-----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, Inc2zVvjtgSwnudIH0IiUlchfNUkn7XDO+5pwBOvh8+BpX0wAEZbDXiaxwir1yU7 EDMyCYNEtUm6ONCn98uGiQ== 0000848821-98-000042.txt : 19981026 0000848821-98-000042.hdr.sgml : 19981026 ACCESSION NUMBER: 0000848821-98-000042 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980831 FILED AS OF DATE: 19981023 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TERRA NATURAL RESOURCES CORP CENTRAL INDEX KEY: 0000848821 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 880219765 STATE OF INCORPORATION: NV FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: SEC FILE NUMBER: 001-12867 FILM NUMBER: 98729855 BUSINESS ADDRESS: STREET 1: 5038 N PARKWAY CALABASAS STREET 2: STE 100 CITY: CALABASAS STATE: CA ZIP: 91302 BUSINESS PHONE: 8185914400 MAIL ADDRESS: STREET 1: 5038 N PARKWAY CALABASAS STREET 2: STE 100 CITY: CALABASAS STATE: CA ZIP: 91302 FORMER COMPANY: FORMER CONFORMED NAME: NEVADA MANHATTAN MINING INC DATE OF NAME CHANGE: 19961126 10QSB/A 1 AMENDMENT NO. 1 TO QUARTERLY REPORT 1 United States Securities and Exchange Commission Washington, D.C. 20549 Amendment No. 1 to FORM 10-QSB (Mark One) [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended August 31, 1998. [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT For the transition period from ______to ______ Commission file number: 001-12867 TERRA NATURAL RESOURCES CORPORATION - -------------------------------------------------------------------------------- (Exact Name of Small Business Issuer as Specified in Its Charter) NEVADA 88-0219765 (State or Other Jurisdiction of (I.R.S.Employer Incorporation or Organization) Identification No.) 5038 N. PARKWAY CALABASAS, SUITE #100, CALABASAS, CA 91302 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices (818) 591-4400 - -------------------------------------------------------------------------------- (Issuer's Telephone Number, Including Area Code) NEVADA MANHATTAN MINING INCORPORATED - -------------------------------------------------------------------------------- (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Check whether the issuer: (1) filed all reports required to be filed by Section 3 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 35,885,168 of Common Stock and 176,414 of Series A Preferred Stock. Traditional Small Business Disclosure Format (check one): Yes [X] No [ ] 2 TERRA NATURAL RESOURCES CORPORATION AND SUBSIDIARIES (dba NEVADA MANHATTAN) INDEX TO FORM 10-QSB PART I FINANCIAL INFORMATION PAGE NO. Item 1 Financial Statements for Terra Natural Resources Corp. Consolidated Balance Sheets - August 31, 1998 and May 31, 1998 3 Consolidated Statements of Operations - Three Months Ended August 31, 1998 and 1997 4 Consolidated Statements of Cash Flow - Three Months Ended August 31, 1998 and 1997 5 Notes to Consolidated Financial Statements 6 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operation 8 PART II OTHER INFORMATION Item 1 Legal Proceedings 10 Item 2 Changes in Securities 10 Item 3 Defaults Upon Senior Securities 10 Item 4 Submission of Matters to a Vote of Security Holders 10 Item 5 Other Information 10 Item 6 Exhibits and Reports on Form 8-K 11 Signature 12 3 TERRA NATURAL RESOURCES CORPORATION AND SUBSIDIARIES (dba NEVADA MANHATTAN) CONSOLIDATED BALANCE SHEETS
(Unaudited) (Audited) August 31, 1998 May 31, 1998 --------------- ------------ ASSETS Current assets: Cash and cash equivalents $ 221,273 $ 81,529 Accounts receivable, net of allowance for doubtful accounts of $150,000 285,316 255,027 Inventories 96,001 108,844 Stock Subscription Receivable 250,000 Prepaid expenses 372,789 283,354 --------- ------- Total current assets 1,225,379 728,754 Properties and equipment Mineral Properties: Domestic 2,936,000 2,936,000 Indonesia 1,400,000 1,400,000 Timber concession 700,000 700,000 Machinery and equipment, net 352,300 355,392 Other Assets 234,445 265,700 ---------- ---------- TOTAL ASSETS $6,848,124 $6,385,846 ========== ========== LIABILITIES AND STOCKHOLDERS'EQUITY (DEFICIENCY) Current liabilities: Accounts payable and Accrued Expenses $1,524,254 $1,445,106 Convertible Notes payable to stockholders - Secured by Common Stock 1,264,520 1,366,075 Notes Payable to Stockholders 522,950 522,950 Note Payable to Officer 713,955 718,000 Current portion of long-term debt 32,214 32,214 ---------- ---------- Total current liabilities 4,057,893 4,084,345 Long term debt 35,327 44,327 Convertible debentures 2,407,771 2,313,459 ---------- --------- Total liabilities 6,500,991 6,442,131 ---------- --------- Commitments and contingencies --- --- Stockholders' Equity (Deficiency): Preferred stock, $1 par, 250,000 shares Authorized, 176,414 outstanding At August 31, 1998 and May 31, 1998 176,414 176,414 Common stock, $0.01 par, 49,750,000 Shares authorized, 40,157,243 and 26,492,543 shares issued and outstanding 401,572 264,926 Additional paid-in capital 30,540,415 28,715,550 Accumulated Foreign Currency Translation 29,610 24,940 Accumulated deficit (30,800,878) (29,238,115) ---------- ----------- Total stockholders' equity (deficiency) 347,133 ( 56,285) ---------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $6,848,124 $ 6,385,846 ========== ===========
See accompanying notes to consolidated financial statements 4 TERRA NATURAL RESOURCES CORPORATION AND SUBSIDIARIES (dba NEVADA MANHATTAN) CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended August 31, 1998 and 1997
(Unaudited) 1998 1997 ---- ---- Revenues $ 248,649 $ 156,776 Cost of Sales 191,004 80,595 ------- ------ Gross profit 57,645 76,181 Exploration Costs 78,008 --- General and administrative Expenses 1,308,308 1,354,981 --------- --------- Net loss from Operations (1,328,671) (1,278,800) Other Expenses 234,092 --- --------- --------- Net Loss (1,562,763) (1,278,800) ---------- --------- Cumulative preferred dividends --- 29,337 ----------- --------- Net loss attributable to common shareholders $(1,562,763) $(1,308,137) =========== =========== Basic Loss Per Share $ (0.06) $ (0.10) =========== =========== Diluted Loss Per Share $ (0.06) $ (0.10) =========== =========== Weighted average shares outstanding 28,895,266 12,467,496 ========== ===========
See accompanying notes to consolidated financial statements 5 TERRA NATURAL RESOURCES CORPORATION AND SUBSIDIARIES (dba NEVADA MANHATTAN) CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended August 31, 1998 and 1997
1998 1997 ------ ------ (Unaudited) (Unaudited) Cash flows from operating activities: Net loss $(1,562,763) $(1,278,800) Adjustments to reconcile net loss to net cash used in operating activities: Common stock issued for services 196,092 --- Common Stock Issued for Financing Expense --- Amortization of Debenture Discount 94,312 Depreciation and amortization 15,771 99,909 (Increase) Decrease Accounts receivable (30,289) (13,391) Inventories 12,843 Prepaid expenses 87,614 (320,849) Other Assets 31,255 Increase (Decrease) Accounts payable and accrued Expenses 282,317 481,109 ------- ------- Net cash used in operating activities (872,848) (1,032,022) --------- ----------- Cash flows from investing activities: Purchase of property and equipment (12,678) (419,189) --------- --------- Cash flows from financing activities: Proceeds from Issuance of convertible debentures --- 1,500,000 Payments on long-term debt (9,000) (489,928) Proceeds from issuance of notes to stockholders 25,000 Payments for Notes Payable to Officer (4,045) Proceeds from issuance of stock 1,033,645 0 --------- ------- Net cash provided by financing activities 1,020,600 1,035,072 --------- --------- Foreign Currency Translation Adjustment 4,670 --- Net increase (decrease) in cash and cash equivalents 139,744 (416,139) Cash and cash equivalents at beginning of period 81,529 559,510 ----------- ---------- Cash and cash equivalents at end of period $ 221,273 $ 143,371 =========== ==========
Supplemental disclosure of cash flow information: During the three months ended August 31, 1998 and 1997, the Company paid no income taxes and no interest. SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: During the three months ended August 31, 1998, the Company issued: 722,754 shares of its common stock for services rendered by employees and third parties for $196,092; and 138,834 shares of its common stock for $187,846 of liquidating damages associated with the Convertible Debentures. See accompanying notes to consolidated financial statements 6 TERRA NATURAL RESOURCES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Statement of Information Furnished The accompanying unaudited consolidated financial statements have been prepared in accordance with Form 10-QSB instructions and in the opinion of management contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of August 31, 1998, the results of operations for the three months ending August 31, 1998 and 1997, and the cash flows for the three months ended August 31, 1998 and 1997. These results have been determined on the basis of generally accepted accounting principles and practices applied consistently with those used in the preparation of the Company's audited financial statements for its fiscal year ended May 31, 1998. 2. Business The Company's business is the harvesting of timber and the production of rough sawn lumber and other finished wood products in Brazil, the exploration and mining of precious metals in Nevada and the exploration of precious metals and coal in Indonesia. The Company holds various rights to develop and/or harvest timber properties on up to approximately 950,000 hectares located in the states of Para and Amazonas, Brazil; the right to conduct sawmill operations at a 3.6 hectare sawmill facility located near the port city of Belem, Para, Brazil; and the right to conduct exploration activities on seven (7) gold properties and four (4) coal properties in Indonesia. In August 1998, the Company entered into an agreement to harvest timber from an additional 1,380 hectares in Para, Brazil, for a period of thirty years. 3. Other A. On August 31, 1998, the Company announced that it received an initial capital infusion of $500,000 from a group led by Tetsuo Kitagawa. Mr. Kitagawa had a 25-year history with the Marubeni Group and until recently was the financial managing director of Marubeni's subsidiary in Holland. Mr. Kitagawa is currently assigned by the Office of the President of the Russian Federation to form investment funds in and outside of Russia under the management of the Office of the President of the Russian Federation for the improvement of its economy. Mr. Kitagawa, with his group, will provide full-time management and financial services for the Company. The Company has been reviewing acquisition candidates submitted through the Kitigawa Group, many of which are located in the countries of the former Soviet Union. On October 14, 1998, Mr. Kitagawa was elected a director of the Company by the Board of Directors. B. From July 1997 through October 16, 1998, Jeffrey S. Kramer, Chief Operating Officer, provided loans to the Company, aggregating approximately $714,000. Mr. Kramer and the Company are currently contemplating a partial settlement of these outstanding loans through the issuance of restricted common shares by the Company. 7 4. Subsequent Events A. On September 24, 1998, the Company announced that it executed a letter of understanding to acquire the controlling interest of "Chrustalnaia" of Russia. Chrustalnaia owns and operates five mines with significant reserves as well as 100 percent of "Stanum" which is involved in harvesting, cutting and fabricating timber, also with substantial reserves. Chrustalnaia/Stanum has gross revnues of approximately $16.2 million for fiscal 1997 as presented in their Russian-audited balance sheet. A recognized major accounting firm will be retained to perform an audit of the Russian balance sheet and assets, and the final closing will be subject to such confirmation and the preparation of a more definitive agreement prepared in accordance with the laws of the United States and the other appropriate countries which will contain other closing conditions. Chrustalnaia's mining activities include mining, processing ore of colored metals and obtaining concentrates in the fields of gold, silver and tin, and functions under the direction of Dr. Alexander Gonchar. Dr. Gonchar is a well-known academician and a respected member of the Academy of Science in Russia as well as other highly respected scientific communities. B. On September 10, 1998, the Company announced that Dr. Thomas Ward, consultant to the U.S. Department of Energy and the Pentagon, has agreed to become a member of the Company's Advisory Committee in the capacity of Executive Consulting Director for Scientific Development Mr. Ward, an internationally respected scientist, was for a period of six years, a representative of the United States in Russia in charge of the nuclear demilitarization program. Mr. Ward owns his own consulting company which contracts a number of scientists providing project expertise to the U.S. government and private companies. Ward will head the Company's Research and Development Department in a number of areas including monocrystallite silicon and isotope development. In addition, he will implement the technology to process Russian timber for export to the U.S. in order to preserve the United States' forests and parks in accordance with the Gore-Russian Agreement which starts in the year 2000 and is in the range of 20 million cubic meters of timber. On October 13, 1998, the Company formed Science & Technology Resources, Inc., which is currently structured as a wholly owned subsidiary, for the purpose of developing its technological division to be headed by Mr. Ward. C. The Company is in the final stages of negotiation with Cyprus Amax Coal Company for the exploration and development of one of the Company's coal properties in East Kalimantan, Indonesia. 8 D. On October 5, 1998, the Company announced that it had signed an agreement for the acquisition of a substantial interest in oil and revenue-producing gas leases located on the Plainview natural gas field on 25,000 acres of gas prospects. The agreement on the leases located in Macoupin County in southwest Illinois is with S.M.T.V. and Western Pipeline Group. In its initial due diligence on a small part of the holdings prior to entering into the agreement, the Company has been able to confirm approximately an initial 4.76 BCF of natural gas. Additional due diligence and confirmation is planned to commence immediately. E. On October 13, 1998 the Board of Directors elected Tetsuo Kitagawa and Neil H. Lewis as directors, expanding the Board to seven members. Mr. Kitagawa has been President of SYMIC, a management consulting firm, since October 1997, prior to which he was employed by Marubeni Finance (Holland). For the last six of those years he was a Managing Director of Marubeni Finance, which is a wholly-owned subsidiary of Marubeni, one of Japan's leading general trading companies. Mr. Lewis is an attorney in private practice and a consultant to the Company. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION RESULTS OF OPERATION Comparison of Results of Operations - Three months Ended August 31, 1998 and August 31, 1997. - -------------------------------------------------------------------------------- Revenues for three months ended August 31, 1998 were approximately $249,000 as compared to approximately $157,000 for the same period in 1997. The sales in both periods relate to the Brazilian operations. The $92,000 increase in Sales is due to increased efficiencies. The gross margin for the three months ended August 31, 1998 was approximately 23% as compared to approximately 49% for the same period in 1997. The decrease in the gross margin is attributable to increased labor costs. The General and Administrative Expenses and exploration costs in the aggregate for the three month period ending August 31, 1998 increased slightly compared to the same period in 1997. Although the Company's operating activities increased for the three months ending August 31, 1998 over the same period in 1997, General and Administrative Expenses and exploration costs in the aggregate rose only slightly due to the Company's ability to control corporate expenses. 9 LIQUIDITY AND CAPITAL RESOURCES The Company's working capital position as of August 31, 1998 was a deficit of approximately $2,833,000. Almost since inception, the Company has experienced pressure on its working capital position due to operating losses and the need to continually invest in exploration activities on the Nevada Property and, more recently, the Brazilian Properties, the Silobat Property and the remainder of the Indonesian Concessions. To raise funds in the past, the Company has relied upon private placements of its equity securities. In the quarter ending August 31, 1998, the Company raised approximately $1,242,000 pursuant to such private placements. On March 27, 1998, the Company executed an agreement securing $14 million in equity financing, primarily to fund its timber operations in South America. The financing, through Bristol Asset Management Company II LLC, requires an effective registration statement and enables the Company to draw up to $14 million over a three-year period. As of the filing date of this Quarterly Report, the Company has not effected a registration statement covering the common stock to be issued pursuant to the $14 million equity financing agreement. As of August 28, 1998, TiNV1, Inc., ("TiNV1"), entered into a Subscription Agreement and a letter agreement with the Company pursuant to which TiNV1 purchased 5,500,000 shares of the Company's common stock for $500,000. The Brazilian operations represent an opportunity for the Company to generate significant cash flows for the first time. The Company believes that with the anticipated increase in daily production at its Brazilian operations to 125 cubic meters per day, much of its continued operations in Brazil, Indonesia, the Nevada Property, and its operating expenses and overhead at its corporate offices will be funded by the cash flow generated from its operations in Brazil. The pending acquisition of Chrustalnaia and the formation of Science & Technology Resources, Inc. are also being developed for the purpose of increased revenues. The Company anticipates that it will require additional capital and intends to secure it through its agreement with Bristol Assets Management Company II LLC, by utilizing a publicly registered offering of its securities, the capital provided by the TiNV1 transaction, "Private Placements" and/or funds generated from its Brazilian operations. 10 TERRA NATURAL RESOURCES CORPORATION AND SUBSIDIARIES (dba NEVADA MANHATTAN) PART II - OTHER INFORMATION 1. LEGAL PROCEEDINGS As reported in the Company's Annual Report on Form 10-KSB, on July 14, 1998 the following lawsuit was filed in United States District Court for the Central District of California (Case No. 98-5624 JSL CTx) (the "Securities Action") on behalf of the Company and Francis Parkes, Dr. Joe C. Rude, Christopher D. Michaels, who are individual Company shareholders: Francis Parkes, Dr. Joe C. Rude III, Christopher D. Michaels and Nevada Manhattan Mining, Inc. v. Sheldon Salcman, Arie Rabinowitz, Mayer Rooz, Thomson Kernaghan & Co. Limited, Soreq, Inc., Silenus Limited, Mary Park Properties, L.H. Financial Services, Austost Anstalt Schaan, Tusk Investments, Inc., Mendel Group, Inc., Top Holding International, Ltd., Praha Investments S.A., UFH Endowment, Ltd., Atead Consulting S.A., and Ausinvest Anstalt Balzers, In the Securities Action, plaintiffs contend that defendants violated Section 10(b) and 13(g) of the Securities Exchange Act, Section 1962(b) of the Racketeer Influenced and Corrupt Organizations Act, and committed fraud by engaging in a fraudulent scheme to manipulate and artificially depress the market in and for the Company's common stock by use of massive short sales. Plaintiffs seek an unspecified amount of damages, including punitive damages, a judicial declaration that the terms, conditions and covenants of certain debentures and subscription agreements were violated and certain injunctive relief. During this quarterly period, various defendants filed motions to dismiss and/or transfer venue. 2. CHANGES IN SECURITIES Not applicable. 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. 5. OTHER INFORMATION Not applicable. 11 6. EXHIBITS AND REPORTS ON FORM 8-K EXHIBITS - -------- Exhibit Description Reference No. - ------------------- ------------- Amended By-Laws of Terra Natural Resources Corporation 3.(xi) Financial Data Schedule 27 REPORTS ON FORM 8-K - ------------------- 8-K Report dated July 15, 1998 to report the press release issued on July 15, 1998 announcing that the company and certain company stockholders filed a lawsuit in the U.S. Federal District Court in Los Angeles seeking damages, among other things, for an alleged fraudulent scheme to depress the market price of the Company's common stock. 8-K Report dated July 7, 1998 to report Changes in Certifying Accountants. 12 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Terra Natural Resources Corporation /s/ Jeffrey S. Kramer October 20, 1998 __________________________________________ Jeffrey S. Kramer, Chief Financial Officer 13 EXHIBIT INDEX Exhibit Number Description of Exhibit - ------- ---------------------- 3.(xi) Amended By-Laws of Terra Natural Resources Corporation 27 Financial Data Schedule EX-3.(XI) 2 EXHIBIT 3.(XI) 1 EXHIBIT 3.(XI) BY-LAWS OF TERRA NATURAL RESOURCES CORPORATION. ------------------------------------------------------------------------------- ARTICLE I-OFFICES SECTION 1. REGISTERED OFFICE. The registered office shall be established and maintained at the office of the resident agent. SECTION 2. OTHER OFFICES. The corporation may have other offices, either within or without the State of Nevada, at such place or places as the Board of Directors may from time to time appoint or the business of the corporation may require. ARTICLE II-MEETING OF STOCKHOLDERS SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for the election of directors and for such business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of Nevada, and at such time and date as the Board of Directors, by resolution, shall determine and as set forth in the notice of the meeting. In the event the Board of Directors fails to so determine the time, date and place of meeting, the annual meeting of stockholders shall be held at the registered office of the corporation in Nevada on: The first Monday which occurs after the annual anniversary of the date upon which the corporation's Articles of Incorporation were certified by the Secretary of State of Nevada. If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held an the next succeeding business day. At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors and may transact such other corporate business as shall be stated in the notice of the meeting. SECTION 2. OTHER MEETINGS. Meetings of stockholders for any purpose other than the election of Directors may be held at such time and place, within or without the State of Nevada, as shall be stated in the notice of the meeting. SECTION 3. VOTING. Each stockholder entitled to vote in accordance with the terms and provisions of the Articles of Incorporation and these By-Laws shall be entitled to one vote, in person or by proxy, from each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. Upon the demand of any stockholder, the vote for directors and upon any question before the meeting shall be by ballot. All elections for Directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Articles of Incorporation or the laws of the State of Nevada. 2 SECTION 4. STOCKHOLDER LIST. The Officer who has charge of the stock ledger of the corporation shall at least 10 days before each meeting of stockholders prepare a completely alphabetically addressed list of the stockholders entitled to vote at the ensuing election, with the number of shares held by each. Said list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 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 be available for inspection at the meeting. SECTION 5. QUORUM. Except as otherwise required by law, by the Articles of Incorporation or by these By-Laws, the presence, in person or by proxy, of stockholders holding a majority of the stock of the corporation entitled to vote shall constitute a meeting. A majority in interest of the stockholders entitled to vote thereat, present in person or by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof. SECTION 6. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose, unless otherwise prescribed by statute or by the Articles of incorporation, 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 Directors or stockholders entitled to vote. Such request shall state the purpose of the proposed meeting. SECTION 7. NOTICE OF MEETINGS. Written notice, stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be given to each stockholder entitled to vote thereat at his address as it appears on the records of the corporation, not less than 10 nor more than 50 days before the date of the meeting. SECTION 8. BUSINESS TRANSACTED. No business other than that stated in the notice shall be transacted at any meeting without the unanimous consent of all the stockholders entitled to vote thereat. 3 SECTION 9. ACTION WITHOUT MEETING. Except as otherwise provided by the Articles of Incorporation, whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with any corporate action by any provisions of the statutes or the Articles of Incorporation or of these By-Laws, the meeting and vote of stockholders may be dispensed with, if all the stockholders who would have been entitled to vote upon the action if such meeting were held, shall consent in writing to such corporate action being taken. SECTION 10. STOCKHOLDER NOMINATION OF DIRECTORS. Nominations for the Board of Directors may be made by resolution of the Board of Directors or a committee appointed by the Board of Directors or by any stockholder entitled to vote in the election of Directors. Notwithstanding the foregoing, any stockholder may nominate one or more persons for election as Directors at a meeting of the stockholders only if written notice of such stockholder's intent to make such nomination or nominations has been given to the Secretary of the Company not later than the close of business on the fifteenth day following the date on which notice of such meeting or the record date thereof is first publicly announced or, if earlier with respect to an election of Directors to be held at the annual meeting of stockholders, ninety days prior to the date that is one year from the date of the immediately preceding annual meeting of stockholders. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of any arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated by the Board of Directors; and (e) the consent of each nominee to serve as a Director of the Company if so elected. The presiding officer at the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure. SECTION 11. STOCKHOLDER PROPOSALS. Proposals for business to be conducted and actions to be taken by the stockholders at any annual or special meeting may be made by resolution of the Board of Directors or a committee appointed by the Board of Directors or by any stockholder entitled to vote at such meeting. Notwithstanding the foregoing, any stockholder may propose business to be conducted or actions to be taken at a meeting of the stockholders only if written notice of such stockholder's intent to propose such business or action has been given to the Secretary of the Company not later than the earlier of (a) the close of business on the fifteenth day following the date on which notice of such meeting or the record date thereof is first publicly announced, and (b) ninety days prior to the date that is one year from the date of the immediately preceding annual meeting of stockholders with respect to proposals to be considered at an annual meeting of stockholders. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the proposal; (b) a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to make the proposals specified in the notice; (c) a copy of the proposal; and (d) such other information regarding the proposal as is necessary to inform the stockholders with reasonable particularity of the nature, purpose, intent and consequences of the proposal to the Company if adopted. The presiding officer at the meeting may refuse to acknowledge any proposal not made in compliance with the foregoing procedure. 4 ARTICLE III-DIRECTORS SECTION 1. NUMBER AND TERM. The number of Directors shall be not more than 7. The Directors shall be elected at the annual meeting of stockholders and each Director shall be elected to serve until his successor shall be elected and shall qualify. The number of Directors may not be less than 3 except that where all the shares of the corporation are owned beneficially and of record by either one or two stockholders, the number of Directors may be less than 3 but not less than the number of stockholders. SECTION 2. RESIGNATIONS. Any Director, member of a committee or other Officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective. SECTION 3. VACANCIES. If the office of any Director, member of a committee or other Officer becomes vacant, the remaining Directors in office, though less than a quorum, by a majority vote may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his successor shall be duly chosen. SECTION 4. REMOVAL. Any Director or Directors may be removed either for or without cause at any time by the affirmative vote of the holders of two-thirds of the Company's shares then entitled to vote at an election of Directors, at a special meeting of stockholders duly called for such purpose, and the vacancies thus created may be filled at the meeting held for the purpose of removal by the affirmative vote of two-thirds in interest of the stockholders, provided that any person elected as a Director pursuant hereto must be duly nominated as provided in Article II, Section 10 of these By-Laws. If the stockholders fail to fill the vacancies created by removal at such special meeting, the vacancies shall be filled as provided in Article III, Section 3 of these By-Laws. SECTION 5. INCREASE IN NUMBER. The number of Directors may be increased by amendment of these By-Laws by the affirmative vote of a majority of the Directors, though less than a quorum, or, by the affirmative vote of a majority in interest of the stockholders, at the annual meeting or at a special meeting called for that purpose, and by like vote the additional Directors may be chosen at such meeting to hold office until the next annual election and until their successors are elected and qualify. SECTION 6. COMPENSATION. Directors shall not receive any stated salary for their services as Directors or as members of committees, but by resolution of the Board a fixed fee and expenses of attendance my be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity as an Officer, Agent, or otherwise, and receiving compensation therefor. SECTION 7. ACTION WITHOUT MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the Board, or of such committee as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee. 5 ARTICLE IV-OFFICERS SECTION 1. OFFICERS. The Officers of the corporation shall consist of a President, a Treasurer, and a Secretary, and shall be elected by the Board of Directors and shall hold office until their successors are elected and qualified. In addition, the Board of Directors may elect a Chairman of the Board, one or more Vice Presidents, and such Assistant Secretaries and Assistant Treasurers as it may deem proper. None of the Officers of the corporation need be Directors. The Officers shall be elected at the first meeting of the Board of Directors after each annual meeting. More than two offices may be held by the same person. SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint such Officers and Agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such power and perform such duties as shall be determined from time to time by the Board of Directors. SECTION 3. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board of Directors, if one be elected, shall preside at all meetings of the Board of Directors and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 4. PRESIDENT. The President shall be the Chief Executive Officer of the corporation and shall have the general powers and duties of supervision and management usually vested in the Office of President of a corporation. He shall preside at all meetings of the stockholders if present thereat, and in the absence or non-election of the Chairman of the Board of Directors, at all meetings of the Board of Directors, and shall have general supervision, direction and control of the business of the corporation. Except as the Board of Directors shall authorize the execution thereof in some manner, he shall execute bonds, mortgages, and other contracts in behalf of the corporation, and shall cause the seal to be affixed to any instrument requiring it and when so affixed the seal shall be attested by the signature of the Secretary or the Treasurer or an Assistant Secretary or an Assist- and Treasurer. 6 SECTION 5. VICE-PRESIDENT. Each Vice-President shall have such powers and shall perform such duties as shall be assigned to him by the Directors. SECTION 6. TREASURER. The Treasurer shall have custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the corporation. He shall deposit all moneys and other valuables in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors, or the President, taking proper vouchers for such disbursements. He shall render to the President and Board of Directors at the regular meetings of the Board of Directors, or whenever they may request it, an account of all his transactions as Treasurer and of the financial condition of the corporation. If required by the Board of Directors, he shall give the corporation a bond for the faithful discharge of his duties in such amount and with such surety as the Board shall prescribe. SECTION 7. SECRETARY. The Secretary shall give, or cause to be given, notice of all meetings of stockholders and Directors, and all other notices required by law or by these By-Laws, and in case of his absence or refusal or neglect to do so, any such notice may be given by any person thereunto directed by the President, or by the Directors, or stockholders, upon whose requisition the meeting is called as provided in these By-Laws. He shall record all the proceedings of the meetings of the corporation's stockholders and Directors in a book to be kept for that purpose, and shall affix the seal to all instruments requiring it, when authorized by the Directors or the President, and attest the same. SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant Treasurers and Assistant Secretaries, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the Directors. 7 ARTICLE V-STOCK SECTION 1. CERTIFICATES OF STOCK. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the Chairman or Vice-Chairman of the Board of Directors, or the President or a Vice-President, and the Treasurer or Assistant Treasurer, or the Secretary or Assistant Secretary of the corporation, certifying the number of shares owned by him in the corporation. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof, and the qualifications, limitations, or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in the General Corporation Law of Nevada, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preference and/or rights. Where a certificate is countersigned (1) by a Transfer Agent other than the corporation or its employee, or (2) by a registrar other than the corporation or its employee, the signatures of such persons may be facsimiles. SECTION 2. LOST CERTIFICATES. New certificates of stock my be issued in the place of any certificate therefore issued by the corporation, alleged to have been lost or destroyed, and the Directors may, in their discretion, require the owner of the lost or destroyed certificate or his legal representatives, to give the corporation a bond, in such sum as they my direct, not exceeding double the value of the stock, to indemnify the corporation against it on account of the alleged loss of any new certificate. SECTION 3. TRANSFER OF SHARES. The shares of stock of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other persons as the Directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer. SECTION 4. STOCKHOLDERS RECORD DATE. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 50 nor less than 10 days before the day of such meeting, nor more than 50 days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. 8 SECTION 5. DIVIDENDS. Subject to the provisions of the Articles of Incorporation the Board of Directors may, out of funds legally available therefor at any regular or special meeting, declare dividends upon the capital stock of the corporation as and when they deem expedient. Before declaring any dividends there may be set apart out of any funds of the corporation available for dividends, such sum or sums as the Directors from time to time in their discretion deem proper working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the Directors shall deem conducive to the interests of the corporation. SECTION 6. SEAL. The corporate seal shall be circular in form and shall contain the name of the corporation, the year of its creation and the words "CORPORATE SEAL NEVADA." Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced. SECTION 7. FISCAL YEAR. The fiscal year of the corporation shall be determined by resolution of the Board of Directors. SECTION 8. CHECKS. All checks, drafts, or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by an Officer or Officers, or Agent or Agents of the corporation, and in such manner as shall be determined from time to time by resolution of the Board of Directors. SECTION 9. NOTICE AND WAIVER OF NOTICE. Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly stated, and any notice so required shall be deemed, to be sufficient if given by depositing the same in the United States Postal System, postage prepaid, addressed to the person entitled thereto at his address as it appears on the records of the corporation, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by statute. Whenever any notice whatever is required to be given under the provisions of any law, or under the provisions of the Articles of Incorporation of the corporation or these By-Laws, a waiver thereof in writing signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed proper notice. SECTION 10. NRS GOVERNANCE. The Board of Directors of the Company, by virtue of this Section 10 of the By-Laws, elects not to be governed by Nevada Revised Statutes Sections 78.378 through 78.3793 inclusive in connection with the acquisition of common stock and options by TiNV1, Inc. approved by the Board of Directors on August 28, 1998. 9 ARTICLE VI-AMENDMENTS These By-Laws may be altered and repealed and By-Laws may be made at any annual meeting of the stockholders or at any special meeting thereof if notice thereof is contained in the notice of such special meeting by the affirmative vote of a majority of the stock issued and outstanding or entitled to vote thereat, or by the regular meeting of the Board of Directors, or at any special meeting of the Board of Directors, if notice thereof is contained in the notice of such special meetings. (SEAL) AMENDED BY-LAWS AS OF AUGUST 31, 1998 EX-27 3 EXHIBIT 27
5 3-MOS MAY-31-1998 JUN-01-1998 AUG-31-1998 221,273 0 285,316 0 96,001 1,225,379 473,718 121,418 6,848,124 4,057,893 0 0 176,414 401,572 30,540,415 6,848,124 248,649 248,649 191,004 191,004 1,386,316 0 234,092 (1,328,671) 0 (1,328,671) 0 0 0 (1,328,671) (0.06) (0.06)
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