Be careful with this one. I don't know if the issue below from the February 17, 2004, SEC filing has been resolved. See http://biz.yahoo.com/e/040217/nres.pk10qsb.html. THE COMPANY BELIEVES IT HAS VIOLATED NEVADA CORPORATE LAW
At the time of its incorporation, the Company had 1 million shares of its common stock authorized. Since that time, the Company believed it had effected the 1994 Stock Split, the 1999 Reverse Stock Split, the 40 Million Share Increase, the 250 Million Share Increase, the 750 Million Share Increase and the 1.5 Billion Share Increase. These changes in capital structure appear to have not been validly adopted by the Company's board of directors, approved by the Company's shareholders or filed with the Secretary of State of the State of Nevada, as required by the laws of the State of Nevada. As such, it appears the Company currently has only 1 million shares of NRES Common Stock authorized, and the majority of the validly issued shares are held by Richard and Pamela Astrom as tenants by the entireties. The Company believes a majority of the Company's validly issued and outstanding shares and the board of directors can cure and ratify the overissuances of stock and the aforementioned changes in capital structure. Until that time, the Company may be liable to the holders of the NRES Common Stock issued in excess of the authorized amount. The Company also believes the issuance of Class A common stock to Christopher Astrom was not authorized as an amendment to the Company's Articles of Incorporation was never filed with the Secretary of State of the State of Nevada. The Company believes the recipient of the unauthorized shares, Christopher Astrom, may have a claim against the Company for damages, but it is unlikely that Christopher Astrom will file a claim against the Company as he is an officer, director and principal shareholder of the Company. Also, as discussed below, the Company's board of directors and
the holders of a majority of its validly issued shares intend to authorize the creation of Class A common stock and issue shares to Christopher Astrom.
It has come to the Company's attention that, as a result of the conversion of the debentures issued by the Company into NRES Common Stock, coupled with the decrease in the trading price of NRES Common Stock, investors were entitled to more shares of NRES Common Stock than is authorized under the Company's Articles of Incorporation. As a result, as of February 5, 2004, the Company has 1,938,566,046 shares of NRES Common Stock issued, which exceeds the number of shares authorized. As stated above, the Company believes the holders of a majority of the Company's validly issued and outstanding shares and the board of directors can cure and ratify the overissuances of stock. If this cannot be accomplished, the Company may be liable to the holders of the NRES Common Stock issued in excess of the authorized amount in an amount equal to 1,937,566,046 shares (the number of shares issued in excess of the amount authorized) multiplied by the price each such share was issued for (which ranged from approximately $.0001 to $5.4 per share). The overissuance, together with the Company's inability to increase its authorized number of shares, has eliminated the Company's ability to raise capital through issuances of publicly registered securities. The Company believes it will not be able to continue trading NRES Common Stock or increase its capital resources through selling publicly registered securities until the overissuance is cured and the Company increases the authorized number of shares of NRES Common Stock. The Company may also have violated other provisions of Nevada law with respect to the duties of officers and directors to the Company and by not having sufficient shares available upon the conversion of debentures issued by the Company.
The Company Has Violated Section 5 of the Securities Act.
Section 5 of the Securities Act prohibits the public sale of securities absent an effective registration statement being filed with the SEC, unless an exemption from registration applies. All shares of NRES Common Stock issued upon conversion of the NRES Debentures were sold by holders of the NRES Debentures following conversion. This occurred during the period beginning on May 16, 2001 and ending on July 13, 2001 for the NRES Connecticut Debentures and beginning on November 5, 2001 and ending on August 2, 2002 for the NRES DC Power Debentures. In October of 2000, the Company issued debentures pursuant to a merger with 2217 Acquisition Inc., a Nevada corporation. These debentures were also converted into NRES Common Stock. These transactions were performed in a manner thought to be exempt from the registration requirements of Section 5 of the Securities Act. However, the requirements of the exemptions relied on do not appear to have been satisfied.
As of the date of this report, the Company has not received $540,000 in additional proceeds from the sale of the NRES DC Power Debentures and has $199,202 in NRES DC Power Debentures outstanding. The Company has no plans to issue additional NRES Debentures for any amounts not yet received and has no plans to permit outstanding NRES Debentures to be converted.
The Company May Have Violated the Federal Proxy Rules
At the time of its incorporation, the Company had 1 million shares of its common stock authorized. Since that time, the Company believed it had effected the 1994 Stock Split, the 1999 Reverse Stock Split, the 40 Million Share Increase, the 250 Million Share Increase, the 750 Million Share Increase and the 1.5 Billion Share Increase. These changes in capital structure appear to have not been validly adopted by the Company's board of directors, approved by the Company's shareholders or filed with the Secretary of State of the State of Nevada, as required by the laws of the State of Nevada. The Company may have violated the federal proxy rules by either (i) not obtaining the requisite shareholder approval to effect these changes or (ii) not providing shareholders with an Information Statement on Schedule 14C. As such, it appears the Company has only 1 million shares of NRES Common Stock authorized. Until the
Company's board of directors and shareholders cure and ratify the overissuances of stock, the 40 Million Share Increase, the 250 Million Share Increase, the 750 Million Share Increase and the 1.5 Billion Share Increase and comply with the federal proxy rules in doing so by properly obtaining shareholder approval, the Company may be liable to the holders of the NRES Common Stock issued in excess of the authorized amount. The Company still may be subject to an enforcement action for possible violations of this and other provisions of the federal securities laws.
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