The National Brotherhood of Fathers Rights can help you form a Nevada Corporation Today!!!

                                       Nevada has spent more than a decade developing the
                                       infrastructure to support its claim as the incorporating
                                       capital of the West. Instead of resting on its laurels,
                                       Nevada has become much more determined to establish
                                       itself as a leader in incorporation, as evidenced by the
                                       complete revision of Nevada's Corporation Code in 1991
                                       that makes the entire incorporation process quicker and
                                       more efficient, with greater liability protection than ever
                                       before. Approximately 1,500 corporations are formed every
                                       month in Nevada, which is three times higher than in 1985.

                                       Because of Nevada's pro-business attitude, Inc. Magazine
                                       and Money Magazine have rated Nevada #1 among all
                                       States in recent years for favorable business climates. In
                                       the last decade, Nevada has clearly established itself as
                                       the "Corporation Capital of the West," and has shown
                                       significant annual growth in the number of new businesses
                                       that incorporate there each year. And, Nevada's legal
                                       system, while not as experienced as Delaware's, has
                                       naturally grown to accommodate the need for establishing
                                       legal precedents that support the state law.

                                      Nevada offers many advantages as a corporate haven:

                                       1.   Nevada has no state corporate taxes.
                                       2.   Nevada has no franchise tax.
                                       3.   Nevada has no tax on corporate shares.
                                       4.   Nevada has no personal income tax.
                                       5.   Nevada provides total privacy of shareholders.
                                       6.   Nevada is the only state without a formal
                                             information-sharing agreement with the IRS.
                                       7.   Nevada is the only state that allows for the issuance of
                                             "bearer shares."
                                       8.   Nevada has minimal reporting and disclosure
                                       9.   Nevada has nominal annual fees.
                                       10. Nevada allows for a one-man corporation.
                                       11. Nevada has established case law that prevents easy
                                             piercing of the corporate veil.
                                       12. Corporate officers and directors can be protected from
                                             any personal liability for their lawful acts on behalf of the
                                       13. Stockholders, directors and officers need not live or
                                              hold meetings in Nevada, or even be U.S. citizens.
                                       14. Only the names of the officers and directors are on
                                              public records. No other information, listings, or minutes of
                                              meetings are filed with the State.
                                       15. There is no minimum initial capital requirement to
                                       16. Nevada corporations may issue stock for capital,
                                              services, personal property, or real estate. The directors
                                              alone may determine the value of any such transactions,
                                              and their decision is final.

                                       Nevada's Corporation Code has been criticized by some as
                                       too pro-management, offering far too much flexibility in
                                       maintaining the corporation's affairs. Critics have said that
                                       the law in Nevada is not concerned enough about the rights
                                       of stockholders or employees. However, since the 1991
                                       version of the Corporation Code was adopted, Nevada has
                                       experienced a 20% increase in the number of corporations
                                       filed in the state.

                                       Most of these corporations are being formed by small
                                       companies, where the stockholders and the management
                                       are the same. These people are concerned very little with
                                       protecting their rights as a stockholder, since they also
                                       manage the company and receive all of the benefits of
                                       Nevada's liberal Code.

                                       From the Reno Gazette-Journal, Monday, April 29, 1991:

                                       Incorporating becomes big business for Nevada
                                       "They come from all over: the busy streets of New York,
                                       the snowy slopes of Colorado, the oil fields of the Yukon,
                                       and they all want the same thing: the painless, cheap and
                                       anonymous security of Nevada's business world.

                                       "Scores of companies fill out a few documents, list a few
                                       officers, pay a nominal fee and presto ) a new corporation
                                       is born. For instance:

                                       "A New York City cab company has established 50 Nevada
                                       corporations -- one for every two vehicles in its 100-taxi
                                       fleet. If the company gets sued, its liability is limited to the
                                       value of individual properties, just two cabs, unless the
                                       plaintiff wants to file lawsuits against 50 different

                                       "Some ski resorts have followed the same principle, setting
                                       up corporations for each ski lift, lodge and snack bar. A
                                       major petroleum company set up Nevada corporations for
                                       each of its 100 Alaska Oil wells. 'It's really the idea of
                                       making a new basket, every time you have an egg you
                                       want to insulate,' said one Nevada incorporation expert.

                                       "Several entertainers have also started their own
                                       corporations. Rock stars Madonna, the Artist Formerly
                                       Known as Prince, Michael Jackson and Paul Simon all
                                       reportedly have Nevada corporations, as do Chevy Chase
                                       and Rodney Dangerfield. Some have their big-money
                                       salaries paid to accounts in Nevada, where there is no
                                       income tax or corporate tax, and the entertainers draw a
                                       salary from the corporation. "They buy boats, cars and take
                                       trips to Europe and everything," said Nevada businessman
                                       Brian Foote, who helps out-of-staters set up Nevada
                                       corporations. "They have the corporation buy for them."

                                       "All of this is made possible because Nevada lawmakers
                                       drafted its liberal corporation laws over the past several
                                       decades, said Cyndy Woodgate, state deputy secretary for

                                       "Officials didn't want to be hard-nosed about business
                                       coming to Nevada, Woodgate said. "And not being
                                       restricted here, they're able to come here and do business.
                                       We like that fact."

                                       "There are several benefits of having a Nevada corporation.
                                       These include low filing fees, minimal information
                                       requirements, and no standard corporate tax. Most other
                                       states, including California, have a tax.

                                       "To make matters even better, Nevada is the only state
                                       without a reciprocal agreement with the IRS to exchange
                                       tax returns. This is especially attractive to some
                                       corporations or individuals who want to legally protect their

                                       "With all these advantages, it's sometimes feasible for a
                                       single person or company to set up several Nevada
                                       corporations. The same thing would be a paperwork
                                       nightmare in California, where basic individual filing fees are
                                       up to or more.

                                       "The liberal laws have spawned their own growth industry:
                                       businesses that specialize in helping other businesses set
                                       up corporations. And business is booming, in part because
                                       it's getting more complicated and costly to do business in
                                       other states.

                                       "At least for now, Nevada remains the second most popular
                                       state for incorporating on a per capita basis. The leader is
                                       Delaware, but local corporation makers aren't impressed:
                                       Nevada, they say, has several benefits Delaware doesn't
                                       have, like privacy, no franchise taxes and other benefits."

                                       LIABILITY PROTECTION
                                       "The number of lawyers confounds all belief in the land of
                                       the fee and the home of the brief." - Leon Frielich

                                       There is a national trend developing where people are
                                       steadfastly refusing to serve on the board of directors of
                                       corporations because of their exposure to stockholders and
                                       the public. Gone are the days in which someone tries to
                                       embellish their resume by listing all of the corporations for
                                       which they serve as a director or vice-president. People are
                                       slowly realizing the liability exposure that they have in
                                       those situations.

                                       In 1987, the Nevada Legislature passed a revolutionary law
                                       that allows corporations to place provisions in their articles
                                       of incorporation that eliminates the personal liability of
                                       officers and directors to the stockholders of Nevada
                                       corporations. Delaware and a few other states soon
                                       adopted lesser versions of Nevada's law, but Nevada's
                                       remains among the most thorough and comprehensive in
                                       the country.

                                       Contained in the Nevada Revised Statutes (78.037), the law
                                       in part reads as follows:

                                       "The articles of incorporation may also contain:

                                       1. A provision eliminating or limiting the personal liability of
                                           a director or officer to the corporation or its stockholders for
                                           damages for breach of fiduciary duty as a director or officer,
                                           but such provision must not eliminate or limit the liability of
                                           a director or officer for:

                                       (a) Acts or omissions which involve intentional misconduct,
                                             fraud or a knowing violation of law"

                                       In Nevada, the officers and directors of the corporation are
                                       the only people listed on public records, so they have the
                                       only real exposure to the outside world. As stated above,
                                       stockholders can be indemnified as well, although that is
                                       secondary protection to the fact that no one can find you
                                       on public records in the first place. How can somebody sue
                                       you - or at least collect against you - if they can't find you?

                                       Additionally, Nevada's Corporation Code allows for the
                                       indemnification of all officers, directors, employees,
                                       stockholders, or agents of a corporation for all actions that
                                       they take on behalf of the corporation that they had
                                       reasonable cause to believe was legal. This indemnification
                                       can include any civil, criminal and administrative action.
                                       (See NRS 78.751.) These two laws can provide
                                       comprehensive protection for the officers and directors of
                                       Nevada corporations as long as they act prudently in their

                                       In product liability cases, the damages are categorized as
                                       one of two types. The first type is referred to as
                                       "compensatory," which are intended to compensate the
                                       injured for some loss, which can include economic (such
                                       as lost income, medical bills, etc.) or noneconomic (for
                                       example, pain and suffering).The second type of damages
                                       are called "exemplary," also known as "punitive."
                                       Exemplary damages are imposed to punish the wrongdoer
                                       for conduct which by clear and convincing proof is shown to
                                       involve oppression, fraud, or malice, either express or
                                       implied. These damages are designed as a deterrence to

                                       Tort Reform
                                       Nevada has joined a group of states that have enacted tort
                                       reform legislation in response to the increased cost of
                                       doing business resulting from potential liability. The goal of
                                       tort reform is to reduce the exposure of businesses and
                                       their insurers. The key features of Nevada's legislation are
                                       provisions which limit exemplary damages and abolish joint
                                       and several liability except in certain cases.

                                       Before the tort reform legislation, it was common for courts
                                       to award exemplary damages three to five times greater
                                       than the compensatory damages. Nevada statute now
                                       limits exemplary damages to an amount no greater than
                                       ,000 when the amount of compensatory damages is less
                                       than ,000. These limitations do not apply to situations
                                       involving insurer bad faith, the release of toxic substances,
                                       or product liability.

                                       The other significant change in Nevada law is the
                                       abolishment of joint and several liability. Joint and several
                                       liability means that if a judgment is entered against several
                                       defendants, they are each equally liable for the full amount
                                       of the judgment, without regard to their relative fault in
                                       causing the damages. Nevada now requires the court to
                                       assign a percentage of fault to each defendant, from zero to
                                       one hundred with the total equal to 100 percent. Each
                                       defendant found liable is required to pay a share of the total
                                       judgment no greater than his/her percentage of fault.

                                       "Anyone may arrange his affairs that his taxes shall be as
                                       low as possible; he is not bound to choose that pattern
                                       which will best pay the Treasury; there is not even a
                                       patriotic duty to increase one's taxes." - Learned Hand, in
                                       Helvering v. Gregory.

                                       All US corporations are subject to federal income tax
                                       liability. Although there are many strategies involving the
                                       corporation that may reduce the federal tax liability, the
                                       state of incorporation is not a direct factor in reducing
                                       federal taxes. However, some strategies that will reduce
                                       federal income taxes for corporations may require the use
                                       of a corporation from a specific jurisdiction, such as
                                       Nevada, due to several factors that are inherent in Nevada

                                       State Corporate Income Tax
                                       California has a state corporate tax rate of 9.3 percent, with
                                       a minimum tax of per year. Arizona has a tax of 9.3
                                       percent on all taxable income over ,000. New York's tax
                                       rate is 9 percent, (10 percent on unrelated income) with a
                                       minimum required tax of per year, in addition to taxes
                                       levied by local jurisdictions (New York City imposes an
                                       8.85% corporate tax). Even Delaware has a corporate tax
                                       of 8.7 percent and a minimum per year franchise tax.

                                       The difference in tax liability becomes immediately
                                       apparent when looking at state corporate tax rates. The
                                       rate of tax among the forty-five states that have state
                                       corporate income tax, ranges from 1 percent (Arkansas'
                                       corporate tax on the first ,000 of income) to 12.25 percent
                                       (Pennsylvania's corporate tax). Many states have additional
                                       surtaxes, and allow local governments to assess their own
                                       corporate taxes on top of that.

                                       Nevada is one of only four states with no corporate income
                                       tax. Additionally, Nevada has no franchise tax, no taxes on
                                       corporate shares, and no succession tax. This type of tax
                                       structure is made possible in Nevada by a state economy
                                       centered in three major industries, namely; (1) gaming, (2)
                                       tourism, and (3) mining.

                                       The revenue generated by these industries has historically
                                       paid for a substantial portion of Nevada's budget needs.
                                       Any visitor to the Las Vegas Strip can testify that Nevada's
                                       entertainment industry has poured billions of dollars into
                                       protecting it's title as the entertainment capital of the world.
                                       Besides the gaming taxes generated on the casino floor,
                                       the millions of visitors add substantially to state coffers
                                       each year in sales revenue from purchases made during
                                       their visit.

                                       So, by incorporating in Nevada instead of California and
                                       with careful structuring that distinctly separates the Nevada
                                       source income from the California source income, you can
                                       create an entity that has it's tax domicile in Nevada. This
                                       could save the business ,300 in state corporate income
                                       taxes on every ,000 of taxable income. What's more, your
                                       corporate structure would be in complete compliance, and
                                       legally justified.

                                       Remember, there is a difference between "tax avoidance,"
                                       which is perfectly legal, and "tax evasion," which is very
                                       illegal. Tax avoidance is avoiding situations which are
                                       taxed, while tax evasion is failing to pay taxes that are due.

                                       And just as important, Nevada has been fiscally
                                       conservative throughout its history. Nevadans have never
                                       had high regard for taxes. So much so, that several years
                                       ago the Nevada legislature approved a measure that made
                                       a state personal income tax unconstitutional.

                                       Nevada's Business License Tax
                                       The best example I know that demonstrates the difference
                                       between the two is in consideration of a toll bridge.
                                       Crossing the toll bridge without paying the toll would be
                                       evasion, while choosing another route, even if it adds a few
                                       miles to the trip, is simply avoidance. There is nothing
                                       illegal or immoral about it.

                                       The one business-related tax that you should be aware of
                                       may not even apply to your Nevada corporation. Effective
                                       July 1, 1991, the tax is often called the Nevada Business
                                       License Tax, which is based on the average number of
                                       employees the company has on the payroll during each
                                       quarter of the year. The tax is paid quarterly by every
                                       person, corporation, partnership, or proprietorship that
                                       conducts an activity for profit in Nevada. The only exempt
                                       companies are nonprofit organizations and government

                                       Only businesses that have employees working in Nevada
                                       are subject to the tax. If you don't have employees, the tax
                                       does not apply. Independent contractors are not considered
                                       employees of the company, and are liable for their own tax
                                       under the law.

                                       The procedure for administrating and collecting the tax is
                                       as follows: an application is mailed to all new businesses
                                       by the Nevada Department of Taxation within weeks of
                                       incorporating or securing local business licenses. The
                                       original application must be accompanied by a .00 filing
                                       fee, and a current list of corporate officers and directors. All
                                       new businesses must return the application, if for no other
                                       reason than to say that the company had no employees.

                                       The tax amounts to per employee per year. To dissuade
                                       the critics of this tax, who properly complain that it
                                       produces a negative reward for hiring new employees, the
                                       tax is now based on the number of hours worked by
                                       employees, instead of the number of employees hired. The
                                       total hours worked are then divided by the number of hours
                                       the state thinks a full-time employee should work each
                                       quarter, and the result is the number of
                                       employee-equivalents that the business has.

                                       "The makers of our Constitution undertook to secure
                                       conditions favorable to the pursuit of happiness. They
                                       recognized the significance of man's spiritual nature, of his
                                       feelings and of his intellect. They knew that only a part of
                                       the pain, pleasure and satisfactions of life are to be found in
                                       material things. They sought to protect Americans in their
                                       beliefs, their thoughts, their emotions and their sensations.
                                       They conferred, as against the Government, the right to be
                                       let alone - the most comprehensive of rights and the right
                                       most valued by civilized man." - Louis Brandeis, in
                                       Olmstead v. United States.

                                       For many people, privacy is the primary issue in their
                                       financial life. It seems that in our society, so bent as it is
                                       upon litigation and lawsuit, the less people know about
                                       your assets, the better off you are. It is no coincidence that
                                       people without significant assets do not get sued nearly as
                                       often as those who are perceived as having "deep pockets."
                                       Individuals with any assets at all should anticipate the
                                       possibility of being sued during their lifetime. This is the
                                       very reason many people incorporate their business

                                       From the Reno Gazette Journal, Monday, April 29, 1991:

                                       Silver State's regulations allow for 'hidden' firms

                                       "Taking advantage of a new Nevada law, some Silver State
                                       corporations now are able to withhold from the public the
                                       location of their principal offices.

                                       "But a top official in Nevada's Secretary of State's office
                                       said she believes the new law isn't causing problems,
                                       although the number of hidden corporate sites is unknown.

                                       "Under the previous regulation, corporate papers available
                                       to the public were required to list the location of a
                                       corporation's principal office. That's not required under the
                                       new rule, which mandates only that a corporation list the
                                       address of its Nevada resident agent.

                                       "The updated law requires that the resident agent keep a
                                       record of the corporation's principal office address. But
                                       there's no requirement that a resident agent reveal a
                                       corporate office site, except under court order.

                                       "However, corporate directors must list their names and
                                       addresses - information that sometimes can be used as a
                                       clue to the area a principal office is located, said Cyndy
                                       Woodgate, deputy secretary of state.

                                       "Nevada's corporation law remains liberal, and finding a
                                       corporation "is no easier than it was before," she said.
                                       That's partly because a Nevada corporation doesn't
                                       necessarily have to conduct business, and its address can
                                       be listed as a post office box.

                                       "The rule changes were approved by the 1991 Legislature."

                                       Frivolous lawsuits are expected and planned for by
                                       companies across the country. Because it is widely
                                       recognized that insurance companies regularly settle
                                       claims - even frivolous and unsubstantiated claims - rather
                                       than deal with the expense of, or risk the decision of the
                                       court, we have become a suit-happy society.

                                       To protect your assets from this disturbing trend, you need
                                       a specific plan of action that isolates your assets from
                                       yourself. If someone has no reason to believe that you have
                                       access to a million dollars, it is not likely that someone
                                       would pursue a million-dollar judgment against you. If you
                                       keep your assets private, you will greatly reduce your
                                       chances of being sued. Certainly no attorney would work
                                       on a contingency against you unless they see some way of
                                       getting paid. Suing poor people has never made an attorney

                                       The Nevada corporation offers many ways to protect your
                                       privacy as a stockholder. To appreciate how this is
                                       possible, it is necessary to understand that there are
                                       essentially five ways to identify the stockholders of a

                                       1. Call the Secretary of State's office (or it's equivalent)
                                       where the corporation was formed. In some states, the
                                       Secretary of State requires that a list of stockholders,
                                       including their capital contribution and the value of their
                                       stock be on file. Often, this information is available over the

                                       2.Obtain a copy of the corporation's tax return in that state.
                                       Every state that has a corporate income tax or franchise
                                       tax requires that the return be filed on a state-approved
                                       form. It is common for the state income tax return to
                                       require a list of stockholders, (particularly when that state
                                       also has a personal income tax.) This is difficult to get over
                                       the phone, but can be accessed, depending upon the
                                       state's policy, either through the mail to any individual who
                                       asks, or to anyone who has a subpoena for the record.

                                       3.The corporation's resident agent in that state is required
                                       to have information on file regarding the ownership of stock.
                                       Usually, this means that the corporation is required to
                                       provide the resident agent with a copy of the stock ledger
                                       for file. This is not available to just anyone, but a subpoena
                                       will have immediate access to it.

                                       4.The corporation itself maintains the original of the stock
                                       ledger. This ledger contains all the information regarding
                                       the amount, type and value of stock owned by each
                                       stockholder. A subpoena can get to any corporate record.

                                       5.The corporate officers or directors can be deposed under
                                       oath about their direct knowledge of the ownership of the

                                       It can be difficult or impossible to find out who the
                                       stockholders are of a Nevada corporation using any of the
                                       methods described above. Let's discuss each of these
                                       avenues individually.

                                       First, the only filing required of a Nevada corporation to the
                                       Secretary of State is an annual list of officers and directors.
                                       This list represents the only information that the Secretary
                                       of State will have regarding the ownership and management
                                       of the corporation. This list is due within 60 days of
                                       incorporation, and annually after that.

                                       Although there is room on this list for many names, only
                                       five lines need to be filled out. The required offices that the
                                       Secretary of State must have on file include the president,
                                       the secretary, the treasurer, at least one director, and
                                       resident agent. The most significant thing about that is the
                                       fact that one person may serve in all of those capacities,
                                       and is not required to be a stockholder.

                                       If someone calls the Secretary of State in Nevada and
                                       requests information on a corporation, they will learn
                                       several things. They will learn whether or not the
                                       corporation is in good standing with the state. They will
                                       learn the names of the president, secretary, treasurer, and
                                       director (as well as any additional officers which may have
                                       been reported, such as vice-president and/or additional
                                       directors). They may learn that all of those positions are
                                       filled by the same individual, which usually suggests a
                                       one-man corporation, or by several different individuals.
                                       They may discover that the officers and directors appear to
                                       have residency in the US, or that conversely, they appear
                                       to be citizens of a foreign country. They have also
                                       discovered who the resident agent is, but we'll get to that

                                       What they could not learn is significant:

                                       The Secretary of State could not reveal information
                                       regarding whom the stockholders are, or even how many
                                       exist, or how much stock is issued;

                                       If the list of officers and directors was filed, for instance, on
                                       October 1st, it only represents the officers and directors of
                                       the corporation on that date. It is theoretically possible that
                                       the corporation had a meeting on October 2nd, where new
                                       officers and directors were elected. The new officers and
                                       directors would not be on public record for a year, if then.

                                       The Secretary of State could not tell what assets the
                                       corporation owned, how much capitalization exists, or what
                                       their value was, and; The Secretary of State could not say
                                       if the officers and directors had changed since the last list
                                       was filed, since filing the list is only required once a year.

                                       The corporation could conceivably call another meeting the
                                       following September and put the original officers and
                                       directors back into office in time for the next annual filing.
                                       So, you have no guarantee that the names you found have
                                       any relevance to the current situation.

                                       Because Nevada has no corporate income tax, or the
                                       inherent bureaucracy that such a tax creates, there are no
                                       state corporate tax returns to look at. The only document
                                       the Department of Taxation has, is a filing form for the
                                       Nevada Business License Tax, which is not immediately
                                       available as a public record, and if it were it would only
                                       disclose the number of hours worked by employees of the

                                       Let's assume the resident agent for the corporate records
                                       has been subpoenaed for the records it has in its
                                       possession relating to this particular corporation. The
                                       Nevada resident agent is not required to have a copy of the
                                       actual stock ledger on file as is required in most states,
                                       instead it is merely required to have a statement that
                                       provides the name and address of the person who has the
                                       stock ledger in their possession. The actual stock ledger
                                       could be in Sri Lanka, Swaziland, or Senegal.

                                       The law does not require the stock ledger to be in Nevada
                                      at any time. If the corporation so desired, it could force a
                                       potential litigant to spend a lot of time and money to pursue
                                       that information. You would have to be asking yourself how
                                       much trouble this is all worth.

                                       The corporate secretary is another potential source of
                                       stockholder information. This person has no legal obligation
                                       to you to reveal any information at all about the
                                       stockholders of the corporation. In fact, the corporate
                                       secretary is not required, or even allowed, to provide that
                                       information even to another shareholder of the company
                                       unless the shareholder controls enough voting power to
                                       force the issue.

                                       NRS 78.257 provides that any stockholder who owns at
                                       least 15% of the issued shares of a corporation has a right
                                       to inspect all books and records, but must bear the costs
                                       of such an inspection. Minority shareholders with less than
                                       15% ownership do not enjoy this right.

                                       The right for judgment creditors to access a corporation's
                                       stock ledger was removed by the Legislature in 1993.

                                       In essence, a potential judgment creditor does not seem to
                                       have the ability to access corporate records or documents
                                       to suit his interest, unless he is a stockholder, or a criminal
                                       investigation warrants it. If a potential creditor attempts to
                                       obtain and use these corporate records for any interest
                                       other than a shareholder's, he could face civil penalties.

                                       Beyond those limitations, ultimately the stock of the
                                       Nevada corporation may have been issued as bearer
                                       shares. This means that they may be issued and recorded
                                       on the stock ledger as having been written to the "bearer"
                                       of the certificate. Perhaps the shares were first issued to
                                       the trustee of a voting trust, or care of an attorney, who
                                       exercises attorney/client privilege. In any event, the
                                       corporate secretary may have no direct knowledge
                                       regarding who currently possesses those shares.

                                       BEARER SHARES
                                       Nevada is the only state that allows corporations to issue
                                       stock to the "bearer," which is very much like writing a
                                       check to "cash." The person who controls the bearer
                                       certificates, or has the shares in their possession,
                                       technically has the power to redeem those shares as the
                                       beneficial owner. As a negotiable instrument, it may be
                                       difficult to determine how many times the stock has
                                       changed hands since it was first issued.

                                       The use of "bearer shares" to own and control a Nevada
                                       corporation has been touted in seminars, newspaper
                                       advertising, and promotional brochures of many
                                       Nevada-based incorporating companies. Bearer shares are
                                       generally considered to be an attractive solution for
                                       individuals who desire to own or control assets or business
                                       activities, while maintaining a high degree of financial
                                       privacy. It is true that privacy can be accomplished through
                                       bearer share ownership, however there are many issues
                                       which are broadly misunderstood regarding the use of
                                       bearer shares.

                                       HOW BEARER SHARES ARE ALLOWED
                                       Most states base their corporate law extensively on the
                                       Revised Model Business Corporation Act as developed by
                                       the Committee on Corporate Laws of the American Bar
                                       Association. It should surprise no one, then, that there are
                                       amazing similarities in the Corporation Codes of the various
                                       states. However, because the Model Act has been refined
                                       and modified over time, and because of the stubborn
                                       independence of the various states not to conform entirely
                                       to the Model Act, each state has developed its own
                                       eccentricities that set it apart from the others.

                                       In Nevada's case, one area in which it separates its
                                       Corporation Code from the Model Act is in the information
                                       required on the stock certificate of a corporation. Under the
                                       Model Act, for instance, a stock certificate is required to
                                       contain: 1) the name of the issuing corporation and the
                                       state under which it is organized; 2) the name of the person
                                       to whom the stock is issued; and 3) the number and class
                                       of shares and the designation of the series, if any, the
                                       certificate represents.

                                       The Model Act does not contemplate or allow the use of
                                       shares issued to bearer.

                                       The Nevada Revised Statutes (NRS) reads differently, and
                                       by omission of the language of the Model Act, creates an
                                       opportunity to issue shares of a Nevada corporation to "The
                                       Bearer". NRS 78.235 (1) reads in part as follows: "every
                                       stockholder is entitled to have a certificate, signed by
                                       officers or agents designated by the corporation for the
                                       purpose, certifying the number of shares owned by him in
                                       the corporation."

                                       In other words Nevada law specifically only requires two
                                       things: 1) the name of the corporation, and; 2) the number
                                       of shares represented by the certificate. According to an
                                       attorney with the Nevada Attorney General's office assigned
                                       to the Nevada Secretary of State's office, Nevada is the
                                       only state with this language. Since the name of the
                                       shareholder is not specifically required on the certificate,
                                       there has been broad use and acceptance of bearer shares
                                       in the State of Nevada for many years.

                                       Even so, officials with Nevada agencies such as the
                                       Attorney General's office, the Securities Division and
                                       Corporation Division of the Secretary of State's office are
                                       reluctant to take an official position one way or the other on
                                       bearer shares. There are no Attorney General's Opinions on
                                       this issue, and surprisingly, there is absolutely no case law
                                       on the subject. The most positive affirmation I have received
                                       on the viability of bearer shares came from Mr. John
                                       Cunningham, an attorney with the Securities Division who
                                       confirmed that bearer shares could be used as long as the
                                       corporation was not required to qualify for a public offering

                                       WHY BEARER SHARES ARE USED
                                       There are two clear reasons why a corporation would issue
                                       bearer shares: First, as a tool to achieve total privacy in
                                       corporate ownership due to the fact that true ownership is
                                       extremely difficult to determine, and; Second, as a vehicle
                                       to provide for convenient transfer of ownership interests.
                                       Let's discuss these individually.

                                       There are only two tangible sources of information on
                                       ownership of a Nevada corporation: the stock certificate,
                                       and; the stock ledger. The stock ledger has its own legal
                                       requirements under Nevada law. The ledger must contain,
                                       in alphabetical order, the names of the stockholders, their
                                       residence address, and the number of shares owned by
                                       each. This list must be revised annually, and would be a
                                       significant document for a legal adversary to obtain.

                                       However, Nevada law provides a statutory barrier to getting
                                       and using information on the stock ledger that includes its
                                       own penalties. As discussed above, NRS 78.257 provides
                                       that any stockholder who owns at least 15% of the issued
                                       shares of a corporation has a right to inspect all books and
                                       records upon five days notice, but must bear the costs of
                                       such an inspection. But subsection 3 of that statute states

                                       "Any stockholder or other person exercising (these rights)
                                       who uses or attempts to use information, documents,
                                       records or other data obtained from the corporation, for any
                                       purpose not related to the stockholder's interest in the
                                       corporation as a stockholder, is guilty of a gross
                                       misdemeanor." (Emphasis added.)

                                       In other words, the penalty for using corporate information
                                       for any other purpose than to have a stockholder defend or
                                       demonstrate his or her interest in the corporation is up to
                                       one year in the county jail and up to a ,000.00 fine. Clearly,
                                       a non-shareholder in a Nevada corporation has no legal
                                       right or authority whatsoever to view the stock ledger.
                                       (However, the burden of proof, in the cases of Roney v.
                                       Buckland, 4 Nev 557 (1868) and Wayman v. Torreyson, 4
                                       Nev 619 (1868), falls on the corporation to prove improper
                                       motivation for such a request.

                                       With those protections in place, the only other tangible
                                       source of ownership information is found on the stock
                                       certificate itself. A bearer certificate, even if obtained, could
                                       only be considered circumstantial.

                                       Individuals who attempt to use bearer shares should
                                       exercise extreme caution to avoid the potential for civil or
                                       criminal liability. When in the discovery phase of litigation,
                                       there is no guarantee that the court will not require full
                                       disclosure of stock ownership. In a criminal case, a grand
                                       jury may do likewise, although materials submitted to a
                                       grand jury are confidential unless presented in support of a
                                       criminal indictment.

                                       Examples of individuals who might use bearer shares

                                       Persons contractually obliged not to compete in a
                                       particular business. Such persons may establish a Nevada
                                       corporation issuing bearer shares to enter into that market,
                                       recognizing the possibility of civil litigation if their employer
                                       or former employer learns of their indirect involvement.
                                       Persons engaged in contested divorce or family support
                                       proceedings. Once a court of proper jurisdiction establishes
                                       alimony or child support requirements, the person making
                                       such payments might wish to establish a Nevada
                                       corporation issuing bearer shares to avoid addition support
                                       appeals from future income. Persons who wish to maintain
                                       a low profile in their business dealings. Many wealthy and
                                       prominent people want to avoid having their names
                                       associated with high-profile investments. Bearer shares are
                                       an ideal form of ownership for such individuals Persons who
                                       wish (or may need) to remain anonymous to close a
                                       business deal. When personal relationships could
                                       otherwise jeopardize profitable business dealings, it may
                                       be possible to use a corporation with bearer ownership to
                                       close the deal. I know of a wealthy dentist who wanted to
                                       buy a condominium complex he was living in.
                                       Unfortunately, he had developed a poor relationship with
                                       several of the other owners in the complex, and disliked
                                       him so much they refused to sell. Along came a Nevada
                                       corporation, which made an offer slightly less than the
                                       dentist's and the deal closed quickly. The more the dentist
                                       complained about the "low-ball" offer, the more the others
                                       wanted to sell.

                                       Transfer of Ownership
                                       Most of the confusion surrounding bearer shares has to
                                       deal with the issue of transfer of ownership. A bearer
                                       instrument is negotiated differently than an instrument
                                       made payable to order. If an instrument is made payable to
                                       the order of John Doe, it is negotiated by delivery with any
                                       necessary endorsement. If an instrument is made payable
                                       to bearer, it is negotiated by delivery. It is commonly
                                       believed that bearer shares allow you to transfer ownership
                                       of a Nevada corporation in complete privacy, without any
                                       adverse impact. Three important facts must be established
                                       on this topic:

                                       1. A stock certificate is not stock itself. The stockholder
                                       may own the stock with or without the stock certificate.
                                       The Nevada Attorney General has published a formal
                                       opinion on this subject (AGO38). The certificate is merely a
                                       piece of paper that indicates ownership. Because Nevada
                                       does not require corporations to issue certificates at all, it
                                       would be foolish to assume that possession of the
                                       certificate equals ownership of the shares.

                                       2. The Nevada Revised Statutes (78.240) specifically state
                                       that shares of stock are personal property. So, all rules,
                                       regulations, and applicable taxes that would otherwise
                                       apply to transfers of personal property will also apply to
                                       transfers of bearer shares. Bearer share certificates, like
                                       personal property, may be stolen, borrowed, obtained under
                                       false pretenses, lost, copied, sold, inherited, bought, willed,
                                       etc. My car is personal property also. On occasion I have
                                       lent my car to a friend. Simply because he was in
                                       possession of my car during that time did not mean he was
                                       the owner.

                                       3. Nevada case law requires a transfer of stock to be
                                       registered upon the corporation's books before the transfer
                                       is valid against the corporation. This is done to protect
                                       corporate officers in determining ownership of and the right
                                       to vote corporate shares. (61 Nev. 431, 132 P.2d 605.

                                       So, can bearer shares be used to transfer ownership of a
                                       Nevada corporation? Absolutely. But the new owner must
                                       register his ownership with the corporation before the
                                       corporation can grant ownership rights, including dividends.
                                       And, the transfer may trigger other things, like federal gift
                                       and estate or capital gains taxes.

                                       This issue is widely misunderstood. I recall attending a
                                       seminar on corporate strategies in Carson City several
                                       years ago where the founder of a large incorporating
                                       company suggested that he could legally avoid disclosing
                                       his ownership of corporate stock, even if he were called to
                                       testify in court under oath. His solution was to have the
                                       stock issued to bearer, and give the stock certificate to
                                       someone seated next to him immediately prior to being
                                       called to the stand. Then, he said, he could testify that he
                                       did not legally own the stock, and upon returning to his
                                       seat receive the certificate back.

                                       Over one hundred people were in attendance at that
                                       seminar, and heard an "expert" in the field describe how to
                                       perjure oneself. Perhaps he did not know the three
                                       important rules outlined above. I should not be surprised,
                                       because none of the real experts contacted by my office in
                                       preparation for this article could offer anything more than a
                                       personal opinion on how bearer shares are handled.

                                       The fact that there is so little published or known on the
                                       issue of bearer shares could be interpreted as unsettling
                                       evidence that we are wandering in the "great unknown". But
                                       keep in mind that there is no statute that disallows its use,
                                       and no case law that invalidates it.

                                       Recently, I called six prominent Nevada attorneys,
                                       including the head of the business law section of the
                                       Nevada State Bar, with specialties ranging from business
                                       law and contracts, to litigation and bankruptcy, and asked
                                       them what they could tell me about bearer shares. No one
                                       admitted any knowledge of bearer shares, besides the
                                       confirmation that they were used. Three attorneys in the
                                       Nevada Attorney General's office claimed only a passing
                                       acquaintance with bearer shares. The head of the
                                       Securities Division and three other administrators in the
                                       Secretary of State's office could offer us nothing.

                                       HOW TO ISSUE BEARER SHARES
                                       If a corporation chooses to issue bearer shares, I believe
                                       the following formula can be effective:

                                       Step One. Hire someone who understands the
                                       need for strategic planning. If the attorney can form the
                                       corporation in Nevada directly, let him do it. If an
                                       incorporating company/resident agency must be used, let
                                       the attorney make all necessary arrangements and
                                       communications. NBFR can offer such help!
                                       Step Two. Hire nominee officers and
                                       directors who have no personal contact with the
                                       shareholders, but receive all instructions through the
                                       attorney. This way the testimony of officers and directors
                                       relative to their personal knowledge of corporate ownership
                                       is limited.
                                       Step Three. In the organizational meeting of the
                                       corporation, the nominee officers and directors issue
                                       stocks to "bearer certificate" in increments provided in
                                       instructions from the attorney. In the stock ledger, the
                                       transaction is recorded with the stock being issued "in care
                                       of" the attorney.
                                       Step Four. The stock certificates and stock ledger are
                                       forwarded to the office of the attorney. The certificates are
                                       held in file in the attorney's office. The stock ledger may
                                       also be held in the attorney's office, or may be transferred
                                       to any location in the world. The NBFR provides the
                                       corporation's Resident Agent with the name and mailing
                                       address of the individual who holds and maintains the stock
                                       Step Five. All instructions from the shareholders to the
                                       corporate officersand directors are communicated by the
                                       attorney. All communications between the shareholders
                                       and the attorney represent privileged information.

                                       As you can see, if it is total financial privacy you are after,
                                       Nevada is the only state to consider for incorporating. If you
                                       know what the law allows you to do, and how to structure
                                       your affairs, it can be virtually impossible to uncover the
                                       ownership in a Nevada corporation.

                                       As a defense against revealing corporate ownership in civil
                                       litigation, this can be a very effective strategy.
                                       Nevertheless, it may not be absolutely bullet-proof. When a
                                       civil case is in the discovery phase there is no guarantee
                                       that the court will not require the attorney to provide
                                       information over his objections. It is not as likely that this
                                       information would be allowed in the trial itself, but you may
                                       be defeated in your attempt to preserve absolute privacy.

                                       On the other hand, I asked a partner in a prominent
                                       Southern California law firm that frequently utilizes the
                                       strategy outlined above concerning their experience in
                                       handling information requests for corporate ownership.
                                       "Some lawyers don't know what they are doing and simply
                                       comply with every request," I was told, "but we simply
                                       object on basis of privileged information and attorney/client
                                       work product, and we've never been forced to produce

                                       Information Sharing - the IRS

                                       From the Reno Gazette-Journal, April 29, 1991:

                                       Miller closes records to IRS

                                       "Hands off: Governor says federal agency can't use state
                                       computers to find tax cheats.

                                       "Gov. Bob Miller isn't going to let the IRS use state
                                       computers to track tax-delinquent Nevadans.

                                       "Miller said Tuesday that he refused to open up
                                       employment, motor vehicle and other records to the IRS
                                       because there is too great a potential for abuse of peoples
                                       right to privacy.

                                       "He gave examples of IRS undercover operations into Las
                                       Vegas bookmaking and a Reno-area crackdown on
                                       reporting casino dealers tip earnings.

                                       "'The IRS, to date, hasn't treated us the same way its
                                       treated residents of other states,' Miller said.

                                       "Millers announcement during a Las Vegas news
                                       conference came a week after the IRS proposal surfaced.
                                       Since then, Millers Carson office has received about 70
                                       phone calls from irate people.

                                       "'None of them was in favor of agreeing with the IRS,' said
                                       spokesman Mike Campbell.

                                       "In Washington D.C., Sen. Harry Reid, D-Nev., was
                                       pleased. 'Gov. Millers decision was the right one,' Reid
                                       said, 'It puts the people of the state first, rather than the

                                       "Reid and Sen. Richard Bryan and Rep. James Bilbray,
                                       both D-Nev., still await word on a meeting they've requested
                                       this week with the IRS commissioner on IRS activities in

                                       "Miller's order directed Perry Comeaux, director of the state
                                       Department of Taxation, to notify the IRS office in southern
                                       Nevada that state records will not be shared.

                                       "'I told them we weren't going to do anything to expand any
                                       cooperative effort with the Internal Revenue Service at this
                                       time,' Comeaux said.

                                       Nevada has repeatedly denied the access of the Internal
                                       Revenue Service to these records, and is the only state
                                       that does not comply with IRS requests for information. As
                                       recently as July of 1991, Nevada's Governor ordered the
                                       directors of the state Department of Taxation and other
                                       agencies to seal state records from the Internal Revenue

                                       We live in the age of the electronic superhighway.
                                       Information about each of us is bought and sold every day
                                       by list brokers, advertising agencies, demographers, and
                                       statisticians. Computer links between government agencies
                                       make entire databases available for convenient
                                       cross-checking of vital data. This is an alarming trend.
                                       Those who value their privacy should know of the following
                                       aspects of Nevada corporations.

                                       Every state in the United States, with the singular
                                       exception of Nevada, has an information sharing agreement
                                       with the Internal Revenue Service. California residents, for
                                       instance, who file either individual or corporate state
                                       income tax returns, will have their financial information
                                       checked against their federal return without their
                                       knowledge. States have agreed to this, for the most part,
                                       because the sharing agreements allow the states to have
                                       access to IRS records to verify state personal and
                                       business tax returns.

                                       Information sharing goes far beyond tax returns. The
                                       Internal Revenue Service also has agreements to access
                                       any of the individual unemployment records, welfare and
                                       social services records, workman's compensation records,
                                       driver's registration or motor vehicle registration records of
                                       the other states.

                                       Information Sharing - Service Bureaus
                                       There are a large number of companies, such as Dunn &
                                       Bradstreet, which maintain computer links with the various
                                       governmental offices across the country in order to access
                                       and sell commercially information on companies contained
                                       in each state's database. All of the information that each
                                       Secretary of State collects is readily accessible through
                                       this channel, including the officers, directors, and
                                       stockholders, if the state records provide it - complete with
                                       mailing addresses.

                                       Also available in some instances is detailed information on
                                       company revenues and net worth. The interest these
                                       companies have in this information is, of course, to provide
                                       targeted mailing lists to anyone who is willing to pay for it.

                                       Nevada offers a computer link as well, but the only
                                       information it can provide is that which the Secretary of
                                       State already collects - and we have already discussed
                                       how limited that is. The names of stockholders are not
                                       available from the Secretary of State of Nevada, because
                                       the office does not collect that information. Neither do they
                                       collect financial information on Nevada corporations.

                                       MANAGEMENT & CONTROL ISSUES
                                       Nevada allows corporations a great deal of flexibility in
                                       organizing its ownership interests to fit the needs of that
                                       particular business. The Nevada corporation may issue
                                       different classes of capital stock, and assign different
                                       series within each class. The owners of any one of the
                                       classes or series of stock may be assigned different rights
                                       and privileges.

                                       There may be several classes of common stock and
                                       several classes of preferred stock, each with specific rights
                                       described in the articles of incorporation. The preferred
                                       stock is differentiated from common stock by the fact that
                                       it has the first right to receive a distribution upon the
                                       liquidation of the corporation. When several classes of
                                       preferred stock are present, they may be ranked in order of

                                       If the articles of incorporation permit, the board of directors
                                       may divide a class of preferred stock, without the approval
                                       of the stockholders, into a series with it's own assigned
                                       rights. The effect of this is that the board of directors can
                                       tailor series of shares to be issued in a special
                                       circumstance without the costs and delays of conducting a
                                       special meeting of the stockholders to authorize a new
                                       class of stock. The more stockholders a corporation has,
                                       the more this convenience is appreciated.

                                       Minimum Capital Requirement.
                                       Nevada Corporation Code does not place any requirement
                                       that any minimum amount be invested in a corporation. If,
                                       however, the corporation loans out a disproportionate
                                       amount of its funds, the IRS may reclassify the loans as
                                       stock purchases by determining that the corporation is

                                       Shareholder Rights to Privacy.
                                       Concerning the rights of a minority shareholder to inspect
                                       books and records, the Nevada Revised Statutes [78.257]
                                       provides that any shareholder who owns at least 15% of the
                                       issued stock of a corporation has a right to inspect all
                                       books and records, but must bear the costs of such an
                                       inspection. It goes on further to state:

                                       "Any stockholder or other person, exercising (these rights)
                                       who uses or attempts to us information, documents,
                                       records or other data obtained form the corporation, for any
                                       purpose not related to the stockholder's interest, in the
                                       corporation as a stockholder, is guilty of a gross
                                       misdemeanor." (emphasis added)

                                       The following points are made:

                                       1. If a stockholder holding less than 15% of the issued
                                       stock is denied the right of inspection, then certainly third
                                       parties can be denied inspection of corporate records,
                                       unless the courts grant access to the records under
                                       2. Clearly the statutory intent of this access is for the
                                       interest of the shareholders, not for any third party. Anyone
                                       who obtains information from the corporation books and
                                       records for "any purpose not related to the stockholder's
                                       interest" commits a crime. That is rather good protection.

                                       Approval required on sale of assets.

                                       Nevada Corporation Code requires that the shareholders
                                       approve the sale of all of the assets of the corporation.
                                       Approval takes a majority of the vote of shareholders that
                                       have voting rights, unless the articles of incorporation
                                       require a larger portion of the outstanding shares. In the
                                       dissolution of the corporation, any proceeds not required to
                                       pay existing debt is distributed to shareholders, and their
                                       shares are then canceled.

                                       THE NEVADA SECRETARY OF STATE'S OFFICE
                                       This section will describe the process of incorporating in
                                       Nevada, as well as providing you with a general background
                                       on the variety of services and associated fees for the other
                                       services provided by the Corporation Division of the
                                       Secretary of State's office.

                                       Name Availability & Reservation
                                       The first step in forming a corporation is in selecting a
                                       name for the corporation. The name you choose should be
                                       an asset to the company, since most of your advertising
                                       and public relations will likely revolve around it. It should tell
                                       people what the company does, should be consistent with
                                       the image you want to convey, and should be easy to
                                       remember and pronounce.

                                       You couldn't incorporate a restaurant as McDonnals
                                       Hamburgers, Inc., since that would be unfair to the original
                                       McDonalds. This restriction is intended to protect the rights
                                       to corporate names, protect the public from fraud and
                                       deception, and prevent unnecessary litigation.

                                       The Secretary of State's office can tell you whether or not
                                       the name you have selected is available for use. Nevada's
                                       Corporation Code requires that the name of a corporation
                                       cannot be "deceptively similar" to the name of any other
                                       corporation or limited partnership authorized to conduct
                                       business in the state.

                                       Under Nevada law, the similarity of the corporate names
                                       "Peoples Furniture Exchange, Inc." and "Peoples Furniture
                                       Company, Inc." is not enough for the Secretary of State to
                                       refuse to file the second corporation (Nevada Attorney
                                       General's Opinion A-52, 2-15-1940). The two corporations
                                       must be given names that distinguish them from any other
                                       company. If a name is determined to be too similar to that
                                       of another corporation, the Secretary of State will only
                                       agree to file that corporation if a written consent to the use
                                       of that name by the other company accompanies the
                                      articles of incorporation. The Secretary of State has
                                       complete discretion in deciding whether such a similarity
                                       exists, and his/her decision may only be reviewed in court.

                                       Corporations cannot gain the right to exclusive use of
                                       geographical words in corporate names, unless the words
                                       themselves have acquired a meaning in the mind of the
                                       public associated with the business of the corporation.
                                       (Attorney General's Opinion 50, 4-26-1951) So, Nevaco
                                       Trading Corporation would be considered a valid name,
                                       even though Nevada Trading Corporation already exists, but
                                       Trading Corporation and Trading Corporation of Nevada are
                                       deceptively similar.

                                       In order to show that the company is a corporation, a
                                       number of designations may be included in the name; e.g.,
                                       Corporation, Corp., Incorporated, Inc., Limited, Ltd., etc.
                                       These designations are not required to be part of the name
                                       of the corporation unless without the designation the name
                                       would sound like the name of a natural person. For
                                       example, a corporation cannot be called simply "John
                                       Doe," but can be called "John Doe, Inc."

                                       The use of the specified designations should be strongly
                                       encouraged. In fairness to others who may conduct
                                       business with the corporation, when a designation is used
                                       by the company, the public is aware of the limitation on the
                                       liability of the individuals who may represent the

                                       There are also words that must have prior clearance from
                                       other state agencies before they can be used to name your
                                       corporation. Among these words are:

                                       Accident, Appraisers, Assurance, Banco, Banking,
                                       Bonding, Casualty, College, Engineer, Engineering,
                                       Financial, Fire, Gaming, Guarantee, Guaranty, Health,
                                       Indemnity Insurance, Investment Investor, Liability, Life,
                                       Loan, Mutual, Protection, Purchasing Group, Realtor,
                                       Reassurance, Reinsurance, Risk, Risk Retention Group,
                                       Savings, Surety, Trust, Underwriter, University, Variable,

                                       If a corporation is to be a professional corporation, the
                                       name must include the last name of at least one of the
                                       stockholders, and must be followed by "Professional
                                       Corporation," "Prof. Corp.," "Chartered," "Limited," or "Ltd."
                                       For example, a physician's office might be incorporated as
                                       "Dr. John Doe, M.D., a Professional Corporation."

                                       While it doesn't cost anything to check with the Secretary
                                       of State to see if a name is available for use, for a fee, they
                                       will reserve the rights to any specific corporate name that
                                       they determine to be available for your use and your use
                                       alone. This reservation is good for ninety days, and may be
                                       renewed if necessary. In Nevada, the number for checking
                                       name availability is (702) 687-5203.

                                       If you're in business now, or are planning to go into
                                       business soon, you should either reserve the name you
                                       want to use to prevent another company form using your
                                       name on that state's records, or incorporate under that
                                       name now. If you plan to do business in a number of
                                       states, the chances are greater that one of the states will
                                       have a conflict with the name you would like to use. Only
                                       by checking and rechecking can you insure that your
                                       chosen name is available for use. Many states may allow
                                       you to register the name of your foreign corporations
                                       without qualifying it to do business in that state, so
                                       remember to ask if that service is available.

                                       Once your name has been approved for use by the state,
                                       you still may need to make sure that the name you have
                                       selected is not registered as a federal trademark on the
                                       Principal Register in Washington, D.C. If a similarity exists
                                       and a dispute arises, you may have to prove that you have
                                       a prior right to the use of the name.

                                       The Nevada Secretary of State has a telephone number
                                       where anyone can call and check the status of a
                                       corporation. That number is 900-535-3355.

                                       A corporation must be maintained by filing the annual list
                                       and officers and directors, and paying the annual fee. If the
                                       corporation does not follow this procedure and is between
                                       sixty and two-hundred seventy days late, it lapses into
                                       "delinquent status." A delinquent corporation may be
                                       brought current any time during this period by paying an
                                       additional fee. The Secretary of State will only notify the
                                       resident agent in writing of a delinquency or revocation of
                                       corporate charter, not the directors, officers, or

                                       If the corporation has not been brought current within nine
                                       months, the corporate charter will be revoked by the state.
                                       A corporation that has been revoked may be reinstated any
                                       time within five years, by paying all of the fees that would
                                       have applied during the period of revocation and an
                                       additional penalty.

                                       The catch is, that once your corporation has been revoked,
                                       your corporate name is no longer reserved by the Secretary
                                       of State, and someone else can incorporate under your
                                       name. Also, any action taken during the period of
                                       revocation is outside the protection of the corporate veil.

                                       Certificate of Good Standing
                                       Upon request, the Secretary of State will issue a
                                       "Certificate of Good Standing" to any corporation that is
                                       current in its filings and fees with the state. This certificate
                                       costs , and validates that the corporation was in good
                                       standing as of the date the certificate is issued.

                                       Anytime that you qualify a Nevada corporation to do
                                       business in another state, you are required to provide to
                                       that state a Certificate of Good Standing from the Secretary
                                       of State's office. Banks also will require a Certificate of
                                       Good Standing in many instances, especially when
                                       applying for corporate credit or loans.

                                       Customer Service
                                       The Nevada Secretary of State's office has been
                                       traditionally extremely responsive to the needs of Nevada
                                       corporations. The number of corporations filed with the
                                       State in recent years has forced some limits on their ability
                                       to respond to some requests. Frankly, in many respects
                                       the Secretary of State's office has become bureaucratic to
                                       a degree you might expect of a larger state.

                                       Another significant change to Nevada's Corporation Code is
                                       the allowance for filing corporate documents via FAX
                                       machine or other technologies not yet developed. As of this
                                       writing, the Secretary of State's office is still trying to
                                       decide how to handle these technologies, since live
                                       signatures and notaries are still required to be on file. It is
                                       anticipated that policies may be developed in coming years
                                       that will allow for filing Nevada corporations by FAX or

                                       Even so, they continually make changes to improve. In the
                                       1991 Nevada Legislature, the Secretary of State petitioned
                                       for several new changes that continue to put the office in
                                       the forefront of existing customer service technology.

                                       The Secretary of State now allows for a 24-hour rush for
                                       any filing of corporate status. The 24-hour rush includes
                                       filing articles of incorporation, amendments or mergers,
                                       corporate searches, or reinstatements. If you need to use
                                       this service, be aware that the Secretary of State's office
                                       reserves the right to use all 24 hours of the window they

                                       Small Corporate Offering Registration (SCOR)
                                       Nevada has recently adopted the Small Corporate Offering
                                       Registration Form, (SCOR Form U-7) which allows a
                                       business to reach capital through a public offering of up to
                                       $1 million every twelve months. The SCOR program was
                                       developed by the North American Securities Administrators
                                       Association (NASAA) in cooperation with the Securities
                                       and Exchange Commission and the American Bar
                                       Association, and contemplates an exemption from federal
                                       registration by virtue of Rule 504 of Regulation D of the
                                       federal securities code.

                                       This type of registration has been made available in 34
                                       states across the country. The program allows easier
                                       access to public capital at a lower cost. The principal
                                       innovation of this program is the creation of the simplified
                                       form with a question-and-answer format that permits an
                                       officer of a corporation to fill in the blanks, file it with a state
                                       securities administration, and, upon approval, use it as a
                                       disclosure document in a public offering. One of the notable
                                       features of this program is the requirement that shares be
                                       sold at a minimum of per share to avoid the common
                                       pitfalls of a penny stock offering. A SCOR offering is far
                                       less expensive than a regular initial private offering (IPO),
                                       and you don't need a high-paid underwriter.

                                       A SCOR filing may be easier than a fully registered stock
                                       offering, but it is not necessarily a breeze to accomplish. It
                                       can still be a challenging process involving the preparation
                                       of necessary forms and documents, getting state approval
                                       for the offering, selling the stock, and dealing with the
                                       administrative tasks of having additional investors. As a rule
                                       of thumb, a SCOR offering should take at least three to six
                                       months to complete.

                                       The U-7 application is designed in a question and answer
                                       format, and asks for information on the company's history,
                                       directors and officers, risk factors, assets, capitalization,
                                       use of proceeds and plans for distribution. There are about
                                       250 questions in all. In addition, the application requires
                                       that the articles of incorporation, bylaws, and audited
                                       financial statement be submitted. Even then, expect to
                                       resubmit the application several times until it's format is

                                       Several methods can be used to sell the shares, including
                                       direct mail, telemarketing, commercial advertisement,
                                       networking, and sales presentations. As an alternative, the
                                       corporation could engage an underwriter or bank, which
                                       usually charge a 10 to 15 percent fee.