U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14(a)-6(e)(2))
[ ] Definitive Information Statement
W-J INTERNATIONAL, LTD.
(Name of the Registrant as Specified in Its Charter)
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[ ] Fee Computed on table below per Exchange Act Rules 14a-6(I)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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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):
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4. Proposed aggregate offering price:
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5. Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box is 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
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Notes:
INFORMATION STATEMENT
W-J International, Ltd.
23 Washburne Avenue
Paynesville, Minnesota 56362
We Are Not Asking You for a Proxy and You Are
Requested Not To Send Us a Proxy
This Information Statement is furnished by the Board of
Directors of W-J International, Ltd., a Nevada corporation
("Company"), to the holders of record at the close of business on
September 24, 2004 ("Record Date") that were not solicited by the
Company, of the Company's outstanding common stock, par value $0.01
per share ("Common Stock",) pursuant to Rule 14c-2 promulgated under
the Securities Exchange Act of 1934, as amended ("Exchange Act").
On September 24, 2004, the Company's Board of Directors
unanimously approved and entered into an Agreement and Plan of Merger
with InZon Corporation, a Delaware corporation, and all of InZon's
holders of common shares. Under this agreement, InZon will be merged
into the Registrant, with the Registrant being the surviving
corporation. This merger is intended to be treated as a
"reorganization" for tax purposes, and as a reverse merger for
accounting purposes. On that date, the Company's Board of Directors
also approved the following actions by unanimous written consent: (a)
a proposal to amend and restate the Company's articles of
incorporation; and (b) a proposal to decrease the issued and
outstanding Common Stock of the Company (also known as a reverse
stock split) by the ratio of six (6) existing shares of Common Stock
for each new one (1) share of Common Stock without a change in the
authorized shares of Common Stock of the Company. The Company has
received the consent of a majority of the outstanding shares of
Common Stock for the Company for these actions. The filing of
Articles of Merger with the Nevada Secretary will effect the merger.
This Information Statement will be sent on or about October 18,
2004 to the Company's stockholders of record who have not been
solicited for their consent of these corporate actions. The cost of
preparing, assembling and mailing this Information Statement is being
borne by the Company.
VOTING SECURITIES
The record date of shareholders entitled to receive notice of
this corporate action by the Company is the close of business on
September 24, 2004. On such date, the Company had issued and
outstanding 12,214,632 shares of $0.001 par value common stock. Each
share is entitled to one vote per share on any matter which may
properly come before the shareholders and there is no cumulative
voting right on any shares.
All matters to be voted on required an affirmative vote of a
majority of the issued and outstanding shares of the Company. The
Company has solicited and received written consent of a majority of
stockholders. Votes withheld and abstentions, as well as broker non-
votes, were not voted.
Under Nevada law, there are dissenters' rights with respect to
the Agreement and Plan of Merger as set forth in this Information
Statement. The relevant sections of the Nevada Revised Statutes that
deal with such dissenters' rights are set forth as follows:
NRS 92A.300 Definitions. As used in NRS 92A.300 to 92A.500,
inclusive, unless the context otherwise requires, the words and terms
defined in NRS 92A.305 to 92A.335, inclusive, have the meanings
ascribed to them in those sections.
NRS 92A.305 "Beneficial stockholder" defined. "Beneficial
stockholder" means a person who is a beneficial owner of shares held
in a voting trust or by a nominee as the stockholder of record.
NRS 92A.310 "Corporate action" defined. "Corporate action" means
the action of a domestic corporation.
NRS 92A.315 "Dissenter" defined. "Dissenter" means a stockholder
who is entitled to dissent from a domestic corporation's action under
NRS 92A.380 and who exercises that right when and in the manner
required by NRS 92A.400 to 92A.480, inclusive.
NRS 92A.320 "Fair value" defined. "Fair value," with respect to a
dissenter's shares, means the value of the shares immediately before
the effectuation of the corporate action to which he objects,
excluding any appreciation or depreciation in anticipation of the
corporate action unless exclusion would be inequitable.
NRS 92A.325 "Stockholder" defined. Stockholder" means a stockholder
of record or a beneficial stockholder of a domestic corporation.
NRS 92A.330 "Stockholder of record" defined. "Stockholder of
record" means the person in whose name shares are registered in the
records of a domestic corporation or the beneficial owner of shares
to the extent of the rights granted by a nominee's certificate on
file with the domestic corporation.
NRS 92A.335 "Subject corporation" defined. "Subject corporation"
means the domestic corporation which is the issuer of the shares held
by a dissenter before the corporate action creating the dissenter's
rights becomes effective or the surviving or acquiring entity of that
issuer after the corporate action becomes effective.
NRS 92A.340 Computation of interest. Interest payable pursuant to
NRS 92A.300 to 92A.500, inclusive, must be computed from the
effective date of the action until the date of payment, at the
average rate currently paid by the entity on its principal bank loans
or, if it has no bank loans, at a rate that is fair and equitable
under all of the circumstances.
NRS 92A.380 Right of stockholder to dissent from certain corporate
actions and to obtain payment for shares.
1. Except as otherwise provided in NRS 92A.370 and 92A.390,
any stockholder is entitled to dissent from, and obtain payment of
the fair value of his shares in the event of any of the following
corporate actions:
(a) Consummation of a conversion or plan of merger to which the
domestic corporation is a constituent entity:
(1) If approval by the stockholders is required for the
conversion or merger by NRS 92A.120 to 92A.160, inclusive, or
the articles of incorporation, regardless of whether the
stockholder is entitled to vote on the conversion or plan of
merger; or
(2) If the domestic corporation is a subsidiary and is merged
with its parent pursuant to NRS 92A.180.
(b) Consummation of a plan of exchange to which the domestic
corporation is a constituent entity as the corporation whose
subject owner's interests will be acquired, if his shares are to be
acquired in the plan of exchange.
(c) Any corporate action taken pursuant to a vote of the
stockholders to the extent that the articles of incorporation,
bylaws or a resolution of the board of directors provides that
voting or nonvoting stockholders are entitled to dissent and obtain
payment for their shares.
2. A stockholder who is entitled to dissent and obtain payment
pursuant to NRS 92A.300 to 92A.500, inclusive, may not challenge the
corporate action creating his entitlement unless the action is
unlawful or fraudulent with respect to him or the domestic corporation.
NRS 92A.390 Limitations on right of dissent: Stockholders of certain
classes or series; action of stockholders not required for plan of merger.
1. There is no right of dissent with respect to a plan of
merger or exchange in favor of stockholders of any class or series
which, at the record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting at which the
plan of merger or exchange is to be acted on, were either listed on a
national securities exchange, included in the national market system
by the National Association of Securities Dealers, Inc., or held by
at least 2,000 stockholders of record, unless:
(a) The articles of incorporation of the corporation issuing the
shares provide otherwise; or
(b) The holders of the class or series are required under the
plan of merger or exchange to accept for the shares anything except:
(1) Cash, owner's interests or owner's interests and cash
in lieu of fractional owner's interests of:
(I) The surviving or acquiring entity; or
(II) Any other entity which, at the effective date of
the plan of merger or exchange, were either listed on
a national securities exchange, included in the
national market system by the National Association of
Securities Dealers, Inc., or held of record by a least
2,000 holders of owner's interests of record; or
(2) A combination of cash and owner's interests of the kind
described in sub-subparagraphs (I) and (II) of subparagraph
(1) of paragraph (b).
2. There is no right of dissent for any holders of stock of the
surviving domestic corporation if the plan of merger does not require
action of the stockholders of the surviving domestic corporation
under NRS 92A.130.
NRS 92A.400 Limitations on right of dissent: Assertion as to
portions only to shares registered to stockholder; assertion by
beneficial stockholder.
1. A stockholder of record may assert dissenter's rights as to
fewer than all of the shares registered in his name only if he
dissents with respect to all shares beneficially owned by any one
person and notifies the subject corporation in writing of the name
and address of each person on whose behalf he asserts dissenter's
rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other
shares were registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as to
shares held on his behalf only if:
(a) He submits to the subject corporation the written consent of
the stockholder of record to the dissent not later than the time
the beneficial stockholder asserts dissenter's rights; and
(b) He does so with respect to all shares of which he is the
beneficial stockholder or over which he has power to direct the
vote.
NRS 92A.410 Notification of stockholders regarding right of dissent.
1. If a proposed corporate action creating dissenters' rights
is submitted to a vote at a stockholders' meeting, the notice of the
meeting must state that stockholders are or may be entitled to assert
dissenters' rights under NRS 92A.300 to 92A.500, inclusive, and be
accompanied by a copy of those sections.
2. If the corporate action creating dissenters' rights is taken
by written consent of the stockholders or without a vote of the
stockholders, the domestic corporation shall notify in writing all
stockholders entitled to assert dissenters' rights that the action
was taken and send them the dissenter's notice described in NRS 92A.430.
NRS 92A.420 Prerequisites to demand for payment for shares.
1. If a proposed corporate action creating dissenters' rights
is submitted to a vote at a stockholders' meeting, a stockholder who
wishes to assert dissenter's rights:
(a) Must deliver to the subject corporation, before the vote is
taken, written notice of his intent to demand payment for his
shares if the proposed action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of
subsection 1 and NRS 92A.400 is not entitled to payment for his
shares under this chapter.
NRS 92A.430 Dissenter's notice: Delivery to stockholders entitled to
assert rights; contents.
1. If a proposed corporate action creating dissenters' rights
is authorized at a stockholders' meeting, the subject corporation
shall deliver a written dissenter's notice to all stockholders who
satisfied the requirements to assert those rights.
2. The dissenter's notice must be sent no later than 10 days
after the effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where
and when certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates
to what extent the transfer of the shares will be restricted
after the demand for payment is received;
(c) Supply a form for demanding payment that includes the date
of the first announcement to the news media or to the
stockholders of the terms of the proposed action and requires
that the person asserting dissenter's rights certify whether or
not he acquired beneficial ownership of the shares before that
date;
(d) Set a date by which the subject corporation must receive the
demand for payment, which may not be less than 30 nor more than
60 days after the date the notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.
NRS 92A.440 Demand for payment and deposit of certificates; retention
of rights of stockholder.
1. A stockholder to whom a dissenter's notice is sent must:
(a) Demand payment;
(b) Certify whether he or the beneficial owner on whose behalf he
is dissenting, as the case may be, acquired beneficial ownership of
the shares before the date required to be set forth in the
dissenter's notice for this certification; and
(c) Deposit his certificates, if any, in accordance with the
terms of the notice.
2. The stockholder who demands payment and deposits his
certificates, if any, before the proposed corporate action is taken
retains all other rights of a stockholder until those rights are
cancelled or modified by the taking of the proposed corporate action.
3. The stockholder who does not demand payment or deposit his
certificates where required, each by the date set forth in the
dissenter's notice, is not entitled to payment for his shares under
this chapter.
NRS 92A.460 Payment for shares: General requirements.
1. Except as otherwise provided in NRS 92A.470, within 30 days
after receipt of a demand for payment, the subject corporation shall
pay each dissenter who complied with NRS 92A.440 the amount the
subject corporation estimates to be the fair value of his shares,
plus accrued interest. The obligation of the subject corporation
under this subsection may be enforced by the district court:
(a) Of the county where the corporation's registered office is
located; or
(b) At the election of any dissenter residing or having its
registered office in this state, of the county where the
dissenter resides or has its registered office. The court shall
dispose of the complaint promptly.
2. The payment must be accompanied by:
(a) The subject corporation's balance sheet as of the end of a
fiscal year ending not more than 16 months before the date of
payment, a statement of income for that year, a statement of
changes in the stockholders' equity for that year and the latest
available interim financial statements, if any;
(b) A statement of the subject corporation's estimate of the
fair value of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's rights to demand payment
under NRS 92A.480; and
(e) A copy of NRS 92A.300 to 92A.500, inclusive.
NRS 92A.470 Payment for shares: Shares acquired on or after date of
dissenter's notice.
1. A subject corporation may elect to withhold payment from a
dissenter unless he was the beneficial owner of the shares before the
date set forth in the dissenter's notice as the date of the first
announcement to the news media or to the stockholders of the terms of
the proposed action.
2. To the extent the subject corporation elects to withhold
payment, after taking the proposed action, it shall estimate the fair
value of the shares, plus accrued interest, and shall offer to pay
this amount to each dissenter who agrees to accept it in full
satisfaction of his demand. The subject corporation shall send with
its offer a statement of its estimate of the fair value of the
shares, an explanation of how the interest was calculated, and a
statement of the dissenters' right to demand payment pursuant to NRS
92A.480.
NRS 92A.480 Dissenter's estimate of fair value: Notification of
subject corporation; demand for payment of estimate.
1. A dissenter may notify the subject corporation in writing of
his own estimate of the fair value of his shares and the amount of
interest due, and demand payment of his estimate, less any payment
pursuant to NRS 92A.460, or reject the offer pursuant to NRS 92A.470
and demand payment of the fair value of his shares and interest due,
if he believes that the amount paid pursuant to NRS 92A.460 or
offered pursuant to NRS 92A.470 is less than the fair value of his
shares or that the interest due is incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to
this section unless he notifies the subject corporation of his demand
in writing within 30 days after the subject corporation made or
offered payment for his shares.
NRS 92A.490 Legal proceeding to determine fair value: Duties of
subject corporation; powers of court; rights of dissenter.
1. If a demand for payment remains unsettled, the subject
corporation shall commence a proceeding within 60 days after
receiving the demand and petition the court to determine the fair
value of the shares and accrued interest. If the subject corporation
does not commence the proceeding within the 60-day period, it shall
pay each dissenter whose demand remains unsettled the amount demanded.
2. A subject corporation shall commence the proceeding in the
district court of the county where its registered office is located.
If the subject corporation is a foreign entity without a resident
agent in the state, it shall commence the proceeding in the county
where the registered office of the domestic corporation merged with
or whose shares were acquired by the foreign entity was located.
3. The subject corporation shall make all dissenters, whether
or not residents of Nevada, whose demands remain unsettled, parties
to the proceeding as in an action against their shares. All parties
must be served with a copy of the petition. Nonresidents may be
served by registered or certified mail or by publication as provided
by law.
4. The jurisdiction of the court in which the proceeding is
commenced under subsection 2 is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and
recommend a decision on the question of fair value. The appraisers
have the powers described in the order appointing them, or any
amendment thereto. The dissenters are entitled to the same discovery
rights as parties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is
entitled to a judgment:
(a) For the amount, if any, by which the court finds the fair
value of his shares, plus interest, exceeds the amount paid by
the subject corporation; or
(b) For the fair value, plus accrued interest, of his after-
acquired shares for which the subject corporation elected to
withhold payment pursuant to NRS 92A.470.
NRS 92A.500 Legal proceeding to determine fair value:
Assessment of costs and fees.
1. The court in a proceeding to determine fair value shall
determine all of the costs of the proceeding, including the
reasonable compensation and expenses of any appraisers appointed by
the court. The court shall assess the costs against the subject
corporation, except that the court may assess costs against all or
some of the dissenters, in amounts the court finds equitable, to the
extent the court finds the dissenters acted arbitrarily, vexatiously
or not in good faith in demanding payment.
2. The court may also assess the fees and expenses of the
counsel and experts for the respective parties, in amounts the court
finds equitable:
(a) Against the subject corporation and in favor of all
dissenters if the court finds the subject corporation did not
substantially comply with the requirements of NRS 92A.300 to
92A.500, inclusive; or
(b) Against either the subject corporation or a dissenter in
favor of any other party, if the court finds that the party
against whom the fees and expenses are assessed acted
arbitrarily, vexatiously or not in good faith with respect to
the rights provided by NRS 92A.300 to 92A.500, inclusive.
3. If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters similarly
situated, and that the fees for those services should not be assessed
against the subject corporation, the court may award to those counsel
reasonable fees to be paid out of the amounts awarded to the
dissenters who were benefited.
4. In a proceeding commenced pursuant to NRS 92A.460, the court
may assess the costs against the subject corporation, except that the
court may assess costs against all or some of the dissenters who are
parties to the proceeding, in amounts the court finds equitable, to
the extent the court finds that such parties did not act in good
faith in instituting the proceeding.
5. This section does not preclude any party in a proceeding
commenced pursuant to NRS 92A.460 or 92A.490 from applying the
provisions of N.R.C.P. 68 or NRS 17.115.
STOCK OWNERSHIP
The following table sets forth information regarding the
beneficial ownership of shares of the Registrant's common stock as of
September 24, 2004 (12,214,632 issued and outstanding) by (i) all
stockholders known to the Registrant to be beneficial owners of more
than 5% of the outstanding common stock; and (ii) all officers and
directors of the Registrant, individually and as a group (each person
has sole voting power and sole dispositive power as to all of the
shares shown as beneficially owned by them):
Title of Class Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Class
Owner (1)
Common Stock Edward H. Webb 7,155,500 (2) 58.58%
Route 3, Box 59
Paynesville, Minnesota 56362
Common Stock Kathy V. Webb 0 0.00%
Route 3, Box 59
Paynesville, Minnesota 56362
Common Stock Gary L. Borglund 0 0.00%
2535 Pilot Knob Road
Suite 118
Mendota Heights, Minnesota 55120
Common Stock Shares of all directors and 7,155,500 58.58%
executive officers as a group (3
persons)
(1) None of these security holders has the right to acquire any
amount of the shares within sixty days from options, warrants,
rights, conversion privilege, or similar obligations.
(2) Shares jointly owned by Edward Webb and Kathy Webb, as husband
and wife.
MERGER WITH INZON CORPORATION
On September 24, 2004, the Company's Board of Directors
unanimously approved and entered into an Agreement and Plan of Merger
("Agreement") with InZon Corporation, a Delaware corporation, and all
of InZon's holders of common shares. Under this agreement, InZon
will be merged into the Registrant, with the Registrant being the
surviving corporation. This merger is intended to be treated as a
"reorganization" for tax purposes, and as a reverse merger for
accounting purposes. The Company has received the consent of a
majority of the outstanding shares of Common Stock for the Company
for this corporate action.
Reasons for the Merger.
Company management believes that merging with InZon it will make
the Company eligible for listing on the Over the Counter Bulletin
Board. In addition, since the Company currently has no business,
this may enable shareholders to realize value to their shares of
common stock of the Company.
Business Description of InZon Corporation.
InZon was organized in the State of Delaware on May 14, 2004.
Based in Delray Beach, Florida, InZon is currently rolling out a
consumer voice-over-internet-protocol (VoIP) phone, the "inZon Z-
8008", to the Asian marketplace. This company has achieved results in
the test launch of its new session initiation protocol (SIP) based
VoIP service in the Asian market, and has an exclusive agreement to
provide private-labeled VoIP services to a major multimedia Asian
cable operator with a high speed cable network reaching millions of
homes. InZon was selected to provide advanced telecommunications
services over this network, inclusive of local U.S. numbers (DID's),
SIP telephones and voicemail. InZon's VoIP technology provides
complete voice, fax, data and conference call services on an
application service provider (ASP) basis utilizing its own worldwide
hybrid VoIP/TDM network. InZon provides international voice, data,
fax and Internet services on a wholesale basis over a private IP
network to international carriers and other communication service
providers in the United States and internationally. This company's
state-of-the-art internet protocol (IP) network offers its customers
economical pricing, global reach and an intelligent platform that
guarantees fast delivery of value-added services and applications.
InZon's objective is to build a strong worldwide presence in
the industry at a middle market level or be acquired by a larger
industry participant. InZon intends to accomplish this through a
combination of internal growth and acquisitions, capitalizing on the
growing consolidation trend in the industry.
Merger Procedure.
The merger will be effected by exchanging all of the issued and
outstanding shares of common stock of InZon for shares of common
stock of the Company. When the merger is complete, each outstanding
share of common stock of the InZon will be exchanged. All fractional
shares shall be rounded up or down to the whole share. It will be
necessary for shareholders of InZon to exchange their existing stock
certificates for certificates of the Company. Certificates for
shares of InZon's common stock will automatically represent the
number of shares of the Company when the exchange is completed.
Conditions to Consummation of the Merger.
The merger will not be completed unless, among other things, the
following conditions are satisfied or, if allowed by law, waived:
(a) The representations and warranties of each of the
parties to the Agreement are true in all material respects.
(b) All parties have performed and complied with all of the
terms and conditions required by the Agreement to be performed or
complied with by them before the Closing.
(c) Each of the parties has received an opinion from counsel for
the other party that certain representations are correct; the counsel
knows of no inaccuracy in certain of the representations; and the
shares to be delivered by each of the parties have been validly
issued, fully paid and non-assessable.
(d) Each party has made available to the other party all
books and records of each party, including minute books and stock
transfer records.
There are no regulatory approvals needed for the merger.
Termination of Agreement.
The Agreement may be terminated by mutual consent in writing:
(a) By either the Directors of the Company or the InZon
stockholders and InZon if there has been a material misrepresentation
or material breach of any warranty or covenant by the other party; or
(b) By either the Directors of the Company or the InZon
stockholders and InZon if the Closing shall not have taken place,
unless adjourned to a later date by mutual consent in writing, by the
date fixed in Section 2.1 of the Agreement.
Effective Time.
The Company anticipates that the merger will become effective
promptly following the filing of Articles of Merger with the Nevada
Secretary of State, unless a later effective time is specified in
this filing.
Required Vote.
The exchange requires the affirmative vote of the holders of a
majority of the outstanding common stock of the Company and InZon,
which has occurred.
Effect of Merger.
The effect of the merger will be that the new corporation will
succeed to, without other transfer, and will possess and enjoy all
rights, privileges, powers and franchises, and be subject to all
restrictions, disabilities and duties of each of two constituent
corporations, and the rights, privileges, powers and franchises of
each of corporations, and all property, real, personal and mixed, and
all debts to either of the constituent corporations shall be vested
in the continuing corporation. In addition, all rights of creditors
and all liens on any property of each of constituent corporations
will be preserved unimpaired, limited to property affected by the
liens at time of merger, and all debts, liabilities and duties of
constituent corporations will attach to the continuing corporation,
and may be enforced against it to the same extent as if debts,
liabilities and duties had been incurred or contracted by it.
AMENDMENT AND RESTATEMENT OF
ARTICLES OF INCORPORATION
The corporate action to be taken also consists of the Company
filing Amended and Restated Articles of Incorporation, which will,
among other things, amend the name of the Company to "InZon
Corporation." The Board of Directors believes it is in the best
interests of the Company to take advantage of such identity by
adopting the new corporate name (which is the same as the company
merging into the Company).
In connection with this name change, the Company will notify the
Over the Counter Bulletin Board, and a new trading symbol will be
assigned, if the Company is trading on that exchange when the
amendment occurs.
DECREASE IN ISSUED AND OUTSTANDING COMMON STOCK
Description of Securities.
(a) Shareholder Rights.
The authorized capital of the Company currently consists of
500,000,000 shares of common stock, $0.001 par value per share. The
holders of Common Stock:
- have equal ratable rights to dividends from funds legally
available therefore, when, as, and if declared by the board of
directors of the Company;
- are entitled to share ratably in all of the assets of the
Company available for distribution upon winding up of the
affairs of the Company; and
- are entitled to one non-cumulative vote per share on all matters
on which shareholders may vote at all meetings of shareholders.
The shares of Common Stock do not have any of the following rights:
- special voting rights;
- preference as to dividends or interest;
- preemptive rights to purchase in new issues of shares;
- preference upon liquidation; or
- any other special rights or preferences.
In addition, the shares of Common Stock are not convertible into
any other security. There are no restrictions on dividends under any
loan other financing arrangements or otherwise.
(b) Non-Cumulative Voting.
The holders of shares of Common Stock do not have cumulative
voting rights, which means that the holders of more than 50% of such
outstanding shares, voting for the election of directors, can elect
all of the directors to be elected, if they so choose. In such
event, the holders of the remaining shares will not be able to elect
any of the company's directors.
(c) Dividends.
The Company does not currently intend to pay cash dividends.
Because the Company does not intend to make cash distributions,
potential shareholders would need to sell their shares to realize a
return on their investment. There can be no assurances of the
projected values of the shares, or can there be any guarantees of the
success of the Company.
A distribution of revenues will be made only when, in the
judgment of the Company's Board of Directors, it is in the best
interest of its stockholders to do so. The Board of Directors will
review, among other things, the financial status of the company and
any future cash needs of the Company in making its decision.
(d) Transfer Agent.
The Company uses the services of Liberty Transfer Co., 191 New
York Avenue, Huntington Station, New York 11743, as transfer agent
and registrar.
Decrease in Issued and Outstanding Shares (Reverse Stock Split).
The Company intends to decrease the issued and outstanding
Common Stock by the ratio of six (6) existing shares of Common Stock
for each new one (1) share of Common Stock without a change in the
authorized shares of Common Stock of the Company (this is also known
as a reverse stock split). The Company must provide the Over the
Counter Bulletin Board (if the Company is trading on that exchange
when this is to take affect) at least ten (10) calendar days' advance
notice of the effective date of this reverse stock split in
compliance with Rule 10b-17 under the Securities Exchange Act of 1934.
The Company sought approval for this reverse stock split because
it believes its shareholders would benefit from a capital structure
more appropriate for a company of its operational and financial
status. The Company has refined its focus, set new objectives to
enhance shareholders' value and hopes that a reverse stock split,
which should result in a higher price per share, and corresponding
lower number of total shares issued and outstanding at the time of
implementation, should help to increase the marketability of its
stock to potential new investors and its ability to attract
institutional investors to hold its shares, while decreasing the
volatility of its stock price. The Company believes that these
changes will help to better position the Company to capture new
growth opportunities and enable it to execute its business plans more
effectively.
One affect of a reverse stock split is to increase the number of
authorized, but unissued shares of Common Stock. One effect of the
existence of authorized but unissued capital stock may be to enable
the Board of Directors to render more difficult or to discourage an
attempt to obtain control of the company by means of a merger, tender
offer, proxy contest, or otherwise, and thereby to protect the
continuity of the Company's management. If, in the due exercise of
its fiduciary obligations, for example, the Board of Directors were
to determine that a takeover proposal was not in the Company's best
interests, such shares could be issued by the Board of Directors
without stockholder approval in one or more private placements or
other transactions that might prevent, or render more difficult or
costly, completion of the takeover transaction by diluting the voting
or other rights of the proposed acquiror or insurgent stockholder or
stockholder group, by creating a substantial voting block in
institutional or other hands that might undertake to support the
position of the incumbent board of directors, by effecting an
acquisition that might complicate or preclude the takeover, or otherwise.
Prior to Reverse After Reverse
Number of Outstanding
Shares (as of September 24, 2004) 12,214,632 2,035,772 (1)
Shares Unreserved and
Authorized for Issuance 487,785,368 497,964,228 (1)
Total Amount of Authorized
Shares 500,000,000 500,000,000
(1) These numbers are an approximation since rounding may cause
these numbers to change slightly.
There are no current provisions of the Company's articles of
incorporation, bylaws, or other contractual arrangements that have
material anti-takeover impacts. The Company does not have any
current plans, proposals, or arrangements to propose any amendments
to the articles of incorporation or bylaws that would have a material
anti-takeover effect.
Another affect of a reverse stock split is that any Company
shareholders that hold five or fewer shares will no longer be
shareholders of the Company. In addition, any fractional interests
in connection with the payment of this reverse split will be rounded
up to the nearest whole number of Shares by the Company's transfer agent.
By order of the Board of Directors
September 24, 2004
/s/ Edward H. Webb
Edward H. Webb, President