-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OstUI/HtXrwKjKL2Q39QUTqsdUYb+h4wjumRDwWyq3a2gPZuYI0fU6b+jYEuCQDO Li+XnvIfNua+3wwiytqLtA== 0001165527-05-000031.txt : 20060508 0001165527-05-000031.hdr.sgml : 20060508 20050214162927 ACCESSION NUMBER: 0001165527-05-000031 CONFORMED SUBMISSION TYPE: SB-2/A PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20050214 DATE AS OF CHANGE: 20050427 FILER: COMPANY DATA: COMPANY CONFORMED NAME: M.E.R. CORP CENTRAL INDEX KEY: 0001303943 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 201575477 STATE OF INCORPORATION: NV FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SB-2/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-119223 FILM NUMBER: 05610948 BUSINESS ADDRESS: STREET 1: 2400, 10303 JASPER AVENUE CITY: EDMONTON STATE: A0 ZIP: T5J 3T8 BUSINESS PHONE: 780-918-0918 MAIL ADDRESS: STREET 1: 2400, 10303 JASPER AVENUE CITY: EDMONTON STATE: A0 ZIP: T5J 3T8 SB-2/A 1 g0770.txt AMENDMENT NO. 3 TO FORM SB-2 As Filed With the Securities and Exchange Commission on February 14, 2005 Registration No.333-119223 ================================================================================ U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM SB-2/A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 THIRD AMENDMENT M.E.R.CORPORATION (Name of Small Business Issuer in its charter) Nevada 6770 20-1575477 State or Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Incorporation or Organization) Classification Code Number) Identification No.) 2400, 10303 Jasper Avenue Edmonton, Alberta T5J 3T8 (780) 918-0918 (Address and telephone number of Registrant's principal executive offices and principal place of business) Ronald Mercier 2400, 10303 Jasper Avenues Edmonton, Alberta T5J 3T8 (780) 918-0918 (Name, address, and telephone number of agent for service) WITH A COPY TO: The O'Neal Law Firm, P.C. Attention: William D. O'Neal, Esq. 668 North 44th Street Phoenix, Arizona 85008 Ph: (602) 267-3855 Fax: (602) 267-7400 Approximate date of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If the delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 415, check the following box. [X] CALCULATION OF REGISTRATION FEE
====================================================================================================== Title of Each Proposed Maximum Proposed Maximum Class of Securities Amount to be Offering Price Aggregate Offering Amount of to be Registered Registered Per Share Price (2) Registration Fee - ------------------------------------------------------------------------------------------------------ Common Stock 500,000 $0.10 per share(1) $50,000 $4.60 =====================================================================================================
1. Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457. M.E.R. Corporation ("M.E.R.") hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until M.E.R. shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ================================================================================ PRELIMINARY PROSPECTUS DATED FEBRUARY 14, 2005 THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. PROSPECTUS 500,000 shares of Common Stock $0.10 per share M.E.R.Corporation There is no public or private market for our securities. We intend to offer, sell and distribute publicly not less than 500,000 shares our securities at an offering price of $0.10 per share, for an offering of $50,000. Our offering is being offered on a "best efforts", "all-or-none" basis during an offering period of 90 days, that may be extended for an additional 120 days. If less than $50,000 is received from the sale of the shares within the offering period, all investors' funds will be promptly refunded without interest and without any deductions for commission or other expenses. Subscribers will not be able to obtain return of their funds while in escrow. There will be a minimum purchase of 1,000 shares at $100. The securities and proceeds of this offering will be held in a non- interest-bearing escrow account until such time that we have identified a potential merger or acquisition candidate and proposed it to our investors, our investors have had an opportunity to re-affirm their investment in accordance with the requirements of Rule 419 of Regulation C, and the merger or acquisition has been consummated. INVESTING IN OUR SECURITIES INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 6. Offering Costs(2) Price to Discounts and Net Public Commissions(3) Proceeds ------ -------------- -------- Per share $0.10 $0.00 $0.10 Aggregate Offering Amount $50,000.00 $0.00 $50,000.00 - ---------- 2. Total Offering costs to date of $11,000.00 have been paid out of Mr. Mercier's initial capital contribution. 3. No commissions will be paid nor discounts given. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is February 14, 2005. DEALER PROSPECTUS DELIVERY OBLIGATION UNTIL 90 DAYS FROM THE DATE FUNDS AND SECURITIES ARE RELEASED FROM THE ESCROW ACCOUNT, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. 2 TABLE OF CONTENTS Page ---- Prospectus Summary 4 Risk Factors 6 Use of Proceeds 9 Determination of Offering Price 9 Dilution 9 Description of Business 10 Management's Plan of Operation 13 Description of Property 20 Management 21 Executive Compensation 21 Principal Stockholders 22 Certain Relationships and Related Transactions 22 Market for Common Equity and Related Shareholder Matters 22 Dividend Policy 22 Description of Securities 23 Plan of Distribution 25 Legal Proceedings 26 Legal Matters 26 Disclosure of Commission Position of Indemnification for Securities Act Liabilities 26 Experts 27 Changes in and Disagreements with Accountants on Accounting and Financial Disclosures 27 Where You Can Find More Information 27 Index to Financial Statements F-1 RELIANCE ON PROSPECTUS YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS MAY BE USED ONLY WHERE IT IS LEGAL TO SELL THESE SECURITIES. 3 PROSPECTUS SUMMARY The Company M.E.R. Corporation, a development stage corporation, was organized to provide a corporate entity in order to participate in a merger or acquisition with another entity meeting the requirements of Rule 419 of Regulation C. We are a blank check company and are subject to certain regulatory requirements imposed by Rule 419 of Regulation C under the Securities Act. We believe that following this offering certain opportunities to merge with, or acquire the assets of another corporate entity may become available to us due primarily to our status as a reporting publicly held company and to our flexibility in structuring and participating in certain business combinations, such as mergers and acquisitions. However, we have no plans, proposals, arrangements, understandings or agreements to participate in any specific merger or acquisition. M.E.R. Corporation was incorporated in Nevada on August 17, 2004. In this prospectus, we refer to M.E.R.Corporation as "M.E.R.", "we" and "us." Our principal executive offices are located at 2400, 10303 Jasper Avenue, Edmonton, Alberta T5J 3T8. Our phone number is (780) 918-0918. The Offering Securities Offered by M.E.R.Corporation: 500,000 shares Shares Outstanding Prior to Offering 5,000,000 shares Shares Outstanding After Offering: 5,500,000 shares Comparative Share Ownership Upon Completion of Offering: Current Shareholders (5,000,000 shares) 90.91% Public Shareholders (500,000 shares) 9.09% Use of Proceeds Business development; working capital as utilized by prospective business opportunity candidate. M.E.R. is offering 500,000 shares at $0.10 per share on a "best efforts", "all-or-none basis." We intend to offer our securities directly to the public only through our sole officer and director in those jurisdictions where sales by such persons are permitted by law. No broker-dealer will be used to offer our securities to the public and no commissions will be paid to any third party. Ronald Mercier, our sole director and officer will not purchase any of our securities in this offering. The securities and proceeds of this offering shall be placed in a non- interest-bearing escrow account with Manufacturers and Traders Trust Company, a New York banking company, and may be released from escrow only upon the closing of a merger or acquisition representing at least 80% of the maximum offering proceeds, the filing of a post-effective amendment, and the reconfirmation of a sufficient number of purchasers in the investment. In no event shall the proceeds remain in escrow for more than 18 months after the effective date of the initial registration statement. If a consummated acquisition or merger meeting the requirements of Regulation C has not occurred by a date 18 months after the effective date of this Registration Statement, funds held in escrow shall be returned by first class mail to the purchaser within five (5) business days following that date. 4 Selected Financial Data The following table sets forth selected financial information concerning M.E.R.: As of August 31, As of November 30, 2004 2004 ---------------- ---------------- Balance Sheet: Current assets $ 0 $ 0 Total assets 0 0 Current liabilities 0 0 Working capital 0 0 Stockholders' equity 0 0 Net tangible book value per share $ 0 $ 0 Statement of Operations: Revenue $ 0 $ 0 Total expenses 11,000 11,000 Net loss $(11,000) $(11,000) The "Selected Financial Data" is a summary only and has been derived from and is qualified in its entirety by reference to M.E.R.'S financial statements, included in this prospectus. 5 RISK FACTORS The securities offered are highly speculative in nature and involve a high degree of risk. They should be purchased only by persons who can afford to lose their entire investment. This section sets forth all material risks known to management with respect to this offering. Therefore, each prospective investor should, prior to purchase, consider very carefully each of the following known material risk factors among other things, as well as all other information set forth in this prospectus. WE HAVE A VERY LIMITED OPERATING HISTORY UPON WHICH YOU MAY EVALUATE AN INVESTMENT IN OUR COMPANY. We only have a brief operating history. As a result, we have only a limited operating history upon which an investor can base an evaluation of our business and prospects. Our prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development, such as operating loses, limited access to capital and issues relating to management of growth. We may not be successful in addressing these risks and uncertainties and our failure to do so could have a material adverse effect on our business, financial condition and operating results. OUR BUSINESS HAS NO REVENUES AND WILL LIKELY FAIL UNLESS WE MERGE WITH OR ACQUIRE AN OPERATING BUSINESS. We are a development stage company and have had no revenues from operations. We may not realize any revenues unless and until we successfully merge with or acquire an operating business. If we do not find a suitable merger or acquisition candidate, our business will likely fail. WE INTEND TO ISSUE MORE SHARES IN A MERGER OR ACQUISITION, WHICH WILL RESULT IN SUBSTANTIAL DILUTION. Our certificate of incorporation authorizes the issuance of a maximum of 25,000,000 shares of common stock, $.001 par value. Any merger or acquisition effected by us may result in the issuance of additional securities without shareholder approval and may result in substantial dilution in the percentage of our common stock held by our then existing shareholders. Moreover, the common stock issued in any such merger or acquisition transaction may be valued on an arbitrary or non-arms-length basis by our management, resulting in an additional reduction in the percentage of common stock held by our then existing shareholders. WE HAVE CONDUCTED NO MARKET RESEARCH OR IDENTIFICATION OF BUSINESS OPPORTUNITIES, WHICH MAY AFFECT OUR ABILITY TO IDENTIFY A BUSINESS TO MERGE WITH OR ACQUIRE. We have neither conducted nor have others made available to us results of market research concerning prospective business opportunities. Therefore, we have no assurances that market demand exists for a merger or acquisition as contemplated by us. Mr. Mercier has not identified any specific business combination or other transactions for formal evaluation, such that it may be expected that any such target business or transaction will present such a level of risk that conventional private or public offerings of securities or conventional bank financing will not be available. There is no assurance that we will be able to acquire a business opportunity on terms favorable to us. If we are unable to locate a suitable merger or acquisition candidate, obtain the consent of a 6 sufficient number of investors to continue their investment in our company, or clear Commission comments upon filing our post-effective amendment in accordance with Rule 419, investors would not have immediate access to, or receive any return upon, escrowed investment funds. IF WE RECEIVE LESS THAN ALL OF THE PROCEEDS AS A RESULT OF LATER REFUNDS UNDER RULE 419, WE MAY NOT BE ABLE TO IMPLEMENT THE BUSINESS PLAN OF OUR BUSINESS OPPORTUNITY AND WE MAY, OTHERWISE, BE UNDERCAPITALIZED SUCH THAT WE MAY NOT HAVE ENOUGH CAPITAL TO IMPLEMENT AND MAINTAIN OUR BUSINESS OPERATIONS. Rule 419 of Regulation C under the Securities Act generally requires: * the deposit of the securities and proceeds of our offering in an escrow account, and that the investors may not have access to their securities and funds for up to 18 months from the date of the prospectus; and * that if a significant number of investors do not reconfirm their investment, the business combination may not be closed and the investors will not be issued their securities. In contingency offerings, Rule 419 provisions relating to the release of funds and Exchange Act Rule 10b-9 obligations will apply. Rule 10b-9 prohibits as a "manipulative or deceptive device or contrivance" under Section 10(b) of the Exchange Act any representations that a security is being offered on an "all or none" or "part or none" basis, unless prompt refunds are made to purchasers if the represented number of securities is not sold at the specified price within the specified time and the total amount due the seller is not received by the seller by the specified date. Upon satisfaction of these conditions, Rule 419 continues to govern the use of offering proceeds. For blank check offerings subject to both Rule 419 and Rule 10b-9, the requirements of Rule 10b-9 apply until the conditions of the offering governed by that Rule are met, for example, reaching the total offering amount in an all-or-none offering. Upon satisfaction of Rule 10b-9, the provisions of Rule 419 will continue to govern. Since we are a blank check company filing our initial registration statement for a contingent offering subject to Rule 10b-9, the provisions of the Rule apply only until the conditions subject to that Rule are met, but after satisfaction of such conditions an investor is not guaranteed a return of proceeds even if, as a result of investor refund requests under 419, the Rule 10b-9 conditions would no longer be met. If we receive less than all of the proceeds as a result of later refunds under Rule 419, we may not be able to implement the business plan of our business opportunity and we may, otherwise, be undercapitalized such that we may not have enough capital to implement and maintain our business operations. These requirements will significantly increase our time and costs of doing business. OUR AUDITOR HAS EXPRESSED SERIOUS DOUBT ABOUT OUR ABILITY TO CONTINUE TO OPERATE AS A GOING CONCERN. Our independent auditor has expressed serious doubt about our ability to continue to operate as a going CONCERN. Our ability to operate as a going concern is dependant upon the completion of this offering and the closing of a business opportunity, such as the merger with or acquisition of an operating business. If we fail to achieve these milestones, we would not likely be able to continue our operations. 7 IF MR. MERCIER IS UNABLE TO FUND OUR OPERATIONS DURING THE 6-MONTH OFFERING PERIOD, WE MAY NOT BE ABLE TO OBTAIN ALTERNATE FINANCING ON TERMS ACCEPTABLE TO US OR AT ALL, WHICH COULD AFFECT OUR ABILITY TO CONTINUE TO OPERATE AS A GOING CONCERN. Mr. Mercier intends to fund our operations and other capital needs through additional capital contributions during the 7 month offering period, or until we locate a merger or acquisition candidate in accordance with the requirements of Rule 419 of Regulation C. Until we locate, a business combination, we will not require any additional funds beyond those to be provided by Mr. Mercier. Once we locate a suitable acquisition or merger candidate, we will incur significant legal fees and expenses in connection with the acquisition or merger of an operating business that will need to be paid by the target company including: * the costs of preparing post-effective amendments, interim reports, quarterly reports, annual reports and proxy materials; and * legal fees and expenses incurred in the preparation of legal documents for mergers and acquisitions. Mr. Mercier intends to provide funds as required to pay for any filings required to maintain our corporate and reporting status, and to keep us in good standing with regulators and tax authorities. Mr. Mercier has no legal obligation to provide any such funds and will depend upon Mr. Mercier's financial ability to provide such funds at the time required. There is no cap or minimum on the amount of funds Mr. Mercier intends to provide. There is no written arrangement or agreement with Mr. Mercier requiring Mr. Mercier to contribute any such additional funds or for the repayment of any such funds, and all such funds shall be considered capital contributions. If Mr. Mercier is unable to provide such funding as needed, we will need to seek alternative funding that may or may not be available to us upon acceptable terms. This could affect our ability to continue to operate as a going concern. Our plan of operation following the effective date of this offering encompasses a merger with or acquisition of an operating business, but we will not know what our cash requirements will be until we close such merger or acquisition. We will not use any of the proceeds of this offering unless and until we close this offering and close a business opportunity. Should the business opportunity have profitable operations, its capital needs may not require the use of our proceeds that, in such event, will be held as working capital for future contingencies. OUR MANAGEMENT HAS OTHER FINANCIAL AND BUSINESS INTERESTS TO WHICH A SIGNIFICANT AMOUNT OF TIME IS DEVOTED, WHICH MAY POSE SIGNIFICANT CONFLICTS OF INTEREST. Because Mr. Mercier has other financial and business interests, conflicts of interest may arise which may compete for his services and time. Mr. Mercier has no plans, proposals, arrangements, understandings or agreements to participate with any specific business opportunity with us. While Mr. Mercier has had no other affiliations or involvement in any other blank check company to date, and has no current plans to become affiliated or involved in any other blank check company, Mr. Mercier may, in the future, hold similar positions in other blank check companies, which may conflict with the interests of M.E.R.. Conflicts may also arise in important matters such as identifying and selecting a merger or acquisition candidate. There can be no assurance that Mr. Mercier will resolve all conflicts of interest in our favor. If we and other blank check companies that Mr. Mercier is affiliated with desire to take advantage of the same business opportunity, the company that first filed a registration statement with the Commission shall be entitled to proceed with the proposed transaction. 8 MR. MERCIER HAS NO PRIOR BLANK CHECK COMPANY EXPERIENCE THAT COULD RESULT IN OUR INABILITY TO LOCATE A SUITABLE MERGER OR ACQUISITION CANDIDATE OR SUCCESSFULLY COMPLETE SUCH A TRANSACTION. Mr. Mercier has no prior experience in operating or managing a blank check company. As a result of Mr. Mercier's lack of experience, we may not be able to locate a suitable acquisition or merger candidate. Further, even if such a target candidate is located, there is no assurance that Mr. Mercier will be able to successfully complete a merger or acquisition transaction. THERE IS NO PUBLIC MARKET FOR OUR COMMON STOCK AND THERE CAN BE NO ASSURANCE THAT OUR COMMON STOCK WILL EVER BE PUBLICLY TRADED OR APPRECIATE SIGNIFICANTLY IN VALUE AND INVESTORS MAY NOT BE ABLE TO FIND PURCHASERS FOR THEIR SHARES OF OUR COMMON STOCK. There is no public market for shares of our common stock. The securities issued pursuant to this offering must remain in the escrow account until we have complied with all of the requirements of Rule 419, and there will be no market for these securities while they remain in the escrow account. Further, we cannot guarantee thereafter that an active public market will develop or be sustained. Therefore, investors may not be able to find purchasers for their shares of our common stock. THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO US, OUR INDUSTRY AND TO OTHER BUSINESSES. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF OUR MANAGEMENT, AS WELL AS ASSUMPTIONS MADE BY AND INFORMATION CURRENTLY AVAILABLE TO OUR MANAGEMENT. WHEN USED IN THIS PROSPECTUS, THE WORDS "ESTIMATE," "PROJECT," "BELIEVE," "ANTICIPATE," "INTEND," "EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS REFLECT OUR CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT MAY CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED IN OUR FORWARD-LOOKING STATEMENTS. WE CAUTION YOU NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE OF THIS PROSPECTUS. WE DO NOT UNDERTAKE ANY OBLIGATION TO PUBLICLY RELEASE ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE OF THIS PROSPECTUS OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS. 9 USE OF PROCEEDS. Mr. Mercier estimates we will receive net proceeds of approximately $50,000 from our sale of 500,000 shares offered by us. This estimate is based upon an offering price of $0.10 per share of common stock with no deduction for estimated offering expenses as these costs are being paid out of our pre-offering working capital. Also, we will pay no commissions or offer any discounts. Since this offering is a "blank check" offering, and we have not identified a merger or acquisition candidate, the use of proceeds of this offering cannot be described with specificity. We have no plans, proposals, arrangements, understandings or preliminary agreements to participate in any specific merger or acquisition. All of the net proceeds will be utilized by our merger or acquisition candidate for the development of its business and for working capital. We do not intend to request a release of 10% of the offering proceeds from the escrow as permitted by Rule 419. Uses of working capital will include, but not be limited to, general and administrative salaries, exclusive of management salaries, associated benefits, office lease and expenses. We are not in a position to allocate specific amounts for specific purposes as we do not know the nature of the acquisition or merger candidate at this time. The salaries of the management of the business opportunity candidate will be paid from such company's cash flow and not from the proceeds of this offering. We intend to escrow all of the proceeds of this offering with Manufacturers and Traders Trust Company, a New York banking company, until the closing of this offering and the closing of a merger with or acquisition of a business. Following the completion of a merger with or acquisition of a business, all of the net proceeds will be used as described in the preceding paragraph. We have incurred to date total offering costs of $11,000.00 that has been paid out of Mr. Mercier's initial capital contribution of $11,000. DETERMINATION OF OFFERING PRICE The offering price is not based upon our net worth, total asset value, or any other objective measure of value based upon accounting measurements. The offering price was determined by Mr. Mercier based upon the number of shares Mr. Mercier, as the sole shareholder, was willing to allow to be sold. DILUTION "Dilution" is the difference between the offering price and the net tangible book value of our shares of common stock immediately after the offering. "Net tangible book value" is determined by dividing the number of shares of common stock issued and outstanding into our net tangible worth (tangible assets less liabilities). Our net tangible book value at , November 30, 2004, was $0.00, or $0.00 per share. Our pro forma net tangible book value at the closing of this offering will be $50,000, or $0.0091 per share, assuming 500,000 shares are sold. These computations, which do not give effect to discounts and commissions of the offering as none are to be paid, represent an immediate increase in net tangible book value of $0.009 per share to present shareholders if the entire 500,000 shares offered are sold. These computations represent an immediate dilution of $0.091 per share to public investors if the entire 500,000 shares are sold. 10 The following table illustrates the dilution of a public investor's equity in a share of common stock as of February 14, 2005, adjusted as described above. Assuming Fully Subscribed Offering ------------------- Public offering price per share $ .10 Net tangible book value per share, before public offering $ 0.00 Increase (to present shareholders) per share attributable to our proceeds from sale to public investors $0.009 Pro forma net tangible book value per share, after public offering $0.0091 Dilution of book value per share to public investors $0.091 The public investors purchasing the securities offered hereby for $0.10 per share will own 500,000 shares of our common stock, or 9.09 percent of the outstanding shares, for which they will have paid $50,000. Mr. Mercier will own 5,000,000 shares, or 90.91 percent of the 5,500,000 shares that will then be outstanding upon completion of the offering, for which he shall have paid $11,000. The following table compares the public offering price of $0.10 per share and the percentage of our common stock to be owned by the public investors after giving effect to this offering, with the cash consideration paid and the percentage of our common stock to be owned by Ronald Mercier, our sole current stockholder:
Percentage Average Total Percentage of Shares of Price Per Consideration Total Purchased Total Shares Share Paid Consideration Paid --------- ------------ ----- ---- ------------------ Shares to be Purchased by Public Investors: 500,000 9.09 $0.10 $50,000 81.97% Shares Purchased by Ronald Mercier: 5,000,000 90.91 $0.0022 $11,000 6.03%
11 DESCRIPTION OF BUSINESS M.E.R., a development stage company, was incorporated in Nevada on August 17, 2004. Since inception, our principal activity has been directed to organizational efforts. We have not had any revenues since inception. Our sole objective is to acquire an operating business through a merger or acquisition. M.E.R. was organized to provide a corporate entity in order to participate in a merger or acquisition in accordance with the requirements of Rule 419 of Regulation C. We believe that following this offering certain opportunities to merge with or acquire an operating company may become available to us due primarily to our status as a reporting publicly held company. Decisions as to which business opportunity to participate in will be unilaterally made by Mr. Mercier, who may act without the consent, vote or approval of our shareholders. We currently have no plans, proposals, arrangements, understandings or agreements to participate in any specific business opportunity. While there is no formal corporate policy in place that would prohibit a related party transaction, Mr. Mercier has agreed that we shall not acquire an interest in any company that Mr. Mercier or any of his affiliates or associates is affiliated with, directly or indirectly, as a shareholder, officer or director, or engage in any form of related party transaction. There is no present potential for a related party transaction between us and Mr. Mercier or any of his affiliates or associates nor does Mr. Mercier contemplate any such related party transaction in the future. Persons purchasing shares in this offering and other shareholders will not have the opportunity to participate in any of our ordinary business decisions. Our proposed business is characteristically referred to as a blank check since investors will entrust their investment funds to our management before they have the chance to analyze any ultimate use to which their funds may be used. Consequently, our potential success is heavily dependent on Mr. Mercier, who will have unilateral discretion in identifying and entering into an opportunity with an operating business, through merger or acquisition. There are no plans, proposals, arrangements, understandings or agreements with respect to the sale of additional securities to affiliates or others following the registered distribution herein and prior to the identification of a business opportunity. We have, and will continue to have following the completion of this offering, insufficient capital with which to provide the owners of operating businesses with any substantial cash or other assets. The owners of the operating business will incur significant post-merger or acquisition registration costs in the event they wish to register a portion of their shares for subsequent sale. We will also incur significant legal fees and expenses in connection with the acquisition or merger of an operating business that will need to be paid by the target company including: * the costs of preparing post-effective amendments, interim reports, quarterly reports, annual reports and proxy materials; and * legal fees and expenses incurred in the preparation of legal documents for mergers and acquisitions. 12 Nevertheless, Mr. Mercier has not conducted market research and is not aware of statistical data that would support the perceived benefits of a merger or acquisition transaction for the owners of a business opportunity. Compensation may be paid or profit transactions may occur in connection with a merger or acquisition by us by means of a stock exchange transaction or other similar means, including, but not limited to, payments of business advisory, legal and accounting fees, sales of current securities, positions and other methods of payment by which current security holders receive funds, securities or other assets. We are not in any position at this time to estimate these costs, as we have not identified any potential acquisition or merger candidate or entered into any form of negotiations. We do not know what form that an acquisition or merger may take, the amount of legal, accounting and due diligence required, advisor involvement, if any, or price in terms of stock or cash that may be involved in the sale or exchange of any shares. Such transactions will likely be subject to substantial negotiation and will be paid by the target company. Following the closing of this offering, we must maintain a current registration statement that may require updating by the filing of a post-effective amendment. A post-effective amendment is required when facts or events have occurred which represent a fundamental change in the information contained in the registration statement, such as the participation in a business opportunity related to a merger or acquisition. Further, upon the closing of the merger or acquisition, the successor company would assume significant compliance and reporting obligations and costs before the Commission, including the filing of a Form 8-K and a registration statement with the Commission in order to become an Exchange Act reporting company, which may have a material adverse effect on such company. Dependence on One or a Few Suppliers As we are a blank check company and conduct no operations other than seeking a suitable merger or acquisition candidate, our business is not dependent on one or a few suppliers. Patents, Trademarks, Licenses, Concessions, Royalty Agreements or Labor Contracts. We do not hold any patents or trademarks, nor are we subject to any licenses, concessions, royalty agreements or labor contracts. Need For Government Approval for our Products or Services We are not required to apply for or have any government approval for our products or services. Effect of Governmental Regulations on our Business We will be subject to federal laws and regulations that relate directly or indirectly to our operations. We will be subject to common business and tax rules and regulations pertaining to the operation of our business in the State of Nevada. Research and Development Costs for the Past Two Years We have not expended funds for research and development costs in the past two years. 13 Costs and Effects of Compliance with Environmental Laws and Regulations Environmental regulations have had no materially adverse effect on our operations to date, but no assurance can be given that environmental regulations will not, in the future, have a materially adverse effect on our business, financial condition or results of operation. Public interest in the protection of the environment has increased dramatically in recent years. The trend of more expansive and stricter environmental legislation and regulations could continue. To the extent that laws are enacted or other governmental action is taken that imposes environmental protection requirements that result in increased costs, our business and prospects could be adversely affected. Competition We are and will continue to be an insignificant participant in the business of seeking business opportunities. A substantial number of established and well-financed entities, including investment banking and venture capital firms, have recently increased their merger and acquisition activities, especially. Nearly all such entities have substantially greater financial resources, technical expertise and managerial capabilities than we have and, consequently, we will be at a competitive disadvantage in identifying suitable merger or acquisition candidates and successfully concluding a proposed merger or acquisition. Employees Our only employee is Ronald Mercier, our sole officer and director. Bankruptcy We have not been involved in any bankruptcy, receivership or similar proceedings. MANAGEMENTS' DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Our plan of operation should be read in conjunction with our financial statements and the related notes that appear elsewhere in this prospectus. The discussion contains forward-looking statements that reflect our plans, estimates and beliefs of our development stage company. Our actual results may differ materially from those discussed in the forward-looking statements. Factors that may cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this prospectus, particularly in "Risk Factors." Plan of Operation Over the next 18 months, or to the date a merger or acquisition of an operating business is closed, Mr. Mercier intends to fund our operations and other capital needs through additional capital contributions, which are anticipated to be minor, and we will not require any additional funds beyond those to be provided by Mr. Mercier. This will enable us to close this offering and to possibly identify and conclude a closing of a merger or acquisition with an operating business. We do not anticipate requiring any additional funds during the next 18 months. Our plan of operation following the effective date of this offering encompasses a merger with or acquisition of an operating business, but we will not know what our cash requirements will be until we close such merger or acquisition. We will not use any of the proceeds of this offering unless and until we close a merger or acquisition with a qualified operating business and 14 our investors have reconfirmed their investment in accordance with the requirements of Rule 419 of Regulation C. Should the operating business have profitable operations, its capital needs may not require the use of our proceeds that, in such event, will be used in any manner that the new management deems appropriate. We have no plans, proposals, arrangements, understandings or agreements to participate in any specific business merger or acquisition. We have made no arrangements to obtain future additional financing beyond this 18 month period, if required, and there can be no assurance that such financing will be available, or that it will be available on terms acceptable to us. Evaluation of Potential Merger or Acquisition Opportunities During this period, the analysis of new business opportunities will be undertaken by or under the supervision of Mr. Mercier. Mr. Mercier intends to concentrate on identifying preliminary prospective business opportunities upon the closing of this offering. He may retain paid outside business advisors to assist in evaluating business opportunities. Compensation to any such advisors may be paid in stock or cash and will be based upon a reasonable hourly rate not to exceed $100 per hour. We have had no negotiations with any such advisors and have not entered into any arrangements or agreements with any such advisors. Mr. Mercier will not be entitled to a finder's fee for locating a merger or acquisition candidate. Such advisors, if any, will not be affiliated with Mr. Mercier or our company. We have no preliminary plans, proposals, arrangements, understandings or agreements with any party to borrow funds to increase the amount of capital available to complete a merger or acquisition. Mr. Mercier may seek a business combination with firms which: - -- have recently commenced operations, - -- are developing companies in need of additional funds for expansion into new products or markets, - -- are seeking to develop a new product or service, or - -- are established businesses which may be experiencing financial or operating difficulties and are in need of additional capital. We will not acquire a business unless the fair value of the acquisition candidate represents 80% of the maximum offering proceeds. Because we will be subject to ongoing reporting requirements, we will be required to furnish certain information about significant acquisitions, including audited financial statements for the business acquired, covering one, two or three years depending upon the relative size of the acquisition. Consequently, acquisition prospects that do not have or are unable to obtain the required audited statements will not be considered. Mr. Mercier is planning to actively search for potential acquisition candidates through Internet websites where companies post their intentions to be acquired. He will also solicit recommendations for possible businesses from friends and business associates. He may also decide to advertise our intention to acquire a company through advertisements in financial publications. Once a promising prospect is identified, Mr. Mercier will review financial, economic and technological data and projections of a prospective business merger or acquisition candidate, and will use its best judgment to determine its fair market value. In doing so, he will consider: 15 * the available technical, financial and managerial resources; * working capital and other financial requirements; * history of operations, if any; * prospects for the future; * nature of present and expected competition; * the quality and experience of management services which may be available and the depth of that management; * the potential further research, development or exploration; * specific risk factors not now foreseeable but which then may be anticipated to impact the proposed activities of us; * the potential for growth or expansion; * the potential for profit; * the perceived public recognition or acceptance of products, services or trades; * name identification; and * other relevant factors. Mr. Mercier will meet personally with management and key personnel of the business opportunity as part of his investigation. To the extent possible, he intend to utilize written reports and personal and professional investigations to evaluate the above factors. As noted previously, the costs to our company as we undertake the process of identifying and evaluating potential business mergers or acquisitions is expected to be nominal. They will generally consist of costs related to regulatory and corporate compliance filings with regulatory authorities and will be paid directly by Mr. Mercier as noted herein. Any costs associated with contracting third parties for evaluation of business prospects will be at the discretion of Mr. Mercier, and will also be paid directly by Mr. Mercier. The only other foreseeable cost during this period leading up to the closing of a merger or acquisition would be for Mr. Mercier' time, which he is not charging our company for, but is at his discretion as to the amount of time spent on our business. The only milestone we are required to meet is to conclude and complete a merger or acquisition with an operating business within 18 months. During this period, we are planning to review as many prospects as necessary to complete a transaction within this milestone, but ultimately the number of prospects we investigate and evaluate, and the time spent on each prospect, is solely at the discretion and availability of Mr. Mercier. 16 Structuring and Closing a Merger or Acquisition with a Prospective Candidate Should we enter into an agreement to acquire or merge with a business candidate within the deadline milestone noted herein, it will likely be on the basis of a share exchange using our common stock, due to our lack of cash resources, and the prerequisite that all cash resources raised under this offering are to be used subsequent to a merger or acquisition for the operating business. In implementing a structure for a particular business acquisition, we may become a party to a merger, consolidation, reorganization, joint venture or licensing agreement with another corporation or entity. We may also purchase stock or assets of any existing business. On the consummation of a transaction, it is possible that our present management and shareholders will not be in control of our company. In addition, Mr. Mercier may, as part of the terms of the acquisition transaction, resign and be replaced by new management without a vote of our shareholders. It is anticipated that any securities issued in any such reorganization would be issued in reliance on exemptions from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of this transaction, we may agree to register such securities either at the time the transaction is consummated, under certain conditions or at specified times thereafter. The issuance of substantial additional securities and their potential sale into any trading market that may develop in our securities may have a depressive and material adverse effect on such market. While the actual terms of a transaction to which we may be a party cannot be predicted, it may be expected that the parties to the business transaction will find it desirable to avoid the creation of a taxable event and thereby structure the acquisition in a so-called "tax-free" reorganization under the Internal Revenue Code of 1986, as amended. In order to obtain tax-free treatment under the Code, it may be necessary for the owners of the acquired business to own 80 percent or more of the voting stock of the surviving entity. In such event, our shareholders, including investors in this offering, will retain 20 percent or less of the issued and outstanding shares of the surviving entity, which will result in significant dilution in the equity of such shareholders. With respect to any mergers or acquisitions, negotiations with target company management will be expected to focus on the percentage of our company that target company shareholders would acquire in exchange for their shareholdings in the target company. Depending upon, among other things, the target company's assets and liabilities, our shareholders will in all likelihood hold a lesser percentage ownership interest in us following any merger or acquisition. The percentage ownership may be subject to significant reduction in the event we acquire a target company with substantial assets. Any merger or acquisition effected by us can be expected to have a significant dilutive effect on the percentage of shares held by our then existing shareholders, including purchasers in this offering. Securities owned or controlled by Mr. Mercier will not be sold in any business combination transaction without affording all of our shareholders a similar opportunity. Mr. Mercier acquired his shares at a price significantly less than other shareholders and may sell his shares at a much lower price than the price in this offering. It is unlikely that we will have sufficient funds from the proceeds of this offering to undertake any significant development, marketing and manufacturing of any products that may be acquired. Accordingly, following the acquisition of such product, we will, in all likelihood, be required to either seek additional debt or equity financing or obtain funding from third parties, in exchange for 17 which we would probably be required to give up a substantial portion of our interest in any acquired product. There is no assurance that we will be able to either obtain additional financing or interest third parties in providing funding for the further development, marketing and manufacturing of any products acquired. We will participate in a business opportunity only after the negotiation and execution of appropriate written agreements. Although the terms of such agreements cannot be predicted, generally such agreements will require specific representations and warranties by all of the parties thereto, will specify certain events of default, will detail the terms of closing and conditions which must be satisfied by each of the parties prior to such closing, will outline the manner of bearing costs if the transaction is not closed, will set forth remedies on default and will include miscellaneous other terms. It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant merger and acquisition agreements, disclosure documents and other instruments will require substantial management time and attention and significant fees and expenses for attorneys, accountants and others. If a decision is made not to participate in a specific business opportunity, the costs and expenses therefore incurred in the related investigation would not be recoverable. Futhermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss to us of the related costs and expenses incurred. Our operations following our acquisition of an interest in a business opportunity will be dependent on the nature of the opportunity and interest acquired. We are unable to predict whether we will be in control of the opportunity or whether present management will be in control of us following the acquisition. It may be expected that the business of the opportunity will present various risks to investors, certain of which have been generally summarized herein. Subsequent to the closing of this offering and the closing of an acquisition or merger, our net proceeds will be for the development of the business and for working capital. The development of the business opportunity may be hampered by our limited resources and, as a result, may have a material adverse affect on our ability to continue as a going concern. In view of the limited amount of funds available to us in this offering, we may exhaust our limited financial resources soon after we merge with or acquire an operating business due to its financial demands. Regulation YOUR RIGHTS AND SUBSTANTIVE PROTECTIONS UNDER RULE 419 ESCROWING OF OFFERING PROCEEDS AND SECURITIES The Securities Act imposes certain regulatory requirements on blank check offerings, such as our offering. In particular, Rule 419 of Regulation C under the Securities Act generally requires: * the prompt deposit of the securities and proceeds of the offering in an escrow account; * the disclosure of certain offering terms of the escrow agreement and information regarding a probable merger or acquisition; * a post-effective amendment of a probable merger or acquisition; and * the disclosure of certain conditions on the release of deposited funds and securities of the offering. 18 For purposes of Rule 419, a blank check offering is a company, such as ours, that is a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies. We have established a non- interest-bearing escrow account for the funds and securities of our offering with Manufacturers and Traders Trust Company, an FDIC insured depository institution, in compliance with the Securities Act. If funds and securities are deposited into an escrow account maintained by an insured depository institution, the Act requires that the deposit account records of the insured depository institution must provide that funds and securities in the escrow account are held for the benefit of the purchasers named and identified in accordance with the regulations of the Federal Deposit Insurance Corporation, and the records of the escrow agent, maintained in good faith and in the regular course of business, must show the name and interest of each party to the account. All offering proceeds shall be deposited promptly into the escrow account; provided, however, that no deduction may be made for underwriting commissions, underwriting expenses or dealer allowances payable to an affiliate of us. INDEMNIFICATION OF ESCROW AGENT We have agreed to indemnify the Escrow Agent and its officers, directors, employees, agents, and shareholders (jointly and severally, the "Indemnitees") against, and hold them harmless of and from, any and all losses, liabilities, costs, damages, and expenses, including, but not limited to, reasonable fees and disbursements for counsel of its own choosing (collectively, "Liabilities"), that the Indemnitees may suffer or incur and which arise out of or relate to this Agreement or any transaction to which this Agreement relates, unless such Liability is the result of the willful misconduct or gross negligence of the Indemnitees. ESCROW FEES AND EXPENSES The Escrow Agent shall be entitled to an acceptance fee of $1,000 and an annual administrative fee of $2,000. In addition, we have agreed to reimburse the Escrow Agent for any reasonable fees and expenses incurred in connection with this escrow, including, but not limited to, disbursement fees not to exceed $50 per subscriber in excess of 15 subscribers. INVESTMENT OF NET PROCEEDS We intend to invest the deposited proceeds of our offering into an obligation that constitutes a "deposit," as that term is defined in the Federal Deposit Act. Interest or dividends earned on the funds shall be held in the escrow account until the funds are released. If funds held in the escrow account are released to a purchaser of the securities, the purchasers shall not receive the interest or dividends earned, if any, on such funds. If funds held in the escrow account are released to us, interest or dividends earned on such funds up to the date of release will be released to us and distributed to the investors on a pro rata basis. 19 SECURITIES ISSUED All securities issued in connection with the offering whether or not for cash consideration, and any other securities issued with respect to such securities, including securities issued with respect to stock splits, stock dividends or similar rights, shall be deposited directly into the escrow account promptly upon issuance until the closing of this offering and the closing of a business opportunity, such as a merger or acquisition, and until the conditions for release of deposited funds and securities have been met. The identity of the purchaser of the securities shall be included on the stock certificates or other documents evidencing such securities. Securities held in the escrow account are to remain as issued and deposited and shall be held for the sole benefit of the purchasers. No transfer or other disposition of securities held in the escrow account or any interest related to such securities shall be permitted other than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986, as amended, or the Employee Retirement Income Security Act, as amended. POST-EFFECTIVE AMENDMENT If, during any period in which offers or sales of our securities are being made, a significant merger with or acquisition of a business or assets that will constitute our business and which the fair value of the business or net assets to be acquired represents at least 80 percent of the maximum offering proceeds, but excluding amounts payable to non-affiliates for underwriting commissions, underwriting commissions and dealer allowances, we shall promptly file a post-effective amendment that * discloses the information specified by the applicable registration statement form, including our financial statements and the company acquired or to be acquired and pro forma financial information required by the form and applicable rules and regulations; and * discloses the results of our initial offering, including, but not limited to the gross offering proceeds received to date, specifying the amounts paid for underwriting commissions, underwriting expenses and dealer allowances, amounts disbursed to us and amounts remaining in the escrow account; and the specific amount, use and application of funds disbursed to us to date, including, but not limited to, the amounts paid to officers, directors, promoters, controlling shareholders or affiliates, either directly or indirectly, specifying the amounts and purposes of such payments; and discloses the terms of the offering. ELECTION TO REMAIN AN INVESTOR The terms of the offering must provide, and we must satisfy, the following conditions: * within five business days after the effective date of the post-effective amendment, we shall send by first class mail to each purchaser of securities held in escrow, a copy of the prospectus contained in the post-effective amendment and any amendment or supplement thereto; 20 * each purchaser shall have no fewer than 20 business days and no more than 45 business days from the effective date of the post-effective amendment to notify us in writing that the purchaser elects to remain an investor. If we have not received such written notification by the 45th business day following the effective date of the post-effective amendment, funds and interest or dividends, if any held in escrow shall be sent by first class mail or other equally prompt means to the purchaser within five business days; should we return investors' funds under Rule 419, it may have a material adverse effect on our ability to implement our business plan; * the acquisition meeting the criteria set forth above will be consummated if a sufficient number of purchasers confirm their investment with us; and * if a consummated acquisition meeting the requirements above has not occurred by a date 18 months after the effective date of our initial registration statement, funds held in escrow shall be returned by first class mail to the purchasers within five business days following that date. RELEASE OF SECURITIES AND FUNDS Funds held in the escrow account may be released to us and securities may be delivered to the purchasers or other registered holders identified on the deposited securities only at the same time as or after: * the escrow agent has received a signed representation from us, together with other evidence acceptable to it, that the requirements with respect to the terms of the offering and filing with the Commission when we sign an agreement as described above have been met; and * consummation of an acquisition meeting the above described requirements. If funds and securities are released from the escrow account to us as described above, our prospectus will be supplemented to indicate the amount of funds and securities released and the date of the release. We will furnish to our security holders audited financial statements for our first full fiscal year of operations following consummation of an acquisition, together with other required information no later than 90 days after the end of the fiscal year and file the financial statements and additional information with the Commission. BUSINESS COMBINATION DEADLINE If a consummated acquisition meeting the criteria described above has not occurred within 18 months after the date of this prospectus, funds held in the escrow account will be returned to the purchasers. INVESTMENT COMPANY ACT OF 1940 The Investment Act defines an "investment company" as an issuer that is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading of securities. While we do not intend to engage in such activities, we may become subject to regulation under the Investment Act in the event we obtain or continue to hold a minority interest in any number of enterprises. We may be expected to incur significant registration and compliance costs if 21 required to register under the Investment Act. Accordingly, Mr. Mercier will continue to review our activities from time to time with a view toward reducing the likelihood that we may be classified as an "investment company." We may participate in a business opportunity by purchasing, trading or selling the securities of such business. However, we do not intend to engage primarily in such activities and are not registered and do not propose to register as an "investment company" under the Investment Act. We believe that such registration is not required. Specifically, we intend to conduct our activities so as to avoid being classified as an "investment company" under the Investment Act, and therefore avoid application of the costly and restrictive registration and other provisions of the Investment Act and the regulations promulgated thereunder. We intend to implement our proposed business in a manner that will not result in we being classified as an "investment company." Consequently, our participation in a business or opportunity through the purchase and sale of investment securities will be limited. In order to avoid classification as an investment company, we will search for, analyze, merge, acquire or participate in a business or opportunity by acquiring a majority interest therein, which does not involve the acquisition of investment securities as defined in the Investment Act. Implementation of our proposed business, especially if it involves a business reorganization as discussed above, may be necessitate changes in our capital structure, management, control and business. Each of these areas is regulated by the Investment Act, which regulation has the purported purpose of protecting purchases of investment company securities. Since we do not intend to register as an investment company, the purchasers in this offering will not otherwise be afforded these protections. DESCRIPTION OF PROPERTY Our principal executive offices consist of 500 square feet of office space at 2400, 10303 Jasper Avenue Edmonton, Alberta T5J 3T8. Our principal executive office is provided on a lease-free basis by our sole officer and director, Ronald Mercier. We incur no costs in the use of our offices and we have no material limitations on the use of our office. 22 MANAGEMENT The directors and executive officers currently serving M.E.R. are as follows: Name Age Positions Held Expiration of Term - ---- --- -------------- ------------------ Ronald Mercier 52 President/Secretary/ August 16, 2005 2400, 10303 Jasper Ave., Treasurer/Director Edmonton, Alberta T5J 3T8 PRESIDENT, SECRETARY, TREASURER, AND DIRECTOR: Ronald Mercier, 52 years of age, is the sole Officer and Director of M.E.R.. Mr. Mercier has served as a Director, President, Secretary and Treasurer since our inception on August 17, 2004. His current term as a Director, President, Secretary and Treasurer expires, subject to re-election, on August 16, 2005. Mr. Mercier has been self employed as a real estate agent for 32 years and received his real estate agency license from the Real Estate Council of Alberta in 1987. The agency license permits him to operate his own independent real estate broker operation, which he conducts through Fullcorp Realty and Property Management. He has also been directly involved in numerous real estate transactions and developments either as a principal or as an active investor or joint venture partner. Mr. Mercier also owns controlling and minority interests in private operating businesses, including two hotels, a public golf course and several commercial real estate related operations. He received his BS.c.(Bachelor of Science) Degree from the University of Alberta in 1974. Mr. Mercier has not served and does not now serve as a director for any other public corporation, and has never been an officer, director or shareholder in any other blank check company. Mr. Mercier devotes approximately 20% of his time to the business of our company. EXECUTIVE COMPENSATION The following table sets forth certain information concerning the compensation paid by M.E.R. for services rendered in all capacities to M.E.R. from inception through the date of this prospectus of all officers and directors of our company. Name and Principal Underlying Positions at 9/07/04 Salary Bonus Compensation Options - -------------------- ------ ----- ------------ ------- Ronald Mercier (1) 0 0 0 0 President/Treasurer Secretary/Director 2400, 10303 Jasper Avenue, Edmonton, Alberta T5J 3T8 - ---------- (1) We have not paid any remuneration to Mr. Mercier since our inception. Mr. Mercier has not entered into an employment agreement with us and does not intend to do so in the foreseeable future. 23 PRINCIPAL STOCKHOLDERS The following table sets forth certain information regarding our common stock owned on the date of this prospectus, and by (i) each person who is known by M.E.R. to own beneficially more than five percent of our common stock; (ii) each of our officers and directors; and (iii) all officers and directors as a group:
Number of % of Shares % of Shares Name and Address Title Shares Before Offering After Offering - ---------------- ----- ------ --------------- -------------- Ronald Mercier Director, President, 2400, 10303 Jasper Ave, Secretary, Treasurer 5,000,000 100% 90.91% Edmonton, Alberta T5J 3T8 All Officers and Directors as a Group 5,000,000 100% 90.91%
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In August 2004, we issued 5,000,000 shares of common stock to Ronald Mercier, our sole officer and director, in private placement transaction for consideration of $11,000. The price of the common stock to such persons was $0.0022 per share. Mr. Mercier may be deemed to be a promoter of M.E.R.. Our principal executive offices are provided on a lease-free basis by our sole officer and director, Ronald Mercier. We incur no costs in the use of our offices. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Principal Market or Markets Our common stock is not listed on any exchange and there is no public trading market for our common stock. Approximate Number of Common Stock Holders As of September 2, 2004 we had 5,000,000 shares of common stock issued and outstanding, held by a single shareholder. We have no issued and outstanding options or warrants. We have no other class of stock. DIVIDEND POLICY We have never declared or paid cash dividends on our common stock and anticipate that future earnings, if any, will be retained for development of our business. 24 DESCRIPTION OF SECURITIES General description. The securities being offered are 500,000, shares of our common stock. Our Articles of Incorporation authorize the issuance of 25,000,000 shares of common stock, with a par value of $0.001. The holders of our shares: (a) have equal ratable rights to dividends from funds legally available therefore, when, as, and if declared by our board of directors; (b) are entitled to share ratably in all of the assets of M.E.R. available for distribution upon winding up of the affairs of M.E.R.; (c) do not have preemptive subscription or conversion rights and there are no redemption or sinking fund applicable thereto; and (d) are entitled to one non- cumulative vote per share on all matters on which our shareholders may vote at all meetings of shareholders. These securities do not have any of the following rights: (a) cumulative or special voting rights; (b) preemptive rights to purchase in new issues of shares; (c) preference as to dividends or interest; (d) preference upon liquidation; or (e) any other special rights or preferences. In addition, the shares are not convertible into any other security. There are no restrictions on dividends under any loan other financing arrangements or otherwise. We currently have 5,000,000 shares of common stock outstanding. Non-Cumulative Voting The holders of shares of our 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 director, 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 our directors. Upon the completion of this offering (assuming the offering is fully subscribed), we shall have 5,500,000 shares of our common stock issued and outstanding. 25 Shares Eligible for Future Sale In January 2000, the Commission issued an interpretative letter to the NASD which concluded that promoters or affiliates of a blank check company and their transferees would act as "underwriters" under the Securities Act when reselling the securities of a blank check company. Such letter also indicated that the Commission believed that those securities can be resold only through a registered offering. Rule 144 would not be available for those resale transactions despite technical compliance with the requirements of such Rule. The Commission also believes that shareholders who obtain securities directly from a blank check issuer, rather than through promoters and affiliates, may not use Rule 144 to resell their securities, since their resale transactions would appear to be designed to distribute or redistribute securities to the public without compliance with the registration requirements of the Securities Act. If the outstanding shares were registered for resale, the Commission would take the view that Rule 419 of Regulation C would apply to those resales. Further, the resale offering would be considered an offering "by or on behalf of the registrant" for purposes of Rule 415(a)(4), which applies to "at the market" offerings, such that: * the offering includes securities registered (or qualified to be registered) on Form S-3 or Form F-3 which are to be offered and sold on a continuous or delayed basis by or on behalf of the registrant, a subsidiary of the registrant or a person of which the registrant is a subsidiary; * the amount of securities registered for such purposes must not exceed ten percent of the aggregate value of our voting stock held by non-affiliates; * the securities must be sold through an underwriter acting on our behalf; and * the underwriter must be named in the prospectus. If all of the above requirements are not met, the offering must be priced and the securities sold only at the price as set forth in the prospectus and not at market prices. Transfer Agent Our transfer agent is First American Transfer Company, 706 East Bell Road, #201, Phoenix, Arizona 85022; (602) 485-1346/ Fax (602) 788-0423. Report to Securities Holders We will furnish to holders of our securities annual reports containing audited financial statements. We may issue other unaudited interim reports to our securities holders as we deem appropriate. Contemporaneously, with this offering, we intend to register our securities with the Commission under the provisions of Section 12(g) of the Exchange Act, as amended, and, in accordance therewith, we will be required to comply with certain reporting, proxy solicitation and other requirements of the Exchange Act. 26 PLAN OF DISTRIBUTION M.E.R. intends to offer, sell and distribute publicly 500,000 shares of our common stock at an offering price of $0.10 per share, for a total offering amount of $50,000. This offering is being offered on a "best efforts, "all-or-none" basis during an offering period of 90 days, that may be extended for an additional 120 days. If 500,000 shares are not sold and paid for by the close of regular banking hours on the last day of the offering period all proceeds will be refunded promptly to subscribers in full, without interest and deduction for commissions or expenses. All proceeds and securities will be deposited in a non- interest-bearing escrow account that we intend to establish with Manufacturers and Traders Trust Company, a New York banking corporation, before we offer any shares in this offering to the public until such time as the closing of this offering and the closing of a business opportunity, such as a merger or acquisition. We intend to offer the securities directly to the public through our sole officer and director, Ronald Mercier, in those jurisdictions where sales by such persons are permitted by law and, otherwise, pursuant to Rule 3a4-1(a)(2) of the Exchange Act. Accordingly, we believe Mr. Mercier is not subject to a statutory disqualification pursuant to Rule 3a4-1(a)(2) of the Exchange Act as (i) Mr. Mercier will be the only individual offering the securities on behalf of M.E.R. and is not an associated person of any broker-dealer nor has he been in the prior 12 months; (ii) no commission or any other remuneration will be paid to Mr. Mercier on account of any such sales; (iii) Mr. Mercier intends primarily to perform at the end of the offering, substantial duties for or on behalf of M.E.R. otherwise than in connection with transactions in securities; and (iv) Mr. Mercier has not participated in the sale of any securities for any issuer in the past 12 months and does not intend to do so in the future except in accordance with Rule 3a4-1(a)4(ii)(C). No broker-dealers will be engaged to assist us in this offering. Mr. Mercier will not purchase any of the securities of this offering. We have no plans, proposals, arrangements, understandings or agreements with any market maker regarding participation in the aftermarket for our securities. There are no plans, proposals, arrangements, understandings or agreements with respect to the sale of additional securities to affiliates or others following the registered distribution but prior to the identification of a business opportunity. Penny Stock Regulations The Commission has adopted regulations that generally define penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Upon authorization of the securities offered hereby for quotation, such securities will not initially be exempt from the definition of penny stock. If the securities offered hereby fall within the definition of a penny stock following the effective date, our securities may become subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the 27 purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to the broker-dealer, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the penny stock rules may restrict the ability of broker-dealers to sell our securities and may affect the ability of purchasers in this offering to sell our securities in the secondary market. Exemption from State Registration We intend to only offer the securities registered herein to foreign investors located outside the U.S. and will not be seeking any state registration or availing ourselves of any state exemptions. In the event we elect to offer the securities registered herein within the U.S., we shall file an amendment to this registration statement stating the states in which we shall be offering the securities herein, the applicable exemption(s) we intend to rely upon, and whether we have registered or will register any of the securities herein with any such states. LEGAL PROCEEDINGS We are not a party to any pending legal proceedings and, to the best of Mr. Mercier's knowledge, no such action by or against us has been threatened. LEGAL MATTERS We have retained William D. O'Neal, Esq., as legal counsel for M.E.R.. The address is: The O'Neal Law Firm, P.C., 668 North 44th Street, Suite 233, Phoenix, Arizona 85008. Mr. O'Neal has no involvement with the day-to-day activities of M.E.R.. DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of M.E.R. pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of M.E.R. in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 28 EXPERTS No named expert or counsel was hired on a contingent basis. No named expert or counsel will receive a direct or indirect interest in the small business issuer. No named expert or counsel was a promoter, underwriter, voting trustee, director, officer, or employee of the small business issuer. The financial statements of M.E.R. as of August 31, 2004, included in the registration statement and this prospectus have been included herein in reliance on the report of Shelley International CPA, independent certified public accountants, given on the authority of such firm as experts in accounting and auditing. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in and/or disagreements with Shelley International CPA on accounting and financial disclosure matters. WHERE YOU CAN FIND MORE INFORMATION We have filed with the Commission a registration statement on Form SB-2 under the Securities Act with respect to the securities offered in this prospectus. This prospectus does not contain all of the information contained in the registration statement and the exhibits and schedules to the registration statement. Some items are omitted in accordance with the rules and regulations of the Commission. For further information about M.E.R. and the securities offered under this prospectus, you should review the registration statement and the exhibits and schedules filed as a part of the registration statement. Descriptions of contracts or other documents referred to in this prospectus are not necessarily complete. If the contract or document is filed as an exhibit to the registration statement, you should review that contract or document. You should be aware that when we discuss these contracts or documents in the prospectus we are assuming that you will read the exhibits to the registration statement for a more complete understanding of the contract or document. The registration statement and its exhibits and schedules may be inspected without charge at the public reference facilities maintained by the Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies may be obtained from the Commission after payment of fees prescribed by the Commission. The Commission also maintains a Web site that contains reports, proxy and information statements and other information regarding registrants, including UNITED STATES, that file electronically with the Commission. The address of this Web site is www.sec.gov. You may also contact the Commission by telephone at (800) 732-0330. 29 INDEX TO FINANCIAL STATEMENTS Report of Independent Certified Public Accountants F-2 Financial Statements as of August 31, 2004 Balance Sheet F-3 Statement of Operations F-4 Statement of Stockholders' Equity F-5 Statement of Cash Flows F-6 Notes to Financial Statements F-7 Notes to Financial Statements F-7 Financial Statements as of November 30, 2004 Balance Sheet F-12 Statement of Operations F-13 Statement of Stockholders' Equity F-14 Statement of Cash Flows F-15 Notes to Financial Statements F-16 F-1 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT To the Board of Directors/Audit Committee M.E.R. CORPORATION We have audited the accompanying balance sheets of M.E.R. CORPORATION (a Nevada development stage company) as of August 31, 2004 the related statements of operations, stockholders' equity, and cash flows for the period August 17, 2004 (inception) to August 31, 2004. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of M.E.R. CORPORATION as of August 31, 2004 the related statements of operations, stockholders' equity, and cash flows for the period August 17, 2004 (inception) to August 31, 2004 in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the company will continue as a going concern. As discussed in the notes to the financial statements, the Company has no established source of revenue and no operations. This raises substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty. /s/ Shelley International CPA Mesa, Arizona September 1, 2004 F-2 M.E.R. CORPORATION Balance Sheet (a development stage company) as of August 31, 2004 ASSETS Cash $ 0 -------- Total Current Assets 0 -------- Other Assets 0 -------- Total Assets $ 0 ======== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Accounts Payable $ 0 -------- Total Current Liabilities 0 -------- Stockholders' Equity Common Stock, authorized 25,000,000 shares, issued and outstanding: 5,000,000 shares, par value $0.001 5,000 Additional Paid in Capital 6,000 Deficit accumulated during development stage (11,000) -------- Total Stockholders' Equity 0 -------- Total Liabilities and Stockholders' Equity $ 0 ======== The accompanying notes are an integral part of these statements F-3 M.E.R. CORPORATION Statement of Operations (a development stage company) For the period from August 17, 2004 (inception) to August 31, 2004 Revenue 0 ----------- Expenses Organizational Costs $ 11,000 ----------- Total Expenses (11,000) ----------- Income before Taxes (11,000) Provision for Income Taxes 0 ----------- Net Income (Loss) $ (11,000) =========== Primary and Diluted Earnings per Share a ----------- Weighted Average Number of Shares 5,000,000 =========== - ---------- a = less than $0.01 The accompanying notes are an integral part of these statements F-4 M.E.R. CORPORATION Statement of Stockholders' Equity (a development stage company) From August 17, 2004 (inception) to August 31, 2004
Common Stock Paid in Accumulated Total Shares Amount Capital Deficit Equity ------ ------ ------- ------- ------ Balance, August 17, 2004 0 $ 0 $ 0 $ 0 $ 0 Initial capitalization Sale of common stock $0.0022 per share 5,000,000 5,000 6,000 11,000 Net (Loss) (11,000) (11,000) --------- ------- ------- -------- -------- Balance, August 31, 2004 5,000,000 $ 5,000 $ 7,000 $(11,000) $ 0 ========= ======= ======= ======== ========
The accompanying notes are an integral part of these statements F-5 M.E.R. CORPORATION Statement of Cash Flows (a development stage company) For the period from August 17, 2004 (inception) to August 31, 2004 Operations Activities Net Loss $(11,000) Changes in Receivable or Payables 0 -------- Cash (Used) by Operations (11,000) -------- Investing Activities 0 -------- Financing Activities Sale of Common Stock 11,000 -------- Cash Provided by Financing 11,000 -------- Net Change in Cash 0 Beginning Cash 0 -------- Ending Cash $ 0 ======== The accompanying notes are an integral part of these statements F-6 M.E.R. CORPORATION (a development stage company) NOTES TO FINANCIAL STATEMENTS August 31, 2004 NOTE 1. GENERAL ORGANIZATION AND BUSINESS M.E.R. Corporation (the Company) was incorporated under the laws of the state of Nevada on August 17, 2004. The Company has one sole officer, director and shareholder. The Company is a blank check company subject to Rule 419. The Company was organized to acquire or merge with another business or company. The officer is currently looking for potential merger candidates but currently has none. The Company has been in the development stage since inception and has no operations to date. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES The Company has no assets or debt as of August 31, 2004. The relevant accounting policies and procedures are listed below. Accounting Basis The basis is generally accepted accounting principles. Earnings per Share The basic earnings (loss) per share is calculated by dividing the Company's net income available to common shareholders by the weighted average number of common shares during the year. The diluted earnings (loss) per share is calculated by dividing the Company's net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. The Company has not issued any options or warrants or similar securities since inception. Dividends The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid during the periods shown. Income Taxes The provision for income taxes is the total of the current taxes payable and the net of the change in the deferred income taxes. Provision is made for the deferred income taxes where differences exist between the period in which transactions affect current taxable income and the period in which they enter into the determination of net income in the financial statements. F-7 M.E.R. CORPORATION (a development stage company) NOTES TO FINANCIAL STATEMENTS August 31, 2004 NOTE 2. (continued) Advertising Advertising is expensed when incurred. There has been no advertising during the periods. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3. GOING CONCERN The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. However the Company has no current source of revenue, or operations. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. It is management's plan to seek a suitable merger candidate, which would supply the needed cash flow. NOTE 4. STOCKHOLDERS' EQUITY Common Stock On August 17, 2004 (inception), the Company issued 5,000,000 shares of its $0.001 par value common stock to it sole shareholder for $11,000. This structure remains unchanged as of the date of these financial statements. F-8 M.E.R. CORPORATION (a development stage company) NOTES TO FINANCIAL STATEMENTS August 31, 2004 NOTE 5. RELATED PARTY TRANSACTIONS The officer and director of the Company is involved in other business activities and may, in the future, become involved in other business opportunities becomes available. This person may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts. NOTE 6. PROVISION FOR INCOME TAXES The Company provides for income taxes under Statement of Financial Accounting Standards NO. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. SFAS No. 109 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. All of the expenditures thus far have been to organize the Company and will not be expensed for tax purposes until the Company has operations. The provision for income taxes is comprised of the net changes in deferred taxes less the valuation account plus the current taxes payable as shown in the chart below. Net changes in Deferred Tax Benefit less than valuation account $ 0 Current Taxes Payable 0 ---- Net Provision for Income Taxes $ 0 ==== The federal income tax filings are not current with the Company. F-9 M.E.R. CORPORATION (a development stage company) NOTES TO FINANCIAL STATEMENTS August 31, 2004 NOTE 7. REVENUE AND EXPENSES The Company currently has no operations and no revenue. NOTE 8. OPERATING LEASES AND OTHER COMMITMENTS: The Company also has no assets or lease obligations. NOTE 9. SUBSEQUENT EVENTS The Company is currently filing a registration statement to conduct a blank check offering subject to Rule 419 of Regulation C. This offering is currently being prepared and has not been filed nor approved as of the report date. This offering calls for the sale of 500,000 shares of common stock at a price of $0.10 per share. When completed, the sale will net the Company $50,000. NOTE 10. THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS Below is a listing of the most recent accounting standards and their effect on the Company. SFAS 148 ACCOUNTING FOR STOCK-BASED COMPENSATION-TRANSITION AND DISCLOSURE Amends FASB 123 to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. SFAS 149 AMENDMENT OF STATEMENT 133 ON DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under FASB Statement NO. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 150 FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY This Statement requires that such instruments be classified as liabilities in the balance sheet. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003. F-10 M.E.R. CORPORATION (a development stage company) NOTES TO FINANCIAL STATEMENTS August 31, 2004 INTERPRETATION NO. 46 (FIN 46) Effective January 31, 2003, The Financial Accounting Standards Board requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a continuing financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The Company has not invested in any such entities, and does not expect to do so in the foreseeable future. The adoption of these new Statements is not expected to have a material effect on the Company's financial position, results or operations, or cash flows. F-11 M.E.R. CORPORATION (A Development Stage Company) BALANCE SHEETS
November 30, August 31, 2004 2004 -------- -------- (Unaudited) ASSETS Current assets $ -- $ -- -------- -------- Total current assets -- -- -------- -------- Other assets -- -- -------- -------- Total assets $ -- $ -- ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ -- $ -- -------- -------- Total current liabilities -- -- -------- -------- Stockholders' equity Common stock Authorized 25,000,000 shares with a par value of $0.001 Issued and outstanding 5,000,000 shares 5,000 5,000 Additional paid-in capital 6,000 6,000 Deficit accumulated during the development stage (11,000) (11,000) -------- -------- Total stockholders' equity -- -- -------- -------- Total liabilities and stockholders' equity $ -- $ -- ======== ========
The accompanying notes are an integral part of these financial statements. F-12 M.E.R. CORPORATION (A Development Stage Company) STATEMENT OF OPERATIONS (Unaudited) Cumulative Amounts From Date of Incorporation Three Month on August 17, Period Ended 2004 to November 30, November 30, 2004 2004 ---------- ---------- REVENUE $ -- $ -- ---------- ---------- OPERATING EXPENSES Organizational and offering costs -- 11,000 ---------- ---------- Loss before income taxes -- -- Provision for income taxes -- -- ---------- ---------- Net loss for the period $ -- $ (11,000) ========== ========== Basic and diluted loss per common share $ -- ========== Weighted average number of common shares outstanding 5,000,000 ========== The accompanying notes are an integral part of these financial statements. F-13 M.E.R. CORPORATION (A Development Stage Company) STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)
Deficit Accumulated Additional During the Total Common Stock Paid in Development Stockholders' Shares Amount Capital Stage Equity ------ ------ ------- ------- ------ Inception, August 17, 2004 -- $ -- $ -- $ -- $ -- Initial capitalization Sale of common stock 5,000,000 5,000 6,000 -- 11,000 Net loss for the year -- -- -- (11,000) (11,000) --------- ------- ------- -------- -------- Balance, August 31, 2004 5,000,000 $ 5,000 $ 6,000 $(11,000) $ -- ========= ======= ======= ======== ======== Net loss for the period -- -- -- -- -- --------- ------- ------- -------- -------- Balance, November 30, 2004 5,000,000 $ 5,000 $ 6,000 $(11,000) $ -- ========= ======= ======= ======== ========
The accompanying notes are an integral part of these financial statements. F-14 M.E.R. CORPORATION (A Development Stage Company) STATEMENT OF CASH FLOWS (Unaudited)
Cumulative Amounts From Date of Incorporation Three Month On August 17, Period Ended 2004 to November 30, September 30, 2004 2004 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period $ -- $ (11,000) Net cash used in operating activities -- (11,000) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common stock -- 11,000 Net cash provided by financing activities -- 11,000 --------- --------- Change in cash during the period -- -- --------- --------- Cash, beginning of the period -- -- --------- --------- Cash, end of the period $ $ -- ========= ========= Supplemental disclosure with respect to cash flows: Cash paid for income taxes $ -- $ -- ========= ========= Cash paid for interest $ -- $ -- ========= =========
The accompanying notes are an integral part of these financial statements. F-15 M.E.R. CORPORATION (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS (Unaudited) NOVEMBER 30, 2004 NOTE 1. GENERAL ORGANIZATION AND BUSINESS M.E.R. Corporation (the Company) was incorporated under the laws of the state of Nevada on August 17, 2004. The Company has one sole officer, director and shareholder. The Company is a blank check company subject to Rule 419. The Company was organized to acquire or merge with another business or company. The officer is currently looking for potential merger candidates but currently has none. The Company has been in the development stage since inception and has no operations to date. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES The Company has no assets or debt as of November 30, 2004. The relevant accounting policies and procedures are listed below. Accounting Basis The basis is generally accepted accounting principles. Earnings per Share The basic earnings (loss) per share is calculated by dividing the Company's net income available to common shareholders by the weighted average number of common shares during the year. The diluted earnings (loss) per share is calculated by dividing the Company's net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. The Company has not issued any options or warrants or similar securities since inception. Dividends The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid during the periods shown. Income Taxes The provision for income taxes is the total of the current taxes payable and the net of the change in the deferred income taxes. Provision is made for the deferred income taxes where differences exist between the period in which transactions affect current taxable income and the period in which they enter into the determination of net income in the financial statements. Advertising Advertising is expensed when incurred. There has been no advertising during the periods. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. F-16 M.E.R. CORPORATION (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS (Unaudited) NOVEMBER 30, 2004 NOTE 3. GOING CONCERN The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. However the Company has no current source of revenue, or operations. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. It is management's plan to seek a suitable merger candidate, which would supply the needed cash flow. NOTE 4. STOCKHOLDERS' EQUITY Common Stock On August 17, 2004 (inception), the Company issued 5,000,000 shares of its $0.001 par value common stock to it sole shareholder for $11,000. This structure remains unchanged as of the date of these financial statements. NOTE 5. RELATED PARTY TRANSACTIONS The officer and director of the Company is involved in other business activities and may, in the future, become involved in other business opportunities becomes available. This person may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts. NOTE 6. PROVISION FOR INCOME TAXES The Company provides for income taxes under Statement of Financial Accounting Standards NO. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. SFAS No. 109 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. All of the expenditures thus far have been to organize the Company and will not be expensed for tax purposes until the Company has operations. The provision for income taxes is comprised of the net changes in deferred taxes less the valuation account plus the current taxes payable as shown in the chart below. Net changes in Deferred Tax Benefit less than valuation account $ 0 Current Taxes Payable 0 ---- Net Provision for Income Taxes $ 0 ==== The federal income tax filings are not current with the Company. F-17 M.E.R. CORPORATION (A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS (Unaudited) NOVEMBER 30, 2004 NOTE 7. REVENUE AND EXPENSES The Company currently has no operations and no revenue. NOTE 8. OPERATING LEASES AND OTHER COMMITMENTS: The Company also has no assets or lease obligations. NOTE 9. SUBSEQUENT EVENTS The Company is currently filing a registration statement to conduct a blank check offering subject to Rule 419 of Regulation C. This offering is currently being prepared and has not been filed nor approved as of the report date. This offering calls for the sale of 500,000 shares of common stock at a price of $0.10 per share. When completed, the sale will net the Company $50,000. NOTE 10. THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS Below is a listing of the most recent accounting standards and their effect on the Company. SFAS 148 ACCOUNTING FOR STOCK-BASED COMPENSATION-TRANSITION AND DISCLOSURE Amends FASB 123 to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. SFAS 149 AMENDMENT OF STATEMENT 133 ON DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under FASB Statement NO. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 150 FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY This Statement requires that such instruments be classified as liabilities in the balance sheet. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003. INTERPRETATION NO. 46 (FIN 46) Effective January 31, 2003, The Financial Accounting Standards Board requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a continuing financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The Company has not invested in any such entities, and does not expect to do so in the foreseeable future. The adoption of these new Statements is not expected to have a material effect on the Company's financial position, results or operations, or cash flows. F-18 INFORMATION NOT REQUIRED IN PROSPECTUS Indemnification of Directors and Officers. Our Articles of Incorporation provide that we must indemnify our directors and officers to the fullest extent permitted under Nevada law against all liabilities incurred by reason of the fact that the person is or was a director or officer or a fiduciary of our company. The effect of these provisions is potentially to indemnify our directors and officers from all costs and expenses of liability incurred by them in connection with any action, suit or proceeding in which they are involved by reason of their affiliation with M.E.R.. Pursuant to Nevada law, a corporation may indemnify a director, provided that such indemnity shall not apply on account of: (a) acts or omissions of the director finally adjudged to be intentional misconduct or a knowing violation of law; (b) unlawful distributions; or (c) any transaction with respect to which it was finally adjudged that such director personally received a benefit in money, property, or services to which the director was not legally entitled. Such indemnification provisions are intended to increase the protection provided directors and, thus, increase out ability to attract and retain qualified persons to serve as directors. Because directors liability insurance is only available at considerable cost and with low dollar limits of coverage and broad policy exclusions, we do not currently maintain a liability insurance policy for the benefit of our directors although we may attempt to acquire such insurance in the future. We believe that the substantial increase in the number of lawsuits being threatened or filed against corporations and their directors and the general unavailability of directors liability insurance to provide protection against the increased risk of personal liability resulting from such lawsuits have combined to result in a growing reluctance on the part of capable persons to serve as members of boards of directors of public companies. We also believe that the increased risk of personal liability without adequate insurance or other indemnity protection for its directors could result in overcautious and less effective direction and management of our company. Although no directors have resigned or have threatened to resign as a result of our failure to provide insurance or other indemnity protection from liability, it is uncertain whether our directors would continue to serve in such capacities if improved protection from liability were not provided. The provisions affecting personal liability do not abrogate a director's fiduciary duty to M.E.R. and our shareholders, but eliminate personal liability for monetary damages for breach of that duty. The provisions do not, however, eliminate or limit the liability of a director for failing to act in good faith, for engaging in intentional misconduct or knowingly violating a law, for authorizing the illegal payment of a dividend or repurchase of stock, for obtaining an improper personal benefit, for breaching a director's duty of loyalty (which is generally described as the duty not to engage in any transaction which involves a conflict between the interest of the registrant and those of the director) or for violations of the federal securities laws. The II-1 provisions also limit or indemnify against liability resulting from grossly negligent decisions including grossly negligent business decisions relating to attempts to change control of M.E.R... The provisions regarding indemnification provide, in essence, that we will indemnify our directors against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with any action, suit or proceeding arising out of the director's status as a director of M.E.R., including actions brought by or on behalf of M.E.R. (shareholder derivative actions). The provisions do not require a showing of good faith. Moreover, they do not provide indemnification for liability arising out of willful misconduct, fraud, or dishonesty, for "short-swing" profits violations under the federal securities laws, or for the receipt of illegal remuneration. The provisions also do not provide indemnification for any liability to the extent such liability is covered by insurance. One purpose of the provisions is to supplement the coverage provided by such insurance. However, as mentioned above, we do not currently provide such insurance to our directors, and there is no guarantee that we will provide such insurance to our directors in the near future although we may attempt to obtain such insurance. The provisions diminish the potential rights of action that might otherwise be available to shareholders by limiting the liability of officers and directors to the maximum extent allowable under Nevada law and by affording indemnification against most damages and settlement amounts paid by a director of M.E.R. in connection with any shareholders derivative action. However, the provisions do not have the effect of limiting the right of a shareholder to enjoin a director from taking actions in breach of his fiduciary duty, or to cause us to rescind actions already taken, although as a practical matter courts may be unwilling to grant such equitable remedies in circumstances in which such actions have already been taken. Also, because the registrant does not presently have directors liability insurance and because there is no assurance that we will procure such insurance or that if such insurance is procured it will provide coverage to the extent directors would be indemnified under the provisions, we may be forced to bear a portion or all of the cost of the director's claims for indemnification under such provisions. If we are forced to bear the costs for indemnification, the value of our stock may be adversely affected. In the opinion of the Commission, indemnification for liabilities arising under the Securities Act is contrary to public policy and, therefore, is unenforceable. Other Expenses of Issuance and Distribution. The following is an itemization of the total offering expenses incurred to date in connection with the issuance and distribution of the securities being offered hereby. Commission Registration and Filing Fee $ 4.60 Transfer Agent Fees 250.00 Financial Printing 745.40 Accounting Fees 2,000.00 Legal Fees 5,000.00 Escrow Fees 3,000.00 Miscellaneous 0 ---------- TOTAL $11,000.00 ========== II-2 Mr. Mercier shall be responsible for the payment of any and all expenses incurred by registrant in connection with the issuance and distribution of securities being offered hereby that exceed our initial pre-offering capital of $11,000. Recent Sales of Unregistered Securities. On August 17, 2004, we issued 5,000,000 shares of our common stock to our sole officer and director, Ronald Mercier, at a price of 0.0022 per share, or $11,000. Mr. Mercier's capital contribution of $11,000 is our pre-offering working capital. There have been no other sales of our unregistered securities. All unregistered securities issued by us prior to this offering are deemed "restricted securities" within the meaning of that term as defined in Rule 144 of the Securities Act and have been issued pursuant to certain "private placement" exemptions under Sections 4(2) of the Securities Act such that the sales of the securities were to sophisticated or accredited investors, as that latter term is defined in Rule 215 and Rule 501 of Regulation D of the Securities Act, and were transactions by an issuer not involving any public offering. Such sophisticated or accredited investors had access to information on the registrant necessary to make an informed investment decision. All of the aforesaid securities have been appropriately marked with a restricted legend and are "restricted securities," as defined in Rule 144 of the rules and regulations of the Commission, unless otherwise registered. All of the aforesaid securities were issued for investment purposes only and not with a view to redistribution, absent registration. All of the aforesaid persons have been fully informed and advised concerning M.E.R., our business, financial and other matters. Transactions by us involving the sales of these securities set forth above were issued pursuant to the "private placement" exemptions under the Securities Act, as amended, as transactions by an issuer not involving any public offering. We have been informed that each person is able to bear the economic risk of his investment and is aware that the securities were not registered under the Securities Act, and cannot be re-offered or re-sold until they have been so registered or until the availability of an exemption therefrom. Our transfer agent will be instructed to mark "stop transfer" on its ledgers to assure that these securities will not be transferred, absent registration, or until the availability of an exemption therefrom is determined. Exhibits The following is a list of Exhibits filed herewith by the registrant as part of the SB-2 Registration Statement and related Prospectus: 3.1 Articles of Incorporation. 3.2 By-laws. 4.1 Form of Common Stock Certificate. 5.1 Opinion and Consent of The O'Neal Law Firm, P.C. 10.1 Escrow Agreement. 10.2 Subscription Agreement. 23.1 Consent of Shelley International CPA II-3 Undertakings We undertake: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement: (iii)To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the forgoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable In the event that a claim for indemnification against such liabilities (other than the payment by the small business issuer of expenses incurred or paid a director, officer or controlling person of the small business issuer in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the small business issuer will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-4 SIGNATURES In accordance with the requirements of the Securities Act of 1933, M.E.R. certifies that we have reasonable grounds to believe that we meets all of the requirements of filing Form SB-2 and authorized this Registration Statement to be signed on our behalf by the undersigned, in the City of Edmonton, in the Province of Alberta, Canada. M.E.R.Corporation By: /s/ Ronald Mercier ------------------------------ Ronald Mercier President Dated: February 14, 2005 By: /s/ Ronald Mercier ------------------------------ Ronald Mercier Principal Financial Officer Dated: February 14, 2005 Ronald Mercier Principal Accounting Officer Dated: February 14, 2005 In accordance with the requirements of the Securities Act of 1933, this Registration Statement was signed by the following person in the capacity and on the date stated. By: /s/ Ronald Mercier ----------------------------- Ronald Mercier Director Dated: February 14, 2005 II-5 EX-3.1 3 ex3-1.txt ARTICLES OF INCORPORATION EXHIBIT 3.1 ARTICLES OF INCORPORATION OF M.E.R.CORPORATION The undersigned natural persons acting as incorporators of a corporation (the "Corporation") under the provisions of Chapter 78 of the Nevada Revised Statutes, adopts the following Articles of Incorporation. ARTICLE 1 NAME The name of the Corporation is M.E.R.Corporation ARTICLE 2 PURPOSE The Corporation shall have the purpose of engaging in any lawful business activity. ARTICLE 3 INITIAL RESIDENT AGENT AND REGISTERED OFFICE The name and address of the initial resident agent of the Corporation is Ralph Kinkade, 4063 Knoblock Road, Carson City, Nevada 89706. ARTICLE 4 AUTHORIZED SHARES The aggregate number of shares that the Corporation shall have the authority to issue is twenty-five million (25,000,000) shares of common stock with a par value of $0.001 per share. ARTICLE 5 DIRECTORS Section 5.1 Style of Governing Board. The members of the governing board of the Corporation shall be styled as Directors. Section 5.2 Initial Board of Directors. The initial Board of Directors shall consist of one (1) Director. 1 Section 5.3 Names and Addresses. The names and addresses of the persons who are to serve as Directors until the first annual meeting of the shareholders, or until their successors shall have been elected and qualified, are as follows: Ronald Mercier 10311-117 Street, Edmonton, Alberta T5K 1X9 Section 5.4 Increase or Decrease of Directors. The number of Directors of the Corporation may be increased or decreased from time to time as shall be provided in the Bylaws of the Corporation. ARTICLE 6 DISTRIBUTIONS The Corporation shall be entitled to make distributions to the fullest extent permitted by law. ARTICLE 7 RELEASE AND INDEMNIFICATION To the fullest extent permitted by Nevada law, the Directors and officers of the Corporation shall be released from personal liability for damages to the Corporation or its stockholders. To the fullest extent permitted by Nevada law, the Corporation shall advance expenses to its Directors and officers to defend claims made against them because they were or are Directors or officers and shall indemnify its Directors and officers from liability for expenses incurred as a result of such claims. The Corporation may provide in its Bylaws that indemnification is conditioned on receiving prompt notice of the claim and the opportunity to settle or defend the claim. 2 ARTICLE 8 INCORPORATOR The name and address of the incorporator of the Corporation is as follows: Ronald Mercier 10311-117 Street, Edmonton, Alberta T5K 1X9 Executed this 10th day of August, 2004. /s/ Ronald Mercier ----------------------------- Ronald Mercier, Incorporator Filed with the Nevada Secretary of State on August 17, 2004. 3 EX-3.2 4 ex3-2.txt BY-LAWS EXHIBIT 3.2 BYLAWS OF M.E.R.CORPORATION AUGUST 17, 2004 ARTICLE I OFFICES AND CORPORATE SEAL SECTION 1.1 Registered Office. The registered office of M.E.R.Corporation, (hereinafter the "Corporation") in the State of Nevada shall be c/o Ralph Kinkade, 4063 Knoblock, Carson City, Nevada 89706. In addition to its registered office, the Corporation shall maintain a principal office at a location determined by the Board. The Board of Directors may change the Corporation's registered office and principal office from time to time. SECTION 1.2 Other Offices. The Corporation may also maintain offices at such other place or places, either within or without the State of Nevada, as may be designated from time to time by the Board of Directors (hereinafter the "Board"), and the business of the Corporation may be transacted at such other offices with the same effect as that conducted at the principal office. SECTION 1.3 Corporate Seal. A corporate seal shall not be requisite to the validity of any instrument executed by or on behalf of the Corporation, but nevertheless if in any instance a corporate seal be used, the same shall be a circle having on the circumference thereof the name of the Corporation and in the center the words "corporate seal", the year incorporated, and the state where incorporated. ARTICLE II SHAREHOLDERS SECTION 2.1 Shareholders Meetings. All meetings of the shareholders shall be held at the principal office of the Corporation between the hours of 9:00 a.m. and 5:00 p.m., or at such other time and place as may be fixed from time to time by the Board, or in the absence of direction by the Board, by the President or Secretary of the Corporation, either within or without the State of Nevada, as shall be stated in the notice of the meeting or in a duly executed waiver of 1 notice thereof. A special or annual meeting called by shareholders owning a majority of the entire capital stock of the Corporation pursuant to Sections 2.2 or 2.3 shall be held at the place designated by the shareholders calling the meeting in the notice of the meeting or in a duly executed waiver of notice thereof. SECTION 2.2 Annual Meetings. Annual meetings of shareholders shall be held on a date designated by the Board of Directors or if that day shall be a legal holiday, then on the next succeeding business day, or at such other date and time as shall be designated from time to time by the Board and stated in the notice of the meeting. At the annual meeting, shareholders shall elect the Board and transact such other business as may properly be brought before the meeting. In the event that an annual meeting is not held on the date specified in this Section 2.2, the annual meeting may be held on the written call of the shareholders owning a majority of the entire capital stock of the Corporation issued, outstanding, and entitled to vote. SECTION 2.3 Special Meetings of Shareholders. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by Nevada statute or by the Articles of Incorporation (hereinafter the "Articles"), may be called by the President and shall be called by the President or Secretary at the request in writing of a majority of the Board, or at the request in writing of shareholders owning a majority of the entire capital stock of the Corporation issued, outstanding, and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. In the event that the President or Secretary fails to call a meeting pursuant to such a request, a special meeting may be held on the written call of the shareholders owning a majority of the entire capital stock of the Corporation issued, outstanding, and entitled to vote. SECTION 2.4 List of Shareholders. The officer who has charge of the stock transfer books for shares of the Corporation shall prepare and make, no more than two (2) days after notice of a meeting of shareholders is given, a complete list of the shareholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address and the number of shares registered in the name of each shareholder. Such list shall be open to examination and copying by any shareholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareholder present. SECTION 2.5 Notice of Shareholders Meetings. Written notice of the annual meeting stating the place, date and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be given, either personally or by mail, to each shareholder of record entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. If mailed, such notice shall be deemed to be delivered when mailed to the shareholder at his address as it appears on the stock transfer books of the Corporation. Business transacted at any special 2 meeting of shareholders shall be limited to the purposes stated in the notice unless determined otherwise by the unanimous vote of the holders of all of the issued and outstanding shares of the Corporation present at the meeting in person or represented by proxy. SECTION 2.6 Closing of Transfer Books or Fixing of Record Date. For the purpose of determining shareholders entitled to notice of, or permitted to vote at, any meeting of shareholders or any adjournment thereof, or for the purpose of determining shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty (60) days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of, or permitted to vote at, a meeting of shareholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the board may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than sixty (60) days and, in case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of shareholders is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of, or permitted to vote at, a meeting of shareholders, or for the determination of shareholders entitled to receive payment of a dividend, the record date shall be 4:00 p.m. on the day before the day on which notice of the meeting is given or, if notice is waived, the record date shall be the day on which, and the time at which, the meeting is commenced. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof, provided that the board may fix a new record date for the adjourned meeting and further provided that such adjournments do not in the aggregate exceed thirty (30) days. The record date for determining shareholders entitled to express consent to action without a meeting pursuant to Section 2.9 shall be the date on which the first shareholder signs the consent. SECTION 2.7 Quorum and Adjournment. (a) The holders of a majority of the shares issued, outstanding, and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by Nevada statute or by the Articles. (b) Business may be conducted once a quorum is present and may continue until adjournment of the meeting notwithstanding the withdrawal or temporary absence of sufficient shares to reduce the number present to less than a quorum. Unless the vote of a greater number or voting by classes is required by Nevada statute or the Articles, the affirmative vote of the majority of the shares then represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders; provided, however, that if the shares then represented are less than required to constitute a quorum, the affirmative vote must be such as would constitute 3 a majority if a quorum were present; and provided further, that the affirmative vote of a majority of the shares then present shall be sufficient in all cases to adjourn a meeting. (c) If a quorum shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote at the meeting, present in person or represented by proxy, shall have power to adjourn the meeting to another time or place, without notice other than announcement at the meeting at which adjournment is taken, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. SECTION 2.8 Voting. At every meeting of the shareholders, each shareholder shall be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such shareholder, but no proxy shall be voted or acted upon after six (6) months from its date, unless the proxy provides for a longer period not to exceed seven (7) years. SECTION 2.9 Action Without Meeting. Any action required or permitted to be taken at any annual or special meeting of shareholders may be taken without a meeting, without prior notice, and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of a majority of the outstanding shares entitled to vote with respect to the subject matter of the action unless a greater percentage is required by law in which case such greater percentage shall be required. SECTION 2.10 Waiver. A shareholder's attendance at a meeting shall constitute a waiver of any objection to defective notice or lack of notice of the meeting unless the shareholder objects at the beginning of the meeting to holding the meeting or transacting business at the meeting, and shall constitute a waiver of any objection to consideration of a particular matter at the meeting unless the shareholder objects to considering the matter when it is presented. A shareholder may otherwise waive notice of any annual or special meeting of shareholders by executing a written waiver of notice either before, at or after the time of the meeting. SECTION 2.11 Conduct of Meetings. Meetings of the shareholders shall be presided over by a chairman to be chosen, subject to confirmation after tabulation of the votes, by a majority of the shareholders entitled to vote at the meeting who are present in person or by proxy. The secretary for the meeting shall be the Secretary of the Corporation, or if the Secretary of the Corporation is absent, then the chairman initially chosen by a majority of the shareholders shall appoint any person present to act as secretary. The chairman shall conduct the meeting in accordance with the Corporation's Articles, Bylaws and the notice of the meeting, and may establish rules for conducting the 4 business of the meeting. After calling the meeting to order, the chairman initially chosen shall call for the election inspector, or if no inspector is present then the secretary of the meeting, to tabulate the votes represented at the meeting and entitled to be cast. Once the votes are tabulated, the shares entitled to vote shall confirm the chairman initially chosen or shall choose another chairman, who shall confirm the secretary initially chosen or shall choose another secretary in accordance with this section. If directors are to be elected, the tabulation of votes present at the meeting shall be announced prior to the casting of votes for the directors. SECTION 2.12 Election Inspector. The Board of Directors, in advance of any shareholders meeting, may appoint an election inspector to act at such meeting. If an election inspector is not so appointed or is not present at the meeting, the chairman of the meeting may, and upon the request of any person entitled to vote at the meeting shall, make such appointment. If appointed, the election inspector will determine the number of shares outstanding, the authenticity, validity and effect of proxies and the number of shares represented at the meeting in person and by proxy; receive and count votes, ballots and consents and announce the results thereof; hear and determine all challenges and questions pertaining to proxies and voting; and, in general, perform such acts as may be proper to ensure the fair conduct of the meeting. ARTICLE III DIRECTORS SECTION 3.1 Number and Election. The number of directors that shall constitute the whole Board shall initially be three; provided, such number may be changed by the shareholders so long as the number of directors shall not be less than one or more than nine. Directors shall be elected by the shareholders, and each director shall serve until the next annual meeting and until his successor is elected and qualified, or until resignation or removal. SECTION 3.2 Powers. The business and affairs of the Corporation shall be managed by the Board, which may exercise all such powers of the Corporation and do all such lawful acts as are not by Nevada statute, the Articles, or these Bylaws directed or required to be exercised or done by the shareholders. SECTION 3.3. Resignation of Directors. Any director may resign his office at any time by giving written notice of his resignation to the President or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein or, if no time be specified therein, at the time of the receipt thereof, and the acceptance thereof shall not be necessary to make it effective. SECTION 3.4 Removal of Directors. Any director or the entire Board may be removed, with or without cause, by a vote of the holders of a majority of the shares then entitled to vote at an election of directors at a meeting of shareholders called expressly for that purpose. 5 SECTION 3.5 Vacancies. Vacancies resulting from the resignation or removal of a director and newly created directorships resulting from any increase in the authorized number of directors shall be filled by the shareholders in accordance with Section 3.1. SECTION 3.6 Place of Meetings. Unless otherwise agreed by a majority of the directors then serving, all meetings of the Board of Directors shall be held at the Corporation's principal office between the hours of 9:00 a.m. and 5:00 p.m., and such meetings may be held by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 3.6 shall constitute presence in person at such meeting. SECTION 3.7 Annual Meetings. Annual meetings of the Board shall be held immediately following the annual meeting of the shareholders and in the same place as the annual meeting of shareholders. In the event such meeting is not held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board, or as shall be specified in a written waiver of notice by all of the directors. SECTION 3.8 Regular Meetings. Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board. SECTION 3.9 Special Meetings. Special meetings of the Board may be called by the President or the Secretary with seven (7) days notice to each director, either personally, by mail, by telegram, or by telephone; special meetings shall be called in like manner and on like notice by the President or Secretary on the written request of two (2) directors and shall in such case be held at the time requested by those directors, or if the President or Secretary fails to call the special meeting as requested, then the meeting may be called by the two requesting directors and shall be held at the time designated by those directors in the notice. SECTION 3.10 Quorum and Voting. A quorum at any meeting of the Board shall consist of a majority of the number of directors then serving, but not less than two (2) directors, provided that if and when a Board comprised of one member is authorized, or in the event that only one director is then serving, then one director shall constitute a quorum. If a quorum shall not be present at any meeting of the Board, the directors then present may adjourn the meeting to another time or place, without notice other than announcement at the meeting, until a quorum shall be present. If a quorum is present, then the affirmative vote of a majority of directors present is the act of the Board of Directors. SECTION 3.11 Action Without Meeting. Unless otherwise restricted by the Articles or these Bylaws, any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting, 6 if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. SECTION 3.12 Committees of the Board. The Board, by resolution, adopted by a majority of the full Board, may designate from among its members an executive committee and one or more other committees each of which, to the extent provided in such resolution and permitted by law, shall have and may exercise all the authority of the Board. The Board, with or without cause, may dissolve any such committee or remove any member thereof at any time. The designation of any such committee and the delegation thereto of authority shall not operate to relieve the Board, or any member thereof, of any responsibility imposed by law. SECTION 3.13 Compensation. To the extent authorized by resolution of the Board and not prohibited or limited by the Articles, these Bylaws, or the shareholders, a director may be reimbursed by the Corporation for his expenses, if any, incurred in attending a meeting of the Board of Directors, and may be paid by the Corporation a fixed sum or a stated salary or both for attending meetings of the Board. No such reimbursement or payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 3.14 Waiver. A director's attendance at or participation in a meeting shall constitute a waiver of any objection to defective notice or lack of notice of the meeting unless the director objects at the beginning of the meeting or promptly upon his arrival to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting. A director may otherwise waive notice of any annual, regular or special meeting of directors by executing a written notice of waiver either before or after the time of the meeting. SECTION 3.15 Chairman of the Board. A Chairman of the Board may be appointed by the directors. The Chairman of the Board shall perform such duties as from time to time may be assigned to him by the Board, the shareholders, or these Bylaws. The Vice Chairman, if one has been elected, shall serve in the Chairman's absence. SECTION 3.16 Conduct of Meetings. At each meeting of the Board, one of the following shall act as chairman of the meeting and preside, in the following order of precedence: (a) The Chairman of the Board; (b) The Vice Chairman; (c) The President of the Corporation; or (d) A director chosen by a majority of the directors present, or if a majority is unable to agree on who shall act as chairman, then the director with the earliest date of birth shall act as the chairman. 7 The Secretary of the Corporation, or if he shall be absent from such meeting, the person whom the chairman of such meeting appoints, shall act as secretary of such meeting and keep the minutes thereof. The order of business and rules of procedure at each meeting of the Board shall be determined by the chairman of such meeting, but the same may be changed by the vote of a majority of those directors present at such meeting. The Board shall keep regular minutes of its proceedings. ARTICLE IV OFFICERS SECTION 4.1 Titles, Offices, Authority. The officers of the Corporation shall be chosen by the Board of Directors and shall include a President, a Secretary and a Treasurer, and may, but need not, include a Chairman, a Vice Chairman, a Chief Executive Officer, a Chief Operating Officer, a Vice President, additional Vice Presidents, one or more assistant secretaries and assistant treasurers, or any other officer appointed by the Board. Any number of offices may be held by the same person, unless the Articles or these Bylaws otherwise provide. If only one person is serving as an officer of this Corporation, he or she shall be deemed to be President and Secretary. An officer shall have such authority and shall perform such duties in the management of the Corporation as may be provided by the Articles or these Bylaws, or as may be determined by resolution of the Board or the shareholders in accordance with Article V. SECTION 4.2 Subordinate Officers. The Board may appoint such subordinate officers, agents or employees as the Board may deem necessary or advisable, including one or more additional Vice Presidents, one or more assistant secretaries, and one or more assistant treasurers, each of whom shall hold office for such period, have authority and perform such duties as are provided in these Bylaws or as the Board may from time to time determine. The Board may delegate to any executive officer or to any committee the power to appoint any such additional officers, agents or employees. Notwithstanding the foregoing, no assistant secretary or assistant treasurer shall have power or authority to collect, account for, or pay over any tax imposed by any federal, state or city government. SECTION 4.3 Appointment, Term of Office, Qualification. The officers of the Corporation shall be appointed by the Board and each officer shall serve at the pleasure of the Board until the next annual meeting and until a successor is appointed and qualified, or until resignation or removal. SECTION 4.4 Resignation. Any officer may resign his office at any time by giving written notice of his resignation to the President or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein or, if no time be specified therein, at the time of the receipt thereof, and the acceptance thereof shall not be necessary to make it effective. SECTION 4.5 Removal. Any officer or agent may be removed by the Board whenever in its judgment the best interests of the Corporation will be served 8 thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Appointment of an officer or agent shall not of itself create contract rights. SECTION 4.6 Vacancies. A vacancy in any office, because of death, resignation, removal, or any other cause, shall be filled for the unexpired portion of the term in the manner prescribed in Sections 4.1, 4.2 and 4.3 of this Article IV for appointment to such office. SECTION 4.7 The President. The President shall preside at all meetings of shareholders. The President shall be the principal executive officer of the Corporation and, subject to the control of the Board, shall in general supervise and control all of the business and affairs of the Corporation. He may sign, when authorized by the Board, certificates for shares of the Corporation and deeds, mortgages, bonds, contracts, or other instruments which the Board has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board or by these Bylaws to some other officer or agent of the Corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of the President and such other duties as may be prescribed by the Board from time to time. SECTION 4.8 The Vice President. Each Vice President shall have such powers and perform such duties as the Board or the President may from time to time prescribe and shall perform such other duties as may be prescribed by these Bylaws. At the request of the President, or in case of his absence or inability to act, the Vice President or, if there shall be more than one Vice President then in office, then one of them who shall be designated for the purpose by the President or by the Board shall perform the duties of the President, and when so acting shall have all powers of, and be subject to all the restrictions upon, the President. SECTION 4.9 The Secretary. The Secretary shall act as secretary of, and keep the minutes of, all meetings of the Board and of the shareholders; he shall cause to be given notice of all meetings of the shareholders and directors; he shall be the custodian of the seal of the Corporation and shall affix the seal, or cause it to be affixed, to all proper instruments when deemed advisable by him; he shall have charge of the stock book and also of the other books, records and papers of the Corporation relating to its organization as a Corporation, and shall see that the reports, statements and other documents required by law are properly kept or filed; and he shall in general perform all the duties incident to the office of Secretary. He may sign, with the President, certificates of stock of the Corporation. He shall also have such powers and perform such duties as are assigned to him by these Bylaws, and he shall have such other powers and perform such other duties, not inconsistent with these Bylaws, as the Board shall from time to time prescribe. If no officer has been named as Secretary, the duties of the Secretary shall be performed by the President or a person designated by the President. SECTION 4.10 The Treasurer. The Treasurer shall have charge and custody of, and be responsible for, all the funds and securities of the Corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all monies and other valuable 9 effects in the name of and to the credit of the Corporation in such banks and other depositories as may be designated by the Board, or in the absence of direction by the Board, by the President; he shall disburse the funds of the Corporation as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the President and to the directors at the regular meetings of the Board or whenever they may require it, a statement of all his transactions as Treasurer and an account of the financial condition of the Corporation; and, in general, he shall perform all the duties incident to the office of Treasurer and such other duties as may from time to time be assigned to him by the Board. He may sign, with the President or a Vice President, certificates of stock of the Corporation. If no officer has been named as Treasurer, the duties of the Treasurer shall be performed by the President or a person designated by the President. SECTION 4.11 Compensation. The Board shall have the power to set the compensation of all officers of the Corporation. It may authorize any officer, upon whom the power of appointing subordinate officers may have been conferred, to set the compensation of such subordinate officers. ARTICLE V AUTHORITY TO INCUR CORPORATE OBLIGATIONS SECTION 5.1 Limit on Authority. No officer or agent of the Corporation shall be authorized to incur obligations on behalf of the Corporation except as authorized by the Articles or these Bylaws, or by resolution of the Board or the shareholders. Such authority may be general or confined to specific instances. SECTION 5.2 Contracts and Other Obligations. To the extent authorized by the Articles or these Bylaws, or by resolution of the Board or the shareholders, officers and agents of the Corporation may enter into contracts, execute and deliver instruments, sign and issue checks, and otherwise incur obligations on behalf of the Corporation. ARTICLE VI SHARES AND THEIR TRANSFER SECTION 6.1 Certificates for Shares. Certificates representing shares of the Corporation shall be in such form as shall be determined by the Board. Such certificates shall be signed by the President or a Vice President and by the Secretary or an assistant secretary. The signatures of such officers upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar, other than the Corporation itself or one of its employees. Each certificate for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. All certificates surrendered to the Corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in case 10 of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the Corporation as the Board may prescribe. SECTION 6.2 Issuance. Before the Corporation issues shares, the Board shall determine that the consideration received or to be received for the shares is adequate. A certificate shall not be issued for any share until such share is fully paid. SECTION 6.3 Transfer of Shares. Transfer of shares of the Corporation shall be made only on the stock transfer books of the Corporation by the holder of record thereof or by his legal representative, who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the Corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the Corporation shall be deemed by the Corporation to be the owner thereof for all purposes. ARTICLE VII FISCAL YEAR The fiscal year of the Corporation shall be August 31. ARTICLE VIII DIVIDENDS From time to time the Board may declare, and the Corporation may pay dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its Articles. ARTICLE IX INDEMNIFICATION The Corporation may indemnify and advance litigation expenses to its directors, officers, employees and agents to the extent permitted by law, the Articles or these Bylaws, and shall indemnify and advance litigation expenses to its directors, officers, employees and agents to the extent required by law, the Articles or these Bylaws. The Corporation's obligations of indemnification, if any, shall be conditioned on the Corporation receiving prompt notice of the claim and the opportunity to settle and defend the claim. The Corporation may, to the extent permitted by law, purchase and maintain insurance on behalf of an individual who is or was a director, officer, employee or agent of the Corporation. ARTICLE X REPEAL, ALTERATION OR AMENDMENT These Bylaws may be repealed, altered, or amended, or substitute Bylaws may be adopted at any time by a majority of the Board at any regular or special meeting, or by the shareholders at a special meeting called for that purpose. 11 Any amendment made by the shareholders may not be amended by the Board unless authorized by the shareholders. No amendment made by the Board that impairs the rights of any shareholder shall be valid. IN WITNESS WHEREOF, the undersigned, being the directors of M.E.R.Corporation, adopt the foregoing Bylaws, effective as of the date first written above. SOLE DIRECTOR: /s/Ronald Mercier ------------------------------ Ronald Mercier, Sole Director 12 EX-4.1 5 ex4-1.txt FORM OF STOCK CERTIFICATE EXHIBIT 4.1 INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA NUMBER SHARES M.E.R. CORPORATION 25,000,000 AUTHORIZED SHARES $.001 PAR VALUE CUSIP NO. This is to certify that is the record holder of shares of M.E.R. Corpoation Common Stock transferrable on the books of the corporation in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This Certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar. Witness the facsimile seal of the corporation and the facsimile signatures of its duly authorized officers. Dated: /s/ Ron Mercier M.E.R. CORPORATION /s/ Ron Mercier Secretary CORPORATE President Seal NEVADA COUNTERSIGNED AND REGISTERED BY FIRST AMERICAN STOCK TRANSFER, INC. 706 EAST BELL ROAD, Suite 202, PHOENIX, ARIZONA 85022 AUTHORIZED SIGNATURE EX-5.1 6 ex5-1.txt OPINION & CONSENT OF WILLIAM D. O'NEAL EXHIBIT 5.1 THE O'NEAL LAW FIRM, P.C. 668 North 44th Street, Suite 233 Phoenix, Arizona 85008 (602) 267-3855 (602) 267-7400 (fax) OPINION OF COUNSEL AND CONSENT OF COUNSEL TO: Board of Directors M.E.R.Corporation RE: Registration Statement on Form SB-2 Dear Mr. Mercier: As counsel to M.E.R.Corporation, a Nevada corporation (the "Company"), we have participated in the preparation of the Company's Registration Statement on Form SB-2 filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, relating to the registration of 500,000 shares of the Company's $0.001 par value common stock. As counsel to the Company, we have examined such corporate records, certificates and other documents of the Company, and made inquiries of such officers of the Company, as we have deemed necessary or appropriate for purposes of this opinion. We have also examined the applicable laws and constitutional provisions of the State of Nevada, and reported judicial decisions interpreting such laws and provisions. Based upon such examinations, we are of the opinion that the shares of the Company's common stock, when issued in the manner set forth in the Registration Statement, will be validly issued, fully paid and non-assessable shares of the shares of the common stock of the Company in accordance with the applicable laws and constitutional provisions of the State of Nevada, and reported judicial decisions interpreting such laws and provisions. We hereby consent to the inclusion of this Opinion as an exhibit to the Registration Statement on Form SB-2 filed by the Company and the reference to our firm contained therein under "Legal Matters". Sincerely, /s/ THE O'NEAL LAW FIRM, P.C. Phoenix, Arizona DATED: February 14, 2005 EX-10.1 7 ex10-1.txt ESCROW AGREEMENT EXHIBIT 10.1 ESCROW AGREEMENT This Escrow Agreement (the "Agreement") is made by and between the Manufacturers and Traders Trust Company, a New York banking corporation., with its principal office located at One M & T Plaza, Buffalo New York 14203 (the "Escrow Agent"), and M.E.R. Corporation, a Nevada corporation, with its principal office located at 2400, 10303 Jasper Avenue, Edmonton, Alberta, Canada T5J 3T8 (the "Issuer"). W I T N E S S E T H: WHEREAS, the Issuer has filed with the Securities and Exchange Commission (the "Commission"), Washington, D.C., an SB-2 Registration Statement (the "Registration Statement"), and related Prospectus, File No. __________, in connection with an initial public offering of the Issuer's securities, comprising 500,000 shares of the Issuer's common stock to be sold at a price of $0.10 per share (the "Securities"), which shall not exceed 50 subscribers; WHEREAS, the Issuer proposes to offer the Securities to the public on a "best efforts, all or none" basis as set forth in the Registration Statement; WHEREAS, the Issuer proposes to establish an escrow account (the "Escrow Account"), to which subscription funds and securities which are received by the Escrow Agent in connection with such public offering are to be credited, and the Escrow Agent is willing to establish the Escrow Account on the terms and subject to the conditions hereinafter set forth; and WHEREAS, the Escrow Agent will establish an Escrow Account into which the subscription funds and securities which are received by the Escrow Agent and credited to the Escrow Account, are to be deposited. NOW, THEREFORE, for and in consideration of the promises and mutual covenants herein contained, and other valuable consideration, the parties hereto hereby agree as follows: 1.0 THE REGISTRATION STATEMENT. 1.1 The Issuer has filed the Registration Statement with the Commission and is included herein as Exhibit A to this Agreement, and is made a part hereof. 2.0 ESTABLISHMENT OF THE ESCROW ACCOUNT. 2.1 The Issuer shall establish a non-interest-bearing Escrow Account at the Escrow Agent. The purpose of the Escrow Account is for (a) the deposit of all subscription funds (checks or wire transfers) which are received by the Issuer from prospective purchasers of the Securities and are delivered by the Issuer to the Escrow Agent; (b) the holding of amounts of subscription funds which are collected through the banking system, (c) the deposit of all Securities to be issued by the Issuer to the prospective purchasersand (d) the disbursement of collected funds, all as described herein. 1 2.2 On or before the date of the initial deposit in the Escrow Account pursuant to this Agreement, the Issuer shall notify the Escrow Agent in writing of the effective date (the "Effective Date") of the Registration Statement, and the Escrow Agent shall not be required to accept any amounts for credit to the Escrow Account or for deposit in the Escrow Account prior to its receipt of such notification. 2.3 The offering period (the "Offering Period"), which shall be deemed to commence on the Effective Date, shall consist of the number of calendar days or business days as set forth in the Registration Statement. The Offering Period shall be extended by an extension period only if the Escrow Agent shall have received written notice thereof at least five business days prior to the expiration of the Offering Period. The extension period, which shall be deemed to commence the next calendar day following the expiration of the Offering Period, shall consist of the number of calendar days or business days set forth in the Registration Statement. The last day of the Offering Period, or the last day of the extension period, is referred to herein as the "Termination Date." Except as provided in Section 4.3 hereof, after the Termination Date, the Issuer shall not deposit, and the Escrow Agent shall not accept, any additional amounts representing payments by prospective purchasers. 3.0 DEPOSITS TO THE ESCROW ACCOUNT. 3.1 The Issuer shall promptly deliver to the Escrow Agent all funds which it receives from prospective purchasers of the Securities, which funds shall be in the form of checks or wire transfers. Upon the Escrow Agent's receipt of such funds, they shall be credited to the Escrow Account. All checks delivered to the Escrow Agent shall be made payable to the " Manufacturers and Traders Trust Company / M.E.R. Corporation Escrow Account." Any checks payable other than to the Escrow Agent as required hereby shall be returned to the prospective purchaser. 3.2 Promptly after receiving subscription funds as described in Section 3.1, the Escrow Agent shall deposit the same into the Escrow Account. Amounts of funds so deposited are hereinafter referred to as "Escrow Amounts." The Escrow Agent shall cause to process all Escrow Amounts for collection through the banking system. Simultaneously with each deposit to the Escrow Account, the Issuer shall inform the Escrow Agent in writing of the name, address and social security number of the prospective purchaser, the amount of Securities subscribed for by such purchaser, and the aggregate dollar amount of such subscription (collectively, the "Subscription Information"). 3.3 The Escrow Agent shall not be required to accept for credit to the Escrow Account checks which are not accompanied by the appropriate Subscription Information. Wire transfers and cash representing payments by prospective purchasers shall not be deemed deposited in the Escrow Account until the Escrow Agent has received in writing the Subscription Information required with respect to such payments. 2 3.4 The Escrow Agent shall not be required to accept in the Escrow Account any amounts representing payments by prospective purchasers, whether by check, or wire, except during the Escrow Agent's regular business hours. 3.5 Only those Escrow Amounts, which have been deposited in the Escrow Account and which have cleared the banking system and have been collected by the Escrow Agent, are herein referred to as the "Fund." 3.6 If the proposed offering is terminated before the Termination Date, the Escrow Agent shall refund any portion of the Fund prior to disbursement of the Fund in accordance with Article 4 hereof upon instructions in from the Issuer. 4.0 DISBURSEMENT FROM THE ESCROW ACCOUNT. 4.1 Subject to Section 4.3 below, if by the close of regular banking hours on the Termination Date the Escrow Agent determines that the amount in the Fund is less than the minimum amount of the offering, then the Escrow Agent shall promptly refund to each prospective purchaser the amount of payment received from such purchaser which is then held in the Fund or which thereafter clears the banking system, without interest thereon or deduction therefrom, by drawing checks on the Escrow Account for the amounts of such payments and mail them to the purchasers. In such event, the Escrow Agent shall promptly notify the Issuer of its distribution of the Fund. 4.2 The terms of the offering must provide, and the Issuer must satisfy, the following conditions: within five business days after the effective date of the post-effective amendment, the Issuer shall send by first class mail to each purchaser of securities held in escrow, a copy of the prospectus contained in the post-effective amendment and any amendment or supplement thereto; each purchaser shall have no fewer than 20 business days and no more than 45 business days from the effective date of the post-effective amendment to notify the Issuer in writing that the purchaser elects to remain an investor. If the Issuer has not received such written notification by the 45th business day following the effective date of the post-effective amendment, funds and interest or dividends, if any held in escrow shall be sent by first class mail or other equally prompt means to the purchaser within five business days; the acquisition meeting the criteria set forth above will be consummated if a sufficient number of purchasers confirm their investment with the Issuer; and if a consummated acquisition meeting the requirements above has not occurred by a date 6 months after the effective date of the Issuer's initial registration statement, funds held in escrow shall be returned by first class mail to the purchasers with five business days following that date. Issuer shall promptly notify Escrow Agent if any of the above conditions are not timely satisfied. 3 Funds held in the escrow account may be released to the Issuer and securities may be delivered to the purchaser only at the same time as or after: the escrow agent has received a signed representation from the Issuer, together with other evidence acceptable to the escrow agent, that the requirements of paragraphs (e)(1) and (e)(2) of Rule 419 have been met; and the escrow agent has received a signed representation from the Issuer, together with other evidence acceptable to the escrow agent, that the requirements of paragraph (e)(2)(iii) of Rule 419 have been met. 4.3 If the Escrow Agent has on hand at the close of business on the Termination Date any uncollected amounts which when added to the Fund would raise the amount in the Fund to the minimum offering amount, and result in the Fund representing the sale of the minimum offering amount, the Collection Period, consisting of the number of business days set forth in the Registration Statement, shall be utilized to allow such uncollected funds to clear the banking system. 4.4 Upon disbursement of the Fund pursuant to the terms of this Article 4, the Escrow Agent shall be relieved of all further obligations and released from all liability under this Agreement. It is expressly agreed and understood that in no event shall the aggregate amount of payments made by the Escrow Agent exceed the amount of the Fund. 5.0 RIGHTS, DUTIES AND RESPONSIBILITIES OF THE ESCROW AGENT; INDEMNIFICATION. 5.1 The Escrow Agent shall notify the Issuer on a regular basis of the escrow amounts which have been deposited in the Escrow Account and of the amounts, constituting the Fund, which have cleared the banking system and have been collected by the Escrow Agent. 5.2 The Escrow Agent shall not be responsible for or be required to enforce any of the terms or conditions of the Agreement with respect to the Issuer. 5.3 The Escrow Agent shall not be required to accept from the Issuer any subscription information pertaining to prospective purchasers unless such Subscription Information is accompanied by checks or wire transfers meeting the requirement of Section 3.1, nor shall the Escrow Agent be required to keep records of any information with respect to payments deposited by the Issuer, except as to the amount of such payments; however, the Escrow Agent shall notify the Issuer within a reasonable time of any discrepancy between the amount set forth in any subscription information and the amount delivered to the Escrow Agent therewith. Such amount need not be accepted for deposit in the Escrow Agent until such discrepancy has been resolved. 5.4 The Escrow Agent shall be under no duty or responsibility to enforce collection of any check delivered to it hereunder. The Escrow Agent, within a reasonable time, shall return to the Issuer any check received which is dishonored, together with the Subscription Information which accompanied such check. 4 5.5 The Escrow Agent shall be entitled to rely upon the accuracy, act in reliance upon the contents, and assume the genuineness of any notice, instruction, certificate, signature, instrument or other document which is given to the Escrow Agent by the Issuer pursuant to this Agreement without the necessity of the Escrow Agent verifying the truth or accuracy thereof. The Escrow Agent shall not be obligated to make any inquiry as to the authority, capacity, existence or identity of any person purporting to give any such notice or instructions or to execute any such certificate, instrument or other document. 5.6 If the Escrow Agent is uncertain as to its duties or rights hereunder or shall receive instructions with respect to the Escrow Account, the escrow amounts of the Fund which, in its sole determination, are in conflict either with other instructions received by it or with any provision of this Agreement, it shall be entitled to hold the escrow amounts, the Fund or a portion thereof, in the Escrow Account pending the resolution of such uncertainty to the Escrow Agent's sole satisfaction, by final judgment of a court of competent jurisdiction or otherwise; or the Escrow Agent, at its sole option, may deposit with the Clerk of a court of competent jurisdiction in a proceeding to which all parties in interest are joined. Upon the deposit by the Escrow Agent of the Fund with the Clerk of any court, the Escrow Agent shall be relieved of all further obligations and released from all liability hereunder. 5.7 The Escrow Agent shall not be liable for any action taken or omitted hereunder, or for the misconduct of any employee, agent or attorney appointed by it, except in the case of willful misconduct or gross negligence. The Escrow Agent shall be entitled to consult with counsel of its own choosing and shall not be liable for any action taken, suffered or omitted by it in accordance with the advice of such counsel. 5.8 The Escrow Agent shall have no responsibility at any time to ascertain whether or not any security interest exists in the escrow amounts, the Fund or any part thereof or to file any financing statement under the Uniform Commercial Code with respect to the Fund or any part thereof. 5.9 The Corporation agrees to indemnify the Escrow Agent and its officers, directors, employees, agents, and shareholders (jointly and severally, the "Indemnitees") against, and hold them harmless of and from, any and all losses, liabilities, costs, damages, and expenses, including, but not limited to, reasonable fees and disbursements for counsel of its own choosing (collectively, "Liabilities"), that the Indemnitees may suffer or incur and which arise out of or relate to this Agreement or any transaction to which this Agreement relates, unless such Liability is the result of the willful misconduct or gross negligence of the Indemnitees. 5.10 If the indemnification provided for in this Section 5 is applicable but is held to be unavailable, the Corporation shall contribute such amounts as are just and equitable to pay or to reimburse the Indemnitees for the aggregate of any and all Liabilities actually incurred by the Indemnitees as a result of or in connection with any amount paid in settlement of any action, claim, or proceeding arising out of or relating in any way to any actions or omissions of the Corporation. 5 5.11 The provisions of this Section 5 shall survive any termination of this Agreement, whether by disbursement of the Fund, resignation of the Escrow Agent, or otherwise. 6.0 AMENDMENT; RESIGNATION. 6.1 This Agreement may be altered or amended only with the written consent of the parties hereto. The Escrow Agent may resign for any reason upon five business days' written notice to the Issuer. Should the Escrow Agent resign as herein provided, it shall not be required to accept any deposit, make any disbursement or otherwise dispose of the escrow amounts, but its only duty shall be to hold the escrow accounts until they clear the banking system and the Fund for a period of not more than five business days following the effective date of such resignation, at which time (a) if a successor escrow agent shall have been appointed and written notice thereof shall have been given to the resigning escrow agent by the Issuer and such successor escrow agent, then the resigning escrow agent shall pay over to the successor escrow agent the Fund, less any portion thereof previously paid out in accordance with this Agreement; or (b) if the resigning escrow agent shall not have received written notice signed by the Issuer and a successor escrow agent, then the resigning escrow agent shall promptly refund the amount in the Fund to each prospective purchaser, without interest thereon or deduction therefrom, and the resigning Escrow Agent shall promptly notify the Issuer of its liquidation and distribution of the Fund; whereupon, in either case, the Escrow Agent shall be relieved of all further obligations and released from all liability under this Agreement. Without limiting the provisions of Section 8 hereof, the resigning Escrow Agent shall be entitled to be reimbursed by the Issuer for any expenses incurred in connection with its resignation, transfer of the Fund to a successor escrow agent or distribution of the Fund pursuant to this Section 6. 7.0 REPRESENTATIONS AND WARRANTIES. 7.1 The Issuer represents and warrants to the Escrow Agent that no party other than the parties hereto and the prospective purchasers have, or shall have, any claim or security interest in the Fund or any part thereof. 7.2 No financing statement under the Uniform Commercial Code is on file in any jurisdiction claiming a security interest in or describing the Fund or any part thereof. 7.3 The Subscription Information submitted with each deposit shall, at the time of submission and at the time of the disbursement of the Fund, be deemed a representation and warranty that such deposit represents a bona fide payment by the purchaser described therein for the amount of Securities set forth in such Subscription Information. 7.4 All of the information contained in the Registration Statement is, as of the date hereof, and will be, at the time of any disbursement of the Fund, true and correct. 8.0 FEES AND EXPENSES. 8.1 The Escrow Agent shall be entitled to an acceptance fee of $1,000 and an annual administrative fee of $2,000, payable upon the execution of this Agreement. In addition, the Issuer agrees to reimburse the Escrow Agent for any 6 reasonable fees and expenses incurred in connection with this Agreement, including, but not limited to, disbursement fees not to exceed $50 per subscriber in excess of 15 subscribers. 9.0 GOVERNING LAW AND ASSIGNMENT. 9.1 This Agreement shall be construed in accordance with and governed by the laws of the STATE OF NEW YORK and shall be binding upon the parties hereto and their respective successors and assigns; provided, however, that any assignment or transfer by any party of its rights under this Agreement or with respect to the Fund shall be void as against the Escrow Agent unless (a) written notice thereof shall be given to the Escrow Agent; and (b) the Escrow Agent shall have consented in writing to such assignment or transfer. 10.0 NOTICES. 10.1 All notices required to be given in connection with this Agreement shall be sent by registered or certified mail, return receipt requested, or by hand delivery with receipt acknowledged, or by Express Mail service offered by the United States Post Office to the addresses set forth in the beginning of this Agreement or such other address as the parties hereto may designate. 11.0 SEVERABILITY. 11.1 If any provision of this Agreement or the application thereof to any person or circumstance shall be determined to be invalid or unenforceable, the remaining provisions of this Agreement or the application of such provision to persons of circumstances other than those to which it is held invalid or unenforceable shall not be affected thereby and shall be valid and enforceable to the fullest extent permitted by law. 12.0 EXECUTION IN SEVERAL COUNTERPARTS; ENTIRE AGREEMENT. 12.1 This Agreement may be executed in several counterparts or by separate instruments, all of such counterparts and instruments shall constitute one agreement, binding on all of the parties hereto. 12.2 This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, written or oral, of the parties in connection therewith. 7 IN WITNESS WHEREOF, the undersigned parties have executed this Agreement upon proper legal authority as of the 30th day of August, 2004. MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation By: /s/ Leslie Boynton ---------------------------------- Leslie Boynton, its Vice President M.E.R. CORPORATION, a Nevada corporation By: /s/ Ronald Mercier ---------------------------------- Ronald Mercier, its President 8 EX-10.2 8 ex10-2.txt SUBSCRIPTION AGREEMENT EXHIBIT 10.2 SUBSCRIPTION AGREEMENT M.E.R.Corporation 2400, 10303 Jasper Ave., Edmonton, Alberta T5J 3T8 Attn: Ronald Mercier 1. APPLICATION. The undersigned ("Investor"), intending to be legally bound, hereby subscribes for ______________ Shares of the $.001 par value Common Stock ("Securities") of M.E.R., Inc, a Nevada corporation (the "Company") at a purchase price of ten cents($0.10) per Share, equaling a total price of _______________________________ Dollars ($____________). The undersigned understands that his/her Subscription to purchase Securities may be accepted or rejected in whole or in part by the Company in its sole discretion. Enclosed is the undersigned's check made payable to Manufacturers and Traders Trust Company/M.E.R.Corporation Escrow Account" and has been forwarded to the escrow account in the self-addressed stamped envelope that has been provided for convenience. The Investor may also elect to submit his subscription funds to the escrow account VIA wire transfer as provided in this Agreement. 2. REPRESENTATIONS AND WARRANTIES. The undersigned represents and warrants as follows: (a) The Securities are being purchased solely for the undersigned's account, for investment purposes only and not with a view to the distribution of said Securities and not with a view to assignment or resale thereof, and no other person will have a direct or indirect beneficial interest in such Securities. (b) The undersigned, if a corporation, partnership, trust or other entity is authorized and otherwise duly qualified to purchase and hold the Securities and to enter into this Subscription Agreement. 3. MISCELLANEOUS. (a) This Subscription Agreement shall survive the death or disability of the undersigned and shall be binding upon the undersigned's heirs, executors, administrators, successors and permitted assigns. (b) This Subscription Agreement has been duly and validly authorized, executed and delivered by the undersigned and constitutes the valid, binding and enforceable agreement of the undersigned. If this Subscription Agreement is being completed on behalf of a corporation, partnership, or trust, it has been completed and executed by an authorized corporate officer, general partner, or trustee. 1 (c) This Subscription Agreement referred to herein constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and together supersede all prior discussions or agreements relating to the purchase of these Securities. (d) Within five (5) days after receipt of a written request from the Company, the undersigned agrees to provide such information, to execute and deliver such documents and to take, or forbear from taking, such actions or provide such further assurances as reasonably may be necessary to correct any errors in documentation or to comply with any and all laws to which the Company is subject. (e) The Company shall be notified immediately of any change in any of the information contained above occurring prior to the undersigned's purchase of the Securities or at any time thereafter for so long as the undersigned is a holder of the Securities. 4. REPRESENTATIONS. The undersigned hereby additionally represents and warrants that: (I) The undersigned is purchasing for his/her/its own account and not on behalf of any other person. (II) The undersigned will not sell or assign the Securities except in accordance with the provisions of the Securities Act of 1933, as amended, or pursuant to the registration Requirements under the Act, or pursuant to an available exemption under the Act such as Rule 144, which requires a prior holding period of not less than one year from date of purchase. (III) Share certificates shall bear an appropriate restrictive legend that restricts the further sale or assignment of the Securities except in accordance with the foregoing provisions set forth above. (IV) The undersigned is aware that there is no public market for the Company's Securities that the transfer of Securities is subject to certain restrictions according to law and that, as a consequence, it may not be possible for the undersigned to liquidate the Securities, which may have to be held indefinitely, which makes this offering an illiquid investment. 5. ACCREDITED INVESTOR CERTIFICATION. The undersigned further represents and warrants as indicated below: (Please mark one or more of the seven following statements) [ ] 1. I am a natural person who had individual income of more than $200,000 in each of the most recent two years, or joint income with my spouse in excess of $300,000 in each of the most recent two years, and reasonably expect to reach that same income level for the current year. The term 2 "income", for purposes of this Subscription Agreement, shall be computed as follows: individual adjusted gross income, as reported (or to be reported) on a federal income tax return, increased by (1) any deduction of long-term capital gains under Section 1202 of the current Internal Revenue Code (the "Code"), (2) any deduction for depletion under Section 611 of the Code, (3) any exclusion for interest under Section 103 of the Codes and (4) any losses of a partnership as reported on Schedule E of Form 1040); [ ] 2. I am a natural person whose individual net worth (i.e., total assets in excess of total liabilities), or joint net worth with my spouse, will at the time of purchase of the Securities be in excess of $1,000,000; [ ] 3. The Investor is a trust, which trust has total assets in excess of $5,000,000, which is not formed for the specific purpose of acquiring the Securities being offered and whose purchase is directed by a sophisticated person as described in Rule 506(b)(ii) of Regulation D and who has such knowledge and experience in financial and business matters that he is capable of evaluating the risks and merits of an investment in the Securities; [ ] 4. The Investor is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, and either (a) the investment decision will be made by a plan fiduciary, as defined in Section 3 (21) of such Act, which is either a bank, insurance company, or a registered investment adviser; or (b) the employee benefit plan has total assets in excess of $5,000,000; or (c) the employee benefit plan is a self-directed plan, within the meaning of Title I of such act, and the person directing the purchase is an Accredited Investor. * [ ] 5. The Investor otherwise satisfies the requirements of Section 501(a)(1), or satisfying the requirements of Section 501(a)(2) or (3) of Regulation D promulgated under the Act, which includes but is not limited to, a self-directed employee benefit plan where investment decisions are made solely by persons who are "Accredited Investors" as otherwise defined in Regulation D; [ ] 6. I am a Director or Executive Officer of the Company; or [ ] 7. The Investor is an entity (other than a trust) in which all of the equity owners meet the requirements of at least one of the above subparagraphs. The undersigned has executed this Subscription Agreement this _______ day of ___________________________, 2004. _________________________ x $per share = $_________________ USD (Shares being purchased) (Subscription Price) 3 If the Investor is an individual, check whether purchased as [ ] JOINT TENANTS, as [ ] TENANTS IN COMMON, as [ ] COMMUNITY PROPERTY, or as an [ ] Individual. Securities should be issued in the name(s) of: - ---------------------------------- ---------------------------------- (Print or Type Owner's Name) (Print or Type Owner's Name) - ---------------------------------- ---------------------------------- (Owner's Mailing Address) (Owner's Mailing Address) - ---------------------------------- ---------------------------------- (City) (State) (City) (State) (Zip) (Zip) - ---------------------------------- ---------------------------------- (Telephone) (Telephone) - ---------------------------------- ---------------------------------- (Signature of Investor) (Signature of Investor) * If the Investor is a [ ] PARTNERSHIP, [ ] CORPORATION, [ ] LIMITED LIABILITY COMPANY, or [ ] TRUST (check applicable): - ---------------------------------- ---------------------------------- (Print Name of Entity as Owner) (Title) - ---------------------------------- ---------------------------------- (Owner Mailing Address) (Print Name of Authorized Officer) by: - ---------------------------------- ---------------------------------- (City) (State) (SIGNATURE) (Zip) SUBSCRIPTION ACCEPTED AND AGREED TO This ________ Day of __________________ 2004 M.E.R.CORPORATION By: ----------------------------------- Ronald Mercier, its President WIRING INSTRUCTIONS: ABA #022000046 M&T Bank Buffalo NY A/C 1005242 Account Name: M.E.R., Inc Attn: Joan Stapley EX-23.1 9 ex23-1.txt CONSENT OF SHELLEY INTERNATIONAL CPA EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITOR Shelley International CPA Certified Public Accountant The Board of Directors M.E.R.Corporation Gentlemen: This letter will authorize you to include the Audit of your company dated September 1, 2004 in the Registration Statement on Form SB-2 to be filed with the Securities and Exchange Commission. Yours Truly, /s/ Shelley International CPA - ---------------------------------- Shelley International CPA Date: February 14, 2005 CORRESP 10 filename10.txt THE O'NEAL LAW FIRM, P.C. 668 North 44th Street Suite 233 Phoenix, Arizona 85008 (602) 267-3855 (602) 267-7400 (fax) E-mail: billo@sunncomm.com February 14, 2005 Pamela Howell Securities and Exchange Commission 450 Fifth Street, N.W. Mail Stop 0511 Washington, D.C. 20549 Re: M.E.R., Inc. Registration Statement on Form SB-2 File No. 333-119233 Filed September 23, 2004 Dear Ms. Howell: We are writing in response to your comment letter dated January 24, 2005 in connection with the above-referenced filing. This response is provided to address each of your comments to further assist you in your review of this filing. The numbered responses below correspond to the numbered comments in you letter. 1. We have revised the document to reference the total amount of offering expenses actually incurred in the offering and have reconciled that number with the financial statements. 2. We have revised this disclosure to provide for a 120 day extension period and have reflected that a consummation of a merger must occur within 18 months from the effective date. The company has not entered into any negotiations, understandings or agreements of any kind at this time with any potential merger candidate. 3. The required legend is on the Prospectus Cover Page. 4. We have made revisions throughout the document to indicate that the escrow account shall not bear interest. 5. We have included language to discuss the release of funds if a merger is not completed with the 18-month time frame. Page 2 6. We have added a risk factor addressing the lack of operating history. 7. We have clarified this disclosure to provide that Mr. Mercier will provide funding until such time a suitable target is located, at which time there will be additional expenses related to the investigation and consummation of the merger which shall be borne by the target company. 8. We have revised this disclosure to reflect that Mr. Mercier has no other blank check company involvement. 9. This was an error. All expenses have already been paid. 10. Organizational costs were nominal and borne personally by Mr. Mercier. 11. This information has been updated. 12. We have added the following language: "While there is no formal corporate policy in place that would prohibit a related party transaction, Mr. Mercier has agreed that we shall not acquire an interest in any company that Mr. Mercier or any of his affiliates or associates is affiliated with, directly or indirectly, as a shareholder, officer or director, or engage in any form of related party transaction. There is no present potential for a related party transaction between us and Mr. Mercier or any of his affiliates or associates nor does Mr. Mercier contemplate any such related party transaction in the future." 13. Please see comment 7 above. 14. The address on the Registration Statement is the physical address of the company. Mr. Mercier has no business relationship with the law firm that owns the building other than as a sub-tenant. The address you cite involves a business that Mr. Mercier sold several years ago and is no longer affiliated with them. 15. We have revised this disclosure to address that Mr. Mercier is not subject to a statutory disqualification under Rule 3a4-1(a)(1). 16. The escrow agreement has been revised to cover deposited securities. Please do not hesitate to contact us if you have any further questions. Very truly yours, /s/ William D. O'Neal - ----------------------------- William D. O'Neal -----END PRIVACY-ENHANCED MESSAGE-----