SCHEDULE 14 C
INFORMATION STATEMENT PURSUANT TO SECTION 14 (C)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[ ] Preliminary information statement
[ x ] Definitive revised information statement
Confidential, for use of the Commission only (as permitted by Rule 14c-5(d)(2))
EARTH SEARCH SCIENCES, INC.
(NAME OF COMPANY AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies: Not
Applicable. (2) Aggregate number of securities to which transaction applies: Not
Applicable.
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined): Not Applicable. (4) Proposed
maximum aggregate value of transaction: Not Applicable.
(5) Total fee paid: Not Applicable.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11 (a) (2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: Not Applicable.
(2) Form, Schedule or Registration Statement No. : Not Applicable. (3) Filing
Party: Not Applicable. (4) Date Filed: Not Applicable.
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INFORMATION STATEMENT
RELATING TO THE
REINCORPORATION IN NEVADA
BY THE MERGER OF
EARTH SEARCH SCIENCES, INC.
(A UTAH CORPORATION)
INTO
Earth Search Sciences, Inc.
(A NEVADA CORPORATION)
- -------------------------------------------------------------------------------
EARTH SEARCH SCIENCES, INC.
1729 Montana Highway 35 * Kalispell, MT 59901
- -------------------------------------------------------------------------------
September 29, 2004
DEAR SHAREHOLDER:
NOTICE IS HEREBY GIVEN that we have received written consents in lieu
of a meeting from stockholders representing a majority of our outstanding shares
of voting stock approving the reincorporation of EARTH SEARCH SCIENCES, INC., a
Utah corporation ("Earth Search Utah") in Nevada by merger with and into our
wholly-owned Nevada subsidiary, EARTH SEARCH SCIENCES, INC. ("Earth Search
Nevada").
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WE ARE NOT ASKING YOU FOR A PROXY
and you are requested not to send us a Proxy.
- -------------------------------------------------------------------------------
As of the close of business on August 19, 2004, the record date for
shares entitled to notice of and to sign written consents in connection with the
reincorporation, there were 194,305,708 shares of our common stock and 2,723,128
shares of Series A Convertible Preferred Stock outstanding. Each share of our
common stock is entitled to one vote and each share of our preferred stock is
entitled to 150 votes in connection with the reincorporation. Prior to the
mailing of this Information Statement, certain of our officers, directors and
affiliates, who represent a majority of our outstanding voting shares, signed
written consents approving the reincorporation. As a result, the Plan and
Agreement of Merger has been approved and neither a meeting of our stockholders
nor additional written consents are necessary. The reincorporation is intended
to be effected on October 20, 2004 and will result in Earth Search Utah being
governed by the laws of the State of Nevada. See "Reincorporation in Nevada
- -Principal Features of the Reincorporation."
The Plan and Agreement of Merger provides for the mandatory exchange of
certificates representing shares of Earth Search Utah for certificates
representing shares of Earth Search Nevada. We urge you to follow the
instructions set forth in the attached Information Statement under "How to
Exchange Earth Search Utah Certificates for Earth Search Nevada Certificates" to
surrender certificates representing shares of Earth Search Utah for certificates
representing Earth Search Nevada.
By Order of the Board of Directors,
/s/Larry Vance
- --------------------------------
Larry Vance, Chief Executive Officer
SUMMARY
Transaction: Reincorporation in Nevada.
Purpose: To provide greater flexibility and simplicity in
corporate transactions, reduce taxes
and other costs of doing business. See "Reincorporation
in Nevada-Principal Reasons
for Reincorporation."
The purpose of this Information Statement is to inform
holders of Earth Search Utah Common Stock or Earth Search
Utah Preferred Stock who have not given Earth Search Utah
their written consent to the foregoing corporate actions
of such actions and their effects.
Record Date: August 19, 2004
Method: Merger of Earth Search Utah with and into our wholly
owned subsidiary, Earth Search
Nevada. See "Reincorporation in Nevada-Principal
Features of the Reincorporation."
Effective Date: 20 days after mailing of this Information Statement.
Right to Dissent No Earth Search Utah stockholder is entitled to be paid
To Reincorporation the fair value of his or her shares if the stockholder
dissents to the reincorporation or any of the actions
resulting from or in connection with the reincorporation.
Additional Exchange of outstanding certificates representing shares
Provisions: of Earth Search Utah common stock for certificates
representing shares of Earth Search Nevada common stock.
See "Reincorporation in Nevada-How to Exchange Earth
Search Utah Certificates for Earth
Search Nevada Certificates."
1
QUESTIONS AND ANSWERS
This Information Statement is first being sent to stockholders on or
about September 29, 2004. The following questions and answers are intended to
respond to frequently asked questions concerning the reincorporation of Earth
Search Utah in Nevada. These questions do not, and are not intended to, address
all the questions that may be important to you. You should carefully read the
entire Information Statement, as well as its appendices and the documents
incorporated by reference in this Information Statement.
Q: Why is Earth Search Utah reincorporating in Nevada?
A: We believe that the Reincorporation in Nevada will give us more flexibility
and simplicity in various corporate transactions. Nevada has adopted Revised
Statutes that includes by statute many concepts created by judicial rulings in
other jurisdictions and provides additional rights in connection with the
issuance and redemption of stock.
Q: Why isn't Earth Search Utah holding a meeting of stockholders to approve
the reincorporation?
A: The board of directors has already approved the reincorporation plan and has
received the written consent of officers, directors, and affiliates that
represent a majority of our outstanding shares of common stock and other voting
interests. Under the Utah Revised Business Corporation Act ("Utah Law") and our
Articles of Incorporation this transaction may be approved by the written
consent of a majority of the shares entitled to vote. Since we have already
received written consents representing the necessary number of shares, a meeting
is not necessary and represents a substantial and avoidable expense.
Q: What are the principal features of the reincorporation?
A: The reincorporation will be accomplished by a merger of Earth Search Utah
with and into our wholly owned subsidiary, Earth Search Nevada. The shares of
Earth Search Utah will cease to trade on the over-the-counter bulletin board
market and the shares of Earth Search Nevada will begin trading in their place
beginning on or about the Effective Date, under a new CUSIP number and a new
trading symbol which has not yet been assigned. Options and warrants to purchase
common stock of Earth Search Utah will also be exchanged for similar securities
issued by Earth Search Nevada without adjustment as to the number of shares
issuable or the total exercise price.
Q: How will the reincorporation affect my ownership of Earth Search Utah?
A: After the effective date of the reincorporation and the exchange of your
stock certificates, you will own the same amount of shares and the same class of
Earth Search Nevada.
Q: How will the reincorporation affect the owners, officers, directors and
employees of Earth Search Utah?
A: Our officers, directors and employees will become the officers, directors
and employees of Earth Search Nevada after the
effective date of the reincorporation.
Q: How will the reincorporation affect the business of Earth Search Utah?
A: Earth Search Nevada will continue its business at the same locations and
with the same assets. Earth Search Utah will cease to
exist on the effective date of the reincorporation.
Q: How do I exchange certificates of Earth Search Utah for certificates of
Earth Search Nevada?
A: Enclosed with this Information Statement is a letter of transmittal and
instructions for surrendering certificates representing our shares. If you are a
record stockholder, you should complete the letter of transmittal and send it
with certificates representing your shares to the address set forth in the
letter. Upon surrender of a certificate for cancellation with a duly executed
letter of transmittal, Earth Search Nevada will issue a new certificate
representing the number of whole shares of Earth Search Nevada as soon as
practical after the effective date of the reincorporation.
Q: What happens if I do not surrender my certificates of Earth Search Utah?
A: YOU ARE NOT REQUIRED TO SURRENDER CERTIFICATES REPRESENTING SHARES OF EARTH
SEARCH UTAH TO RECEIVE SHARES OF Earth Search Nevada. All shares of Earth Search
Utah outstanding after the effective date of the reincorporation continue to be
valid. Until you receive shares of Earth Search Nevada you are entitled to
receive notice of or vote at shareholder meetings or receive dividends or other
distributions on the shares of Earth Search Utah.
Q: What if I have lost Earth Search Utah certificates?
A: If you have lost your Earth Search Utah certificates, you should contact our
transfer agent as soon as possible to have a new certificate issued. You may be
required to post a bond or other security to reimburse us for any damages or
costs if the certificate is later delivered for conversion. Our transfer agent
may be reached at:
Atlas Stock Transfer Corporation
5899 South State Street
Salt Lake City, Utah 84107
Telephone: (801) 266-7151
Facsimile: (801) 262-0907
Q: Can I require Earth Search Utah to purchase my stock?
A: No. Under the Utah Revised Business Corporation Act, you are not entitled
to appraisal and purchase of your stock as a result of
the reincorporation.
Q: Who will pay the costs of reincorporation?
A: Earth Search Utah will pay all of the costs of Reincorporation in Nevada,
including distributing this Information Statement. We may also pay brokerage
firms and other custodians for their reasonable expenses for forwarding
information materials to the beneficial owners of our common stock. We do not
anticipate contracting for other services in connection with the
reincorporation. Each stockholder must pay the costs of exchanging their
certificates for new certificates.
Q: Will I have to pay taxes on the new certificates?
A: We believe that the reincorporation is not a taxable event and that you will
be entitled to the same basis in the shares of Earth Search Nevada that you had
in our common stock. EVERYONE'S TAX SITUATION IS DIFFERENT AND YOU SHOULD
CONSULT WITH YOUR PERSONAL TAX ADVISOR REGARDING THE TAX EFFECT OF THE
REINCORPORATION.
REINCORPORATION IN NEVADA
The following discussion summarizes certain aspects of the
Reincorporation of Earth Search Utah in Nevada. This summary does not include
all of the provisions of the Agreement and Plan of Merger between Earth Search
Utah and Earth Search Nevada, a copy of which is attached hereto as Exhibit "A,"
or the Amended and Restated Articles of Incorporation of Earth Search Nevada
(the "Nevada Certificate"), a copy of which is attached hereto as Exhibit "B."
Copies of the Articles of Incorporation and the By-Laws of Earth Search Utah
(the "Earth Search Utah Articles" and the "Earth Search Utah By-Laws,"
respectively) and the By-Laws of Earth Search Nevada (the "Earth Search Nevada
By-Laws") are available for inspection at the principal office of Earth Search
Nevada and copies will be sent to shareholders upon request.
Principal Reasons for Reincorporation
The Board of Directors believes that the Reincorporation will give
Earth Search Utah a greater measure of flexibility and simplicity in corporate
governance than is available under Utah Law and will increase the marketability
of Earth Search Utah's securities.
The State of Nevada is recognized for adopting comprehensive modern and
flexible corporate laws which are periodically revised to respond to the
changing legal and business needs of corporations. For this reason, many major
corporations have initially incorporated in Nevada or have changed their
corporate domiciles to Nevada in a manner similar to that proposed by Earth
Search Utah. Consequently, the Nevada judiciary has become particularly familiar
with corporate law matters and a substantial body of court decisions has
developed construing Nevada Law. Nevada corporate law, accordingly, has been,
and is likely to continue to be, interpreted in many significant judicial
decisions, a fact which may provide greater clarity and predictability with
respect to Earth Search Utah's corporate legal affairs. For these reasons, the
Board of Directors believes that Earth Search Utah's business and affairs can be
conducted to better advantage if Earth Search Utah is able to operate under
Nevada Law. See "Certain Significant Differences between the Corporation Laws of
Nevada and Utah."
Principal Features of the Reincorporation
The Reincorporation will be effected by the merger of Earth Search Utah
with and into Earth Search Nevada, a wholly-owned subsidiary of Earth Search
Utah is incorporated under the Nevada Revised Statutes (the "Nevada Law") for
the sole purpose of effecting the Reincorporation. The Reincorporation will
become effective upon the filing of the requisite merger documents in Nevada and
Utah, which filings will occur on the Effective Date, or as soon as practicable
thereafter. Following the Merger, Earth Search Nevada will be the surviving
corporation and will operate under the name "Earth Search Sciences, Inc."
On the Effective Date, (i) any fractional shares of Earth Search Nevada
common stock that a holder of shares of Earth Search Utah common stock would
otherwise be entitled to receive upon exchange of his Earth Search Utah common
stock will be canceled with the holder thereof being entitled to receive one
whole share of common stock of Earth Search Nevada common stock, and (ii) each
outstanding share of Earth Search Utah common stock held by Earth Search Utah
shall be retired and canceled and shall resume the status of authorized and
unissued the Earth Search Nevada stock.
The Articles of Incorporation and bylaws of Earth Search Nevada are
significantly different from the Articles of Incorporation and bylaws of Earth
Search Utah. Because of the differences between the Articles of Incorporation
and bylaws of Earth Search Utah and the laws of the State of Utah, which govern
Earth Search Utah, and the Articles of Incorporation and bylaws of Earth Search
Nevada and the laws of the State of Nevada, which govern Earth Search Nevada,
your rights as stockholders will be affected by the reincorporation. See the
information under "Significant Differences between Earth Search Utah and Earth
Search Nevada" for a summary of the differences between the Articles of
Incorporation and bylaws of Earth Search Utah and the laws of the State of Utah
and the Articles of Incorporation and bylaws of Earth Search Nevada and the laws
of the State of Nevada.
The New Board of Directors will consist of those persons presently
serving on the board of directors of Earth Search Utah. The individuals who will
serve as executive officers of Earth Search Nevada are those who currently serve
as executive officers of Earth Search Utah. Such persons and their respective
terms of office are set forth below under the caption "Reincorporation in Nevada
- - Officers and Directors."
Pursuant to the terms of the Agreement and Plan of Merger, the Merger
may be abandoned by the Board of Directors of Earth Search Utah and Earth Search
Nevada at any time prior to the Effective Date. In addition, the Board of
Directors of Earth Search Utah may amend the Agreement and Plan of Merger at any
time prior to the Effective Date provided that any amendment made may not,
without approval by the Majority Holders, alter or change the amount or kind of
Earth Search Nevada common stock to be received in exchange for or on conversion
of all or any of Earth Search Utah Common Stock, alter or change any term of the
Nevada Articles or alter or change any of the terms and conditions of the
Agreement and Plan of Merger if such alteration or change would adversely affect
the holders of Earth Search Utah common stock.
The board of directors and officers of Earth Search Nevada consists of
the same persons that are currently our directors and officers. Our daily
business operations will continue at the principal executive offices at 1729
Montana Highway 35, Kalispell, Montana 59901.
How to Exchange Earth Search Utah Certificates for the Earth Search Nevada
Certificates
Enclosed are (i) a form letter of transmittal and (ii) instructions for
effecting the surrender of Earth Search Utah Certificates in exchange for Earth
Search Nevada Certificates. Upon surrender of a Earth Search Utah Certificate
for cancellation to Earth Search Nevada, together with a duly executed letter of
transmittal, the holder of such Earth Search Utah Certificate shall, as soon as
practicable following the Effective Date, be entitled to receive in exchange
therefor a Earth Search Utah Certificate representing that number of whole
shares of Earth Search Nevada common stock into which Earth Search Utah Common
Stock theretofore represented by Earth Search Utah Certificate so surrendered
have been converted in the Merger and Earth Search Utah Certificate so
surrendered will be canceled.
Because of the Reincorporation in Nevada as a result of the Merger,
holders of Earth Search Utah Common are not required to exchange their Earth
Search Utah Certificates for Earth Search Nevada Certificates. Dividends and
other distributions declared after the Effective Date with respect to Earth
Search Nevada common stock and payable to holders of record thereof after the
Effective Date will be paid to the holder of any unsurrendered Earth Search Utah
Certificate with respect to the shares of Earth Search Nevada common stock,
which by virtue of the Merger are represented thereby and such holder will be
entitled to exercise any right as a holder of Earth Search Nevada common stock,
until such holder has surrendered Earth Search Utah Certificate.
Capitalization
The authorized capital of Earth Search Utah, on the Record Date,
consisted of 200,000,000 shares of common stock, $.001 par value, and an
unlimited number of shares of Series A Preferred Stock, $.001 par value.
Approximately 194,305,708 shares of Earth Search Utah common stock and 2,723,128
shares of Preferred Stock were outstanding. The authorized capital of Earth
Search Nevada, which will be the authorized capital of Earth Search Utah after
the Reincorporation, consists of 200,000,000 shares of Common Stock, par value
$.001 per share ("Earth Search Nevada common stock") and 10,000,000 shares of
preferred stock, $.001 par value per share (collectively, the "Nevada Preferred
Stock"). The Reincorporation will not affect total stockholder equity or total
capitalization of Earth Search Utah.
The New Board of Directors may in the future authorize, without further
stockholder approval, the issuance of such shares of Earth Search Nevada common
stock or Nevada Preferred Stock to such persons and for such consideration upon
such terms as the New Board of Directors determines. Such issuance could result
in a significant dilution of the voting rights and, possibly, the stockholders'
equity, of then existing stockholders.
There are no present plans, understandings or agreements, and Earth
Search Utah is not engaged in any negotiations that will involve the issuance of
the Nevada Preferred Stock to be authorized. However, the New Board of Directors
believes it prudent to have shares of Nevada Preferred Stock available for such
corporate purposes as the New Board of Directors may from time to time deem
necessary and advisable including, without limitation, acquisitions, the raising
of additional capital and assurance of flexibility of action in the future.
It should be recognized that the issuance of additional authorized
Earth Search Nevada common stock (or Nevada Preferred Stock, the terms and
conditions of which including voting and conversion rights, may be set at the
discretion of the Board of Directors) may have the effect of deterring or
thwarting persons seeking to take control of Earth Search Nevada through a
tender offer, proxy fight or otherwise or to bring about removal of incumbent
management or a corporate transaction such as merger. For example, the issuance
of Earth Search Nevada common stock or Nevada Preferred Stock could be used to
deter or prevent such a change of control through dilution of stock ownership of
persons seeking to take control or by rendering a transaction proposed by such
persons more difficult.
SIGNIFICANT DIFFERENCES BETWEEN Earth Search Utah AND Earth Search Nevada
Earth Search Utah was incorporated under the laws of the State of Utah
and Earth Search Nevada is incorporated under the laws of the State of Nevada.
Those stockholders that tender their certificates representing the shares of our
common stock for exchange will become stockholders of Earth Search Nevada. Their
rights as stockholders will be governed by the Title 7, Chapter 78 of the Nevada
Law and the Articles of Incorporation and bylaws of Earth Search Nevada rather
than the Utah Law and the Earth Search Utah Articles of Incorporation and
bylaws.
Significant Changes In Earth Search Utah's Charter and By-laws To Be
Implemented By the Reincorporation
Corporate Name. The Reincorporation will not effect a change in Earth
Search Utah's name. Following the Merger, Earth Search Nevada will be the
surviving corporation and will operate under the name "Earth Search Sciences,
Inc."
Limitation of Liability. The Nevada Articles contain a provision
limiting or eliminating, with certain exceptions, the liability of directors to
Earth Search Nevada and its shareholders for monetary damages for breach of
their fiduciary duties. The Earth Search Utah Articles contains no similar
provision. The Board of Directors believes that such provision will better
enable Earth Search Nevada to attract and retain as directors responsible
individuals with the experience and background required to direct Earth Search
Nevada's business and affairs. It has become increasingly difficult for
corporations to obtain adequate liability insurance to protect directors from
personal losses resulting from suits or other proceedings involving them by
reason of their service as directors. Such insurance is considered a standard
condition of directors' engagement. However, coverage under such insurance is no
longer routinely offered by insurers and many traditional insurance carriers
have withdrawn from the market. To the extent such insurance is available, the
scope of coverage is often restricted, the dollar limits of coverage are
substantially reduced and the premiums have risen dramatically.
At the same time directors have been subject to substantial monetary
damage awards in recent years. Traditionally, courts have not held directors to
be insurers against losses a corporation may suffer as a consequence of
directors' good faith exercise of business judgment, even if, in retrospect the
directors' decision was an unfortunate one. In the past, directors have had
broad discretion to make decisions on behalf of the corporation under the
"business judgment rule." The business judgment rule offers protection to
directors who, after reasonable investigation, adopt a course of action that
they reasonably and in good faith believe will benefit the corporation, but
which ultimately proves to be disadvantageous. Under those circumstances, courts
have typically been reluctant to subject directors' business judgments to
further scrutiny. Some recent court cases have, however, imposed significant
personal liability on directors for failure to exercise an informed business
judgment with the result that the potential exposure of directors to monetary
damages has increased. Consequently legal proceedings against directors relating
to decisions made by directors on behalf of corporations have significantly
increased in number, cost of defense and level of damages claimed. Whether or
not such an action is meritorious, the cost of defense can be well beyond the
personal resources of a director.
The Nevada legislature considered such developments a threat to the
quality and stability of the governance of Nevada corporations because of the
unwillingness of directors, in many instances, to serve without the protection
which insurance traditionally has provided and because of the deterrent effect
on entrepreneurial decision making by directors who do serve without the
protection of traditional insurance coverage. In response, in 1987 the Nevada
legislature adopted amendments to the Nevada Revised Statues which permit a
corporation to include in its charter a provision to limit or eliminate, with
certain exceptions, the personal liability of Directors to a corporation and its
shareholders for monetary damages for breach of their fiduciary duties and to
purchase insurance to provide protection to Directors. Similar charter
provisions limiting a director's liability are permitted under Utah Law,
however, the Earth Search Articles contain no such provision.
The Board of Directors believes that the limitation on directors'
liability permitted under Nevada Law will assist Earth Search Nevada in
attracting and retaining qualified directors by limiting directors' exposure to
liability. The Reincorporation proposal will implement this limitation on
liability of the directors of Earth Search Nevada, inasmuch as the Nevada
Articles provide that to the fullest extent that the Nevada Law now or hereafter
permits the limitation or elimination of the liability of directors, no director
will be liable to Earth Search Nevada or its stockholders for monetary damages
for breach of fiduciary duty. Under such provision, Earth Search Nevada's
directors will not be liable for monetary damages for acts or omissions
occurring on or after the Effective Date of the Reincorporation, even if they
should fail through negligence or gross negligence, to satisfy their duty of
care (which requires directors to exercise informed business judgment in
discharging their duties). The Nevada Articles would not limit or eliminate any
liability of directors for acts or omissions occurring prior to the Effective
Date. As provided under Nevada Law, the Nevada Articles cannot eliminate or
limit the liability of directors for breaches of their duty of loyalty to Earth
Search Nevada; acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law, paying a dividend or effecting a stock
repurchase or redemption which is illegal under the Nevada Law, or transactions
from which a director derived an improper personal benefit. Further, the Nevada
Articles would not affect the availability of equitable remedies, such as an
action to enjoin or rescind a transaction involving a breach of a director's
duty of care. The Nevada Articles pertain to breaches of duty by directors
acting as directors and not to breaches of duty by directors acting as officers
(even if the individual in question is also a director). In addition, the Nevada
Articles would not affect a director's liability to third parties or under the
federal securities laws.
The Nevada Articles are worded to incorporate any future statutory
revisions limiting directors' liability. The Nevada Articles provide, however,
that no amendment or repeal of its provision will apply to the liability of a
director for any acts or omissions occurring prior to such amendment or repeal,
unless such amendment has the affect of further limiting or eliminating such
liability.
Earth Search Utah has not received notice of any lawsuit or other
proceeding to which the Nevada Articles might apply. In addition, the provision
is not being included in the Nevada Articles in response to any director's
resignation or any notice of an intention to resign. Accordingly, Earth Search
Nevada is not aware of any existing circumstances to which the provision might
apply. The Board of Directors recognizes that the Nevada Articles may have the
effect of reducing the likelihood of derivative litigation against directors,
and may discourage or deter stockholders from instituting litigation against
directors for breach of their duty of care, even though such an action, if
successful, might benefit Earth Search Nevada and its shareholders. However,
given the difficult environment and potential for incurring liabilities
currently facing directors of publicly held corporations, the Board of Directors
believes that the Nevada Articles are in the best interests of Earth Search
Nevada and its stockholders, since it should enhance Earth Search Nevada's
ability to retain highly qualified directors and reduce a possible deterrent to
entrepreneurial decision making. In addition, the Board of Directors believes
that the Nevada Articles may have a favorable impact over the long term on the
availability, cost, amount and scope of coverage of directors' liability
insurance, although there can be no assurance of such an effect.
The Nevada Articles may be viewed as limiting the rights of
stockholders, and the broad scope of the indemnification provisions of Earth
Search Nevada could result in increased expense to Earth Search Nevada. Earth
Search Nevada believes, however, that these provisions will provide a better
balancing of the legal obligations of, and protections for, directors and will
contribute to the quality and stability of Earth Search Nevada's governance. The
Board of Directors has concluded that the benefit to stockholders of improved
corporate governance outweighs any possible adverse effects on stockholders of
reducing the exposure of directors to liability and broadening indemnification
rights. Because the Nevada Articles deal with the potential liability of
directors, the members of the Board of Directors may be deemed to have a
personal interest in effecting the Reincorporation.
Indemnification. The Nevada Law authorize broad indemnification rights
which corporations may provide to their directors, officers and other corporate
agents. The Nevada Articles reflect the provisions of Nevada Law, as amended,
and, as discussed below, provide broad rights to indemnification.
In recent years, investigations, actions, suits and proceedings,
including actions, suits and proceedings by or in the right of a corporation to
procure a judgment in its favor (referred to together as "proceedings"), seeking
to impose liability on, or involving as witnesses, directors and officers of
publicly-held corporations have become increasingly common. Such proceedings are
typically very expensive, whatever their eventual outcome. In view of the costs
and uncertainties of litigation in general it is often prudent to settle
proceedings in which claims against a director or officer are made. Settlement
amounts, even if material to the corporation involved and minor compared to the
enormous amounts frequently claimed, often exceed the financial resources of
most individual defendants. Even in proceedings in which a director or officer
is not named as a defendant he may incur substantial expenses and attorneys'
fees if he is called as a witness or otherwise becomes involved in the
proceeding. Although Earth Search Utah's directors and officers have not
incurred any liability or significant expense as a result of any proceeding to
date the potential for substantial loss does exist. As a result, an individual
may conclude that the potential exposure to the costs and risks of proceedings
in which he may become involved may exceed any benefit to him from serving as a
director or officer of a public corporation. This is particularly true for
directors who are not also officers of the corporation. The increasing
difficulty and expense of obtaining directors' and officers' liability insurance
discussed above has compounded the problem.
The broad scope of indemnification now available under Nevada Law will
permit Earth Search Nevada to offer its directors and officers greater
protection against these risks. The Board of Directors believes that such
protection is reasonable and desirable in order to enhance Earth Search Nevada's
ability to attract and retain qualified directors as well as to encourage
directors to continue to make good faith decisions on behalf of Earth Search
Nevada with regard to the best interests of Earth Search Nevada and its
stockholders.
The Nevada Articles are quite different from the Earth Search Utah
Articles and require indemnification of Earth Search Nevada's directors and
officers to the fullest extent permitted under applicable law as from time to
time in affect, with respect to expenses, liability or loss (including, without
limitation, attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) actually and reasonably incurred
by any person in connection with any actual or threatened proceeding by reason
of the fact that such person is or was a director or officer of Earth Search
Nevada or is or was serving at the request of Earth Search Nevada as a director
or officer of another corporation or of a partnership, joint venture; trust,
employee benefit plan or other enterprise at the request of Earth Search Nevada.
The right to indemnification includes the right to receive payment of expenses
in advance of the final disposition of such proceeding; consistent with
applicable law from time to time in effect; provided, however, that if the
Nevada Law requires the payment of such expenses in advance of the final
disposition of a proceeding, payment shall be made only if such person
undertakes to repay Earth Search Nevada if it is ultimately determined that he
or she was not entitled to indemnification. Directors and officers would not be
indemnified for lose, liability or expenses incurred in connection with
proceedings brought against such persons otherwise than in the capacities in
which they serve Earth Search Nevada. Under the Nevada Law Earth Search Nevada
may, although it has no present intention to do so, by action of the Board of
Directors, provide the same indemnification to its employees, agents, attorneys
and representatives as it provides to its directors and officers. The Nevada
Articles provide that such practices are not exclusive of any other rights to
which persons seeking indemnification may otherwise be entitled under any
agreement or otherwise.
The Nevada Articles specify that the right to indemnification is a
contract right. The Nevada Articles also provides that a person seeking
indemnification from Earth Search Nevada may bring suit against Earth Search
Nevada to recover any and all amounts entitled to such person provided that such
person has filed a written claim with Earth Search Nevada has failed to pay such
claim within thirty days of receipt thereof. In addition, the Earth Search
Nevada Articles authorize Earth Search Nevada to purchase and maintain indemnity
insurance, if it so chooses to guard against future expense.
The Nevada Articles provide for payment of all expenses incurred,
including those incurred to defend against a threatened proceeding.
Additionally, the Nevada Articles provides that indemnification shall continue
as to a person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such a person. The Nevada
Articles also provide that to the extent any director or officer who is, by
reason of such a position, a witness in any proceeding, he or she shall be
indemnified for all reasonable expenses incurred in connection therewith.
Under Utah Law, as with Nevada Law, rights to indemnification and
expenses need not be limited to those provided by statute. As a result, under
Nevada Law and the Nevada Articles, Earth Search Nevada will be permitted to
indemnity its directors and officers, within the limits established by law and
public policy, pursuant to an express contract, a by-law provision, a
stockholder vote or otherwise, any or all of which could provide indemnification
rights broader than those currently available under the Earth Search Utah
Articles or expressly provided for under Nevada or Utah Law.
Insofar as the Nevada Articles provide indemnification to directors or
officers for liabilities arising under the Securities Act of 1933, it is the
position of the Securities and Exchange Commission that such indemnification
would be against public policy as expressed in such statute and, therefore,
unenforceable.
The Board of Directors recognizes that Earth Search Nevada may in the
future be obligated to incur substantial expense as a result of the
indemnification rights conferred under the Nevada Articles, which are intended
to be as broad as possible under applicable law. Because directors of Earth
Search Nevada may personally benefit from the indemnification provisions of the
Earth Search Nevada Articles, the members of the Board of Directors may be
deemed to have a personal interest in the effectuation of the Reincorporation.
Significant Differences Between the Corporation Laws of Nevada and Utah
The Company is incorporated under the laws of the State of Utah and
Earth Search Nevada is incorporated under the laws of the State of Nevada. On
consummation of the Reincorporation, the stockholders of the Company, whose
rights currently are governed by Utah Law and the Earth Search Utah Articles and
the Earth Search Utah Bylaws, which were created pursuant to Utah Law, will
become stockholders of a Nevada company, Earth Search Nevada, and their rights
as stockholders will then be governed by Nevada Law and the Nevada Articles and
the Nevada Bylaws which were created under Nevada Law.
Although the corporate statutes of Utah and Nevada are similar, certain
differences exist. The most significant differences, in the judgment of the
management of the Company, are summarized below. This summary is not intended to
be complete, and stockholders should refer to the Nevada Law and the Utah Law to
understand how these laws apply to the Company and Earth Search Nevada.
Classified Board of Directors. Both Utah and Nevada Law permit
corporations to classify their board of directors so that less than all of the
directors are elected each year to overlapping terms. Neither Earth Search Utah
nor Earth Search Nevada have classified boards.
Removal of Directors. Under Utah Law, members of a classified board of
directors may only be removed for cause. Removal requires the vote of a majority
of the outstanding shares entitled to vote for the election of directors. Nevada
Law provides that any or all directors may be removed by the vote of two-thirds
of the voting interests entitled to vote for the election of directors. Nevada
does not distinguish between removal of directors with and without cause. The
reincorporation may make it more difficult for the stockholders of Earth Search
Nevada to remove a member of the board of directors because it increases the
number of shares that must be voted for removal.
Special Meetings of Stockholders. Utah Law permits special meetings of
stockholders to be called by the board of directors or by any other person
authorized in the Articles of Incorporation or bylaws to call a special
stockholder meeting. Nevada Law does not address the manner in which special
meetings of stockholders may be called but permits corporations to determine the
manner in which meetings are called in their bylaws. The Articles of
Incorporation and bylaws of Earth Search Utah and the Articles of Incorporation
and bylaws of Earth Search Nevada each provide that special meetings of the
stockholders may be called only by the board of directors or a committee of the
board of directors that is delegated the power to call special meetings by the
board of directors. There will be no change to this provision as a result of the
reincorporation.
Special Meetings Pursuant to Petition of Stockholders. Utah Law
provides that a director or a stockholder of a corporation may apply to the
Court of Chancery of the State of Utah if the corporation fails to hold an
annual meeting for the election of directors or there is no written consent to
elect directors in lieu of an annual meeting taken, in both cases for a period
of thirty (30) days after the date designated for the annual meeting or if there
is no such date designated, within 13 months after the last annual meeting.
Nevada Law is more restrictive. Under Nevada Law stockholders having not less
than 15% of the voting interest may petition the district court to order a
meeting for the election of directors if a corporation fails to call a meeting
for that purpose within 18 months after the last meeting at which directors were
elected. The reincorporation may make it more difficult for the stockholders of
Earth Search Nevada to require that an annual meeting be held without the
consent of the board of directors.
Cumulative Voting. Cumulative voting for directors entitles
stockholders to cast a number of votes that is equal to the number of voting
shares held multiplied by the number of directors to be elected. Stockholders
may cast all such votes either for one nominee or distribute such votes among up
to as many candidates as there are positions to be filled. Cumulative voting may
enable a minority stockholder or group of stockholders to elect at least one
representative to the board of directors where such stockholders would not
otherwise be able to elect any directors. Both Utah and Nevada Law permit
cumulative voting if provided for in the certificate or articles of
incorporation and pursuant to specified procedures. Neither the Articles of
Incorporation of Earth Search Utah nor the Articles of Incorporation of Earth
Search Nevada provide for cumulative voting. The reincorporation does not change
the fact that the stockholders do not have the right to cumulate their votes.
Vacancies. Under Utah Law, vacancies on the board of directors may be
filled by the affirmative vote of a majority of the remaining directors then in
office, even if less than a quorum. Any director so appointed will hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred. Similarly, Nevada Law provides that vacancies may be filled by
a majority of the remaining directors, though less than a quorum, unless the
articles of incorporation provide otherwise. The bylaws of both Earth Search
Utah and Earth Search Nevada address the election of persons to fill vacancies
on the board of directors in the same manner.
Indemnification of Officers and Directors and Advancement of Expenses.
Utah and Nevada have substantially similar provisions regarding indemnification
by a corporation of its officers, directors, employees and agents. Utah and
Nevada Law differ in their provisions for advancement of expenses incurred by an
officer or director in defending a civil or criminal action, suit or proceeding.
Utah Law provides that expenses incurred by an officer or director in defending
any civil, criminal, administrative or investigative action, suit or proceeding
may be paid by the corporation in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined that he
or she is not entitled to be indemnified by the corporation. A Utah corporation
has the discretion to decide whether or not to advance expenses, unless its
Articles of Incorporation or bylaws provides for mandatory advancement. Nevada
Law differs in two respects: First, Nevada Law applies to advance of expenses
incurred by both officers and directors. Second, under Nevada Law, the articles
of incorporation, bylaws or an agreement made by the corporation may provide
that the corporation must pay advancements of expenses in advance of the final
disposition of the action, suit or proceedings upon receipt of an undertaking by
or on behalf of the director or officer to repay the amount if it is ultimately
determined that he or she is not entitled to be indemnified by the corporation.
There will be a significant difference in stockholders' rights with respect to
this issue because the bylaws of Earth Search Utah do not provide for the
mandatory advancement of expenses of directors and officers and the Articles of
Earth Search Nevada do so provide.
Limitation on Personal Liability of Directors. Nevada Law permits a
corporation to adopt provisions limiting or eliminating the liability of a
director to a company and its stockholders for monetary damages for breach of
fiduciary duty as a director, provided that such liability does not arise from
certain proscribed conduct, including breach of the duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law or liability to the corporation based on unlawful dividends or
distributions or improper personal benefit. The Articles of Incorporation of
Earth Search Nevada exclude director liability to the maximum extent allowed by
Nevada Law. Nevada Law permits, and Earth Search Nevada has adopted, a broader
exclusion of liability of both officers and directors to the corporation and its
stockholders, providing for an exclusion of all monetary damages for breach of
fiduciary duty unless they arise from act or omissions which involve intentional
misconduct, fraud or a knowing violation of law or payments of dividends or
distributions in excess of the amount allowed. The reincorporation will result
in the elimination of any liability of an officer or director for a breach of
the duty of loyalty unless arising from intentional misconduct, fraud, or a
knowing violation of law.
Dividends. Utah Law is substantially the same as Nevada Law with
respect to when dividends may be paid or redemption of its shares. Under the
Utah Law, unless further restricted in the Articles of Incorporation, a
corporation may pay dividends redeem or repurchase its shares only if, after
giving it effect: (a) the corporation would not be able to pay its debts as they
become due in the usual course of business; or (b) the corporation's total
assets would be less than the sum of its total liabilities plus. Nevada Law
provides that no distribution (including dividends on, or redemption or
repurchases of, shares of capital stock) may be made if, after giving effect to
such distribution, the corporation would not be able to pay its debts as they
become due in the usual course of business, or, except as specifically permitted
by the articles of incorporation, the corporation's total assets would be less
than the sum of its total liabilities plus the amount that would be needed at
the time of a dissolution to satisfy the preferential rights of preferred
stockholders. The reincorporation does not significantly change the ability of
Earth Search Nevada to pay dividends or other distributions that would be
payable under Utah Law.
Restrictions on Business Combinations. Both Utah and Nevada Law contain
provisions restricting the ability of a corporation to engage in business
combinations with an interested stockholder. Under Utah Law, a corporation which
is listed on a national securities exchange, included for quotation on the
Nasdaq Stock Market or held of record by more than 2,000 stockholders, is not
permitted to engage in a business combination with any interested stockholder
for a three-year period following the time such stockholder became an interested
stockholder, unless (i) the transaction resulting in a person becoming an
interested stockholder, or the business combination, is approved by the board of
directors of the corporation before the person becomes an interested
stockholder; (ii) the interested stockholder acquires 85% or more of the
outstanding voting stock of the corporation in the same transaction that makes
it an interested stockholder (excluding shares owned by persons who are both
officers and directors of the corporation, and shares held by certain employee
stock ownership plans); or (iii) on or after the date the person becomes an
interested stockholder, the business combination is approved by the
corporation's board of directors and by the holders of at least 66 2/3% of the
corporation's outstanding voting stock at an annual or special meeting (and not
by written consent), excluding shares owned by the interested stockholder. Utah
Law defines "interested stockholder" generally as a person who owns 15% or more
of the outstanding shares of a corporation's voting stock.
Nevada Law regulates business combinations more stringently. First, an
"interested stockholder" is defined as a beneficial owner (directly or
indirectly) of ten percent (10%) or more of the voting power of the outstanding
shares of the corporation. Second, the three-year moratorium can be lifted only
by advance approval by a corporation's board of directors. Finally, after the
three-year period, combinations with "interested stockholders" remain prohibited
unless (i) they are approved by the board of directors, the disinterested
stockholders or a majority of the outstanding voting power not beneficially
owned by the interested party, or (ii) the interested stockholders satisfy
certain fair value requirements. A Nevada corporation may opt-out of the statute
with appropriate provisions in its articles of incorporation.
Neither the Earth Search Utah, nor Earth Search Nevada have opted out
of the applicable statutes and the more stringent requirements of Nevada Law
applying to mergers and combinations after the Effective Date of the
reincorporation.
Amendment to Articles of Incorporation or Bylaws. Both Utah and Nevada
Law require the approval of the holders of a majority of all outstanding shares
entitled to vote to approve proposed amendments to a corporation's certificate
or articles of incorporation. Both Utah and Nevada Law also provide that in
addition to the vote of the stockholders, the vote of a majority of the
outstanding shares of a class may be required to amend the Articles of
Incorporation or articles of incorporation. Neither state requires stockholder
approval for the board of directors of a corporation to fix the voting powers,
designation, preferences, limitations, restrictions and rights of a class of
stock provided that the corporation's organizational documents grant such power
to its board of directors. Both Utah and Nevada Law permit the number of
authorized shares of any such class of stock to be increased or decreased (but
not below the number of shares then outstanding) by the board of directors
unless otherwise provided in the articles of incorporation or resolution adopted
pursuant to the Articles of Incorporation, respectively.
Actions by Written Consent of Stockholders. Both Utah and Nevada Law
provide that, unless the articles or Articles of Incorporation provides
otherwise, any action required or permitted to be taken at a meeting of the
stockholders may be taken without a meeting if the holders of outstanding stock
having at least the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote consents
to the action in writing. Utah Law requires the corporation to give prompt
notice of the taking of corporate action without a meeting by less than
unanimous written consent to those stockholders who did not consent in writing.
Nevada Law does not require notice to the stockholders of action taken by less
than all of the stockholders.
Stockholder Vote for Mergers and Other Corporation Reorganizations.
Both jurisdictions require authorization by an absolute majority of the
outstanding voting rights, as well as approval by the board of directors, of the
terms of a merger or a sale of substantially all of the assets of the
corporation. Neither Utah nor Nevada Law require a stockholder vote of the
surviving corporation in a merger (unless the corporation provides otherwise in
its Articles of Incorporation) if: (a) the merger agreement does not amend the
existing Articles of Incorporation of the surviving corporation; (b) each share
of stock of the surviving corporation outstanding immediately before the
effective date of the merger is an identical outstanding share after the merger;
and (c) either no shares of common stock of the surviving corporation and no
shares, securities or obligations convertible into such stock are to be issued
or delivered under the plan of merger, or the authorized unissued shares or
shares of common stock of the surviving corporation to be issued or delivered
under the plan of merger plus those initially issuable upon conversion of any
other shares, securities or obligations to be issued or delivered under such
plan do not exceed twenty percent (20%) of the shares of common stock of such
constituent corporation outstanding immediately prior to the effective date of
the merger.
APPRAISAL RIGHTS
The reincorporation will be conducted as a merger of Earth Search Utah
into our wholly owned subsidiary pursuant to the Utah Code. Utah Law does not
provide for any right of appraisal or redemption in connection with mergers of a
parent corporation into its subsidiary. The stockholders are not entitled to
receive consideration in lieu of the shares of Earth Search Nevada.
Management
Upon the Effective Date the present officers and directors of Earth
Search Utah will continue to be the officers and directors of Earth Search
Nevada. This will result in the following persons serving in the following
capacities until the first annual meeting after the specified number of years
and until their respective successors are elected and qualified:
NAME AGE POSITION
Larry Vance 69 Chairman of the Board of Directors, Chief Executive Officer
and President
Tami J. Story 41 Secretary, Treasurer and Director
R. Paul Gray 41 Director
Timothy S Novak 41 Director
Larry F. Vance served as Chief Executive Officer of the Company
from 1985 until April 8, 1995. Since April 8, 1995, Mr.
Vance has served as Chairman of the Company. Mr. Vance is also a director of
the Company and has been a full-time employee of the
Company since 1985. Mr. Vance's training is in business and marketing. He
served in a management capacity for the 3M companies, IBM,
and Computer Usage Corporation prior to founding the Company.
Tami J. Story served in an administrative support capacity for the
Company from 1991 until April 1993. Since April 1993,
Ms. Story has served as Secretary and Treasurer of the Company. Ms. Story also
serves as a director of the Company. Ms. Story holds a
degree with a major in Nursing and a minor in Business Administration.
R. Paul Gray is the managing partner of Core Concepts, LLC. Previously,
he was Treasurer, Secretary and Chief Financial Officer of Power 3 Medical
Product, Inc. He also has practiced as a CPA with KPMG, Beers & Cutler and Ernst
& Young. Gray received his Bachelor of Science in Business Administration (BSBA)
from West Virginia University.
Timothy S. Novak is a founding member of Core Concepts, LLC.
Previously, he served as Regional Vice President for Women's Health Partners,
Inc. He also serves as an independent consultant through Novak Ventures. Novak
received his Bachelor of Science Degree in biological sciences from Bowling
Green University, and his Masters of Sciences in General Business Administration
from Central Michigan University.
Compensation of Executive Officers
No compensation has been awarded to, earned by or paid to Earth Search
Utah's chief executive officer or any other executive officer at any time during
the fiscal year ended March 31, 2004.
Federal Income Tax Consequences of the Reincorporation
Earth Search Utah believes that for federal income tax purposes no gain
or loss will be recognized by Earth Search Utah, Earth Search Nevada or the
shareholders of Earth Search Utah who receive Earth Search Nevada common stock
or Nevada Preferred Stock for their Earth Search Utah common stock or Company
Preferred Stock in connection with the Reincorporation. The adjusted tax basis
of each whole share of Earth Search Nevada common stock or Nevada Preferred
Stock received by a shareholder of Earth Search Utah as a result of the
Reincorporation will be the same as the shareholder's aggregate adjusted tax
basis in the shares of Earth Search Utah common stock or Company Preferred Stock
converted into such shares of Earth Search Nevada common stock or Nevada
Preferred Stock. A shareholder who holds Earth Search Utah common stock or
Company Preferred Stock will include in his holding period for the Earth Search
Nevada common stock or Nevada Preferred Stock that he receives as a result of
the Reincorporation his holding period for Earth Search Utah Common Stock or
Company Preferred Stock converted into such Earth Search Nevada common stock or
Nevada Preferred Stock.
Because of the complexity of the capital gains and loss provisions of
the Internal Revenue Code of 1986 and because of the uniqueness of each
individuals capital gain or loss situation, shareholders contemplating
exercising statutory appraisal rights should consult their own tax advisor
regarding the federal income tax consequences of exercising such rights. State,
local or foreign income tax consequences to shareholders may vary from the
federal income tax consequences described above, and SHAREHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISOR AS TO THE CONSEQUENCES TO THEM OF THE
REINCORPORATION UNDER ALL APPLICABLE TAX LAWS.
Security Ownership of Certain Beneficial Owners and Management. The
following table presents certain information regarding the beneficial ownership
of all shares of the Common and Preferred Stock at August 19, 2004 (i) each
person who owns beneficially more than five percent of the outstanding shares of
the Common Stock, (ii) each director of the Company, (iii) each named executive
officer, and (iv) all directors and officers as a group. The percentage of
common shares owned provided in the table is based on 194,305,708 shares
outstanding as of August 19, 2004. The percentage of preferred shares owned
provided in the table is based on 2,723,128 shares outstanding. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. Except as indicated by footnote, the persons named in the
table have sole voting and investment power with respect to all shares of common
and preferred stock shown as beneficially owned by them. The determination of
whether these persons have sole voting and investment power is based on
information provided by them.
- -------------------------- ------------------------------------------ -----------------------------------------------
Name of Beneficial Common Shares Beneficially Owned Preferred Shares(3)(4) Beneficially Owned
Owner(1)
- -------------------------- -------------------- --------------------- ----------------------- -----------------------
Number Percent(2) Number Percent (5)
- -------------------------- -------------------- --------------------- ----------------------- -----------------------
Larry F. Vance 14,765,003 7.60% 2,177,379 79.96%
- -------------------------- -------------------- --------------------- ----------------------- -----------------------
Tami J. Story 2,365,169 1.22% 464,632 17.06%
- -------------------------- -------------------- --------------------- ----------------------- -----------------------
Joseph Zamudio 162,000 0.01% 77,917 2.86%
- -------------------------- -------------------- --------------------- ----------------------- -----------------------
Laurel K. Fisher 470,592 0.24% 3,200 0.12%
- -------------------------- -------------------- --------------------- ----------------------- -----------------------
(1) Unless otherwise indicated, each person named in the above-described
table has the sole voting and investment power with respect to his
shares of the Common Stock beneficially owned.
(2) Unless otherwise provided, the calculation of percentage ownership is
based on the total number of shares of the Common
Stock outstanding as of August 19, 2004.
(3) Series A Preferred Stock entitles the holder thereof to have the
number of votes equal to 10 times the number of shares of
Common Stock into which such share of Series A Preferred Stock is
convertible
(4) Series A Preferred Stock shall be convertible at the rate of fifteen
(15) shares of Common Stock for each full share of
Series A Preferred Stock.
(5) Unless otherwise provided, the calculation of percentage ownership is
based on the total number of shares of the Preferred
Stock outstanding as of August 19, 2004.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that our executive officers and directors, and beneficial owners of more than
ten percent (10%) of any class of equity security registered pursuant to the
Securities Act of 1933, as amended, make certain filings with the SEC and the
Company. We do not believe, based on information provided to us by the reporting
persons, that during or since the fiscal year ended March 31, 2004, any
directors, officers or ten percent (10%) beneficial owners timely complied with
such filing requirements.
EXHIBITS INDEX
A. AGREEMENT AND PLAN OF MERGER*
B. NEVADA amended and restated articles OF INCORPORATION*
C. ANNUAL REPORT ON FORM 10-KSB FILED July 16, 2004*
- -----------------------
* Previously filed with Definitive 14C on September 13, 2004 under
accession number 0001059016-04-000186.