Reorganization, again assumed offices in the Company. This
historical group of directors/officers included Mr. Gregory Stringham, Mr. L.
Kent Mackey and Mr. Dave Winters until approximately 1996 when Mr. Winters
resigned and was replaced by Mr. Damon Madsen as the President and the third
director for the Company.
At all times from the termination of the Greenway Reorganization in
1992, the Company continued to retain the name of Greenway Environmental
Systems, Inc. and continued as a Nevada Corporation. During this entire period
from 1991 through the present reorganization described as part of this report,
the Registrant had no active business purpose of any kind, no assets and
incurred various limited liabilities incident to attempting to maintain its
status as a corporation.
It should be noted that during this period from 1992 through the
present filing, the Company, because of the lack of resources, did not file any
federal or state tax returns nor did it file any of the required periodic
reports as a public company with the Securities and Exchange Commission (SEC).
The Company represents, as part of its attempt to resume reporting status
incident to its current Reorganization, that it does not believe that any
material events occurred during the foregoing period other than the rescission
of the Greenway reorganization, nor was there any material changes to assets or
income as previously discussed. Unfortunately, the Company did not maintain
either formal and independently audited financials, or informal financial
reports during the foregoing period.
The Company in 1996 entered into an arrangement whereby its retained
finding and reorganization agent, Mr. Dennis Madsen (who is also the father of
the former President of the Company, Damon Madsen), entered into a $60,000 loan
with a Greenway shareholder, who agreed to allow Mr. Madsen to advance a portion
of the loan proceeds to pay incurred Company debts and obligations in
consideration for the issuance of five million pledge shares (5,000,000/shares)
of the Company stock in the event that the loan was not repaid by Mr. Madsen.
The Company agreed to this transaction, believing that because it had no
business purpose or opportunities that the issuance of a large block of stock
would be justified to receive interim money to allow it to continue its
existence by Mr. Dennis Madsen agreeing to make available such portions of those
funds as necessary to file periodic corporate reports with the State of Nevada
and to pay accounting and legal experts and to review proposed
merger/acquisition proposals. The Company reports, that of these loan proceeds,
approximately $17,000 were received and expended by the Company and which
expenditures are reflected in the present audited financials attached to this
report as a footnote item. The Company has now entered into a final agreement
with this third party shareholder to issue to him or assigns, in consideration
and discharge of the prior security pledge, 400,000 of the reverse split shares
as more fully described below.
Present management reports, other than the third party shareholder loan
as described above, no significant events of any type occurred in or concerning
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the Company from the period of the 1992 termination of the earlier Greenway
Reverse Acquisition through the current reorganization of the Company through a
reverse acquisition with Travel Dynamics, Inc. as more fully explained and
set-out below.
During this interim period, 1992 to present, the Company continued,
through its Board of Directors, to retain the efforts of Mr. Dennis Madsen as an
independent finding and reorganization agent to search for potential merger
and/or acquisition candidates for the Company, and to negotiate preliminary
letters of intent or proposals, subject to Board review and approval. Mr. Madsen
was to be paid a subsequently negotiated fee and interest for these services
upon the successful culmination of any type of merger, acquisition or
reorganization in which he was successful on behalf of the Company.
During the period of 1992, after the termination of the Greenway
reorganization and until the present completed reorganization with Travel
Dynamics, Mr. Madsen was successful in entering into preliminary discussions and
proposals on two occasions with various potential merger/acquisition
participants. However, neither of these preliminary contacts resulted in any
definitive proposal or agreement and the details of which are not deemed to be
applicable or of importance for current reporting purposes.
Prior to the rescinded reorganization with Greenway Environmental
Systems of Texas, as generally described above, the predecessor company, Centra
Corporation, was formed in 1988 through an S-4 merger of Jewel Management
Company, a private Utah corporation, and Southern Cross Ventures, a Nevada
public corporation resulting in the creation of a consolidation company known as
Centra Corporation ("Centra"). Centra intended to engage in various undefined
business purposes and obtained approximately $70,000 of capital from the S-4
registration in 1988. All of that capital was expended on organizational costs
prior to 1991, the details of which are not deemed applicable to the current
report, and the Company was essentially a shell corporation known as Centra
without any assets or income prior the terminated reverse acquisition with
Greenway in 1991.
The Company did maintain current filings of its periodic reports with
the SEC from 1988 through 1991 when such filing obligations were assumed by the
new management group pursuant to the reorganization. It is believed that three
reports, a 10-KSB and 10-QSB were filed, as well as an 8-K, by the Cambron
Management Group who thereupon ceased continuing with any types of filings.
Current management believes that the foregoing general narrative
description of the Company completely describes all of the material events up to
the reverse acquisition with Travel Dynamics, Inc. which occurred in September,
1998 and which is more fully described below.
The Current Reorganization
In late August 1998, the Company entered into a preliminary letter of
intent with a privately held Nevada Corporation, having its principal place of
business in Scottsdale, Arizona, known as Travel Dynamics, Inc. ("TDI").
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TDI was originally organized in March 1998 as an Arizona limited
liability company to engage in sales of travel packages (air, hotel,
transportation and attraction discounts) through a direct marketing association
of individual contractors or entrepreneurs. TDI also conducts related seminars
for such independent contractors. TDI has also expanded its business operations
to Internet marketing of the same types of travel services and packages.
The assets and liabilities of Travel Dynamics, LLC were purchased by
the newly formed Travel Dynamics, Inc. as of July 31, 1998. The current Vice
President of the Company, Mr. John Piccolo, was a fifty percent (50%) owner of
the LLC, but is not a present shareholder in TDI, Inc.
As a start-up entity, TDI does not have any significant operating
history and has completed its initial set of audited financials from the date of
inception on March 31, 1998 through August 31, 1998 as a part of this 10-KSB
Report. Since under the terms of the Reorganization, Travel Dynamics has become
a wholly owned operating subsidiary of the parent company, Travel Dynamics, Inc.
the Company will report all future financial statements on a consolidated basis.
For its initial month of operation, in August 1998, Travel Dynamics
realized total revenues of approximately $97,555, had cost of sales of $49,877
operating expenses at $58,401; thereby incurring a net loss of ($10,113) for the
one month period ending August 31, 1998.
The Company sells its basic travel package, known as the T-1 product,
to a distribution base of individual entrepreneurs (contractors) who then
redistribute the products to the retail market. The Company also provides
seminar packages that are known as the T-2 and T-3 packages which the individual
entrepreneurs may also purchase. These packages are businessbuilding seminars
that combine premium travel experiences with motivational and business success
training.
On September 29, 1998, TDI signed a definitive Reverse Acquisition
Agreement with Greenway Environmental Systems, Inc. to complete the reverse
acquisition, as generally described above. The intent and essence of the reverse
acquisition was that TDI would become a wholly owned subsidiary of its parent
company Greenway, which would then change its name to Travel Dynamics, Inc. It
is intended that the TDI subsidiary will change its name to Travel Dynamics
Services, Inc. or some similar derivation of that name, to distinguish it from
its parent entity. Pursuant to the reverse acquisition, TDI Services became the
wholly owned subsidiary of Greenway, which then changed its name to Travel
Dynamics, Inc. of record. The TDI corporation was allowed to nominate and elect,
by majority shareholder consent under Nevada Law, a new Board of Directors, as
described below, who then appointed new officers and who accepted the
resignation of the prior management of Greenway/TDI. The business purpose of the
reverse acquisition was to create an active business in the Company and to move
its principal place of business to Scottsdale, Arizona. The Company is
completing these transitional requirements concurrently with the filing of this
10-KSB Report.
A further requirement for the reverse acquisition was a reverse split
of all of the issued and outstanding shares of Greenway/TDI on a 19.5:1 reverse
split ratio. Accordingly, of the approximately 24,159,895 issued and outstanding
shares of Greenway/TDI existing prior to the execution and closing of the
Reverse Acquisition Agreement, there is now issued and outstanding 4,040,080
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reverse split shares. Of these shares, approximately 811,072 are held by prior
shareholders of Greenway, excluding management. Fifteen thousand shares are held
by prior management of Greenway, 400,000 shares are held by Mr. Andrew Limpert,
with certain subsequent assignments to Mr. Dennis Madsen and others. Mr. Limpert
provided the interim financing through Mr. Madsen as previously described. Ten
thousand shares were issued to satisfy historical reorganizational costs. Two
million shares were issued to the prior shareholders of TDI. Mr. Piccolo, the
new President, has received 400,000 shares as part of an employment agreement. A
consulting firm to the company Mackenzie-Shea, Inc. has received 404,008 shares.
This resulting reverse split share allocation is set-out graphically below:
[GRAPHIC OMITTED]
SHARE ALLOCATION AFTER REORGANIZATION
-------------------------------------
49.50% Prior TDI Shareholders
20.08% Prior Greenway Public Shareholders
10.00% Mackenzie-Shea
9.90% Limpert & Assigns
9.90% James Piccolo
0.25% Reorganization Shares
0.37% Greenway Prior Mgt.
The essential terms of the reverse acquisition agreement can be
outlined as follows:
1. The Company changed its name of record from Greenway Environmental
Systems, Inc. to Travel Dynamics, Inc. This action, requiring shareholder
approval, was adopted under Nevada Law by majority shareholder consent. The
change has been filed of record. The operating subsidiary will become known as
Travel Dynamics Services, Inc.
2. A new Board of Directors was elected as nominated by Travel
Dynamics, Inc. The new Board was elected by majority shareholder consent and
consists of the following individuals who are more particularly described under
the management section of this 10-KSB Form:
A. James Piccolo
B. Brian K. Service
C. Thomas (Tom) Dennis
D. Gary Davies
E. Thomas Vergith
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3. The shareholders confirm the exchange of shares by which the Company
received from the prior owners of TDI all of its issued and outstanding stock,
(855,000 shares), for approximately 48% of the issued and outstanding reverse
split shares of Greenway/TDI, being two million shares.
4. Affirmed the Board of Directors' decision in completing a reverse
split of all issued and outstanding shares prior to the Reorganization on a
nineteen and one half to one reverse split share basis (19.5:1).
5. The Agreement further provided that all debts and obligations of
Greenway Environmental Systems, as part of the reverse acquisition, will be
fully paid and discharged.
6. Management will assume the responsibility for completing all
required filings under the Securities and Exchange Act of 1934 (the Act) and
will attempt to have the shares of the Company qualified for limited over the
counter trading on the electronic bulletin board or pink sheets by one or more
licensed members of the National Association of Securities Dealers (NASD).
7. The place of operations of the business was changed to the prior
principal business location of Travel Dynamics Services in Scottsdale, Arizona
with the Company to assume, as its sole operations, the form of business
presently conducted by Travel Dynamics in the sale and marketing of travel
services and leisure travel packages. In this regard, it is anticipated that the
acquired operating subsidiary will most likely change of record its name from
Travel Dynamics, Inc to Travel Dynamics Services, Inc. to reflect its change in
relationship to the parent entity who has acquired the Travel Dynamics name.
B. ANTICIPATED BUSINESS ACTIVITIES OF THE
REORGANIZED COMPANY AND LIMITATIONS
It is reasonably anticipated that the sole operating business of the
Company will be the business which was brought to the reorganized Company by the
acquired operating subsidiary, Travel Dynamics Services, Inc., and as generally
described above. It should be noted, again, that Travel Dynamics is essentially
a start up entity having been formed and commencing operations in August, 1998
and has not had a significant operating history or record. It is, however,
presently and actually engaged in its intended business activity of marketing
travel packages and services, including seminars, on a direct sales basis. The
Company notes that it has generated revenues for essentially the first full
month of operation in August 1998 as set-out in the attached and incorporated
initial audited accounting statements for the acquired entity and will
reasonably anticipate continuing revenues with potential profitability by the
projected second or third month of operations, though no warranty or assurance
of profitability can be made.
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The Company employs four persons as full time employees of the Company,
three of whom are the President, Secretary Treasurer and Vice President. The
Company has no part time employees. Salaries and wages for the first initial
month of operations were $6,032, but it is projected that salaries and wages
after full implementation and operation of the intended business would increase
to approximately $30,000 dollars per month through the end of the year. The
Company does not believe it can reasonably project salary or other overhead
expenses beyond the end of the year, but anticipates that they will increase as
the Company's need for additional employees, services and space requirements
grow.
The Company presently leases approximately 1,500 square feet of space
in an office located at 7525 East Camelback Road, Suite 202, Scottsdale, Arizona
85251 (602) 949-9500 for a gross monthly rental of $2,500 dollars.
All other direct overhead operating expenses for the initial month of
operation, excluding salaries and rent, aggregated approximately $50,000. At
present, the Company has approximately 2,000 persons who are engaged in business
with the Company as independent contract agents for the sale of the travel
products on a mark-up basis.
The Company does not have a reasonable basis, at this time, to make
projections of revenue and income other than on an informal basis. It is
believed by present management of the Company that the Company will be
profitable by not later than its second month of operations. The Travel Dynamics
concept and core business, including software and miscellaneous office
equipment, were acquired on July 31, 1998, from a private limited liability
company of the same name controlled by John Piccolo. In this transaction, Mr.
John Piccolo, as a 50% member and owner of the prior Travel Dynamics, LLC,
became Vice President of Travel Dynamics, Inc.
The Company's assets consists primarily of intangible miscellaneous
proprietary computer software programs to operate the business. The Company also
has various computer equipment, miscellaneous fixtures and furniture and a
limited amount of initial capitalization. The Company in its Financial
Statements has listed tangible assets at $40,902; intangibles at $372,508; cash
at $78,872; and other current assets at $51,385. See attached TDI Financial
Statements.
The Board of Directors of the wholly owned subsidiary consist of James
Piccolo, Brian Service, Thomas Dennis, Thomas Vergith and Gary Davies who are
also members of the Board of Directors of the parent, Travel Dynamics, Inc. and
whose biographical information is more fully set-out below. The principal
officers of the operating subsidiary consist of James PiccoloPresident, John
Piccolo-Vice President and Melinda Fehringer-Secretary/Treasurer, who are also
the principal officers of the parent, Travel Dynamics, Inc.
The Board of the Parent Corporation is still considering whether, in
the future, the Company may elect to complete a short form merger between the
parent and the subsidiary, though no present decision to complete such a final
reorganizational step has been decided or approved.
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Since operational inception in July, 1988, the acquired Company has
held four seminars for training independent agents in direct marketing
techniques. It would anticipate holding an additional seminar prior to the end
of the calendar year 1998.
The Company anticipates that it may require additional capital to fully
fund its anticipated business concepts and proposals as generally outlined
above. In this regard, the Company is contemplating a private placement offering
of its common stock. While no final approval has been made by the Board,
preliminarily the proposal is to sell approximately Two Hundred Fifty Thousand
dollars to Five Hundred Thousand dollars at a per share price to be determined.
No final or definitive decision has been made by present management of the
Company whether to engage in this type of private placement or the timing of any
such private placement, but the fact that it is being informally considered at
this juncture is deemed by present management to constitute a disclosure item.
The Company would note that absent the completion of any such private placement,
the Company is presently minimally capitalized to carry on its intended
activities and would be almost fully dependent upon anticipated revenue growth
to fund such activities absent additional capital.
The Company desires to seek, upon the filing of this Report, limited
public marketing through submission of its shares for quotation through one or
more members of the NASD. No assurance or warranty can be given, at this point,
that a public listing on a limited market basis (such as the electronic bulletin
board or pink sheets) will be available to the Company; or that, if available,
that any type of active trading market will develop.
The Company further notes that it does not, at this time, meet listing
requirements for the NASD SmallCapital Market Listing, or of any known exchange.
The Company does not anticipate that it would be qualified for any such listing
for the foreseeable future. Further, the Company has only a very limited amount
of its currently issued and outstanding stock which is presently registered or
otherwise qualified for public trading. The Company would estimate, at present,
there are approximately 920,000 shares constituting only 22% of the issued and
outstanding shares which are free-trading or may be qualified for free trading
under Rule 144. All other outstanding shares have not been registered and are
restricted shares which can only be sold pursuant to a subsequent registration
or exemption from registration pursuant to further holding periods, principally
Rule 144. All shares issued pursuant to the reorganization on September 29, 1998
are anticipated to become available for future trading pursuant to Rule 144. The
Company may also consider a registration of some of its outstanding shares,
though no decision has been made. The fact that the Company has a very limited
number of shares available for current public trading means that the volatility
of the Company's share price may be exaggerated by the limited number of shares
available in any trading market. It is also difficult to project, at the present
time, if a public market can be created for the Company's shares and at what
price the shares may trade.
C. REMUNERATION
------------
The employees of the Company have received an aggregate remuneration of
$6,032 dollars to date. The three full-time officers and the consultant will
receive annual compensation as more fully set-out under the compensation tables
in the management section of this Report. Board members are not directly paid
any remuneration, but do receive a "per diem" of $1,000 dollars per meeting.
Outside directors are also the recipients of a three year option package with
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the Company. The package consists of options to acquire 100,000 shares by each
director over three years at an exercise price of $0.10/share to be exercised in
five years. Vesting is as follows: 25,000 on appointment, 25,000 per year for up
to three years on the anniversary of appointment.
D. COMPETITION
-----------
The Company is engaged in a business without significant market
barriers to entry or regulation. Accordingly, it is anticipated that there may
be significant competition for the Company's services. At present, the Company
does not know of any entity which is conducting a substantially similar type of
direct marketing approach for the sale of travel and leisure packages in its
relevant market.
E. GOVERNMENT REGULATION
---------------------
The Company does not anticipate it is subject to any direct,
governmental regulations, except as a Reporting Company under Section 15(d) of
the Act, it will be required to report significant events to the SEC, as well as
to file quarterly 10-QSB and annual 10-KSB Reports, such as the within report.
The Company will also have annual reporting requirements to its domicile state,
Nevada. The Company will be, like most commercial enterprises, subject to filing
of various tax returns with the Internal Revenue Service (IRS) and potentially
other state taxing agencies. There may be other standard customary governmental
regulations applicable to various aspects of the Company's business, such as
those imposed by the Federal Trade Commission (FTC), Occupational Health and
Safety Administration (OSHA), Department of Labor and similar type regulatory
agencies.
F. PATENTS, LICENSES & PROPRIETARY RIGHTS
--------------------------------------
The Company is the developer of a proprietary software which is used in
the marketing of its travel packages as well as employed to audit and account
for independent agents selling the Company's products and services. This
software is not protected by copyright.
The Company believes that its method of promoting, advertising and
engaging independent contractors to sell the products on a mark-up basis
constitutes a unique and proprietary business plan and procedure. However, the
Company does not believe that there is any way to protect such procedures from
competitive applications and it is possible that other companies may replicate
substantially the plan and activities and become a competitive factor.
To the best knowledge of any officers or director in the Company, the
Company does not have any licensing or unique proprietary rights acquired from
another party, nor has it licensed any such procedures or proprietary rights or
information.
G. FOREIGN OPERATIONS
------------------
The Company has no foreign operations at the present time and none are
contemplated.
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H. PRODUCT PRICING & RELATED MATTERS
---------------------------------
The Company's only revenues are presently derived from the sale of
various different travel packages. As noted above, these are marketed through a
direct sales marketing activity in which the Company presently has a customer
base of approximately 2,000 independent resellers. The Company also markets
directly through a web site location: "traveldynamics.org". The price for the
basic travel packages sold by the Company averages $295. From the sale of a
typical travel package, the Company estimates its average gross margin, after
all costs of sales, at 49% with an average net margin of 27%. The Company has
arbitrarily priced its products at what it believes to be a fair discount to
similar types of travel packages which may obtained through independent agents.
The typical package contains round trip air, hotel, car rental and discount
tickets to various attractions or events at the place of destination. The
Company obtains the packages of travel services from the original vendors at a
discount to typical market prices, because of its nationally distributed
reseller base the volume purchasing power this relationship generates, and
because the times and dates of travel are frequently during off-peak periods.
The Company would reasonably project gross profit margins at 57% and
net margins at 32% for the T-2 and T-3 seminar\instructional packages. The
average T-2 package sells for $950 and the T-3 package for $1,950. The Company
would estimate approximately 65% of its gross revenues is derived from the sales
of the T-1 products, and approximately 35% from the T-2 and T-3 products.
I. EMPLOYEES
---------
As noted above, the Company presently has approximately four
full time employees and no part time employees, including the officers of the
Company as set-out below. It does not anticipate that unless or until there are
substantial additional retained earnings or other capital received by the
Company, that the Company will increase the number of employees through the
balance of this year. Salaries of non-officer employees are set by the Board of
Directors and are believed commensurate with typical rates of compensation in
the relevant market area and industry.
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OFFICERS/DIRECTORS
------------------
FULL OR
NAME AGE POSITION PART TIME
===================== ======== =================== ===================
JAMES 41 President/CEO FULL
PICCOLO Director
- --------------------- -------- ------------------- -------------------
BRIAN K. 50 Director/ N/A
SERVICE Consultant
- --------------------- -------- ------------------- -------------------
THOMAS (TOM) 51 Director N/A
DENNIS
- --------------------- -------- ------------------- -------------------
GARY DAVIES 53 Director N/A
- --------------------- -------- ------------------- -------------------
THOMAS 38 Director N/A
VERGITH
- --------------------- -------- ------------------- -------------------
MELINDA 22 Secretary/Treas FULL
FEHRINGER urer
- --------------------- -------- ------------------- -------------------
JOHN P. 34 Vice President FULL
PICCOLO
===================== ======== =================== ===================
Options, Warrants or Similar Rights
-----------------------------------
The Company has no outstanding warrants or option rights
except for an option granted to the President, Mr. James Piccolo, under an
executive compensation agreement, and the director options as described above.
As briefly noted above, Mr. Piccolo has a vested option to purchase 200,000
shares of common stock of the Company at the exercise price of ten cents per
share ($0.10/share) during each year of the term of his executive compensation
agreement with the Company. The initial term of the agreement, and thereby the
options, is for three years commencing October 1, 1998. After the initial three
years, the employment term is terminable upon the mutual agreement of Mr.
Piccolo and the Company or upon termination for cause, disability or other
specific events as more explained under the executive compensation provisions
following. As a result, it should be understood that the option provision as to
Mr. Piccolo is not presently determinable and Mr. Piccolo could exercise an
option for 200,000 shares on an annual basis for an indefinite period of time
under the existing employment contract.
The directors are each entitled to acquire up to 100,00 shares by an
option exercisable at $.10/share for five years. The option right vests at the
rate of 25,000 shares on appointment and an additional 25,000 per year for each
full year of service thereafter up to 75,000 additional shares.
Transactions with Prior Management
----------------------------------
The Company does not believe that there are any reportable
transactions with prior management other than have been previously described or
discussed. As of the closing of the reverse acquisition on September 29, 1998,
13
<PAGE>
the three prior directors of the parent Company received 5,000 shares each of
the reverse split stock which they had agreed to accept in full and complete
discharge and satisfaction of all claims or entitlements to which they may have
for their previous services to the Company. Mr. Dennis Madsen, as the finding
and reorganization agent for the Company, also agreed to participate with Mr.
Limpert as to the shares to which he was entitled for reorganization services.
Between Mr. Madsen and Mr. Limpert it was agreed Mr. Madsen will receive 44,000
of these shares. The shares were issued to Mr.Limpert for the prior loan proceed
made available to the Company. Mr. Limpert will retain 100,000 reverse split
shares and has otherwise assigned the balance. The prior accounting and legal
experts retained by the Company (and which were the only other creditors) have
also agreed to a payment and satisfaction of all claims and assert no further
claims through the closing of the reverse acquisition.
Of the existing management, there are no transactions or obligations to
be reported other than the compensation agreement to the President, Mr. James
Piccolo and the directors, the option portion of which is described above and
the balance of the compensation is set-out in the following compensation to
management section.
Transactions and Agreement with Consultant
------------------------------------------
The Company entered into a definitive Consulting Agreement with a firm
known as Mackenzie-Shea, Inc. of San Francisco, California (the "Consultant")
effective October 19, 1998.
The essential terms of this agreement are as follows:
Services Provided By Mackenzie-Shea:
------------------------------------
(1) Locate a suitable public acquisition company, presumably
discharged upon closing of the Reorganization with Greenway, now known as TDI.
(2) Assist the reorganized company (TDI) with seeking
additional business relationships or services.
(3) Advise the Company in locating and negotiating terms for
acquiring subsequent capital through public or private sources.
Consideration to Mackenzie-Shea:
--------------------------------
(1) Five thousand dollars ($5,000) non-refundable retainer, as
paid.
(2) Forty thousand dollars ($40,000) earned upon closing of
the Reorganization Agreement between Greenway/TDI and to be paid December 1,
1998.
(3) A monthly consulting fee of ten thousand dollars per month
($10,000\month) for twenty-four (24) consecutive months. This fee will accrue
for October and November, 1998 and be payable December 31, 1998. The monthly fee
for December, 1998 will also be due and payable on that date and on the first
day of each succeeding month thereafter for 21 months.
(4) Payment of certain necessarily incurred costs, including
potentially legal and accounting fees, with a "cap".
14
<PAGE>
(5) Issuance of TDI Shares to Mackenzie-Shea equal to ten per
cent (10%) of all issued and outstanding shares (preferred and common) of the
Company on a fully diluted basis, including shares issued pursuant to the
exercise of all stock options or other rights. This percentage shall remain in
force and effect and require the issuance of additional shares, until the
Company has received five million dollars ($5,000,000) in post-Reorganization
capitalization. At present the Company has determined and issued to the
Consultant 404,008 shares. This amount will necessarily increase as a result of
any subsequent shares issued by the Company, until the five million
capitalization level is achieved, if at all. Further the percentage to the
Consultant must be preserved in any future merger, acquisition or reorganization
occurring within the next three years.
(6) The Consultant is entitled to registration rights on all
shares issued to it. This right includes the right of the Consultant to require
registration upon demand at anytime after nine months from the date of the
Agreement on October 19, 1998 and to "piggyback" (join in) any registration
otherwise undertaken by the Company and require the registration of the
Consultant's shares as part of that registration..
The Consultant's stock rights, fees and costs will have a
substantial dilutive impact on earnings and share valuations in the Company and
to its other shareholders. Any shareholder wishing to review the actual
Consulting Agreement may obtain a copy by contacting management.
ITEM 2. PROPERTIES
- -------------------
The Company's present facilities are a leasehold at 7525 East
Camelback Road, Suite 202, Scottsdale, Arizona 85251, consisting of
approximately 1,500 square feet of lease space. The Company retains this
property on a 5 month lease with no rights of renewal. In addition, the Company
has tangible and intangible personal property valued at approximately $543,747
as detailed above and in the Financial Statements.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
To the best knowledge of the Company, its prior officers and
directors, there are no material legal proceedings to which the Company is a
party or to which any of its property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
The reverse acquisition generally described above was
completed pursuant to majority shareholder consent under Nevada Law. While it is
the opinion of management and its legal counsel that notice of these
transactions need not be given to shareholders under Nevada Law, the management
has, nonetheless, in accordance with its by-laws, provided notice of all
material terms of the reverse acquisitions to all shareholders of record and
informed them of the reorganization as approved by majority shareholder consent.
Notice of these transactions to shareholders was mailed on October 13th, 1998.
15
<PAGE>
The management of the Company, in consultation with its legal
counsel, does not believe that there are any further shareholder consents,
rights or other legal requirements necessary to the completion of the
reorganization such as dissenting shareholder rights or any notices or action
required under any control share acquisition provisions.
There are no present matters which the Company deems will
require shareholder approval in the foreseeable future. The Company intends to
continue holding regular annual meetings to reelect directors and to vote upon
other matters which may possibility come before the meetings in person or by
proxy.
PART II.
--------
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
- ------- ----------------------------------------------------------
MATTERS
- -------
As noted above, the Company has no present trading markets for
its securities and no warranty or assurance can be given that any will develop.
The Company, upon the filing of this 10-KSB, intends to approach one or more
broker dealers with the proposal to request a listing of the Company's stock;
and, if successful, would anticipate that the Company's stock would trade on the
Electronic BulletinBoard or Pink Sheets until such time, if at all, that the
Company is qualified for NASD SmallCap Listing.
No anticipated listing price is presently known or can be reasonably
anticipated by the Company and it is believed that the market, in connection
with the broker dealers, will determine the initial trading range, if any, of
the Company's stock in the event of a successful limited listing for quotation.
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
See attached initial audited Financial Statements for Travel Dynamics,
Inc. as of August 31, 1998; the audited Financial Statements for Greenway
Environmental Systems, Inc. as of June 30, 1998; and the pro forma unaudited
consolidated Financial Statements derived from the foregoing as of August 31,
1998.
Since Travel Dynamics, Inc. is a start up entity, there are no
historical financial records or data. It is anticipated that the Company will
attempt, in the future, to create and file audited Financial Statements on a
consolidated basis for both the parent and the subsidiary.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------------------------------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
A. Liquidity and Capital Resources
-------------------------------
Management notes that all foreseeable revenues to be generated for the
Company will be from its operating subsidiary Travel Dynamics Services, Inc.
Travel Dynamics, Inc. is essentially a start up entity which, prior to the term
16
<PAGE>
of the Reorganization, has had only one month of operations by its Subsidiary.
Accordingly, all of the following discussions must be considered as limited due
to the fact that the Company does not have a sufficient operating period of time
in which to make reasonable judgments as to its operations or future operations
and revenues.
The Company currently has a total of approximately $130,257 in current
assets. Of the total assets, the preponderant majority, valued at approximately
$368,588, consists primarily of a computer master data base and program related
to vendors and independent sales agents.
The working capital of the Company consists of approximately $78,872 in
cash, a short term note receivable of $3,500 and $28,035 in inventory. The
Company also has furniture and fixtures valued at approximately $14,818 and
computer equipment, less depreciation valued, at $26,459. The Company believes
this is a limited amount of capital from which to continue the operations
intended by the Company. Management is presently considering, though no
definitive decision has been made, to engage in a private placement offering to
raise up to an estimated $500,000 from the additional sale of its securities.
Otherwise, continued operations can only be funded from anticipated retained net
revenues.
B. Results of Operations
---------------------
As noted above, the operating Company has only completed one month of
operations and does not believe that such initial month can be used as
indicative of projected financial performance. During this initial month of
operations, the Company had total sales of $97, 555. The cost of sales were
$49,877, but management reasonably believes that certain of the initial costs of
sales were one time items related to start up which will not be incurred in
subsequent months. Operating expenses were approximately $58,401 which includes
other start up costs some of which should not be replicated in ensuing months.
As a result, management projects, but cannot warrant, that the Company should
obtain profitability within the second or third month of operations. The August
31, 1998 financial statements indicate a retained loss of ($10,113).
The Company does not believe that it can presently make reasonable
projections of future revenues or income based upon the limited operating
history.
C. General
-------
The operating Company has, to date, raised and expended $344,160 from
the private placement of its common stock. The primary expense to be incurred by
the Company is the advertising and holding of various seminars for the purposes
of attracting potential participants to its sales operations.
D. Year 2,000 Compliance
---------------------
The Company has determined that its internal hardware and software will
function past the year 2,000 without modification. The Company does not believe
17
<PAGE>
it would be heavily impacted by computer or computer program failures in the
year 2000 unless such computer program failures occur generally in the travel
industry.
ITEM 8. FINANCIAL STATEMENTS
- -----------------------------
See attached audited Financial Statements dated August 31, 1998 for
Travel Dynamics, Inc.; the June 30, 1998 audited Financial Statements for
Greenway Environmental Systems, Inc.; and the pro forma unaudited consolidated
presentment dated August 31, 1998.
It is intended that the Company will continue to retain the services of
Hansen, Barnett and Maxwell of Salt Lake City, Utah, as its independent auditors
for the foreseeable future. Hansen, Barnett and Maxwell acted as the auditors
for Greenway Environmental Systems, Inc.
PART III.
---------
ITEM 9. CHANGES IN OR DISAGREEMENT WITH AUDITORS.
- --------------------------------------------------
The Company has no disagreements with its current auditors.
ITEM 10. PRESENT DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
- -----------------------------------------------------------------
The following constitute the present Board of Directors and principal
officers as elected pursuant to the reverse acquisition on September 29, 1998.
JAMES PICCOLO - DIRECTOR - (President and CEO)
Age: 41
Mr. Piccolo currently resides with his family in Scottsdale,
Arizona. Mr. Piccolo obtained a BS Degree in Business Management from the
University of Nebraska in 1984. Mr. Piccolo has primarily been engaged in mail
order businesses and consulting for mail order businesses and products for most
of his professional business life. He served as the president for several large
mail order companies from approximately May, 1987 to July, 1994; including Hot
Tops, Inc, Special Effects, Inc., American Innovative Manufacturing and
International Sport Truck Association.Hot Tops, Inc. was the first national mass
distributor of convertible conversions for sport trucks. Mr. Piccolo was
co-founder of International Sports Truck Association and has long been regarded
as an innovator and visionary in the mass marketing area.
BRIAN K. SERVICE - DIRECTOR -
Age: 50
Mr. Service is a New Zealand Citizen, but currently resides in
California. Mr. Service was a Chemical Engineering graduate of the University of
18
<PAGE>
Cantebury in 1968. Mr. Service currently spends a substantial amount of his
professional time in the United States acting as an international business
consultant. In this capacity, he has clients in North and South America, the
United Kingdom, Asia, Australia and New Zealand. From October 1992 to October
1994, Mr. Service was CEO and Managing Director of Salmond Smith BioLab, a New
Zealand publicly traded company engaged in production and sale of consumer and
industrial products. From 1986 to 1982, he was CEO and Executive Chairman of
Milk Products, Holding (North America), Inc., a wholly owned subsidiary of the
New Zealand Dairy Board which was located in Santa Rosa, California. Mr. Service
has also been a member of the Board of Directors and Audit Committee of Visual
Data Corporation since July 1997 and is an Executive Director of EDNet, Inc. In
addition to being a Director, Mr. Service will continue as a business consultant
to the Company.
THOMAS (TOM) DENNIS - DIRECTOR
Age: 51
Mr. Dennis currently resides with his family in Atlanta,
Georgia. Mr. Dennis graduated from Grand Valley State University in 1972 with a
Bachelor of Arts Degree. Mr. Dennis has been involved in the past 25 years as a
business consultant with a particular emphasis on start up enterprises in the
development stage. Prior to his affiliation with Trave Dynamics, Mr. Dennis has
served as Director of Corporate Development for an original licensee of Arby's,
Inc. that operated 88 restaurants and as a Vice President and Board Member of
Sybra, Inc. which is engaged in the construction of Arby's Restaurants.
GARY DAVIES -- DIRECTOR
Age: 53
Mr. Davies currently resides in Scottsdale, Arizona. Mr.
Davies attended Brown University in 1968 where he pursued studies in math and
physics and subsequently presented technical papers in these disciplines. Mr.
Davies has been involved as a consultant or principal in various securities
transactions involving public offerings and mergers and acquisitions. His
clients in various securities offering matters have included Solitron Devices,
Inc.; General Instrument Corporation; Bendix Corporation; Greyhound Corporation;
Bliss and Laughlin Industries; and Gulf and Western. He was a founder of and
currently acts as corporate secretary to Mezzanine Capital Ltd., a "closed end"
investment company in Bermuda, with Bermuda Trading symbol "MEZZ BII." Mr.
Davies is also on the Board of Directors of Xtranet Systems, Inc. a software
developer for the gaming industry.
THOMAS VERGITH - DIRECTOR
Age: 38
Mr. Vergith resides in Scottsdale, Arizona. Mr. Vergith
received a BS/BA in Economics from the University of Nebraska in 1982 and a JD
Degree from Creighton University in 1986. Mr. Vergith is currently assistant
counsel for Scottsdale Insurance Company and a member of the Arizona Bar.
19
<PAGE>
JOHN P. PICCOLO - VICE PRESIDENT
Age: 34
Mr. Piccolo currently resides in Phoenix, Arizona. Mr. Piccolo
attended Mid-Plains Community College and was a graduate of the Emery School of
Aviation in 1985 and the Sawyer School of Aviation in 1985. Mr. Piccolo serves
as the Vice President of Travel Dynamics. Prior to his affiliation with Travel
Dynamics, Mr. Piccolo was employed by Target Mail, a company engaged in direct
mail processing, Global Prosperity, and Metropolitan Financial as a financial
document administrator. Mr. Piccolo has spent approximately the last ten years
in the aviation industry as a commercial pilot and instructor.
MELINDA FEHRINGER - SECRETARY/TREASURER
Age: 22
Ms. Fehringer currently resides in Chandler, Arizona. Ms.
Fehringer is a graduate of Devry University with a 1995 Bachelor of Science
Degree in Accounting. Ms. Fehringer was retained as the Secretary/Treasurer for
Travel Dynamics since its inception. Prior to her affiliation with Travel
Dynamics, Ms. Fehringer was employed by Electronic Visions as an accountant, a
company engaged in the manufacturing of semi-conductor equipment, with SynerNet
as its Accounting Manager, a company involved in computer consulting and prior
to that by Sheritan Crescent.
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
The initial compensation for each of the principal officers of
the corporation is as set-out in the following table, exclusive of stock option
rights. It should be noted that none of the directors are paid any fixed
compensation, as directors, but are entitled to a per diem of one thousand
dollars per meeting for attendance at Board of Directors meeting.
Annual Base Other Annual
Name of Officer Position Compensation Consideration1
- --------------- -------- ------------ --------------
James Piccolo President and $250,000 per See Below
CEO annum
- --------------- -------- ------------ --------------
John P. Piccolo Vice $60,000/yr See Below
President
- --------------- -------- ------------ --------------
Melinda Secretary/ $42,500/yr See Below
Fehringer Treasurer
- --------------- -------- ------------ --------------
Brian K. Service Consultant $24,000/yr. See Below
1Officers also receive standard medical/dental benefits.
20
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
- ------------------------------------------------------------
MANAGEMENT
- ----------
The following tables set forth, as of the current date, the
holders of common stock by each person who owned of record, or was known by the
Company to own beneficially, five percent (5%) or more of the Company's common
stock, and by the Company's directors and officers.
21
<PAGE>
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
Percent
Shares of
Name & Address Position Owned Shares Option Rights
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James Piccolo Director/President 400,000 9.8% Undetermined
Up to 200,000
Scottsdale, AZ per year for
employment
term.1
- -----------------------------------------------------------------------------------------------------
Brian Service Director 0 Up to 100,0002
San Francisco, CA
- -----------------------------------------------------------------------------------------------------
Thomas (Tom) Dennis Director 0 0 Up to 100,000
Atlanta, Georgia
- -----------------------------------------------------------------------------------------------------
Gary Davies Director 0 0 Up to 100,000
Scottsdale, AZ
- -----------------------------------------------------------------------------------------------------
Thomas Vergith Director 0 0 Up to 100,000
Scottsdale, AZ
- -----------------------------------------------------------------------------------------------------
John P. Piccolo Vice President 0 0 0
Phoenix, AZ
- -----------------------------------------------------------------------------------------------------
Melinda Fehringer Secretary/ 0 0 0
Treasurer
Chandler, AZ
- -----------------------------------------------------------------------------------------------------
OFFICERS AND N/A 400,000 9.8%
DIRECTORS
AS A GROUP
(Individuals)
- -----------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
1 Pursuant to his Employment Agreement, Mr. James Piccolo can acquire up to
200,000 shares per year at $0.10/share. Since his employment term may be
extended beyond a base period of three years, the total options and rights must
be considered indeterminate.
2. Each director may earn options to acquire up to 100,000 shares at
$0.10/share. Each has a current vested option for 25,000 shares at $0.10 and
will earn an option for an additional 25,000 shares for each year of service up
to 75,000 additional shares.
OTHER SHAREHOLDERS HOLDING OVER 5%
NAME OF SHARE-HOLDER NO. OF PERCENT OF
SHARES OUT-STANDING1
============================== ======================== =======================
Beverly Kasbeer 725,145 22.4%
- ------------------------------ ------------------------------------------------
Mackenzie-Shea, Inc.1 404,008 10%
- ------------------------------ ------------------------------------------------
Esteem Corporation.2 304,807 9.4%
- ------------------------------ ------------------------------------------------
Yorkton Ltd3 287,180 8.9%
- ------------------------------ ------------------------------------------------
Eli Datesh 233,918 7.2%
- ------------------------------ ------------------------------------------------
Bob Snyder 233,918 7.2%
- ------------------------------ ------------------------------------------------
Jim Sheidell 233,910 7.2%
- ------------------------------ ------------------------------------------------
Alan Guy Jontz 200,000 6.2%
- ------------------------------ ------------------------------------------------
Target Mail, LLC4 163,030 5.0%
============================== ======================== =======================
1The Mackenzie-Shea shares will increase as other shares are issued to maintain
its relative ten percent (10%) share. See more detailed description of
Mackenzie-Shea rights comencing on page 14.
2Esteem Corporation is an Arizona corporation engaged in marketing and of which
100% of the issued and outstanding shares are owned by the Mother of the
President, Mary Pat Piccolo.
3Yorkton Ltd. was the only prior Greenway shareholder holding in excess of 5% of
the issued shares. Mr. Limpert who was issed 400,000 shares has subsequently
assigned most of those shares and retains only 100,000.
4Target Mail LLC is an Arizona limited liability company engaged in direct
marketing; Target is 100% owned by Beverly Kasbeer.
23
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
Prior to the formation of the reorganized company, Mr. John
Piccolo was the principal owner and proprietor of a similar limited liability
company which commenced business in May, 1998. The Travel Dynamics, LLC sold its
assets and assigned its obligations to the operating company, Travel Dynamics,
Inc. in July, 1998. The corporate entity was acquired by Greenway and is now to
be known as Travel Dynamics Services, Inc. No outstanding rights or interests
were afforded Mr. John Piccolo other than his employment as Vice President
described above. It should also be noted that Mr. Dennis Madsen acted as the
finding and reorganization agent for the parent Company (Greenway) for the past
several years and was primarily responsible for representing Greenway
Environmental Systems in the reverse acquisition which has been reported in this
Report. As a result of such participation, Mr. Madsen was to receive certain
shares upon the successful completion of the reorganization. Mr. Madsen will
participate in those shares issued to Mr. Limpert, as previously disclosed.
There were no other related party transactions known to management of the
Company. Mr. Limpert retains 100,000 shares in consideration for making loan
proceeds available to Greenway in 1997. Mr. Jontz, listed above, is a holder of
200,000 shares obtained from Mr. Limpert.
PART IV.
--------
ITEM 14. ATTACHED EXHIBITS
- ---------------------------
Financials....
--------------
(A) See attached August 31, 1998 audited start up
financials for Travel Dynamics, Inc; and Travel
Dynamics, LLC, as the asset transferor to the
acquired Company.
(B) See attached June 30, 1998 audited financials for
Greenway Environment Systems, Inc.
(C) See unaudited pro forma August 31, 1998 consolidated
financials.
Other Exhibits....
------------------
(D) Current By-Laws - Attached.
(E) Certificate of Incorporation and Amendments -
Previously Filed.
(F) Reverse Acquisition Agreement - Concurrently Filed
with 8-K.
(G) 8-K dated October 14, 1998 - Concurrently Filed.
(H) Certificate of Amendment of Name in Nevada -
Attached.
(I) Board Minutes Pertaining to Reorganization.
(J) Majority Shareholder Consent.
24
<PAGE>
DATED this 21st day of October, 1998.
|s| James Piccolo
--------------------------------------------
James Piccolo
Director/President/CFO
Date: 10/21/98
|s| Brian K. Service
--------------------------------------------
Brian K. Service
Director
Date: 10/21/98
|s| Thomas Vergith
--------------------------------------------
Thomas Vergith
Director
Date: 10/21/98
|s| Melinda Fehringer
--------------------------------------------
Melinda Fehringer
Secretary/Treasurer
Controller and Principal Accounting Officer
Date: 10/21/98
25
<PAGE>
TRAVEL DYNAMICS, INC.
INDEX TO FINANCIAL STATEMENTS
Page
----
Travel Dynamics, Inc.
Independent Auditor's Report. . . . . . . . . . . . . . . . . . . F-8
Balance Sheet - August 31, 1998 . . . . . . . . . . . . . . . . . F-9
Statement of Income and Retained Earnings For the One Month Ended
August 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . F-10
Statement of Cash Flows For the One Month Ended August 31, 1998 . F-11
Schedule of Expenses For the One Month Ended August 31, 1998. . . F-12
Notes to Financial Statements . . . . . . . . . . . . . . . . . . F-13
Travel Dynamics, L.L.C.
Independent Auditor's Report. . . . . . . . . . . . . . . . . . . F-17
Balance Sheet - August 31, 1998 . . . . . . . . . . . . . . . . . F-18
Statement of Income and Members Equity For the Six Months Ended
August 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . F-19
Statement of Cash Flows For the Six Months Ended August 31, 1998. F-20
Schedule of Expenses For the Six Months Ended August 31, 1998 . . F-21
Notes to Financial Statements . . . . . . . . . . . . . . . . . . F-22
<PAGE>
TRAVEL DYNAMICS, INC.
(A NEVADA CORPORATION)
FINANCIAL STATEMENTS
(Audited)
For The Month Ended August 31, 1998
TESS L. RIDGWAY
CERTIFIED PUBLIC ACCOUNTANT
5151 N. 16TH STREET
PHOENIX, AZ. 85016
<PAGE>
TRAVEL DYNAMICS, INC.
(A Nevada Corporation)
FINANCIAL STATEMENTS
(Audited)
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Travel Dynamics, Inc.
7525 East Camelback, Suite 212
Scottsdale, AZ 85251
I have audited the accompanying balance sheet of Travel Dynamics, Inc. as of
August 31, 1998, and the related statements of income, retained earnings,
equity, cash flows and schedule of expenses for the month ended August 31,
1998. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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. I believe that my audit provides a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Travel Dynamic, Inc. as of
August 31, 1998, and the results of its operations and its cash flows for the
month then ended in conformity with generally accepted accounting principles.
/s/ Tess L. Ridgway
-------------------
Tess L. Ridgway
Certified Public Accountant
September 18, 1998
F-8
<PAGE>
TRAVEL DYNAMICS, INC.
BALANCE SHEET
AUGUST 31, 1998
ASSETS
CURRENT ASSETS
Cash on Hand and in Banks (Note 2) $ 78,872
Inventory (Note 1) 28,035
Short Term Note Receivable (Note 4) 3,500
Prepaid Rent 7,600
Deposits and Retainers 12,250
----------
Total Current Assets 130,257
----------
PROPERTY AND EQUIPMENT (NOTE 1)
Furniture and Fixtures 14,818
Computer Equipment 26,459
Less Accumulated Depreciation (375)
----------
Total Property and Equipment 40,902
----------
OTHER ASSETS
Club Membership (Note 6) 4,000
Intangibles - Net (Note 1) 325,039
----------
Total Other Assets 329,039
----------
TOTAL ASSETS $ 500,198
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 92,986
Short Term Note Payable (Note 6) 1,000
Accrued Liabilities 244
Deferred Revenue (Note 1) 114,615
----------
Total Current Liabilities 208,845
----------
LONG TERM LIABILITIES 0
----------
Total Liabilities 208,845
----------
SHAREHOLDERS' EQUITY
Capital Stock - Authorized 1,000,000 Shares at $.001 Par
Issued and Outstanding 855,000 Shares (Note 8) 855
Paid in Capital (Note 8) 344,160
Retained Earnings (Deficit) (53,662)
----------
Total Shareholders' Equity 291,353
----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 500,198
==========
The accompanying notes are an integral part of the financial statements.
F-9
<PAGE>
TRAVEL DYNAMICS, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE MONTH ENDED AUGUST 31, 1998
AMOUNT % TO SALES
SALES --------- ----------
Membership Processing Fees $ 9,718 10.3%
Product and Certified Sales 84,455 86.6
Freight In 3,382 3.1
--------- ---------
Total Sales 97,555 100.0
--------- ---------
COST OF SALES
Purchases and Certificates 48,315 49.5
Freight Out 1,562 1.6
--------- ---------
Total Cost of Sales 49,877 51.1
--------- ---------
Gross Profit 47,678 48.9
--------- ---------
Selling Expenses - See Schedule 18,433 18.9
Administrative Expenses - See Schedule 39,968 41.0
--------- ---------
Total Operating Expenses 58,401 59.9
--------- ---------
Net Loss From Operations (10,723) (11.0)
Other Income 660 0.7
--------- ---------
Net Loss Before Income Tax (10,063) (10.4)
Income Taxes (Note 1) 50 0.1
--------- ---------
Net Loss (10,113) (10.5)%
=========
Retained Earnings at the Beginning 0
Acquisition of Accumulated Deficit(Note 6) (42,549)
Distribution to shareholders (1,000)
---------
Retained Earnings (Deficit) at the End $ (53,662)
=========
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE>
TRAVEL DYNAMICS, INC.
STATEMENT OF CASH FLOWS
FOR THE MONTH ENDED AUGUST 31, 1998
OPERATING ACTIVITIES:
Net Loss from Operations $ (10,113)
Adjustment to Reconcile Net Loss to Net Cash Provided
by Operations:
Depreciation 375
Changes in Operating Assets and Liabilities, Net of
Effects from Transfer of Assets and Liabilities of
Travel Dynamics, L.L.C.:
Increase in Inventory (28,035)
Increase in Deposits (2,250)
Increase in Accounts Payables 92,986
Increase in Accrued Expenses 244
Increase in Customer Deposits(Deferred Revenue) 31,500
---------
Net Cash Provided by Operating Activities 84,707
---------
INVESTING ACTIVITIES:
Purchase of Furniture and Equipment (29,790)
Increase in Short Term Notes Receivable (3,000)
Transfer of Cash from Travel Dynamics L.L.C. (Note 6) 26,300
---------
Net Cash Used In Investing Activities (6,490)
---------
FINANCING ACTIVITIES:
Proceeds from Issuance of Common Stock 655
---------
Net Increase in Cash 78,872
Cash Balance, Beginning of Period 0
---------
Cash Balance, End of Period $ 78,872
=========
Supplemental Schedule of Noncash Investing and Financing Activities:
The Company issued 200,000 shares of common stock upon conversion of notes
payable in the amount of $344,360. Assets of $235,566 and liabilities of
$278,115 were transferred to the Company from Travel Dynamics, L.L.C., as
detailed in Note 6. A $1,000 short term note payable was issued as an
equity distribution to the former owners of Travel Dynamics, L.L.C.
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE>
TRAVEL DYNAMICS, INC.
SCHEDULE OF EXPENSES
FOR THE MONTH ENDED AUGUST 31, 1998
AMOUNT % TO SALES
--------- ----------
SELLING EXPENSES
Training Conferences $ 6,753 6.9
Recruiting 195 0.2
Travel 8,793 9
Meals and Entertainment 2,692 2.8
---------
18,433 18.9
=========
ADMINISTRATIVE EXPENSES
Advertising 2,175 2.3
Bad Debts 985 1.0
Office and Postage 2,710 2.8
Consulting and Professional Fees 10,000 10.3
Bonuses 500 0.5
Legal and Accounting Fees 11,046 11.4
Health Insurance 679 0.6
Depreciation 375 0.3
Taxes and Licenses 461 0.4
Telephone 5,005 5.2
Salaries and Wages 6,032 6.2
---------
$ 39,968 41.0
=========
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE>
TRAVEL DYNAMICS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
NATURE OF BUSINESS:
-------------------
The Company is a marketing firm which sells vacation discount packages
and provides marketing seminars for associated salespeople. The Company
was incorporated in Nevada and began operation in August 1998.
BASIS OF ACCOUNTING:
--------------------
The financial statements of Travel Dynamics, Inc. are prepared using the
accrual basis of accounting where revenues are recognized when earned
and expenses are recognized when incurred. This basis of accounting
conforms to generally accepted accounting principles.
USE OF ESTIMATES:
-----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those
estimates.
PROPERTY & EQUIPMENT:
---------------------
All property and equipment is recorded at cost and depreciated over
their estimated useful lives, using the straight-line method.
Depreciation for the period ended August 31, 1998 was $375.
INTANGIBLES:
------------
Intangibles are capitalized and amortized on a straight-line basis.
There is no current amortization expense. As of August 31, 1998,
intangible assets consisted of the following:
Master Data Base, net of amortization $ 117,657
Net Properating costs acquired 58,022
Organization Costs (See Note 7) 149,360
------------
$ 325,039
============
The above assets, except for the organization costs of the
company, were acquired based on August 31, 1998 net amounts. See
Note 6.
ADVERTISING:
------------
Advertising costs are expensed as incurred. Advertising expense was
$2175 for the month ended August 31, 1998.
REVENUE RECOGNITION:
--------------------
Revenue includes the cash sale of travel discount packages and receipt
F-13
<PAGE>
of membership fees in the current period. The Company recognizes
revenues for training seminars at the date the customer participates
in a seminar. Deferred revenues (seminar deposits) represent amounts
billed in advance of such participation
INVENTORY
---------
Inventories include vacation travel discount packages and cruise
certificates. All inventory items are stated at the lower of
cost(first-in, first-out) or market value.
INCOME TAXES:
-------------
Other than the minimum tax due the State of Arizona, no income tax
accruals have been made since the Company has a current net operating
loss of $9,597 for Federal purposes and $9,517 for Arizona purposes.
NOTE 2. CASH ON HAND AND IN BANK:
-------------------------
Checking Account, Wells Fargo Bank $ 72,912
Undeposited Funds 5,960
------------
$ 78,872
============
NOTE 3. LEASE COMMITMENTS:
------------------
In August the Company took over a prepaid lease of its current office
space. The lease term is August through December, 1998 at a total
cost to the Company of $7600. The Company does not intend to renew
its lease.
NOTE 4. RELATED PARTY TRANSACTIONS:
---------------------------
The Company has identified the following related party transactions:
1. A Short Term Note Receivable of $3500 from the Company's
President, James Piccolo. It is a demand loan with no
interest.
2. On July 31,1998, the Company agreed to purchase the assets and
Liabilities of Travel dynamics, L.L.C. a 50% member of the
L.L.C. also owns 36.25% of the outstanding stock of the
Company.
3. The Company shares personnel and administrative services and
common office space with Target Mail Systems, L. L.C. a
shareholder of the Company.
NOTE 5. CONTINGENCIES:
--------------
On September 1,1998, the Company accepted a Letter of Intent from
Greenway Environmental Systems, Inc., regarding an acquisition by
this Purchaser of the Company's net assets or outstanding stock.
F-14
<PAGE>
NOTE 6. ACQUISITION OF TRAVEL DYNAMICS L.L.C.:
---------------------------------------------
On July 31, 1998, the Company purchased the assets and liabilities of
Travel Dynamics, L.L.C. (the L.L.C) (a related party), based on the
L.L.C.'s audited financial statement for the six month period ending
August 31, 1998 (the L.L.C. had commenced business in March 1998).
The historical cost of the assets and liabilities transferred was as
follows:
Cash in Bank $ 26,300
Short Term Note Receivable 500
Property & Equipment 11,487
Master Data Base net of amortization 117,657
Preoperating costs, net of amortization 58,022
Prepaid Rent 7,600
Country Club Membership 4,000
Attorney Retainer Deposit 10,000
Short Term Notes Payable (195,000)
Deferred Revenue (seminar deposits) (83,115)
-----------
Net Liabilities Assumed $ (42,549)
===========
The assets and liabilities transferred are accounted for at historical cost in
a manner similar to that of pooling of interests.
NOTE 7. ORGANIZATION COSTS:
-------------------
The Company has chosen to amortize its preoperating and organization
costs. In future years, the Company will adjust its assets and retained
earnings deficit to be in agreement with generally accepted accounting
principles, which will be required as of the Company's fiscal year
ending December 31, 1999.
NOTE 8. COMMON STOCK TRANSACTION:
-------------------------
During August 1998, the Company issued 655,000 shares of common stock at
$.001 per share. On August 31, 1998, after the acquisition of the assets
and assumption of the liabilities of Travel Dynamic L.L.C., the Company
issued 130,305 shares of common stock in payment of two notes owed to
Esteem Corporation (a related party). The balance of the Notes payable
were $224,360 prior to the exchange. The Company issued 69,695 shares to
Target Mail Systems L.L.C. as payment for a Note Payable with a balance
of $120,000 prior to the exchange. The share were exchanged at a $.001
per share plus additional paid in capital of $344,160. The change in
Stockholders' Equity for the month of August is as follows:
Shares Amount Capital Earnings
------ -------- ----------- ---------
Balance July 31, 1998 - $ - $ - $ -
Stock issued for Cash through
August 1998 655,000 655 - -
Shares issued for Debt
Payment 200,000 200 344,160 -
Transfer of Accumulated Deficit (42,549)
Distribution to shareholders - - - (1,000)
Net Loss, August 1998 - - - (10,113)
------- -------- ---------- --------
Balance August 31, 1998 855,000 $ 855 $ 344,160 $(53,662)
======== ========= =========== ========
F-15
<PAGE>
TRAVEL DYNAMICS L.L.C.
(An Arizona Limited Liabilities Company)
FINANCIAL STATEMENTS
(Audited)
For the Six Months Ended August 31, 1998
TESS L. RIDGWAY
CERTIFIED PUBLIC ACCOUNTANT
5151 N. 16TH STREET
PHOENIX, AZ. 85016
F-16
<PAGE>
TRAVEL DYNAMICS L.L.C
(An Arizona Limited Liability Company)
FINANCIAL STATEMENTS
(Audited)
INDEPENDENT AUDITOR'S REPORT
Managing Members
Travel Dynamics L.L.C.
7525 East Camelback, Suite 212
Scottsdale, AZ 85251
I have audited the accompanying balance sheet of Travel dynamics, L.L.C. as of
August 31, 1998, and the related statements of income, members equity, cash
flows and schedule of expenses for the six months ended August 31, 1998. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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. I believe that my audit provides a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Travel Dynamics L.L.C. as of
August 31, 1998, and the results of its operations and its cash flows for the
six months then ended in conformity with generally accepted accounting
principles.
/s/ Tess L. Ridgway
-------------------
Tess L. Ridgway
Certified Public Accountant
September 18, 1998
F-17
<PAGE>
TRAVEL DYNAMICS L.L.C.
BALANCE SHEET
AUGUST 31, 1998
ASSETS
CURRENT ASSETS
Cash on Hand and in Banks (Note 2) $ 26,301
Prepaid Rent (Note 3) 7,600
Short Term Note Receivable (Note 4) 500
Refundable Deposits 10,000
---------
Total Current Assets 44,401
---------
PROPERTY AND EQUIPMENT (NOTE 1)
Furniture and Fixtures 3,719
Computer Equipment 9,045
Less Accumulated Depreciation (1,277)
---------
Total Property and Equipment 11,487
---------
OTHER ASSETS
Club Membership 4,000
Intangibles - Net (Note 1) 175,678
---------
Total Other Assets 179,678
---------
TOTAL ASSETS $ 235,566
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short Term Note Payable (Note 4) $ 195,000
Deferred Revenue (Note 1) 83,115
---------
Total Current Liabilities 278,115
---------
LONG TERM LIABILITIES -
---------
Total Liabilities 278,115
Member's Deficit (42,549)
---------
TOTAL $ 235,566
=========
The accompanying notes are an integral part of the financial statements.
F-18
<PAGE>
TRAVEL DYNAMICS L.L.C.
STATEMENT OF INCOME AND MEMBERS' EQUITY
FOR THE SIX MONTHS ENDED AUGUST 31, 1998
AMOUNT % TO SALES
SALES --------- ----------
Membership Processing Fees $ 21,622 9.1
Product and Certificate Sales 212,550 88.6
Freight In 5,743 2.3
--------- ----------
Total Sales 239,915 100
--------- ----------
COST OF SALES
Purchases and Certificates 146,072 60.9
Freight Out 22,505 9.4
--------- ----------
Total Cost of Sales 168,577 70.3
---------
Gross Profit 71,338 29.8
---------
Selling Expenses - See Schedule 50,429 21.1
Administrative Expenses - See Schedule 63,558 26.5
--------- ----------
Total Operating Expenses 113,987 47.6
Net Loss (42,649) 17.8
Members' Contribution 100
---------
Members' Deficit $ (42,549)
=========
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE>
TRAVEL DYNAMICS L.L.C.
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED AUGUST 31, 1998
OPERATING ACTIVITIES
Net Loss from Operations $ (42,649)
Adjustment to Reconcile Net Income
to Net Cash Provided by Operations
Activities:
Depreciation and Amortization 9,975
Changes in Operating Assets and Liabilities
Increase in Short Term Note Receivable (500)
Increase in Prepaid Rent and Deposit (17,600)
Increase in Customer Deposits 83,115
---------
Net Cash Used by Operating Activities $ 32,341
=========
INVESTING ACTIVITIES
Organization Costs (64,376)
Purchase of Furniture and Equipment (12,764)
Purchase of Master Data Base (120,000)
Country Club Membership (4,000)
---------
Net Cash Used by Investing Activities (201,140)
FINANCING ACTIVITIES
Members' Contributions 100
Notes Receivable 195,100
---------
Net Cash Provided by Financial Activities 195,000
---------
Increase in Cash 26,301
Cash at Beginning of Period 0
---------
Cash at End of Year $ 26,301
=========
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE>
TRAVEL DYNAMICS L.L.C.
SCHEDULE OF EXPENSES
FOR THE SIX MONTHS ENDED AUGUST 31, 1998
AMOUNT % TO SALES
-------- ----------
SELLING EXPENSES
Training Conferences $ 18,546 7.5
Commissions 7,200 3.0
Recruiting 613 0.3
Travel 13,235 5.7
Meals and Entertainment 10,835 4.6
--------
Total Selling Expenses 50,429 21.1
========
ADMINISTRATIVE EXPENSES
Advertising 4,524 1.9
Auto Expenses 1,091 0.5
Office and Postage 6,207 2.6
Consulting and Professional Fees 9,780 4.1
Legal and Accounting Fees 21,531 9
Donations 2,087 0.9
Dues, Membership, Licenses 1,266 0.6
Rent 1,900 0.8
Telephone 5,197 2.2
Depreciation and Amortization 9,975 3.9
--------
$ 63,558 26.5
========
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE>
TRAVEL DYNAMICS L.L.C.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS:
The Company is a marketing firm which sells vacation discount packages and
provides marketing seminars for associated salespeople. The Company was
organized in Arizona and began operation in March 1998. On July 31, 1998,
the Company's Assets and Liabilities were purchased by Travel Dynamics,
Inc., a related party (see Note 4). As of September 1, 1998, the Company is
no longer an active business entity.
BASIS OF ACCOUNTING:
The financial statements of Travel Dynamics L.L.C. are prepared using the
accrual basis of accounting where revenues are recognized when earned and
expenses are recognized when incurred. This basis of accounting conforms to
generally accepted accounting principles.
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those
estimates.
PROPERTY EQUIPMENT:
All property and equipment is recorded at cost and depreciated over their
estimated useful lives, using the straight-line method. Depreciation for
the period ended August 31, 1998 was $1277.
INTANGIBLES:
The Company purchased a Master Data Base at a cost of $120,000, which is
being amortized over 15 years using the straight-line method. Preoperating
expenses of $64,376 comprised primarily of legal fees, were incurred prior
to March 1998 and is being amortized over 5 years using the straight-line
method. Amortization expense for the period ended August 31, 1998 was
$8698.
ADVERTISING
Advertising costs, which are included in Sales expenses, are expensed as
incurred. Advertising expenses was $4524 for the six months ended August
31, 1998.
REVENUE RECOGNITION:
Revenue includes the cash sale of travel discount packages and receipt of
membership fees in the current period. The Company recognizes revenues for
training seminars at the date the customer participates in a seminar.
Deferred revenues (seminar deposits) represent amounts billed in advance of
such participation.
INCOME TAXES:
The Company is treated as a partnership for federal income tax purposes and
does not incur income taxes. Instead, its earnings and losses are included
in the personal returns of the members and taxed depending on their
personal tax situation. The financial statements do not reflect a provision
for income taxes.
F-22
<PAGE>
NOTE 2. CASH ON HAND AND IN BANK:
Checking Account, Wells Fargo Bank. $26,301
NOTE 3. LEASE COMMITMENTS:
In August the Company prepaid to sublease its current office space. The
sublease term is August through December 1998 at a total cost of $9500.
The Company does not intend to renew its lease.
NOTE 4. RELATED PARTY TRANSACTIONS
The Company has identified the following related party transaction:
1. A short Term Note Receivable of $500 is with a member of the
immediate family of one of the members. It is a demand loan and no
interest is charged or expected to be received.
2. The Short Term Note Payable includes a note for $75,000 for Esteem
Corporation, owned by the mother of one of the members. This note was
converted to equity in Travel Dynamics, Inc., after the purchase of
the Company's assets and liabilities (See Note 1).
3. One of the 50% members of the Company owns 36.25% of the outstanding
shares of Travel Dynamics, Inc.
F-23
<PAGE>
GREENWAY ENVIRONMENTAL SYSTEMS, INC.
(A Development Stage Enterprise)
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUTANTS
AND
FINANCIAL STATEMENTS
June 30, 1998 and 1997
and for the Cumulative Period from
Inception (January 26,1989) Through June 30, 1998
HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
GREENWAY ENVIRONMENTAL SYSTEMS, INC.
(A Development Stage Enterprise)
TABLE OF CONTENTS
Page
----
Report of Independent Certified Public Accountants 1
Financial Statements:
Balance Sheet - June 30, 1998 2
Statements of Operations for the Years Ended June 30,
1998 and 1997 and for the Cumulative Period from January
26, 1989 (Date of Inception) through June 30, 1998 3
Statements of Stockholders' Equity for the Cumulative Period
from January 26, 1989 (Date of Inception) through September
30, 1990, for the Cumulative Period from September 30, 1990
through June 30, 1996 and for the years ended June 30, 1997
and 1998 4
Statements of Cash Flows for the Years Ended June 30, 1998
and 1997 and for the Cumulative Period from January 26,
1989 (Date of Inception) through June 30, 1998 5
Notes to Financial Statements 6
<PAGE>
HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS
(801) 532-2200
Member of AICPA Division of Firms Fax (801) 532-7944
Member of SECPS 345 East Broadway, Suite 200
Member of Summit International Associates Salt Lake City, Utah 84111-2693
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Greenway Environmental Systems, Inc.
We have audited the accompanying balance sheet of Greenway Environmental
Systems, Inc. (a development stage enterprise) as of June 30, 1998 and the
related statements of operations, stockholders' equity (deficit), and cash flows
for the years ended June 30, 1998 and 1997 and for the cumulative period from
January 26, 1989 (date of inception) through June 30, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The financial statements of the Company from January 26, 1989
through September 30, 1990 were audited by another auditor whose report dated
March 1, 1991 contained an explanatory paragraph relating to the Company's
ability to continue as a going concern, as discussed in Note 5. Our opinion, in
so far as it relates to the period from January 26, 1989 through September 30,
1990, is based solely on the report of the other auditor.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require 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
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 and the report of the other auditor provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditor, the
financial statements referred to above present fairly, in all material respects,
the financial position of Greenway Environmental Systems, Inc. as of June 30,
1998 and the results of its operations and its cash flows for the years ended
June 30, 1998 and 1997 and for the cumulative period from January 26, 1989 (date
of inception) through June 30, 1998, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5 to the
financial statements, the Company's significant losses raise substantial doubt
about its ability to continue as a going concern. Management's plans regarding
those matters are also described in Note 5. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
September 29, 1998
1
<PAGE>
GREENWAY ENVIRONMENTAL SYSTEMS, INC.
(A Development Stage Enterprises)
BALANCE SHEET
JUNE 30, 1998
ASSETS
Current Assets
Cash $ 10
Receivable from shareholder 10,000
---------
Total Assets $ 10,010
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $ -
---------
Stockholders' Equity
Common stock - $0.001 par value; 50,000,000 shares
authorized; 1,236,072 shares issued and outstanding 1,236
Additional paid-in capital 173,161
Deficit accumulated during the development stage (164,387)
---------
Total Stockholders' Equity 10,010
---------
Total Liabilities and Stockholders' Equity $ 10,010
=========
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
GREENWAY ENVIRONMENTAL SYSTEMS, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
Cumulative From
January 26,
1989 (Date
For the Years of Inception)
Ended June 30, through
--------------------- June 30,
1998 1997 1998
--------- --------- ----------
Revenue $ - $ - $ -
General and administrative expenses 89,990 - 164,387
--------- --------- ----------
Net Loss $ (89,990) $ - $ (164,387)
========= ========= ==========
Basis Loss Per Share $ (0.07) $ (0.00) $ (0.99)
========= ========= ===========
Weighted Average Number of Shares
Outstanding 1,226,072 46,431 166,040
========= ========= ===========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
GREENWAY ENVIRONMENTAL SYSTEMS, INC.
(A Development Stage Enterprise)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Deficit
Accumulated Total
Common Stock Additional During the Stockholders'
---------------------- Paid-In Development Equity
Shares Amount Capital Stage (Deficit)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Shares issued to acquire Jewel Management
Company, January 26, 1989, $0.29 per share 46,431 $ 49 $ 14,351 $ - $ 14,397
Net loss for the cumulative period January
26, 1989 through September 30, 1990 - - - (24,199) (24,199)
---------- ---------- ---------- ---------- ----------
Balance - September 30, 1990 46,431 49 14,351 (24,199) (9,802)
Net loss for the cumulative period from
October 1,1990 through June 30, 1990 - - - (50,198) (50,198)
---------- ---------- ---------- ---------- ----------
Balance - June 30, 1996 46,431 49 14,351 (74,397) (60,000)
Net loss for the year ended June 30, 1997 - - - - -
---------- ---------- ---------- ---------- ----------
Balance - June 30, 1997 46,431 49 14,351 (74,397) (60,000)
Shares issued for cash and $10,000 receivable
from a shareholder, August 4, 1997 through
February 28, 1998, $0.09 per share 314,744 315 26,710 - 27,025
Shares issued for services, July 1, 1997
through June 30, 1998, $0.09 per share 675,200 675 57,300 - 57,975
Shares issued upon conversion of accounts
payable, July 1, 1997, $0.09 per share 174,697 175 14,825 - 15,000
Shares issued to officers for services July
1, 1997, $1.00 per share 15,000 15 14,985 - 15,000
Shares issued upon conversion of accounts
payable, June 30, 1998, $4.50 per share 10,000 10 44,990 - 45,000
Net loss for the year ended June 30, 1998 - - - (89,990) (89,990)
---------- ---------- ---------- ---------- ----------
Balance - June 30, 1998 1,238,969 $ 1,239 $ 173,158 $ (164,387) $ 10,010
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
GREENWAY ENVIRONMENTAL SYSTEMS, INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative From
January 26, 1989
For the Years (Date of Inception)
Ended June 30, through
--------------------- June 30,
1998 1997 1998
--------- --------- ----------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net loss $ (89,990) $ - $ (164,387)
Depreciation and amortization - - 948
Compensation expense satisfied with stock 57,975 - 57,975
Stock issued for services 15,000 - 15,000
Legal expense satisfied with stock - - 20,000
Changes in accounts payable - - (9,139)
--------- --------- ----------
Net Cash Provided by Operating Activities (17,015) - (79,603)
--------- --------- ----------
Cash Flows From Investing Activities
Net cash acquired in acquisitions - - 22,588
--------- --------- ----------
Net Cash Provided by Investing Activities - - 22,588
--------- --------- ----------
Cash Flows From Financing Activities
Proceeds from issuance of common stock 17,025 - 17,025
Proceeds from issuance of notes payable - - 40,000
--------- --------- ----------
Net Cash Provided by Financing Activities 17,025 - 57,025
--------- --------- ----------
Net Increase in Cash and Cash Equivalents 10 - 10
Cash and Cash Equivalents at Beginning of Year - - -
--------- --------- ----------
Cash and Cash Equivalents at End of Year $ 10 $ - $ 10
========= ========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
GREENWAY ENVIRONMENTAL SYSTEMS
(A Development Stage Enterprises)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Jewel Management Company, a privately held Utah corporation,
and Southern Cross Ventures, a Nevada publically held corporation, were
consolidated into Centra Corp., a Nevada Corporation, on January 26, 1989.
This legal consolidation resulted in the issuance of 46,431 (post-split)
shares of Centra Corp.'s common stock. In connection with the legal
consolidation, the stockholders approved a quasi-reorganization and $2,180,573
of accumulated deficit were reclassified to additional paid-in capital. The
assets and liabilities of Jewel Management Company were recorded in the
purchase business combination at historical cost in a manner similar to a
pooling of interests.
On June 24, 1991, Centra Corp. was merged into Greenway
Environmental Systems, Inc., a newly-formed Nevada corporation,
and all of the outstanding Centra Corp. common stock was
exchanged for 46,431 (post-split) common shares of Greenway
Environmental Systems, Inc. This transaction was accounted for
as the reorganization of Centra Corp. into Greenway
Environmental Systems, Inc. at the historical cost of Centra
Corp.
The accompanying financial statements include the operations of
Centra Corp. from January 26, 1989 and the operations of
Greenway Environmental Systems, Inc. from June 24, 1991. The
Company is considered a development stage enterprise which has
been seeking a merger or acquisition.
In June 1998, the Board of Directors approved a 1-for-19.5 reverse stock
spilt. The financial statements have been restated to reflect the stock spilt
for all periods presented.
Earnings (Loss) per Share - In the fourth quarter of 1997, the Company adopted
Statement of Financial Accounting Standards (SFAS) No . 128 Earnings per
Share. Under SFAS 128, loss per common share is computed by dividing net loss
available to common shareholders by the weighted average number of common
shares outstanding during the period.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures
NOTE 2 -- INCOME TAXES
The components of the net deferred tax asset as of June 30, 1998 are as
follows:
Tax Net Operating Loss Carryforward $ 61,316
Valuation Allowance (61,316)
----------
Net Deferred Tax Asset $ -
==========
6
<PAGE>
During the years ended June 30, 1998 and 1997 the valuation allowance
increased $33,567 and none, respectively.
As of June 30, 1998 the Company had net operating loss carry forwards for
federal income tax reporting purposes of 164,387 which will expire , beginning
in 2004.
The following is a reconciliation of the income tax at the federal statutory
tax rate with the provision of income taxes for the years ended June 30:
1998 1997
--------- ---------
Income tax benefit at statutory rate (34%) $ (30,597) $ -
Change in valuation allowance 33,567 -
State benefit net of federal tax (2,970) -
--------- ---------
Provision for Income Taxes $ - $ -
========== =========
NOTE 3 -- COMPENSATION
On July 1, 1997, members of the Board of Directors were issued 15,000 shares
of common stock valued at $15,000, or $1.00 per share, for their services to
the Company. In July 1997 the Company entered into an agreement with an
individual for his services in finding and completing a merger or acquisition
of an operating company. The conditions required for issuance 989,944 shares
of common stock were considered met beginning in July 1997. Consideration
received by the Company for the issuance of the common stock was $27,025 paid
during the year ended June 30, 1998 and in September 1998 and the services of
the individual valued at $57,975 based upon the fair value of the common stock
on the date the agreement was established.
NOTE 4--RECEIVABLE FROM SHAREHOLDER
During the year ended June 30, 1998, the Company issued 314,744 shares of
common stock for $17,025 paid in cash and $10,000 receivable from the
shareholder. The receivable was collected in September 1998.
NOTE 5 -- GOING CONCERN
The Company has accumulated losses since inception of the development stage of
$164,387. This situation raises substantial doubt about its ability to
continue as a going concern. Management plans to complete the reverse
acquisition agreement with Travel Dynamics as discussed in Note 8.
7
<PAGE>
NOTE 6 -- SUPPLEMENTAL CASH FLOW INFORMATION
On January 26, 1989, the Company acquired all of the net assets of Jewel
Management Company. In conjunction with the acquisition, net liabilities were
assumed as follows:
Fair value of assets acquired including cash $ 23,536
Fair value of common stock issued (14,397)
---------
Net Liabilities Assumed $ 9,139
=========
During the year ended June 30,1998, the Company issued 675,200 shares of
common stock valued at $57,975 to a consultant for his services in finding
Travel Dynamics, Inc., as disclosed in Note 8. The Company issued 174,697
common shares upon the conversion of accounts payable in the amount of $60,000
and issued 15,000 common shares for services valued at $15,000 to three
members of the Board of Directors.
NOTE 7 -- CONTINGENCIES
In 1991, the Company issued 265,002 shares of common stock to acquire the
assets of a Texas corporation also known as Greenway Environmental. This
acquisition was aborted and the 265,002 shares were canceled except 39,750
shares have not been returned. While the Company considers the shares
canceled, it is possible that a holder in due course may be able to assert a
future claim as to the validity of these shares.
NOTE 8 -- SUBSEQUENT EVENTS
Pursuant to a reverse acquisition agreement dated September 30, 1998, with
Travel Dynamics, Inc., a Nevada Corporation, the Company exchanged
approximately 2,000,000 shares of its common stock for all of the outstanding
shares of Travel Dynamics. The Company changed its name to Travel Dynamics
Inc. and elected a new board of directors.
8
<PAGE>
TRAVEL DYNAMICS, INC.
INDEX TO FINANCIAL STATEMENTS
Page
----
Unaudited Pro Forma Condensed Consolidated Financial Statements. . . F-2
Unaudited Pro Forma Condensed Consolidated Balance Sheet -
August 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Unaudited Pro Forma Condensed Consolidated Statements of Operations
for the Six Months Ended August 31, 1998. . . . . . . . . . . . .F-4
Notes to the Unaudited Pro Forma Condensed Consolidated
Financial Statements . . . . . . . . . . . . . . . . . . . . . . F-5
<PAGE>
TRAVEL DYNAMICS, INC.
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
On September 30, 1998, Travel Dynamics, Inc. ("Travel Dynamics") entered into
and completed an agreement with Greenway Environmental Systems, Inc.
("Greenway") pursuant to which Greenway issued 2,000,000 shares of its common
stock in exchange for 100% of the issued and outstanding common stock of Travel
Dynamics. In addition, Greenway changed its name to Travel Dynamics, Inc. in
connection with the agreement. The agreement has been accounted for as the
reorganization of Travel Dynamics and the acquisition of Greenway at historical
cost. The following unaudited pro forma condensed consolidated balance sheet has
been prepared to present the consolidated financial position of Travel Dynamics
as though the agreement had been consummated on August 31, 1998. On July 31,
1998, the assets and liabilities of Travel Dynamic L.L.C. were transferred to
Travel Dynamics. Travel Dynamics L.L.C. was formed and began doing business on
March 1, 1998. The following unaudited pro forma condensed consolidated
statement of operations has been prepared to present the operations of the
consolidated companies for the six months ended August 31, 1998 assuming the
agreement had been completed on March 1, 1998.
The following financial information was derived from, and should be read in
conjunction with the separate historical financial statements of Greenway
included in its annual report to shareholders on Form 10-KSB for the year ended
June 30, 1998, and the financial statements of Travel Dynamics and Travel
Dynamics, L.L.C. and the related notes to those financial statements which are
included elsewhere herein. The unaudited pro forma condensed consolidated
balance sheet and statement of operations have been included herein for
comparative purposes only and do not purport to be indicative of the results of
operations which actually would have been obtained had the agreement been
completed on August 31, 1998 or March 1, 1998, or the results of operations
which may be obtained in the future. In addition, further results may vary
significantly from the results reflected in these pro forma financial
statements.
F-2
<PAGE>
TRAVEL DYNAMICS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
AUGUST 31, 1998
Greenway
Enviorn-
Travel mental Pro
Dynamics System Forma Pro
Inc. Inc. Adjustments Forma
--------- ----------- ------------ -------------
ASSETS
Current assets
Cash $ 78,872 $ 10 $ - $ 78,882
Inventory 28,035 - - 28,035
Related party
receivable 3,500 10,000 - 13,500
Prepaid rent 7,600 - - 7,600
Deposits and retainers 12,250 - - 12,250
--------- ------------ ------------- -------------
Total Current
Assets 130,257 10,010 - 140,267
--------- ------------ ------------- -------------
Property and Equipment 41,277 - - 41,277
Less accumulated
depreciation (375) - - (375)
--------- ------------ ------------- -------------
Net Property and
Equipment 40,902 - - 40,902
--------- ----------- ------------- -------------
Intangible Assets 329,039 - (B) (207,382) 121,657
--------- ------------ ------------- -------------
Total Assets $ 500,198 $ - $ (207,382) $ 302,826
========= ============ ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 92,986 $ - $ - $ 92,986
Note payable 1,000 - - 1,000
Accrued liabilities 244 - (D) 45,500 45,744
Deferred revenue 114,615 - - 144,615
--------- ------------ ------------- -------------
Total Current
Liabilities 208,845 - 45,500 254,345
--------- ------------ ------------- -------------
Stockholders' Equity
Common stock 855 1,236 (A) 1,145
(D) 404
(F) 400 4,040
Additional
paid-in-capital 344,160 173,161 (A) (165,532)
(D) 60,197
(E) 21,000
(F) 59,600 492,586
Accumulated deficit (53,662) (164,387)(A) 164,387
(B) (207,382)
(D) (106,101)
(E) (21,000)
(F) (60,000) (448,145)
--------- ------------ ------------- -------------
Total Stockholders'
Equity 291,353 10,010 (252,882) 48,481
--------- ------------ ------------- -------------
Total Liabilities and
Stockholders' Equity $ 500,198 $ 410,010 $ (207,382) $ 302,826
========= ============ ============= =============
Notes to the Unaudited Condensed Pro Forma Consolidated Statements are
presented on page
F-3
<PAGE>
TRAVEL DYNAMICS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED AUGUST 31, 1998
Greenway
Travel Travel Environ- Pro
Dynamics Dynamics mental Pro Forma Forma
L.L.C. Inc. Systems Adjustments Results
--------- --------- ---------- ----------- -----------
Sales $ 239,915 $ 97,555 $ - $ - $ 337,470
st of sales 168,577 49,877 - - 218,454
--------- --------- ---------- ---------- -----------
Gross profit 71,338 47,678 - - 119,016
Selling expense 50,429 18,433 - - 68,862
Administrative
expense 63,558 39,968 89,990 (B) 58,022
(C) (73,975)
(D) 166,101
(E) 38,538
(F) 185,000 567,202
--------- --------- ---------- ---------- -----------
Loss from operations (42,649) (10,723) (89,990) (373,686) (517,048)
Other income - 660 - - 660
--------- --------- ---------- ----------- -----------
Net loss before
income tax (42,649) (10,063) (89,990) (373,686) (516,388)
Income taxes - 50 - (C) (50) -
--------- --------- ---------- ----------- -----------
Net Loss $ (42,649) $ (10,113) $ (89,990) $ (373,636) $ (516,388)
========= ========= ========== =========== ===========
Basic and Diluted
Loss per Common Share $ (0.13)
===========
Weighted average number of
common shares used in per
share calculation 4,040,080
===========
Notes to the Unaudited Condensed Pro Forma Consolidated Statements are
presented on page
F-4
<PAGE>
TRAVEL DYNAMICS, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
A - On June 30, 1998, Greenway had 1,236,072 common shares
outstanding. Travel Dynamics had common shares outstanding of
855,000. As part of the agreement, Greenway exchanged 2,000,000
shares of its common stock for all of the outstanding common stock
of Travel Dynamics and changed its name to Travel Dynamics, Inc.
As a result of the agreement, Travel Dynamics, Inc. had 3,236,072
common shares outstanding. The agreement has been accounted for as
the reorganization of Travel Dynamics and the acquisition of
Greenway using the purchase method of accounting. Greenway did not
have any operations and had only nominal assets at the date of the
agreement. Accordingly, the acquisition of the assets of Greenway
were recorded at their historical costs. The results of the
operations for Travel Dynamics, L.L.C. and for Travel Dynamics,
Inc. are for the six months and the one month ended August 31,
1998, respectively.
B - The assets and liabilities of Travel Dynamics, L.L.C. were
transferred to Travel Dynamics, Inc. on July 31, 1998 at their
historical costs. Travel Dynamics L.L.C. had capitalized and
transferred preoperating expenses of $58,022 net of accumulated
amortization of $6,354 to Travel Dynamics, Inc. In addition,
Travel Dynamics, Inc. had capitalized $149,360 of expenses
associated with the agreement with Greenway. These capitalized
costs were charged to operations at the date of the
reorganization. However, the $149,360 expenses associated with the
agreement with Greenway were non-recurring expenses directly
attributed to the agreement and are therefore excluded from the
pro forma statement of operations.
C - The historical operations of Greenway are for the year ended June
30, 1998. Expenses of $57,975 were incurred for services in
finding and completing the reorganization with Travel Dynamics,
were non-recurring and have been eliminated from the pro forma
results of operations. In addition, approximately $16,000 of
Greenway's expenses which related to the six months ended December
31, 1997 and $50 of income taxes of Travel Dynamics, Inc. have
also been eliminated from the pro forma results of operations.
There were no material expenses incurred by Greenway during the
two months ended August 31, 1998 which were excluded due to
Greenway reporting its operations only through June 30, 1998.
F-5
<PAGE>
D - Travel Dynamics entered into an agreement on June 26, 1998 with a
business consulting firm which agreement was mutually rescinded on
October 17, 1997 and a new agreement was entered into on October
19, 1998. Under the terms of the new agreement, the consulting
firm has provided services and benefits relating to the
reorganization of Travel Dynamics' and the finding of Greenway and
shall provide services relating to Travel Dynamics' ongoing
business activities. Travel Dynamics has agreed to pay the
consulting firm $5,000 as a non-refundable retainer, $40,000 for
assisting Travel Dynamics in the reorganization with Greenway,
$10,000 per month for a period of 24 months unless terminated
earlier by a 60-day notice of termination, reimbursement of
out-of-pocket, printing, and legal expenses, the cost to hire
certain professionals on a temporary or contract basis which may
range from $1,500 to $2,500 per day to execute some of the
consultant firm's recommendations, and the issuance of common
stock of Travel Dynamics equal to 10% of all outstanding equity
securities, computed on a fully- diluted basis, until Travel
Dynamics has raised up to $5,000,000 of investment capital and/or
entered into equivalent business combinations (359,885 shares at
October 19, 1998). The consulting firm shall have registration
rights regarding their common stock commencing niine months from
the date of the agreement and piggyback registration rights to
register their stock as part of any other registration of Travel
Dynamic's equity securities. If Travel Dynamics merges with,
acquires assets or property from or obtains financing from any
entity the consulting firm introduces to Travel Dynamics, Travel
Dynamics is obligated to pay the consulting firm a finder's fee of
5% of the first $3,000,000. 4% of the next $2,000,000 and 3% of
the amount above $5,000,000 of the gross proceeds of the
transaction. The consulting firm shall be entitled to appoint one
member of the Board of Directors. The Company is obligated under
the agreement to issue 404,008 shares of common stock to the
consulting firm, based upon the common stock presently
outstanding. In addition, the Company has granted options to
purchase 1,000,000 shares of common stock which may rquire the
Company to issue an additional 111,111 shares of common stock to
the consulting firm. There is no market for the Company's common
stock; however, management of the Company and the consulting firm
have determined that the fair value of the common stock at the
date of the agreement was $0.15 per share. The 404,008 shares of
common stock presently issuable to the consulting firm have been
valued at $60,601 for purposes of these pro forma financial
statements.
F-6
<PAGE>
E - The Company has granted options to purchase 100,000 shares of
common stock at $0.10 per share to each of the four members of the
Board of Directors. The options vest at the rate of 25% upon being
granted, and 25% per year over three years. The options have a
fair value of $0.11 per share computed using the Black-Scholes
option-pricing model with the following assumptions: underlying
common stock value - $0.15, expected life of the options - 5
years, expected volatility - 75% and risk-free interest rate -
4.4%. Compensation relating to the options granted to the Board of
Directors is recognized based upon the fair value of the options
which will be recognized over the vesting period. The Company also
granted options to the President of the Company in connection with
a three-year employment agreement. Options to purchase 600,000
shares of common stock at $0.10 per share were granted under the
agreement. Options to purchase 200,000 shares vested upon
execution of the agreement and an additional 200,000 options vest
each year of employment. The intrinsic value of the options is
$30,000 which will be recognized as compensation over the period
the options vest. Compensation expense relating to the stock
options of $21,000 was recognized as of August 31, 1998 for
purposes of the pro forma balance sheet. Compensation expense
relating to the stock options has been increased by $38,538 during
the six months ended August 31, 1998 for purposes of the pro forma
statement of operations.
F - In connection with the employment agreement with the Company's
President, the Company issued 400,000 shares of common stock
valued at $0.15 per share, or $60,000. In addition, cash
compensation of $250,000 per year will be paid to the President.
F-7
BY-LAWS
OF
Greenway Environmental Systems, Inc
===================================
ARTICLE I
Offices
Section 1. Principal Executive Office. The principal executive office
of the corporation shall be located at 5110 South 800 East, Salt Lake City, Utah
84107. The Board of Directors is hereby granted full power and authority to
change said principal executive office from one location to another. Any such
change shall be noted on the by-laws by the secretary, opposite this Section, or
in a writing executed by the Board of Directors.
Section 2. Other Offices. Other business offices may at any time be
established by the Board of Directors at such other places both within and
without the State of Nevada as the Board of Directors may from time to time
determine or the business of the corporation may require.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meetings. All annual or other meetings of
stockholders shall be held at the principal executive office of the corporation,
or at any other place within or without the State of Nevada which may be
designated by the Board of Directors and stated in the notice of the meeting.
Section 2. Annual Meetings. Annual meetings shall be held at such date
and time as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting. At such meetings, Directors shall be
elected, reports of the affairs of the corporation shall be considered and any
other business may be transacted which is within the powers of the stockholders.
Section 3. Special Meetings. Special meetings of the stockholders, for
the purpose of taking any action permitted by the stockholders under the Nevada
Revised Statutes and the Articles of Incorporation, may be called at any time by
the chairman of the board or the president, by the Board of Directors or by one
or more stockholders holding collectively, not less than fifteen percent (15%)
of the shares of capital stock of the corporation issued and outstanding and
entitled to vote at the meeting. Upon request in writing that a special meeting
of stockholders be called for any proper purpose, directed to the chairman of
the board, the president, any vice president or the secretary by any person
(other than the Board of Directors) entitled to call a special meeting of
stockholders, the officer forthwith shall cause notice to be given to
stockholders entitled to vote that a meeting will be held at a time requested by
the person or person calling the meeting, not less than 20 nor more than 60 days
after receipt of the request.
<PAGE>
If the notice is not given within 20 days after receipt of the request, the
person or persons entitled to call the meeting may give the notice. If a special
meeting is called by any person or persons other than the Board of Directors,
the written request to an appropriate officer of the corporation shall specify
the time of such meeting and the nature of the business proposed to be
transacted, and shall be delivered personally or sent by registered mail or by
telegraphic or facsimile transmission.
Section 4. Notice of Meetings of Stockholders and Delivery of Reports
to Stockholders. Except as provided in Section 9, written notice of any meeting
of stockholders shall be given to each stockholder entitled to vote and a copy
of each report to the stockholders shall be given to each stockholder, in each
case either personally or by mail or other means of written communication,
charges prepaid, addressed to such stockholder at his address appearing on the
books of the corporation or given by him to the corporation for the purpose of
notice. If any notice or report addressed to the stockholder at the address of
such stockholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice or report to the
stockholder at such address, all future notices or reports shall be deemed to
have been duly given without further mailing if such notice or report shall be
available for the stockholder upon written demand of the stockholder at the
principal executive office of the corporation for a period of one year from the
date of the giving of the notice or report to all other stockholders. If a
stockholder gives no address, notice or a report shall be deemed to have been
given to such stockholder if sent by mail or other means of written
communication addressed to the place where the principal executive office of the
corporation is situated, or if published at least once in a newspaper of general
circulation in the county in which the principal executive office is located.
All such notices of meetings shall be given to each stockholder
entitled thereto not less than 10 days nor more than 60 days before each
meeting, and all such reports shall be given to each stockholder entitled
thereto at the times provided in Section 3 of Article VII of the Bylaws or as
otherwise provided by applicable law. Any such notice or report shall be deemed
to have been given at the time when delivered personally or deposited in the
mail or sent by other means of written communication. An affidavit of mailing of
any such notice or report in accordance with the provisions of this Section,
executed by a responsible employee or any agent of the corporation, shall be
prima facie evidence of the giving of the notice or report.
2
<PAGE>
Each such notice shall specify:
(a) the place, the date and the hour of the meeting;
(b) in the case of special meetings, the nature of the
business to be transacted (and no other business may be transacted at such
meeting);
(c) in the case of annual meetings, those matters which the
Board of Directors, at the time of the mailing of the notice, intends to present
for action by the stockholders;
(d) if Directors are to be elected, the names of nominees
intended at the time of the notice to be presented by the Board of Directors or
management for election; and
(e) such other matters, if any, as may be expressly required
by applicable law, or as the Board determines to be appropriate..
Section 5. Quorum. The presence in person or by proxy of the persons
entitled to vote a majority of the voting shares at any meeting shall constitute
a quorum for the transaction of business, except as otherwise provided by
applicable law or by the Articles of Incorporation. The stockholders present at
a duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum, or by any greater number of shares required to take such
action by applicable law or the Articles of Incorporation. Whenever under the
Nevada Revised Statutes any shares are disqualified from voting on any matter,
they shall not be considered outstanding for purposes of determining the quorum
required at a meeting held to act upon, or the required vote to approve action
upon, that matter.
Section 6. Adjourned Meeting and Notice Thereof. Any stockholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the voting shares, the holders of
which are either present in person or represented by proxy thereat, but in the
absence of a quorum no other business may be transacted at such meeting, except
as provided in the preceding Section 5. When any stockholders' meeting, annual
or special, is adjourned for more than 30 days, or if after adjournment a new
record date is fixed for the adjourned meeting, notice of the adjourned meeting
shall be given as in the case of an original meeting to each stockholder of
record entitled to vote at the meeting. Except as provided above, it shall not
be necessary to give notice of the time and place of the adjourned meeting or of
the business to be transacted thereat if the time and place thereof are
announced at the meeting at which such adjournment is taken. At the adjourned
meeting, provided the foregoing notice requirements, if applicable, and the
quorum requirements of the preceding Section 5 are satisfied, the stockholders
may transact any business which might have been transacted at the original
meeting.
Section 7. Voting. Pursuant to Section 1 of Article VI of these Bylaws,
the Board of Directors may fix a record date for the determination of the
stockholders entitled to vote at any meeting of stockholders.
Unless the Articles of Incorporation provide for more or less than one
vote per share, each outstanding share, regardless of class, shall be entitled
to one vote on each matter on which such share is entitled to be voted. Any
holder of shares entitled to vote on any matter may vote part of his shares in
3
<PAGE>
favor of the proposal and refrain from voting the remaining shares or (except in
voting upon election of Directors) vote them against the proposal, but, if the
stockholder fails to specify the number of shares such stockholder is voting
affirmatively, it will be conclusively presumed that the stockholder's approving
vote is with respect to all shares such stockholder is entitled to vote. Voting
by the stockholders may be a voice vote or by ballot; provided, however, that
all elections for Directors must be by ballot upon demand made by a stockholder
at the meeting and before the voting begins.
Except as otherwise provided in the last two sentences of Section 5 of
this Article II:
(a) the affirmative vote of a majority of the shares actually
voted for or against a matter at a duly held meeting at which a quorum is
present (without giving effect to abstentions and broker non-votes) shall be the
act of the stockholders, unless the vote of a greater number or voting by
classes is required for such act by applicable law, the Articles of
Incorporation or the Bylaws; and
(b) in the election of Directors, the candidates receiving the
highest number of affirmative votes of shares entitled to be voted, up to the
number of Directors to be elected by such shares, shall be elected. Votes
against a candidate for Director and votes withheld shall have no legal effect.
If the Articles of Incorporation provide for more or less than one vote
for any shares on any matter, the references in this Section and in Section 5 of
this Article II to a majority or other proportion of shares means, as to such
matter, a majority or other proportion of the votes entitled to be cast by such
shares.
Section 8. Validation of Defectively Called or Noticed Meetings. The
transactions of any meeting of stockholders, annual or special, however called
and noticed and wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum is present pursuant to Section 5
of this Article II, either in person or by proxy, and if, either before or after
the meeting, each of the following persons signs a written waiver of notice, a
consent to the holding of such meeting or an approval of the minutes thereof:
(a) any person entitled to vote at the meeting not present at
the meeting in person or by proxy;
(b) any person who, though present, has, at the beginning of
the meeting, properly objected to the transaction of any business because the
meeting was not lawfully called or convened; or
(c) any person who, though present, during the meeting has
properly objected to the consideration of particular matters of business
required by the Nevada Revised Statutes or the Bylaws or otherwise to be
included in the notice of the meeting, but not so included.
Except as otherwise provided in the Articles of Incorporation, neither the
business to be transacted at, nor the purpose of, any annual or special meeting
of stockholders need be specified in any written waiver of notice, consent to
the holding of the meeting or approval of the minutes thereof. All such waivers,
consents or approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
4
<PAGE>
Section 9. Action Without Meeting.
(a) Unless otherwise provided in the Articles of
Incorporation:
(i) Directors may be elected without a meeting only
by a written consent signed by the majority of stockholders who would
be entitled to vote for the election of such Director or Directors;
provided, that with appropriate notice, as hereinafter set forth, a
Director may be elected at any time to fill a vacancy not filled by the
Directors by a written consent signed by the holders of a majority of
the outstanding shares entitled to vote for the election of the
Directorship or Directorships which are vacant; and
(ii) any other action which, under any provision of
the Nevada Revised Statutes, may be taken at a meeting of the
stockholders, may be taken without a meeting, upon notice as
hereinafter set forth, if a consent in writing, setting forth the
action so taken, is signed by the holders of outstanding shares having
not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled
to vote thereon were present and voted.
(b) Unless the consents of all stockholders entitled to vote
have been solicited in writing, written notice shall be given of the taking of
any corporate action or election by Director(s) approved by stockholders without
a meeting by less than unanimous written consent to those stockholders entitled
to vote who have not consented in writing. Such notices shall be given in the
manner and shall be deemed to have been given as provided in Section 4 of
Article II of the Bylaws.
(c) All such written consents shall be filed with the
secretary of the corporation.
(d) Pursuant to Section 1 of Article VI of the Bylaws, the
Board of Directors may fix a record date for the determination of stockholders
entitled to give such written consent.
(e) Any stockholder giving a written consent, or the
stockholder's proxyholders, or a transferee of the shares of a personal
representative of the stockholder or their respective proxyholders, may revoke
the consent by a writing received by the corporation prior to the time that
written consents of the number of shares required to authorize the proposed
action have been filed with the secretary of the corporation, but may not do so
thereafter. Such revocation is effective upon its receipt by the secretary of
the corporation.
Section 10. Proxies.
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(a) At any meeting of stockholders, any stockholder may
designate another person or persons to act as a proxy or proxies. If any
stockholder designates two or more persons to act as proxies, a majority of
those persons present at the meeting or, if only one is present, then that one,
has and may exercise all of the powers conferred by the stockholder upon all of
the persons so designated unless the stockholder provides otherwise.
(b) Without limiting the manner in which a stockholder may
authorize another person or persons to act for him as proxy pursuant to
subsection (a), the following constitute valid means by which a stockholder may
grant such authority:
(i) a stockholder may execute a writing authorizing
another person or persons to act for him as proxy. Execution may be
accomplished by the signing of the writing by the stockholder or his
authorized officer, Director, employee or agent or by causing the
signature of the stockholder to be affixed to the writing by any
reasonable means, including, but not limited to, a facsimile signature;
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or
(ii) a stockholder may authorize another person or
persons to act for him as proxy by transmitting or authorizing the
transmission of a telegram, cablegram or other means of electronic
transmission to the person who will be the holder of the proxy or to a
firm which solicits proxies or like agent who is authorized by the
person who will be the holder of the proxy to receive the transmission.
Any such telegram, cablegram or other means of electronic transmission
must either set forth or be submitted with information from which it
can be determined that the telegram, cablegram or other electronic
transmission was authorized by the stockholder. If it is determined
that the telegram, cablegram or other electronic transmission is valid,
the persons appointed by the corporation to count the votes of
stockholders and determine the validity of proxies and ballots or other
persons making those determinations must specify the information upon
which they relied.
(c) Any copy, communication by telecopier or other reliable
reproduction of the writing or transmission created pursuant to subsection (b)
may be substituted for the original writing or transmission for any purpose for
which the original writing or transmission could be used, if the copy,
communication by telecopier or other reproduction is a complete reproduction of
the entire original writing or transmission.
(d) No such proxy is valid after the expiration of six months
from the date of its creation, unless it is coupled with an interest, or unless
the stockholder specifies in it the length of time for which it is to continue
in force, which may not exceed seven years from the date of its creation.
Subject to these restrictions, any proxy properly created is not revoked and
continues in full force and effect until another instrument or transmission
revoking it or a properly created proxy bearing a later date is filed with or
transmitted to the secretary of the corporation or another person or persons
appointed by the corporation to count the votes of stockholders and determine
the validity of proxies and ballots.
Section 11. Inspectors of Election. In advance of any meeting of
stockholders, the Board of Directors may appoint any persons other than nominees
for office as inspectors of election to act at such meeting or any adjournment
thereof. If inspectors of election are not so appointed, the chairman of any
such meeting may, and on the request of any stockholder or his proxy shall, make
such appointment at the meeting. The number of inspectors shall be either one or
three. If appointed at a meeting on the request of one or more stockholders or
their respective proxies, the majority of shares entitled to vote represented in
person or by proxy shall determine whether one or three inspectors are to be
appointed. In case any person appointed as inspector fails to appear or fails or
refuses to act, the vacancy may, and on the request of any stockholder or a
proxy of any stockholder entitled to vote shall, be filled by appointment by the
Board of Directors in advance of the meeting, or at the meeting by the chairman
of the meeting.
The duties of such inspectors shall include: determining the number of
shares outstanding and the voting power of each; the shares represented at the
meeting; the existence of a quorum; the authenticity, validity and effect of
proxies; receiving votes, ballots or consents; hearing and determining all
challenges and questions in any way arising in connection with the right to
vote; counting and tabulating all votes or consents; determining when the polls
shall close; determining the result; and such acts as may be proper to conduct
the election or vote with fairness to all stockholders. In the determination of
the validity and effect of proxies, the dates contained on the forms of proxy
shall presumptively determine the order of execution of the proxies, regardless
of the postmark dates on the envelopes in which they are mailed.
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The inspectors of election shall perform their duties impartially, in
good faith, to the best of their ability and as expeditiously as is practical.
If there are three inspectors of election, the decision, act or certificate of a
majority is effective in all respects as the decision, act or certificate of
all. Any report or certificate made by the inspectors of election is prima facie
evidence of the facts stated therein.
Section 12. Presiding Officer; Order of Business; Conduct of Meeting.
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(a) Meetings of the stockholders shall be presided over by
such person as shall be designated by the Board of Directors, if no designation
is made, then by the chairman of the Board of Directors, or if there is no
chairman of the Board of Directors, then the president. The secretary of the
corporation, or in his absence, an assistant secretary, shall act as secretary
of the meeting.
(b) Subject to the following, meetings of stockholders shall
generally follow accepted rules of parliamentary procedure.
(i) The chairman of the meeting shall have absolute
authority over matters of procedure and there shall be no appeal from
the ruling of the chairman. If the chairman, in his absolute
discretion, deems it advisable to dispense with the rules of
parliamentary procedure as to any one meeting of stockholders or a part
thereof, the chairman shall so state and shall clearly state the rules
under which the meeting or appropriate part thereof shall be conducted.
(ii) If disorder shall arise which prevents
continuation of the legitimate business of the meeting, the chairman
may quit the chair and announce the adjournment of the meeting, and
upon his so doing, the meeting is immediately adjourned.
(iii) The chairman may ask or require that anyone not
a bona fide stockholder or proxyholder leave the meeting.
(iv) A resolution or motion shall be only considered
for a vote if proposed by a stockholder or duly authorized proxyholder,
and seconded by an individual, who is a stockholder or duly authorized
proxyholder, other than the individual who proposed the resolution or
motion.
ARTICLE III
Directors
Section 1. Powers. Subject to the limitations of the Nevada Revised
Statutes and any limitations in the Articles of Incorporation relating to action
required to be authorized or approved by the stockholders, the business and
affairs of the corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the Board of Directors. Without prejudice
to such general powers, but subject to the same limitations, it is hereby
expressly declared that the Directors shall have the following powers:
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First - To select and remove all the officers, agents and
employees of the corporation; prescribe such powers and duties for them as may
not be inconsistent with applicable law, the Articles of Incorporation or the
Bylaws; fix their compensation and require from them security for faithful
service.
Second - To conduct, manage and control the affairs and
business of the corporation, and to make such rules and regulations therefore,
not inconsistent with applicable law, the Articles of Incorporation or the
Bylaws, as they may deem appropriate.
Third - To change the principal executive office of the
corporation from one location to another as provided in Section 1 of Article I
of the Bylaws; to fix and locate from time to time one or more subsidiary
offices of the corporation within or without the State of Nevada, as provided in
Section 2 of Article I of the Bylaws; to designate any place within or without
the State of Nevada for the holding of any stockholders' meeting or meetings;
and to adopt, make and use a corporate seal, and to prescribe the forms of
certificates of stock and to alter the form of such seal and of such
certificates from time to time, as in their judgment they may deem appropriate,
provided such seal and such certificates shall at all times comply with the
provisions of applicable law.
Fourth - To authorize the issue of shares of stock of the
corporation from time to time, upon such terms as may be lawful and to retain
counsel and other experts to comply with all federal and state securities laws
and regulation incident to the issuance of stock of the company.
Fifth - To borrow money and incur indebtedness for the
purposes of the corporation, and to cause to be executed and delivered
therefore, in the corporate name, promissory notes, bonds, debentures, deeds of
trust, mortgages, pledges, hypothecation or other evidences of debt and security
therefore.
Sixth - To review, negotiate, and propose for ratification by
the shareholders, all proposals for merger, acquisition, reorganization, sale of
most or all assets or other acts requiring shareholder vote. Preliminary
negotiations or such transactions may be delegated to one or more officers or
agents of the company.
Seventh - To retain, through its officers, various experts,
such as attorneys and accountants, to render securities and tax opinions and
like legal or accounting advice to the Board.
Section 2. Number and Qualification of Directors. The number of
Directors of the corporation shall not be less than three nor more than seven
until changed by amendment of the Articles of Incorporation or by a Bylaw
amending this Section. The exact number of Directors shall be fixed from to
time, at any odd number, within the limits specified in this Section, by a
resolution adopted by the Board of Directors.
Subject to the foregoing provisions for changing the number of
Directors, the number of Directors of this corporation has been fixed at three.
Section 3. Election and Term of Office. Directors shall be elected to
hold office until the succeeding annual meeting of stockholders, and until their
respective successors have been elected and qualified. Directors shall be
elected at each annual meeting of stockholders, but if any such annual meeting
is not held or Directors are not elected thereat, Directors may be elected at
any special meeting of stockholders held for that purpose. Each Director,
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including a Director elected to fill a vacancy, shall hold office until the
expiration of the term for which such Director was elected, and until a
successor has been elected and qualified, subject to the Nevada Revised Statutes
and the provisions of the Bylaws with respect to vacancies on the Board of
Directors.
Section 4. Vacancies.
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(a) A vacancy on the Board of Directors shall be deemed to
exist in case of the death, resignation, incapacity or removal of any Director,
if the authorized number of Directors is increased or if the stockholders fail,
at any annual or special meeting of stockholders at which any Director or
Directors are to be elected, to elect the full authorized number of Directors to
be voted for at that meeting.
(b) Except as otherwise provided in the Articles of
Incorporation, any or all of the Directors may be removed with or without cause
if such removal is approved by the affirmative vote of at least two-thirds of
the outstanding shares entitled to vote on the election of Directors, provided
that when by the provisions of the Articles of Incorporation the holders of the
shares of any class or series, voting as a class or series, are entitled to
elect one or more Directors, any Directors so elected may be removed only by the
applicable vote of the holders of the shares of that class or series.
No reduction in the authorized number of classes of Directors shall
have the effect of removing any Director prior to the expiration of his term of
office.
(c) Any Director may resign effective upon giving written
notice to the chairman of the board, the president, the secretary or the Board
of Directors of the corporation, unless the notice specifies a later time for
the effectiveness of such resignation. If the Board of Directors accepts the
resignation of a Director tendered to take effect at a future time, the Board of
Directors shall have power to elect a successor to take office when the
resignation is to become effective.
(d) Vacancies in the Board of Directors may be filled (i) by
the affirmative vote of a majority of the Directors then in office present at a
duly held meeting at which a quorum is present or the unanimous written consent
of the Directors then in office or (ii) if the number of Directors then in
office is less than a quorum, by the unanimous written consent of the Directors
then in office, or the affirmative vote of a majority of the Directors then in
office at a duly held meeting of such Directors or a sole remaining Director;
and each Director so elected shall hold office until his successor is elected
and qualified. The stockholders may elect a Director or Directors at any time to
fill any vacancy or vacancies not filled by the Directors. Any such election by
written consent shall require the consent of holders of a majority of the
outstanding shares entitled to vote for the election of such Directors.
Section 5. Annual Meeting. Immediately following each annual meeting of
stockholders, the Board of Directors shall hold a regular meeting at the place
of said annual meeting, or at such other place as shall be fixed by the Board of
Directors, for the purpose of organization, election of officers and the
transaction of other business. Call and notice of such meetings are hereby
dispensed with.
Section 6. Other Regular Meetings. Other regular meetings of the Board
of Directors shall be held during each year, at such times and places as the
Board of Directors may from time to time provide by resolution, either within or
without the State of Nevada, without other notice than such resolution.
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Section 7. Special Meetings. Special meetings of the Board of Directors
for the purpose of taking any action permitted by the Directors under the Nevada
Revised Statutes and the Articles of Incorporation may be called at any time by
the chairman of the board, the president, the secretary or any two Directors.
Notice of the date, hour and place of special meetings shall be given to each
Director (a) personally or by telephone, telegraph or facsimile transmission, in
each case at least 24 hours prior to the holding of the meeting or (b) by first
class mail, charges prepaid, addressed to him at his address as it is shown upon
the records of the corporation or, if it is not so shown on such records and is
not readily ascertainable, at the place at which the meetings of the Directors
are regularly held, at least two days prior to the holding or the meeting.
Notice by mail shall be deemed to have been given at the time a written notice
is deposited in the Unites States mail, postage prepaid. Any other written
notice shall be deemed to have been given at the time it is personally delivered
to the recipient or is delivered to a common carrier for transmission, or
actually transmitted by the person giving the notice by electronic means to the
recipient. Oral notice shall be deemed to have been given at the time it is
communicated, in person or by telephone, to the recipient or to a person at the
office of the recipient who the person giving the notice has reason to believe
will promptly communicate it to the recipient. Any notice shall state the date,
place and hour of the meeting and may, but shall not be required to, state the
general nature of the business to be transacted.
Section 8. Waiver of Defectively Called or Noticed Meetings. Notice of
a meeting need not be given to a Director who signs a waiver of notice, or a
consent to holding the meeting or an approval of the minutes thereof, whether
before or after the meeting, or who attends the meeting without protesting,
prior to or at the commencement of the meeting, the lack of proper notice to
him. Any such waiver or consent shall state the date, place and hour of the
meeting, but need not specify the purpose of the meeting. All such waivers,
consents or approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
Section 9. Place of Meeting. Regular and special meetings of the Board
of Directors shall be held at any place within or without the State of Nevada
which has been designated from time to time by resolution of the Board of
Directors. In the absence of such designation, regular and special meetings
shall be held at the principal executive office of the corporation.
Section 10. Action at a Meeting; Quorum and Required Vote. Presence in
person of a majority of the authorized number of Directors at a meeting of the
Board of Directors constitutes a quorum for the transaction of business, except
as hereinafter provided. Members of the board may participate in a meeting
through use of conference telephone or similar communications equipment, so long
as all members participating in such meeting can hear one another. Participation
in a meeting as permitted by the preceding sentence constitutes presence in
person at such meeting. Every act or decision done or made by a majority of the
Directors present at a meeting duly held at which a quorum is present shall be
regarded as the act of the Board of Directors, unless a greater number, or the
same number after disqualifying one or more Directors from voting, is required
by the Nevada Revised Statutes, the Articles of Incorporation or the Bylaws. A
meeting at which a quorum is initially present may continue to transact business
notwithstanding the withdrawal of a Director, provided that any action taken is
approved by at least a majority of the required quorum for such meeting.
Section 11. Adjournment. A majority of the Directors present at any
meeting, whether or not a quorum is present, may adjourn any meeting of the
Board of Directors to meet again at a stated date, hour and place. If any
meeting is adjourned for more than 48 hours, notice of any adjournment to
another date, hour or place shall be given prior to the time of the adjourned
meeting to the Directors who were not present at the time of adjournment.
Otherwise, notice of the date, hour and place of holding an adjourned meeting
need not be given to absent Directors if the date, hour and place are fixed at
the meeting adjourned.
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Section 12. Action Without Meeting. Any action by the Board of
Directors may be taken without a meeting if all members of the Board of
Directors shall individually or collectively consent in writing to such action.
Such written consent or consents shall be filed with the minutes of the
proceedings of the Board of Directors and shall have the same force and effect
as a unanimous vote of the Directors.
Section 13. Committees of the Board. By resolution adopted by the Board
of Directors, the Board of Directors may designate an executive committee, an
audit committee and such other committees as it shall determine, each consisting
of at least one Director and which may include one or more other persons who
need not be Directors, to serve at the pleasure of the Board of Directors, and
prescribe the manner in which proceedings of such committees shall be conducted.
The appointment of members or alternate members of a committee shall be made by
a majority vote of the Board of Directors. For purposes of the Bylaws, the term
"audit committee" shall mean any committee of the Board of Directors to which is
delegated the function of periodically reviewing the financial condition, and
the results of audit examinations, of the corporation with the corporation's
independent public accountants. The audit committee, if appointed, shall not
include any officer or employee of the corporation or its subsidiaries unless
the Board of Directors shall specifically designate an officer or employee to
serve on such committee. Unless the Board of Directors shall otherwise prescribe
the manner of proceedings of any such committee, meetings of such committee may
be scheduled in advance, in which case call and notice of any such meetings are
hereby dispensed with, and may be called at any time by any member thereof;
otherwise, the provisions of the Bylaws with respect to notice and conduct of
meetings of the Board of Directors shall govern. Any such committee, to the
extent provided in a resolution of the Board of Directors, may have all of the
authority of the Board of Directors, expect with respect to:
(a) the approval of any action for which the Nevada
Revised Statutes, the Articles of Incorporation or the Bylaws also requires
approval of the stockholders;
(b) the filling of vacancies on the Board of Directors or
on any committee;
(c) the fixing of compensation of the Directors for
serving on the Board of Directors or on any committee;
(d) the adoption, amendment or repeal of Bylaws;
(e) the amendment or repeal of any resolution of the
Board of Directors which by its express terms is not so amendable or repealable;
(f) any distribution to the stockholders, except at a
rate or in a periodic amount or within a range determined by the Board of
Directors; and
(g) the appointment of other committees of the Board of
Directors or the members thereof.
Section 14. Compensation. Directors, and members of any committee of
the Board of Directors, shall be entitled to such compensation for their
services as Directors and members of any such committee as shall be fixed from
time to time by resolution of the Board of Directors and shall also be entitled
to reimbursement for any reasonable expenses incurred in attending such
meetings. Any Director receiving compensation under these provisions shall not
be barred from serving the corporation in any other capacity and receiving
compensation for such other services.
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Section 15. Transfer Agents and Registrars. The Board of Directors may
appoint one or more transfer agents and one or more registrars, either domestic
or foreign, at such times and places as the requirements of the corporation may
necessitate.
ARTICLE IV
Officers
Section 1. Officers. The officers of the corporation shall be a
president, a secretary and a treasurer. The corporation may also have, at the
discretion of the Board of Directors, a chairman of the board, a chief financial
officer, one or more vice presidents, one or more assistant secretaries, one or
more assistant treasurers and such other officers as may be appointed in
accordance with the provisions of Section 3 of Article IV. One person may hold
any two or more offices.
Section 2. Election. The officers of the corporation, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article IV, shall be chosen annually by the Board of
Directors; provided, however, that each officer of the corporation shall hold
his office at the pleasure of the Board of Directors, or until he shall resign
or shall become disqualified to serve, or until his successor shall be elected
and qualified, subject, in each case, to the rights, if any, of the corporation
and any such officer under any contract of employment between the corporation
and the officer.
Section 3. Subordinate Officers, Etc. The Board of Directors may
appoint, and may empower the chairman of the board, the president or any vice
president to appoint, such other officers as the business of the corporation may
require, each of whom shall hold office for such period, have such authority and
perform such duties as provided in the Bylaws or as the Board of Directors may
from time to time determine.
Section 4. Removal and Resignation.
(a) Any officer may be removed, either with or without cause,
by the Board of Directors, at any regular or special meeting thereof, or, except
in case of an officer chosen by the Board of Directors, by any officer upon whom
such power of removal may be conferred by the Board of Directors, subject, in
each case, to the rights, if any, of an officer under any contract of employment
with the corporation.
(b) Any officer may resign at any time by giving written
notice to the Board of Directors, the president or the secretary of the
corporation, without prejudice, however, to the rights, if any, of the
corporation under any contract to which such officer is a party. Any such
resignation shall take effect at the date of the 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 5. Vacancies. A vacancy in any office as a result of any cause
shall be filled in the manner prescribed in the Bylaws for regular appointments
to such office.
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Section 6. Chairman of the Board. The chairman of the board, if there
shall be such an officer, shall be elected from among the Directors and shall,
if present, preside at all meetings of the Board of Directors and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the Bylaws.
Section 7. President. Subject to such supervisory powers, if any, as
may be given by the Board of Directors to the chairman of the board, if there be
such an officer, the president shall be the chief executive officer of the
corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of the
corporation. He shall preside at all meetings of the stockholders and, in the
absence of the chairman of the board, or if there be none, at all meetings of
the Board of Directors. He shall have the general powers and duties of
management usually vested in the office of president of a corporation, and shall
have such other powers and duties as may be prescribed by the Board of Directors
or the Bylaws.
Section 8. Vice President(s). In the absence or disability of the
president, the vice presidents in order of their rank as fixed by the Board of
Directors or, if not ranked, the vice president designated by the Board of
Directors, shall perform all the duties of the president, and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as are incident to the office of corporate vice president and as
from time to time may be prescribed for them respectively by the Board of
Directors or the Bylaws.
Section 9. Secretary. The secretary shall record or cause to be
recorded, and shall keep or cause to be kept, at the principal executive office
and such other place or places as the Board of Directors may order, a book of
minutes of actions taken at all meetings of, and by all written consents of,
Directors and stockholders, together with, in the case of meetings, the time and
place of holding, whether regular or special and, if special, how authorized,
the notice thereof given, the names of those present at meetings of stockholders
and the proceedings thereof. The secretary shall keep, or cause to be kept, at
the principal executive office or at the office of the corporation's transfer
agent or registrar, a stock ledger, or a duplicate stock ledger, showing the
names of the stockholders, alphabetically arranged, and their address, the
number and classes of shares held by each, the number and date of certificates
issued for such shares and the number and date of cancellation of every
certificate surrendered for cancellation. If the stock ledger or duplicate stock
ledger is kept at the office of the corporation's transfer agent or registrar, a
statement containing the name and address of the custodian of the stock ledger
or duplicate stock ledger shall be kept at the corporation's principal executive
office. The secretary shall give, or cause to be given, notice of all the
meetings of the stockholders and of the Board of Directors required by the
Bylaws or by law to be given, and shall keep the seal of the corporation in safe
custody, and shall have such other powers and perform such other duties as are
incident to the office of corporate secretary and as may be prescribed by the
Board of Directors or the Bylaws.
Section 10. Treasurer. The treasurer shall keep and maintain, or cause
to be kept and maintained, adequate and correct accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, surplus and
shares. The books of account shall at all reasonable times be open to inspection
by any Director. The treasurer shall deposit all moneys and other valuables in
the name and to the credit of the corporation with such depositories as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
president and the Board of Directors, whenever they request it, an account of
all of his transactions as treasurer and of such other duties as are incident to
the office of corporate treasurer and as may be prescribed by the Board of
Directors or the Bylaws.
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Section 11. Compensation. The salaries and other compensation for the
principal officers of the corporation shall be fixed, from time to time, by the
Board of Directors. No officer shall be disqualified from receiving a salary or
such other compensation by reason of his also being a Director of the
corporation.
Section 12. Multiple Offices. Any one person may hold up to two offices
described by this section, except the president may not hold any other office.
It is initially intended the Secretary/Treasurer will be a combined office.
Officers need not, but may be shareholders and/or Directors in the company.
ARTICLE V
Indemnification of Corporate Agents;
Purchase of Liability Insurance
Section 1. Indemnification of Agents of the Corporation; Purchase of
Liability Insurance.
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(a) The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by reason
of the act that he is or was a Director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, 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. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent does not, of itself, create a presumption that the person did not act
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 that, with respect to any
criminal action or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a Director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a Director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses, including amounts paid in settlement and attorneys' fees, actually and
reasonably incurred by him in connection with the defense or settlement of the
action or suit, 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.
However, indemnification shall not be made for any claim, issue or matter as to
which a person has been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the corporation or for
amounts paid in settlement to the corporation, unless and only to the extent
that the court in which the action or suit was brought or other court of
competent jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
(c) To the extent that a Director, officer, employee or agent
of the corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsection (a) or (b), or in
14
<PAGE>
defense of any claim, issue or matter therein, he shall be indemnified by the
corporation against expenses, including attorneys' fees, actually and reasonably
incurred by him in connection with the defense.
(d) Any indemnification under subsection (a) or (b), unless
ordered by a court or advanced pursuant to subsection (e), shall be made by the
corporation only as authorized in the specified case upon a determination that
indemnification of the Director, officer, employee or agent is proper in the
circumstances, The determination shall be made: (i) by the stockholders; (ii) by
the Board of Directors by a majority vote of a quorum consisting of Directors
who were not parties to the action, suit or proceeding; (iii) if a majority vote
of a quorum consisting of Directors who were not parties to the action, suit or
proceeding so orders, by independent legal counsel in a written opinion; or (iv)
if a quorum consisting of Directors who were not parties to the action, suit or
proceeding cannot be obtained, by independent legal counsel in a written
opinion.
(e) The expenses of officers and Directors incurred in
defending a civil or criminal action, suit or proceeding shall be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the Director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection (e) do not affect any rights to
advancement of expenses to which corporate personnel other than Directors or
officers may be entitled under any contract or otherwise by law.
(f) The indemnification and advancement of expenses authorized
in or ordered by a court pursuant to this Article V (i) does not exclude any
other rights to which a person seeking indemnification or advancement of
expenses may be entitled under the Articles of Incorporation, the Bylaws or any
agreement, vote of stockholders or disinterested Directors or otherwise, for
either an action in his official capacity or an action in another capacity while
holding his office, except that indemnification, unless ordered by a court
pursuant to subsection (b) or for the advancement of expenses made pursuant to
subsection (e), shall not be made to or on behalf of any Director or officer if
a final adjudication establishes that his acts or omissions involved intentional
misconduct, fraud or knowing violation of the law and were material to the cause
of action (ii) continues for a person who has ceased to be a Director, officer,
employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
(g) The corporation may purchase and maintain insurance or
make other financial arrangements on behalf of any person who is or was a
Director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a Director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, for
any liability asserted against him and liability and expenses incurred by him in
his capacity as a Director, officer, employee or agent, or arising out of his
status as such, whether or not the corporation has the authority to indemnify
him against such liability and expenses. The other financial arrangements made
by the corporation may include any now or hereafter permitted by applicable law.
(h) In the event that the Nevada Revised Statutes shall
hereafter permit or authorize indemnification by the corporation of the
Directors, officers, employees or agents of the corporation for any reason or
purpose or in any manner not otherwise provided for in this Article V, then such
Directors, officers, employees and agents shall be entitled to such
indemnification it being the intention of this Article V at all times to provide
the most comprehensive indemnification coverage to the corporation's Directors,
officers, employees and agents as may now or hereafter be permitted by the
Nevada Revised Statutes.
15
<PAGE>
(i) The foregoing indemnification provisions shall inure to
the benefit of all present and future Directors, officers, employees and agents
of the corporation and all persons now or hereafter serving at the request of
the corporation as Directors, officers, employees or agents of another
corporation, partnership, joint venture, trust or other enterprise and their
heirs, executors and administrators, and shall be applicable to all acts or
omissions to act of any such persons, whether such acts or omissions to act are
alleged to have or actually occurred prior to or subsequent to the adoption of
this Article V.
Section 2. Vested Rights. Neither the amendment nor repeal of this
Article V, nor the adoption of any provision of the Articles of Incorporation or
the Bylaws or of any statute inconsistent with this Article V, shall adversely
affect any right or protection of a Director, officer, employee or agent of the
corporation existing at the time of such amendment, repeal or adoption of such
inconsistent provision.
ARTICLE VI
Shares and Share Certificates
Section 1. Record Date.
------------
(a) The Board of Directors may fix a time in the future as a
record date for the determination of the stockholders entitled to notice of and
to vote at any meeting of stockholders or entitled to give consent to corporate
action in writing without a meeting, to receive any report, to receive any
dividend or distribution or any allotment of rights or to exercise any rights in
respect of any other lawful action. The record date so fixed shall be not more
than 60 days nor less than 10 days prior to the date of any meeting, nor more
than 60 days prior to any other event for the purposes of which it is fixed.
(b) A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting unless the Board of Directors fixes a new record date for the
adjourned meeting, but the Board of Directors shall fix a new record date if the
meeting is adjourned for more than 30 days from the date set for the original
meeting.
(c) When a record date is fixed, only stockholders of record
on the close of business on that date are entitled to notice of and to vote at
any such meeting, to give consent without a meeting, to receive any report, to
receive a dividend, distribution or allotment of rights or to exercise the
rights, as the case may be, notwithstanding any transfer of any shares on the
books of the corporation after the record date, except as otherwise provided in
the Articles of Incorporation, by agreement, by the Nevada Revised Statutes or
in Section 4 of this Article VI.
16
<PAGE>
Section 2. Certificate for Shares. Every holder of shares in the
corporation shall be entitled to have a certificate signed in the name of the
corporation by the chairman of the board or the president or a vice president
and by the treasurer or an assistant treasurer or the secretary or an assistant
secretary, certifying the number of shares and the class or series of shares
owned by the stockholder. Any of the signatures on the certificate may be by
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if such
person were an officer, transfer agent or registrar at the date of issuance.
Any certificate for shares shall contain such legend or other statement
as may be required by the Nevada Revised Statutes, applicable federal or state
securities laws, other applicable law or regulation or any agreement between the
corporation and the issuee thereof.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the Board of Directors or the Bylaws may
provide; provided, however, that any such certificate so issued prior to full
payment shall state on the face thereof the amount theretofore paid, the amount
remaining unpaid and the terms of payment thereof.
No new certificate for shares shall be issued in lieu of an old
certificate unless the latter is surrendered and cancelled at the same time;
provided, however, that a new certificate shall be issued without the surrender
and cancellation of the old certificate if: (i) the old certificate is lost,
apparently destroyed or wrongfully taken; (ii) the request for the issuance of
the new certificate is made within a reasonable time after the owner of the old
certificate has notice of its loss, destruction or the; (iii) the request for
the issuance of a new certificate is made prior to the receipt of notice by the
corporation that the old certificate has been acquired by a bona fide purchaser;
(iv) if required by the corporation, the owner of the old certificate furnishes
sufficient indemnity to or provides other adequate security to the corporation;
and (v) the owner of the old certificate satisfies any other reasonable
requirements imposed by the corporation. In the event of the issuance of a new
certificate, the rights and liabilities of the corporation, and of the holders
of the old and new certificates, shall be governed by the provisions of the
Nevada Uniform Commercial Code.
When the Articles of Incorporation are amended in any way affecting the
statements contained in the certificates for outstanding shares, or it becomes
desirable for any reason, in the discretion of the Board of Directors, to cancel
any outstanding certificate for shares and issue a new certificate therefore
conforming to the rights of the holder, the Board of Directors may order any
holders of outstanding certificates for share to surrender and exchange them for
new certificates within a reasonable time to be fixed by the Board of Directors.
The order may provide that a holder of any certificates so ordered to be
surrendered is not entitled to vote or to receive dividends or exercise any of
the other rights of stockholders until the holder has complied with the order,
but such order operates to suspend such rights only after notice and until
compliance. The duty of surrender of any outstanding certificates may also be
enforced by civil action.
Section 3. Transfer of Shares. Upon surrender to the secretary or
transfer agent or registrar of the corporation of a certificate for shares fully
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books, unless under applicable federal or state
securities laws or otherwise such transfer would be adverse to the best
interests of the corporation or unless the corporation has notice of an adverse
claim, which may be an adverse claim of the corporation, to the certificate.
Section 4. Stockholders of Record. Voting by stockholders shall in
all cases be subject to the following provisions:
17
<PAGE>
(a) Subject to subsection (h) of this Section 4, shares held
by an administrator, executor, guardian, conservator or custodian may be voted
by such holder either in person or by proxy, without a transfer of such shares
into the holder's name, and shares standing in the name of a trustee may be
voted by the trustee, either in person or by proxy, but no trustee shall be
entitled to vote shares held by such trustee without a transfer of such shares
into the trustee's name.
(b) 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 the receiver's name if
authority to do so is contained in the order of the court by which such receiver
was appointed.
(c) Except where otherwise agreed in writing between the
parties, a stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledge shall be entitled to vote the shares so transferred.
(d) Shares standing in the name of a minor may be voted and
the corporation may treat all rights incident thereto as exercisable by the
minor, in person or by proxy, whether or not the corporation has notice, actual
or constructive, of the nonage, unless a guardian of the minor's property has
been appointed and written notice of such appointment given to the corporation.
(e) If authorized to vote the shares by the power of attorney
by which the attorney-in-fact was appointed, shares held by or under control of
an attorney-in-fact may be voted and the corporation may treat all rights
incident thereto as exercisable by the attorney-in-fact, in person or by proxy,
without transfer of the shares into the name of the attorney-in-fact.
(f) Shares standing in the name of another corporation,
domestic or foreign, may be voted by such officer, agent or proxyholder as the
Articles of Incorporation or the Bylaws of such other corporation may prescribed
or, in the absence of such provision, as the Board of Directors of such other
corporation may determine or, in the absence of such determination, by the
chairman of the board, president or any vice president of such other
corporation, or by any other person authorized to do so by the Board of
Directors, president or any vice president of such other corporation. Shares
which are purported to be voted or any proxy purported to be executed in the
name of a corporation (whether or not any title of the person signing is
indicated) shall be presumed to be voted or the proxy executed in accordance
with the provisions of this subsection, unless the contrary is shown.
(g) Subject to subsection (h) below, shares of the corporation
owned by the corporation or any subsidiary shall not be entitled to vote on any
matter and shall not be counted in determining the total number of outstanding
shares. Solely for purposes of this subsection and subsection (h) below, a
"subsidiary" of the corporation shall mean a corporation, shares of which
possessing a majority of the power to vote for the election of Directors at the
time determination of such voting power is made, are owned directly, or
indirectly through one or more subsidiaries, by the corporation.
(h) Shares held by the corporation in a fiduciary capacity,
and shares of the corporation held in a fiduciary capacity by any subsidiary,
shall not be entitled to vote on any matter, except to the extent that the
settlor or beneficial owner possesses and exercises a right to vote or give the
corporation binding instructions as to how to vote such shares.
18
<PAGE>
(i) If shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, husband and wife as community property, tenants by the entirety,
voting trustees, persons entitled to vote under a stockholder voting agreement
or otherwise, or if two or more persons (including proxyholders) have the same
fiduciary relationship respecting the same shares, unless the secretary of the
corporation is given written notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, their acts with respect to voting shall have the following
effect:
(a) If only one votes, such act binds all;
(b) If more than one vote, the act of the
majority so voting binds all; and
(c) If more than one vote, but the vote is
evenly split on any particular matter, each
faction may vote the securities in question
proportionately.
If the instrument so filed or the registration of the shares shows that
any such tenancy is held in unequal interests, a majority or even split for the
purposes of this Section shall mean a majority or even split in interest.
ARTICLE VII
Records and Reports
Section 1. Maintenance of Books and Records. The corporation shall keep
adequate and correct books and records of account and shall keep minutes of the
proceedings of its stockholders, Board of Directors and committees of the Board
of Directors and shall keep at its principal executive office, or at the office
of its transfer agent or registrar, a record of its stockholders, giving the
names and addresses of all stockholders and the number and class of shares held
by each stockholder. Such minutes shall be kept in written form. Such other
books and records may be kept either in written form or in any other form
capable of being converted into written form within a reasonable time. The
corporation shall keep at its principal executive office, or if its principal
executive office is not in Nevada, then at its principal office, if any, in
Nevada, a copy of the Articles of Incorporation, as amended to date, certified
by the Secretary of State, and the original or a copy of the Bylaws, as amended
to date, certified by an officer of the corporation.
Section 2. Inspection of Corporate Records. Every Director shall have
the absolute right at any reasonable time to inspect and copy all books, records
and documents of every kind and to inspect the physical properties of the
corporation and its subsidiaries. Such inspection by a Director may be made in
person or by agent or attorney and the right of inspection includes the right to
copy and make extracts.
Section 3. Annual Reports.
---------------
(a) At such times as the corporation is subject to the
Securities Exchange Act of 1934, as amended, the Board of Directors shall cause
an annual report to be sent to the stockholders not later than 120 days after
the close of the fiscal year; provided that such report shall be sent to the
stockholders at least 10 days prior to the annual meeting of stockholders. Such
report shall contain all matters required by the Securities Exchange Act of
1934, as amended and other applicable laws.
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<PAGE>
(b) Any report required by this Section shall be given in the
manner and shall be deemed to have been given by the corporation as provided in
Section 4 of Article II of the Bylaws.
Section 4. Annual Statement of Information. The corporation shall file
annually with the Secretary of State of the State of Nevada, on the prescribed
form, a statement in compliance with Section 78.150 of the Nevada Revised
Statutes.
ARTICLE VIII
Miscellaneous
Section 1. Checks, Drafts, Etc. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the Board of Directors.
Section 2. Contracts, Etc., How Executed. The Board of Directors,
except as otherwise provided in the Bylaws, may authorize any officer or
officers, agent or agents, to enter into any contract or execute any instrument
in the name of and on behalf of the corporation, and such authority may be
general or confined to specific instances; and, unless so authorized by the
Board of Directors, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount. Subject to the
provisions of applicable law, any note, mortgage, evidence of indebtedness,
contract, share certificate, conveyance or other document or instrument in
writing and any assignment or endorsements thereof executed or entered into
between the corporation and any other person, when signed by the chairman of the
board, the president, any vice president, the chief financial officer, the
treasurer or any assistant treasurer of the corporation shall be valid and
binding on the corporation in the absence of actual knowledge on the part of the
other person that the signing officers had no authority to execute the same.
Section 3. Representation of Shares of Other Corporations. Any officer
of the corporation is authorized to vote, represent and exercise on behalf of
the corporation all rights incident to any and all shares of any other
corporation or corporations standing in the name of the corporation. The
authority herein granted to such officers to vote or represent on behalf of the
corporation any and all shares held by the corporation in any other corporation
or corporations may be exercised either by such officers in person or by any
other person authorized so to do by proxy or power of attorney duly executed by
such officers.
Section 4. Seal. The corporation shall adopt and may, but shall not be
required to, use a corporate seal consisting of a circle setting forth on its
circumference the name of the corporation and showing the state and date of
incorporation.
Section 5. Fiscal Year. Unless changed by resolution of the Board of
Directors, the fiscal year of the corporation shall end on the last day of
December.
Section 6. Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors, which authority may be
general or confined to specific instances.
20
<PAGE>
Section 7. Deposits. The Board of Directors shall select banks, trust
companies or other depositories in which all funds of the corporation not
otherwise employed shall, from time to time, be deposited to the credit of the
corporation.
Section 8. Construction and Definitions. Unless the context otherwise
requires, the general provisions, rules of construction and definitions
contained in the Nevada Revised Statutes shall govern the construction of the
Bylaws. Without limiting the generality of the foregoing, the masculine gender
includes the feminine and neuter, the singular number includes the plural number
and the plural number includes the singular and the term "person" includes a
corporation or other entity as well as a natural person.
Section 9. Preclusion of Acquisition of Controlling Interest--Statute.
The Incorporators and initial Directors, being fully advised of the Nevada
Statutory Provisions related to treatment of the acquisition of controlling
sharehold interest pursuant to subsequent share transactions, wish to invoke the
provisions of Nevada Revised Statutes (NRS) ss. 78.378, or any subsequent
provision or section, to hereby elect out of any application of the Acquisition
of Controlling Sharehold Interest Provisions under Nevada Statute, NRS ss.ss.
78.378-78.3793, or other or subsequent related statutory provisions in any
jurisdiction.
ARTICLE IX
Amendments
Section 1.Power of Stockholders. New Bylaws may be adopted or the
Bylaws may be amended or repealed by the affirmative vote or written consent of
a majority of the outstanding shares entitled to vote, except as otherwise
expressly provided by applicable law, the Articles of Incorporation or elsewhere
in the Bylaws.
Section 2.Power of Directors. Subject to the right of the stockholders
as provided in Section 1 of this Article IX to adopt, amend or repeal Bylaws,
Bylaws may be adopted, amended or repealed by the Board of Directors.
The undersigned President affirms adoption of these By-Laws by majority
vote of the Board of Directors on October 15, 1995. The By-Laws, as set-out
herein, having been adopted as part of the Minutes were inadvertently lost, but
are and were deemed of full force and effect from the date of adoption on
October 15, 1995.
------------------------
Mr. Damon Madsen
President
Date:
(Seal)
21
FILED Telephone 702.687.5203
IN THE OFFICE OF THE Fax 702.687.3471
SECRETARY OF STATE Web site http://sos.state.nv.us
STATE OF NEVADA Filing Fee:
Oct 06 1998 STATE OF NEVADA
OFFICE OF THE SECRETARY OF STATE
101 N. CARSON ST., STE. 3
CARSON CITY, NEVADA 89701-4786
Certificate of Amendment to Articles of Incorporation
-----------------------------------------------------
For Profit Nevada Corporations
------------------------------
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
Dean Heller -Remit in Duplicate-
Secretary Or State
/s/Dean Heller
No C496-91
-------
1. Name of Corporation Greenway Environmental Systems, Inc. (to be known as
----------------------------------------------------------
Travel Dynamics, Inc.)
- --------------------------------------------------------------------------------
2. The articles have been amended as follows (provide article numbers, if
available):
Article I: The name of the Corporation is changed to: "Travel Dynamics, Inc."
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a vote
by classes or series, or as may be required by the provisions of the articles of
incorporation have voted in favor of the amendment is:
17,800,000 of a total 23,964,832 issued and outstanding.
- --------------------------------------------------------
4. Signatures: James Piccolo- Julian Jensen, Esq.,
President Assistant Secretary
/s/ James Piccolo- /s/ Julian Jensen, Esq.,
- --------------------------------- ------------------------------
President or Vice President Secretary or Asst. Secretary
(acknowledgement required) (acknowledgement not required)
State of: Utah
------------------------------
County of: Salt Lake
------------------------------
This instrument was acknowledged before me on
September 29 , 1998 , by
- ------------------------------- ----
James Piccolo, (Name of Person)
- ----------------------------
as President
- --------------------------------------------
as designated to sign this certificate
of Greenway Environmental Systems, N/K/A
------------------------------------------
Travel Dynamics, Inc.
- --------------------------------------------
(name of behalf of whom instrument was executed)
/s/ J. Craig Carman Notary Republic
- ------------------- J. Craig Carman
Notary Public Signature 311 South State Street, #380
Salt Lake City, Utah 84111
My Commission Expires
May 20, 2002
State of Utah
*If any proposed amendment would alter or change any preference or any relative
or other right given to any class or series of outstanding shares, then the
amendment must be approved by the vote, in addition to the affirmative vote
otherwise required, of the holders of shares representing a majority of the
voting power of each class or series affected by the amendment regardless of
limitations or restrictions on the voting power thereof.
IMPORTANT: Failure to include any of the above information and remit the proper
fees may cause this filing to be rejected.
WAIVER OF NOTICE OF SPECIAL MEETING
OF THE BOARD OF DIRECTORS OF
GREENWAY ENVIRONMENTAL SYSTEMS, INC.
====================================
The undersigned, being all of the Directors of GREENWAY ENVIRONMENTAL
SYSTEMS, INC., hereby waive notice of a Special Meeting of the Board of
Directors and consent to the holding thereof on the ______ day of September,
1998 at 10:00 am at 5110 South 800 East, Salt Lake City, Utah 84107.
IN WITNESS WHEREOF, we have hereunto subscribed our names on this ____
day of September, 1998.
- ----------------------------- -----------------------------
L. Kent Mackay Director Damon Madsen, Director
- -----------------------------
Gregory Stringham, Director
1
<PAGE>
MINUTES
=======
of
Special Board of Directors Meeting
of
GREENWAY ENVIRONMENTAL SYSTEMS, INC.
The undersigned, Damon Madsen, acting as President and Chairman of the
Board, called to order a special Board of Directors Meeting for the primary
purposes of resolving all outstanding legal and business issues and providing
the necessary authorization to the Board to go forward with the proposed
reorganization in the form of a Reverse Acquisition with Travel Dynamics, Inc.,
a Nevada Corporation, having its principal place of business in Scottsdale,
Arizona ("Travel Dynamics").
Mr. Damon Madsen noted to the Board that the special merger and
acquisition agent for the company, as previously appointed and approved by the
Board of Directors, Mr. Dennis G. Madsen, has been successful in negotiating a
preliminary letter of intent and agreement for a reverse acquisition with Travel
Dynamics, a privately held company involved in the telemarketing and direct
marketing of various travel incentives and packages. In essential terms, the
Agreement negotiated by and through the efforts of Mr. Dennis Madsen and
proposed to be ratified by this Board provides, in outline fashion, as follows:
1. The Company is to approve a nineteen and a half to one
(19.5:1) reverse split of its shares to reduce down the total
issued and outstanding shares to approximately one million,
two hundred twenty thousand shares (1,220,000 shares)
immediately prior to the closing of the proposed Reverse
Acquisition.
2. The Company would propose to acquire all of the issued and
outstanding shares of Travel Dynamics which would then become
a wholly owned and sole operating subsidiary of the Company.
3. As part of the reorganization, the Company would change of
record its name to Travel Dynamics, adopt the Travel Dynamics
business as its sole business to be operated through its
subsidiary and agree to authorize the movement of the
principal place of business to the present principal business
location of Travel Dynamics, in or around Scottsdale, Arizona.
The present Board of Directors of the Company would resign as
directors and officers to be replaced by newly elected
directors as nominated by Travel Dynamics, who would then
appoint from existing management of Travel Dynamics officers
in the parent corporation.
4. There would be authorized to the Travel Dynamics shareholders
approximately two million (2,000,000) shares of the Company
2
<PAGE>
stock, constituting approximately sixty-two percent (62%) off
issued and outstanding shares upon Closing of the Reverse
Acquisition. These shares would be issued as restricted
shares.
5. The present members of the Board of Directors, and including
Dennis Madsen as a special agent, would hold approximately
twenty thousand (20,000) reverse split shares of the Company
and the public would hold approximately eight hundred thousand
(800,000) shares pursuant to the reverse split.
6. The Company has agreed, as part of the Reverse Acquisition, to
complete a comprehensive and omnibus type 10-KSB filing
through its newly designated fiscal year ending June 30, 1998
and with the reporting of all historical transactions since
the last SEC filing in 1991 upon the termination of the
abortive reorganization with the Greenway Environmental
Systems of Texas.
7. Mr. Dennis Madsen has entered into an undertaking to ensure
that all of the issued and outstanding obligations owing to
corporate counsel, Mr. Julian D. Jensen and the auditors,
Hansen, Barnett and Maxwell, or any other creditor, will be
discharged from remaining funds available to Mr. Madsen and,
additionally, from an assignment of a block of ten thousand
(10,000) incentive shares being given to Mr. Dennis Madsen or
assigns relative to the closing of the transaction. The
present auditing firm will complete audited financials through
June 30, 1998 and Mr. Jensen will prepare the foregoing
omnibus 10-KSB filing, any required 8-K filing, and consent to
shareholders of the proposed reorganization for the cash and
stock previously recited.
8. Mr. Damon Madsen then noted that a copy of the proposed
Reverse Acquisition Agreement, to be executed by himself as
President and essentially incorporating the foregoing terms of
reorganization, was attached hereto and incorporated by this
reference as Schedule "A" to these minutes and the execution
thereof is to be approved pursuant to resolution of this
Board.
9. It was noted by corporate counsel to the Board that under his
reading of Nevada Corporate Law, it will not be necessary to
solicit a formal proxy solicitation of shareholders to approve
this Reorganization, if a majority of shareholders consents in
writing to the Reorganization, the change of name, and the
election of the new nominees to the Board. Majority consent is
given without notice. Counsel did suggest that if such
majority is available, as appears from a review of the present
shareholder list, that the Company should, upon consummation
of the reorganization, suggest to new management that a notice
be sent to shareholders of record indicating the change of
name, business purpose and generally outlining the terms of
the Reverse Acquisition, together with further instructions on
the right to tender existing shares for new shares in the
Company or that such shares will automatically be exchanged
3
<PAGE>
upon subsequent share transactions. The shareholders should
also be informed of the completion of the reverse split and
the general purposes of the Reorganization. Counsel further
noted to the Board that since the existing company will be the
surviving corporation and will acquire Travel Dynamics as a
subsidiary, there will not be any requirement to recognize
Dissenting Shareholder Rights, under Nevada law. Counsel also
noted that the Nevada Majority Control Share Acquisition
statutory provisions were further not applicable because the
By-Laws had been adopted electing out of such statutory
provisions under Nevada law.
AGENDA
Based upon the foregoing general presentation of matters to be acted
upon and an informal discussion by the Board, it was next proposed and moved by
Mr. Kent L. Mackay that the following Agenda be adopted and followed for this
meeting:
1. Motion to approve the Reverse Acquisition and all provisions
therein, with authorization to Mr. Damon Madsen, as the
President, to execute the Reverse Acquisition Agreement;
2. Resolution providing for the 19.5:1 reverse split of the
Company's shares;
3. Formal statements required by Mr. Limpert as to his acceptance
of a final share issuance to him of 400,000 reverse split
shares in full satisfaction and discharge of his prior loan
for the benefit of the Company in the principal sum of
$60,000;
4. Direction to corporate counsel to prepare the Majority Share
Approval Statement for the reorganization matters, including
change of name, reverse split and election of the nominees to
be provided by Travel Dynamics;
5. Authorization to corporate counsel to prepare an omnibus
10-KSB filing and 8-K filing, as necessary, and to do other
work reasonably related to the proposed reverse acquisition,
including reviewing and revising the Reverse Acquisition
Agreement;
6., Ratification of all prior efforts of Mr. Dennis Madsen in
negotiating and working on the Reorganization pursuant to
prior Board authorization and instruction;
7. A Resolution authorizing the issuance out of the new shares to
the Travel Dynamic Shareholders, present management, and Mr.
Dennis Madsen, upon closing of the Reverse Acquisition;
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8. A Resolution confirming and certifying the appropriate number
of shares to be presently issued and outstanding upon adoption
of the reverse split and upon completion and closing of the
Reverse Acquisition.
9. A Resolution confirming the authority of the President to
complete collateral tax filings and arrange for audit work
with Hansen, Barnett & Maxwell.
ITEM 1: Review and Approval of Reverse Acquisition Agreement
----------------------------------------------------
Each Board member indicated that he has had the opportunity to now read
and review in detail and ask questions of corporate counsel concerning the
Reverse Acquisition Agreement, which the directors have authorized to be
attached to these Minutes as Exhibit "A."
After general discussion, the Board agreed that the Reverse Acquisition
appeared to be appropriate and to conform with the representation of the
proposed reorganization made by Mr. Dennis Madsen to the other Board members.
The Board understood that there may still be further minor modification and
changes required before the execution of the Agreement, but that the general
principles had been agreed upon and approved by both sides.
Accordingly, it was moved by Mr. Damon Madsen, seconded by Greg
Stringham and unanimously approved by the Board that the general form of the
Reverse Acquisition Agreement, and all of the terms thereof, be approved by the
Board of Directors, as attached. It was further moved as part of the same motion
that Mr. Damon Madsen, (in connection and consultation with Mr. Dennis Madsen as
the agent for the Company in reorganization matters and legal counsel for the
Company) have the authority to enter into minor changes and modifications prior
to or subsequent to the execution of the Agreement, so long as no substantive
provisions were changed, without further Board review or authorization.
RESOLVED: The Board herewith reviews and approves the Reverse
Acquisition Agreement as attached with Travel Dynamics, and all terms therein.
Mr. Damon Madsen is fully and duly authorized to execute the Agreement in
substantially the form attached as the President of the Company and has further
authority to made minor additional revisions, changes or additions to the
Agreement without further Board approval, so long as the substantive terms and
provisions are not otherwise modified. The Board, by the approval of the Reverse
Acquisition, herewith further adopts and approves all the necessary specific
actions required by such Agreement, to include, though not necessarily limited
to:
1. Change of the name of the Company to Travel Dynamics, Inc.;
2. Adoption of Travel Dynamics Business as the wholly owned
operating subsidiary of the Company and location of the
Company offices to the Travel Dynamics facilities;
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3. Resignation of the undersigned Board of Directors as directors
and officers upon election of the new Board nominated by
Travel Dynamics effective upon Closing of the Reverse
Acquisition;
4. Issuance out of new shares to the owners of Travel Dynamics in
the sum of approximately one million nine hundred fifty seven
thousand eight hundred and ninety five (1, 957,895), or such
substantially similar number as determined equal to sixty two
percent (62%) of all issued and outstanding stock after the
Reorganization; and,
5. All other necessary acts, provisions and documents required to
implement and conclude the Closing of the Reverse Acquisition.
ITEM 2: Election of New Directors
-------------------------
As part of the Reverse Acquisition, Travel Dynamics will propose a
slate of three new directors to be voted upon and elected as the new directors
for the Company to assume office immediately upon the Closing of the Reverse
Acquisition. It is further understood that the new Board will then appoint new
officers for the Company at the time of Closing and that the resignation
tendered by the undersigned directors as part of the adoption of the Reverse
Acquisition will be effective immediately upon Closing of such Reverse
Acquisition in accordance with its terms. The nominees are to be proposed and
elected as part of a Majority Shareholder Consent Form prepared by counsel for
the Company and are listed in the attached Reverse Acquisition Agreement.
Based upon the following, it was formally moved by Mr. Gregory
Stringham, seconded by Mr. Damon Madsen and unanimously approved by the
undersigned Directors as follows:
RESOLVED: A Unanimous Consent Form approving all of the terms of the
foregoing reverse acquisition shall be prepared by corporate counsel in
conformity with Nevada law and signed by a majority of all issued and
outstanding shares as soon as possible. The list of directors in the Reverse
Acquisition Agreement will be designated as the new director nominees to be
voted upon to hold office and receive appointment immediately upon the final
Closing of the Reverse Acquisition.
ITEM 3: Legal Matters to Implement Reverse Acquisition
----------------------------------------------
The Board next considered Mr. Dennis Madsen's representation that as
part of the Reverse Acquisition, the Company will be required through its
corporate counsel and retained auditors to prepare for Board review and
approval, a proposed "omnibus" 10KSB filing disclosing all historical matters to
date from the last SEC filing in 1991. It is further understood and agreed,
under the terms of the Reverse Acquisition, the Company will be further
responsible for completing any other periodic filing requirement required by the
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SEC to become a Reporting Company, including the filing of a Form 10, if
necessary. It is anticipated and hoped that the filing of the 10-KSB in a
comprehensive fashion will be sufficient, along with a report on Form 8-K of the
reverse acquisition, to satisfy requirements for the Company to again become a
Reporting company.
The undersigned further agree and ratify that Mr. Dennis Madsen has
available ten thousand dollars ($10,000) in an account payable to the Company,
as earlier authorized, to pay for the current services of the auditors and
retained attorney. Mr. Dennis Madsen will also be receiving 10,000 incentive
shares pursuant to this Resolution, and in accordance with the Reorganization
Agreement, which will be entirely, or substantially, assigned to these retained
experts as additional consideration for their historical services. Mr. Madsen
and the Board further understand, however, that if the filing of the anticipated
10-KSB and 8-K Reports are not sufficient for the Company to again become a
15(D) Reporting Company, and further historical filings are required or the
filing of a Form 10, then further and additional consideration will have to be
paid to these retained experts, or other experts for the Company by, Mr. Madsen
to meet his and the Company's contractual obligations to Travel Dynamics. Mr.
Madsen has assured the Board he believes that, if necessary, such additional
funding in cash or in shares can be arranged and would be acceptable to the
experts to provide such additional services. Based upon the foregoing, it was
moved by Mr. Gregory Stringham, seconded by Mr. David Madsen and unanimously
approved that:
RESOLVED: Mr. Dennis G. Madsen will continue to work with the legal and
accounting experts for the Company to prepare the required 10-KSB and 8-K
filings, and such other filings as may be necessary, to insure the Company is a
15(D) Reporting Company with the SEC under the Reverse Acquisition Agreement.
Mr. Dennis Madsen is directed and has agreed to employ all or as much of the
10,000 reverse split Incentive Shares being authorized pursuant to the this
Resolution to the experts for the Company as necessary to complete the basic
filing services described above. The Board further accepts the undertaking of
Mr. Dennis Madsen that should additional filings be required with the SEC for
the Company to become a Reporting Company that other consideration or shares
will be made available to the Company to pay the presently retained experts for
the Company, or any newly retained legal and accounting experts, as may be
necessary to complete such filings. Counsel for the Company is further directed
to prepare a Majority Shareholder Consent in conformity with Nevada law and to
have the same circulated through Mr. Dennis Madsen to the designated majority
shareholders for signature and approval of the specific matters necessary to
implement the Reverse Acquisition to be effective upon Closing.
ITEM 4: Certification and Authorization for Shares Issued and to be
--------------------------------------------------------------
Issued
------
The Board next discussed and decided that it would be appropriate and
necessary to make a final certification of shares to be issued and outstanding
pursuant to the reverse split and to formally authorized the issuance of
additional shares pursuant to the Reverse Acquisition Agreement.
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In discussing this matter, the Board has recognized that it has
received the benefits of a loan made in 1997 by Mr. Andrew Limpert to Mr.
Madsen, the proceeds of which were primarily used for Company purposes and which
loan was secured by a commitment to issue to Mr. Limpert various shares of stock
in the Company if the loan was not repaid. Mr. Limpert has previously agreed to
fully capitalize such prior loan to Mr. Madsen by receiving, after the 19.5:1
reverse split, a residual 400,000 share block of reverse split shares incident
to the Reverse Acquisition with Travel Dynamics. Mr. Limpert is acknowledging
his agreement to this final resolution as a shareholder by his signature to
these minutes below. The Board and Mr. Limpert have recognized that there is
presently issued a pre-reverse certificate to Mr. Limpert which has been held,
pending reorganization discussions, by counsel for the company in the amount of
seven million eight hundred thousand shares (7,800,000) shares, Certificate 1-n.
Mr. Limpert and the Board have agreed that this certificate will be surrendered
and a new reverse split restricted certificate with an issue date equivalent to
the prior certificate of July 1, 1997, reissued to Mr. Limpert in the amount of
400,000 reverse split shares. Mr. Limpert will acknowledge by his signature
below that this constitutes all shares of the Company to which he is entitled
and that such shares are accepted in complete satisfaction, discharge and
capitalization of the prior $60,000 cash loan made to Mr. Madsen for employment
by the Company and previously memorialized in earlier minutes and agreements.
This Resolution constitutes a final discharge and replacement of all prior
agreements, resolutions and understandings pertaining to shares and/or money
owing to Mr. Limpert by the Company.
The Board next noted that Mr. Damon Madsen, Mr. Gregory Stringham, and
Mr. L. Kent Mackey had each been authorized to receive ninety seven thousand
five hundred (97,500) pre-reverse split shares, but it is understood and agreed
between each of the undersigned Directors that they will now each receive five
thousand (5,000) reverse split shares in complete satisfaction and discharge of
all sharehold interest owing or which may be owed to the prior management group.
Mr. Dennis Madsen, as the interim transfer agent for the Company, is directed to
issue the shares upon the Closing of the Reverse Acquisition. The Directors
acknowledge and agree to the accounting and the sufficiency of the reverse split
shares by their signature below.
Additionally, there will be authorized a block of ten thousand 10,000
reverse split shares to Mr. Dennis G. Madsen, or assigns, with the
understanding, as previously recited, that such shares will be used primarily by
Mr. Dennis Madsen to pay and discharge historical accounts owing to legal
counsel and auditors for the Company and/or to discharge, in part, the remaining
obligations for the currently committed services of those experts as generally
outlined above.
The Company would note that the public shareholders, including
approximately twenty thousand (20,000) shares held by Mr. Dennis Madsen and
current management, are entitled to hold eight hundred twenty thousand (820,000)
reverse split shares upon completion of the reverse split. It is not the intent
of the Company to do a general solicitation and request for return of shares by
shareholders after the reverse split, but it will be recommended by the
undersigned present Board to the new Board and management that a general
explanation letter of the Reverse Acquisition be sent to existing shareholders
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<PAGE>
of their right to tender, at their own cost and expense, current shares for
reverse split shares, and further informing such shareholders that such shares
will be automatically exchanged at the reverse split ratio pursuant to future
share transactions.
Finally, it is agreed and understood that the present owners of Travel
Dynamics, pursuant to the Reverse Acquisition, will receive, collectively, two
million (2,000,000) reverse split shares of the Company, constituting
approximately sixty two percent (62%) after the Closing. Mr. Damon Madsen, as
the President of the Company, should be given authority by the Board to adjust
this actual number in consultation with the auditors for the Company and Mr.
Dennis Madsen, who is acting as the interim transfer agent, to ensure that the
Travel Dynamics shareholders receive not less than 62% of all issued and
outstanding shares of Greenway pursuant to the terms of the Reverse Acquisition.
These shares will be issued immediately upon the final Closing of the Reverse
Acquisition Agreement and in accordance with its terms.
Based upon all of the foregoing, it was moved by Damon Madsen, seconded
by Greg Stringham and unanimously adopted by all the directors as follows:
RESOLVED: The President of the Company is hereby authorized to work
with the transfer agent to effect the reverse split required by the Reverse
Acquisition and upon the completion of the reverse split and Closing of the
Reverse Acquisition to issue out those reverse split shares generally discussed
above and summarized as follows:
1. Issuance of five thousand (5,000) reverse split shares each to
Mr. L. Kent Mackey, Mr. Damon Madsen and Mr. Gregory
Stringham.
2. Issuance of four hundred thousand (400,000) reverse split
shares to Mr. Limpert, upon tender for cancellation of his
presently issued and outstanding seven million eight hundred
thousand (7,800,000) share certificate.
3. Issuance of ten thousand (10,000) incentive and reorganization
reverse split shares to Mr. Dennis L. Madsen, or assigns, as
discussed above.
4. Instruction to the transfer agent to reverse split all other
issued and outstanding shares on a 19.5 ratio and to reissue
such shares as requested by public shareholders or upon the
tender of shares incident to normal trading transactions.
5. Issue two million (2,000,000) to the present owners of Travel
Dynamics, or such other amount as the President shall
determine is equal to 62%, in consultation with the transfer
agent and accountants for the Company.
ITEM 5: By-Laws, Tax Filings and Miscellaneous
--------------------------------------
The Board next noted that corporate counsel had indicated that a set of
the By-Laws of the Company could not be located in the corporate files. The
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Board members remember having earlier adopted a standard set of Nevada By-Laws
hereby authorizes the reissuance of those ByLaws effective as of the earlier
deemed resolution date of October, 1995.
The Board has reviewed and approved those By-Laws attached hereto as
Schedule "C" to these Minutes. The same may also be made available to the
principals of Travel Dynamics as part of the Reverse Acquisition.
Based upon the foregoing, it was moved by Gregory Stringham, seconded
by Mr. Damon Madsen and unanimously approved that the foregoing By-Laws be
adopted.
RESOLVED: The By-Laws attached hereto are adopted as the By-Laws of the
Company, effective as of the date when originally deemed adopted in October,
1995. A copy shall be placed in the permanent record books of the Company and
made available to the Travel Dynamics principals and counsel.
The Board next noted in discussion that the Company had not filed any
state or federal tax returns at least since 1991, and no record of prior filings
have been found. The Board then decided to direct the President to consult with
the Company's auditors to see if the delinquent tax filing requirement could
reasonably be satisfied by filing the most current returns due, or whether
historical filings are required. The Board generally discussed directing the
President, after such consultation, to file such returns as he deemed necessary.
Based upon the foregoing discussion, it was moved by Mr. Mackay,
seconded by Mr. Stringham and unanimously resolved as follows:
RESOLVED: The Board directs the President to consult with Hansen,
Barnett & Maxwell concerning bringing current any required federal and state tax
filing requirement for the Company and to assist in the preparation, signing and
filing of any required tax returns for the Company.
Finally, the Board discussed that many of the foregoing issues and
Resolutions may have replaced, modified or superseded prior Resolutions,
agreements, policies or positions of the Company. It was, therefore, suggested
by Mr. Mackay that a final Resolution be adopted clarifying and stating that
these minutes are intended, and do in fact, replace, amend or supersede any and
all prior actions, policies or Resolutions of the Board not consistent with the
Resolutions contained in these Minutes and are intended to bind the Board, as
well as any third party consenting or otherwise affected and not in position to
require his or its assent.
Based upon the foregoing, it was moved by Mr. Damon Madsen, Seconded by
Mr. Stringham and unanimously resolved as follows:
RESOLVED: These Minutes are intended to be a final and
comprehensive treatment and resolution of all matters discussed herein.
Consequently, the Board intends these Minutes to supersede, amend or replace any
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prior inconsistent Minutes or Resolutions of this Company and to bind third
parties, so far as possible. The Board also deems that it has fully ratified all
acts of Mr. Dennis Madsen for and on behalf of the Company, including those
related to negotiations and entering the Reverse Acquisition.
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There being no further business to come before the meeting and all
agenda items having been addressed, it was moved by Mr. Damon Madsen, and
unanimously approved, that this meeting be adjourned.
- ----------------------------------- -----------------------------------
Gregory Stringham, Director Damon Madsen, Director--President
- -----------------------------------
L. Kent Mackay, Director
- -----------------------------------
Andrew Limpert, Individually
12
MAJORITY SHAREHOLDER CONSENT
Greenway Environmental Systems, Inc.
September ___, 1998
The undersigned collectively represent the holders of a majority of the
issued and outstanding shares of Greenway Environmental Systems, Inc., a Nevada
Corporation ("Greenway").
In accordance with Nevada Law, the undersigned majority shareholders
understand and agree that they may waive notice of a shareholders' meeting and
agree to the adoption of any action or election of directors which could be
enacted or voted upon by a majority of the Greenway shareholders at a
shareholder meeting regularly called for such purposes. The undersigned hereby
wish to exercise such right and do hereby waive notice of a Special Shareholders
Meeting and the opportunity to vote at such meeting and hereby express, by their
majority consent, approval to the following corporate actions and elections
requiring shareholder consent and approval::
1. Approval that the Board of Directors (as now constituted or as
may subsequently be constituted pursuant to the Reverse
Acquisition Agreement) has proposed the change of name of the
corporation of record to Travel Dynamics, Inc., or any
reasonable derivation of such name as determined by the Board.
2. Even though not required under Nevada Law, the undersigned
shareholders wish to ratify, as part of the Reverse
Acquisition Agreement, the reverse split by the Board of
Directors of the Company's shares on a nineteen and one half
to one (19.5:1) ratio, including the shares of the
undersigned.
3. The change of business purpose and location of Greenway to the
business currently conducted by Travel Dynamics at its current
place of business in or around Scottsdale, Arizona.
4. Increasing the number of Directors to five. The election of
the following nominees by the travel dynamics corporation to
be the new Board of Directors of the Company (Greenway/Travel
Dynamics):
(a) James Piccolo
(b) Brian K. Service
(c) Thomas (Tom) Dennis
(d) Gary Davies
(e) Thomas Vergith
5. All other terms and provisions of the Reverse Acquisition
Agreement between the Company and Travel Dynamics, Inc.
Each of the undersigned fully cast all of their votes which they are
entitled to vote in favor of the election and appointment of the foregoing to
the Board of Directors, subject only to the closing of the Reverse Acquisition
Agreement with Greenway.
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While not requiring shareholder approval, the undersigned also wish to
ratify and affirm the Board's decision to issue out, as part of the
reorganization with Travel Dynamics, two million shares of the Company stock is
reverse split to the Travel Dynamics shareholders as part of the Reverse
Acquisition Agreement.
The undersigned represent that they have been fully informed of the
terms of the Reverse Acquisition Agreement and have been given an opportunity to
review such Agreement before entering this informed consent. The undersigned
shareholders further represent that they have had full opportunity to ask
questions of and discuss the proposed matters listed above, and the other terms
and conditions of the Reverse Acquisition, with Greenway management and are
fully satisfied with the fact that they have been given full and complete
disclosure of such transaction and herewith voluntarily and willfully approve
such transaction of their free will and accord. Further, the undersigned
represent that they understand that they may consent to such action or may
withhold their consent and that they are fully entitled to review this decision
with outside legal or accounting experts of their own choosing and have either
done so or knowingly elected not to do so.
Finally, the undersigned shareholders understand and agree that with
their majority approval of these matters, a formal meeting and proxy will not be
solicited of the other shareholders in the Company; but, in accordance with the
By-Laws of the Company, notice of the undersigned majority consent and the
actions taken pursuant to this consent will be distributed to all shareholders
of the Company by the new management group.
WITNESS the signature and date of each of the undersigned shareholders
of the Company constituting a majority of all issued and outstanding shares on
this ____ day of September, 1998.
SHAREHOLDERS:
- -------------------- -------------------- --------------------
Andrew Limpert Date # of Shares
- -------------------- -------------------- --------------------
Thomas Hinckle Date # of Shares
- -------------------- -------------------- --------------------
Fred O. Walden Date # of Shares
- -------------------- -------------------- --------------------
Yorktown Ltd. Date # of Shares
By:__________________
Its:__________________
2
