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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities
of Small Business Issuers
Under Section 12(b) or (g) of
the Securities Exchange Act of 1934
MERCURY CAPITAL CORP.
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(Name of Small Business Issuer)
Colorado (Pending)
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(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
5770 South Beech Court, Greenwood Village, Colorado 80121
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(Address of Principal Executive Offices, Including Zip Code)
(303) 221-7376
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(Issuer's Telephone Number)
Securities to be Registered Under Section 12(b) of the Act: None
Securities to be Registered Under Section 12(g) of the Act:
Common Stock, No Par Value
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(Title of Class)
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Mercury Capital Corp. (the "Company"), was incorporated on December 9,
1996, under the laws of the State of Colorado, to engage in any lawful
corporate undertaking, including, but not limited to, selected mergers and
acquisitions. The Company has been in the developmental stage since inception
and has no operations to date. Other than issuing shares to its original
shareholders, the Company never commenced any operational activities.
The Company was formed by Timothy J. Brasel, the initial director, for
the purpose of creating a corporation which could be used to consummate a
merger or acquisition. Mr. Brasel asked Joseph J. Peirce, a close friend who
has been an investor in a number of other companies managed by Mr. Brasel, to
serve as President and a director, and these two persons invited Mr. Brasel's
sister to participate as a founding shareholder. No further action was taken
in connection with the organization of the Company until February 1999 when
the management determined to proceed with filing a Form 10-SB. Management
then raised $12,000 from three business acquaintances to pay the expense of
preparing the Form 10-SB.
The Board of Directors of the Company has elected to commence
implementation of the Company's principal business purpose, described below
under "Item 2, Plan of Operation". As such, the Company can be defined as a
"shell" company, whose sole purpose at this time is to locate and consummate a
merger or acquisition with a private entity.
The proposed business activities described herein classify the Company as
a "blank check" company. Many states have enacted statutes, rules and
regulations limiting the sale of securities of "blank check" companies in
their respective jurisdictions. Management does not intend to cause a market
to develop in the Company's securities until such time as the Company has
completed an acquisition or merger.
The Company's business is subject to numerous risk factors, including the
following:
NO OPERATING HISTORY OR REVENUE AND MINIMAL ASSETS. The Company has had
no operating history nor any revenues or earnings from operations. The
Company has no significant assets or financial resources. The Company will,
in all likelihood, sustain operating expenses without corresponding revenues,
at least until the consummation of a business combination. This may result in
the Company incurring a net operating loss which will increase continuously
until the Company can consummate a business combination with a profitable
business opportunity. There is no assurance that the Company can identify
such a business opportunity and consummate such a business combination.
SPECULATIVE NATURE OF COMPANY'S PROPOSED OPERATIONS. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified business
opportunity. While management intends to seek business combinations with
entities having established operating histories, there can be no assurance
that the Company will be successful in locating candidates meeting such
criteria. In the event the Company completes a business combination, of which
there can be no assurance, the success of the Company's operations may be
dependent upon management of the successor firm or venture partner firm and
numerous other factors beyond the Company's control.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND COMBINATIONS.
The Company is and will continue to be an insignificant participant in the
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business of seeking mergers with, joint ventures with and acquisitions of
small private entities. A large number of established and well-financed
entities, including venture capital firms, are active in mergers and
acquisitions of companies which may be desirable target candidates for the
Company. Nearly all such entities have significantly greater financial
resources, technical expertise and managerial capabilities than the Company
and, consequently, the Company will be at a competitive disadvantage in
identifying possible business opportunities and successfully completing a
business combination. Moreover, the Company will also compete in seeking
merger or acquisition candidates with numerous other small public companies.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION - NO STANDARDS
FOR BUSINESS COMBINATION. The Company has no arrangement, agreement or
understanding with respect to engaging in a merger with, joint venture with or
acquisition of, a private entity. There can be no assurance the Company will
be successful in identifying and evaluating suitable business opportunities or
in concluding a business combination. Management has not identified any
particular industry or specific business within an industry for evaluations.
The Company has been in the developmental stage since inception and has no
operations to date. Other than issuing shares to its original shareholders,
the Company never commenced any operational activities. There is no assurance
the Company will be able to negotiate a business combination on terms
favorable to the Company. The Company has not established a specific length
of operating history or a specified level of earnings, assets, net worth or
other criteria which it will require a target business opportunity to have
achieved, and without which the Company would not consider a business
combination in any form with such business opportunity. Accordingly, the
Company may enter into a business combination with a business opportunity
having no significant operating history, losses, limited or no potential for
earnings, limited assets, negative net worth or other negative
characteristics.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME AVAILABILITY. While seeking a
business combination, management anticipates devoting up to twenty hours per
month to the business of the Company. The Company's two officers have not
entered into written employment agreements with the Company and are not
expected to do so in the foreseeable future. The Company has not obtained key
man life insurance on either of its officers or directors. Notwithstanding
the combined limited experience and time commitment of management, loss of the
services of any of these individuals would adversely affect development of the
Company's business and its likelihood of continuing operations. See
"MANAGEMENT."
CONFLICTS OF INTEREST - GENERAL. The Company's officers and directors
participate in other business ventures which compete directly with the
Company. Additional conflicts of interest and non-arms length transactions
may also arise in the future in the event the Company's officers or directors
are involved in the management of any firm with which the Company transacts
business. The Company's Board of Directors has adopted a resolution which
prohibits the Company from completing a merger with, or acquisition of, any
entity in which management serve as officers, directors or partners, or in
which they or their family members own or hold any ownership interest.
Management is not aware of any circumstances under which this policy could be
changed while current management is in control of the Company. See "ITEM 5.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS - CONFLICTS OF
INTEREST."
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REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION. Section 13 of
the Securities Exchange Act of 1934 (the "Exchange Act"), requires companies
subject thereto to provide certain information about significant acquisitions,
including certified financial statements for the company acquired, covering
one or two years, depending on the relative size of the acquisition. The time
and additional costs that may be incurred by some target entities to prepare
such statements may significantly delay or essentially preclude consummation
of an otherwise desirable acquisition by the Company. Acquisition prospects
that do not have or are unable to obtain the required audited statements may
not be appropriate for acquisition so long as the reporting requirements of
the 1934 Act are applicable.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company has
neither conducted, nor have others made available to it, results of market
research indicating that market demand exists for the transactions
contemplated by the Company. Moreover, the Company does not have, and does
not plan to establish, a marketing organization. Even in the event demand is
identified for a merger or acquisition contemplated by the Company, there is
no assurance the Company will be successful in completing any such business
combination.
LACK OF DIVERSIFICATION. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a
business combination with only one business opportunity. Consequently, the
Company's activities will be limited to those engaged in by the business
opportunity which the Company merges with or acquires. The Company's
inability to diversify its activities into a number of areas may subject the
Company to economic fluctuations within a particular business or industry and
therefore increase the risks associated with the Company's operations.
REGULATION. Although the Company will be subject to regulation under the
Securities Exchange Act of 1934, management believes the Company will not be
subject to regulation under the Investment Company Act of 1940, insofar as the
Company will not be engaged in the business of investing or trading in
securities. In the event the Company engages in business combinations which
result in the Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the Investment
Company Act of 1940. In such event, the Company would be required to register
as an investment company and could be expected to incur significant
registration and compliance costs . The Company has obtained no formal
determination from the Securities and Exchange Commission as to the status of
the Company under the Investment Company Act of 1940 and, consequently, any
violation of such Act would subject the Company to material adverse
consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination
involving the issuance of the Company's common stock will, in all likelihood,
result in shareholders of a private company obtaining a controlling interest
in the Company. Any such business combination may require management of the
Company to sell or transfer all or a portion of the Company's common stock
held by them, or resign as members of the Board of Directors of the Company.
The resulting change in control of the Company could result in removal of one
or more present officers and directors of the Company and a corresponding
reduction in or elimination of their participation in the future affairs of
the Company.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS COMBINATION.
The Company's primary plan of operation is based upon a business combination
with a private concern which, in all likelihood, would result in the Company
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issuing securities to shareholders of such private company. The issuance of
previously authorized and unissued common stock of the Company would result in
reduction in percentage of shares owned by present and prospective
shareholders of the Company and would most likely result in a change in
control or management of the Company.
DISADVANTAGES OF BLANK CHECK OFFERING. The Company may enter into a
business combination with an entity that desires to establish a public trading
market for its shares. A business opportunity may attempt to avoid what it
deems to be adverse consequences of undertaking its own public offering by
seeking a business combination with the Company. Such consequences may
include, but are not limited to, time delays of the registration process,
significant expenses to be incurred in such an offering, loss of voting
control to public shareholders and the inability or unwillingness to comply
with various federal and state securities laws enacted for the protection of
investors. These securities laws primarily relate to provisions regarding the
registration of securities which require full disclosure of the Company's
business, management and financial statements.
TAXATION. Federal and state tax consequences will, in all likelihood, be
major considerations in any business combination the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as
to minimize the federal and state tax consequences to both the Company and the
target entity; however, there can be no assurance that such business
combination will meet the statutory requirements of a tax-free reorganization
or that the parties will obtain the intended tax-free treatment upon a
transfer of stock or assets. A non-qualifying reorganization could result in
the imposition of both federal and state taxes which may have an adverse
effect on both parties to the transaction.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY BUSINESS
OPPORTUNITIES. Management of the Company believes that any potential business
opportunity must provide audited financial statements for review, and for the
protection of all parties to the business combination. One or more attractive
business opportunities may choose to forego the possibility of a business
combination with the Company, rather than incur the expenses associated with
preparing audited financial statements.
BLUE SKY CONSIDERATIONS. Because the securities registered hereunder
have not been registered for resale under the blue sky laws of any state, and
the Company has no current plans to register or qualify its shares in any
state, the holders of such shares and persons who desire to purchase them in
any trading market that might develop in the future, should be aware that
there may be significant state blue sky restrictions upon the ability of new
investors to purchase the securities which could reduce the size of the
potential market. As a result of recent changes in federal law, non-issuer
trading or resale of the Company's securities is exempt from state
registration or qualification requirements in most states. However, some
states may continue to attempt to restrict the trading or resale of blind-pool
or "blank-check" securities. Accordingly, investors should consider any
potential secondary market for the Company's securities to be a limited one.
ITEM 2. PLAN OF OPERATION
The Registrant intends to seek to acquire assets or shares of an entity
actively engaged in business which generates revenues, in exchange for its
securities. The Registrant has no particular acquisitions in mind and has not
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entered into any negotiations regarding such an acquisition. None of the
Company's officers, directors, promoters or affiliates have engaged in any
preliminary contact or discussions with any representative of any other
company regarding the possibility of an acquisition or merger between the
Company and such other company as of the date of this registration statement.
While the Company will attempt to obtain audited financial statements of
a target entity, there is no assurance that such audited financial statements
will be available. The Board of Directors does intend to obtain certain
assurances of value of the target entity's assets prior to consummating such a
transaction, with further assurances that an audited statement would be
provided within seventy-five days after closing of such a transaction.
Closing documents relative thereto will include representations that the value
of the assets conveyed to or otherwise so transferred will not materially
differ from the representations included in such closing documents.
The Registrant has no full time employees. The Registrant's two officers
have agreed to allocate a portion of their time to the activities of the
Registrant, without compensation. Management anticipates that the business
plan of the Company can be implemented by each officer devoting approximately
10 hours per month to the business affairs of the Company and, consequently,
conflicts of interest may arise with respect to the limited time commitment by
such officers. See "ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS."
Mr. Brasel is involved with several other blank check companies, and both
officers are involved creating eight other blank check companies similar to
this one. In addition, the Company's officers and directors may, in the
future, become involved with other companies which have a business purpose
similar to that of the Company. As a result, additional conflicts of interest
may arise in the future. If such a conflict does arise and an officer or
director of the Company is presented with a business opportunity under
circumstances where there may be a doubt as to whether the opportunity should
belong to the Company or another "blank check" company they are affiliated
with, they will disclose the opportunity to all such companies. If a
situation arises in which more than one company desires to merge with or
acquire that target company and the principals of the proposed target company
have no preference as to which company will merge or acquire such target
company, the company of which Mr. Brasel first became an officer and director
will be entitled to proceed with the transaction. As between the Company and
the eight other companies formed on December 9, 1996, the company which first
filed a registration statement with the Securities and Exchange Commission
will be entitled to proceed with the proposed transaction. See "ITEM 5,
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS - PREVIOUS BLIND
POOL ACTIVITIES."
The Company is filing this registration statement on a voluntary basis
because the primary attraction of the Registrant as a merger partner or
acquisition vehicle will be its status as an SEC reporting company. Any
business combination or transaction will likely result in a significant
issuance of shares and substantial dilution to present stockholders of the
Registrant.
The Articles of Incorporation of the Company provides that the Company
may indemnify officers and/or directors of the Company for liabilities, which
can include liabilities arising under the securities laws. Therefore, assets
of the Company could be used or attached to satisfy any liabilities subject to
such indemnification. See "ITEM 12, INDEMNIFICATION OF DIRECTORS AND
OFFICERS."
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GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in business opportunities presented to it by
persons or firms who or which desire to seek the perceived advantages of an
Exchange Act registered corporation. The Company will not restrict its search
to any specific business, industry, or geographical location and the Company
may participate in a business venture of virtually any kind or nature. This
discussion of the proposed business is purposefully general and is not meant
to be restrictive of the Company's virtually unlimited discretion to search
for and enter into potential business opportunities. Management anticipates
that it will be able to participate in only one potential business venture
because the Company has nominal assets and limited financial resources. See
Item F/S, "Financial Statements." This lack of diversification should be
considered a substantial risk to shareholders of the Company because it will
not permit the Company to offset potential losses from one venture against
gains from another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company may acquire assets and establish wholly-owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The primary method the Company will use to find potential merger or
acquisition candidates will be to run classified ads in the Wall Street
Journal periodically seeking companies which are looking to merge with a
public shell.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Due to general
economic conditions, rapid technological advances being made in some
industries and shortages of available capital, management believes that there
are numerous firms seeking the perceived benefits of a publicly registered
corporation. Such perceived benefits may include facilitating or improving the
terms on which additional equity financing may be sought, providing liquidity
for incentive stock options or similar benefits to key employees, providing
liquidity (subject to restrictions of applicable statutes) for all
shareholders and other factors. Business opportunities may be available in
many different industries and at various stages of development, all of which
will make the task of comparative investigation and analysis of such business
opportunities extremely difficult and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business opportunities with any significant cash or
other assets. However, management believes the Company will be able to offer
owners of acquisition candidates the opportunity to acquire a controlling
ownership interest in a publicly registered company without incurring the cost
and time required to conduct an initial public offering. The owners of the
business opportunities will, however, incur significant legal and accounting
costs in connection with the acquisition of a business opportunity, including
the costs of preparing Form 8-K's, 10-K's or 10-KSB's, agreements and related
reports and documents. The Securities Exchange Act of 1934 (the "34 Act"),
specifically requires that any merger or acquisition candidate comply with all
applicable reporting requirements, which include providing audited financial
statements to be included within the numerous filings relevant to complying
with the 34 Act. Nevertheless, the officers and directors of the Company have
not conducted market research and are not aware of statistical data which
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would support the perceived benefits of a merger or acquisition transaction
for the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, the officers and directors of the Company, none of
whom is a professional business analyst. Management intends to concentrate on
identifying preliminary prospective business opportunities which may be
brought to its attention through present associations of the Company's two
officers, or by the Company's shareholders. In analyzing prospective business
opportunities, management will consider such matters as the available
technical, financial and managerial resources; working capital and other
financial requirements; history of operations, if any; prospects for the
future; nature of present and expected competition; the quality and experience
of management services which may be available and the depth of that
management; the potential for further research, development, or exploration;
specific risk factors not now foreseeable but which then may be anticipated to
impact the proposed activities of the Company; the potential for growth or
expansion; the potential for profit; the perceived public recognition or
acceptance of products, services, or trades; name identification; and other
relevant factors. Management will meet personally with management and key
personnel of the business opportunity as part of their investigation. To the
extent possible, the Company intends to utilize written reports and personal
investigation to evaluate the above factors. The Company will not acquire or
merger with any company for which audited financial statements cannot be
obtained within a reasonable period of time after closing of the proposed
transaction.
Management of the Company, while not especially experienced in matters
relating to the new business of the Company, will rely upon their own efforts
and, to a much lesser extent, the efforts of the Company's shareholders, in
accomplishing the business purposes of the Company. It is not anticipated
that any outside consultants or advisors, other than the Company's legal
counsel and accountants, will be utilized by the Company to effectuate its
business purposes described herein. However, if the Company does retain such
an outside consultant or advisor, any cash fee earned by such party will need
to be paid by the prospective merger/acquisition candidate, as the Company has
no cash assets with which to pay such obligation. There have been no
discussions, understandings, contracts or agreements with any outside
consultants and none are anticipated in the future. In the past, the
Company's management has never used outside consultants or advisors in
connection with a merger or acquisition.
The Company will not restrict its search for any specific kind of firms,
but may acquire a venture which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its corporate
life. It is impossible to predict at this time the status of any business in
which the Company may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded, or may seek
other perceived advantages which the Company may offer. However, the Company
does not intend to obtain funds in one or more private placements to finance
the operation of any acquired business opportunity until such time as the
Company has successfully consummated such a merger or acquisition. The
Company also has no plans to conduct any offerings under Regulation S.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may
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also acquire stock or assets of an existing business. On the consummation of
a transaction, it is probable that the present management and shareholders of
the Company will no longer be in control of the Company. In addition, the
Company's directors may, as part of the terms of the acquisition transaction,
resign and be replaced by new directors without a vote of the Company's
shareholders.
It is anticipated that the Company's principal shareholders may actively
negotiate or otherwise consent to the purchase of a portion of their common
stock as a condition to, or in connection with, a proposed merger or
acquisition transaction. Any terms of sale of the shares presently held by
officers and/or directors of the Company will be also afforded to all other
shareholders of the Company on similar terms and conditions. The policy set
forth in the preceding sentence is based on an understanding between the two
members of management, and these two persons are not aware of any
circumstances under which this policy would change while they are still
officers and directors of the Company. Any and all such sales will only be
made in compliance with the securities laws of the United States and any
applicable state.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all
or a part of such securities immediately after the transaction is consummated
or at specified times thereafter. If such registration occurs, of which there
can be no assurance, it will be undertaken by the surviving entity after the
Company has successfully consummated a merger or acquisition and the Company
is no longer considered a "shell" company. Until such time as this occurs,
the Company will not attempt to register any additional securities. The
issuance of substantial additional securities and their potential sale into
any trading market which may develop in the Company's securities may have a
depressive effect on the value of the Company's securities in the future, if
such a market develops, of which there is no assurance.
While the actual terms of a transaction to which the Company may be a
party cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event
and thereby structure the acquisition in a so-called "tax-free" reorganization
under Sections 368a or 351 of the Internal Revenue Code (the "Code").
With respect to any merger or acquisition, negotiations with target
company management is expected to focus on the percentage of the Company which
target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in
all likelihood hold a substantially lesser percentage ownership interest in
the Company following any merger or acquisition. The percentage ownership may
be subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the
percentage of shares held by the Company's then-shareholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the
terms of such agreements cannot be predicted, generally such agreements will
require some specific representations and warranties by all of the parties
thereto, will specify certain events of default, will detail the terms of
closing and the conditions which must be satisfied by each of the parties
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prior to and after such closing, will outline the manner of bearing costs,
including costs associated with the Company's attorneys and accountants, will
set forth remedies on default and will include miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge with any
entity which cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction. The
Company is subject to all of the reporting requirements included in the 34
Act. Included in these requirements is the affirmative duty of the Company to
file independent audited financial statements as part of its Form 8-K to be
filed with the Securities and Exchange Commission upon consummation of a
merger or acquisition, as well as the Company's audited financial statements
included in its annual report on Form 10-K (or 10-KSB, as applicable). If
such audited financial statements are not available at closing, or within time
parameters necessary to insure the Company's compliance with the requirements
of the 34 Act, or if the audited financial statements provided do not conform
to the representations made by the candidate to be acquired in the closing
documents, the closing documents may provide that the proposed transaction
will be voidable, at the discretion of the present management of the Company.
The Company's officers and shareholders have verbally agreed that they
will advance to the Company any additional funds which the Company needs for
operating capital and for costs in connection with searching for or completing
an acquisition or merger. These persons have further agreed that such
advances will be made in proportion to each person's percentage ownership of
the Company. These persons have also agreed that such advances will be made
interest free without expectation of repayment unless the owners of the
business which the Company acquires or merges with agree to repay all or a
portion of such advances. There is no dollar cap on the amount of money which
such persons will advance to the Company. The Company will not borrow any
funds from anyone other than its current shareholders for the purpose of
repaying advances made by the shareholders, and the Company will not borrow
any funds to make any payments to the Company's promoters, management or their
affiliates or associates.
The Board of Directors has passed a resolution which prohibits the
Company from completing an acquisition or merger with any entity in which any
of the Company's Officers, Directors, principal shareholders or their
affiliates or associates serve as officer or director or hold any ownership
interest. Management is not aware of any circumstances under which this
policy, through their own initiative may be changed.
There are no arrangements, agreements or understandings between non-
management shareholders and management under which non-management shareholders
may directly or indirectly participate in or influence the management of the
Company's affairs. There is no agreement that non-management shareholders
will exercise their voting rights to continue to re-elect the current
directors, however, it is expected that they will do so based on the existing
friendship among such persons.
COMPETITION
The Company will remain an insignificant participant among the firms
which engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns which have significantly
greater financial and personnel resources and technical expertise than the
Company. In view of the Company's combined extremely limited financial
resources and limited management availability, the Company will continue to be
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at a significant competitive disadvantage compared to the Company's
competitors.
YEAR 2000 COMPLIANCE
The Company is aware of the issues associated with the programming code
in existing computer systems as the year 2000 approaches. The Company has
assessed these issues as they relate to the Company, and since the Company
currently has no operating business and does not use any computers, and since
it has no customers, suppliers or other constituents, it does not believe that
there are any material year 2000 issues to disclose in this Form 10-SB.
ITEM 3. DESCRIPTION OF PROPERTY
The Registrant has no properties and at this time has no agreements to
acquire any properties. The Company currently uses the offices of Timothy J.
Brasel at no cost to the Company and the Company expects this arrangement to
continue until the Company completes an acquisition or merger. This
arrangement is a verbal understanding between Mr. Brasel and the Company's
Board of Directors.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of February 10, 1999, each person
known by the Company to be the beneficial owner of five percent or more of the
Company's Common Stock, all Directors individually and all Directors and
Officers of the Company as a group. Except as noted, each person has sole
voting and investment power with respect to the shares shown.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT OF BENEFICIAL
OF BENEFICIAL OWNER OWNERSHIP PERCENTAGE OF CLASS
- ------------------------ -------------------- -------------------
<S> <C> <C>
Timothy J. Brasel 1,365,000<FN1> 34.1%
5770 South Beech Court
Greenwood Village, CO 80121
Joseph J. Peirce 1,415,000 35.4%
5125 West Lake Avenue
Littleton, CO 80123
Brasel Family Partners, Ltd. 645,000 16.1%
5770 South Beech Court
Greenwood Village, CO 80121
LaMirage Trust 720,000 18.0%
5770 South Beech Court
Greenwood Village, CO 80121
Nasus Lesarb, Ltd. <FN2> 720,000 18.0%
16198 East Prentice Place
Aurora, CO 80015
Kurt Tuerkl IRA 200,000 5.0%
8101 E. Dartmouth, No. 1
Denver, CO 80231
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All Executive Officers and 2,780,000 69.5%
Directors as a Group
(2 Persons)
__________________
<FN>
<FN1>
Includes 720,000 shares held by the La Mirage Trust and 645,000 shares held by
Brasel Family Partners, Ltd. Mr. Brasel is a trustee for the La Mirage Trust
and the General Partner of Brasel Family Partners, Ltd.
<FN2>
The general partner of Nasus Lesarb, Ltd. is Susan Brasel, the sister of
Timothy J. Brasel.
</FN>
</TABLE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The Directors and Officers of the Company are as follows:
NAME AGE POSITIONS AND OFFICES HELD
----------------- --- ---------------------------------
Joseph J. Peirce 54 President and Director
Timothy J. Brasel 38 Secretary, Treasurer and Director
There are no agreements or understandings for any officer or director to
resign at the request of another person and none of the above named officers
and directors are acting on behalf of or will act at the direction of any
other person.
The directors and officers will devote their time to the Company's
business on an "as needed" basis which is expected to be between five to ten
hours per month on average.
In addition to the two officers and directors listed above, the following
person could also be deemed to be a promoters and/or control person of the
Company, as those terms are defined in the Rules and Regulations promulgated
under the Securities Act of 1933, as amended. There are no other persons who
could be deemed to be promoters of the Company.
Kurt Tuerkl - Shareholder
Mr. Tuerkl is primarily acting as an investor only in the Company,
however, he may assist management in the review of possible acquisition or
merger candidates.
KURT TUERKL - SHAREHOLDER. Mr. Tuerkl founded and operated Tuerkl &
Tuerkl P.C., a public accounting firm in Denver, Colorado from 1970 until
April 1994, when he sold the firm and retired. He continues to do occasional
consulting work in Europe. He received a Master of Business Administration
and Accounting from Vienna University in 1964.
There is no family relationship between any Director or Executive Officer
of the Company.
The Company presently has no committees.
Set forth below are the names of all Directors and Executive Officers of
the Company, all positions and offices with the Company held by each such
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person, the period during which he has served as such, and the business
experience of such persons during at least the last five years:
J.J. PEIRCE. Mr. Peirce has served as the President and a Director of
the Company since December 1996. He also serves as the President and a
director of eight other companies which were formed at the same time and for
the same purpose as the Company. These companies are Westlake Capital Corp.,
Calneva Capital Corp., Studio Capital Corp., Zirconium Capital Corp., Royal
Belle Capital Corp, Copper Capital Corp. and Hightop Capital Corp., and
Antares Capital Corp. For approximately the last 22 years Mr. Peirce has
served as President and owner of Peirce Enterprises, Inc., which has been
engaged in commercial real estate sales and which has provided consulting
services in various areas including patents, product development and mergers
and acquisitions.
TIMOTHY J. BRASEL. Mr. Brasel has served as Secretary, Treasurer and a
director of the Company since December 1996. He also serves as President and
a Director of one other publicly-held "shell": Aspen Capital, Inc., and he
serves as a Director of a publicly-held shell named Beechport Capital Corp.
He also serves as a director of eight other companies which were formed at the
same time and for the same purpose as the Company. These companies are
Westlake Capital Corp., Calneva Capital Corp., Studio Capital Corp., Zirconium
Capital Corp., Royal Belle Capital Corp., Copper Capital Corp., Hightop
Capital Corp., and Antares Capital Corp. From December 1996 until September
1998, he served as President and a Director of Cypress Capital, Inc., which
completed an acquisition of Terra Telecommunications, Inc. during September
1998. From September 1995 until January 1999, he served as President and a
Director of High Hopes, Inc. which completed an acquisition of certain
technology from Sanga e-Health LLC during January 1999. From May 1995 until
August 1997, Mr. Brasel served as President and a director of Universal
Capital Corp., which completed an acquisition of Remarc International Inc.
during August 1997. From February 1996 until February 1997, Mr. Brasel served
as President and a director of Capital 2000, Inc. which completed an
acquisition of United Shields Corporation in February 1997. From July 1996
until December 1997, Mr. Brasel served as President and a director of Mahogany
Capital, Inc. which completed an acquisition of Pontotoc Production Company,
Inc. during December 1997. From July 1996 until May 1998, Mr. Brasel served
as President and a director of Walnut Capital, Inc., which completed a merger
with Links Ltd. during May 1998. From March 1990 until September 1994, Mr.
Brasel served as President, Secretary, Treasurer and a Director of Prentice
Capital, Inc., a publicly-held blank-check company which completed an
acquisition of Universal Footcare, Inc. From March 1990 until August 1993,
Mr. Brasel was President, Secretary and a Director of Brasel Ventures, Inc., a
publicly-held blank-check company, which completed an acquisition of American
Pharmaceutical Company. Since January 1987, Mr. Brasel has been President and
a Director of Bleu Ridge Consultants, Inc., a business and management
consulting firm located in Denver, Colorado. Mr. Brasel received a Bachelor
of Science Degree in Business Administration from Morningside College, Sioux
City, Iowa in 1980.
PREVIOUS BLANK-CHECK EXPERIENCE
Mr. Timothy J. Brasel, Secretary, Treasurer and a Director of the
Company, has been involved either as an officer or director, or both, with
seventeen other blank-check companies which have completed some form of
corporate reorganization. These companies are Cambridge Ventures, Inc., Fox
Ridge Capital, Inc., Crystal Gold, Ltd., Extare Corporation, L.I. Inc., Ivory
Coast, Inc., Brasel Ventures, Inc., Eagle Vision, Inc., Eagle Eye
Enterprises, Inc., Prentice Capital, Inc., Coalmont, Inc., Universal Capital
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Corporation, Capital 2000, Inc., Mahogany Capital, Inc., Walnut Capital, Inc.,
Cypress Capital, Inc. and High Hopes, Inc.
Following is a summary of the previous blank-check companies which have
completed their public offerings. Each of these companies initially conducted
a public offering for the purpose of completing a merger with or an
acquisition of a private company.
In each of the companies listed below, unless otherwise indicated, Mr.
Brasel was a director and major shareholder of the Company before the
reorganization, and on the closing of each reorganization he resigned all
officer and director positions. In addition, after each resignation, his
equity position in the Company was less than 5% of the shares outstanding.
Cambridge Ventures, Inc. ("Cambridge") closed its public offering on
March 14, 1986, and raised a total of $200,000 gross proceeds by selling
10,000,000 units at $.02 per unit. During July, 1986, Cambridge completed a
reverse acquisition of Elkins Institute in Atlanta, Inc. ("Elkins"). Elkins
owned and operated a private school in Atlanta, Georgia, which provides
technical training in the field of electronics, computer technology, and
radio/TV broadcasting. Cambridge is no longer an SEC reporting company and
its stock is no longer publicly traded. In connection with the acquisition of
Cambridge, Timothy J. Brasel sold 3,000,000 shares to principals of Elkins for
a total consideration of $9,859.
Fox Ridge Capital, Inc. ("Fox Ridge") closed its public offering in
October, 1988, and raised a total of $600,000 in gross proceeds by selling
60,000,000 shares at $.01 per share. During March, 1989, Fox Ridge completed
a reverse acquisition of R. V. Seahawk, Inc., an oceanographic services
company which is involved in deep water search, survey and recovery
operations. Fox Ridge changed its name to Seahawk Deep Ocean Technology, Inc.
which currently trades on the NASD's Bulletin Board. In connection with the
acquisition of Seahawk, Timothy J. Brasel sold 25,000,000 shares to principals
of Seahawk for a price of $.0008 per share or $20,000 for Mr. Brasel. In
addition, subsequent to the acquisition of Seahawk, Tim Brasel sold 15,000,000
warrants to principals of Seahawk for a price of $.0015 per warrant or
$22,500.
Crystal Gold, Ltd. ("Crystal Gold") closed its public offering in
October, 1988, and raised a total of $322,500 in gross proceeds by selling
64,500,000 shares at $.005 per share. During June, 1989, Crystal Gold
completed a reverse acquisition of Morgan Medical Corp. ("Morgan"). Morgan is
engaged in the business of serving as consultant and project manager for
physicians interested in developing and operating magnetic resonance imaging,
lithography and ambulatory surgery centers. In connection with the
acquisition of Morgan, Tim Brasel sold 16,000,000 shares and 18,000,000
warrants to principals of Morgan for a total consideration of $21,334.
Crystal Gold subsequently changed its name to Morgan Medical Holdings, Inc.,
and during 1995 it was merged into NMR of America, Inc., which trades on
NASDAQ.
Extare Corporation ("Extare") closed its public offering during June,
1988, and raised a total of $595,000 gross proceeds by selling 11,900,000
shares at $.05 per share. During October, 1989, Extare completed an
acquisition of NCS Acquisitions Corp. ("NCS"), a company which had a P.C.
based software system which allows credit union members to shop for
automobiles and other consumer goods at discounted prices. In connection with
the acquisition of NCS, Timothy J. Brasel sold an option to buy his B warrants
to the principal shareholder of NCS. In consideration for the option, Mr.
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Brasel received $3,937.50. The option granted the holder the right to
purchase B warrants at a price of $.01 per Warrant. The option was never
exercised.
During September 1996, NCS (which had no assets and liabilities of
approximately $68,560) was sold to Eric Schedeler, a former
officer/shareholder and a director of Extare, for approximately $500. During
July 1995, Extare completed an acquisition of Infi-Shield Corporation, a
Minnesota corporation which had developed a line of products used as external
protective shielding for water/sewer lines, manholes and catch basins.
Extare's name has been changed to Infi-Shield International, Inc., and it is
no longer an SEC reporting company.
L. I. Inc. closed its public offering in May, 1989, and raised a total of
$50,000 in gross proceeds by selling 2,500,000 shares at $.02 per share.
During June, 1990, L. I. Inc. completed a reverse acquisition of Imaging
Management Associates, Inc. ("IMA"), and changed its name to Imaging
Management Associates, Inc., which trades on NASDAQ. IMA operates nine
outpatient centers that provide diagnostic imaging services. Generally, these
centers provide magnetic resonance imaging, and, in some centers, CAT Scan,
mammography and general diagnostic x-ray services. In connection with this
transaction, Timothy J. Brasel sold an option to purchase up to 966,000 units
(each unit consisting of one share of common stock and two warrants) of L. I.
Inc. held by him to two outside investors. Mr. Brasel received $4,830 for
this option, and he received an additional $4,830 on the exercise of the
option.
Ivory Coast, Inc. closed its public offering in September, 1989, and
raised a total of $600,000 in gross proceeds by selling 6,000,000 Units at
$.10 per Unit. During November, 1989, Ivory Coast completed an acquisition of
Continental Management Group, Inc. ("Continental"), a Florida corporation,
which had an option to acquire Musselman Steel Corporation of Tampa, Florida.
In connection with the acquisition of Continental, Mr. Brasel sold a total of
16,875,000 warrants to the principal of Continental at a price of $.001 per
warrant or a total of $16,875. Ivory Coast is no longer an SEC reporting
company and no longer trades as a public company.
Brasel Ventures, Inc. closed its public offering in November, 1990, and
raised a total of $75,000 in gross proceeds by selling 7,500,000 Units at $.01
per Unit. During July 1993, Brasel Ventures completed a reverse acquisition
of American Pharmaceutical Company, a New Jersey corporation engaged in the
business of packaging and distributing non-prescription OTC pharmaceutical and
vitamin products. Brasel Ventures changed its name to American Pharmaceutical
Company. This company is no longer an SEC reporting company and its stock no
longer trades publicly.
Eagle Vision, Inc. ("Eagle Vision") closed its public offering in
January, 1990, and raised a total of $299,040 by selling 49,840 Units at $6.00
per Unit. During April, 1990, Eagle Vision completed an acquisition of UMA
Management Associates, Inc. ("UMA"), a Tampa, Florida, based company which had
an option to acquire Novadyne Corporation. UMA and Novadyne were engaged in
the environmental remediation business. Eagle Vision currently trades on the
NASD's Bulletin Board. In connection with the acquisition of UMA, Mr. Brasel
sold a total of 35,621,250 warrants to the principals of UMA at an average
price of $.00056 per warrant or a total of $20,000.
Eagle Eye Enterprises, Inc. ("Eagle Eye") closed its public offering in
August 1990, and raised a total of $200,000 in gross proceeds by selling
20,000,000 shares at $.01 per share. Eagle Eye completed a reverse
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<PAGE>
acquisition of Atlas Environmental, Inc. during November 1994, and changed its
name to Atlas Environmental, Inc. which currently trades on the NASD's
Bulletin Board. During February 1997, Atlas Environmental, Inc. filed
bankruptcy under Chapter XI of the Federal Bankruptcy laws.
Prentice Capital, Inc. ("Prentice") closed its public offering during
August 1991, and raised a total of $75,000 in gross proceeds by selling
7,500,000 units at $.01 per unit. During September 1994, Prentice completed a
reverse acquisition of Universal Footcare, Inc., a company which is engaged in
the business of acquiring and operating podiatry clinics in Florida. Prentice
currently trades on the NASD's Bulletin Board. In connection with the closing
of this transaction, Prentice issued 130,000 shares (after a 1 for 25 reverse
split) to La Mirage Trust as consideration for its agreement to not sell its
200,000 shares for one year from the closing. Tim Brasel, Susan Brasel (Tim's
sister) and Mary Jane Brasel (Tim's mother) are the three beneficiaries of
LaMirage Trust and Susan Brasel is the trustee.
Coalmont, Inc. ("Coalmont") closed its public offering during March 1991,
and raised a total of $100,000 in gross proceeds by selling 10,000 units at
$10.00 per unit. During August 1992, Coalmont completed a reverse acquisition
of Machinery Credit Corporation, a company engaged in the business of
financing manufacturing equipment and distribution systems for manufacturing
companies and distributors. On December 31, 1993, the agreement with
Machinery Credit Corporation was rescinded because the management which was
installed in August 1992 spent all of Coalmont's money and quit filing
periodic reports with the SEC. All of the shares issued in the acquisition
were returned and canceled and the original officers and directors of Coalmont
were installed. Coalmont has since changed its name to Beechport Capital
Corp. and is currently looking for an acquisition. Timothy Brasel currently
serves as a director of Beechport Capital Corp.
Universal Capital Corporation ("Universal") closed its public offering in
January 1987, and raised a total of $200,000 in gross proceeds by selling
10,000,000 shares at $.02 per share. In May 1995, Timothy J. Brasel acquired
a controlling interest (approximately 60% of the shares outstanding) in
Universal from its principal shareholders for approximately $27,000, and
became the President and sole director. During August 1997, Universal
completed a reverse acquisition of Remarc International, Inc., a company
which specialized in shipwreck research and project development. Universal
changed its name to Odyssey Marine Exploration, Inc. which currently trades on
the OTC Bulletin board. In connection with the closing of this transaction
Remarc contributed $60,000 to Universal to pay outstanding liabilities
including $12,700 of outstanding loans from Timothy J. Brasel and his
affiliates. In addition, Universal issued 500,000 shares of its common stock
to Timothy J. Brasel pursuant to a consulting agreement and 400,000 shares of
common stock to Bleu Ridge Consultants, Inc., an entity owned by Mr. Brasel,
as a finders fee for the transaction.
Capital 2000, Inc. ("Capital") closed its public offering in 1987 and
raised a total of $150,700 in gross proceeds by selling 15,070,000 shares at
$.01. Capital's name at the time of the offering was O.T.C. Capital
Corporation. In February 1996 Timothy J. Brasel acquired a controlling
interest (45% of the shares outstanding) in Capital from its principal
shareholders for $25,000 and became the President and sole director. During
February 1997 Capital completed a reverse acquisition of United Shields
Corporation ("USC") which holds the worldwide marketing rights for a
collapsible plastic drink bottle. After the closing Capital changed its name
to United Shields Capital and currently trades on the OTC Bulletin Board. In
connection with the closing of the transaction, USC contributed $50,000 to
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Capital to pay outstanding liabilities including a $13,350 loan from Brasel
Family Partners. In addition, Capital entered into a 12 month consulting
agreement with Bleu Ridge Consultants, Inc. at the rate of $3,500 per month.
Mahogany Capital, Inc. ("Mahogany") had its Form 10-SB declared effective
on November 4, 1996. During December 1997 Mahogany completed a reverse
acquisition of Pontotoc Production Company, Inc., an oil and gas exploration
and development company located in Ada, Oklahoma. After the closing Mahogany
changed its name to Pontotoc Production, Inc. This company had its common
stock approved for trading on the OTC Bulletin Board during February 1998.
Walnut Capital, Inc. ("Walnut") had its Form 10-SB declared effective on
October 22, 1996. During May 1998, Walnut completed a merger with Links Ltd.,
a company engaged in the business of marketing and sales of multimedia kiosks.
After the closing Walnut changed its name to Enter Tech Corp. This company
has applied to have its shares listed for trading on the OTC Bulletin Board,
but it has not yet been listed for trading.
Cypress Capital, Inc. ("Cypress") had its Form 10-SB declared effective
on November 16, 1996. During September 1998, Cypress completed a reverse
acquisition of Terra Telecommunications Corp., a company based in Miami,
Florida, which operates a telecommunications network of switches and leased
lines in the Caribbean, Central and South America and Mexico. After the
closing Cypress changed its name to Terra Telecommunications Corp. This
company had its common stock approved for trading on the OTC Bulletin Board
during January 1999.
High Hopes, Inc. ("High Hopes") closed is public offering in 1987 and
raised a total of $500,000 in gross proceeds by selling 25,000,000 shares at
$.02 per share. In September 1995, Timothy J. Brasel and Paul Dragul acquired
a controlling interest (60% of the shares outstanding) in High Hopes from its
principal shareholders for $28,000 and Mr. Brasel became the President and
sole director. During January 1998, High Hopes completed the acquisition of a
JAVA-based, on-line healthcare management system from Sanga e-Health LLC. As
part of this closing, High Hopes changed its name to Medtech, Inc., and during
February 1999, the name was changed to e-MedSoft.com, and it currently trades
on the OTC Bulletin Board. At the closing, the company issued 1,000,000
shares of common stock to Brasel Family Partners Ltd. as a finder's fee for
this transaction.
CONFLICTS OF INTEREST
The Company's two officers and directors have organized eight other
companies of a similar nature and with a similar purpose as the Company, and
Mr. Peirce serves as President of these companies. In addition, Mr. Brasel
serves as President and a director of one publicly-held shell company which is
in the same business as the Company. Consequently, there are potential
inherent conflicts of interest in Mr. Peirce and Mr. Brasel acting as officers
and directors of the Company. Insofar as the officers and directors are
engaged in other business activities, management anticipates it will devote
only a minor amount of time to the Company's affairs. The officers and
directors of the Company may in the future become shareholders, officers or
directors of other companies which may be formed for the purpose of engaging
in business activities similar to those conducted by the Company. The Company
does not currently have a right of first refusal pertaining to opportunities
that come to management's attention insofar as such opportunities may relate
to the Company's proposed business operations.
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The officers and directors are, so long as they are officers or directors
of the Company, subject to the restriction that all opportunities contemplated
by the Company's plan of operation which come to their attention, either in
the performance of their duties or in any other manner, will be considered
opportunities of, and be made available to the Company and the companies that
they are affiliated with on an equal basis. A breach of this requirement will
be a breach of the fiduciary duties of the officer or director. Subject to
the next paragraph, if a situation arises in which more than one company
desires to merge with or acquire that target company and the principals of the
proposed target company have no preference as to which company will merge or
acquire such target company, the company of which Mr. Brasel first became an
officer and director will be entitled to proceed with the transaction. The
one publicly-held shell company referred to in the preceding paragraph and
which was incorporated before December 1996 filed its registration statement
before the Company did and therefore it will have the first preference to
proceed with a proposed merger with a target business. As between the Company
and the eight other companies formed in December 1996, six of the companies
filed their registration statements with the Securities and Exchange
Commission before the Company and therefore they will be entitled to proceed
with the proposed transaction before the Company. Except as set forth above,
the Company has not adopted any other conflict of interest policy with respect
to such transactions.
INVESTMENT COMPANY ACT OF 1940
Although the Company will be subject to regulation under the Securities
Act of 1933 and the Securities Exchange Act of 1934, management believes the
Company will not be subject to regulation under the Investment Company Act of
1940 insofar as the Company will not be engaged in the business of investing
or trading in securities. In the event the Company engages in business
combinations which result in the Company holding passive investment interests
in a number of entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be required
to register as an investment company and could be expected to incur
significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission as to the
status of the Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act would subject the Company to material
adverse consequences.
ITEM 6. EXECUTIVE COMPENSATION.
None of the Company's officers and/or directors receive any compensation
for their respective services rendered to the Company, nor have they received
such compensation in the past. They both have agreed to act without
compensation until authorized by the Board of Directors, which is not expected
to occur until the Registrant has generated revenues from operations after
consummation of a merger or acquisition. As of the date of this registration
statement, the Company has no funds available to pay directors. Further, none
of the directors are accruing any compensation pursuant to any agreement with
the Company.
It is possible that, after the Company successfully consummates a merger
or acquisition with an unaffiliated entity, that entity may desire to employ
or retain one or more members of the Company's management for the purposes of
providing services to the surviving entity, or otherwise provide other
compensation to such persons. However, the Company has adopted a policy
whereby the offer of any post-transaction remuneration to members of
management will not be a consideration in the Company's decision to undertake
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any proposed transaction. Each member of management has agreed to disclose to
the Company's Board of Directors any discussions concerning possible
compensation to be paid to them by any entity which proposes to undertake a
transaction with the Company and further, to abstain from voting on such
transaction. Therefore, as a practical matter, if each member of the
Company's Board of Directors is offered compensation in any form from any
prospective merger or acquisition candidate, the proposed transaction will not
be approved by the Company's Board of Directors as a result of the inability
of the Board to affirmatively approve such a transaction.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for
their referral in the form of a finder's fee. It is anticipated that this fee
will be either in the form of restricted common stock issued by the Company as
part of the terms of the proposed transaction, or will be in the form of cash
consideration. However, if such compensation is in the form of cash, such
payment will be tendered by the acquisition or merger candidate, because the
Company has insufficient cash available. The amount of such finder's fee
cannot be determined as of the date of this registration statement, but is
expected to be comparable to consideration normally paid in like transactions.
No member of management of the Company will receive any finders fee, either
directly or indirectly, as a result of their respective efforts to implement
the Company's business plan outlined herein. Persons "associated" with
management is meant to refer to persons with whom management may have had
other business dealings, but who are not affiliated with or relatives of
management.
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by the Registrant for the
benefit of its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On December 10, 1996, the Company issued a total of 3,600,000 shares of
Common Stock to the following persons for a total of $50 in cash:
NAME NUMBER OF SHARES TOTAL CONSIDERATION
- --------------------------- ---------------- -------------------
Joseph J. Peirce 1,440,000 $ 20
Brasel Family Partners Ltd. 720,000 10
Nasus Lesarb, Ltd. 720,000 10
La Mirage Trust 720,000 10
On February 1, 1999, the Company issued a total of 400,000 shares of
Common Stock to the following persons for a total of $12,000 in cash:
NAME NUMBER OF SHARES TOTAL CONSIDERATION
- --------------------------- ---------------- -------------------
Mark E. Massa 100,000 $ 3,000
Karma Investment Group 100,000 3,000
Kurt Tuerkl IRA 200,000 6,000
------- -------
Total 400,000 $12,000
The Board of Directors has passed a resolution which contains a policy
that the Company will not seek an acquisition or merger with any entity in
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which any of the Company's Officers, Directors, principal shareholders or
their affiliates or associates serve as officer or director or hold any
ownership interest. Management is not aware of any circumstances under which
this policy, through their own initiative may be changed.
The proposed business activities described herein classify the Company as
a "blank check" company. Many states have enacted statutes, rules and
regulations limiting the sale of securities of "blank check" companies in
their respective jurisdictions. Management does not intend to cause a market
to develop in the Company's securities until such time as the Company has
completed an acquisition or merger.
ITEM 8. DESCRIPTION OF SECURITIES.
COMMON STOCK
The Company's Articles of Incorporation authorize the issuance of
100,000,000 shares of Common Stock, no par value. Each record holder of
Common Stock is entitled to one vote for each share held on all matters
promptly submitted to the stockholders for their vote. Cumulative voting for
the election of directors is not permitted by the Articles of Incorporation.
Holders of outstanding shares of Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors out
of legally available funds; and, in the event of liquidation, dissolution or
winding up of the affairs of the Company, holders are entitled to receive,
ratably, the net assets of the Company available to stockholders after
distribution is made to the preferred stockholders, if any, who are given
preferred rights upon liquidation. Holders of outstanding shares of Common
Stock are, and all unissued shares when offered and sold will be, duly
authorized, validly issued, fully paid, and nonassessable. To the extent that
additional shares of the Company's Common Stock are issued, the relative
interests of the existing stockholders may be diluted.
Management is not aware of any circumstances under which any additional
shares of the Company's Common or Preferred Stock would be issued to
management, promoters or their affiliates or associates.
PREFERRED STOCK
The Company's Articles of Incorporation authorize the issuance of
5,000,000 shares of Preferred Stock, no par value. The Board of Directors of
the Company is authorized to issue the Preferred Stock from time to time in
series and is further authorized to establish such series, to fix and
determine the variations in the relative rights and preferences as between
series, to fix voting rights, if any, for each series, and to allow for the
conversion of Preferred Stock into Common Stock. The issuance of Preferred
Stock may have the effect of delaying or preventing a change in control of the
Company without any further action by shareholders. At present, no Preferred
Stock is issued or outstanding or contemplated to be issued.
DIVIDENDS
No dividends have been paid by the Company on any of its securities in
the past and such dividends are not contemplated in the foreseeable future.
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PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
There is no trading market for the Registrant' s Common Stock at present
and there has been no trading market to date. Management has not undertaken
any discussions, preliminary or otherwise, with any prospective market maker
concerning the participation of such market maker in the aftermarket for the
Company's securities and management does not intend to initiate any such
discussions until such time as the Company has consummated a merger or
acquisition. There is no assurance that a trading market will ever develop
or, if such a market does develop, that it will continue.
After a merger or acquisition has been completed, one or both of the
Company's two officers and directors will most likely be the persons to
contact prospective market makers. It is also possible that persons
associated with the entity that merges with or is acquired by the Company will
contact prospective market makers. The Company does not intend to use
consultants to contact market makers.
(a) MARKET PRICE. The Registrant's Common Stock is not quoted at the
present time.
Effective August 11, 1993, the Securities and Exchange Commission adopted
Rule 15g-9, which established the definition of a "penny stock," for purposes
relevant to the Company, as any equity security that has a market price of
less than $5.00 per share or with an exercise price of less than $5.00 per
share, subject to certain exceptions. For any transaction involving a penny
stock, unless exempt, the rules require: (i) that a broker or dealer approve
a person's account for transactions in penny stocks; and (ii) the broker or
dealer receive from the investor a written agreement to the transaction,
setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person's account for transactions in penny stocks, the
broker or dealer must (i) obtain financial information and investment
experience and objectives of the person; and (ii) make a reasonable
determination that the transactions in penny stocks are suitable for that
person and that person has sufficient knowledge and experience in financial
matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating to the penny
stock market, which, in highlight form, (i) sets forth the basis on which the
broker or dealer made the suitability determination; and (ii) that the broker
or dealer received a signed, written agreement from the investor prior to the
transaction. Disclosure also has to be made about the risks of investing in
penny stocks in both public offerings and in secondary trading, and about
commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and the rights and
remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on
the limited market in penny stocks.
The National Association of Securities Dealers, Inc. (the "NASD"), which
administers NASDAQ, has recently made changes in the criteria for initial
listing on the NASDAQ Small Cap market and for continued listing. For initial
listing, a company must have net tangible assets of $4 million, market
capitalization of $50 million or net income of $750,000 in the most recently
completed fiscal year or in two of the last three fiscal years. For initial
listing, the common stock must also have a minimum bid price of $4 per share.
21
<PAGE>
<PAGE>
In order to continue to be included on NASDAQ, a company must maintain
$2,000,000 in net tangible assets and a $1,000,000 market value of its
publicly-traded securities. In addition, continued inclusion requires two
market-makers and a minimum bid price of $1.00 per share.
Management intends to strongly consider undertaking a transaction with
any merger or acquisition candidate which will allow the Company's securities
to be traded without the aforesaid limitations. However, there can be no
assurances that, upon a successful merger or acquisition, the Company will
qualify its securities for listing on NASDAQ or some other national exchange,
or be able to maintain the maintenance criteria necessary to insure continued
listing. The failure of the Company to qualify its securities or to meet the
relevant maintenance criteria after such qualification in the future may
result in the discontinuance of the inclusion of the Company's securities on a
national exchange. In such events, trading, if any, in the Company's
securities may then continue in the non-NASDAQ over-the-counter market. As a
result, a shareholder may find it more difficult to dispose of, or to obtain
accurate quotations as to the market value of, the Company's securities.
(b) HOLDERS. There are twenty-seven (27) holders of the Company's
Common Stock. In December 1996 and February 1999, the Company issued a total
of 4,000,000 of its Common Shares to seven of these persons for a total
$12,050 in cash. All of the issued and outstanding shares of the Company's
Common Stock were issued in accordance with the exemption from registration
afforded by Section 4(2) of the Securities Act of 1933. Subsequently, two of
these shareholders gifted a total of 100,000 shares to 20 persons.
(c) DIVIDENDS. The Registrant has not paid any dividends to date, and
has no plans to do so in the immediate future.
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Registrant has not changed accountants since its formation and there
are no disagreements with the findings of said accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Registrant has sold securities which
were not registered as follows:
NUMBER OF
DATE NAME SHARES CONSIDERATION
- ----------------- ------------------------ --------- -------------
December 10, 1996 Joseph J. Peirce 1,440,000 $ 20.00
December 10, 1996 Brasel Family Partners,
Ltd. 720,000 $ 10.00
December 10, 1996 Nasus Lesarb, Ltd. 720,000 $ 10.00
December 10, 1996 La Mirage Trust 720,000 $ 10.00
February 1, 1999 Mark E. Massa 100,000 $ 3,000.00
February 1, 1999 Karma Investment Corp. 100,000 $ 3,000.00
February 1, 1999 Kurt Tuerkl IRA 200,000 $ 6,000.00
--------- ----------
Total 4,000,000 $12,050.00
22
<PAGE>
<PAGE>
With respect to the sales made, the Registrant relied on Section 4(2) of
the Securities Act of 1933, as amended. No advertising or general
solicitation was employed in offering the shares. The securities were offered
for investment only and not for the purpose of resale or distribution, and the
transfer thereof was appropriately restricted. With the exception of Nasus
Lesarb, Ltd., Mark E. Massa and Karma Investment Corp., all of the above
investors were accredited investors. Nasus Lesarb, Ltd., Mark E. Massa and
Karma Investment Corp. are all sophisticated investors and they had access to
information on the Company necessary to make an informal investment decision.
Any liquidation by the current shareholders may have a depressive effect
upon the trading price of the Company's securities in any future market which
may develop.
In general, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period, under certain
circumstances, may sell within any three-month period a number of shares which
does not exceed the greater of one percent of the then outstanding Common
Stock or the average weekly trading volume during the four calendar weeks
prior to such sale. Rule 144 also permits, under certain circumstances, the
sale of shares without any quantity limitation by a person who has satisfied a
two-year holding period and who is not, and has not been for the preceding
three months, an affiliate of the Company.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The only statute, charter provision, bylaw, contract, or other
arrangement under which any controlling person, Director or Officer of the
Registrant is insured or indemnified in any manner against any liability which
he may incur in his capacity as such, is as follows:
(a) The Company has the power under the Colorado Business Corporation
Act to indemnify any person who was or is a party or is threatened to be made
a party to any action, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a Director,
Officer, employee, fiduciary, or agent of the Company or was serving at its
request in a similar capacity for another entity, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection therewith if he acted in good faith
and in a manner he reasonably believed to be in the best interest of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. In case of an action
brought by or in the right of the Company such persons are similarly entitled
to indemnification if they acted in good faith and in a manner reasonably
believed to be in the best interests of the Company but no indemnification
shall be made if such person was adjudged to be liable to the Company for
negligence or misconduct in the performance of his duty to the Company unless
and to the extent the court in which such action or suit was brought
determines upon application that despite the adjudication of liability, in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnification. In such event, indemnification is limited to
reasonable expenses. Such indemnification is not deemed exclusive of any
other rights to which those indemnified may be entitled under the Articles of
Incorporation, Bylaws, agreement, vote of shareholders or disinterested
directors, or otherwise.
(b) Article V of the Registrant's Articles of Incorporation provides in
general that the Registrant is authorized to indemnify its Officers and
23
<PAGE>
<PAGE>
Directors to the fullest extent permitted by the Colorado Business Corporation
Act as in effect at the time of the conduct by such persons.
PART F/S
FINANCIAL STATEMENTS.
Attached are audited financial statements for the Company for the period
ended December 31, 1997. The following financial statements are attached to
this report and filed as a part thereof. See pages F-1 through F-8.
1) Table of Contents - Financial Statements
2) Report of Independent Certified Public Accountants
3) Balance Sheet
4) Statement of Operations
5) Statement of Changes in Stockholders' Equity
6) Statement of Cash Flows
7) Notes to Financial Statements
PART IV
ITEM 1. EXHIBIT INDEX.
EXHIBIT
NUMBER DESCRIPTION LOCATION
- ------- ------------------------------ ----------------------------
(2) Articles of Incorporation
and Bylaws:
2.1 Articles of Incorporation Filed electronically herewith
2.2 Bylaws Filed electronically herewith
(3) Instruments Defining the
Rights of Holders:
(10)(a) Consents - Experts:
10.1 Consent of Schumacher & Filed electronically herewith
Associates, Inc.
27 Financial Data Schedule Filed herewith electronically
24
<PAGE>
<PAGE>
INDEX TO FINANCIAL STATEMENTS
MERCURY CAPITAL CORP.
(A Development Stage Company)
FINANCIAL STATEMENTS
with
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Page
Report of Independent Certified Public Accountants ............... F-2
Financial Statements:
Balance Sheet .................................................. F-3
Statements of Operations ....................................... F-4
Statement of Changes in Stockholders' Equity .................. F-5
Statements of Cash Flows ....................................... F-6
Notes to Financial Statements .................................. F-7
F-1
<PAGE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Mercury Capital Corp.
Greenwood Village, CO
We have audited the accompanying balance sheet of Mercury Capital Corp. (a
development-stage company) as of December 31, 1998, and the related statements
of operations, stockholders' equity and cash flows for the period from
December 5, 1996 (date of inception) through December 31, 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 audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements, referred to above, present fairly,
in all material respects, the financial position of MERCURY CAPITAL CORP. (a
development-stage company) as of December 31, 1998, and the results of its
operations, changes in its stockholders' equity and its cash flows for the
period from December 5, 1996 (date of inception) through December 31, 1998 in
conformity with generally accepted accounting principles.
/s/ Schumacher & Associates, Inc.
Schumacher & Associates, Inc.
Certified Public Accountants
12835 E. Arapahoe Road
Tower II, Suite 110
Englewood, CO 80112
February 28, 1999
F-2
<PAGE>
<PAGE>
MERCURY CAPITAL CORP.
(A Development Stage Company)
BALANCE SHEET
December 31, 1998
ASSETS
Current Assets: $ -
-----------
Total Current Assets -
Organization costs, net of accumulated amortization 30
-----------
TOTAL ASSETS $ 30
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities: $ -
-----------
TOTAL LIABILITIES -
-----------
Stockholders' Equity:
Preferred stock, no par value 5,000,000 shares
authorized, none issued and outstanding -
Common stock, no par value 100,000,000 shares
authorized, 3,600,000 issued and outstanding 50
Additional Paid In Capital 7,200
Accumulated (Deficit) (7,220)
-----------
TOTAL STOCKHOLDERS' EQUITY 30
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 30
===========
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
<PAGE>
MERCURY CAPITAL CORP.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For the For the
Period from Period from
December 5, December 5,
1996 (in- For the 1996 (in-
ception) to year ended ception) to
December 31, December 31, December 31,
1997 1998 1998
------------ ------------ ------------
Revenue $ - $ - $ -
------------ ------------ ------------
Expenses:
Amortization 10 10 20
Professional fees 2,400 2,400 4,800
Rent 1,200 1,200 2,400
------------ ------------ ------------
3,610 3,610 7,220
Net (Loss) $ (3,610) $ (3,610) $ (7,220)
------------ ------------ ------------
Per Share $ - $ - $ -
============ ============ ============
Weighted Average Shares
Outstanding 3,600,000 3,600,000 3,600,000
============ ============ ============
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
<PAGE>
MERCURY CAPITAL CORP.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from December 5, 1996 (date of inception) through
December 31, 1998
<TABLE>
<CAPTION>
Additional
Preferred Stock Common Stock Paid-in Accumulated
No./Shares Amount No./Shares Amount Capital (Deficit) Total
---------- ------ ---------- ------ ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 5,
1996 - $ - - $ - $ - $ - $ -
Common Stock issued
for cash, at inception,
at $.00003 per share - - 3,600,000 50 - - 50
--- ---- --------- --- ------ -------- --------
Balance at December 31,
1996 - - 3,600,000 50 - - 50
Additional paid-in
capital - - - - 3,600 - 3,600
Net loss for the year
ended December 31, 1997 - - - - - (3,610) (3,610)
--- ---- --------- --- ------ -------- --------
Balance at December 31,
1997 - - 3,600,000 50 3,600 (3,610) 40
Additional paid-in
capital - - - - 3,600 - 3,600
Net loss-year ended
December 31, 1998 - - - - - (3,610) (3,610)
--- ---- --------- --- ------ -------- --------
Balance at December 31,
1998 - $ - 3,600,000 $50 $7,200 $(7,220) $ 30
=== ==== ========= === ====== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
<PAGE>
MERCURY CAPITAL CORP.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the For the
Period from Period from
December 5, December 5,
1996 (in- For the 1996 (in-
ception) to year ended ception) to
December 31, December 31, December 31,
1997 1998 1998
------------ ------------ ------------
Operating Activities:
Net (Loss) $ (3,610) $ (3,610) $ (7,220)
Adjustment to reconcile
net (loss) to net cash
provided by operating
activities:
Amortization 10 10 20
------------ ------------ ------------
Net Cash (Used in)
Operating Activities (3,600) (3,600) (7,200)
------------ ------------ ------------
Cash Flows from
Investing Activities - - -
------------ ------------ ------------
Cash Flows from
Financing Activities:
Organization costs (50) - (50)
Issuance of stock 50 - 50
Additional paid-in
capital 3,600 3,600 7,200
------------ ------------ ------------
Net Cash Provided by
Financing Activities 3,600 3,600 7,200
------------ ------------ ------------
Increase in Cash - - -
Cash, Beginning of
Period - - -
------------ ------------ ------------
Cash, End of Period $ - $ - $ -
============ ============ ============
Interest Paid $ - $ - $ -
============ ============ ============
Income Taxes Paid $ - $ - $ -
============ ============ ============
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
<PAGE>
MERCURY CAPITAL CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
(1) SUMMARY OF ACCOUNTING POLICIES
This summary of significant accounting policies of Mercury Capital Corp.
(Company) is presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of the
Company's management who is responsible for their integrity and objectivity.
These accounting policies conform to generally accepted accounting principles
and have been consistently applied in the preparation of the financial
statements.
(a) DESCRIPTION OF BUSINESS
The Company was organized on December 5, 1996 for the purpose of engaging
in any lawful business but it is management's plan to seek a business
combination. The Company is a development-stage company since planned
principal operations have not commenced. The Company has selected December 31
as its year end.
(b) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
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 revenue and expenses during the
reporting period. Actual results could differ from those estimates.
(c) ORGANIZATION COSTS
Costs incurred to organize the Company are being amortized on a straight-
line basis over a sixty month period.
(2) COMMON STOCK ISSUED
During the period ended December 31, 1996 the Company issued 3,600,000
restricted shares of common stock for $50 cash.
(3) RELATED PARTY TRANSACTION
The Company uses the office of a shareholder at no cost. The Company expects
this arrangement to continue until the Company commences planned operations.
The Company has considered the value of this office facility to be $100 per
month and has accounted for this amount as additional paid-in capital. In
addition, two officers of the Company provided services at no cost to the
Company. The value of these services was determined to be $100 per month per
officer which has been accounted for as additional paid-in capital.
(4) SUBSEQUENT EVENTS
Effective February 1, 1999, the Company issued 400,000 restricted shares of
common stock for $12,000.
F-7
<PAGE>
<PAGE>
The Company has agreed to pay $7,500 for registration of the Company with the
Securities and Exchange Commission and $500 for organizational expenses of the
Company. Of this amount, $4,000 was paid in February 1999, $2,000 is payable
when the document is filed, and the balance of $2,000 is payable upon approval
of the registration statement.
F-8
<PAGE>
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant caused this Registration Statement to be signed on its behalf by
the undersigned thereunto duly authorized.
MERCURY CAPITAL CORP.
Date: March 9, 1999 By:/s/ J. J. Peirce
J. J. Peirce, President and Director
Date: March 9, 1999 By:/s/ Timothy J. Brasel
Timothy J. Brasel, Secretary,
Treasurer and Director
ARTICLES OF INCORPORATION
OF
MERCURY CAPITAL CORP.
KNOW ALL MEN BY THESE PRESENTS: That the undersigned incorporator, being
a natural person of the age of eighteen years or more, and acting as
incorporator of this corporation under the Colorado Business Corporation Act,
does hereby adopt these Articles of Incorporation:
ARTICLE I
NAME
The name of the Corporation shall be: Mercury Capital Corp.
ARTICLE II
PRINCIPAL STREET ADDRESS
The principal street address of the Corporation shall be: 16178 East
Prentice Place, Aurora, Colorado 80015.
ARTICLE III
PERIOD OF DURATION
The Corporation shall exist in perpetuity, from and after the date of
filing these Articles of Incorporation with the Secretary of State of the
State of Colorado unless dissolved according to law.
ARTICLE IV
CAPITAL STOCK
The aggregate number of shares which this Corporation shall have
authority to issue is One Hundred Million (100,000,000) shares of no par value
each, which shares shall be designated "Common Stock"; and Five Million
(5,000,000) shares of no par value each, which shares shall be designated
"Preferred Stock" and which may be issued in one or more series at the
discretion of the Board of Directors. In establishing a series the Board of
Directors shall give to it a distinctive designation so as to distinguish it
from the shares of all other series and classes, shall fix the number of
shares in such series, and the preferences, rights and restrictions thereof.
All shares of any one series shall be alike in every particular except as
otherwise provided by these Articles of Incorporation or the Colorado Corpora
tion Code.
1. Dividends. Dividends in cash, property or shares shall be paid upon
the Preferred Stock for any year on a cumulative or noncumulative basis as
determined by a resolution of the Board of Directors prior to the issuance of
such Preferred Stock, to the extent earned surplus for each such year is
available, in an amount as determined by a resolution of the Board of
Directors. Such Preferred Stock dividends shall be paid pro rata to holders
of Preferred Stock in any amount not less than nor more than the rate as
determined by a resolution of the Board of Directors prior to the issuance of
such Preferred Stock. No other dividend shall be paid on the Preferred Stock.
<PAGE>
<PAGE>
Dividends in cash, property or shares of the Corporation may be paid upon
the Common Stock, as and when declared by the Board of Directors, out of funds
of the Corporation to the extent and in the manner permitted by law, except
that no Common Stock dividend shall be paid for any year unless the holders of
Preferred Stock, if any, shall receive the maximum allowable Preferred Stock
dividend for such year.
2. Distribution in Liquidation. Upon any liquidation, dissolution or
winding up of the Corporation, and after paying or adequately providing for
the payment of all its obligations, the remainder of the assets of the
Corporation shall be distributed, either in cash or in kind, first pro rata to
the holders of the Preferred Stock until an amount to be determined by a
resolution of the Board of Directors prior to issuance of such Preferred
Stock, has been distributed per share, and, then, the remainder pro rata to
the holders of the Common Stock.
3. Redemption. The Preferred Stock may be redeemed in whole or in part
as determined by a resolution of the Board of Directors prior to the issuance
of such Preferred Stock, upon prior notice to the holders of record of the
Preferred Stock, published, mailed and given in such manner and form and on
such other terms and conditions as may be prescribed by the Bylaws or by
resolution of the Board of Directors, by payment in cash or Common Stock for
each share of the Preferred Stock to be redeemed, as determined by a resolu
tion of the Board of Directors prior to the issuance of such Preferred Stock.
Common Stock used to redeem Preferred Stock shall be valued as determined by a
resolution of the Board of Directors prior to the issuance of such Preferred
Stock. Any rights to or arising from fractional shares shall be treated as
rights to or arising from one share. No such purchase or retirement shall be
made if the capital of the Corporation would be impaired thereby.
If less than all the outstanding shares are to be redeemed, such
redemption may be made by lot or pro rata as may be prescribed by resolution
of the Board of Directors; provided, however, that the Board of Directors may
alternatively invite from shareholders offers to the Corporation of Preferred
Stock at less than an amount to be determined by a resolution of the Board of
Directors prior to issuance of such Preferred Stock, and when such offers are
invited, the Board of Directors shall then be required to buy at the lowest
price or prices offered, up to the amount to be purchased.
From and after the date fixed in any such notice as the date of
redemption (unless default shall be made by the Corporation in the payment of
the redemption price), all dividends on the Preferred Stock thereby called for
redemption shall cease to accrue and all rights of the holders thereof as
stockholders of the Corporation, except the right to receive the redemption
price, shall cease and terminate.
Any purchase by the Corporation of the shares of its Preferred Stock
shall not be made at prices in excess of said redemption price.
4. Voting Rights; Cumulative Voting. Each outstanding share of Common
Stock shall be entitled to one vote and each fractional share of Common Stock
shall be entitled to a corresponding fractional vote on each matter submitted
to a vote of shareholders. A majority of the shares of Common Stock entitled
to vote, represented in person or by proxy, shall constitute a quorum at a
meeting of shareholders. Except as otherwise provided by these Articles of
Incorporation or the Colorado Corporation Code, if a quorum is present, the
affirmative vote of a majority of the shares represented at the meeting and
entitled to vote on the subject matter shall be the act of the shareholders.
When, with respect to any action to be taken by shareholders of this Corpora
tion, the laws of Colorado require the vote or concurrence of the holders of
two-thirds of the outstanding shares, of the shares entitled to vote thereon,
2
<PAGE>
<PAGE>
or of any class or series, such action may be taken by the vote or concurrence
of a majority of such shares or class or series thereof. Cumulative voting
shall not be allowed in the election of directors of this Corporation.
Shares of Preferred Stock shall only be entitled to such vote as is
determined by the Board of Directors prior to the issuance of such stock,
except as required by law, in which case each share of Preferred Stock shall
be entitled to one vote.
5. Preemptive Rights. The holders of shares of common stock of the
Corporation shall be entitled to and shall have preemptive rights or
preferential rights to subscribe to any additional unissued stock or any other
securities which the Corporation may offer as now or hereafter may be
authorized for issuance. The Board of Directors, however, may issue stock
options to directors, officers, or employees in accordance with applicable
law, without first offering such options or the underlying shares to stock
holders of the Corporation; and no stockholder shall have any preemptive right
in, or preemptive right to subscribe to, any such options or the underlyng
shares issued pursuant to such options.
6. Conversion Rights. Holders of shares of Preferred Stock may be
granted the right to convert such Preferred Stock to Common Stock of the Cor
poration on such terms as may be determined by the Board of Directors prior to
issuance of such Preferred Stock.
ARTICLE V
INDEMNIFICATION
The Corporation may indemnify any director, officer, employee, fiduciary,
or agent of the Corporation to the full extent permitted by the Colorado
Business Corporation Act as in effect at the time of the conduct by such
person.
ARTICLE VI
AMENDMENTS
The Corporation reserves the right to amend its Articles of Incorporation
from time to time in accordance with the Colorado Business Corporation Act.
ARTICLE VII
ADOPTION OF BYLAWS
The initial Bylaws of the Corporation shall be adopted by its board of
directors. The Bylaws may contain any provisions for the regulation and
management of the affairs of the Corporation not inconsistent with law or
these Articles of Incorporation.
ARTICLE VIII
INITIAL BOARD OF DIRECTORS
The number of directors of the Corporation shall be fixed by the Bylaws
of the Corporation. The initial board of directors of the Corporation shall
consist of one (1) director. The name and address of the person who shall
serve as director until the first annual meeting of shareholders and unti his
successor is elected and shall qualify are:
Timothy J. Brasel 16178 East Prentice Place
Aurora, Colorado 80015
3
<PAGE>
<PAGE>
ARTICLE IX
LIMITATION OF LIABILITY OF
DIRECTORS TO CORPORATIONS AND SHAREHOLDERS
No director shall be liable to the Corporation or any shareholder for
monetary damages for breach of fiduciary duty as a director, except for any
matter in respect of which such director (a) shall be liable under C.R.S.
Section 7-108-403 or any amendment thereto or successor provision thereto; (b)
shall have breached the director's duty of loyalty to the Corporation or its
shareholders; (c) shall have not acted in good faith or, in failing to act,
shall not have acted in good faith; (d) shall have acted or failed to act in a
manner involving intentional misconduct or a knowing violation of law; or (e)
shall have derived an improper personal benefit. Neither the amendment nor
repeal of this Article, nor the adoption of any provision in the Articles of
Incorporation inconsistent with this Article, shall eliminate or reduce the
effect of this Article in respect of any matter occurring prior to such
amendment, repeal or adoption of an inconsistent provision. This Article
shall apply to the full extent now permitted by Colorado law or as may be
permitted in the future by changes or enactments in Colorado law, including
without limitation C.R.S. Section 7-102-102 and/or C.R.S. Section 7-103-102.
ARTICLE X
REGISTERED OFFICE AND REGISTERED AGENT
The address of the initial registered office of the Corporation is 16178
East Prentice Place, Aurora, Colorado 80015, and the name of the initial
registered agent at such address is Timothy J. Brasel. Further the regis
tered office or the registered agent may be changed in the manner permitted by
law. The undersigned consents to his appointment as registered agent of the
Corporation.
Dated: December 5, 1996 /s/ Timothy J. Brasel
Timothy J. Brasel
ARTICLE XI
INCORPORATOR
The name and address of the incorporator is Jon D. Sawyer, 600 17th
Street, Suite 2700, Denver, Colorado 80202.
Dated: December 5, 1996 /s/ Jon D. Sawyer
Jon D. Sawyer, Incorporator
4
BYLAWS
OF
MERCURY CAPITAL CORP.
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - OFFICES. . . . . . . . . . . . . . . . . . . . . . .4
1.1 Business Office . . . . . . . . . . . . . . . . . . .4
1.2 Registered Office. . . . . . . . . . . . . . . . . . .4
ARTICLE II - SHARES AND TRANSFER THEREOF . . . . . . . . . . . .4
2.1 Regulation . . . . . . . . . . . . . . . . . . . . . .4
2.2 Certificates for Shares. . . . . . . . . . . . . . . .4
2.3 Cancellation of Certificates . . . . . . . . . . . . .4
2.4 Lost, Stolen or Destroyed Certificates . . . . . . . .4
2.5 Transfer of Shares . . . . . . . . . . . . . . . . . .4
2.6 Transfer Agent . . . . . . . . . . . . . . . . . . . .5
2.7 Close of Transfer Book and Record Date . . . . . . . .5
ARTICLE III - SHAREHOLDERS AND MEETINGS THEREOF. . . . . . . . .5
3.1 Shareholders of Record . . . . . . . . . . . . . . . .5
3.2 Meetings . . . . . . . . . . . . . . . . . . . . . . .5
3.3 Annual Meetings. . . . . . . . . . . . . . . . . . . .5
3.4 Special Meetings . . . . . . . . . . . . . . . . . . .5
3.5 Notice . . . . . . . . . . . . . . . . . . . . . . . .6
3.6 Meeting of all Shareholders. . . . . . . . . . . . . .6
3.7 Voting Record. . . . . . . . . . . . . . . . . . . . .6
3.8 Quorum . . . . . . . . . . . . . . . . . . . . . . . .6
3.9 Manner of Acting . . . . . . . . . . . . . . . . . . .6
3.10 Proxies. . . . . . . . . . . . . . . . . . . . . . . .7
3.11 Voting of Shares . . . . . . . . . . . . . . . . . . .7
3.12 Voting of Shares by Certain Holders. . . . . . . . . .7
3.13 Informal Action by Shareholders. . . . . . . . . . . .7
3.14 Voting by Ballot . . . . . . . . . . . . . . . . . . .7
3.15 Cumulative Voting. . . . . . . . . . . . . . . . . . .7
ARTICLE IV - DIRECTORS, POWERS AND MEETINGS. . . . . . . . . . .7
4.1 Board of Directors . . . . . . . . . . . . . . . . . .7
4.2 Regular Meetings . . . . . . . . . . . . . . . . . . .7
4.3 Special Meetings . . . . . . . . . . . . . . . . . . .8
4.4 Notice . . . . . . . . . . . . . . . . . . . . . . . .8
4.5 Participation by Electronic Means. . . . . . . . . . .8
4.6 Quorum and Manner of Acting. . . . . . . . . . . . . .8
4.7 Organization . . . . . . . . . . . . . . . . . . . . .8
4.8 Presumption of Assent. . . . . . . . . . . . . . . . .8
4.9 Informal Action by Directors . . . . . . . . . . . . .8
4.10 Vacancies. . . . . . . . . . . . . . . . . . . . . . .8
4.11 Compensation . . . . . . . . . . . . . . . . . . . . .9
4.12 Removal of Directors . . . . . . . . . . . . . . . . .9
4.13 Resignations . . . . . . . . . . . . . . . . . . . . .9
4.14 General Powers . . . . . . . . . . . . . . . . . . . .9
ARTICLE V - OFFICERS . . . . . . . . . . . . . . . . . . . . . .9
5.1 Term and Compensation. . . . . . . . . . . . . . . . .9
5.2 Powers . . . . . . . . . . . . . . . . . . . . . . . .9
5.3 Compensation . . . . . . . . . . . . . . . . . . . . 10
5.4 Delegation of Duties . . . . . . . . . . . . . . . . 10
5.5 Bonds. . . . . . . . . . . . . . . . . . . . . . . . 10
5.6 Removal. . . . . . . . . . . . . . . . . . . . . . . 10
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ARTICLE VI - FINANCE . . . . . . . . . . . . . . . . . . . . . 10
6.1 Reserve . . . . . . . . . . . . . . . . . . . . . . 10
6.2 Banking. . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VII - DIVIDENDS. . . . . . . . . . . . . . . . . . . . 11
ARTICLE VIII - CONTRACTS, LOANS AND CHECKS . . . . . . . . . . 11
8.1 Execution of Contracts . . . . . . . . . . . . . . . 11
8.2 Loans. . . . . . . . . . . . . . . . . . . . . . . . 11
8.3 Checks . . . . . . . . . . . . . . . . . . . . . . . 11
8.4 Deposits . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IX - FISCAL YEAR . . . . . . . . . . . . . . . . . . . 11
ARTICLE X - CORPORATE SEAL . . . . . . . . . . . . . . . . . . 11
ARTICLE XI - AMENDMENTS. . . . . . . . . . . . . . . . . . . . 11
ARTICLE XII - EXECUTIVE COMMITTEE. . . . . . . . . . . . . . . 11
12.1 Appointment. . . . . . . . . . . . . . . . . . . . . 11
12.2 Authority. . . . . . . . . . . . . . . . . . . . . . 12
12.3 Tenure and Qualifications. . . . . . . . . . . . . . 12
12.4 Meetings . . . . . . . . . . . . . . . . . . . . . . 12
12.5 Quorum . . . . . . . . . . . . . . . . . . . . . . . 12
12.6 Informal Action by Executive Committee . . . . . . . 12
12.7 Vacancies. . . . . . . . . . . . . . . . . . . . . . 12
12.8 Resignations and Removal . . . . . . . . . . . . . . 12
12.9 Procedure. . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE XIII - EMERGENCY BYLAWS. . . . . . . . . . . . . . . . 12
CERTIFICATE. . . . . . . . . . . . . . . . . . . . . . . . . . 13
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ARTICLE I
OFFICES
1.1 Business Office. The principal office and place of business of the
corporation shall be at 5770 South Beech Court, Greenwood Village, Colorado
80121. Other offices and places of business may be established from time to
time by resolution of the Board of Directors or as the business of the
corporation may require.
1.2 Registered Office. The registered office of the corporation,
required by the Colorado Business Corporation Act to be maintained in the
State of Colorado, may be, but need not be, identical with the principal
office in the State of Colorado, and the address of the registered office may
be changed from time to time by the Board of Directors.
ARTICLE II
SHARES AND TRANSFER THEREOF
2.1 Regulation. The Board of Directors may make such rules and
regulations as it may deem appropriate concerning the issuance, transfer and
registration of certificates for shares of the corporation, including the
appointment of transfer agents and registrars.
2.2 Certificates for Shares. Certificates representing shares of the
corporation shall be respectively numbered serially for each class of shares,
or series thereof, as they are issued, shall be impressed with the corporate
seal or a facsimile thereof, and shall be signed by the Chairman or Vice
Chairman of the Board of Directors or by the President or a Vice-President and
by the Treasurer or an Assistant Treasurer or by the Secretary or an Assistant
Secretary; provided that any or all of the signatures may be facsimiles if the
certificate is countersigned by a transfer agent, or registered by a
registrar, other than the corporation itself or its employee. Each
certificate shall state the name of the corporation, the fact that the
corporation is organized or incorporated under the laws of the State of
Colorado, the name of the person to whom issued, the date of issue, the class
(or series of any class), the number of shares represented thereby and the par
value of the shares represented thereby or a statement that such shares are
without par value. A statement of the designations, preferences,
qualifications, limitations, restrictions and special or relative rights of
the shares of each class shall be set forth in full or summarized on the face
or back of the certificates which the corporation shall issue, or in lieu
thereof, the certificate may set forth that such a statement or summary will
be furnished to any shareholder upon request without charge. Each certificate
shall be otherwise in such form as may be prescribed by the Board of Directors
and as shall conform to the rules of any stock exchange on which the shares
may be listed. The corporation shall not issue certificates representing
fractional shares and shall not be obligated to make any transfers creating a
fractional interest in a share of stock. The corporation may issue scrip in
lieu of any fractional shares, such scrip to have terms and conditions
specified by the Board of Directors.
2.3 Cancellation of Certificates. All certificates surrendered to the
corporation for transfer shall be cancelled and no new certificates shall be
issued in lieu thereof until the former certificate for a like number of
shares shall have been surrendered and cancelled, except as herein provided
with respect to lost, stolen or destroyed certificates.
2.4 Lost, Stolen or Destroyed Certificates. Any shareholder claiming
that his certificate for shares is lost, stolen or destroyed may make an
affidavit or affirmation of the fact and lodge the same with the Secretary of
the corporation, accompanied by a signed application for a new certificate.
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Thereupon, and upon the giving of a satisfactory bond of indemnity to the
corporation not exceeding an amount double the value of the shares as
represented by such certificate (the necessity for such bond and the amount
required to be determined by the President and Treasurer of the corporation),
a new certificate may be issued of the same tenor and representing the same
number, class and series of shares as were represented by the certificate al-
leged to be lost, stolen or destroyed.
2.5 Transfer of Shares. Subject to the terms of any shareholder
agreement relating to the transfer of shares or other transfer restrictions
contained in the Articles of Incorporation or authorized therein, shares of
the corporation shall be transferable on the books of the corporation by the
holder thereof in person or by his duly authorized attorney, upon the
surrender and cancellation of a certificate or certificates for a like number
of shares. Upon presentation and surrender of a certificate for shares
properly endorsed and payment of all taxes therefor, the transferee shall be
entitled to a new certificate or certificates in lieu thereof. As against the
corporation, a transfer of shares can be made only on the books of the
corporation and in the manner hereinabove provided, and the corporation shall
be entitled to treat the holder of record of any share as the owner thereof
and shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person, whether or not it
shall have express or other notice thereof, save as expressly provided by the
statutes of the State of Colorado.
2.6 Transfer Agent. Unless otherwise specified by the Board of
Directors by resolution, the Secretary of the corporation shall act as
transfer agent of the certificates representing the shares of stock of the
corporation. He shall maintain a stock transfer book, the stubs in which
shall set forth among other things, the names and addresses of the holders of
all issued shares of the corporation, the number of shares held by each, the
certificate numbers representing such shares, the date of issue of the
certificates representing such shares, and whether or not such shares
originate from original issue or from transfer. Subject to Section 3.7, the
names and addresses of the shareholders as they appear on the stubs of the
stock transfer book shall be conclusive evidence as to who are the
shareholders of record and as such entitled to receive notice of the meetings
of shareholders; to vote at such meetings; to examine the list of the
shareholders entitled to vote at meetings; to receive dividends; and to own,
enjoy and exercise any other property or rights deriving from such shares
against the corporation. Each shareholder shall be responsible for notifying
the Secretary in writing of any change in his name or address and failure so
to do will relieve the corporation, its directors, officers and agents, from
liability for failure to direct notices or other documents, or pay over or
transfer dividends or other property or rights, to a name or address other
than the name and address appearing on the stub of the stock transfer book.
2.7 Close of Transfer Book and Record Date. For the purpose of
determining shareholders entitled to notice of or to vote at any meeting of
shareholders, or any adjournment thereof, or entitled to receive payment of
any dividend, or in order to make a determination of shareholders for any
other proper purpose, the Board of Directors may provide that the stock
transfer books shall be closed for a stated period, but not to exceed, in any
case, fifty days. If the stock transfer books shall be closed for the purpose
of determining shareholders entitled to notice of, or to vote at a meeting of
shareholders, such books shall be closed for at least ten days immediately
preceding such meeting. In lieu of closing the stock transfer books, the
Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than fifty
days and, in case of a meeting of shareholders, not less than ten days prior
to the date on which the particular action requiring such determination of
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shareholders is to be taken. If the stock transfer books are not closed and
no record date is fixed for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders, or shareholders entitled to
receive payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors declaring
such dividend is adopted, as the case may be, shall be the record date for
such determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof.
ARTICLE III
SHAREHOLDERS AND MEETINGS THEREOF
3.1 Shareholders of Record. Only shareholders of record on the books of
the corporation shall be entitled to be treated by the corporation as holders
in fact of the shares standing in their respective names, and the corporation
shall not be bound to recognize any equitable or other claim to, or interest
in, any shares on the part of any other person, firm or corporation, whether
or not it shall have express or other notice thereof, except as expressly
provided by the laws of Colorado.
3.2 Meetings. Meetings of shareholders shall be held at the principal
office of the corporation, or at such other place as specified from time to
time by the Board of Directors. If the Board of Directors shall specify
another location such change in location shall be recorded on the notice
calling such meeting.
3.3 Annual Meeting. In the absence of a resolution of the Board of
Directors providing otherwise, the annual meeting of shareholders of the
corporation for the election of directors, and for the transaction of such
other business as may properly come before the meeting, shall be held at such
time as may be determined by Board of Directors by resolution in conformance
with Colorado law. If the election of Directors shall not be held on the day
so designated for any annual meeting of the shareholders, the Board of
Directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as may be convenient.
3.4 Special Meetings. Special meetings of shareholders, for any purpose
or purposes, unless otherwise prescribed by statute, may be called by the
President, the Board of Directors, the holders of not less than one-tenth of
all the shares entitled to vote at the meeting, or legal counsel of the
corporation as last designated by resolution of the Board of Directors.
3.5 Notice. Written notice stating the place, day and hour of the
meeting and, in case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered unless otherwise prescribed by
statute not less than ten days nor more than sixty days before the date of the
meeting, either personally or by mail, by or at the direction of the
President, the Secretary, or the officer or person calling the meeting to each
shareholder of record entitled to vote at such meeting; except that, if the
authorized shares are to be increased, at least thirty days' notice shall be
given. Notice to shareholders of record, if mailed, shall be deemed given as
to any shareholder of record, when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock
transfer books of the corporation, with postage thereon prepaid, but if three
successive letters mailed to the last-known address of any shareholder of
record are returned as undeliverable, no further notices to such shareholder
shall be necessary, until another address for such shareholder is made known
to the corporation.
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3.6 Meeting of All Shareholders. If all of the shareholders shall meet
at any time and place, either within or without the State of Colorado, and
consent to the holding of a meeting at such time and place, such meeting shall
be valid without call or notice, and at such meeting any corporate action may
be taken.
3.7 Voting Record. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make, at least ten days
before such meeting of shareholders, a complete record of the shareholders
entitled to vote at each meeting of shareholders or any adjournment thereof,
arranged in alphabetical order, with the address and the number of shares held
by each. The record, for a period of ten days prior to such meeting, shall be
kept on file either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held, whether within or
without the State of Colorado, and shall be subject to inspection by any
share- holder for any purpose germane to the meeting at any time during usual
business hours. Such record shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
for any purpose germane to the meeting during the whole time of the meeting
for the purposes thereof. The original stock transfer books shall be the
prima facie evidence as to who are the shareholders entitled to examine the
record or transfer books or to vote at any meeting of shareholders.
3.8 Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at any meeting of shareholders, except as otherwise provided by the Colorado
Business Corporation Act and the Articles of Incorporation. In the absence of
a quorum at any such meeting, a majority of the shares so represented may
adjourn the meeting from time to time for a period not to exceed sixty days
without further notice. At such adjourned meeting at which a quorum shall be
presentor represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The shareholders present at
a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
3.9 Manner of Acting. If a quorum is present, the affirmative vote of
the majority of the shares represented at the meeting and entitled to vote on
the subject matter shall be the act of the shareholders, unless the vote of a
greater proportion or number or voting by classes is otherwise required by
statute or by the Articles of Incorporation or these Bylaws.
3.10 Proxies. At all meetings of shareholders a shareholder may vote in
person or by proxy executed in writing by the shareholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the Secretary of
the corporation before or at the time of the meeting. No proxy shall be valid
after three years from the date of its execution, unless otherwise provided in
the proxy.
3.11 Voting of Shares. Unless otherwise provided by these Bylaws or the
Articles of Incorporation, each outstanding share entitled to vote shall be
entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders, and each fractional share shall be entitled to a corresponding
fractional vote on each such matter.
3.12 Voting of Shares by Certain Holders. Shares standing in the name of
another corporation may be voted by such officer, agent or proxy as the bylaws
of such corporation may prescribe, or, in the absence of such provision, as
the Board of Directors of such other corporation may determine. Shares
standing in the name of a deceased person, a minor ward or an incompetent
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person, may be voted by his administrator, executor, court appointed guardian
or conservator, either in person or by proxy without a transfer of such shares
into the name of such administrator, executor, court appointed guardian or
conservator. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name. Shares standing
in the name of a receiver may be voted by such receiver, and shares held by or
under the control of a receiver may be voted by such receiver without the
transfer thereof into his name if authority so to do be contained in an
appropriate order of the court by which such receiver was appointed.
A shareholder 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 pledgee shall be entitled to vote the shares so
transferred. Neither shares of its own stock belonging to this corporation,
nor shares of its own stock held by it in a fiduciary capacity, nor shares of
its own stock held by another corporation if the majority of shares entitled
to vote for the election of directors of such corporation is held by this
corporation may be voted, directly or indirectly, at any meeting and shall not
be counted in determining the total number of outstanding shares at any given
time. Redeemable shares which have been called for redemption shall not be
entitled to vote on any matter and shall not be deemed outstanding shares on
and after the date on which written notice of redemption has been mailed to
shareholders and a sum sufficient to redeem such shares has been irrevocably
deposited or set aside to pay the redemption price to the holders of the
shares upon surrender of certificates therefor.
3.13 Informal Action by Shareholders. Any action required or permitted
to be taken at a meeting of the shareholders may be taken without a meeting if
a consent in writing, setting forth the action so taken, shall be signed by
all of the shareholders entitled to vote with respect to the subject matter
thereof.
3.14 Voting by Ballot. Voting on any question or in any election may be
by voice vote unless the presiding officer shall order or any shareholder
shall demand that voting be by ballot.
3.15 Cumulative Voting. No shareholder shall be permitted to cumulate
his votes by giving one candidate as many votes as the number of such
directors multiplied by the number of his shares shall equal, or by
distributing such votes on the same principal among any number of candidates.
ARTICLE IV
DIRECTORS, POWERS AND MEETINGS
4.1 Board of Directors. The business and affairs of the corporation
shall be managed by a board of not less than one (1) nor more than seven (7)
directors. Directors need not be shareholders of the corporation or residents
of the State of Colorado and who shall be elected at the annual meeting of
shareholders or some adjournment thereof. Directors shall hold office until
the next succeeding annual meeting of shareholders and until their successors
shall have been elected and shall qualify. The Board of Directors may
increase or decrease, to not less than one (1) nor more than seven (7), the
number of directors by resolution.
4.2 Regular Meetings. A regular, annual meeting of the Board of
Directors shall be held at the same place as, and immediately after, the
annual meeting of shareholders, and no notice shall be required in connection
therewith. The annual meeting of the Board of Directors shall be for the
purpose of electing officers and the transaction of such other business as may
come before the meeting. The Board of Directors may provide, by resolution,
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the time and place, either within or without the State of Colorado, for the
holding of additional regular meetings without other notice than such
resolution.
4.3 Special Meetings. Special meetings of the Board of Directors may be
called by or at the request of the President or any two directors if there are
two or more directors of the Corporation. The person or persons authorized to
call special meetings of the Board of Directors may fix any place, either
within or without the State of Colorado, as the place for holding any special
meeting of the Board of Directors called by them.
4.4 Notice. Written notice of any special meeting of directors shall be
given as follows:
(a) By mail to each director at his business address at least three
days prior to the meeting; or
(b) By personal delivery or telegram at least twenty-four hours
prior to the meeting to the business address of each director, or in the event
such notice is given on a Saturday, Sunday or holiday, to the residence
address of each director. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, so addressed, with postage
thereon prepaid. If notice be given by telegram, such notice shall be deemed
to be delivered when the telegram is delivered to the telegraph company. Any
director may waive notice of any meeting. The attendance of a director at any
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
4.5 Participation by Electronic Means. Except as may be otherwise
provided by the Articles of Incorporation or Bylaws, members of the Board of
Directors or any committee designated by such Board may participate in a
meeting of the Board or committee by means of conference telephone or similar
communications equipment by which all persons participating in the meeting can
hear each other at the same time. Such participation shall constitute
presence in person at the meeting.
4.6 Quorum and Manner of Acting. A quorum at all meetings of the Board
of Directors shall consist of a majority of the number of directors then
holding office, but a smaller number may adjourn from time to time without
further notice, until a quorum is secured. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors, unless the act of a greater number is required by
the laws of the State of Colorado or by the Articles of Incorporation or these
Bylaws.
4.7 Organization. The Board of Directors shall elect a chairman to
preside at each meeting of the Board of Directors. The Board of Directors
shall elect a Secretary to record the discussions and resolutions of each
meeting.
4.8 Presumption of Assent. A director of the corporation who is present
at a meeting of the Board of Directors at which action on any corporate matter
is taken shall be presumed to have assented to the action taken unless his
dissent shall be entered in the minutes of the meeting or unless he shall file
his written dissent to such action with the person acting as the Secretary of
the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the corporation immediately after the
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adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.
4.9 Informal Action By Directors. Any action required or permitted to
be taken by the Board of Directors, or a committee thereof, at a meeting may
be taken without a meeting if a consent in writing, setting forth the action
so taken, shall be signed by all the directors or all the committee members
entitled to vote with respect to the subject matter thereof.
4.10 Vacancies. Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the Board of Directors. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office,
and shall hold such office until his successor is duly elected and shall
qualify. Any directorship to be filled by reason of an increase in the number
of directors shall be filled by the affirmative vote of a majority of the
directors then in office or by an election at an annual meeting, or at a
special meeting of shareholders called for that purpose. A director chosen to
fill a position resulting from an increase in the number of directors shall
hold office only until the next election of directors by the shareholders.
4.11 Compensation. By resolution of the Board of Directors and
irrespective of any personal interest of any of the members, each director may
be paid his expenses, if any, of attendance at each meeting of the Board of
Directors, and may be paid a stated salary as director or a fixed sum for
attendance at each meeting of the Board of Directors or both. No such payment
shall preclude any director from serving the corporation in any other capacity
and receiving compensation therefor.
4.12 Removal of Directors. Any director or directors of the corporation
may be removed at any time, with or without cause, in the manner provided in
the Colorado Business Corporation Act.
4.13 Resignations. A director of the corporation may resign at any time
by giving written notice to the Board of Directors, President or Secretary of
the corporation. The resignation shall take effect upon the date of receipt
of such notice, or at any later period of time specified therein. The
acceptance of such resignation shall not be necessary to make it effective,
unless the resignation requires it to be effective as such.
4.14 General Powers. The business and affairs of the corporation shall
be managed by the Board of Directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the Articles of Incorporation or by these Bylaws directed or required to be
exercised or done by the shareholders. The directors shall pass upon any and
all bills or claims of officers for salaries or other compensation and, if
deemed advisable, shall contract with officers, employees, directors,
attorneys, accountants, and other persons to render services to the
corporation.
ARTICLE V
OFFICERS
5.1 Term and Compensation. The elective officers of the corporation
shall consist of at least a President, a Secretary and a Treasurer, each of
whom shall be eighteen years or older and who shall be elected by the Board of
Directors at its annual meeting. Unless removed in accordance with procedures
established by law and these Bylaws, the said officers shall serve until the
next succeeding annual meeting of the Board of Directors and until their
respective successors are elected and shall qualify. Any number of offices
may be held by the same person at the same time. The Board may elect or
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appoint such other officers and agents as it may deem advisable, who shall
hold office during the pleasure of the Board.
5.2 Powers. The officers of the corporation shall exercise and perform
the respective powers, duties and functions as are stated below, and as may be
assigned to them by the Board of Directors.
(a) 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, when present, at all meetings of the
shareholders and of the Board of Directors unless a different chairman of such
meetings is elected by the Board of Directors.
(b) In the absence or disability of the President, the
Vice-President or Vice-Presidents, if any, in order of their rank as fixed by
the Board of Directors, and if not ranked, the Vice-Presidents in the order
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 on the President. Each Vice-President shall have such
other powers and perform such other duties as may from time to time be
assigned to him by the President or the Board of Directors.
(c) The Secretary shall prepare and maintain accurate minutes of
all meetings of the shareholders and the Board of Directors unless a different
Secretary of such meetings is elected by the Board of Directors. He shall
keep, or cause to be kept a record of the shareholders of the corporation and
shall be responsible for the giving of notice of meetings of the shareholders
or the Board of Directors. The Secretary shall prepare and maintain any and
all other records and information required to be kept by the corporation under
Section 7-116-101 of the Colorado Business Corporation Act. The Secretary
shall have the responsibility for authenticating records of the corporation.
The Secretary shall be custodian of the records and of the seal of the
corporation and shall attest the affixing of the seal of the corporation when
so authorized. The Secretary or Assistant Secretary shall sign all stock
certificates, as described in Section 2.2 hereof. The Secretary shall perform
all duties commonly incident to his office and such other duties as may from
time to time be assigned to him by the President or the Board of Directors.
(d) An Assistant Secretary may, at the request of the Secretary, or
in the absence or disability of the Secretary, perform all of the duties of
the Secretary. He shall perform such other duties as may be assigned to him
by the President or by the Secretary.
(e) The Treasurer, subject to the order of the Board of Directors,
shall have the care and custody of the money, funds, valuable papers and
documents of the corporation. He shall keep accurate books of accounts of the
corporation's transactions, which shall be the property of the corporation,
and shall render financial reports and statements of condition of the
corporation when so requested by the Board of Directors or President. The
Treasurer shall perform all duties commonly incident to his office and such
other duties as may from time to time be assigned to him by the President or
the Board of Directors. In the absence or disability of the President and
Vice-President or Vice-Presidents, the Treasurer shall perform the duties of
the President.
(f) An Assistant Treasurer may, at the request of the Treasurer, or
in the absence or disability of the Treasurer, perform all of the duties of
the Treasurer. He shall perform such other duties as may be assigned to him
by the President or by the Treasurer.
8
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5.3 Compensation. All officers of the corporation may receive salaries
or other compensation if so ordered and fixed by the Board of Directors. The
Board of Directors shall have authority to fix salaries in advance for stated
periods or render the same retroactive as the Board may deem advisable.
5.4 Delegation of Duties. In the event of absence or inability of any
officer to act, the Board of Directors may delegate the powers or duties of
such officer to any other officer, director or person whom it may select.
5.5 Bonds. If the Board of Directors by resolution shall so require,
any officer or agent of the corporation shall give bond to the corporation in
such amount and with such surety as the Board of Directors may deem
sufficient, conditioned upon the faithful performance of their respective
duties and offices.
5.6 Removal. Any officer or agent may be removed by the Board of
Directors or by the executive committee, if any, whenever in its judgment the
best interest of the corporation will be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed. Election or appointment of an officer or agent shall not, of itself,
create contract rights.
ARTICLE VI
FINANCE
6.1 Reserve Funds. The Board of Directors, in its uncontrolled
discretion, may set aside from time to time, out of the net profits or earned
surplus of the corporation, such sum or sums as it deems expedient as a
reserve fund to meet contingencies, for equalizing dividends, for maintaining
any property of the corporation, and for any other purpose.
6.2 Banking. The moneys of the corporation shall be deposited in the
name of the corporation in such bank or banks or trust company or trust
companies, as the Board of Directors shall designate, and may be drawn out
only on checks signed in the name of the corporation by such person or persons
as the Board of Directors, by appropriate resolution, may direct. Notes and
commercial paper, when authorized by the Board, shall be signed in the name of
the corporation by such officer or officers or agent or agents as shall
thereunto be authorized from time to time.
ARTICLE VII
DIVIDENDS
Subject to the provisions of the Articles of Incorporation and the laws
of the State of Colorado, the Board of Directors may declare dividends
whenever, and in such amounts, as in the Board's opinion the condition of the
affairs of the corporation shall render such advisable.
ARTICLE VIII
CONTRACTS, LOANS AND CHECKS
8.1 Execution of Contracts. Except as otherwise provided by statute or
by these Bylaws, the Board of Directors may authorize any officer or agent of
the corporation to enter into any contract, or execute and deliver any
instrument in the name of, and on behalf of the corporation. Such authority
may he general or confined to specific instances and, unless so authorized, no
officer, agent or employee shall have any power to bind the corporation for
any purpose, except as may be necessary to enable the corporation to carry on
its normal and ordinary course of business.
9
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8.2 Loans. No loans shall be contracted on behalf of the corporation
and no negotiable paper shall be issued in its name unless authorized by the
Board of Directors. When so authorized, any officer or agent of the
corporation may effect loans and advances at any time for the corporation from
any bank, trust company or institution, firm, corporation or individual. An
agent so authorized may make and deliver promissory notes or other evidence of
indebtedness of the corporation and may mortgage, pledge, hypothecate or
transfer any real or personal property held by the corporation as security for
the payment of such loans. Such authority, in the Board of Directors'
discretion, may be general or confined to specific instances.
8.3 Checks. Checks, notes, drafts and demands for money or other
evidence of indebtedness issued in the name of the corporation shall be signed
by such person or persons as designated by the Board of Directors and in the
manner the Board of Directors prescribes.
8.4 Deposits. All funds of the corporation not otherwise employed shall
be deposited from time to time to the credit of the corporation in such banks,
trust companies or other depositories as the Board of Directors may select.
ARTICLE IX
FISCAL YEAR
The fiscal year of the corporation shall be the year adopted by
resolution of the Board of Directors.
ARTICLE X
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation
and the state of incorporation and the words "CORPORATE SEAL".
ARTICLE XI
AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by a majority of the Directors present at any meeting of the Board of
Directors of the corporation at which a quorum is present.
ARTICLE XII
EXECUTIVE COMMITTEE
12.1 Appointment. The Board of Directors by resolution adopted by a
majority of the full Board, may designate two or more of its members to
constitute an executive committee. The designation of such committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed by law.
12.2 Authority. The executive committee, when the Board of Directors is
not in session shall have and may exercise all of the authority of the Board
of Directors except to the extent, if any, that such authority shall be
limited by the resolution appointing the executive committee and except also
that the executive committee shall not have the authority of the Board of
Directors in reference to amending the Articles of Incorporation, adopting a
plan of merger or consolidation, recommending to the shareholders the sale,
lease or other disposition of all or substantially all of the property and
assets of the corporation otherwise than in the usual and regular course of
its business, recommending to the shareholders a voluntary dissolution of the
corporation or a revocation thereof, or amending the Bylaws of the
corporation.
10
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12.3 Tenure and Qualifications. Each member of the executive committee
shall hold office until the next regular annual meeting of the Board of
Directors following his designation.
12.4 Meetings. Regular meetings of the executive committee may be held
without notice at such time and places as the executive committee may fix from
time to time by resolution. Special meetings of the executive committee may
be called by any member thereof upon not less than one day's notice stating
the place, date and hour of the meeting, which notice may be written or oral,
and if mailed, shall be deemed to be delivered when deposited in the United
States mail addressed to the member of the executive committee at his business
address. Any member of the executive committee may waive notice of any
meeting and no notice of any meeting need be given to any member thereof who
attends in person. The notice of a meeting of the executive committee need
not state the business proposed to be transacted at the meeting.
12.5 Quorum. A majority of the members of the executive committee shall
constitute a quorum for the transaction of business at any meeting thereof,
and action of the executive committee must be authorized by the affirmative
vote of a majority of the members present at a meeting at which a quorum is
present.
12.6 Informal Action by Executive Committee. Any action required or
permitted to be taken by the executive committee at a meeting may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the members of the committee entitled to vote with
respect to the subject matter thereof.
12.7 Vacancies. Any vacancy in the executive committee may be filled by
a resolution adopted by a majority of the full Board of Directors.
12.8 Resignations and Removal. Any member of the executive committee may
be removed at any time with or without cause by resolution adopted by a
majority of the full Board of Directors. Any member of the executive
committee may resign from the executive committee at any time by giving
written notice to the President or Secretary of the corporation, and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
12.9 Procedure. The executive committee shall elect a presiding officer
from its members and may fix its own rules of procedure which shall not be
inconsistent with these Bylaws. It shall keep regular minutes of its
proceedings and report the same to the Board of Directors for its information
at the meeting thereof held next after the proceedings shall have been taken.
ARTICLE XIII
EMERGENCY BYLAWS
The Emergency Bylaws provided for in this Article shall be operative
during any emergency in the conduct of the business of the corporation
resulting from an attack on the United States or any nuclear or atomic
disaster, notwithstanding any different provision in the preceding articles of
the Bylaws or in the Articles of Incorporation of the corporation or in the
Colorado Business Corporation Act. To the extent not inconsistent with the
provisions of this Article, the Bylaws provided in the preceding articles
shall remain in effect during such emergency and upon its termination the
Emergency Bylaws shall cease to be operative.
During any such emergency:
11
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(a) A meeting of the Board of Directors may be called by any
officer or director of the corporation. Notice of the time and place of the
meeting shall be given by the person calling the meeting to such of the
directors as it may be feasible to reach by any available means of
communication. Such notice shall be given at such time in advance of the
meeting as circumstances permit in the judgment of the person calling the
meeting.
(b) At any such meeting of the Board of Directors, a quorum shall
consist of the number of directors in attendance at such meeting.
(c) The Board of Directors, either before or during any such
emergency, may, effective in the emergency, change the principal office or
designate several alternative principal offices or regional offices, or
authorize the officers so to do.
(d) The Board of Directors, either before or during any such
emergency, may provide, and from time to time modify, lines of succession in
the event that during such an emergency any or all officers or agents of the
corporation shall for any reason be rendered incapable of discharging their
duties.
(e) No officer, director or employee acting in accordance with
these Emergency Bylaws shall be liable except for willful misconduct.
(f) These Emergency Bylaws shall be subject to repeal or change by
further action of the Board of Directors or by action of the shareholders, but
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action taken prior to the time of such repeal or
change. Any amendment of these Emergency Bylaws may make any further or
different provision that may be practical and necessary for the circumstances
of the emergency.
CERTIFICATE
I hereby certify that the foregoing Bylaws constitute the Bylaws of
Mercury Capital Corp., adopted by the Board of Directors of the corporation as
of December 9, 1996.
/s/ Timothy J. Brasel
Secretary
12
CONSENT OF INDEPENDENT AUDITORS
Board of Directors
Mercury Capital Corp.
Aurora, Colorado
We have issued our report dated February 28, 1999, accompanying the financial
statements of Mecury Capital Corp. in the Registration Statement. We consent
to the use of the aforementioned report in the Registration Statement.
/s/ Schumacher & Associates, Inc.
SCHUMACHER & ASSOCIATES, INC.
Certified Public Accountants
12835 E. Arapahoe Road
Tower II, Suite 110
Englewood, Colorado 80112
March 9, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheets and statements of operations found on pages F-3 and F-4 of the
Company's Form 10-SB for the period ended December 31, 1998, and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 30
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 50
0
0
<OTHER-SE> (20)
<TOTAL-LIABILITY-AND-EQUITY> 30
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,610
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,610)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
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<EXTRAORDINARY> 0
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</TABLE>
