<PAGE>2
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10SB
General Form for Registration of Securities of Small
Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
CREATIVE BEAUTY SUPPLY, INC.
(Exact name of Small Business Issuer in its charter)
NEW JERSEY 22-3392051
(State or other jurisdiction of (IRS Employer
incorporation or organization Identification No.)
380 Totowa Road, Totawa, NJ 07512
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code: (973-904-0004
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
Forward-Looking Statements and Associated Risk. This Registration
Statement, including the information incorporated herein by reference,
contains forward-looking statements including statements regarding, among
other items, the Company's growth strategies, and anticipated trends in
the Company's business and demographics. These forward-looking
statements are based largely on the Company's expectations and are
subject to a number of risks and uncertainties, certain of which are
beyond the Company's control. Actual results could differ materially
from these forward-looking statements.
<PAGE>3
ITEM 1. DESCRIPTION OF BUSINESS
A. The Company was incorporated in New Jersey on August 28, 1995. On
March 15, 1996, the Company effectuated a 45,392 for 1 stock split.
There have been no other material events in the development of the
Company (including any material mergers or acquisitions) since inception.
There are no pending or anticipated mergers, acquisitions, spin-offs or
recapitalizations. On February 26, 1997, the Company's officers
surrendered 7,543,000 Common Shares. The issued and outstanding shares
were reduced from 11,348,000 to 3,805,000. On July 1, 1997, the Company
effectuated a 1 for 2.5 reverse stock split reducing the issued and
outstanding shares from 4,600,000 to 1,840,000.
Corporate Operations. The Company operates as a cosmetic and beauty
supply distributor at both the retail and wholesale levels. The Company's
various beauty and cosmetic products are purchased by it from a number of
unaffiliated suppliers and manufacturers and thereafter sold on its
premises to retail "walk-in" customers or directly to beauty salons.
Products. The Company's beauty and cosmetic products primarily consist
of the following items: Shampoos, conditioners, mousse, setting/styling
and spray gels, lotions, lipstick and nail products and hair sprays as
well as such beauty and cosmetic related appliances as blow dryers,
curling irons, mirrors, air diffusers and hair trimmers. Many of the
aforesaid products (at least 80%) may be considered to be "national"
brands bearing consumer recognition with respect to the their respective
names. Such consumer recognition of such "brand" names is considered by
the Company to be of assistance to it with respect to sale of such
products since consumer recognition is advanced by national brand media
advertising (at no cost to the Company but to the Company's benefit) when
potential customers are already familiar with the product as a result of
media advertising.
Suppliers. The above indicated products are purchased by the Company
from a number of unaffiliated suppliers and management of the Company
does not contemplate or anticipate any significant difficulties with its
ability to purchase such products from its current suppliers and/or from
replacement and/or additional suppliers if and when necessary or
advisable. The Company does not have any written agreements with any of
its suppliers nor does any one supplier or small group of suppliers (i.e.
three suppliers) account for any significant portion of the Company's
purchases. Currently, the Company utilizes approximately 50
unaffiliated suppliers, none of whom account for 5% or more of the
Company's purchases (and no group of three of who account for an
aggregate of 10% or more of such purchases). Additionally, the Company
intends to acquire new product lines. Accordingly, the Company is not
dependent, whatsoever, upon any individual supplier or small group of
suppliers.
Distribution. The Company is currently distributing its products to
approximately 200 nail and beauty salons. Its territory is principally
and almost exclusively located within the northern portion of the State
of New Jersey, in the counties of Essex, Hudson, Bergen, Passaic, Morris
and Union.
The Company sells cosmetic and beauty supplies, both on the retail and
wholesale levels to beauty salons and to the general public.
Wholesale sales consist of beauty salons of merchandise for resale.
Sales of merchandise to beauty salons for their own consumption, not for
resale, are considered retail sales. All sales to the general public
are also considered retail sales.
Sales are summarized as follows:
1999 1998
Wholesale $118,935 $107,363
Retail 143,205 142,368
-------- --------
$262,140 $249,731
======== ========
Competition. Competition is based on price. The Company's price ranges
of its various products are within the manufacturer-suggested prices,
services and product lines. The Company will be competing with
established companies and other entities (many of which may possess
substantially greater resources than the Company). Almost all of the
companies with which the Company competes are substantially larger, have
more substantial histories, backgrounds, experience and records of
<PAGE>4
successful operations, greater financial, technical, marketing and other
resources, more employees and more extensive facilities than the Company
now has, or will have in the foreseeable future. It is also likely that
other competitors will emerge in the near future. There is no assurance
that the Company's products will compete successfully with other
established and/or well-regarded products. Inability to compete
successfully might result in increased costs, reduced yields and
additional risks to the investors herein
Marketing. The Company intends to purchase its products in larger
quantities, resulting in larger discounts on purchases, resulting in more
profit and better competition. The Company's products will be marketed
through a combination of personal contact by sales representatives,
advertising, special promotion and some telemarketing and by conducting
product knowledge classes which current and prospective clients are
invited to attend. The salons order and receive their products
weekly. No customer accounts for more than 20% of sales and there are
no existing sales contracts.
Backlog. The Company services its accounts on two days notice. There
is no backlog. If the Company does not have a specific item, it is back
ordered until the next delivery.
Employees The Company currently has two full-time employees and no part-
time employees. The Company intends to add one or two sales
representatives and one beauty consultant to conduct the product
knowledge classes within the next eight months.
The Company's operations do not depend nor are they expected to depend
upon patents, copyrights, trade secrets, know-how or other proprietary
information. No amounts have been expended by the Company for research
and development of any products nor does the Company expect to expend any
amounts this year.
The Company's business, products and properties are not subject to
material regulation (including environmental regulation) by federal,
state, or local governmental agencies.
Seasonal Nature of Business Activities. The Company's business
activities are not seasonal.
Item 2. Management's Discussion and Analysis or Plan of Operation
Trends and Uncertainties. Demand for the Company's products will be
dependent on, among other things, market acceptance of the Company's
concept and general economic conditions, which are cyclical in nature.
Inasmuch as a major portion of the Company's activities is the receipt of
revenues from the sales of its products, the Company's business
operations may be adversely affected by the Company's competitors and
prolonged recessionary periods.
Hair styles in the industry change drastically from season to season.
The recent trend away from straight hair will have a favorable impact on
the sales of the Company's hair products such as perms, etc. although the
extent of this impact is indeterminable.
Capital and Source of Liquidity. In April, 1999, the Company renewed
its lease for a term of three (3) years commencing May 1, 1999 at a
monthly rental of $1,200 per month for the first twelve (12) months and
$1,300 a month for each of the remaining twenty four (24) months.
Additionally, Management intends to lease additional warehouse space.
The increased lease amounts will have a negative effect on the cash flow
of the Company.
For the year ended March 31, 1999, the Company issued common stock for
$47,750. As a result, the Company had net cash flow provided by
financing activities of $47,750.
For the year ended March 31, 1998, the Company issued common stock for
$67,556. As a result, the Company had net cash flow provided by
financing activities of $67,556.
For the years ended March 31, 1999 and 1998, the Company pursued no
investing activities.
<PAGE>5
Results of Operations. For the year ended March 31, 1999, the Company
had a net loss of $52,453. The Company had net sales of $262,140 with a
cost of goods sold of $212,266 resulting in gross profit of $49,874 for
the year ended March 31, 1999.
The Company had operating expenses of $119,520 for the year ended March
31, 1999. These expenses primarily consisted of officer's salaries of
$60,796, auto and delivery of $9,049, professional fees of $12,642, rent
of $14,400, telephone of $1,842, utilities of $2,047, store supplies of
$1,696, insurance of $3,097, payroll and other taxes of 2,893 and other
miscellaneous expenses of $11,058.
For the year ended March 31, 1998, the Company had a net loss of $42,353.
The Company had net sales of $249,731 with a cost of goods sold of
$197,450 resulting in gross profit (20.9%) of $52,281 for the year ended
March 31, 1998.
The Company had operating expenses of $106,660 for the year ended March
31, 1998. These expenses primarily consisted of officers salaries of
$60,796, auto and delivery of $10,098, professional fees of $3,800, rent
of $14,400, telephone of $1,683, utilities of $1,636, store supplies of
$1,620, insurance of $2,870, payroll and other taxes of $2,945 and other
miscellaneous expenses of $6,812.
The major cause of the Company's losses from operations have been the low
sales volume. Management is looking for new suppliers at more favorable
prices and to increase their customer base and sales volume.
Additionally, management has implemented inventory controls which has
resulted in additional profits.
Management believes that the implementation of its inventory controls and
obtaining supplies from new sources will have a favorable impact on the
Company's results of operations within the new 12 months.
Plan of Operation. During the next twelve months, the Company intends to
obtain new product lines by negotiating with various manufacturers, hire
new sales representatives and hire technician to conduct product
knowledge classes
If the Company does not achieve the milestones within the above time
schedule, their operating costs will be higher and the Company will lose
even more money.
The Company's liquidity will be decreased due to little or no increase in
revenue and higher operating costs.
The Company is not delinquent on any of its obligations even though the
Company has had limited operating revenues. The Company intends to
market its products utilizing cash made available from the sale of its
products. The Company is of the opinion that revenues from the sales of
its products and the proceeds from the sale of its securities will be
sufficient to pay its expenses.
Year 2000 Compliance. The Company has conducted a comprehensive review of
its computer systems to identify any business functions that could be
affected by the "Year 2000" issue. As the millennium ("Year 2000")
approaches, businesses may experience problems as the result of computer
programs being written using two digits rather than four to define the
applicable year. The Company has conducted a comprehensive review of
its computer systems to identify those areas that could be affected by
the "Year 2000" issue. Any of the Company's programs that have time-
sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. If not corrected, this could result in
extensive miscalculations or a major system failure.
The Company relies on industry standard software. Certain manufacturers
have already provided the Company with upgraded software to address the
"Year 2000" issue. The Company believes that by modifying existing
software, the "Year 2000" issue will not pose significant operational
problems and is not anticipated to require additional expenditures that
would materially impact its financial position or results of operations
in any given year. The Company believes that this modification will be
completed in the latter part of 1999 at a minimal cost.
<PAGE>6
ITEM 3. DESCRIPTION OF PROPERTY.
The Company's executive offices and showroom are located at 380 Totowa
Road, Totowa, New Jersey 07512. Telephone No. (973) 904-0004. These
offices consist of 1,400 square feet on a lease term. The Company has a
lease for a term of three (3) years commencing May 1, 1999 at a month
rental of $1,200 per month for the first twelve (12) months and $1,300 a
month for each of the remaining twenty four (24) months. The Company
needs additional warehouse space and will attempt to locate adequate
warehouse space on a lease basis in the second quarter of 1999. The
Company owns its delivery vehicle and the computers used in the operation
of the business.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tabulates holdings of shares of the Company by each person
who, subject to the above, at the date of this registration statement,
holders of record or is known by Management to own beneficially more than
5.0% of the Common Shares and, in addition, by all directors and officers
of the Company individually and as a group. Each named beneficial owner
has sole voting and investment power with respect to the shares set forth
opposite his name.
Shareholdings at Date of
This Prospectus
<TABLE>
<CAPTION>
Percentage of
Number & Class(1) Outstanding
Name and Address of Shares Common Shares
<S> <C> <C>
Carmine Catizone Common 808,000 43.33%
10 1/2 Walker Avenue
Morristown, NJ 07960
Daniel T. Generelli Common 80,000 4.29%
24 Kansas Street
Hackensack, NJ 07601
Pat Catizone Common 160,000 8.58%
Common 160,000(2) 8.58%
266 Cedar Street
Cedar Grove, NJ 07009
Barbara Catizone Common 160,000 8.58%
Common 160,000(2) 8.58%
266 Cedar Street
Cedar Grove, NJ 0709
Robyn Conforth Common 140,000 7.51%
266 Cedar Street
Cedar Grove, NJ 07009
David Wong Common 108,050 5.79%
300 Rector Place #41
New York, NY 10280
All Directors & Officers 47.62%
as a group (2 persons)
</TABLE>
(1)Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared
voting power (including the power to vote or direct the voting) and/or
sole or shared investment power (including the power to dispose or direct
the disposition) with respect to a security whether through a contract,
arrangement, understanding, relationship or otherwise. Unless otherwise
indicated, each person indicated above has sole power to vote, or dispose
or direct the disposition of all shares beneficially owned, subject to
applicable unity property laws.
(2)Pat Catizone and Barbara Catizone are husband and wife and are deemed
to be the beneficial owners of each other's shares.
<PAGE.7
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Board of Directors. The following persons listed below have been
retained to provide services as directors and executive officers until
the qualification and election of his successor. All holders of Common
Stock will have the right to vote for Directors of the Company. The
Board of Directors has primary responsibility for adopting and reviewing
implementation of the business plan of the Company, supervising the
development business plan, review of the officers' performance of
specific business functions. The Board is responsible for monitoring
management, and from time to time, to revise the strategic and
operational plans of the Company. Directors receive no cash
compensation or fees for their services rendered in such capacity.
Name Position Held Term of Office
Carmine Catizone, age 54 President, Director Inception
to present
Daniel Generelli, age 36 Secretary/Treasurer Inception
Vice-President/Director to present
Resumes:
Carmine Catizone. Mr. Catizone has been President and a director of the
Company since its inception in August 1995. From June 1988 to July 1994,
Mr. Catizone was President and a Director of J&E Beauty Supply, Inc., a
retail and wholesale beauty supply distributor. Mr. Catizone served as
President and a director of C&C Investments, Inc., a blank check company
(now known as T.O.P.S. Medical Corp., which provided chemicals for
transportation of organs) from July 1977 to December 1984. Mr. Catizone
is not currently involved with T.O.P.S. Medical Corp. From June 1980 to
December 1985, Mr. Catizone had been district sales manager (engaged in
sales of cosmetics) for Chattem Labs. Mr. Catizone received his
Bachelor of Science degree from Fairleigh Dickerson University in 1972.
Daniel Generelli. Mr. Generelli has been Secretary-Treasurer and a
director of the Company since inception in August 1995. From December
1989 to July 1996, Mr. Generelli was Secretary/Treasurer and a director
of J&E Beauty Supply, Inc., a retail and wholesale beauty supply
distributor. From December 1984 to December 1989, Mr. Generelli was
employed as a distribution supervisor with Tags Beauty Supply, a retail
and wholesale beauty supply distributor in Fairfield, NJ. Mr. Generelli
graduated from Ramapo College of New Jersey with a Bachelor of Science
degree in June of 1984.
ITEM 6. EXECUTIVE COMPENSATION
Remuneration. To date, the Company has not entered into employment
agreements nor are any contemplated. Mr. Generelli is paid approximately
$30,000 per year, however, all of Mr. Catizone's $30,000 salary has been
accrued.
Board of Directors Compensation. Members of the Board of Directors may
receive an amount yet to be determined annually for their participation and
will be required to attend a minimum of four meetings per fiscal year. To
date, the Company has paid $0.00 in directors' expenses.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
ITEM 8. DESCRIPTION OF SECURITIES
Qualification. The following statements constitute brief summaries of
the Company's Certificate of Incorporation and Bylaws, as amended. Such
summaries do not purport to be complete and are qualified in their
entirety by reference to the full text of the Certificate of
Incorporation and Bylaws.
The Company's articles of incorporation authorize it to issue up to
100,000,000 Common Shares, $.001 par value per Common Share and up to
10,000,000 Preferred Shares, $.001 par value.
Common Stock. The Company's articles of incorporation authorize it to
issue up to 100,000,000 Common Shares, $.001 par value per Common Share.
All outstanding Common Shares are legally issued, fully paid and non-
assessable.
<PAGE>8
Liquidation Rights. Upon liquidation or dissolution, each
outstanding Common Share will be entitled to share equally in the assets
of the Company legally available for distribution to shareholders after
the payment of all debts and other liabilities.
Dividend Rights. There are no limitations or restrictions upon the
rights of the Board of Directors to declare dividends out of any funds
legally available therefor. The Company has not paid dividends to date
and it is not anticipated that any dividends will be paid in the
foreseeable future. The Board of Directors initially may follow a policy
of retaining earnings, if any, to finance the future growth of the
Company. Accordingly, future dividends, if any, will depend upon, among
other considerations, the Company's need for working capital and its
financial conditions at the time.
Voting Rights. Holders of Common Shares of the Company are entitled
to cast one vote for each share held at all shareholders meetings for all
purposes.
Other Rights. Common Shares are not redeemable, have no conversion
rights and carry no preemptive or other rights to subscribe to or
purchase additional Common Shares in the event of a subsequent offering.
Preferred Stock. The Corporation is authorized to issue 10,000,000
Preferred Shares. There are currently no Preferred Shares issued and
outstanding. The Board of Directors has the right to determine the
terms of any series of Preferred Shares to be issued.
Transfer Agent. Continental Stock Transfer acts as the Company's
transfer agent.
<PAGE>9
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The Company's intends to apply to have its common stock traded in the
over-the-counter market and listed on the NASDAQ Bulletin Board
The Company has never paid any cash dividends nor does it intend, at this
time, to make any cash distributions to its shareholders as dividends in
the near future.
As of May 31, 1999, the number of holders of Company's common stock is
73.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings nor is the Company
aware of any disputes, which may result in legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
During the Company's two most recent fiscal years or any later interim
period, there have been no changes in or disagreements with the Company's
principal independent accountant or a significant subsidiary's
independent accountant.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
In the first quarter of 1997, the Company issued 795,000 shares of common
stock (pre-1 for 2.5 reverse) for $159,000 ($.20 per share) to the
following unaffiliated individuals and entities for cash. All Common
Share amounts reflect the 1 for 2.5 reverse stock split effectuated July
1, 1997.
Name Number of Common Shares
Scott Caputo 50,000
Cashro International Holding, Ltd. 50,000
Pat Catizone 110,000
David Wong 108,000
These sales were made to sophisticated investors pursuant to an exemption
from registration provided by Section 4(2) of the Securities Act of 1933.
The Company determined the sophistication of the investors based on its
prior relationships with said investors and/or verbal inquiries.
From March 1998 through July 1998, the Company completed an offering
under Rule 504 of Regulation D of the Securities Act of 1933 at $5.00 per
Common Share to the following:
Name # of Common Shares
C&A Stables partnership 500
John F. Agoglia 200
Richard W. Agoglia 200
John F. Agoglia, Jr. 200
Dina Anderson 1,000
Anthony Borgio 100
Carmela Borgio 100
Phyllis A. Calwhite
Custodian for John P. Coolack 200
Phyllis A. Calwhite
Custodian for Timothy Coolack 200
Phyllis A. Calwhite
Custodian for Jason A. Coolack 200
R. Scott Caputo 200
Robert G. Caputo 1,000
Catherine Corforte 200
Henry Corforte 200
John H. Corforte 400
John P. Corforte 200
Louise Corforte 200
Lyndell Corforte 200
Michael Corforte 200
Pauline S. Corforte 200
Ann Cortese 100
Carmine Cortese 100
Kathleen Doherty 100
Albert Galli 100
Marie Galli 100
Mary Giangiobre 200
Andrew L. Gioia
Custodian for Sandra Gioia 200
Andrew L. Gioia
Custodian for Christopher Gioia 200
<PAGE>10
Andrew L. Gioia 1,600
Maria A. Kolacy 100
Michele Lee 50
Betty Lim 50
Judy Lim 50
Michael Lim 50
Yak Lim 50
Yuet Ping Lim 50
Thomas Mismo 200
Maria Patierno 500
Serafina Patierno 2,000
Thomas Patierno 500
Alissa Pelliccio 200
Joseph Pelliccio 200
John Perez 1,200
Marla Regan
Custodian for Kevin Regan 500
Marla Regan
Custodian for Ryan Regan 500
Marla Regan
Custodian for Jason Regan 500
Wayne Robbins 6,000
Gregory V. St. Thomasino 200
Frank Wermick 200
Betty Wong 50
David Wong 50
Man Wai Wong 50
Richard Wong 50
Yee Wong 50
Kenneth Yeung 50
Linda Yeung 50
These sales were made pursuant to an exemption from registration pursuant
to Section 504 of Regulation D. The offering was approved and/or
exempted by the required states and the appropriate Form D was filed with
the Securities and Exchange Commission.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Indemnification. The Company shall indemnify to the fullest extent
permitted by, and in the manner permissible under the laws of the State
of New Jersey, any person made, or threatened to be made, a party to an
action or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that he is or was a director or
officer of the Company, or served any other enterprise as director,
officer or employee at the request of the Company. The Board of
Directors, in its discretion, shall have the power on behalf of the
Company to indemnify any person, other than a director or officer, made a
party to any action, suit or proceeding by reason of the fact that he/she
is or was an employee of the Company.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company,
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 Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of
any action, suit or proceedings) is asserted by such director, officer,
or controlling person in connection with any securities being registered,
the Company will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issues.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE CORPORATION FOR
LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE
AGAINST PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS
THEREFORE UNENFORCEABLE.
<PAGE>11
PART F/S
The following financial statements required by Item 310 of Regulation S-B
are furnished below
Independent Auditor's Report
Balance Sheet as of March 31, 1999 and 1998
Statements of Operations for the Years ended March 31, 1999 and 1998
Statements of Stockholders' Equity for the Years ended March 31, 1999 and
1998
Statement of Cash Flows for the Years ended March 31, 1999 and 1998
Notes to Financial Statements
<PAGE>12
Bederson & Company LLP
Certified Public Accountants
Consultants
405 Northfield Avenue
West Orange, New Jersey 07052
(973) 736-3333 Fax: (973) 736-3367,8786
Insolvency and Litigation Fax: (973) 736-9219
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders of
Creative Beauty Supply, Inc.
Totawa, New Jersey
We have audited the accompanying balance sheets of Creative Beauty
Supply, Inc. as of March 31, 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 audits.
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
audits provide 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 Creative
Beauty Supply, Inc. at March 31, 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.
BEDERSON & COMPANY LLP
West Orange. New Jersey
April 23, 1999
Member of TAG International with offices in principal cities worldwide
Affiliated with the American Institute of CPAs Division for Firms
<PAGE>13
CREATIVE BEAUTY SUPPLY, INC.
BALANCE SHEETS
MARCH 31, 1999 AND 1998
ASSETS
<TABLE>
<CAPTION>
1999 1998
----- -----
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $324,683 $291,674
Accounts receivable 3,263 2,541
Inventory 72,904 76,532
Prepaid expenses 2,431 2,251
---------- ----------
TOTAL CURRENT ASSETS 403,281 372,998
PROPERTY AND EQUIPMENT, net of
accumulated depreciation 4,216 6,380
OTHER ASSETS:
Organization cost, net of
Accumulated amortization 197 310
---------- ----------
TOTAL ASSETS $407,694 $379,688
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $9,863 $7,408
Payroll taxes withheld and accrued 698 720
Accrued expenses - officers salaries 98,365 68,269
Accrued expenses 19,770 19,590
--------- ----------
TOTAL CURRENT LIABILITIES 128,696 95,987
--------- ----------
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.001,
authorized 10,000,000 shares issued
and outstanding -0- - -
Common stock, par value $.001,
Authorized 100,000,000 shares;
Issued and outstanding 1,964,650
shares (1999) and
1,855,100 shares (1998) 1,865 1,855
Additional paid-in-capital 472,541 424,801
Accumulated deficit (195,408) (142,955)
--------- --------
TOTAL STOCKHOLDERS' EQUITY 278,998 283,701
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $407,694 $379,688
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>14
CREATIVE BEAUTY SUPPLY, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---------- -----------
<S> <C> <C>
Net Sales $262,140 $249,731
Cost of Goods Sold 212,266 197,450
--------- ---------
Gross Profit 49,874 52,281
--------- --------
Operating Expenses:
Salaries - officers 60,796 60,746
Payroll taxes 2,600 2,652
Auto and delivery 9,049 10,098
Employee welfare 3,143 2,128
Insurance 3,097 2,870
Office 2,293 2,107
Professional fees 12,642 3,800
Rent 14,400 14,400
Store supplies 1,696 1,620
Taxes 293 293
Telephone 1,842 1,683
Utilities 2,047 1,636
Miscellaneous 3,345 350
Depreciation and amortization 2,277 2,277
-------- ---------
TOTAL OPERATING EXPENSES 119,520 106,660
-------- ---------
LOSS FROM OPERATIONS BEFORE
OTHER INCOME (69,646) (54,379)
OTHER INCOME:
Interest Income 17,193 12,026
-------- ---------
NET LOSS $(52,453) $(42,353)
======== =========
NET LOSS PER COMMON SHARE $(.03) $(.02)
======== =========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 1,863,371 1,840,083
========= =========
The accompanying note are an integral part of these financial statements.
<PAGE>15
CREATIVE BEAUTY SUPPLY, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED MARCH 31, 1999 and 1998
</TABLE>
<TABLE>
<CAPTION>
Common Stock Additional
Number of Paid-in Accumulated
Shares Amount Capital Deficit Total
------- --------- --------- ---------- --------
<S> <C> <C> <C> <C> <C>
BALANCE, March 31, 1997 4,600,000 $4,600 $354,500 $(100,602) $258,498
July 1, 1997, 1 for 2.5
Reverse stock split (2,760,000) (2,760) 2,760 - -
March 30, 1998, issuance of
Common stock for cash 15,100 15 67,541 - 67,556
Net loss for the year - - - (42,353) (42,353)
-------- ------- -------- -------- --------
BALANCE, March 31, 1998 1,855,100 1,855 424,801 (142,955) 282,701
April 17, 1998, issuance of
Common stock for cash 6,200 6 30,994 - 31,000
May 12, 1998, issuance of
Common stock for cash 300 1 1,499 - 1,500
June 27, 1998, issuance of
Common stock for cash 50 - 250 - 250
July 27, 1998, issuance of
Common stock for cash 3,000 3 14,997 - 15,000
Net loss for the year - - - (52,453) (52,453)
-------- --------- -------- -------- --------
BALANCE, March 31, 1999 1,864,650 $1,865 $472,541 $(195,408) $278,998
========== ======== ========= ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>16
CREATIVE BEAUTY SUPPLY, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(52,453) $(42,353)
Adjustments to reconcile net loss to
Net cash from operating activities:
Depreciation and amortization 2,277 2,277
(Increase) decrease in operating assets:
Accounts receivable (722) 967
Inventory 3,628 7,905
Prepaid expenses (180) (188)
Increase (decrease) in operating liabilities:
Accounts payable 2,455 (14,456)
Payroll taxes withheld and accrued (22) (100)
Accrued expenses - officers' salaries 30,096 30,096
Accrued expenses 180 (4,801)
--------- ---------
NET CASH USED BY OPERATING ACTIVITIES (14,741) (20,653)
-------- --------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Issuance of common stock 47,750 67,556
-------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 33,009 46,903
CASH AND CASH EQUIVALENTS -
beginning of period 291,674 244,771
-------- --------
CASH AND CASH EQUIVALENTS - end of period $324,683 $291,674
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>17
CREATIVE BEAUTY SUPPLY, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999 and 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Creative Beauty Supply, Inc. was incorporated in the State of New Jersey
on August 28, 1995 and commenced operations on January 2, 1996. The
Company sells cosmetic and beauty supplies both on the retail and
wholesale levels to the general public and beauty salons in Northern and
Central New Jersey.
The Company is located in Totowa, New Jersey and has two employees.
Accounting 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 period. Actual results could differ from those estimates.
Basis of Accounting
The Company maintains its records on the accrual basis of accounting.
Income is recognized when customers take title to the goods and expenses
are recorded when incurred.
Cash Equivalents
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
Provision for Doubtful Accounts
Bad debts are provided on the allowance method based on historical
experience and management's evaluation of outstanding accounts
receivable. Management considered accounts receivable at March 31, 1999
and 1998 to be fully collectible; accordingly, no allowance for doubtful
accounts was provided for at March 31, 1999 and 1998.
Inventory
Inventory, consisting of finished goods, is valued at cost, with cost
being determined on the first-in, first-out (FIFO) method.
Property and Equipment
Property and equipment are recorded at cost. Depreciation of property
and equipment is provided for over the estimated useful lives of the
respective assets. Depreciation is recorded based on the straight-line
method.
The major classes of assets and ranges of estimated useful lives are as
follows:
Years
---------
Delivery equipment 5
Furniture and office equipment 7
Maintenance, repairs, and minor renewals are charged to earnings when
they are incurred. When assets are retired or otherwise disposed of,
the assets and related allowance for depreciation and amortization are
eliminated from the accounts and any resulting gain or loss is reflected
in income.
Organization Costs
All costs incurred by the Company in connection with its incorporation
and organization have been capitalized. The Company has elected to
amortize these costs over sixty (60) months. The charge to operations
for the years ended March 31, 1999 and 1998 was $113 each year.
Income Taxes
Deferred tax assets and liabilities are determined on the differences
between financial statement and tax bases of assets and liabilities,
using enacted tax rates in effect for the year in which the differences
are expected to reverse. Current income taxes are based on the year's
income taxable for federal and state tax reporting purposes.
Impairment of Long-Lived Assets
The Company, in April 1997, adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed Of. In accordance with SFAS
No. 121, the Company reviews long-lived assets for impairments whenever
events or changes in business circumstances occur that indicate that the
<PAGE>18
carrying amount of the assets may not be recoverable. The Company
assesses the recoverability of long-lived assets held and to be used
based on undiscounted cash flows, and measures the impairment, if any,
using discounted cash flows. Adopting SFAS No. 121 did not have a
material impact on the Company's financial position, operating results or
cash flows.
Expenses Related to Sale and Issuance of Securities
All cost incurred in connection with the sale and issuance of the
Company's common stock have been capitalized and charged to additional
paid-in-capital.
Net Loss per Common Share
Loss per common share is computed by dividing the net loss by the
weighted average number of shares outstanding during the year. There
were no dilutive common stock equivalents for both years.
NOTE 2 - RISK ARISING FROM CASH DEPOSITS IN EXCESS OF INSURE LIMITS
The Company maintains its cash balances with a major bank. The balances
are insured by the Federal Deposit Insurance Corporation up to $100,000
per depositor. At March 31, 1999 and 1998, the Company's uninsured cash
balances approximated $225,000 and $192,000, respectively.
NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company measures it financial assets and liabilities in accordance
with general accepted accounting principles. For certain of the
Company's financial instruments, including cash and cash equivalents,
trade receivables, accounts payable and accrued expenses, the carrying
amounts approximate fair value due to their short-term maturities.
NOTE 4 - PROPERTY AND EQUIPMENT
The components of property and equipment are as follows:
1999 1998
-------- -------
Delivery equipment $9,750 $9,750
Furniture and office equipment 1,500 1,500
-------- --------
Less: Accumulated depreciation 11,250 11,250
7,034 4,870
-------- --------
TOTAL $4,216 $6,380
========= ========
Depreciation expense for the years ended March 31, 1999 and 1998 was
$2,164 each year.
NOTE 5 - INCOME TAXES
The Company adopted Statement of Financial Accounting Standard 109
("SFAS"). SFAS 109 provides for an asset and liability approach to
accounting for income taxes that require the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events
that will be recognized in the Company's financial statements or tax
returns.
In estimating future consequences, SFAS 109 generally considers all
expected future events other than proposed changes in the tax law or
rates prior to enactment.
Deferred income taxes at March 31, 1999 related to federal and state net
operating losses of approximately $78,000 each, and an accrued liability
of approximately $116,000. The resulting deferred income tax asset has
been fully offset by a valuation allowance. The valuation allowance has
been established equal to the full amount of the deferred tax assets, as
the Company is not assured at March 31, 1999 that it is more likely than
not that these benefits will be realized.
Net operating loss carryforwards and temporary differences between the
financial statement carrying amounts and tax bases of assets that give
rise to the net deferred assets relate to the following:
1999 1998
--------- ---------
Net operating loss $9,637 $5,274
<PAGE>19
Accrued liabilities,
principally due to expenses not
currently deductible for
income tax purposes 12,900 12,900
------- -------
Net deferred income tax asset $22,537 $18,174
========= ========
A reconciliation between the statutory federal income tax rate (34%) and
the effective income tax rates based on continuing operations is as
follows:
1999 1998
-------- --------
Statutory federal income tax benefit $(17,834) $(14,384)
State income tax benefit (4,703) (3,790)
Valuation allowance 22,537 18,174
--------- ----------
Total provision for income tax $ - $ -
========= ==========
Federal net operating loss carryforward of $78,972 will expire in the
year 2014 and the state net operating loss of $78,322 will expire in the
year 2004.
NOTE 6 - SALES
The Company sells cosmetic beauty supplies both on the retail and
wholesale levels to beauty salons and to the general public.
Wholesale sales consist of sales to beauty salons of merchandise for
resale. Sales of merchandise to beauty salons for their own
consumption, not for resale, are considered Retail sales. All sales to
the general public are also considered retail sales.
Sales are summarized as follows:
1999 1998
Wholesale $118,935 $107,363
Retail 143,205 142,368
-------- --------
$262,140 $249,731
======== ========
NOTE 7 - COMMITMENTS
In April of 1996, the Company entered into a lease agreement with a non-
related party for a term of three (3) years commencing May 1, 1996 for
the rental of its executive offices, retail, wholesale and warehouse
facilities in Totowa, New Jersey at a monthly rental of $1,200 per month.
The total rent charged to operations for the years ended March 31, 1999
and 1998 was $14,400 each year.
In April of 1999, the Company renewed its lease for a term of three (3)
years commencing May 1, 1999 at a month rental of $1,200 per month for
the first twelve (12) months and $1,300 a month for each of the remaining
twenty four (24) months.
The minimum annual future payments are as follows:
Years Ended
March 31,
2000 $14,400
2001 $15,500
2002 $15,600
2003 1,300
NOTE 8 - COMMON STOCK
On July 1, 1997, the Company effectuated a 1 for 2.5 reverse stock split
reducing the issued and outstanding shares form 4,600,000 to 1,840,000.
On March 30, 1998, the Company issued 15,100 share of common stock for
$67,556, net of related issuance cost of $7,944 ($5.00 per share).
The Company issued 9,550 shares of common stock for $47,750 ($5.00 per
share) during the fiscal year ended March 31, 1999.
<PAGE>21
PART III
ITEM 1. INDEX TO EXHIBITS
(2) Charter and By-Laws
(3) Instruments defining the rights of security holders
(5) Voting Trust Agreement - Not Applicable
(6) Material Contracts - Not Applicable
(7) Material Foreign Patents - Not Applicable
(12) Additional Exhibits - Not Applicable
ITEM 2. DESCRIPTION OF EXHIBITS
(2.1) Articles of Incorporation
(2.2) Bylaws
(3.1) Common Stock Certificate
<PAGE>22
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.
Creative Beauty Supply, Inc.
/s/Carmine Catizone
Date: June 1, 1999 ----------------------------
By: Carmine Catizone, President
State of New Jersey
Department of State
Filing Certification (Certified Copy)
Creative Beauty Supply, Inc.
I, the Secretary of State of the State of New Jersey, do hereby
certify, that the above named business did file and record in this
department the below listed documents and that the foregoing is a
true copy of the Certificate of Incorporation as the same is take
from and compared with the original(s) filed in this office on the
date set forth on each instrument and now remaining on file and of
record in my office.
In testimony whereof, I have hereunto set my hand and affixed my
Official Seal at Trenton, this 3rd day of October, 1997
Lonna R. Hooks
Secretary of State
<PAGE>24
Filed
August 28, 1995
1038277
Lonna R. Hooks
Secretary of State
Certificate of Incorporation of Creative Beauty Supply, Inc.
The undersigned natural person of the age of eighteen years or more,
acting as incorporator of a corporation under the provisions of
Title 14a of the New Jersey Statutes, Annotated, as amended, adopts
the following Certificate of Incorporation for such corporation.
ARTICLE I
NAME
The name of the corporation is Creative Beauty Supply, Inc.
ARTICLE II
EXISTENCE AND DURATION
The period of duration of this corporation is perpetual.
ARTICLE III
PURPOSES AND POWERS
The purpose for which this corporation is organized is to engage in
all lawful business for which corporations may be incorporated
pursuant to the New Jersey Business Corporation Act. In furtherance
of its lawful purposes, the corporation shall have and may exercise
all rights, powers and privileges now or hereafter exercisable by
corporations organized under the laws of New Jersey. In addition,
it may do everything necessary, suitable, convenient or proper for
the accomplishment of any of its corporate purposes.
ARTICLE IV
CAPITALIZATION
Authorized Shares. The aggregate number of shares which the
corporation shall have the authority to issue is 110,000,000 shares.
One Hundred Million (100,000,000) shares shall be designated "Common
Stock", and shall have a par value of $.001. Ten Million
(10,000,000) shares shall be designated "Preferred Stock", and shall
have a par value of $.001 per share, and shall be issued for such
consideration, expressed in dollars, as the Board of Directors may,
from time to time, determine.
Preferred Stock shall be issued by the corporation for cash,
property or services actually performed, for no less than the par
value of $.001 for Common Stock and $.001 for Preferred stock. All
shares shall be fully paid and non-assessable.
Issuance of Preferred Stock. The Preferred Stock authorized by
these Certificate of Incorporation may be issued from time to time
in series. The Board of Directors of the corporation is authorized
to establish such series, to fix and determine the variations and
the relative rights and preferences as between series, and to
thereafter issue such stock from time to time. The Board of
Directors is also authorized to allow for conversion of the
Preferred Stock to Common Stock under terms and conditions as
determined by the Board of Directors.
Dividends. Dividends in cash, property or share of the corporation
may be paid upon the Common and Preferred Stock, as and when
declared by the Board of Directors, out of funds of the corporation
to the extent, and in the manner permitted by law.
Voting Rights and Cumulative Voting. Each outstanding share of
Common Stock shall be entitled to one vote, and each fractional
share of Common Stock shall be entitled to a corresponding
fractional vote on each matter submitted to a vote of shareholders.
The voting rights of Preferred Stock, if any, shall be established
by the Board of Directors at the time such stock is issued in
series. Cumulative voting shall be allowed in the election of
directors of the corporation.
Denial of Preemptive Rights. No holder of any shares of the
corporation, whether now or hereafter authorized, shall have any
preemptive or preferential right to acquire any shares or securities
of the corporation, including shares or securities held in the
treasury of the corporation.
Dissolution or Liquidation. Upon any dissolution or liquidation,
whether voluntary or involuntary, the holders of preferred shares
shall be entitled to receive out of the assets of the Corporation,
whether such assets are capital or surplus, the sum initially paid
per share and a further amount equal to any dividend thereon
declared and paid to the date of such distribution, before any
payment shall be made or any
<PAGE>25
assets distributed to the common stock shareholders. Upon any
dissolution or liquidation, whether voluntary or involuntary, if the
assets thus distributed among the holders of preferred shares are
insufficient to permit the payment to such shareholder of the full
preferential amounts, then the entire assets of the Corporation to
be distributed shall be distributed ratably among the holders of
preferred shares and after payment to the preferred shareholders of
such preferential amounts, the holders of common shares shall be
entitled to receive ratably all the remaining assets. A merger or
consolidation of this corporation with or into any other corporation
or corporations shall not be deemed to be a dissolution or
liquidation within the meaning of this provision.
ARTICLE V
INITIAL OFFICE AND AGENT
The address of this corporation's initial registered office at 10 1/2
Walker Avenue, Morristown, New Jersey 07960, and the name of its
initial registered agent is Carmine Catizone.
ARTICLE VI
PRINCIPAL OFFICE
The address of the principal office of the corporation is 380 Totowa
Road, Totowa, New Jersey 07512. The corporation may maintain such
other offices, either within or out of the State of New Jersey, as
the Board of Directors may from time to time determine or the
business of the corporation may require.
ARTICLE VII
INITIAL BOARD OF DIRECTORS
The number of directors constituting the initial board of directors
of this corporation is four. The number of directors of this
corporation shall be not less than three; except there need be only
as many directors as there are shareholders in the event that the
outstanding shares are, or initially will be, held of record by
fewer than three shareholders. The names and addresses of the
person who are to serve as directors until the first annual meeting
of shareholders or until their successors are elected and qualified
are:
Carmine Catizone
10 1/2 Walker Avenue
Morristown, NJ 07960
Daniel T. Generelli
24 Kansas Street
Hackinsack, NJ 07601
ARTICLE VIII
IINDEMNIFICATION
As the Board of Directors may from time to time provide in the By-
Laws or by resolution, the corporation may indemnify its officers,
directors, agents and other persons to the full extent permitted by
the laws of the State of New Jersey.
ARTICLE IX
INCORPORATOR
The name and address of the incorporator is:
Carmine Catizone
10 1/2 Walker Avenue
Morristown, NJ 07960
Dated this 23 day of August, 1995
Carmine Catizone, Incorporator.
<PAGE>26
STATE OF NEW JERSEY)
COUNTY OF PASSAIC
I, Louis Batelli, a Notary Public, hereby certify that Carmine
Catizone, know to me to be the person whose name is subscribed to
the annexed and foregoing Certificate of Incorporation, appeared
before me this 23rd day of August, 1995, in person and being by me
first duly sworn, acknowledged that he signed said Certificate of
Incorporation as his free and voluntary act and deed for the uses
and purposes therein set forth and that statements therein contained
are true.
My Commission Expires: March 28, 1998
Louis Batelli
Notary Public
111 Bobolink Ct.
Address
Wayne NJ 07470
SEAL
BYLAWS OF
CREATIVE BEAUTY SUPPLY, INC.
A NEW JERSEY CORPORATION
ARTICLE I
OFFICES
Section 1.01 Registered Office and Agent. The name of the
registered agent and the location of the registered office of the
Corporation in the State of New Jersey shall be Carmine Catizone, 10
1/2 Walker Avenue, Morristown, New Jersey 07960, and such information
shall be filed in the appropriate office of the State of New Jersey
pursuant to applicable provisions of law.
Section 1.02 Corporate Offices. The Corporation may have such
corporate offices within and outside the State of New Jersey as the
board of directors from time to time may direct or the Corporation
may require. The principal office of the Corporation may be fixed
and so designated from time to time by the board of directors, but
the location or residence of the Corporation in New Jersey shall be
deemed for all purposes to be in the county in which its principal
office in New jersey is maintained. The location of the principal
office of the Corporation shall be 380 Totowa Road, Totowa, New
Jersey 07512.
Section 1.03 Records. The Corporation shall keep correct and
complete books and records of account, minutes of proceedings of its
shareholders and board of directors, and such other or additional
records as may be required by law. The Corporation shall keep at
its registered office or principal place of business, or at the
office of its transfer agent or registrar, either within or outside
New Jersey, a record of its shareholders, giving the names and
addresses of all shareholders and the number and class of the shares
held by each.
ARTICLE II
SHAREHOLDERS' MEETINGS
Section 2.01 Place of Meeting. All meetings of the shareholders
shall be held at the principal office of the Corporation, unless the
board of directors designates some other place either within or
outside the State of New Jersey. Unless specifically prohibited by
law any meeting may be held at any place and at any time and for
any purpose if consented to in writing by all of the shareholders
entitled to vote at such meeting.
Section 2.02 Annual Meetings. An annual meeting of shareholders
shall be held of the 1st day of June of each year, unless notified of
an alternate date in accordance with the provisions of these bylaws,
at 3:00 p.m. for the purpose of electing directors and for the
transaction of such other business as may properly come before it.
If such day is a legal holiday, the meeting shall be on the next
business day.
Section 2.03 Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise
prescribed by statute, may be called by the president, secretary or
by the board of directors, and shall be called by the president at
the request of holders of not less than 10% of all the outstanding
shares of the Corporation entitled to vote at the meeting. No
business other than that specified in the notice of the meeting
shall be transacted at any such special meeting.
Section 2.04 Notice of Meetings. Written or printed notice stating
the place, day and hour of the meeting and, in case of a special
meeting, the purpose for which the meeting is called, shall be
delivered not less than ten days nor more than fifty days before the
date of the meeting, either personally or by mail, by or at the
direction of the board of directors, the president, the secretary,
or the officer or person calling the meeting to each shareholder of
record entitled to vote at such meeting; except that, if the
authorized shares are to be increased at least thirty days' notice
shall be given.
Section 2.05 Fixing Record Date and Closing Transfer Books. The
board of directors may fix a date not less than ten nor more than
fifty days prior to any meeting as the record date for the purpose
of determining shareholders entitled to notice of and to vote at
such meetings, of the shareholders. The transfer books may be
closed by the board of directors for a stated period not to exceed
fifty days for the purpose of determining shareholders entitled to
receive payment of any dividend or in order to make a determination
of shareholders for any other purpose. In the absence of any action
by the board of directors, the date upon which the board of
directors adopts the resolution declaring the dividend shall be the
record date.
Section 2.06 Voting Lists. The officers or agent having charge of
the stock transfer books for shares of the corporation shall make,
at least ten days before each meeting of the shareholders, a
complete record of
<PAGE>28
the shareholders entitled to vote at the meeting or any adjournment
thereof, arranged in alphabetical order with the address of, and the
number of shares held by each. The record, for a period of ten days
before such meeting, shall be kept on file at the principal office
of the Corporation whether within or outside the State f New Jersey,
and shall be subject to inspection by any shareholder for any
purpose germane to the meeting at any time during normal business
hours. Such record shall also be produced and kept open a the time
and place of any purpose germane to the meeting during the whole
time of the meeting. The original stock transfer book shall be
prima facie evidence as to the shareholders who are entitled to
examine the record or transfer books or to vote any meeting of
shareholders.
Section 2.07 Quorum. The holders of a majority of the shares who
are entitled to vote at a shareholders meeting and who are present
in person or by proxy shall be necessary for and shall constitute a
quorum for the transaction of business at such meetings, except as
otherwise provided by statute, by the Certificate of Incorporation
or these Bylaws. If a quorum is not present or represented at a
meeting of the shareholders, those present in person or represented
by proxy shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a
quorum is present or represented. At an adjourned meeting where a
quorum is present or represented, any business may be transacted
which might have been transacted at the meeting as originally
notified.
Section 2.08 Majority Vote; Withdrawal of Quorum. When a quorum is
present at a meeting, the vote of the holders of a majority of the
issued and outstanding shares having voting power, present in person
or represented by proxy, shall decide any question brought before
the meeting, unless the question is one which, by express provision
of the statutes, the Certificate of Incorporation or these Bylaws,
requires a higher vote in which case the express provision shall
govern. The shareholders present at a duly constituted meeting may
continue to transact business until adjournment, despite the
withdrawal of enough shareholders holding, in the aggregate, issued
and outstanding shares having voting power to leave less than a
quorum.
Section 2.09 Proxies. At all meetings of shareholders, a
shareholder may vote in person or by proxy executed in writing by
the shareholder or by his or her duly authorized attorney in fact.
No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided by the proxy. Each proxy shall
be filed with the secretary of the Corporation before or at the
time of the meeting.
Section 2.10 Voting. Each issued and outstanding share is entitled
to its respective vote and each fractional share is entitled to a
corresponding fractional vote on each matter submitted to a vote at
a meeting of shareholders. The vote of a majority of the shares
voting on any matter at a meeting of shareholders at which a quorum
is present shall be the act of the shareholders on the matter,
unless the vote of a greater number is required by law, the
Certificate of Incorporation, or these Bylaws. Voting on all
matters except the election of directors shall be by voice or by
show of hands, unless the holders of one-tenth of the shares
represented at the meeting shall, prior to the voting on any matter,
demand a ballot vote on that particular matter.
(A) Neither treasury shares nor shares held by another Corporation
if the majority of the shares entitled to vote for the election of
directors of such other Corporation is held by the Corporation shall
be voted at any meeting or counted in determining the total number
of issued and outstanding shares at any given time.
(B) Shares standing in the name of another Corporation, domestic or
foreign, may be voted by such officer, agent or proxy as the Bylaws
of that Corporation may prescribe, or, in the absence of such
provision, as the board of directors of that Corporation may
determine.
(C) Shares held by an administrator, executor, guardian, or
conservator may be voted by him or her, either in person or by
proxy, without the transfer of such shares into his name. Shares
standing in the name of a trustee may be voted by him or her, either
in person or by proxy, but no trustee shall be entitled to vote
shares held by him or her without a transfer of the shares into his
or her name.
(D) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may
be voted by such receiver without the transfer into his or her name
if authority to do so is contained in an appropriate order of the
court by which the receiver was appointed.
(E) A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of
the pledgee, and thereafter the pledgee shall be entitled to vote
the shares transferred.
(F) Redeemable shares which have been called for redemption shall
not be entitled to vote on any matter and shall not be entitled to
vote on any matter and shall not be deemed issued and outstanding
shares on and
<PAGE>29
after the date on which written notice of redemption has been mailed
to shareholders and a sum sufficient to redeem such shares has been
deposited with a bank or trust corporation with irrevocable
instruction and authority to pay the redemption price to the holders
of the shares upon surrender of their certificates.
Section 2.11 Action Without Meeting. Any action required by statute
to be taken at a meeting of the shareholders, or any action which
may be taken at a meeting of the shareholders, may be taken without
a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the holders entitled to vote with
respect to the subject matter thereof and such consent shall have
the same force and effect as a unanimous vote of the shareholders.
The consent may be in more than one counterpart so long as each
shareholder signs one of the counterparts. The signed consent, or a
signed copy shall be placed in the minutes book.
Section 2.12 Telephone and Similar Meetings. Shareholders may
participate in and hold a meeting by means of conference telephone
or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation is
such a meeting shall constitute presence in person at the meeting,
except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
Section 2.13 Order of Business at Meetings. The order of business
at annual meetings and so far as practicable at other meetings of
shareholders shall be as follows unless changed by the board of
directors: (a) call to order; (b) proof of due notice of meeting;
(c) determination of quorum and examination of proxies: (d)
announcement of availability of voting lists; (e) announcement of
distribution of annual statement; (f) reading and disposing of
minutes of last meeting of shareholders; (g) reports of officers and
committees; (h) reports of directors; (l) opening of polls for
voting; (m) recess; (n) reconvening, closing of polls; (o) report of
voting inspectors; (p) other business; and (q) adjournment.
ARTICLE III
BOARD OF DIRCTORS
Section 3.01 General Powers. The business and affairs of the
Corporation shall be managed by its board of directors. The
directors shall in all cases act as a board of directors, and they
may adopt such rules and regulations for the conduct of their
meetings and the management of the Corporation as they deem proper.
Such rules and regulations may not be inconsistent with these
Bylaws, the Certificate of Incorporation, and the laws of New
Jersey.
Section 3.02. Number, Tenure and Qualifications. The number of
directors constituting the board of directors of this Corporation is
two. The number of directors of this Corporation shall not be less
than three; except that there need by only as many directors as
there are shareholders in the event that the issued and outstanding
shares are held of record by fewer than three shareholders. A
director shall be elected by the shareholders to serve until the
next annual meeting of shareholders, or until his or her death, or
resignation and his or her successor is elected. A director must be
at least eighteen years of age but need not be a shareholder in the
Corporation nor a resident of the State of New Jersey.
Section 3.03 Change in Number. The number of directors may be
increased or decreased from time to time by amendment to these
Bylaws but no decrease shall have the effect of shortening the term
of any incumbent director. Any directorship to be filled by reason
of an increase in the number of directors shall be filled by
election at an annual meeting or at a special meeting of
shareholders called for that purpose.
Section 3.04 Election of Directors. The directors shall be elected
at the annual meeting of shareholders and those persons who receive
the highest number of votes shall be deemed to have been elected.
Election of directors shall be by ballot.
Section 3.05 Cumulative Voting. Directors shall be elected by
majority vote. Cumulative voting shall be permitted.
Section 3.06 Removal of Directors. A meeting called expressly for
the purpose of removing a director, the entire board of directors or
any lessor number may be removed, with or without cause, by a vote
of the holders of the majority of the shares then entitled to vote
at an election of directors. If any directors are so removed, new
directors may be elected at the same meeting.
<PAGE>30
Section 3.07 Resignation. Subject to Section 3.02, a director may
resign at any time by giving written notice to the board of
directors, the president, or the secretary of the Corporation and
unless otherwise specified in the notice, the resignation shall take
effect upon receipt thereof by the board of directors or such
officer, and the acceptance of the resignation shall not be
necessary to make it effective.
Section 3.08 Vacancies. A vacancy occurring in the board of
directors may be filled by the affirmative vote of a majority of the
remaining directors though less than a quorum of the board of
directors remains. A director elected to fill a vacancy shall be
elected for the unexpired term of his or her predecessor in office.
Any directorship to be filled by reason of an increase in the number
of directors shall be filled by election at an annual meeting of
shareholders or at a special meeting of the shareholders called for
that purpose. A director chosen to fill a position resulting from
an increase in the number of directors shall holder office until his
or her successor(s) shall have been qualified.
Section 3.09 Compensation. By resolution of the board of
directors, compensation may be paid to directors for their services.
Also by resolution of the board of directors, a fixed sum and
expenses for actual attendance at each regular or special meeting of
the board of directors may also be paid. Nothing herein contained
shall be construed to preclude any director form serving the
Corporation in any other capacity and receiving compensation
therefore. Members of the executive committee or of special or
standing committees may, by resolution of the board of directors, be
allowed like compensation for attending committee meetings.
Section 3.10 First Meeting. The first meeting of a newly elected
board shall be held without further notice immediately following the
annual meeting of shareholders, and it shall be a the same place,
unless by unanimous consent of the directors then electing and
serving, the time or place is changed.
Section 3.11 Regular Meetings. Regular meetings of the board of
directors may be held without notice at such time and place as shall
from time to time be determined by the board of directors.
Section 3.12 Special Meetings. Special meetings of the board of
directors may be called by the president on three days notice to
each director, either personally or by mail or by telegram. Special
meetings shall be called in like manner and on like notice on the
written request of two directors. Except as otherwise expressly
provided by statute, the Certificate of Incorporation or these
Bylaws, neither the business to e transacted at, nor the purpose of
any special meeting need be specified in a notice or waiver of
notice.
Section 3.13 Quorum; Majority Vote. At meetings of the board of
directors a majority of the number of directors fixed by these
Bylaws shall constitute a quorum for the transaction business. The
act of a majority of the directors present at a meeting at which
quorum is not present at a meeting at which quorum is not present at
a meeting of the board of directors, the directors present may
adjourn the meeting from time to time, without notice other than
announcement at the meeting until a quorum is present.
Section 3.14 Procedure. The board of directors shall keep regular
minutes of its proceedings. The minutes shall be placed in the
minutes book of the Corporation.
Section 3.15 Action Without Meeting. Any action required or
permitted to be taken at a meeting of the board of directors may be
taken without a meeting if a consent in writing, setting forth the
action so taken, is signed by all members of the board of directors.
Such consent shall have the same force and effect as a unanimous
vote at a meeting. The signed consent, or a signed copy, shall be
placed in the minutes book. The consent may be in more than one
counterpart so long as each director signs once of the counterparts.
Section 3.16 Telephone and Similar Meetings. Directors may
participate in and hold a meeting by means of conference telephone
or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in
such a meeting shall constitute presence in person at the meeting,
except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the
ground that the meeting in not lawfully called or convened.
Section 3.17 Interested Directors and Officers.
No contract or transaction between the Corporation and one or more
of its directors or officers, or any other corporation, firm,
association, partnership or entity in which one or more of its
directors of officers are directors or officers or are financially
interested shall be either void or voidable solely because of such
relationship or
<PAGE>31
interest or solely because such directors or officers are present at
the meeting of the board of directors or a committee thereof which
authorizes, approves, or ratifies such contract or transaction or
solely because their votes are counted for such purposes if:
(1) in fact of the common directorship or financial interest is
disclosed to or known by the board of directors or committee and
noted in the minutes, and the board or committee which authorizes,
approves, or ratifies the contract or transaction by a vote
sufficient for the purpose without counting the votes or consents of
such interested directors; or
(2) the material facts of such relationship or financial interest is
disclosed to or known by the shareholders entitled to vote thereon
and they authorize, approve or ratify such contract or transaction
in good faith by a majority vote or written consent of shareholders
holding a majority of the shares the votes of the common or
interested directors or officers shall be counted in any such vote
of shareholders; or
(3) the contract or transaction is fair and reasonable to the
Corporation.
(B) common or interested director may be counted in determining the
presence of a quorum at a meeting of the board of directors or a
committee thereof which authorizes, approves or ratifies such
contract or transaction.
ARTICLE IV
EXECUTIVE COMMITTEE
Section 4.01 Designation. The board of directors may from time to
time, by resolution adopted by a majority of the whole board,
designate an executive committee.
Section 4.01 Number; Qualification and Term. The executive
committee shall consist of one or more directors, one of whom shall
be the president of the executive committee. The executive
committee shall serve at the pleasure of the board of directors.
Section 4.03 Authority. The executive committee, to the extent
provided in such resolution, shall have and may exercise all of the
authority of the board of directors in the management of the
business and affairs of the Corporation, including authority over
the use of the corporate seal. However, the executive committee
shall not have the authority of the board of directors in reference
to (a) amending the Certificate of Incorporation; (b) approving a
plan of merger or consolidation; (c) recommending to the
shareholders the sale, lease or exchange of all or substantially of
the property and assets for the corporation other than in the usual
and regular course of its business; (d) recommending to the
shareholders a voluntary dissolution of the Corporation or a
revocation thereof; (e) amending, altering, or repealing these
Bylaws or adopting new Bylaws; (f) filling vacancies in or removing
members of the board of directors or of any committee appointed by
the board of directors; (g) electing or removing officers or members
of any such committee; (h) fixing the compensation of any member of
such committee; (I) altering or repealing any resolution of the
board of directors which by its terms provides that it shall not be
so amendable or repealable; (j) declaring a dividend; or (k)
authorizing the issuance of shares of the Corporation.
Section 4.04 Change in Number. The number of executive committee
members may be increased or decreased from time to time by
resolution adopted by a majority of the board of directors.
Section 4.05 Removal. Any member of the executive committee may be
removed by the board of directors by the affirmative vote of the
majority of the board of directors, whenever in its judgement the
best interests of the Corporation will be served thereby.
Section 4.06 Vacancies. A vacancy occurring in the executive
committee (by death, resignation, removal or otherwise) may be
filled by the board of directors in the manner providing for
original designation in Bylaw Section 4.01
Section 4.07 Resignation. A committee member may resign by giving
written notice to the board of directors, the president or the
secretary of the Corporation. The resignation shall take effect at
the time specified in it, or immediately if no time is specified.
Unless it specifies otherwise, a resignation takes effect without
being accepted.
Section 4.08 Meetings. Time, place and notice (if any) of
executive committee meetings shall be determined by the executive
committee.
Section 4.09 Quorum; Majority Vote. At meetings of the executive
committee, a majority of the number of members designated by the
board of directors shall constitute a quorum for the transaction of
business. The act of a majority of the members present at any
meeting at which a quorum is present shall be the act of the
executive committee, except as
<PAGE>32
otherwise specifically provided by statute, the Certificate of
Incorporation or these Bylaws. If a quorum is not present at a
meeting of the executive committee, the members present may adjourn
the meeting from time to time, without notice other than an
announcement at the meeting, until a quorum is present.
Section 4.10 Compensation. By resolution of the board of
directors, compensation may be paid to members of the executive
committee for their services. Also by resolution of the board of
directors, a fixed sum and expenses for actual attendance at each
regular or special meeting of the executive committee may also be
paid.
Section 4.11 Procedure. The executive committee shall keep regular
minutes of its proceedings and report the same to the board of
directors when required. The minutes of the proceedings of the
executive committee shall be placed in the minutes book of the
Corporation.
Section 4.12 Action Without Meeting. Any action required or
permitted to be taken at a meeting of the executive committee may be
taken without a meeting if a consent in writing, setting forth the
action so taken, is signed by all the members of the executive
committee. Such consent shall have the same force and effect as a
unanimous vote at a meeting. The signed consent, or a signed copy,
shall be placed in the minutes book.
Section 4.13 Telephone and Similar Meetings. Members of the
executive committee may participate in and hold a meeting by means
of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear
each other. Participation in such a meeting shall constitute
presence in person at the meeting, except where a person
participates in the meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is
not lawfully called or convened.
Section 4.14 Responsibility. The designation of an executive
committee and the delegation of authority to it shall not operate to
relieve the board of directors, or any member thereof, of any
responsibility imposed upon it, him or her by law.
ARTICLE V
NOTICE
Section 5.01 Method. Whenever by statute, the Certificate of
Incorporation, these Bylaws or otherwise, notice is required to be
given to a shareholder, director or committee member, and no
provision is made as to how the notice shall be given, it shall not
be construed to mean personal notice, but any such notice may be
given: (a) in writing, by United States mail, certified, return
receipt requested, postage prepaid, addressed to the shareholder,
director or committee member at the address appearing on the books
of the Corporation; or (b) in any other method permitted by law.
Any notice required or permitted to be given by mail shall be deemed
given at the time when the same is deposited in the United States
mails.
Section 5.02 Waiver. Whenever by statute, the Certificate of
Incorporation or these Bylaws, notice is required to be given to a
shareholder, committee member or director, a waiver thereof in
writing signed by the person or persons entitled to such notice,
whether before or after the time stated in such notice. Attendance
at a meeting shall constitute a waiver of notice of such meeting,
except where a person attends for the express purpose of objecting
to the transaction of any business on the ground that the meeting is
not lawfully called or convened.
ARTICLE VI
OFFICERS AND AGENTS
Section 6.01 Number, Qualification; Election; Term.
(A) The Corporation shall have:
(1) a president, a vice president, a secretary and a treasurer; and
(2) such other officers (including a chairman of the board of
directors and additional Vice Presidents) and assistant officers and
agents as the board of directors may deem necessary.
(B) No officer or agent need be a shareholder, a director or a
resident of the state of incorporation.
(C) Officers named in Bylaw Section 6.01 (A) (1) shall be elected by
the board of directors on the expiration of an officer's term or
whenever a vacancy exists. Officers and agents named in Bylaw
Section (A) (2) may be elected by the Board of Directors at any
meeting.
(D) Unless otherwise specified by the board of directors at the time
of election or appointment, or in an employment contract approved by
the board of directors, each officer's and agent's term shall end at
the first meeting of directors held after each annual meeting of the
<PAGE>33
shareholders. He shall serve until the end of his or her term, or
if earlier, until his or her death, resignation or removal.
(E) Any two or more offices may be held by the same person, except
that the president and the secretary shall not be the same person.
Section 6.02 Election and Term of Office. The officers of the
Corporation shall be elected annually by the board of directors at
the first meeting of the board of directors held after each annual
meeting of the shareholders. If the election officers shall not be
held at such meeting, such election shall be held as soon thereafter
as convenient. Each officer shall hold office until his or her
successor shall have been duly elected and shall have qualified or
until his or her death or until he or she shall resign or shall been
removed in the manner hereinafter provided.
Section 6.03 Resignation. Any officer may resign at any time by
delivering a written resignation either to the board of directors,
the president or the secretary of the Corporation. The resignation
shall take effect at the time specified therein or immediately if no
time is specified. Unless it specifies otherwise, a resignation
takes effect without being accepted.
Section 6.04 Removal. Any officer or agent elected or appointed by
the board of directors may be removed by the board of directors,
whenever, in its judgment, the best interest of the Corporation will
be served thereby, but such removal shall be without prejudice to
the contractual rights, if any, of the person so removed.
Section 6.05 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, creation of a new office, or
otherwise, may be filled by the board of directors for the unexpired
portion of the term.
Section 6.06 Salaries and Compensation. The salaries or other
compensation of the officers of the Corporation shall be fixed from
time to time by the board of directors, except that the board of
directors may delegate to nay person or group of persons the duty of
fixing salaries or other compensation by reason of the fact that he
or she is also a director of the Corporation.
Section 6.07 Surety Bonds. In the event the board of directors
shall so require, any officer or agent of the Corporation shall
execute to the Corporation a bond in such sums and with such surety
or sureties as the board of directors may direct, conditioned upon
the faithful performance of his or her duties to the Corporation,
including responsibility for negligence and for the accounting for
all property, monies, or securities of the Corporation which may
come into his or her hands.
Section 6.08 President
(A) The president shall be the chief executive and administrative
officer of the Corporation
(B) The president shall preside at all meetings of the shareholders,
and, in the absence of the chairman of the board of directors, at
meetings of the board of directors.
(C) The president shall exercise such duties as customarily pertain
to the office of the president and shall have general and active
supervision over the property, business and affairs of the
Corporation and over its several officer.
(D) The president may appoint officers, agents, or employees other
than those appointed by the board of directors.
(E) The president may sign, execute and deliver in the name of the
Corporation powers of attorney, contracts, bonds and other
obligations, and shall perform such other duties as may be
prescribed from time to time by the board of directors or by the
Bylaws.
Section 6.09 Vice President. The vice president(s) in the order of
their seniority, unless otherwise determined by the board of
directors, shall, in the absence or disability of the president,
perform the duties and have the authority and powers as the board of
directors may from time to time prescribe or as the president may
from time to time delegate.
Section 6.10 Secretary
(A) The secretary shall keep the minutes of all meetings of the
shareholders and of the board of directors and, to the extent
ordered by the board of directors or the president, the minutes of
all committees.
(B) The secretary shall cause notice to be given of meetings of
shareholders, of the board of directors, and of any committee
appointed by the board of directors.
(C) The secretary shall have custody of the corporate seal and
general charge of the records, documents and papers of the
Corporation not pertaining to the performance of the duties vested
in other officers, which shall at all reasonable times be open to
the examination of any director.
<PAGE>34
(D) secretary may sign or execute contracts with the president in
the name of the Corporation and affix the seal of the Corporation
thereto.
(E) The secretary shall perform such other duties as may be
prescribed from time to time by the board of directors or the
bylaws.
Section 6.11 Assistant Secretary. The assistant secretaries in the
order of their seniority, unless otherwise determined by the board
of directors, shall, in the absence or disability of the secretary,
perform the duties and have the authority and exercise the powers of
the secretary. They shall perform other duties and have such other
powers as the board of directors may from time to time prescribe or
as the president may from time to time delegate.
Section 6.12 Treasurer.
(A) The treasurer shall have general custody of the collection and
disbursements of funds of the Corporation.
(B) The treasurer shall endorse on behalf of the Corporation for
collection, checks, notes and other obligations, and shall deposit
the same to the credit of the Corporation in such bank or banks or
depositories as the board of directors may direct.
(C) The treasurer may sign, for the president and other persons as
may be designated for the purpose by the board of directors, all
bills of exchange or promissory notes of the Corporation
(D) The treasurer shall enter or cause to be entered regularly in
the books of the Corporation a full and accurate account of all
monies received and paid by him or her on account of the
Corporation; shall at all times exhibit his or her books and
accounts to any director of the corporation upon application at the
office of the Corporation during business hours; and, whenever
required by the board of directors or the president, shall render
statements of his or her accounts. The treasurer shall perform such
other duties as may be prescribed from time to time by the board of
directors or by the Bylaws.
(E) If the board of directors require, the treasurer shall give bond
for the faithful performance of his or her duties in such sum and
with or without such surety as shall be approved by the board of
directors.
Section 6.13 Assistant Treasurer. The assistant treasurers in the
order of their seniority, unless otherwise determined by the board
of directors, shall, in the absence or disability of the treasurer,
perform the duties and have the authority and exercise the powers of
the treasurer. They shall perform such other duties and have such
other powers as the board of directors may from time to time
prescribe or the president may from time to time delegate.
Section 6.14 Registered Agent. The Registered Agent shall serve as
the agent of the Corporation for purposes of receiving service of
process or any demand or notice authorized by law to be served on
the Corporation.
Section 6.15 Other Officers. Other officers shall perform such
duties and have such powers as may be assigned to them by the board
of directors or the president.
Section 6.16 Delegation of Duties. If any officer of the
Corporation is absent or unable to act for any other reason the
board of directors may deem sufficient, the board of directors may
delegate, for a period of time, some or all of the function, duties,
powers and responsibilities of any officer to any other officer,
agent or employee of the Corporation or other responsible person,
provided a majority of the whole board of directors concurs therein.
ARTICLE VII
CONTRACTS, LOANS, DEPOSITS AND CHECKS
Section 7.01 Contracts. The board of directors may authorize any
officer or officers, agent or agents, to enter into any contract or
execute and deliver any instrument in the name of an on behalf of
the Corporation and such authority may be general or confined to
specific instances.
Section 7.02 Loans. No loans or advances shall be contracted on
behalf of the Corporation; on negotiable paper or other evidence of
its obligation under any loan or advance shall be issued in its
name, and no property of the Corruption shall be mortgaged, pledged,
hypothecated, or transferred as security for the payment of any
loan, advance, indebtedness or liability of the Corporation unless
and except as authorized by the board of directors. Any such
authorization may be general or confined to specific instances.
Section 7.03 Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the
Corporation in such banks, rust companies or other depositories as
the board of directors may select, or as may be selected by an
officer of agent authorized to do so by the board of directors.
<PAGE>35
Section 7.04 checks and Drafts. All notes, drafts, acceptances,
checks, endorsements, and evidences of indebtedness of the
Corporation shall be signed by such officer or officers, or such
agent or agents of the Corporation and in such manner as the board
of directors from time to time may determine.
ARTICLE VIII
CAPITAL STOCK
Section 8.01 Certificates. Certificates representing shares of the
Corporation shall be issued, in such from as the board of directors
shall be issued, in such form as the board of directors shall
determine, to every shareholder for the fully paid shares owned by
him. These certificates shall be signed by the president and the
secretary. They shall be consecutively numbered or otherwise
identified; and the name and address of the person to whom they are
issued, with the number of shares and the date of issue, shall be
entered on the stock transfer books of the Corporation.
Section 8.02 Issuance. Shares (both treasury and authorized but
unissued) may be issued for such consideration (not less than par
value) and to such persons as the board of directors may determine
from time to time. Shares may not be issued until the full amount
of the consideration, fixed as provided by law, has been paid.
Section 8.03 Payment of Shares.
(A) The consideration for the issuance of shares shall consist of
money paid, labor done (including the service actually performed for
the Corporation) or property (tangible or intangible) actually
received. Neither promissory notes nor the promise of future
services shall constitute payment for shares.
(B) In the absence of fraud in the transaction, the judgment of
the board of directors as to the value of consideration received
shall be conclusive.
(C) When consideration, fixed as provided by law, ahs been paid, the
shares shall be deemed to have been issued and shall be considered
fully paid and nonassessable.
(D) The consideration received for shares shall be allocated by the
board of directors, in accordance with law, between stated capital
and capital surplus accounts.
Section 8.04 Subscriptions. Unless otherwise provided in the
subscription agreement, subscriptions for shares, whether made
before or after organization of the Corporation, shall be paid in
full at such time or in such installments and at such times as shall
be determined by the board of directors. Any call made by the board
of directors for payment of subscriptions shall be uniform as to all
shares of the same series. In case of default in the payment on any
installment or call when payment is due, the Corporation may proceed
to collect the amount due I the same manner as any dept due the
Corporation.
Section 8.05 Lien. For any indebtedness of a shareholder to the
Corporation, the Corporation shall have a first and prior lien on
all dividends or other distributions declared thereon.
Section 8.06 Lost, Stolen or Destroyed Certificates. The
Corporation shall issue a new certificate in place of any
certificate for shares previously issued if the registered owner of
the certificate: (a) makes proof in affidavit form that it has been
lost, destroyed or wrongfully taken; (b) requests the issuance of a
new certificate before the Corporation has notice that the
certificate ahs been acquired by a purchaser for value in good faith
and without notice of an adverse claim; (c) gives a bond in such
form, and with such surety or sureties, with fixed or open penalty,
as the Corporation may direct, to indemnify the Corporation (and its
transfer agent and registrar, if any) against any claim that may be
made on account of the alleged loss, destruction or theft of the
certificate; and (d) satisfies any other reasonable requirements
imposed by the Corporation. When a certificate has been lost,
apparently destroyed or wrongfully take, and the holder of record
fails to notify the Corporation within a reasonable time after he or
she has notice of it, and the Corporation registers a transfer of
the shares represented by the certificate before receiving such
notification, the holder of record is precluded from making any
claim against the Corporation for the transfer or for a new
certificate.
Section 8.07 Registration of Transfer. The Corporation shall
register the transfer of a certificate for shares presented to it
for transfer if: (a) the certificate is properly endorsed by the
registered owner or by his or her duly authorized attorney; (b) the
signature of such person has been notarized and reasonable assurance
is given that such endorsements are effective; (c) the corporation
has no notice of an adverse claim or has discharged any duty to
inquire into such a claim; (d) any applicable law relating to the
collection of taxes has been
<PAGE>36
complied with; and (e) there is an opinion of counsel satisfactory
to counsel of the Corporation that such transfer is made in
accordance with all federal and state securities regulations.
Section 8.08 Registered Owner. Prior to due presentment for
registration of transfer of a certificate for shares, the
Corporation may treat the registered owner as the person exclusively
entitled to vote, to receive notices and otherwise to exercise all
rights and powers of a shareholder.
Section 8.09 Transfer of Shares. Transfer of shares of the
Corporation shall be made only in the stock transfer books of the
Corporation by the holder of record thereof or by his or her legal
representative, who shall furnish proper evidence of authority to
transfer, or by his attorney therein authorized by power of attorney
duly executed and filed with the secretary of the Corporation and on
surrender for cancellation of the certificate for such shares. The
person in whose name the shares stand on the books of the
Corporation shall be deemed by the Corporation to be the owner
thereof for all purposes by the stock transfer books shall be in the
possession of the secretary or transfer agent or clerk of the
Corporation.
Section 8.10 Transfer Agent and Registrar. By resolution of the
board of directors, the Corporation may from time to time appoint a
transfer agent, and, if desired, a registrar, who will perform his
or her duties in accordance with the terms and conditions the board
of directors deems advisable; provided, however, that until and
unless the board of directors appoints some other person, firm or
Corporation as its transfer agent, the secretary of the Corporation
shall act as transfer agent without the necessity of any formal
action of the board of directors and he or she shall perform all of
the duties thereof.
ARTICLE LX
INDEMNIFICATION
Section 9.01 Indemnification.
(A) No officer or director shall be personally liable for any
obligations of the Corporation or for any duties or obligation of
the Corporation or for any duties or obligations arising out of any
actions or conduct of such officer or director or director performed
for or on behalf of the Corporation.
(B) The corporation shall and does hereby indemnify and hold
harmless each person and his or her heirs and administrators who
shall serve at any time hereafter as a director or officer of the
Corporation from and against any and all claims, judgments and
liabilities to which such person shall become subject by reason of
his or her having heretofore or hereafter been a director officer of
the Corporation or by reason of any action alleged to have
heretofore or hereafter been taken or admitted to have been taken by
him or her as such director or officer and shall reimburse each such
persons for all legal and other expenses reasonably incurred by him
or her in connection with any such claim or liability, including
power to defend such person from all suits or claims as provided for
under the laws of the state of New Jersey; provided, however, that
no such person shall be indemnified against, or be reimbursed for,
any expense incurred in connection with any claim or liability
arising out of his or her negligence or willful misconduct. The
rights accruing to any person under the foregoing provisions of this
section shall not exclude any other right to which he or she may
lawfully be entitled, nor shall anything herein contained restrict
the right of the Corporation to indemnify or reimburse such person
in any proper case, even though not specifically herein provided.
The Corporation, its director, officers, employees and agent shall
be fully protected in taking any action or making any payment in
reliance upon the advice of counsel.
Section 9.02 Other Indemnification. The indemnification herein
provided shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any Bylaw,
agreement, vote of shareholders, or disinterested directors or
otherwise, both as to action in his or her official capacity and as
to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer,
employee or agent, and shall inure to the benefit of the heirs,
executors and administrators of such person.
Section 9.03 Issuance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation or is or who 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 any liability asserted against him or her and
incurred by him or her in any such capacity, or arising out of his
or
<PAGE>37
her status as such, whether or not the Corporation would have the
power to indemnify him or her against liability under the provisions
of this section or the laws of the State of New Jersey.
Section 9.04 Settlement by Corporation. The right of any person to
be indemnified shall be subject always to the right of the
corporation by its board of directors, in lieu of such indemnity, to
settle any claim, action suit or proceeding at the expense of the
Corporation by the payment of the amount of such settlement and the
cost and expense incurred in connection therewith.
ARTICLE X
GENERAL PROVISIONS
Section 10.01 Dividends and Reserves.
(A) Subject to statue, the Certificate of Incorporation and these
Bylaws, dividends may be declared by the board of directors at any
regular or special meeting and may be paid in cash, in property, or
in shares of the Corporation. The declaration and payment shall be
at the discretion of the board of directors.
(B) By resolution, the board of directors may create such reserve
or reserves out of the earned surplus of the Corporation as the
directors from time to time, in their discretion, think proper to
provide for contingencies, or to equalize dividends, or to repair or
maintain any property of the Corporation, or for any other purpose
they think beneficial to the Corporation. The directors may modify
or abolish any such reserve in the manner in which it was created.
Section 10.02 Books and Records. The Corporation shall keep
correct and complete books and records of account, shall keep
minutes of the proceedings of its shareholders and board of
directors, and shall keep at its registered office or principal
place of business, or at the office of its transfer agent or
registrar, a record of its shareholders, giving the names and
addresses of all shareholders and the number and class of shares
held by each.
Section 10.03 Annual Statement. The board of directors shall mail
to each shareholder of record, at least ten days before each annual
meeting a full and clear statement of the business and condition of
the Corporation, including a reasonably detailed balance sheet,
income statement, surplus statement, and statement of changes in
financial position, for the last fiscal year and for the prior
fiscal year, all prepared in conformity with generally accepted
accounting principals applied on a consistent basis.
Section 10.04 Checks and Notes. Checks, demands for money and
notes of the Corporation shall be signed by officer(s) or other
person(s) designated from time to time by the board of directors.
Section 10.05 Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the board of directors.
Section 10.06 Seal. The corporate seal of the Corporation (of
which there may be one or more exemplars) shall contain the name of
the corporation and the name of the state of incorporation. The
seal may be use by impressing it or reproducing a facsimile of it,
or otherwise.
Section 10.07 Amendment of Bylaws.
(A) These Bylaws may be altered, amended or repealed at any meeting
of the board of directors at which a quorum is present, by the
affirmative vote of a majority of the directors present at such
meeting, provided notice of the proposed alteration, amendment, or
repeal is contained in the notice of the meeting.
(B) These Bylaws may also be altered, amended or repealed at any
meeting of the shareholders at which a quorum is present or
represented, by the affirmative vote of the holders of a majority of
the shares present or represented at the meeting and entitled to
vote thereat, provided notice of the proposed alteration, amendment
or repeal is contained in the notice of the meeting.
Section 10.08 Construction. Whenever the context so requires, the
masculine shall include the feminine and neuter, and the singular
shall include the plural, and conversely. If any portion of these
bylaws shall be invalid or inoperative, then, so far as is
reasonable and possible: (a) the remainder of these Bylaws shall be
considered valid and operative and (b) effect shall be given to the
intent manifested by the portion held invalid or inoperative.
Section 10.09 Table of Contents; Headings. The table of contents
and headings are for organization, convenience and clarity. In
interpreting these bylaws, they shall be subordinated in importance
to the other written material.
<PAGE>38
Section 10.10 Relation to Certificate of Incorporation. These
bylaws are subject to and governed by the Certificate of
Incorporation.
Adopted by the directors on this __ day of August, 1995.
Carmine Catizone, Director
Daniel T. Generelle, Director
SAMPLE CERTIFICATE
NUMBER SHARES
CREATIVE BEAUTY SUPPLY, INC
INCORPORATED UNDER THE LAWS OF THE STATE OF NEW JERSEY
SEE REVERSE FOR CERTAIN DEFINITIONS
COMMON STOCK CUSIP 225269 10 9
THIS CERTIFIES THAT:
Is owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF $.001 PAR
VALUE EACH OF
CREATIVE BEAUTY SUPPLY, INC.
Transferable on the books of the Corporation in person or by
attorney upon surrender of this certificate duly endorsed or
assigned. This certificate and the shares represented hereby are
subject to the laws of the State of New Jersey, and to the
Certificate of Incorporation and Bylaws of the Corporation, as now
or hereafter amended. This certificate is not valid until
countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
DATED:
Countersigned:
Continental Stock Transfer & Trust Company
Jersey City, NY
Transfer Agent
David Generelli
Secretary/Treasurer
Carmine Catizone
President
Creative Beauty Supply, Inc.
Corporate Seal 1995 New Jersey
<PAGE>40
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM- as tenants in common
TEN ENT- as tenants by the entireties
JT TEN- as joint tenants with right of survivorship and not as tenants
in common
UNIF GIFT MIN ACT- Custodian under Uniform Gifts to Minors Act. (Cust)
(Minor) (State)
Additional abbreviations may also be used though not in the above list.
For Value Receive, ________ hereby sell, assign and transfer unto
[PLEASE INSERT SOCIAL SECURTITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE]
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE OF
ASSIGNEE
Shares of the stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint -__________________________________
Attorney to transfer the said stock on the books of the within named
Corporation with full power of substitution in the premises.
Dated:
NOTICE: The signature to this assignment must correspond with the name
as written upon the face of the certificate in every particular without
alteration or enlargement of any change whatsoever.
THE SIGNATURE TO THE ASSIGNMENT MUST CORRESPONT TO THE NAME AS WRITTEN
UPON THE FACE OF THIS CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF A
NATIONAL OR REGIONAL OR OTHER RECOGNIZED STOCK EXCHANGE INCONFORMANCE
WITH A SIGNATURE GUARANTEE MEDALLION PROGRAM.
STOCK MARKET INFORMATION EXCHANGE
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 324,683
<SECURITIES> 0
<RECEIVABLES> 3,263
<ALLOWANCES> 0
<INVENTORY> 72,904
<CURRENT-ASSETS> 403,281
<PP&E> 4,216
<DEPRECIATION> 2,277
<TOTAL-ASSETS> 407,694
<CURRENT-LIABILITIES> 128,696
<BONDS> 0
<COMMON> 1,865
0
0
<OTHER-SE> 277,133
<TOTAL-LIABILITY-AND-EQUITY> 407,694
<SALES> 262,140
<TOTAL-REVENUES> 262,140
<CGS> 212,266
<TOTAL-COSTS> 212,266
<OTHER-EXPENSES> 119,520
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (52,453)
<INCOME-TAX> 0
<INCOME-CONTINUING> (52,453)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (52,453)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
