U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
DITA, INC.
(Name of Small Business Issuer in its charter)
Nevada 33-0696051
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6519 Fountain Avenue, Hollywood, CA 90028
(Address of principal executive offices)
323-953-9565
(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None
Securities to be registered under Section 12(g) of the Act:
Common Stock, $0.01 par value
(Title of Class)
<PAGE>
TABLE OF CONTENTS
Page
Preliminary Statement .................................................... 1
Description of Business................................................... 1
Business Development ............................................ 1
Business of the Company ......................................... 1
Products ............................................... 1
Raw Materials, Supplies and Manufacturing .............. 2
Distribution Methods ................................... 2
Competition ............................................ 2
Advertising and Promotion .............................. 3
Dependence on Major Customers .......................... 3
Patents, Trademarks and Licenses ....................... 3
Government Approval and Regulations .................... 3
Year 2000 Computer Problems ............................ 3
Research and Development ............................... 4
Cost of Compliance with Environmental Laws ............. 4
Seasonality ............................................ 4
Employees .............................................. 4
New Products ........................................... 4
Management's Discussion and Analysis of Financial
Condition and Results of Operations ............................. 4
Results of Operations ........................................... 4
Sales .................................................. 5
Gross Margin ........................................... 5
Selling, General and Administrative Expenses ........... 5
Net Loss ............................................... 6
Balance Sheet Items .................................... 6
Liquidity and Outlook .................................. 6
Costs of Filing Periodic Reports ....................... 7
Properties ............................................................... 7
Security Ownership of Certain Beneficial Owners and
Management ...................................................... 7
Changes in Control ..................................... 8
Directors, Executive Officers and Control Persons ........................ 8
Executive Compensation ................................................... 10
Certain Relationships and Related Transactions ........................... 10
Description of Securities ................................................ 11
Common Stock .................................................... 11
Voting Rights .......................................... 11
Dividend Rights ........................................ 11
Liquidation Rights ..................................... 11
Preemptive Rights ...................................... 11
Registrar and Transfer Agents .......................... 11
Dissenters' Rights ..................................... 11
ii
<PAGE>
Market for Common Stock and Related Stockholder Matters .................. 12
Holders ......................................................... 12
Dividends ....................................................... 12
Legal Proceedings ........................................................ 12
Recent Sales of Unregistered Securities .................................. 13
Indemnification of Directors and Officers ................................ 13
Financial Statements ..................................................... 15
iii
<PAGE>
PRELIMINARY STATEMENT
Dita, Inc. (the "Company") is filing this registration statement on a
voluntary basis under Section 12(g) of the Securities Exchange Act of 1934. Our
common stock trades in the over-the-counter market and is quoted by NASD market
makers on the OTC Bulletin Board. A recent rule change requires that all
companies whose securities are approved for quotation on the OTC Bulletin Board
must file periodic financial reports with governmental authorities such as the
Securities and Exchange Commission. The effectiveness of this registration
statement subjects the Company to the periodic reporting requirements imposed by
Section 13(a) of the Securities Exchange Act.
DESCRIPTION OF BUSINESS
Business Development
Dita, Inc. (the "Company") was incorporated on October 3, 1995 in the State
of Nevada. We conduct our business from our headquarters in Hollywood,
California. We first had revenues from operations in 1996.
Business of the Company
The Company
o wholesales fashion sunglasses and optical frames;
o designs, markets, and distributes these products from
our Hollywood headquarters; and
o distributes our products in "high-end" optical,
boutique and department store accounts throughout the
U.S. and in Canada, Japan, New Zealand and Australia.
Products
--------
We have two principal products -
o sunglasses, and
o optical frames.
We offer our sunglasses in two ranges:
o fashion, at mid-range prices, and
o couture, at high-end prices.
We offer our optical frames in seven frame styles and each frame style in
three colors.
1
<PAGE>
Raw Materials, Supplies and Manufacturing
-----------------------------------------
Our frames are 100 percent plastic. The plastic to produce the frames is
ordered by us from the Mazzucchelli factory in Italy. Mazzucchelli supplies
approximately 60 percent of the plastic for the high-end sunglass and eyeglass
brands in the world. Mazzucchelli is slow, but dependable, in delivery. Delivery
of our orders usually takes four months.
When our plastic orders are ready for delivery, Mazzucchelli ships them to
the manufacturers we designate. Our sunglass products are then assembled in
China by subcontractors selected by Glance, Inc. The optical frames are
assembled in the U.S. by Golden Gate Optical.
We purchase our sunglass lenses either from Glance as part of the frame
that is assembled in China, or we purchase the frames from Glance without a lens
and purchase the lens from a separate manufacturer. Glance is an affiliated
company located in New York and under the control of Bendar Wu, a director of
Dita. See "Certain Relationships and Related Transactions." The sunglass lens
manufacturers that we buy from include Sola in Florida, from whom we usually
purchase directly from their stock, and Christian Dalloz in France, from whom we
purchase both from stock and on special order.
Distribution Methods
--------------------
We distribute our products through independent contractors:
o Planet 3 Australais, in New Zealand and Australia;
o Levante, in Japan;
o Overdrive, in Canada; and
o Paul Baltiste, Jeff Chiuminatto, and Steven Choen,
independent contracts in the U.S. who work under the
direction of our in-house sales manager and of our
president, Troy Schmidt.
The international distributors are responsible for all aspects of sales and
marketing in their respective territories. They each manage their own inventory,
warranty, billings, sales and customer service departments.
Competition
-----------
The fashion optical industry is highly competitive. Well- known designer
brands such as Bausch & Lomb, Luxottica and Bolla occupy a majority of the
sunglass market. We believe that the demand for optical frames has somewhat
deteriorated due to the development of corrective laser eye surgery.
2
<PAGE>
Dita holds a special niche in the optical and sunglass market. We have
established an upscale image of fashion and innovative style at prices that are
aggressively competitive. We offer, for $100 to $200 at retail, sunglasses that
are comparable in style, quality and image to those of the leading brands that
are offered at $250 to $400 at retail.
Advertising and Promotion
-------------------------
All our advertising and promotional materials employ striking,
fashion-forward and edgy photography to project our image.
We price our products significantly lower than our competitors do. Yet, our
quality, image and design are comparable - and sometimes better - than the
leaders in the sunglass industry.
We design our sunglasses to be extremely wearable, yet still fashionable.
Our philosophy is to give the average consumer of designer products a sunglass
product that is fashionable, yet suitable for everyday use, at a price that is
most competitive. We protect our upscale image by limiting the retail
distribution of our sunglasses to the high-end boutiques and outlets where
sunglasses are sold.
Dependence on Major Customers
-----------------------------
We are not dependent on any major customers in the U.S. However, our
international sales - which account for 50 percent of all sales - are divided
approximately evenly among three customers - Planet 3 in Australia, Levante in
Japan and Overdrive in Canada.
Patents, Trademarks and Licenses
--------------------------------
We have registered the trademark "Dita" in the U.S. and internationally.
Government Approval and Regulations
-----------------------------------
We need no governmental approval for the design and marketing of sunglasses
made for us by manufacturing companies. We are not aware of any proposed
governmental regulations that would affect our operations.
Year 2000 Computer Problems
---------------------------
We have determined that we do not face material costs, problems or
uncertainties about the year 2000 computer problem. This problem affects many
companies and organizations and stems from the fact that many existing computer
programs use only two digits to identify a year in the date field and do not
consider the impact of the year 2000. We are newly organized, use off-
3
<PAGE>
the-shelf and easily replaceable software programs, and have yet to devise our
own software programs.
We have been advised by our suppliers that they are Year 2000 compliant.
Should they not be and should difficulties arise in ordering frames or lenses
from suppliers, we should still be able to obtain these products from other
manufacturers or dealers who would have the products in inventory.
Research and Development
------------------------
We expended approximately $10,000 in 1998 researching new materials for
sunglass frames.
Cost of Compliance with Environmental Laws
------------------------------------------
There are no environmental laws that impact our operations of designing,
marketing and distributing sunglasses made for us by manufacturing companies.
Seasonality
-----------
Our sales of sunglasses in the U.S. and Canada are highest in the period
from March to September. Sales are highest in New Zealand and Australia in the
period from September to March.
Employees
---------
We employ seven persons full time.
New Products
------------
We have designed a new handbag line that we propose to offer to our
sunglass accounts. We are currently talking to several manufacturers about their
producing our line. We are also seeking a source of capital to finance such
production, but we have not located the capital.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the financial statements and the accompanying notes thereto and is qualified
entirely by the foregoing and by other more detailed financial information
appearing elsewhere. See "Financial Statements."
Results of Operations
The following table presents, as a percentage of sales, certain selected
financial data for the two fiscal years ended February 28, 1999 and for the
three-month periods ended May 31, 1998 and May 31, 1999:
4
<PAGE>
<TABLE>
<CAPTION>
Year Ended 2-28 3-Mos. Ended 5-31
1998 1999 1998 1999
---------------------- ---------------------
<S> <C> <C> <C> <C>
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 48.2 47.2 45.4 43.1
----- ----- ----- -----
Gross margin 51.8 52.8 54.6 56.9
Selling, general and
administrative
expenses 65.5 73.9 41.7 58.1
----- ----- ----- -----
Net income (loss) (13.7) (21.1) 12.9 (1.2)
</TABLE>
Sales
-----
Sales increased from $709,591 in the fiscal year ended February 28, 1998 to
$882,921 in the fiscal year ended February 28, 1999, an increase of 24.4
percent. The increase in sales was attributable to an increased advertising
budget and the addition of a line of prescription glasses.
Interim results.
---------------
Sales decreased 11.4 percent from $326,339 in the three-month period ended
May 31, 1998 (Q1 1999) to $289,286 in the three-month period ended May 31, 1999
(Q1 2000).
Gross Margin
------------
Gross margin improved from $367,419, or 51.8 percent of sales, in fiscal
year 1998 to $465,889, or 52.8 percent of sales, in fiscal year 1999, an
improvement of 1.0 percent. This improvement is attributed to the better margin
we receive on our added line of prescription glasses.
Interim results.
---------------
Gross margin improved from $178,185, or 54.6 percent of sales in Q1 1999 to
$164,598, or 56.9 percent of sales, in Q1 2000, an improvement of 2.3 percent.
This improvement is attributed by management to a slight reduction in the
inventory carrying costs we pay to Glance, Inc. by reason of an improvement in
our payment history with regard to Glance, Inc.
Selling, General and Administrative Expenses
--------------------------------------------
Selling, general and administrative expenses increased from $465,069 in
fiscal year 1998, or 65.5 percent of sales, to $652,159 in fiscal year 1999, or
73.9 percent of sales. This increase is due to our having hired a sales
representative in New York City who is paid a base rate that, so far, has
exceeded the commissions he earns from sales.
Interim results.
---------------
Selling, general and administrative expenses increased from $136,017, or
41.7 percent of sales, in Q1 1999 to $168,053, or 58.1 percent of sales in Q1
2000. This marked increase was due to the continued failure of our New York City
sales representative to earn commissions that equal his draw.
5
<PAGE>
Net Loss
--------
We had a net loss from operations in fiscal year 1998 of $97,650, or $0.04
a share of our common stock. In fiscal year 1999 we had a net loss from
operations of $186,270, or $0.06 a share of common stock. This deepening loss -
despite an increase of 24.4 percent in sales - is attributed by management to
substantial increases we made in marketing and advertising expenses.
Interim results.
---------------
We had net income from operations of $42,168 during Q1 1999 but a net loss
from operations of $3,455 on 11.4 percent less sales during Q1 2000. An increase
in advertising expense from $2,494 to $43,828 accounts for more than the
difference. The advertising increase reflects the decision of management to
increase consumer awareness of our brands, particularly in new markets.
Balance Sheet Items
-------------------
Despite a loss from operations of $186,270 for the fiscal year ended
February 28, 1999, stockholders' equity increased by $13,730 from $63,313 at the
end of fiscal year 1998 to $77,043 at the end of fiscal year 1999. The increase
is attributed entirely to the sale of $200,000 in common stock during the last
fiscal year. Our cash position improved from $17,806 to $121,516 at the end of
fiscal year 1999, but $55,000 of this cash was held in a savings account as
collateral for a $55,000 line of credit with our bank. Accounts receivable
improved slightly from $111,745 to $71,249 while inventory increased from
$64,721 to $71,587 at the end of fiscal year 1999.
Interim balance sheet items.
---------------------------
During the three months ended May 31, 1999, our accounts receivable have
increased by $78,929 from $71,249 at fiscal year-end to $150,178 and our
accounts payable and accrued expenses have increased by $79,300 from $209,578 at
fiscal year-end to $288,878. A cash position of $121,516 at fiscal year-end on
February 28, 1999 was reduced to $68,540 by May 31, 1999, but inventory was
increased from $71,587 at fiscal year-end to $115,831 on May 31, 1999.
Stockholders' equity of $77,043 at fiscal year-end was reduced by $3,455 in net
operating loss to $73,588 on May 31, 1999.
Liquidity and Outlook
We have been able to stay in operation only (1) from the services provided
by Glance, Inc., a manufacturer of sunglasses under the control of Bendar Wu,
the chairman of our board of directors, which company funds and warehouses a
considerable portion of our inventory and (2) from the proceeds realized from
the sale of capital stock. We perceive our long-term solution to our continuing
losses to be an improvement in our gross margin. The essential services provided
by Glance, Inc. come at a cost to us - they increase our cost of goods sold from
20 to 30 percent above industry standard. Yet, it is impossible to dispense with
6
<PAGE>
these services without the cash to pay for and warehouse all our inventory. And,
our inability to demonstrate profitable operations makes it difficult to sell
capital stock. At this time, we have not identified the sources of equity
capital we need to break out of our dilemma.
Costs of Filing Periodic Reports
--------------------------------
The filing of this Form 10-SB registration statement subjects the Company
to certain requirements of the Exchange Act of 1934. These requirements include
the filing of an annual report on the Company's business, which must include
audited financial statements; quarterly reports, which must include unaudited
interim financial statements; and periodic reports of certain material events of
which investors should be made aware. Legal and accounting expertise are
required to prepare these reports. The Company's president prepares unaudited
financial statements for the Company. The services of the Company's securities
law attorney and the annual auditor's services must be paid for in cash. Should
cash not be available to pay for these legal and auditor's services, the Company
will have to borrow these needed funds from sources not yet identified.
PROPERTIES
We lease approximately 2,600 square feet of office and warehouse space in
Hollywood, California for a monthly rental of $2,205. The lease expires October
14, 1999.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of June 30, 1999, the number of shares of
Common Stock of the Company beneficially owned by each officer and director of
the Company, individually and as a group, and by each person known to the
Company to be the beneficial owner of more than five percent of the Common
Stock.
<TABLE>
<CAPTION>
Number of
Shares of
Name and Address Common Stock Percent
---------------- ------------ -------
<S> <C> <C>
Bendar Wu 650,000 20.7
384 East Shore Road
Great Neck, NJ 11024
Troy Schmidt 325,000 10.4
942 Alandale Avenue
Los Angeles, CA 90036
Jeff Solorio 576,000 18.4
336 North Sycamore Avenue
Los Angeles, CA 90036
7
<PAGE>
Micky Dhillon(1) 400,000 12.7
6 Liberty
Aliso Viejo, CA 92656
John Juniper 576,000 18.4
336 North Sycamore Avenue
Los Angeles, CA 90036
Officers and Directors 2,527,000 80.5
as a group (5 persons)
-------------------------
</TABLE>
(1) These shares are owned of record by the Micky Dhillon Trust,
which is under the control of Micky Dhillon.
Changes in Control
There are no arrangements which may result in a change in control of the
Company.
DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS
The Company's directors, officers and significant employees occupying
executive officer positions, their ages as of June 30, 1999, the directors'
terms of office and the period each director has served are set forth in the
following table:
<TABLE>
<CAPTION>
Director's
Director Term
Person Positions and Offices Since Expires
- ----------------- --------------------- --------- ----------
<S> <C> <C> <C>
Bendar Wu, 53 Chairman of the Board 1996 1999
of Directors
Troy Schmidt, 33 President and Director 1996 1999
Jeff Solorio, 29 Secretary, Director of 1996 1999
Operations, and Director
Micky Dhillon, 33 Director 1998 1999
John Juniper, 29 Director of Marketing, and 1996 1999
Director
</TABLE>
BENDAR WU.
---------
Mr. Wu has been in the optical industry for over 23 years as a distributor
or manufacturer. Mr. Wu is the founder, owner and is the president of Glance
Eyewear, a worldwide distributor of eyewear with annual sales exceeding $20
million. The company has been in business for over fifteen years. Glance has
manufactured eyewear for companies such as J. Crew, Limited and Nordstrom. Mr.
Wu received a law decree in Taiwan at Soo Chow University and an MBA from Wager
College in New York.
TROY SCHMIDT.
------------
For five years prior to starting Dita, Inc., Mr. Schmidt managed a better
than $53 million real estate portfolio owned by Ox Pierside Corporation, Haseko
Marina
8
<PAGE>
Development Inc., Shin-Ei Corporation and Echo Usa. Mr. Schmidt has extensive
experience in financial management including budgeting, accounting and cash flow
management, implementation of expense minimization procedures, collection and
collection- related litigation, inventory control, financial reporting and
supervision of investment and operation accounts. Mr. Schmidt received a degree
in business management with an emphasis in finance from Point Loma Nazarene
College in 1990. Over the last three and a half years Mr. Schmidt has acted as a
director and president of Dita, Inc. Mr. Schmidt's responsibilities include
financial management, supervision of the Dita staff, corporation direction,
product, pricing, securing new investment and alternative sources of cash flow
to fund growth, overseeing all company operations, product development and
design, and management of both domestic sales and of international sales.
JEFF SOLORIO.
------------
Prior to starting Dita Mr. Solorio founded a marketing firm, Hollywood died
Independence. Mr. Solorio acted as president of Hollywood died Independence for
three years and produced creative marketing materials for companies such as
Rusty, Capital Distribution (Spare, Ezekiel, Blond) and Herbie Fletcher. Mr.
Solorio also provided film production and other marketing materials for action
sports related companies such as Rusty, Morrow Snowboards, Purged Snowboards,
Lib-Tech, Herbie Fletcher, Capital Distribution, Black Flys and Arnet. Mr.
Solorio's marketing and promotional work has won several industry awards. Over
the last three and a half years Mr. Solorio has acted as a director and vice
president of operations of Dita, Inc. Mr. Solorio's duties at Dita include
inventory management, product development and design, processing of accounts
payable, management of warehouse staff, processing of payroll and pricing.
MICKY DHILLON.
-------------
Mr. Dhillon is the founder of, and has been the chairman of the board of
directors and chief executive officer of, Main Street Trading Company for the
past eight years. Main Street Trading Company is a privately held, Mission
Viejo, California based, retail commodities brokerage firm with more than 260
employees. Mr. Dhillon provides guidance to the directors with respect to
financial growth, cash flow management and new sources of funding.
JOHN JUNIPER.
------------
Prior to joining Dita, Mr. Juniper was employed by Crown Distribution and
was responsible for creating and implementing marketing programs and sales
materials for Crown Distribution's family of companies, which included Purged
Snowboards, BPS Binding Company, Mantle Snowboards, 1159 Snowboards, Dynamics
Sled Manufacturing and Holly Grail Productions. Mr. Juniper's responsibilities
included all advertising concepts, design and layout of advertisements,
selection of models, photographers, cinematographers, graphic artists,
photography and coordination of media publication advertisements. He produced
over 150 full-page color advertisements and editorials in both national and
international publications in a twelve-month period. In addition, Mr. Juniper
9
<PAGE>
is a freelance photographer and has worked with action sports companies
including Morrow Snowboards, Black Flys, Evol Casuals, Blond, Spare, Ezekiel,
Original Sin and Rusty Clothes. Over the last three and a half years Mr. Juniper
has acted as a director and vice president of marketing for Dita, Inc. Mr.
Juniper's duties at Dita as marketing director include development of annual
advertising campaigns, selection of photographers, models, stylists, hair and
makeup artists, development of company catalogs, print and outdoor ads,
selection of graphic artists and development of all mailers, trade show
invitations, public relations and product development and design.
EXECUTIVE COMPENSATION
Set forth below is the aggregate compensation during fiscal years 1996,
1997 and 1998 of the chief executive officer of the Company. During the period,
no executive officer of the Company received compensation that exceeded
$100,000.
<TABLE>
<CAPTION>
Fiscal Annual Other
Name Year Salary Compensation
-------------- ------ ------- ------------
<S> <C> <C>
Troy Schmidt, 1998 $45,000 None
President
1997 $45,000 None
1996 $45,000 None
</TABLE>
During the last three fiscal years, no executive officer of the Company has
been granted stock options or stock appreciation rights and no executive officer
has been granted stock in exchange for services. The Company has no long-term
incentive plan intended to serve as incentive for performance.
Directors of the Company receive no compensation for their services as
directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We buy a substantial portion of our inventory from Glance, Inc., a
manufacturing company under the direction of and owned by Bendar Wu, a director
and major stockholder of the Company. Due to our lack of sufficient capital to
pay for inventory and then warehouse it, Glance, Inc. manufactures our sunglass
orders in China, pays for the product when it arrives in the U.S. and warehouses
the product for us until the product is needed.
When we need the product, we place orders for it with Glance. Glance ships
the product to us and bills us net, 30 days for each invoice. In exchange for
Glance's funding and warehousing these inventories, Glance charges us a premium.
This premium increases our cost of goods sold from 20 to 30 percent above
industry standard.
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<PAGE>
DESCRIPTION OF SECURITIES
The Company is authorized to issue ten million shares of Common Stock
($0.01 par value). The presently outstanding shares of Common Stock are fully
paid and nonassessable.
Common Stock
Voting Rights
-------------
Holders of shares of Common Stock have one vote a share on all matters
submitted to a vote of the shareholders. Shares of Common Stock do not have
cumulative voting rights, which means that the holders of a majority of the
shareholder votes eligible to vote and voting for the election of the board of
directors can elect all members of the board of directors.
Dividend Rights
---------------
Holders of record of shares of Common Stock receive dividends when and if
declared by the board of directors out of funds of the Company legally available
therefor.
Liquidation Rights
------------------
Upon any liquidation, dissolution or winding up of the Company, holders of
shares of Common Stock receive pro rata all of the assets of the Company
available for distribution to shareholders after distributions are made to the
holders of the Company's Preferred Stock.
Preemptive Rights
-----------------
Holders of Common Stock do not have any preemptive rights to subscribe for
or to purchase any stock, obligations or other securities of the Company.
Registrar and Transfer Agent
----------------------------
The Company's registrar and transfer agent is Nevada Agency and Trust
Company, 50 West Liberty Street, Suite 880, Reno, Nevada 87501.
Dissenters' Rights
------------------
Under current Nevada law, a shareholder is afforded dissenters' rights
which, if properly exercised, may require the Company to purchase his shares.
Dissenters' rights commonly arise in extraordinary transactions such as mergers,
consolidations, reorganizations, substantial asset sales, liquidating
distributions, and certain amendments to the Company's Certificate of
Incorporation.
11
<PAGE>
MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is quoted on the OTC Bulletin Board. Its symbol
is "Dita."
During the last two fiscal years and the subsequent interim period for
which financial statements are provided, the range of high and low bid
information for our Common Stock is set forth below. The source of this
information is the OTC Bulletin Board. The quotations reflect inter-dealer
prices without markup, markdown or commissions and may not represent actual
transactions.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C> <C>
1997
----
1st Qtr. 0.5625 0.25
2nd Qtr. 0.34375 0.3125
3rd Qtr. 0.3125 0.28125
4th Qtr. 0.28125 0.1875
1998
----
1st Qtr. 0.1875 0.1875
2nd Qtr. 0.21875 0.1875
3rd Qtr. 0.21875 0.15625
4th Qtr. 0.1563 0.1563
1999
----
1st Qtr. 1.7500 0.0900
2nd Qtr. 1.0000 0.5000
</TABLE>
On June 30, 1999 there were 3,142,530 shares of Common Stock outstanding.
No shares are subject to outstanding options to purchase, or securities
convertible into, such shares of stock.
Holders
As of June 30, 1999 there were approximately thirty-three holders of record
of our Common Stock. Some 476,650 shares of Common Stock are held in brokerage
accounts under the record name of "Cede & Co."
Dividends
We have paid no dividends to our stockholders and do not plan to pay
dividends on our Common Stock in the foreseeable future. We currently intend to
retain any earnings to finance future growth.
LEGAL PROCEEDINGS
Neither the Company nor our property is a party to any pending legal
proceeding or any known proceeding that a governmental authority is
contemplating.
12
<PAGE>
RECENT SALES OF UNREGISTERED SECURITIES
During the past three years the Company sold 825,000 shares of our Common
Stock in two transactions exempt from registration pursuant to the provisions of
Regulation D, Rule 506 of the Securities and Exchange Commission. No
underwriters were used to effect the sales. The names of the persons who bought
the shares of stock, the dates the shares sold, the number of shares issued and
the price paid in cash for the shares are as follows:
<TABLE>
<CAPTION>
No. of Price
Shares per
Person Date Issued Share
-------------- ------- ------- -----
<S> <C> <C> <C>
Micky Dhillon 7-28-98 400,000 $0.50
Bendar Wu 4-21-97 425,000 $0.24
</TABLE>
Both of the above persons had a preexisting relationship with our Company.
Micky Dhillon was an acquaintance of Jeff Solorio and John Juniper, officers and
directors of the Company, and had followed the Company's progress for some time.
Bendar Wu, at the time of the above purchase, was already a significant
shareholder of the Company and was chairman of the board of directors of the
Company.
Both of the above persons are sophisticated investors within the meaning of
the Commission's Rule 506(b)(2)(ii). Both are "accredited investors" within the
meaning of Rule 501 of Regulation D.
With regard to the above transactions, Dita furnished to Mr. Dhillon
financial statements, a description of our business, a business plan,
information concerning the directors and officers of Dita and other information
required by Rule 502(b) of Regulation D.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Nevada corporation law, a corporation is authorized to indemnify
officers, directors, employees and agents who are made or threatened to be made
parties to any civil, criminal, administrative or investigative suit or
proceeding by reason of the fact that they are or were a director, officer,
employee or agent of the corporation or are or were acting in the same capacity
for another entity at the request of the corporation. Such indemnification
includes expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such persons if they acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the corporation or, with respect to any criminal action or
proceeding, if they had no reasonable cause to believe their conduct was
unlawful.
13
<PAGE>
In the case of any action or suit by or in the right of the corporation
against such persons, the corporation is authorized to provide similar
indemnification, provided that, should any such persons be adjudged to be liable
for negligence or misconduct in the performance of duties to the corporation,
the court conducting the proceeding must determine that such persons are
nevertheless fairly and reasonably entitled to indemnification. To the extent
any such persons are successful on the merits in defense of any such action,
suit or proceeding, Nevada law provides that they shall be indemnified against
reasonable expenses, including attorney fees.
A corporation is authorized to advance anticipated expenses for such suits
or proceedings upon an undertaking by the person to whom such advance is made to
repay such advances if it is ultimately determined that such person is not
entitled to be indemnified by the corporation.
Indemnification and payment of expenses provided by Nevada law are not
deemed exclusive of any other rights by which an officer, director, employee or
agent may seek indemnification or payment of expenses or may be entitled to
under any by-law, agreement, or vote of shareholders or disinterested directors.
In such regard, a Nevada corporation is empowered to, and may, purchase and
maintain liability insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation. As a result of such corporation
law, the Company may, at some future time, be legally obligated to pay judgments
(including amounts paid in settlement) and expenses in regard to civil or
criminal suits or proceedings brought against one or more of its officers,
directors, employees or agents.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable.
14
<PAGE>
FINANCIAL STATEMENTS
There appears below the following financial statements of the Company:
Independent accountant's report ......................................... F-1
Balance Sheets at February 28, 1999 and at
February 28, 1998 and (unaudited)
at May 31, 1999..................................................... F-2
Statements of Operations for the Years Ended February 28, 1999
and February 28, 1998 and (unaudited) for the three months
ended May 31, 1999 and May 31, 1998 ................................ F-3
Statements of Changes in Stockholders' Equity for the Years
Ended in February 28, 1999 and February 28, 1998 and
(unaudited) for the three months ended May 31, 1999 ............... F-4
Statements of Cash Flows for the Years Ended February 28, 1999
and February 28, 1998 and (unaudited) for the three months
ended May 31, 1999 and May 31, 1998 ................................ F-5
Notes to Financial Statements for the years ended
February 28, 1999 and February 28, 1998 ............................ F-6
15
<PAGE>
STONEFIELD JOSEPHSON, INC.
1620 26th Street, Suite 400 South
Santa Monica, CA 90404
(310) 453-9400
Board of Directors
Dita, Inc.
Hollywood, California
We have audited the accompanying balance sheets of Dita, Inc. as of February 28,
1999 and 1998, and the related statements of operations, stockholders' equity
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Dita, Inc. as of February 28,
1999 and 1998, and the results of its operations and its cash flows for the
years then ended, in conformity with generally accepted accounting principles.
/s/ Stonefield Josephson, Inc.
Santa Monica, California
July 16, 1999
F-1
<PAGE>
DITA, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
May 31, February 28,
ASSETS 1999 1999 1998
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
Current assets:
Cash $ 12,394 $ 65,822 $ 17,806
Cash - restricted 56,146 55,694 -
Accounts receivable - trade, net of allowance for
doubtful accounts of $37,160 and 18,123, respectively 150,178 71,249 111,745
Inventory 115,831 71,587 64,721
Prepaid expenses 2,163 20,103 1,050
---------- ----------- ----------
Total current assets 336,712 284,455 195,322
Property and equipment, net of
accumulated depreciation and amortization 90,133 87,732 70,261
Other assets 2,434 2,434 4,161
---------- ----------- ----------
$ 429,279 $ 374,621 $ 269,744
========== ===========---==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 288,878 $ 209,578 $ 151,705
Advances from officers-stockholders 30,331 36,531 28,518
Note payable, bank 5,000 19,000 -
Current maturities of obligations under capital lease 13,613 14,600 7,450
---------- ----------- ----------
Total current liabilities 337,822 279,709 187,673
---------- ----------- ----------
Obligations under capital lease, less current maturities 17,869 17,869 18,758
---------- ----------- ----------
Stockholders' equity:
Common stock; $.01 par value, 10,000,000 shares
authorized, 3,140,000 and 2,740,000 shares issued
and outstanding, respectively 31,400 31,400 27,400
Additional paid-in capital 613,339 613,339 417,339
Deficit (571,151) (567,696) (381,426)
---------- ----------- ----------
Total stockholders' equity 73,588 77,043 63,313
---------- ----------- ----------
$ 429,279 $ 374,621 $ 269,744
========== =========== ==========
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-2
<PAGE>
DITA, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended Three months ended Year ended Year ended
May 31, 1999 May 31, 1998 February 28, 1999 February 28, 1998
--------------------- ---------------------- -------------------- ----------------------
Amount Percent Amount Percent Amount Percent Amount Percent
-------- -------- -------- ------- -------- -------- -------- ---------
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 289,286 100.0% $ 326,339 100.0% $ 882,921 100.0% $ 709,591 100.0%
Cost of sales 124,688 43.1 148,154 45.4 417,032 47.2 342,172 48.2
----------- ------- ----------- ------ ----------- ------ ---------- ---------
Gross profit 164,598 56.9 178,185 54.6 465,889 52.8 367,419 51.8
Operating expenses 168,053 58.1 136,017 41.7 652,159 73.9 465,069 65.5
----------- ------- ----------- ------ ----------- ------ ---------- ---------
Net income (loss) $ (3,455) (1.2)% $ 42,168 12.9% $ (186,270) (21.1)% $ (97,650) (13.7)%
=========== ======= =========== ====== =========== ====== =========== =========
Net income (loss) per share -
basic and diluted $ - $ 0.02 $ (0.06) $ (0.04)
=========== =========== =========== ===========
Weighted average shares outstanding -
basic and diluted 3,140,000 2,740,000 2,980,000 2,623,311
=========== =========== =========== ===========
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-3
<PAGE>
DITA, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
YEARS ENDED FEBRUARY 28, 1999 AND 1998
<TABLE>
<CAPTION>
Common stock Additional Total
---------------------- paid-in stockholders'
Shares Amount capital Deficit equity
-------- -------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at February 28, 1997 2,040,000 $ 20,400 $ 321,589 $ (283,776) $ 58,213
Issuance of common stock for
services previously provided 275,000 2,750 2,750
Issuance of common stock 425,000 4,250 95,750 100,000
Net loss for the year ended
February 28, 1998 (97,650) (97,650)
---------- --------- ---------- ---------- ---------
Balance at February 28, 1998 2,740,000 27,400 417,339 (381,426) 63,313
Issuance of common stock 400,000 4,000 196,000 200,000
Net loss for the year ended
February 28, 1999 (186,270) (186,270)
---------- --------- ---------- ---------- ---------
Balance at February 28, 1999 3,140,000 31,400 613,339 (567,696) 77,043
Net loss for the three months
ended May 31, 1999 (unaudited) (3,455) (3,455)
---------- --------- ---------- ---------- ---------
Balance at May 31, 1999 (unaudited) 3,140,000 $ 31,400 $ 613,339 $ (571,151) $ 73,588
========== ========= ========== ========== =========
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-4
<PAGE>
DITA, INC.
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Three months ended May 31, Years ended February 28,
---------------------------- ---------------------------
1999 1998 1999 1998
----------- ---------- ------------ ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Cash flows provided by (used for)
operating activities:
Net income (loss) $ (3,455) $ 42,168 $ (186,270) $ (97,650)
----------- ---------- ------------ ----------
Adjustments to reconcile net loss to net
cash provided by (used for) operating
activities:
Depreciation and amortization - - 22,249 $ 10,928
Provision for doubtful accounts - 2,062 35,827 28,248
Other - - - 2,750
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (78,929) (67,686) 4,669 (75,126)
Inventory (44,244) (17,477) (6,866) (3,041)
Prepaid expenses 17,940 (4,599) (19,053) (542)
Increase (decrease) in liabilities -
accounts payable and accrued expenses 79,582 42,436 52,354 87,377
----------- ---------- ------------ ----------
Total adjustments (25,651) (45,264) 89,180 50,594
----------- ---------- ------------ ----------
Net cash used for operating
activities (29,106) (3,096) (97,090) (47,056)
----------- ---------- ------------ ----------
Cash flows used for investing activities:
Acquisition of property and equipment (2,400) (55) (22,761) (34,069)
Increase in other assets - - - (1,340)
----------- ---------- ------------ ----------
Net cash used for investing
activities (2,400) (55) (22,761) (35,409)
----------- ---------- ------------ ----------
Cash flows provided by (used for)
financing activities:
(Payments on) advances from
officer-stockholders (6,200) (495) 8,013 (759)
(Payments on) proceeds from
note payable, bank (14,000) - 19,000 -
(Payments on) proceeds from other
current liabilities (283) - 5,519 -
(Payments on) obligations under
capital lease (987) (3,073) (8,971) -
Proceeds from issuance of common stock - - 200,000 100,000
----------- ---------- ------------ ----------
Net cash provided by financing
activities (21,470) (3,568) 223,561 99,241
----------- ---------- ------------ ----------
Net increase (decrease) in cash (53,428) (6,719) 48,016 16,776
Net increase in cash - reserve 452 - 55,694 -
Cash, beginning of year 121,516 17,806 17,806 1,030
----------- ---------- ------------ ----------
Cash, end of year $ 68,540 $ 11,087 $ 121,516 $ 17,806
=========== ========== ============ ==========
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-5
<PAGE>
DITA, INC.
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Three months ended May 31, Years ended February 28,
-------------------------- ------------------------
1999 1998 1999 1998
----------- ---------- ----------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Supplemental disclosure of cash flow
information:
Income taxes paid $ - $ - $ 800 $ 1,723
=========== ========== ============ ==========
Interest paid $ 5,044 $ 1,832 $ 14,870 $ 1,832
=========== ========== ============ ==========
Supplemental disclosure of non-cash
financing activities:
Capital lease obligation incurred for use of
equipment $ - $ - $ 15,232 $ 26,208
=========== ========== ============ ==========
Common stock issuance to officers for
prior service $ - $ - $ - $ 2,750
=========== ========== ============ ==========
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
F-6
<PAGE>
DITA, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28, 1999 AND 1998
(1) Summary of Significant Accounting Policies:
Business Activity:
The Company is a wholesaler of unique, alternative and fashionable
women's sunglasses and sells to retailers throughout the United
States, Japan and Europe.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Fair Value:
Unless otherwise indicated, the fair values of all reported assets
and liabilities which represent financial instruments (none of which
are held for trading purposes) approximate the carrying values of
such amounts.
Cash:
Equivalents
For purposes of the statement of cash flows, cash equivalents
include all highly liquid debt instruments with original maturities
of three months or less which are not securing any corporate
obligations.
Concentration
The Company maintains its cash in bank deposit accounts which, at
times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts.
Inventory:
Inventory is valued at the lower of cost (first-in, first-out) or
market.
Income Taxes:
Deferred income taxes are reported using the liability method.
Deferred tax assets are recognized for deductible temporary
differences and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment (see Note 8).
See accompanying independent auditors' report.
F-7
<PAGE>
DITA, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED FEBRUARY 28, 1999 AND 1998
(1) Summary of Significant Accounting Policies, Continued:
Net Loss Per Share:
The Company has adopted Statement of Financial Accounting Standard
No. 128, Earnings per Share ("SFAS No. 128"), which is effective
for annual and interim financial statements issued for periods
ending after December 15, 1997. SFAS No. 128 was issued to simplify
the standards for calculating earnings per share ("EPS") previously
in APB No. 15, Earnings Per Share. SFAS No. 128 replaces the
presentation of primary EPS with a presentation of basic EPS. The
new rules also require dual presentation of basic and diluted
EPS on the face of the statement of operations. Net loss per common
share is computed based on the weighted average number of common
shares outstanding.
Unaudited Interim Financial Statements:
In the opinion of the Company's management, all adjustments
(consisting of normal recurring accruals) necessary to present
fairly the Company's financial position as of May 31, 1999, and the
results of operations and cash flows for the three month periods
ended May 31, 1999 and 1998 have been included. The results of
operations for the three month period ended May 31, 1999, are not
necessarily indicative of the results to be expected for the full
fiscal year. For further information, refer to the financial
statements and footnotes thereto included in the Company's Form
10-SB filed for the year ended February 28, 1999 and 1998.
(2) Property and Equipment:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Display cases $ 73,854 $ 51,092
Computers and software 34,939 27,132
Furniture and fixtures 9,670 2,246
------------ ----------
118,463 80,470
Less accumulated depreciation and amortization 30,731 10,209
------------ ----------
$ 87,732 $ 70,261
============ ==========
</TABLE>
(3) Advances from Officer-Stockholders:
This amount represents the unpaid balance of non-interest bearing
short-term advances received from officer-stockholders. Such advances are
unsecured and payable on demand.
See accompanying independent auditors' report.
F-8
<PAGE>
DITA, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED FEBRUARY 28, 1999 AND 1998
(4) Note Payable, Bank:
The Company has a line of credit with its bank in the amount of $55,000
and is secured by a collateral savings account in the amount of $55,000.
As of July 16, 1999, the line of credit was paid off and the secured
savings account was released to the Company.
Interest paid on all corporate borrowings, exclusive of related party
interest and other bank interest amounted to $798 for the year ended
February 28, 1999.
(5) Obligations under Capital Lease:
The Company leases computer equipment, software, lens cutters and trade
show booths under the terms of a capital lease, which is secured by the
related equipment costing $41,440. The following is a schedule by years of
future minimum lease payments required under the capital leases, together
with the present value of the net minimum lease payments:
<TABLE>
<CAPTION>
Year ending February 28,
<S> <C>
2000 $ 14,600
2001 16,431
2002 1,438
------------
Present value of minimum lease payments 32,469
Less current maturities 14,600
------------
$ 17,869
============
</TABLE>
Interest expense for the year ended February 28, 1999 amounted to $3,492.
(6) Common Stock:
Between April 18, 1997 and July 10, 1997, the Company's principal supplier
of sunglasses, who is also a shareholder and member of the Board of
Directors, purchased 425,000 shares of common stock for $100,000. Also, on
April 18, 1997, three officer-stockholders of the Company were issued a
total of 275,000 shares for services previously provided on behalf of the
Company.
As of February 28, 1999 and 1998, there were 92,900 shares outstanding
sold through a December 1995 public offering made in reliance upon an
exemption from registration under federal and state securities laws
provided by Regulation D, Rule 504 of the Securities and Exchange
Commission.
(7) Related Party Transactions:
The Company's principal supplier of sunglasses is also a shareholder and a
member of the Board of Directors. Total product purchased from this
supplier for the year ended February 28, 1999 and 1998 was $313,746 and
$294,082, respectively. Accounts payable and accrued expenses at February
28, 1999 and 1998 include $131,162 and $106,154 payable to this supplier,
respectively. The Company also pays interest on outstanding accounts
payable balances at a rate of 9% per month to this related party.
See accompanying independent auditors' report.
F-9
<PAGE>
DITA, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED FEBRUARY 28, 1999 AND 1998
(8) Income Taxes:
For federal income tax return purposes, the Company has available net
operating loss carryforwards of approximately $556,000 and $381,000, which
expire through 2013 and 2012 and are available to offset future income tax
liabilities for the years ended February 28, 1999 and 1998, respectively.
Temporary differences which give rise to deferred tax assets and
liabilities at February 28, 1999 are as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Net operating loss carryforwards $ 226,548 $ 152,400
Valuation allowance (226,548) (152,400)
------------ ----------
Net deferred taxes $ - $ -
============ ==========
</TABLE>
(9) Subsequent Event:
The Company is in the process of negotiating to sell its corporate shell
to a third party. As of July 16, 1999, no negotiations have been
finalized. Upon completion of the proposed sale, the Company will
reorganize and continue to operate under a different entity.
See accompanying independent auditors' report.
F-10
<PAGE>
EXHIBITS
Index to Exhibits
Exhibit No. Description
----------- -----------
3 - Articles of Incorporation of Dita, Inc.
3.1 - Bylaws of Dita, Inc.
16
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
DITA, INC.
Date: August 13, 1999 By /s/ Troy Schmidt
---------------------------------
Troy Schmidt, President and
Chief Financial Officer
17
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
OCT 03 1995
17068-95
ARTICLES OF INCORPORATION
-------------------------
OF
--
DITA, INC.
----------
KNOW ALL MEN BY THESE PRESENTS:
We, the undersigned, have this day voluntarily associated ourselves
together for the purpose of forming a corporation under the laws of the State of
Nevada and we do hereby certify:
I.
The name of this corporation is:
DITA, INC.
----------
II.
The Resident Agent, TONY TERRY, whose street address where process may be
served is 1200 S. 4th St., #D, Las Vegas, NV 89104.
III.
The objects, business and pursuits and the nature of the business or
objects or purposes to be transacted, promoted, or carried on by this
corporation are and shall continue to be, manufacturing, marketing and
distribution of apparel and any other lawful business.
IV.
The total authorized capitalization of this corporation shall be and is the
sum of TEN MILLION (10,000,000) shares of stock, at ONE CENT (.01) per share;
said stock shall carry full voting power and the said shares shall be issued
fully paid at such times as the Board of Directors may designate in exchange for
cash, property or services, the stock of other corporations or other values,
rights or things and the judgment of the Board of Directors as to the value
thereof shall be conclusive.
V.
The members of the governing Board shall be styled "DIRECTORS" and the
first Board of Directors shall consist of three. The names and addresses of the
First Board of Directors and of each of the
Exhibit 3
Page 1 of 5 Pages
<PAGE>
incorporators signing these articles are as follows:
JEFF J. SOLORIO
33815 Alcazar #B
Dana Point, CA 92629
JOHN LEONARD JUNIPER
33815 Alcazar #B
Dana Point, CA 92629
ALLISON C. RODDAN
228 Monarch Bay
Monarch Beach, CA 92629
The number of directors of this corporation may, from time to time, be
increased, provided the number shall not be reduced to less than three, by an
amendment to the bylaws of this corporation in that regard and without the
necessity of amending these Articles of Incorporation.
VI.
The capital stock shall be and remain nonassessable. The private property
of the stockholders shall not be liable for the debts or liabilities of the
corporation.
VII.
The corporation is to have perpetual existence.
VIII.
At all elections of directors, each stockholder shall be entitled to as
many votes as shall equal the number of his shares of stock, multiplied by the
number of directors to be elected and he may cast all of such votes for a single
director or may distribute them among the number to be voted for or any two or
more of them, as he may see fit.
IX.
No director or officer shall be liable to the corporation or its
stockholders for damages for breach of his fiduciary duty as a director or
officer, but this provision does 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; or
(b) The payment of distributions in violation of NRS 78.300.
Exhibit 3
Page 2 of 5 Pages
<PAGE>
IN WITNESS WHEREOF, we have hereunto set our hands this 26 day of
September, 1995.
/s/ Jeff Solorio
---------------------------
JEFF J. SOLORIO
/s/ John Leonard Juniper
---------------------------
JOHN LEONARD JUNIPER
/s/ Allison C. Roddan
---------------------------
ALLISON C. RODDAN
STATE OF CALIFORNIA )
: ss.
COUNTY OF ORANGE )
On this 26th day of September, 1995, personally appeared before me, a
Notary Public in and for said County and State, JEFF J. SOLORIO and JOHN LEONARD
JUNIPER, known to me to be the persons described in and who duly acknowledged to
me that they executed the same freely and voluntarily and for the uses and
purposes therein mentioned.
/s/ Jean F. Koci
------------------------------------
Notary Public in and for said County and State
[SEAL]
STATE OF NEVADA )
: ss.
COUNTY OF CLARK )
On this 22nd day of September, 1995, personally appeared before me, a
Notary Public in and for said County and State, ALLISON C. RODDAN, known to me
to be the person described in and who duly acknowledged to me that he executed
the same freely and voluntarily and for the uses and purposes therein mentioned.
/s/ F.D. Braud
---------------------------------------------
Notary Public in and for said County and State
[SEAL]
Exhibit 3
Page 3 of 5 Pages
<PAGE>
STATE OF CALIFORNIA )
: ss.
COUNTY OF ORANGE )
On September 26, 1995 before me, Jean F. Koci, Notary Public, personally
appeared Jeff J. Solorio and John Leonard Juniper, proved to me on the basis of
satisfactory evidence to be the persons whose names are subscribed to the within
instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument the
persons, or the entity upon behalf of which the persons acted, executed the
instrument.
[SEAL] WITNESS my hand and official seal.
/s/ Jean F. Koci
----------------------------------
Signature of Notary
----------------------------OPTIONAL----------------------------
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
INDIVIDUAL
- ---
X CORPORATE OFFICER Articles of Incorporation
- --- --------------------------------
Board of Directors Title or Type of Document
------------------
PARTNERS LIMITED
- --- ---
GENERAL 3
--- -------------------------------
Number of Pages
ATTORNEY-IN-FACT
- ---
TRUSTEE(S)
- ---
GUARDIAN/CONSERVATOR
- ---
OTHER: 9-26-95
- --- ---------------- -------------------------------
Date of Document
SIGNER IS REPRESENTING:
Name of Person(s) or Entity(ies)
Dita, Inc. Allison C. Roddan
- -------------------------------- -------------------------------
Signer(s) Other Than Named Above
Exhibit 3
Page 4 of 5 Pages
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
OCT 03 1995
17068-95
STATE OF NEVADA
SECRETARY OF STATE
[SEAL]
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT
BY RESIDENT AGENT
IN THE MATTER OF DITA, INC., I, TONY TERRY, ESQ., with address at Suite D,
1200 S. 4th St., #D, Las Vegas, NV 89104, Town of Las Vegas, County of Clark,
State of Nevada, hereby accept the appointment as Resident Agent of the above
entitled corporation in accordance with NRS 78.090.
FURTHERMORE, that the principal office in this state is located at Suite D,
1200 S. 4th St., #D, Town of Las Vegas, County of Clark, State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand this 29th day of September,
1995.
/s/ Tony Terry
---------------------------
Resident Agent
- --------------------------------------------------------------------------------
NRS 78.090 Except during any period of vacancy described in HRS 78.097,
every corporation shall have a resident agent, who may be either a natural
person or a corporation, resident or located in this state, in charge of its
principal office. The resident agent may be any bank or banking corporation, or
other corporation, located and doing business in this state. . . . The
certificate of acceptance must be filed at the time of the initial filing of the
corporate papers.
Exhibit 3
Page 5 of 5 Pages
BYLAWS
OF
DITA, Inc.
ARTICLE I
OFFICES
-------
SECTION 1. REGISTERED OFFICE. The registered office of the
corporation shall be established and maintained at 33815
Alcazar, Unit B, Dana Point, California, 92629.
SECTION 2. OTHER OFFICES. The corporation may have other
offices, either within or without the State of Nevada, at such place or places
as the Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders
for the election of directors and for such other business as may be stated in
the notice of the meeting, shall be held at such place, either within or without
the State of Nevada, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. In
the event the Board of Directors fails to so determine the time, date and place
of meeting, the annual meeting of stockholders shall be held at the registered
office of the corporation in Nevada on the second Tuesday of May of each year at
11 a.m., local time.
If the date of the annual meeting shall fall upon a legal
holiday, the meeting shall be held on the next succeeding business
Exhibit 3.1
Page 1 of 16 Pages
<PAGE>
day. At each annual meeting, the stockholders entitled to vote shall elect a
Board of Directors and they may transact such other corporate business as shall
be stated in the notice of the meeting.
SECTION 2. OTHER MEETINGS. Meetings of stockholders for any
any purpose other than the election of directors may be held at such time and
place as shall be stated in the notice of the meeting.
SECTION 3. VOTING. Each stockholder entitled to vote in
accordance with the terms of the Certificate of Incorporation and in accordance
with the provisions of these Bylaws shall be entitled to one vote, in person or
by proxy, for each share of stock entitled to vote held by such stockholder, but
no proxy shall be voted after three years from its date unless such proxy
provides for a longer period. Upon the demand of any stockholder, the vote for
directors and the vote upon any question before the meeting, shall be by ballot.
All elections for directors shall be decided by plurality vote of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors; and all other questions shall be decided by the
affirmative vote of the majority of shares present in person or represented by
proxy at the meeting and entitled to vote on the subject matter, except as
otherwise provided by the Certificate of Incorporation or the laws of the State
of Nevada.
A complete list of the stockholders entitled to vote at the
ensuing election, arranged in alphabetical order, with the address of each, and
the number of shares held by each, shall be
Exhibit 3.1
Page 2 of 16 Pages
<PAGE>
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours for a period of at least ten (10) days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
SECTION 4. QUORUM. Except as otherwise required by law, by the
Certificate of Incorporation or by these Bylaws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting until the requisite amount of stock entitled to vote
shall be present. At any such adjourned meeting at which the requisite amount of
stock entitled to vote shall be represented, any business may be transacted
which might have been transacted at the meeting as originally noticed; but only
those stockholders entitled to vote at the meeting as originally noticed shall
be entitled to vote at any adjournment or adjournments thereof.
Exhibit 3.1
Page 3 of 16 Pages
<PAGE>
SECTION 5. SPECIAL MEETINGS. Special meetings of the
stockholders for any purpose or purposes may be called by the
President or Secretary, or by resolution of the directors.
SECTION 6. NOTICE OF MEETINGS. Written notice, stating the
place, date and time of the meeting, and the general nature of the business to
be considered, shall be given to each stockholder entitled to vote thereat at
his address as it appears on the records of the corporation, not less than ten
(10) nor more than sixty (60) days before the date of the meeting. No business
other than that stated in the notice shall be transacted at any meeting without
the unanimous consent of all the stockholders entitled to vote thereat.
SECTION 7. ACTION WITHOUT MEETING. Unless otherwise provided
by the Certificate of Incorporation, any action required to be taken at any
annual or special meeting of stockholders, or any action which may be taken at
any annual or special meeting, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
Exhibit 3.1
Page 4 of 16 Pages
<PAGE>
ARTICLE III
DIRECTORS
---------
SECTION 1. NUMBER AND TERM. The number of directors shall be
one or more. The directors shall be elected at the annual meeting of the
stockholders and each director shall be elected to serve until his or her
successor shall be elected and shall qualify. Directors need not be
stockholders.
SECTION 2. RESIGNATIONS. Any director, member of a committee
or other office may resign at any time. Such resignation shall be made in
writing, and shall take effect at the time specified therein, and if no time be
specified, at the time of its receipt by the President or Secretary. The
acceptance of a resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES. If the office of any director, member of
a committee or other officer becomes vacant, the remaining directors in office,
though less than a quorum by a majority vote, may appoint any qualified person
to fill such vacancy, who shall hold office for the unexpired term and until his
successor shall be duly chosen.
SECTION 4. REMOVAL. Any director or directors may be removed
either for or without cause at any time by the affirmative vote of the holders
of a majority of all the shares of stock outstanding and entitled to vote, at a
special meeting of the stockholders called for the purpose and the vacancies
thus created may be filled, at the meeting held for the purpose of removal, by
Exhibit 3.1
Page 5 of 16 Pages
<PAGE>
the affirmative vote of a majority in interest of the stockholders entitled to
vote.
SECTION 5. INCREASE OF NUMBER. The number of directors may be
increased by amendment of these Bylaws by the affirmative vote of a majority
vote of a majority in interest of the stockholders, at the annual meeting or at
a special meeting called for that purpose, and by like vote the additional
directors may be chosen at such meeting to hold office until the next annual
election and until their successors are elected and qualify.
SECTION 6. POWERS. The Board of Directors shall exercise all
of the powers of the corporation except such as are by law, or by the
Certificate of Incorporation of the corporation or by these Bylaws conferred
upon or reserved to the stockholders.
SECTION 7. COMMITTEES. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole board, designate one
or more committees, each committee to consist of one or more of the directors of
the corporation. Any such committee, to the extent provided in the resolution of
the Board of Directors, or in these Bylaws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall have
the power or authority in reference to amending the Certificate of
Incorporation, adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially
Exhibit 3.1
Page 6 of 16 Pages
<PAGE>
all of the corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
Bylaws of the corporation; and, unless the resolution, these Bylaws or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock.
SECTION 8. ANNUAL MEETINGS. The annual meeting of the Board
may be held at such time and place as shall be fixed by a vote of the
shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order to legally constitute such
meeting.
SECTION 9. REGULAR MEETINGS. Regular meetings of the
directors may be held without notice at such places and times as shall be
determined from time to time by resolution of the directors.
SECTION 10. SPECIAL MEETINGS. Special meetings of the board
may be called by the President or by the Secretary on the written request of any
two (2) directors on at least two (2) days' notice to each director and shall be
held at such place or places as may be determined by the directors, or as shall
be stated in the call of the meeting.
SECTION 11. QUORUM. A majority of the directors shall
constitute a quorum for the transaction of business. If at any meeting of the
board there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time
Exhibit 3.1
Page 7 of 16 Pages
<PAGE>
until a quorum is obtained, and no further notice thereof need be given other
than by announcement at the meeting which shall be so adjourned.
SECTION 12. COMPENSATION. Directors shall not receive any
stated salary for their services as directors or as members of committees, but
by resolution of the board a fixed fee and expenses of attendance may be allowed
for attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.
SECTION 13. ACTION WITHOUT MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting, if prior to such action a
written consent thereto is signed by all members of the board, or of such
committee as the case may be, and such written consent is filed with the minutes
of proceedings of the board or committee.
ARTICLE IV
OFFICERS
--------
SECTION 1. OFFICERS. The officers of the corporation shall be
a President, a Treasurer, and a Secretary, all of whom shall be elected by the
Board of Directors and who shall hold office until their successors are elected
and qualified. In addition, the Board of Directors may elect a Chairman, one (1)
or more Vice Presidents and such Assistant Secretaries and Assistant Treasurers
as they may deem proper. None of the officers of the
Exhibit 3.1
Page 8 of 16 Pages
<PAGE>
corporation need be directors. The officers shall be elected at the first
meeting of the Board of Directors after each annual meeting. More than two (2)
offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors
may appoint such other officers and agents as it may deem advisable, who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the Board of Directors.
SECTION 3. CHAIRMAN. The Chairman of the Board of Directors,
if one be elected, shall preside at all meetings of the Board of Directors and
he shall have and perform such other duties as from time to time may be assigned
to him by the Board of Directors.
SECTION 4. PRESIDENT. The President shall be the chief
executive officer of the corporation and shall have the general powers and
duties of supervision and management usually vested in the office of President
of a corporation. He shall preside at all meetings of the stockholders if
present thereat, and in the absence or non-election of the Chairman of the Board
of Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the corporation. Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages and other contracts in behalf of the
corporation, and shall cause the seal to be affixed to any instrument requiring
it
Exhibit 3.1
Page 9 of 16 Pages
<PAGE>
and when so affixed the seal shall be attested by the signature of the Secretary
or an Assistant Secretary.
SECTION 5. VICE PRESIDENT. Each Vice President shall have
such powers and shall perform such duties as shall be assigned to him by the
directors.
SECTION 6. TREASURER. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation. He shall
deposit all monies and other valuables in the name and to the credit of the
corporation in such depositories as may be designated by the Board of Directors.
SECTION 7. SECRETARY. The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and directors, and all other
notices required by law or by these Bylaws, and in case of his absence or
refusal or neglect so to do, any such notice may be given by any person
thereunto directed by the President, or by the directors, or stockholders, upon
whose requisition the meeting is called as provided in these Bylaws. He shall
record all the proceedings of the meetings of the corporation and of the
directors in a book to be kept for that purpose, and shall perform such other
duties as may be assigned to him by the directors or the President. He shall
have custody of the seal of the corporation and shall affix the same to all
instruments requiring it, when authorized by the directors or the President, and
attest the same.
Exhibit 3.1
Page 10 of 16 Pages
<PAGE>
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES.
Assistant Treasurers and Assistant Secretaries, if any, shall be elected and
shall have such powers and shall perform such duties as shall be assigned to
them, respectively, by the directors.
SECTION 9. SALARIES. The salaries of all officers of the
corporation shall be fixed by the Board of Directors.
SECTION 10. REMOVAL. Any officer elected or appointed by the
Board of Directors may be removed from office, with or without cause, at any
time by the affirmative vote of a majority of the directors present at any
meeting of the Board at which a quorum is present.
ARTICLE V
MISCELLANEOUS
-------------
SECTION 1. CERTIFICATES OF STOCK. Certificates of stock,
signed by the President or Vice President, and the Treasurer or an Assistant
Treasurer, or Secretary or an Assistant Secretary, shall be issued to each
stockholder certifying the number of shares owned by him in the corporation. Any
of or all the signatures may be facsimiles.
SECTION 2. LOST CERTIFICATES. A new certificate of stock may
be issued in the place of any certificate theretofore issued by the corporation,
alleged to have been lost or destroyed, and the directors may, in their
discretion, require the owner of the lost or destroyed certificate, or his legal
representatives, to give the corporation a bond, in such sum as they may direct,
not
Exhibit 3.1
Page 11 of 16 Pages
<PAGE>
exceeding double the value of the stock, to indemnify the corporation against
any claim that may be made against it on account of the alleged loss of any such
certificate, or the issuance of any such new certificate.
SECTION 3. TRANSFER OF SHARES. The shares of stock of the
corporation shall be transferable only upon its books by the holders thereof in
person or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificates shall be surrendered to the corporation by
the delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the directors may designate, by whom they
shall be cancelled, and new certificates shall thereupon be issued. A record
shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. In order that the
corporation may determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, or to express consent to
corporation action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other
Exhibit 3.1
Page 12 of 16 Pages
<PAGE>
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 5. REGISTERED STOCKHOLDERS. The corporation shall be
entitled to treat the holder of record of any share or shares as the holder in
fact thereof, and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such share on the part of any other person,
whether or not it shall have express or other notice thereof, except as may be
otherwise expressly provided by the laws of Nevada.
SECTION 6. DIVIDENDS. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of funds legally
available therefor at any regular or special meeting, declare dividends upon the
capital stock of the corporation as and when they deem expedient. Before
declaring any dividend there may be set apart out of any funds of the
corporation available for dividends, such sum or sums as the directors from or
as a reserve fund to meet contingencies or for equalizing dividends or for such
other purposes as the directors shall deem conducive to the interests of the
corporation.
SECTION 7. SEAL. The corporate seal shall be circular in form
and shall contain the name of the corporation and the words "CORPORATE SEAL."
Said seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Exhibit 3.1
Page 13 of 16 Pages
<PAGE>
SECTION 8. FISCAL YEAR. The fiscal year of the corporation
shall be determined by resolution of the Board of Directors.
SECTION 9. CHECKS. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation shall be signed by such officer or officers, agent or agents of
the corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 10. NOTICE. Whenever any notice is required by these
Bylaws to be given, personal notice is not meant unless expressly so stated, and
any notice so required shall be deemed to be sufficient if given by depositing
the same in the United States mail, postage prepaid, addressed to the person
entitled thereto at his address as it appears on the records of the corporation,
and such notice shall be deemed to have been given on the day of such mailing.
Stockholders not entitled to vote shall not be entitled to receive notice of any
meetings except as otherwise provided by Statute.
SECTION 11. WAIVER OF NOTICE. Whenever any notice whatever is
required to be given under the provisions of any law, or under the provisions of
the Certificate of Incorporation of the corporation or these Bylaws, a waiver
thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto.
Exhibit 3.1
Page 14 of 16 Pages
<PAGE>
ARTICLE VI
INDEMNIFICATION OF OFFICERS, DIRECTORS,
EMPLOYEES AND AGENTS
To the extent and in the manner permitted by the laws of the
State of Nevada, and specifically as is permitted under Section 1031 of the
Nevada General Corporation Act, the corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, other than an action by or in the right of the corporation, by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement.
ARTICLE VII
AMENDMENTS
----------
These Bylaws may be altered or repealed and Bylaws may be made
at any annual meeting of the stockholders or at any special meeting thereof if
notice of the proposed alteration or repeal or Bylaw or Bylaws to be made be
contained in the notice of such special meeting, by the affirmative vote of a
majority of the stock issued and outstanding and entitled to vote thereat, or by
the affirmative vote of a majority of the Board of Directors, at any
Exhibit 3.1
Page 15 of 16 Pages
<PAGE>
regular meeting of the Board of Directors, or at any special meeting of the
Board of Directors, if notice of the proposed alteration or repeal, or Bylaw or
Bylaws to be made, be contained in the notice of such special meeting. ADOPTED:
October 3, 1995
Exhibit 3.1
Page 16 of 16 Pages
