As filed with the Securities and Exchange Commission on October 18, 1996
Registration No. 333-
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
DURWOOD, INC.
(Name of small business issuer in its charter)
Delaware (State or other jurisdiction of incorporation or organization)
5996 (Primary Standard Industrial Classification Code Number)
87-0561426 (I.R.S. Employer Identification No.)
4085 West 4715 South, Kearns, Utah 84118 (801) 967-0777
(Address & telephone number of principal executive offices
& place of business)
Darren Heiselt, 4085 West 4715 South, Kearns, Utah 84118 (801) 967-0777
(Name, address & telephone number of agent for service)
Copies to:
Thomas G. Kimble & Van L. Butler
THOMAS G. KIMBLE & ASSOCIATES (801) 531-0066
311 South State Street, Suite 440, Salt Lake City, Utah 84111
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this registration statement.
______________________________________________________________________________
CALCULATION OF REGISTRATION FEE
Title of Each Class|Amount to be|Proposed Maximum |Proposed Maximum|Amount
of Securities to be|Registered |Offering Price/Unit|Aggregate Price |of fee
Registered
Common Stock 200,000 $ .50 $ 100,000 $100.00
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The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section
8(a), may determine.
<PAGE>
<PAGE>
200,000 Shares
DURWOOD, INC.
Common Stock
Durwood, Inc. (the "Company"), is offering, on a "best efforts, minimum-
maximum" basis, up to 200,000 shares of its $.001 par value common stock, (the
"Shares") to the public at a price of $.50 per Share.
Prior to this offering, there has been no public market for the Shares.
The Shares will not be listed on an exchange or quoted on the NASDAQ system
upon completion of this offering and there can be no assurance that a market
will develop or, if a market should develop, that it will continue. The
initial public offering price has been arbitrarily determined by the Company
and bears no relationship to assets, shareholders' equity or any other
recognized criteria of value.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SUBSTANTIAL AND IMMEDIATE
DILUTION AND SHOULD NOT BE PURCHASED BY PERSONS WHO CANNOT AFFORD TO RISK THE
LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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Price to Commissions & Proceeds to
Public(1) Discounts(1)(2) Company(2)(3)
Per Share $.50 $.07 $.43
Total Minimum $ 50,000 $ 7,000 $ 43,000
Total Maximum $ 100,000 $ 14,000 $ 86,000
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(1) The offering price is payable in cash upon subscription. The offering
will be managed by the Company and the Shares will be offered and sold
by the Company without any discounts or other commissions. Licensed
NASD Broker-dealers may also participate and receive a commission of up
to 14% of the offering price on sales made by them. See "Plan of
Distribution."
(2) Proceeds to the Company are shown assuming payment of commissions to
licensed NASD broker-dealers with respect to all shares sold, but before
deducting other offering expenses payable by the Company estimated at
$12,000, for legal and accounting fees and printing costs.
(3) Proceeds will be deposited no later than noon of the next business day
after receipt into an escrow account with Brighton Bank, 311 South State
Street, Salt Lake City, Utah 84111, pending receipt of subscriptions for
at least $50,000. If subscriptions for a minimum of 100,000 Shares have
not been received within 120 days from the date hereof (unless extended
by the Company for up to 30 additional days), all proceeds will be
promptly refunded to subscribers without interest thereon or deduction
therefrom. Subscribers will have no right to return or use of their
funds during the offering period, which may last up to 150 days.
The Shares are being offered by the Company subject to prior sale,
receipt and acceptance by the Company, approval of certain matters by counsel,
and certain other conditions. The Company reserves the right to withdraw or
cancel such offer and reject any order, in whole or in part.
The date of this Prospectus is , 1996
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the United States Securities and Exchange
Commission (the "Commission") a Registration Statement on Form SB-2, under the
Securities Act of 1933, as amended (the "Securities Act), with respect to the
securities offered hereby. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all of the information contained
in the Registration Statement. For further information regarding both the
Company and the Securities offered hereby, reference is made to the
Registration Statement, including all exhibits and schedules thereto, which
may be inspected without charge at the public reference facilities of the
Commission's Washington, D.C. office, 450 Fifth Street, N.W., Washington, D.C.
20549. Copies may be obtained from the Washington, D.C. office upon request
and payment of the prescribed fee.
As of the date of this Prospectus, the Company became subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(The "Exchange Act") and, in accordance therewith, will file reports and other
information with the Commission. Reports and other information filed by the
Company with the Commission pursuant to the informational requirements of the
Exchange Act will be available for inspection and copying at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following regional offices of
the Commission: New York Regional Office, 75 Park Place, New York, New York
10007; Chicago Regional Office, 500 West Madison Street, Chicago, Illinois
60661. Copies of such material may be obtained from the public reference
section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates.
Copies of the Company's Annual, Quarterly and other Reports which will
be filed by the Company with the Commission commencing with the Quarterly
Report for the first quarter ended after the date of this Prospectus (due 45
days after the end of such quarter) will also be available upon request,
without charge, by writing Durwood, Inc., 4085 West 4715 South, Kearns, Utah
84118.
UNTIL [90 DAYS AFTER THE DATE OF THIS PROSPECTUS], ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY STATE SECURITIES
COMMISSION OR OTHER STATE REGULATORY AUTHORITY, AND NO SUCH REGULATORY
AUTHORITY HAS PASSED UPON THE TERMS OF THIS OFFERING OR APPROVED THE MERITS
THEREOF. INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE
TERMS OF THIS OFFERING IN EVALUATING THE MERITS AND RISKS OF THE OFFERING AND
MAKING AN INVESTMENT DECISION.
THIS PROSPECTUS SHOULD BE READ IN ITS ENTIRETY BY ANY PROSPECTIVE INVESTOR
PRIOR TO HIS OR HER INVESTMENT.
PAGE
<PAGE>
PROSPECTUS SUMMARY
This summary is qualified in its entirety by the more detailed
information appearing elsewhere in the Prospectus.
The Company
Durwood, Inc. (the "Company") was recently incorporated under the laws
of the State of Delaware on July 12, 1996. The Company has not commenced
active business operations and is considered a development stage company.
The proposed business and purpose of the Company's formation is to engage in
the business of making and selling custom pool cues as collectors items as
well as for playing pool and billiards; and to engage in and perform any and
all acts and activities customary in connection therewith, or incident
thereto. The Company intends to use the proceeds of this offering, if
successful, to purchase equipment for manufacturing custom pool cues and also
wood and other raw materials for manufacture into finished goods inventory,
and for initial working capital to begin active business operations upon
completion of this offering.
The Company's mailing address and telephone number of its principal
executive offices are 4085 West 4715 South, Kearns, Utah 84118. (801) 967-
0777.
The Offering
Securities offered
200,000 Shares of Common Stock, $.001 par value ("Common Stock") of the
Company. See "Description of Securities".
Offering Price
$.50 Per Share.
Plan of Distribution
The offering will be managed by the Company and the Shares will be offered and
sold by the officers of the Company, without any discounts or other
commissions. Licensed NASD Broker-dealers may also participate and receive
commissions of up to 14% of the offering price on sales made by them.
Offering proceeds will be escrowed pending completion or termination of the
offering. The offering will terminate 120 days from the date hereof (or 150
days if extended by the Company for an additional 30 days), and funds held in
escrow will be promptly returned to subscribers, without interest thereon or
deduction therefrom, unless the offering is completed on or before that date
upon receipt of subscriptions for at least the minimum offering amount
($50,000). See "Plan of Distribution."
Escrow Agent
Brighton Bank, 311 South State Street, Salt Lake City, Utah 84111 will serve
as escrow agent for receipt of the proceeds from this offering.
Transfer Agent
American Registrar & Transfer Co., 10 Exchange Place, Suite 750, P.O Box 1798,
Salt Lake City, Utah 84110, (801) 363-9065, has agreed to serve as transfer
agent and registrar for the Company's outstanding securities upon completion
of the offering.
Securities Outstanding
The Company is authorized to issue up to 50,000,000 shares of Common Stock and
presently has 1,000,000 shares of Common Stock issued and outstanding. Upon
completion of this offering, if all Shares offered herein are sold, 1,200,000
shares of Common Stock will then be issued and outstanding; 1,100,000 Shares
will be issued and outstanding if only the minimum number of Shares offered
herein are sold. In addition, the Company is authorized to issue up to
500,000 shares of Preferred Stock in one or more series with such rights and
preferences as the Board of Directors may designate. The Board of Directors
has not designated any such series and no preferred shares are presently
issued and outstanding.
Risk Factors
The Company is a start up company with no operating history; consequently, an
investment in the Company is highly speculative. Investors will suffer
substantial dilution in the book value per share of the Common Stock compared
to the purchase price. In seeking to implement its proposed business, the
Company could incur substantial losses during the development stage, and
require additional funding for which it has no commitments. Management has
other interests which may conflict with the interests of the Company. Until
such time, if ever, that the Company generates sufficient revenue to pay
management a salary, management will not be employed full time and will only
devote a minimal amount of time to the affairs of the Company. There is no
assurance that the proposed business of the Company will be successful, nor
any assurance the Company could find other business ventures in the event the
proposed business fails. There are presently no plans, commitments or
arrangement with respect to any other potential business venture. No person
should invest in the Company who cannot afford to risk loss of the entire
investment. See "Risk Factors."
PAGE
<PAGE>
RISK FACTORS
The securities being offered hereby involve a high degree of risk.
Prospective investors should carefully consider the following risk factors
before investing in the Company.
Risks Inherent in a New Start Up Company
No Operating History. The Company was only recently incorporated, has
no significant assets, no current business operations nor any history of
operations and is considered to be a development stage enterprise. There is
absolutely no assurance that the Company will be able, upon completion of this
offering, to successfully implement its proposed business or that it will ever
operate profitably. In the event the proposed business is unsuccessful, there
is no assurance the Company could successfully become involved in any other
business venture. The Company presently has no plans, commitments or
arrangements with respect to any other potential business venture. See
"Management's Plan of Operation," "Business" and financial statements.
Limited Capital/Need for Additional Capital. The Company presently has
no significant operating capital and is totally dependent upon receipt of the
proceeds of this offering to provide the minimum capital necessary to commence
its proposed business. Upon completion of the offering, the amount of capital
available to the Company will still be extremely limited, especially if only
the minimum amount of the offering is raised. The Company has no commitments
for additional cash funding beyond the proceeds expected to be received from
this offering. In the event that the proceeds from this offering are not
sufficient, the Company may need to seek additional financing from commercial
lenders or other sources, for which it presently has no commitments or
arrangements. See "Management's Plan of Operation," "Business" and financial
statements.
Dependence Upon Sole Officer/Director/Business and Time Conflicts. The
Company will be totally dependent in the conduct of its proposed business upon
the knowledge, skills and experience of the President of the Company; Darren
Heiselt. As compared to many other public companies, the Company does not
have a depth of managerial and technical personnel. Accordingly, there is a
greater likelihood that loss of the services of this person would have a
material adverse impact upon the Company. The Company has no employment
contract with or key man life insurance on the President. Furthermore, the
President of the Company will not be employed full time, at least initially,
and is involved with other businesses and has other interests which could give
rise to conflicts of interest with respect to the business of and amount of
time devoted to the Company. There is no assurance such conflicts will be
resolved favorably to the Company. See "Certain Transactions - Conflicts of
Interest".
Other Conflicts of Interest. The Company will be dependent initially
upon the availability of certain facilities provided by a shareholder and
certain equipment provided by its President for the ability to conduct its
proposed business. There is no assurance that such facilities and equipment
will continue to be available for any specified length of time. The
arrangements under which these facilities and equipment were made available to
the Company were determined by the President and shareholder and were not the
result of arms length negotiation. Management intends that these and any
other transactions with affiliates be entered into on a fair and reasonable
basis to the Company on terms no less favorable than could be obtained from
unaffiliated parties; however, due to the non arms length nature of such
transactions, there is no assurance of this. See "Certain Transactions."
No Dividends. The Company does not currently intend to pay cash
dividends on its Common Stock and does not anticipate paying such dividends at
any time in the foreseeable future. At present, the Company will follow a
policy of retaining all of its earnings, if any, to finance development and
expansion of its business. See "Dividend Policy."
Limited Liability of Management. The Company has adopted provisions to
its Articles of Incorporation and Bylaws which limit the liability of Officers
and Directors and provides for indemnification by the Company of Officers and
Directors to the full extent permitted by Delaware law, which provides that
officers and directors shall have no personal liability to a Company or its
stockholders for monetary damages for breach of fiduciary duties as directors,
except for a breach of their duty of loyalty, acts or omissions not in good
faith or which involve intentional misconduct or knowing violation of law,
unlawful payment of dividends or unlawful stock purchases or redemptions, or
any transaction from which a director derives an improper personal benefit.
Such provisions substantially limit the shareholders' ability to hold officers
and directors liable for breaches of fiduciary duty, and may require the
Company to indemnify its officers and directors. See "Certain Transactions -
Conflicts of Interest".
Risks Related to the Nature of the Proposed Business
Limited Experience of Management and Lack of Established Reputation.
Although the President of the Company has developed some limited knowledge,
skills and experience as a cuemaker, neither he nor the Company are well known
or have established any significant reputation or prominence, and there is no
assurance the Company will be able to produce cues of sufficient quality to be
sought after custom pool cues in demand as collectors items or for playing.
See "Business" and "Management."
Competitive, Specialized Market/Limited Supply & Demand. The Company
will operate in a highly competitive environment. The market for handmade,
custom pool cues of collectible quality is very specialized and limited and is
composed of a very small number of private collectors, players and other
buyers. See "Business - Competition and Markets".
Risks of Loss from Damage, Theft, Etc. The cues most highly sought
after as collectors' items can become extremely valuable, which creates a
significant need for security precautions to reduce the risk of theft or other
loss. The Company will be dependent upon its President to maintain security,
insurance and provide handling for its cues, but there is no assurance any
measures taken will be adequate to prevent loss. See "Business."
Risks Related to the Offering
Lack of Underwriter Participation. Because the Company has not engaged
the services of an Underwriter with respect to this offering, the independent
due diligence review of the Company, its affairs and financial condition,
which would ordinarily be performed by an underwriter and its legal counsel,
has not been performed with respect to the Company and investors will not have
the benefit of an underwriter's independent due diligence review.
Dilution. Investors in this offering will suffer substantial dilution
in the purchase price of the Shares compared to the net tangible book value
per share immediately after the offering. See "Dilution."
Best Efforts Offering/No Firm Commitment. The Shares are offered by the
Company on a "best efforts, minimum-maximum basis"; there is no underwriter
and no firm commitment from anyone to purchase all or any of the Shares
offered. No assurance can be given that all or any of the Shares will be
sold. However, escrow provisions have been made to insure that if
subscriptions for a minimum of 100,000 Shares are not received within the
offering period, plus any extensions, all funds received will be promptly
refunded within 5 days to subscribers, without interest thereon or deduction
therefrom. During the offering period, which could last up to 150 days,
subscribers will receive no interest on their funds nor have any use or right
to return of the funds. See "Plan of Distribution".
Benefits to Present Stockholders/Disproportionate Risks. The 1,000,000
shares of the Company's presently outstanding Common Stock are owned by the
President and founders of the Company, for which they paid $10,000 cash. If
all Shares offered are sold, immediately after completion of the offering,
present stockholders will own 80% of the then outstanding Common Stock, and
investors in this offering will own the other 20%, for which they will have
paid $100,000 cash. If only the minimum number of Shares offered is sold,
present stockholders will own 89% of the then outstanding Common Stock, and
investors in this offering will own the other 11%, for which they will have
paid $50,000 cash. Thus, investors in this offering will contribute to
capital of the Company disproportionately more than the percentage of
ownership they receive. Present stockholders will benefit from a greater
share of the Company if successful, while investors in this offering risk a
greater loss of cash invested if the Company is not successful. See
"Comparative Data."
Continuation of Management Control. Upon completion of this offering,
present shareholders, which includes current management of the Company, will
own a majority of the total outstanding securities and will have absolute
control of the Company. Investors in this offering as a group will have no
ability to remove, control or direct such management. Only one third of the
outstanding shares is required to constitute a quorum at any stockholders'
meeting, and action may be taken by a majority of the voting power present at
a meeting, or may be taken without a meeting by written consent of
stockholders holding a majority of the total voting power. See "Principal
Stockholders" and "Description of Securities."
Arbitrary Determination of Offering Price. The public offering price of
the Shares of Common Stock offered hereby was arbitrarily determined by
management of the Company and was set at a level substantially in excess of
the price recently paid by such management for securities of the same class.
The price bears no relationship to the Company's assets, book value, net worth
or other economic or recognized criteria of value. In no event should the
public offering price be regarded as an indicator of any future market price
of the Company's securities. See Cover Page, "Comparative Data" and "Certain
Transactions".
No Assurance of a Liquid Public Market for Securities. There has been
no public market for the Shares prior to the offering made hereby. The Shares
will not be listed on an exchange or quoted on the NASDAQ system upon
completion of this offering and there can be no assurance any market will
develop for the securities or that if a market does develop, that it will
continue. There can also be no assurance as to the depth or liquidity of any
market for Common Stock or the prices at which holders may be able to sell the
securities. As a result, an investment in the Shares may be totally illiquid
and investors may not be able to liquidate their investment readily or at all
when they need or desire to sell. See "Plan of Distribution."
Volatility of Stock Prices. In the event a public market does develop
for the Shares, market prices will be influenced by many factors, and will be
subject to significant fluctuation in response to variations in operating
results of the Company and other factors such as investor perceptions of the
Company, supply and demand, interest rates, general economic conditions and
those specific to the industry, international political conditions,
developments with regard to the Company's activities, future financial
condition and management.
Shares Eligible for Future Sale. All of the shares of Common Stock
presently outstanding are restricted securities which are not presently, but
may in the future be sold, pursuant to Rule 144, into any public market that
may develop for the Common Stock. Future sales by current shareholders could
depress the market prices of the Common Stock in any such market. See "Shares
Eligible for Future Sale".
Potential Issuance of Additional Common and Preferred Stock. The
Company is authorized to issue up to 50,000,000 shares of Common Stock, of
which only 1,200,000 shares at most will be issued and outstanding upon
completion of this offering. To the extent of such authorization, the Board
of Directors of the Company will have the ability, without seeking shareholder
approval, to issue additional shares of Common Stock in the future for such
consideration as the Board of Directors may consider sufficient. The issuance
of additional Common Stock in the future will reduce the proportionate
ownership and voting power of the Common Stock offered hereby. The Company is
also authorized to issue up to 500,000 shares of preferred stock, the rights
and preferences of which may be designated in series by the Board of
Directors. To the extent of such authorization, such designations may be made
without shareholder approval. The Board of Directors has not designated any
series or issued any shares of preferred stock. The designation and issuance
of series of preferred stock in the future would create additional securities
which would have dividend and liquidation preferences over the Common Stock
offered hereby. See "Description of Securities."
Applicability of Penny Stock Risk Disclosure Requirements. The
securities of the Company will be considered a "penny stock" as that term is
defined in rules promulgated under the Exchange Act. Under these rules,
broker-dealers participating in transactions in penny stocks must first
deliver a Schedule 15G risk disclosure document which describes the risks
associated with penny stocks, the broker-dealer's duties, the customer's
rights and remedies, and certain market and other information, and make a
suitability determination approving the customer for penny stock transactions
based on the customer's financial situation, investment experience and
objectives. Broker-dealers must also disclose these restrictions in writing
to the customer and obtain specific written consent of the customer, and
provide monthly account statements to the customer. With all these
restrictions, the likely effect of designation as a penny stock will be to
decrease the willingness of broker-dealers to make a market for the stock, to
decrease the liquidity of the stock and increase the transaction cost of sales
and purchases of penny stocks compared to other securities.
DILUTION
Dilution is the difference between the public offering price of $.50 per
share for the Common Stock offered herein, and the net tangible book value per
share of the Common Stock immediately after its purchase. The Company's net
tangible book value per share is calculated by subtracting the Company's total
liabilities from its total assets less any intangible assets, and then
dividing by the number of shares then outstanding.
The net tangible book value of the Company prior to the offering, based
on the July 31, 1996 financial statements, was $10,000 or $.01 per common
share. Prior to selling any shares in this offering, the Company has
1,000,000 shares of Common Stock outstanding.
If all Shares offered herein are sold, the Company will have 1,200,000
Shares outstanding upon completion of the offering. The estimated post
offering pro forma net tangible book value of the Company, which gives effect
to receipt of the estimated net proceeds from the offering and issuance of the
additional Shares of Common Stock in the offering, but does not take into
consideration any other changes in the net tangible book value of the Company
after July 31, 1996, will be $84,000 or approximately $.07 per share. This
would result in dilution to investors in this offering of $.43 per share, or
86% of the public offering price of $.50 per share. Net tangible book value
per share would increase to the benefit of present stockholders from $.01
prior to the offering to $.07 after the offering, or an increase of $.06 per
share attributable to the purchase of the Shares by investors in this
offering.
If only the minimum number of Shares is sold, the Company will have
1,100,000 Shares outstanding upon completion of the offering. The post
offering pro forma net tangible book value of the Company, would be $41,000 or
approximately $.037 per share. This would result in dilution to investors in
this offering of $.463 per share, or 92.6% from the public offering price of
$.50 per share. Net tangible book value per share would increase to the
benefit of present stockholders from $.01 prior to the offering to $.037 after
the offering, or an increase of $.027 per share attributable to the purchase
of the Shares by investors in this offering.
The following table sets forth the estimated net tangible book value
("NTBV") per share after the offering and the dilution to persons purchasing
Shares based on the foregoing minimum and maximum offering assumptions.
Minimum Maximum
Public offering price/share $.50 $.50
NTBV/share prior to offering $.01 $.01
Increase attributable to new investors .06 .027
----- -----
Post offering pro forma NTBV/share .07 .037
---- ----
Dilution $.43 $.463
COMPARATIVE DATA
The following charts illustrate the pro forma proportionate ownership in
the Company, upon completion of the offering under alternative minimum and
maximum offering assumptions, of present stockholders and of investors in this
offering, compared to the relative amounts paid and contributed to capital of
the Company by present stockholders and by investors in this offering,
assuming no changes in net tangible book value other than those resulting from
the offering.
MINIMUM OFFERING Shares Owned Percent Cash Paid Percent Per share
Present Shareholders 1,000,000 91% $ 10,000 17% $0.01
New Investors 100,000 9% $ 50,000 83% $0.50
MAXIMUM OFFERING Shares Owned Percent Cash Paid Percent Per share
Present Shareholders 1,000,000 83% $ 10,000 9% $0.01
New Investors 200,000 17% $100,000 91% $0.50
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 200,000 Shares
offered hereby at a public offering price of $.50 per Share will vary
depending upon the total number of Shares sold and the amount of any
commissions paid to licensed NASD broker-dealers in connection with such
sales. (Licensed NASD Broker-dealers may participate and receive commissions
of up to 14% of the offering price on sales made by them, or the Company may
pay finders fees if no commission is paid and the payment of such fees is
permissible under applicable law.) Regardless of the amount of any
commissions paid, the Company also expects to incur other offering expenses
estimated at $12,000 for legal, accounting, printing and other costs in
connection with the offering. The following table sets forth gross and net
proceeds, alternatively under the minimum and maximum offering, assuming that
commissions are paid with respect to all sales, and management's present
estimate of the allocation and prioritization of net proceeds expected to be
received from this offering. Actual receipts and expenditures may vary from
these estimates. Pending use, the Company will invest the net proceeds in
investment-grade, short-term, interest bearing securities.
Minimum Offering Maximum Offering
Gross Proceeds $ 50,000 $100,000
Commissions (1) 7,000 14,000
Other Offering Expenses (2) 12,000 12,000
NET OFFERING PROCEEDS $ 31,000 $ 74,000
Acquisition of Equipment and Inventory (3) $ 9,000 $ 12,000
Marketing and Travel (4) 10,000 15,000
Initial Operating Expenses & Working Capital (5) 12,000 47,000
TOTAL $ 31,000 $ 74,000
(1) The foregoing amount assumes payment of sales commissions with respect
to all Shares sold. The Company will pay a commission of up to 14% of
the offering price to any licensed NASD Broker-dealers who participate
in the offering, but only with respect to sales made by them. To the
extent that sales are made by the officers of the Company without the
payment of any sales commission or discount, the amount allocated above
for the payment of commissions will be reallocated and used as
additional working capital.
(2) Regardless of the number of Shares sold in the offering and the amount
of any commissions paid, the Company will incur other offering expenses
for legal and accounting fees and costs, printing and transfer agent
costs, filing fees, etc.
(3) This is the approximate amount of net proceeds of the offering which
management estimates will be used to acquire various items of equipment
necessary to manufacture the pool cues, including inlay machines, cue
smiths, cutting bits, spindle bores and chucks, drill presses, belt
sander, scroll saw, work benches, etc., as well as make initial
purchases of a supply of wood and other raw materials with which to
manufacture the cues.
(4) This represents the approximate amount management estimates it will
expend during the initial start up period (approximately one year) for
advertising in such magazines as Billard News and Billiard Digest and
for traveling to shows, conventions and other gatherings of pool players
and pool cue makers and collectors where the Company's cues can be
displayed or advertised to become more well known.
(5) The Company intends to use the remaining portion of the net proceeds to
cover rent and other operating expenses and provide working capital
during the initial start up of operations.
MANAGEMENT'S PLAN OF OPERATION
The following discussion should be read in conjunction with the
Company's consolidated financial statements and the notes associated with them
contained elsewhere in this prospectus.
Plan of Operations.
The Company was only recently incorporated on July 12, 1996. The
Company has not commenced planned principal operations and is considered a
development stage company. The Company has no significant assets, no active
business operations nor any results therefrom. To date, activities have been
limited to organizational matters and the preparation and filing of the
registration statement of which this prospectus is a part.
Management's plan of operation for the next twelve months is first to
raise funds from this offering. If the offering is successful, the Company
will use the proceeds to purchase various items of equipment needed to turn
out and finish the custom pool cues, as well as initial supplies of wood and
other raw materials from which to make the cues. The remaining portion of the
proceeds will be used to pay rent and other operating expenses of the Company
and otherwise provide initial working capital for the operation of the
Company's proposed business. The Company is totally dependent upon the
successful completion of this offering and receipt of the proceeds therefrom,
of which there is no assurance, for the ability to commence its intended
business operations. The Company was formed to engage in the business of
manufacturing or otherwise acquiring custom pool cues of collectible quality.
The Company intends to market such pool cues to private collectors and the
general public. There is absolutely no assurance that the proposed business
will succeed and that the Company will be able, with the proceeds of this
offering, to make and acquire custom pool cues of the type that will be
considered collectible or that pool and billiards players desire to acquire.
In the event the proposed business is unsuccessful, there is no assurance the
Company could successfully become involved in any other business venture. The
Company presently has no plans, commitments or arrangements with respect to
any other proposed business venture.
At this time, no assurances can be given with respect to the timing of
commencement of operations or the length of time after commencement that it
will be necessary to fund operations from proceeds of this offering.
Management intends to commence operations as soon as possible after the
offering is completed and the proceeds therefrom received by the Company.
Management believes that the proceeds of this offering will be
sufficient to cover the operating expenses of the Company for six months to a
year after commencement of operations, during which time managment believes
the company can begin generating sufficient revenues from sales and operations
to thereafter cover ongoing expenses. However, there is absolutely no
assurance of this, and if the Company is unable to generate sufficient
revenues from operations to cover expenses within such time frame, it will
have to seek additional debt or equity financing for which it has no
commitments.
BUSINESS
History of the Company
Durwood, Inc. (the "Company") was recently incorporated under the laws
of the State of Delaware on July 12, 1996. The Company has not commenced
business operations and is considered a development stage company. To date,
activities have been limited to organizational matters and the preparation and
filing of the registration statement of which this prospectus is a part. In
connection with the organization of the Company, the President and founders of
the Company contributed $10,000 cash to initially capitalize the Company in
exchange for 1,000,000 shares of Common Stock. The Company has no significant
assets, and is totally dependent upon the successful completion of this
offering and receipt of the proceeds therefrom, of which there is no
assurance, for the ability to commence its proposed business operations.
Proposed Business of the Company
The proposed business and purpose of the Company's formation is to
engage in the business of manufacturing or otherwise acquiring and marketing
custom pool cues. The Company's business plan is to take advantage of what
management believes is an escalating market in the cue-as-art industry, as
well as build quality custom pool cues for pool and billiards players. There
is no assurance that the proposed business of the Company will be successful,
and the Company presently has no plans, commitments or arrangements with
respect to any other potential business venture.
The President of the Company, Darren Heiselt, who will have operational
and production management of the Company, has been making custom pool cues for
the past several years. Mr. Heiselt has been employed since 1991 at EO's
Society Billiards and Cafe, first as Assistant Manager and currently as
Manager. During and prior to that time, because of his interest in the game,
he has developed as a sideline custom cuemaking and has acquired certain
knowledge, skills and experience related to cuemaking, which includes having
produced and sold approximately twenty handmade, custom pool cues for prices
ranging from approximately $300 up to $1,100. Mr. Heiselt's cuemaking skills
have developed to the point that he has an existing backlog of orders for
handmade custom pool cues which, at current rates of production, would take
him in excess of six months to fill. Mr. Heiselt believes that acquisition of
the additional equipment which the Company intends to purchase using proceeds
of this offering, will enable him to significantly increase the number of cues
in process that he can work on at the same time, and thus substantially
increase the number of cues he can produce within a given period of time,
while at the same time also improving the quality of the finished product.
Also, he would be able to increase both the amount and intricacy of both the
woodwork and inlay work to produce custom cues in higher price ranges, where
profit margins would be greater. (Different cues made by the same person will
most likely have the same hit and quality of construction, but the difference
between a $300 cue and a $3,000 cue might be rarer or more exotic woods, more
inlays, more intricate inlays and more exotic materials.)
Mr. Heiselt will continue to be employed at EO's Society Billiards and
Cafe, and the Company will rent space at that location where Mr. Heiselt can
keep the equipment and materials to set up shop. This arrangement is intended
to make it more convenient for him to be able to devote several hours per week
of spare time to the production of cues. In addition to facilitating Mr.
Heiselt's ability to devote time to the business of the Company, it is
believed that this arrangement will enable his work and work product to be on
display in a setting frequented by pool and billiard's players and others
potentially interested in buying and collecting custom pool cues.
Historical Background of Billiards, Cuemaking and the Cue Art Industry
The various forms of the basic game of billiards are of unknown origin,
but the game billiards is known to have been played as early as the
16th-century in England. The word billiards is derived from the Old French
billart, meaning "curved stick." All billiards games are played on a
rectangular, slate-topped table twice as long as it is wide and covered with a
felt cloth. The playing area is surrounded by rubber cushions, or rails. Two
basic types of billiards exist today: pocket billiards, which is also called
pool, is played on a table with six pockets, and carom billiards, is usually
played on a table with no pockets. The game of pocket billiards, or pool, is
played with a white cue ball, and in the form played in the United States, 15
object balls numbered 1-15 (1-8, solid; 9-15, striped). Pocket billiards also
requires the use of cue sticks, and as such, is the form of the game of
billiards that has given rise to an industry centered around the making of
finely crafted, custom cue sticks or pool cues.
The cue stick developed from the common habit of using the thin shaft of
the Mace (a curved mallet evidently borrowed from the lawn games from which
billiards developed) to strike the balls lying near the cushion. It evolved
as a separate instrument during the period from 1680 to 1780. Today, the cue
stick is a straight, tapered instrument used for striking the cue ball, which
is usually made principally of wood and is approximately 57 inches long. Cue
sticks have been made of a wide variety of woods including Ash, Maple,
Cocobolo, and other materials such as aluminum and graphite. The principal
parts of a modern day cuestick consist of the tip, the ferrule, the shaft, the
joint and the butt or handle.
The tip was unknown in the eighteenth century and, for this reason, only
good players were allowed to use the cue out of fear that lesser players would
tear the cloth. The first tip was cut out of a leather harness, and is said
to have been invented sometime between 1807 and 1823. The tip is a rounded
patch of material, usually leather, affixed to the narrow end of a cue stick.
The tip is needed to prevent the cue from slopping off the ball as it is being
struck. It increases the friction between the two surfaces and, because it is
compressible, increases the amount of time the stick and the ball are in
contact, which permits more English, or spin, to be applied to the ball.
Application of chalk further increases the friction.
The ferrule is the segment of a cue stick below the tip, fastened to the
shaft on a projection known as the tennon. The ferrule forms a flat base for
attaching the tip and prevents the shaft from splintering. The shaft is the
thinner section of a cue stick extending from the joint to the tip, away from
the butt end. The shaft is generally made from Maple.
The joint is the fitting at which a two piece cue or jointed cue can be
broken down. (The piece that joins the butt and the shaft.) The jointed cue
or two piece cue appeared in 1829 and became popular in the late nineteenth
century for convenience in carrying and storage. Joints may be "piloted" or
"flat faced," referring to the manner in which the butt and the shaft are
placed in contact. A flat joint is formed by mounting a screw in the butt
end, leaving exposed wood surrounding the screw so that wood meets wood when
the cue is screwed together. A piloted joint is one in which a metal fitting
is inserted into the shaft and a screw protrudes from the butt and in which
metal meets metal when the cue is assembled for play.
In addition to the woods previously mentioned, butts are often made
using Walnut, Ebony or Rosewood. The butt of a cue is often spliced because
it is not desireable to make a cue out of a single type of wood. A cue made
entirely of Maple (a good shaft material) would be too light, one made
entirely of Rosewood or Ebony would be too heavy. The splice is made by
fitting together two positions composed of long, thin triangles known as
points or prongs. A wrap is sometimes placed on a cue, it is a covering for
that portion of the butt of a cue stick that is grasped by the player. The
function of the wrap is to improve the players hold on the cue and, in the
case of cloth and cork wraps, to absorb perspiration.
The question whether metal-to-metal or wood-to-wood joint is superior is
not yet settled. Debate also rages over such things as whether or not the
prongs at the butt play a role in shock absorption, whether a cue with a
flexible shaft or a stiff shaft is preferable, and so forth.
The popularity and longevity of the game has resulted in an interest
among aficionados of the game in buying, selling, and collecting custom pool
cues that are finely crafted, not only in the sense of their playability, or
suitability for playing the game, but also in the sense of being intricately
and ornately handcrafted, highly decorative art objects that collectors are
holding for investment. An immense amount of creativity goes into decorating
cues with complex inlays of wood, Ivory, or mother-of-pearl. Inlays are a
method of decorating the butt of a cue stick by setting material into a groove
cut in the wood.
According to an article in the Wall Street Journal dated January 3,
1996, for about a decade now, the cue-as-art market for custom pool cues has
been escalating. According to the article, ornately crafted pool cues
painstakingly turned out by a small clique of American artisans are taking the
symbol of the billiard hustler to new levels. Indeed, the article itself was
occasioned by, and highlighted a convention or gathering held the preceding
month at the Biltmore Hotel in Los Angeles, which was billed as the Showcase
of American Cue Art, and reportedly had the largest group of collectible art
cues ever assembled and presented to the public in one place at one time.
In addition to the traditional interest of pool and billiards players,
collectors whose primary interest is investment are now taking an interest in
high quality, custom pool cues. It is not unusual to find a cue that is more
expensive than the table on which it is being used. Custom cues now begin at
prices ranging from around $300 to $500; collectors have forced the price of
cues made by the finest cue-makers to over $3000. A surprising number of cues
have sold for just under $10,000 in the United States, and there are stories
of cues with inlaid jewels and precious metals that have sold in the Orient
for five times that amount. Yet it is precisely because custom pool cues -
some intricately adorned with inlays of ivory, gold, and even gemstones - have
become so artistic and such hot investments that customers are reluctant to
bang up their sticks by actually playing with them.
There is also much lore associated with cue manufacture; sticks from
certain makers such as Herman Rambow and George Balabushka are of legendary
quality and price. Cuemakers can spend hours, days, or weeks producing a
single cue as they combine handicraft with high tech. A cue maker carefully
chooses and seasons different types of exotic woods, before tapering and
sanding down on a lathe. Industrial sized jigsaws are used to carve out inlay
pieces from dyed wood, ivory and shell. The pieces are, in turn, inlaid by
hand and then buffed and varnished. There is always interest in cues made by
such famed craftsmen as Rambow, Balabushka, Martin, Bill Stroud, and Szamboti.
These instruments are felt to have properties that are not readily duplicated.
The President of the Company, Mr. Heiselt, is not well known as a
cuemaker outside the patrons of the billiards establishment where he works,
and his reputation is not well established; therefore, it is not anticipated
that the custom pool cues to be sold by the Company will have any intrinsic
value or worth from the fact that they will be made by Mr. Heiselt. Rather,
it is anticipated that the value of the pool cues will depend on the perceived
quality of construction and playability, as well as the types of woods and
other materials used and the amount and intricacy of the inlay work and
woodwork done. Using the knowledge, skills and experience of its President,
the Company will attempt to produce and sell handmade, custom cuesticks or
pool cues that will be in demand for playing because of their quality, and
also for their artistic value because of the amount and intricacy of the inlay
work and woodwork. The President believes that with the funding provided by
this offering, the Company will be able to acquire additional equipment and
tools that will enable him to produce more cues of higher quality and value,
to take advantage of what is believed to be a developing market for such
cuesticks. However, there is absolutely no assurance that the Company will be
successful in this effort and will be able to compete with other, more well
known cuemakers.
Competition
The Company will operate in a highly competitive environment. The
market for custom pool cues of collectible quality is very specialized and
limited and is composed of a very small number of cuemakers, private
collectors, pool players, and other buyers. There is no assurance the Company
will be able to produce custom pool cues of sufficient quality to be of
interest to private collectors, pool and billiards players or the general
public.
Advertising and Marketing Strategy
The Company will attempt to create a high end line of cues that will be
advertised in selected billiards publications (Billiards Digest, Billiard
Exchange, Breaking News). The Company will also mail flyers to numerous
billiard rooms and billiard accessory retailers in an attempt to market its
products. Also, the Company's workshop and production facilities will be
located in a pool and billiards establishment where the finished pool cues and
also the work in process will be on display. Management believes this ongoing
exposure to pool and billiards players will generate interest among the
patrons of this establishment in the Company's products and business, and that
they will become potential customers.
Physical Facilities and Employees
The Company presently has no office facilities but upon completion of
the offering will rent space on a month to month basis for $500 per month at
EO's Society Billiards and Cafe in Kearns, Utah, where Mr. Darren Heiselt, the
Company's President, is presently employed. The Company will use these
facilities as its principal place of business for the time being, and does not
intend to seek other office arrangements unless and until the Company's
business requires more extensive facilities, which is not anticipated in the
foreseeable future. The Company presently has no employees, and does not
presently anticipate the need to hire employees (other than Mr. Heiselt) upon
completion of the offering. It is presently anticipated that Mr. Heiselt will
initially work for the Company on a commission or piecework basis and will not
receive a regular salary or wage.
MANAGEMENT
Executive Officers, Directors and Significant Employees
The following table sets forth the directors and executive officers of
the Company, their ages, term served and all offices and positions with the
Company. A director is elected for a period of one year and thereafter serves
until his or her successor is duly elected by the stockholders and qualifies.
Officers and other employees serve at the will of the Board of Directors.
Name of Director Age Term Served Positions with Company
Darren Heiselt 30 Since inception President, & Secretary/Treasurer
This individual will serve as management of the Company. A brief
description of his background and business experience is as follows:
Darren Heiselt will serve as President, Secretary/Treasurer and Director
of the Company. Mr. Heiselt attended Kearns High School from which he
graduated in 1983. Following graduation, he worked for various contractors in
the construction industry becoming a supervising Foreman for Jacobsen
Construction Company, (a Salt Lake City based contractor), from 1985 to 1987.
From 1988 to 1991 Mr. Heiselt worked for Gregory & Cook as a supervisory
Foreman. Beginning in 1991 to the present Mr. Heiselt has worked for Maxim
Management Corp. as Assistant Manager and now Manager for EO's Society
Billiards and Cafe, where he has assisted in putting on clinics and
tournaments, and arranging special events for the company, including booking
top name players to appear at EO's (former world champions Buddy Hall and
Grady Mathews). In 1992 Mr. Heiselt created his own pro shop where he did cue
repair and manufacture of custom cues. Due to his involvement in the billiard
industry, Mr. Heiselt was exposed to numerous cuemakers where he learned the
art of the trade, and began to develop his own designs. Mr. Heiselt was one
of the first to offer these services in Salt Lake City. He has been invited
to set up on a temporary basis to do cue repair at regional tournaments, which
has helped establish his name and reputation in the intermountain area.
The director holds no directorships in any other companies subject to
the reporting requirements of the Securities Exchange Act of 1934.
Executive Compensation
The Company was only recently incorporated, has not yet commenced
planned operations and has not paid any compensation to its executive officer
or director to date.
Proposed Compensation. Upon the completion of the offering, the sole
officer/director will be entitled to reimbursement of any out of pocket
expenses reasonably and actually incurred on behalf of the Company.
Initially, it is anticipated that the officer will only devote a portion of
his time to the affairs of the Company. He will not be employed full time and
will not receive a regular salary or wage for his time, unless and until the
Company's business operations develop to the point where a full time or other
extensive time commitment is required. In lieu thereof, Mr. Heiselt will
initially work for the Company on a commission or piecework basis, under which
he will receive a set amount or percentage of the sales price of each custom
pool cue produced and sold. The Company presently has no formal written
employment agreements or other arrangements or understandings with the officer
regarding the commitment of time or the payment of salaries or other
compensation, and there is no assurance that the presently contemplated
arrangements will continue for any specified length of time in the future, nor
any assurance with respect to the continued availability to the Company of Mr.
Heiselt's services. However, Mr. Heiselt presently is prepared to devote such
time as may be necessary to the development of the Company's business,
including full time, if that becomes necessary.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's common stock with respect to each
director of the Company, each person known to the Company to be the beneficial
owner of more than five percent (5%) of said securities, and all directors and
executive officers of the Company as a group:
Title Amount and Nature of Percent % After
Name and Address of Class Beneficial Ownership of Class Offering
Darren Heiselt Common 200,000 shares 20% 16.7%
4871 S. 4055 W.
Kearns, UT 84118
Cowbell, Inc. Common 400,000 shares 40% 33.3%
1173 A 2nd Ave.
N.Y., N.Y. 10021
Elvena, Inc. Common 400,000 shares 40% 33.3%
666 Fith Ave. #159
N.Y., N.Y. 10103
All officers and directors Common 200,000 shares 20% 16.7%
as a group (1 person)
Prior to the sale of any Shares in this offering, these are the only
shareholders of the Company. Cowbell, Inc. and Elvena, Inc. are private
corporations solely owned by Eslie Barlow and Lynn Dixon, respectively. See
"Certain Transactions."
CERTAIN TRANSACTIONS
In connection with the organization of the Company, its founding
shareholders paid an aggregate of $10,000 cash to purchase 1,000,000 shares of
Common Stock of the Company at a price of $.01 per share. See "Principal
Shareholders."
It is contemplated that the Company may enter into certain transactions
with officers, directors or affiliates of the Company which, even though they
may involve conflicts of interest in that they are not arms' length
transactions, are believed to be fair and equitable transactions in the best
interest of the Company. The Company's policy is that all transactions
between the Company and any affiliates be on terms no less favorable to the
Company than could be obtained from unaffiliated parties. These transactions
include the following:
The Company presently has no office facilities but upon completion of
the offering the Company will use as its principal place of business certain
facilities located at the address of the Company as set forth herein. This is
also the business address of EO's Society Billiards and Cafe, a pool and
billiards establishment owned and operated by Maxim Management Corp., an
entity with which Mr. Eslie Barlow, a principal shareholder of the Company, is
affiliated. Darren Heiselt, the President of the Company, is presently
employed there and will also provide certain equipment used in the making of
pool cues. These facilities will be available to the Company for the time
being, until such time as the business operations of the Company may require
more extensive facilities and the Company has the financial ability to pay for
more extensive facilities. It is presently contemplated that the Company will
be charged $500 per month for the use of such facilities, including phone and
other utilities, on a month to month basis. There is presently no formal
written agreement for the use of such facilities, and no assurance that such
facilities will be available to the Company on such a basis for any specific
length of time. Mr. Heiselt anticipates initially devoting up to
approximately 20% of his time to the affairs of the Company. If and when the
business operations of the Company increase and a more extensive time
commitment is needed, Mr. Heiselt is prepared to devote more time to the
Company, in the event that becomes necessary.
The Company has no formal written employment agreement or other
contracts with its President, and there is no assurance that the services and
facilities to be provided by Mr. Heiselt will be available for any specific
length of time in the future. The amounts of compensation and other terms of
any full time employment arrangements with Mr. Heiselt would be determined if
and when such arrangements become necessary.
Conflicts of Interest
Other than as described herein the Company is not expected to have
significant further dealings with affiliates. However, if there are such
dealings the parties will attempt to deal on terms competitive in the market
and on the same terms that either party would deal with an unrelated third
person. Presently no officer or director of the Company has any transactions
which they contemplate entering into with the Company, aside from the matters
described herein.
Management will attempt to resolve any conflicts of interest that may
arise in favor of the Company. Failure to do so could result in fiduciary
liability to management.
Indemnification and Limitation of Liability of Management
The General Corporation Law of Delaware permits provisions in the
articles, by-laws or resolutions approved by shareholders which limit
liability of directors for breach of fiduciary duty to certain specified
circumstances, namely, breaches of their duties of loyalty, acts or omissions
not in good faith or which involve intentional misconduct or knowing violation
of law, acts involving unlawful payment of dividends or unlawful stock
purchases or redemptions, or any transaction from which a director derives an
improper personal benefit. The Company's by-laws indemnify its Officers and
Directors to the full extent permitted by Delaware law. The by-laws with
these exceptions eliminate any personal liability of a Director to the Company
or its shareholders for monetary damages for the breach of a Director's
fiduciary duty and therefore a Director cannot be held liable for damages to
the Company or its shareholders for gross negligence or lack of due care in
carrying out his fiduciary duties as a Director. The Company's Articles
provide for indemnification to the full extent permitted under law which
includes all liability, damages and costs or expenses arising from or in
connection with service for, employment by, or other affiliation with the
Company to the maximum extent and under all circumstances permitted by law.
Delaware law permits indemnification if a director or officer acts in good
faith in a manner reasonably believed to be in, or not opposed to, the best
interests of the corporation. A director or officer must be indemnified as to
any matter in which he successfully defends himself. Indemnification is
prohibited as to any matter in which the director or officer is adjudged
liable to the corporation. Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers, and
controlling persons of the Company pursuant to the foregoing provisions or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
DESCRIPTION OF SECURITIES
The following statements are qualified in their entirety by reference to
the detailed provisions of the Company's Articles of Incorporation and Bylaws,
copies of which will be furnished to an investor upon written request
therefor. The Shares being registered pursuant to the registration statement
of which this prospectus is a part are shares of Common Stock, all of the same
class and entitled to the same rights and privileges as all other shares of
Common Stock.
Common Stock
The Company is presently authorized to issue 50,000,000 shares of $.001
par value Common Stock. The holders of common stock, including the Shares
offered hereby, are entitled to equal dividends and distributions, per share,
with respect to the common stock when, as and if declared by the Board of
Directors from funds legally available therefor. No holder of any shares of
common stock has a pre-emptive right to subscribe for any securities of the
Company nor are any common shares subject to redemption or convertible into
other securities of the Company. Upon liquidation, dissolution or winding up
of the Company, and after payment of creditors and preferred stockholders, if
any, the assets will be divided pro-rata on a share-for-share basis among the
holders of the shares of common stock. All shares of common stock now
outstanding are fully paid, validly issued and non-assessable. Each share of
common stock is entitled to one vote with respect to the election of any
director or any other matter upon which shareholders are required or permitted
to vote. Holders of the Company's common stock do not have cumulative voting
rights, so that the holders of more than 50% of the combined shares voting for
the election of directors may elect all of the directors, if they choose to do
so and, in that event, the holders of the remaining shares will not be able to
elect any members to the Board of Directors. The Company's bylaws provide
that a quorum at any meeting of stockholders is one third of the shares
outstanding and entitled to vote. Delaware law requires a majority of the
voting power present at a meeting to take action, or permits action to be
taken by written consent without a meeting if stockholders holding a majority
of the voting power consent. The bylaws also permit action by written consent
if the same percentage as would be required at a meeting (i.e. a majority) of
all the shareholders entitled to vote, consent in writing.
The Company has reserved from its authorized but unissued shares a
sufficient number of shares of Common Stock for issuance of the Shares offered
hereby. The shares of Common Stock issuable on completion of the offering
will be, when issued in accordance with the terms of the offering, fully paid
and non-assessable.
During the pendency of the offering, subscribers will have no rights as
stockholders of the Company until the offering has been completed and the
Shares have been issued to them.
Preferred Stock
The Company is also presently authorized to issue 500,000 shares of
$.001 par value Preferred Stock. Under the Company's Articles of
Incorporation, as amended, the Board of Directors has the power, without
further action by the holders of the Common Stock, to designate the relative
rights and preferences of the preferred stock, and issue the preferred stock
in such one or more series as designated by the Board of Directors. The
designation of rights and preferences could include preferences as to
liquidation, redemption and conversion rights, voting rights, dividends or
other preferences, any of which may be dilutive of the interest of the holders
of the Common Stock or the Preferred Stock of any other series. The issuance
of Preferred Stock may have the effect of delaying or preventing a change in
control of the Company without further shareholder action and may adversely
effect the rights and powers, including voting rights, of the holders of
Common Stock. In certain circumstances, the issuance of preferred stock could
depress the market price of the Common Stock. The Board of Directors effects
a designation of each series of Preferred Stock by filing with the Delaware
Secretary of State a Certificate of Designation defining the rights and
preferences of each such series. Documents so filed are matters of public
record and may be examined in accordance with procedures of the Delaware
Secretary of State, or copies thereof may be obtained from the Company.
Transfer Agent
American Registrar & Transfer Co., 10 Exchange Place, Suite 750, P.O.
Box 1798, Salt Lake City, Utah 84110, (801) 363-9065, has agreed to serve as
transfer agent and registrar for the Company's outstanding securities upon
completion of the offering.
Dividend Policy
The Company has not previously paid any cash dividends on Common Stock
and does not anticipate or contemplate paying dividends on Common Stock in the
foreseeable future. It is the present intention of management to utilize all
available funds for the development of the Company's business. The only
restrictions that limit the ability to pay dividends on common equity or that
are likely to do so in the future, are those restrictions imposed by law.
Under Delaware corporate law, no dividends or other distributions may be made
which would render the Company insolvent or reduce assets to less than the sum
of its liabilities plus the amount needed to satisfy outstanding liquidation
preferences.
SHARES ELIGIBLE FOR FUTURE SALE
All 1,000,000 shares of Common Stock currently outstanding are
"restricted securities," as that term is defined under Rule 144 promulgated
under the Securities Act of 1933, as amended, in that such shares were issued
and sold by the Company without registration, in private transactions not
involving a public offering, and/or are securities held by affiliates.
Although such restricted and affiliate securities are not presently tradeable
in any public market which may develop for the Common Stock, such securities
may in the future be publicly sold into any such market, if such a market
should develop, in accordance with the provisions of Rule 144. In general,
under Rule 144 as currently in effect, a person (or group of persons whose
share are aggregated), including affiliates of the Company, can sell within
any three-month period, a number of shares of restricted securities that does
not exceed the greater of 1% of the total number of outstanding shares of the
same class, or (if the Stock becomes quoted on NASDAQ or a stock exchange),
the reported average weekly trading volume during the four calendar weeks
preceding the sale; provided, that at least two years have elapsed since the
restricted securities being sold were acquired from the Company or any
affiliate of the Company, and provided further that certain other conditions
are also satisfied. If at least three years have elapsed since the restricted
securities were acquired from the Company or an affiliate of the Company, a
person who has not been an affiliate of the Company for at least three months
is entitled to sell such restricted shares under Rule 144 without regard to
any limitations on the amount.
PLAN OF DISTRIBUTION
The Company is offering up to 200,000 Shares of its $.001 par value
Common Stock to the public on a "best efforts, 100,000 shares minimum, 200,000
shares maximum" basis, at a price of $.50 per share. The offering will be
managed by the Company without an underwriter. The Company may enter into
agreements with securities broker-dealers who are members of the National
Association of Securities Dealers, Inc. (NASD), whereby these broker-dealers
will be involved in the sale of the Shares and will be paid a commission by
the Company of up to 14% of the offering price of the Shares sold by them. In
addition, the Shares will be offered and sold by the officer of the Company,
who will receive no sales commissions or other compensation in connection with
the offering, except for reimbursement of expenses actually incurred on behalf
of the Company in connection with such activities. This will not involve any
reallocations between NASD members and non-members. The Company will not
compensate any of its officers or directors for sale of securities hereunder
but may pay a finders fee (not to exceed 14%) to other persons who introduce
investors, where no sales commission is paid and such payment is permitted
under applicable state law. Neither Mr. Heiselt nor any other associated
person of the Company is an associated person of a broker or dealer or subject
to any statutory disqualification as defined in Section 3(a)(39) of the
Securities Act, nor will any such person be compensated in connection with his
participation in the offering, which participation will be limited to
distributing this prospectus or other written communication (the content of
which is approved by an officer or director of the Company), by mail or other
means that does not involve oral solicitation, responding to inquiries of
prospective purchasers with information contained herein and performing
ministerial and clerical work involved in effecting sales transactions.
There is no assurance that all or any of the Shares will be sold. If
the Company fails to receive subscriptions for a minimum of 100,000 Shares
within 120 days from the date of this Prospectus (or 150 days if extended by
the Company), the offering will be terminated and any subscription payments
received will be promptly refunded within 5 days to subcribers, without any
deduction therefrom or any interest thereon. If subscriptions for at least
the minimum amount are received within such period, funds will not be returned
to investors and the Company may continue the offering until such periods
expires or subscriptions for all 200,000 Shares have been received, whichever
occurs first. Current shareholders may purchase up to 10 percent of the
shares offered hereby. Any such purchases will be made for investment
purposes only and not with a view toward further resale, and may be made for
the purpose of completing at least the minimum amount of the offering.
All subscription payments should be made payable to Brighton Bank as
Escrow Agent for the Company. The Company and any participating broker-
dealers will mail or otherwise forward all subcription payments received, by
noon of the next business day following receipt, to Brighton Bank at 311 South
State Street, Salt Lake City, Utah 84111 for deposit into the escrow account
being maintained by Brighton Bank as escrow agent for the Company, pending
receipt of subscriptions for at least a minimum of 100,000 Shares or
expiration of the offering period, whichever occurs first. Subcription
payments will only be disbursed from the escrow account to the Company if at
least 100,000 Shares are sold, or if not sold, for the purpose of refunding
subscription payments to the subscribers. Subscribers will have no right to
return or use of their funds during the offering period, which may last up to
150 days.
LEGAL MATTERS
To the knowledge of management, there is no material litigation pending
or threatened against the Company. The validity of the issuance of the Shares
offered hereby will be passed upon for the Company by Thomas G. Kimble &
Associates, Salt Lake City, Utah.
EXPERTS
The consolidated financial statements of Durwood, Inc. as of July 31,
1996, included in this Prospectus have been examined by Jones, Jensen & Co.,
independent certified public accountants, as indicated in their report with
respect thereto, and are included herein in reliance on such report given upon
the authority of that firm as experts in accounting and auditing.
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
July 31, 1996
<PAGE>
C O N T E N T S
Independent Auditors' Report . . . . . . . . . . . . . . . . 3
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . 4
Statement of Operations . . . . . . . . . . . . . . . . . . 5
Statement of Stockholders' Equity . . . . . . . . . . . . . 6
Statement of Cash Flows . . . . . . . . . . . . . . . . . . 7
Notes to the Financial Statements . . . . . . . . . . . . . 8
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Durwood, Inc.
Salt Lake City, Utah
We have audited the accompanying balance sheet of Durwood, Inc. (a
development stage company) as of July 31, 1996 and the related
statements of operations, stockholders' equity, and cash flows from
inception on July 12, 1996 through July 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion the financial statements referred to above present
fairly, in all material respects, the financial position of
Durwood, Inc. (a development stage company) as of July 31, 1996 and
the results of its operations and its cash flows from inception on
July 12, 1996 through July 31, 1996 in conformity with generally
accepted accounting principles.
Jones, Jensen & Company
August 5, 1996
PAGE
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Balance Sheet
ASSETS
July 31,
1996
CURRENT ASSETS
Cash $ 10,000
Total Current Assets 10,000
TOTAL ASSETS $ 10,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ -
Total Current Liabilities -
TOTAL LIABILITIES -
STOCKHOLDERS' EQUITY
Preferred stock: 500,000 shares
authorized of $0.001 par value
but unissued -
Common stock: 50,000,000 shares
authorized of $0.001 par value,
1,000,000 shares issued and outstanding 1,000
Additional paid-in capital 9,000
Total Stockholders' Equity 10,000
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 10,000
The accompanying notes are an integral part of these financial statements
<PAGE>
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Statement of Operations
From
Inception on
July 12,
1996 Through
July 31,
1996
REVENUES $ -
EXPENSES -
NET INCOME (LOSS) $ -
NET EARNINGS (LOSS)
PER SHARE OF
COMMON STOCK $ 0.00
The accompanying notes are an integral part of these financial statements
<PAGE>
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Statement of Stockholders' Equity
Additional
Common Stock Paid-in
Shares Amount Capital Total
Balance, July 12, 1996 - $ - $ - $ -
Common stock issued for
cash at $0.01 per share
on July 15, 1996 1,000,000 1,000 9,000 10,000
Balance, July 31, 1996 1,000,000 $ 1,000 $ 9,000 $ 10,000
The accompanying notes are an integral part of these financial statements
<PAGE>
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Statement of Cash Flows
From
Inception on
July 12,
1996 Through
July 31,
1996
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash $ 10,000
Net Cash Provided By Financing Activities 10,000
NET INCREASE IN CASH AND CASH EQUIVALENTS 10,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD -
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 10,000
Cash Paid For:
Interest $ -
Income taxes $ -
The accompanying notes are an integral part of these financial statements
<PAGE>
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Notes to the Financial Statements
July 31, 1996
NOTE 1 - ORGANIZATION AND HISTORY
a. Organization
Durwood, Inc. (the "Company") was recently incorporated under the
laws of the State of Delaware on July 12, 1996. The Company has not
commenced active business operations and is considered a development
stage company. The proposed business and purpose of the Company's
formation is to engage in the business of making and selling custom
pool cues as collectors items as well as for playing pool and
billiards; and to engage in and perform any and all acts and
activities customary in connection therewith, or incident thereto.
The Company intends to use the proceeds of its proposed public
offering, if successful, to purchase equipment for manufacturing
custom pool cues and also wood and other raw materials for
manufacture into finished goods inventory, and for initial working
capital to begin active business operations upon completion of this
offering.
b. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a July 31, year end.
c. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with
maturities of three months or less at the time of acquisition.
d. Earnings (Loss) Per Share
The computations of earnings per share of common stock are based on
the weighted average number of shares outstanding at the date of the
financial statements.
e. Income Taxes
The Company provides for income taxes based on income reported for
financial reporting purposes. At July 31, 1996, the Company has not
reported any income or loss, and has therefore not recorded any
deferred income taxes.
f. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
<PAGE>
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Notes to the Financial Statements
July 31, 1996
NOTE 2 - PROPOSED PUBLIC OFFERING
The Company is offering, on a "best efforts, minimum - maximum"
basis up to 200,000 shares of its common stock to the public at
$0.50 per share. The offering will terminate 120 days from the
effective date thereof (or 150 days if extended by the Company)
unless a minimum of $50,000 of subscriptions have been received.
PAGE
<PAGE>
[OUTSIDE BACK COVER PAGE BEGINS HERE]
No dealer, salesman or other person is authorized to give any information or
to make any representations other that those contained in this Prospectus in
connection with the offer made hereby. If given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities covered hereby in any
jurisdiction or to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus
nor any sale made hereunder shall, in any circumstances, create any
implication that there has been no change in the affairs of the Company since
the date hereof.
TABLE OF CONTENTS Page
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
COMPARATIVE DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
MANAGEMENT'S PLAN OF OPERATION . . . . . . . . . . . . . . . . . . . . . . 11
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . 16
CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
DESCRIPTION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . 19
SHARES ELIGIBLE FOR FUTURE SALE. . . . . . . . . . . . . . . . . . . . . . 20
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . See Index
DURWOOD INC.
200,000 Shares
Common Stock
PROSPECTUS
, 1996
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Directors and Officers
The statutes, charter provisions, bylaws, contracts or other arrangements
under which controlling persons, directors or officers of the issuer are
insured or indemnified in any manner against any liability which they may
incur in such capacity are as follows:
1. Section 145 of the Delaware General Corporation Law provides that each
corporation shall have the following powers:
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the corporation, and that, with respect
to any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged liable to the corporation unless
and only to the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit
or proceeding referred to in subsections (a) and (b) of this section, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him
in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in subsections (a) and (b) of
this section. Such determination shall be made (1) by majority vote of
directors who were not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or (3)
by the stockholders;
(e) Expenses (including attorneys' fees) incurred by an officer or director in
defending any civil, criminal, administrative or investigative action, suit or
proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay the amount if it shall ultimately
be determined that he is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees)
incurred by other employees and agents may be paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
(g) A corporation shall have power to 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 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 and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had the
power and authority to indemnify its directors, officers, and employees or
agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under this section with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of the employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to
in this section.
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to this section shall, unless otherwise provided when authorized or
ratified, continues 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 a person.
2. The Issuer's Articles of Incorporation limit liability of its Officers and
Directors to the full extent permitted by the Delaware General Corporation
Law. The bylaws provide for indemnification in accordance with the foregoing
statutory provisions.
ITEM 25. Other Expenses of Issuance and Distribution*
The following table sets forth all estimated costs and expenses, other than
underwriting discounts, commissions and expense allowances, payable by the
issuer in connection with the maximum offering for the securities included in
this registration statement:
Amount
SEC registration fee $ 100.00
Blue sky fees and expenses 1,000.00
Printing and shipping expenses 300.00
Legal fees and expenses 10,000.00
Accounting fees and expenses 500.00
Transfer and Miscellaneous expenses 100.00
-----------
Total $ 12,000.00
* All expenses are estimated except the Commission filing fee.
ITEM 26. Recent Sales of Unregistered Securities
In connection with the organization of the Company, its founding shareholders
paid an aggregate of $10,000 cash to purchase 1,000,000 shares of Common Stock
of the Company. These transactions were not registered under the Securities
Act of 1933 (the "Act") in reliance on the exemption from registration in
Section 4(2) of the Act. The securities were offered and sold without any
general solicitation to persons affiliated with the Issuer as founding
shareholders, are subject to the resale provisions of Rule 144 and may not be
sold or transferred without registration except in accordance with Rule 144.
Certificates representing the securities will bear such a legend.
ITEM 27. Exhibits Index
SEC No. Document Exhibit No.
1 Form of Dealer Agreement 1.1
3 Articles of Incorporation 3.1
3 By-Laws 3.3
4 Common Stock Specimen Certificate 4.1
5,24 Opinion & Consent of Counsel 5.1 & 24.1
20 Subscription Agreement 20.1
23 Consent of Accountants 23.1
27 Financial Data Schedule 27.1
ITEM 28. Undertakings
The issuer hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a post-
effective amendment to this Registration Statement to:
(i) Include any prospectus required by section 10(a)(3) of the Securities Act
of 1933;
(ii) Include any additional or changed material information on the plan of
distribution; and
(iii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
Registration Statement.
(2) For determining any liability under the Securities Act, treat each post-
effective amendment as a new Registration Statement of the securities offered,
and the offering of the securities at that time to be the initial bona fide
offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
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 registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant 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 issue.<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the issuer
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form SB-2 and authorized this Registration Statement
to be signed on its behalf by the undersigned, in the City of Salt Lake ,
State of Utah, on October 18th , 1996.
DURWOOD, INC.
By: /s/ Darren Heiselt
President (Chief Executive and Financial Officer)
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Thomas G. Kimble or Van L. Butler, the
undersigned's true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same with all exhibits thereto, and all documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and
perform each and every act and thing, requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney-in-
fact and agent, or his substitutes, may lawfully do or cause to be done by
virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities
and on the dates indicated.
Signature: /s/ Darren Heiselt
Title: President & Director (Chief Executive and Financial Officer)
Date: October 18th , 1996
Durwood, Inc.
4085 West 4715 South
Kearns, Utah 84118
(801) 967-0777
Name of Broker~
Street Address~
City, State, Zipcode~
Re: Selling Agreement
Gentlemen:
As the Issuer named in the enclosed Registration Statement filed with
the Securities and Exchange Commission on Form SB-2, we are proposing to offer
for sale and sell on a best efforts basis, a minimum of 100,000 and a maximum
of 200,000 shares of common stock (the "Shares") to the public, in certain
states. The Shares and the terms upon which they are being offered for sale
are more fully described in the enclosed Prospectus included in the
Registration Statement.
The Issuer is offering to certain dealers who are members of the
National Association of Securities Dealers, Inc., the opportunity to
participate in the sale of part of the Shares. The offering price is $.50 per
Share. We agree to pay you a commission of [up to 14%] of the offering price
of $.50 per Share on all Shares which you sell. This commission shall be paid
by the Issuer to the Broker-Dealer within 15 days of the closing of the
offering, subject to receipt of good funds by the Issuer from the Broker-
Dealer. We understand that you are a member of the National Association of
Securities Dealers, Inc., and on the basis of such understanding, invite you
to become a Participating Dealer (such dealers who shall agree to sell Shares
hereunder being hereinafter referred to as "Participating Dealers") to
distribute the Shares. We hereby agree with you as follows:
1. You and we agree to abide by the rules and regulations that are
now or hereafter become applicable to transactions hereunder, including but
not limited to the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., the applicable requirements of the Securities Act of
1933 and the Securities Exchange Act of 1934 and the Rules and Regulations of
the Securities and Exchange Commission, and any applicable State securities
laws.
2. We hereby offer you the opportunity to sell the Shares subject to
the terms and condition hereof. You may participate in the sale of the Shares
by signing and returning to us the duplicate copy of this agreement enclosed
herewith. All sales hereunder are strictly subject to our confirmation, and
we reserve the right in our uncontrolled and sole discretion to reject any
subscription in whole or in part, to make allotments and to close the
subscription books at any time without notice.
3. The Shares are to be offered to the public by us as the Issuer and
by you as a Participating dealer at the price of $.50 per Share, in accordance
with the terms hereof and in the Registration Statement and Prospectus
enclosed, only in those states or other jurisdictions which we have advised
you the offer and sale is registered or otherwise qualified and in which you
are registered as a broker-dealer or are otherwise licensed to make such offer
and sale. The Shares shall not be offered or sold by you below or above such
price. This offering is made subject to the issuance and delivery of the
Shares, acceptance by us, the approval of legal matters by counsel and the
terms and conditions as set forth herein, in the Registration Statement and in
the Prospectus describing such Shares.
4. As the Issuer, we shall have full authority to take such action as
we may deem advisable in respect to all matters pertaining to the offering of
the Shares. Neither you nor any other person is authorized by the Issuer to
give any information or make any representations other than those contained in
the Prospectus in connection with the sale of the Shares. Neither you nor any
other Participating Dealer is authorized to act as agent for the Issuer when
offering the Shares or otherwise but rather will act as an independent
contractor and will be subject to the terms and conditions as provided herein.
5. If any dealer that has sold Shares pursuant hereto violates any
provision of this agreement we shall have the right to repurchase such Shares
from the purchasers thereof. If we elect to repurchase such Shares, such
repurchase shall be made at the full offering price less the concession
initially paid to such Dealer.
6. Payment for all shares should be to the Issuer at the address set
forth above accompanied by duly completed and executed subscription documents.
7. We reserve the right in our discretion without notice to you to
suspend the sales or withdraw the offering of Shares entirely or to modify or
cancel this agreement (which shall be construed in accordance with the laws of
the State of Delaware).
8. No obligation on our part not expressed herein shall be implied or
inferred herefrom. We shall have full authority to take such action as we may
deem advisable in respect to all matters pertaining to this offering. Nothing
herein will be deemed to constitute the Dealers as an association or as
partners with the Issuer or each other, but you will be responsible for your
shares as to any liability or expense based upon any claim to the contrary,
and you further agree to indemnify the Issuer for any liability suffered by it
(including a reasonable attorney's fee) as a result of your violation of
applicable laws in connection with your sale of any of the Shares or a
violation of the terms of this agreement. We shall not be under any liability
for or in respect of the value, validity or form of the securities or the
delivery of the certificates for the shares or the performance by anyone of
any agreement on its part or the qualification of the securities for sale
under the laws of any jurisdiction or for or in respect of any matter
connected with this agreement except for lack of good faith and for
obligations expressly assumed by us in this agreement. The foregoing
provisions shall not be deemed a waiver of compliance with or any liability
imposed under the Securities Act of 1933 or the Rules and Regulations of the
Securities and Exchange Commission promulgated thereunder.
9. Additional copies of the Prospectus and Subscription Documents
will be supplied in limited quantities upon request at no expense to you.
10. Any notice to you will be considered duly given if mailed or
telegraphed to you at your address as indicated herein unless we have received
your written notification of an address change.
11. This agreement will terminate when we have determined that the
offering of the Shares has been completed, and we agree to promptly provide
telegraphic notice of such termination to you. However, if not terminated by
prior notice, this agreement shall automatically terminate at the end of the
offering period in accordance with the provisions of the Prospectus.
12. Please confirm your agreement hereto by signing and returning the
duplicate copy of this agreement enclosed herewith to the Issuer.
Very truly yours,
Durwood, Inc.
Dated: By
Darren Heiselt, President
The undersigned hereby desires to sell the Shares in accordance with the
terms and conditions stated in the foregoing letter agreement. We hereby
acknowledge receipt of a copy of the Registration Statement and Prospectus in
connection with the Offering of the securities of the Company. We further
state that in agreement to use our best efforts to sell the Shares we have
relied upon such documents and upon no other statement whatsoever, written or
oral. We confirm that we are members in good standing of the National
Association of Securities Dealers, Inc.
NAME OF BROKER~
Dated: By:
CERTIFICATE OF INCORPORATION
OF
DURWOOD, INC.
FIRST: The name of this corporation shall be:
DURWOOD, INC.
SECOND: Its registered office in the State of Delaware is to
be located at 1013 Centre Road, in the City of Wilmington, County
of New Castle and its registered agent at such address is
CORPORATION SERVICE COMPANY.
THIRD: The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of stock which this
corporation is authorized to issue is:
(a) Common. 50,000,000 shares of Common Stock having a
par value of $.001 per share:
(b) Preferred. 500,000 shares of Preferred stock having
a par value of $.001 per share and to be issued in such series
and to have such rights, preferences, and designation as
determined by the Board of Directors of the Corporation.
FIFTH: The name and address of the incorporator is as
follows:
Jane S. Krayer
Corporation Service Company
1013 Centre Road
Wilmington, DE 19805
SIXTH: The Board of Directors shall have the power to amend
or repeal the by-laws.
<PAGE>
SEVENTH: No director shall be personally liable to the
Corporation or its stockholders for monetary damages from any
breach of fiduciary duty by such director as a director.
Notwithstanding the foregoing sentence, a director shall be liable
to the extent provided by applicable law, (i) for breach of the
directory's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the Delaware General Corporation Law or
(iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this
Article Seventh shall apply to or have any effect on the liability
or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior
to such amendment.
IN WITNESS WHEREOF, the undersigned, being the incorporator
hereinbefore named, has executed, signed and acknowledged this
certificate of incorporation this twelve day of July, A.D., 1996.
/s/Jane S. Krayer
Jane S. Krayer
Incorporator
BY-LAWS
OF
DURWOOD, INC.
ARTICLE I - OFFICES
Section 1. The registered office of the corporation in the
State of Delaware shall be at 1013 Centre Road, Wilmington,
Delaware 19805-1297.
The registered agent in charge thereof shall be CSC Networks.
Section 2. The corporation may also have offices at such
other places as the Board of Directors may from time to time
appoint or the business of the corporation may require.
ARTICLE II - SEAL
Section 1. The corporate seal shall have inscribed thereon
the name of the corporation, the year of its organization and the
words "Corporate Seal, Delaware".
ARTICLE III - STOCKHOLDERS' MEETINGS
Section 1. Meetings of stockholders shall be held at the
registered office of the corporation in this state or at such
place, either within or without this state, as may be selected from
time to time by the Board of Directors.
Section 2. ANNUAL MEETINGS: The annual meeting of the
stockholders shall be held on such date as is determined by the
Board of Directors for the purpose of electing directors and for
the transaction of such other business as may properly be brought
before the meeting.
Section 3. ELECTION OF DIRECTORS: Elections of the directors
of the corporation shall be by written ballot.
Section 4. SPECIAL MEETINGS: Special meetings of the
stockholders may be called at any time by the President, or the
Board of Directors, or stockholders entitled to cast at least
one-fifth of the votes which all stockholders are entitled to cast
at the particular meeting. At any time, upon written request of
any person or persons who have duly called a special meeting, it
shall be the duty of the Secretary to fix the date of the meeting,
to be held not more than sixty days after receipt of the request,
and to give due notice thereof. If the Secretary shall neglect or
refuse to fix the date of the meeting and give notice thereof, the
person or persons calling the meeting may do so.
Business transacted at all special meetings shall be confined
to the objects stated in the call and matters germane thereto,
unless all stockholders entitled to vote are present and consent.
Written notice of a special meeting of stockholders stating
the time and place and object thereof, shall be given to each
stockholder entitled to vote thereat at least ten days before such
meeting, unless a greater period of notice is required by statute
in a particular case.
Section 5. QUORUM: A majority of the outstanding shares of
the corporation entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of stockholders. If
a majority of the outstanding shares entitled to vote is
represented at a meeting, a majority of the shares so represented
may adjourn the meeting from time to time without further notice.
At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The stockholders
present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum.
Section 6. PROXIES: Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to
corporate action in writing without a meeting may authorize another
person or persons to act for him by proxy, but no such proxy shall
be voted or acted upon after three years from its date, unless the
proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that
it is irrevocable and if, and only as long as, it is coupled with
an interest sufficient in law to support an irrevocable power. A
proxy may be made irrevocable regardless of whether the interest
with which it is coupled is an interest in the stock itself or an
interest in the corporation generally. All proxies shall be filed
with the Secretary of the meeting before being voted upon.
Section 7. NOTICE OF MEETINGS: Whenever stockholders are
required or permitted to take any action at a meeting, a written
notice of the meeting shall be given which shall state the place,
date and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called.
Unless otherwise provided by law, written notice of any
meeting shall be given not less than ten nor more than sixty days
before the date of the meeting to each stockholder entitled to vote
at such meeting.
Section 8. CONSENT IN LIEU OF MEETINGS: Any action required
to be taken at any annual or special meeting of stockholders of a
corporation, or any action which may be taken at any annual or
special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented
in writing.
Section 9. LIST OF STOCKHOLDERS: The officer who has charge
of the stock ledger of the corporation shall prepare and make, at
least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged
in alphabetical order, and showing the address of each stockholder
and the number of shares registered in the name of each
stockholder. No share of stock upon which any installment is due
and unpaid shall be voted at any meeting. The list shall be open
to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at
least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at
the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is
present.
ARTICLE IV - DIRECTORS
Section 1. The business and affairs of this corporation shall
be managed by its Board of Directors, no less than one in number or
such other minimum number as is required by law. The directors
need not be residents of this state or stockholders in the
corporation. They shall be elected by the stockholders of the
corporation or in the case of a vacancy by remaining directors, and
each director shall be elected for the term of one year, and until
his successor shall be elected and shall qualify or until his
earlier resignation or removal.
Section 2. REGULAR MEETINGS: Regular meetings of the Board
shall be held without notice other than this by-law immediately
after, and at the same place as, the annual meeting of
stockholders. The directors may provide, by resolution, the time
and place for the holding of additional regular meetings without
other notice than such resolution.
Section 3. SPECIAL MEETINGS: Special Meetings of the Board
may be called by the President or any director upon two day notice.
The person or persons authorized to call special meetings of the
directors may fix the place for holding any special meeting of the
directors called by them.
Section 4. QUORUM: A majority of the total number of
directors shall constitute a quorum for the transaction of
business.
Section 5. CONSENT IN LIEU OF MEETING: Any action required
or permitted to be taken at any meeting of the Board of Directors,
or of any committee thereof, may be taken without a meeting if all
members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee. The Board of
Directors may hold its meetings, and have an office or offices,
outside of this state.
Section 6. CONFERENCE TELEPHONE: One or more directors may
participate in a meeting of the Board, of a committee of the Board
or of the stockholders, 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
this manner shall constitute presence in person at such meeting.
Section 7. COMPENSATION: Directors as such, shall not
receive any stated salary for their services, but by resolution of
the Board, a fixed sum and expenses of attendance, if any, may be
allowed for attendance at each regular or special meeting of the
Board provided, that nothing herein contained shall be construed to
preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 8. REMOVAL: Any director or the entire Board of
Directors may be removed, with or without cause, by the holders of
a majority of the shares then entitled to vote at an election of
directors, except that when cumulative voting is permitted, if less
than the entire Board is to be removed, no director may be removed
without cause if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election
of the entire Board of Directors, or, if there be classes of
directors, at an election of the class of directors of which he is
a part.
ARTICLE V - OFFICERS
Section 1. The executive officers of the corporation shall be
chosen by the directors and shall be a President, Secretary and
Treasurer. The Board of Directors may also choose a Chairman, one
or more Vice Presidents and such other officers as it shall deem
necessary. Any number of offices may be held by the same person.
Section 2. SALARIES: Salaries of all officers and agents of
the corporation shall be fixed by the Board of Directors.
Section 3. TERM OF OFFICE: The officers of the corporation
shall hold office for one year and until their successors are
chosen and have qualified. Any officer or agent elected or
appointed by the Board may be removed by the Board of Directors
whenever in its judgment the best interest of the corporation will
be served thereby.
Section 4. PRESIDENT: The President shall be the chief
executive officer of the corporation; he shall preside at all
meetings of the stockholders and directors; he shall have general
and active management of the business of the corporation, shall see
that all orders and resolutions of the Board are carried into
effect, subject, however, to the right of the directors to delegate
any specific powers, except such as may be by statute exclusively
conferred on the President, to any other officer or officers of the
corporation. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation. He shall be
EX-OFFICIO a member of all committees, and shall have the general
power and duties of supervision and management usually vested in
the office of President of a corporation.
Section 5. SECRETARY: The Secretary shall attend all
sessions of the Board and all meetings of the stockholders and act
as clerk thereof, and record all the votes of the corporation and
the minutes of all its transactions in a book to be kept for that
purpose, and shall perform like duties for all committees of the
Board of Directors when required. He shall give, or cause to be
given, notice of all meetings of the stockholders and of the Board
of Directors, and shall perform such other duties as may be
prescribed by the Board of Directors or President, and under whose
supervision he shall be. He shall keep in safe custody the
corporate seal of the corporation, and when authorized by the
Board, affix the same to any instrument requiring it.
Section 6. TREASURER: The Treasurer shall have custody of
the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
corporation, and shall keep the moneys of the corporation in a
separate account to the credit of the corporation. He shall
disburse the funds of the corporation as may be ordered by the
Board, taking proper vouchers for such disbursements, and shall
render to the President and directors, at the regular meetings of
the Board, or whenever they may require it, an account of all his
transactions as Treasurer and of the financial condition of the
corporation.
ARTICLE VI - VACANCIES
Section 1. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise, shall be
filled by the Board of Directors. Vacancies and newly created
directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in
office, although less than a quorum, or by a sole remaining
director. If at any time, by reason of death or resignation or
other cause, the corporation should have no directors in office,
then any officer or any stockholder or an executor, administrator,
trustee or guardian of a stockholder, or other fiduciary entrusted
with like responsibility for the person or estate of a stockholder,
may call a special meeting of stockholders in accordance with the
provisions of these By-Laws.
Section 2. RESIGNATIONS EFFECTIVE AT FUTURE DATE: When one
or more directors shall resign from the Board, effective at a
future date, a majority of the directors then in office, including
those who have so resigned, shall have power to fill such vacancy
or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective.
ARTICLE VII - CORPORATE RECORDS
Section 1. Any stockholder of record, in person or by
attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours
for business to inspect for any proper purpose the corporation's
stock ledger, a list of its stockholders, and its other books and
records, and to make copies or extracts therefrom. A proper
purpose shall mean a purpose reasonably related to such person's
interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection,
the demand under oath shall be accompanied by a power of attorney
or such other writing which authorizes the attorney or other agent
to so act on behalf of the stockholder. The demand under oath
shall be directed to the corporation at its registered office in
this state or at its principal place of business.
ARTICLE VIII - STOCK CERTIFICATES, DIVIDENDS, ETC.
Section 1. The stock certificates of the corporation shall be
numbered and registered in the share ledger and transfer books of
the corporation as they are issued. They shall bear the corporate
seal and shall be signed by the president.
Section 2. TRANSFERS: Transfers of shares shall be made on
the books of the corporation upon surrender of the certificates
therefor, endorsed by the person named in the certificate or by
attorney, lawfully constituted in writing. No transfer shall be
made which is inconsistent with law.
Section 3. LOST CERTIFICATE: The corporation may issue a new
certificate of stock in the place of any certificate theretofore
signed by it, alleged to have been lost, stolen or destroyed, and
the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative to give the
corporation a bond sufficient to indemnify it against any claim
that may be made against it on account of the alleged loss, theft
or destruction of any such certificate or the issuance of such new
certificate.
Section 4. RECORD DATE: In order that the corporation may
determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than
sixty days prior to any other action. If no record date is fixed:
(a) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice
is given, or, if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held.
(b) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is necessary, shall
be the day on which the first written consent is expressed.
(c) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which
the Board of Directors adopts the resolution relating thereto.
(d) A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the Board
of Directors may fix a new record date for the adjourned meeting.
Section 5. DIVIDENDS: The Board of Directors may declare and
pay dividends upon the outstanding shares of the corporation, from
time to time and to such extent as they deem advisable, in the
manner and upon the terms and conditions provided by statute and
the Certificate of Incorporation.
Section 6. RESERVES: Before payment of any dividend there
may be set aside out of the net profits of the corporation such sum
or sums as the directors, from time to time, in their absolute
discretion, think proper as a reserve fund to meet contingencies,
or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other purpose as the
directors shall think conducive to the interests of the
corporation, and the directors may abolish any such reserve in the
manner in which it was created.
ARTICLE IX - MISCELLANEOUS PROVISIONS
Section 1. CHECKS: All checks or demands for money and notes
of the corporation shall be signed by such officer or officers as
the Board of Directors may from time to time designate.
Section 2. FISCAL YEAR: The fiscal year shall begin on the
first day of January.
Section 3. NOTICE: Whenever written notice is required to be
given to any person, it may be given to such person, either
personally or by sending a copy thereof through the mail, or by
telegram, charges prepaid, to his address appearing on the books of
the corporation, or supplied by him to the corporation for the
purpose of notice. If the notice is sent by mail or by telegraph,
it shall be deemed to have been given to the person entitled
thereto when deposited in the United States mail or with a
telegraph office for transmission to such person. Such notice
shall specify the place, day and hour of the meeting and, in the
case of a special meeting of stockholders, the general nature of
the business to be transacted.
Section 4. WAIVER OF NOTICE: Whenever any written notice is
required by statute, or by the Certificate or the By-Laws of this
corporation a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such
notice. Except in the case of a special meeting of stockholders,
neither the business to be transacted at nor the purpose of the
meeting need be specified in the waiver of notice of such meeting.
Attendance of a person either in person or by proxy, at any meeting
shall constitute a waiver of notice of such meeting, except where
a person attends a meeting for the express purpose of objecting to
the transaction of any business because the meeting was not
lawfully called or convened.
Section 5. DISALLOWED COMPENSATION: Any payments made to an
officer or employee of the corporation such as a salary,
commission, bonus, interest, rent, travel or entertainment expense
incurred by him, which shall be disallowed in whole or in part as
a deductible expense by the Internal Revenue Service, shall be
reimbursed by such officer or employee to the corporation to the
full extent of such disallowance. It shall be the duty of the
directors, as a Board, to enforce payment of each such amount
disallowed. In lieu of payment by the officer or employee, subject
to the determination of the directors, proportionate amounts may be
withheld from his future compensation payments until the amount
owed to the corporation has been recovered.
Section 6. RESIGNATIONS: Any director or other officer may
resign at any time, such resignation to be in writing and to take
effect from the time of its receipt by the corporation, unless some
time be fixed in the resignation and then from that date. The
acceptance of a resignation shall not be required to make it
effective.
ARTICLE X - ANNUAL STATEMENT
Section 1. The President and the Board of Directors shall
present at each annual meeting a full and complete statement of the
business and affairs of the corporation for the preceding year.
Such statement shall be prepared and presented in whatever manner
the Board of Directors shall deem advisable and need not be
verified by a Certified Public Accountant.
ARTICLE XI - INDEMNIFICATION AND INSURANCE:
Section 1. (a) RIGHT TO INDEMNIFICATION. Each person who was
or is made a party or is threatened to be made a party or is
involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of
whom he or she is the legal representative, is or was a director or
officer, of the Corporation or is or was serving at the request of
the Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or
other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee or
agent or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held harmless
by the Corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to
provide prior to such amendment), against all expense, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in
paragraph (b) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or
part thereof) initiated by such person only if such proceeding (or
part thereof) was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this
Section shall be a contract right and shall include the right to be
paid by the Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition: provided, however,
that, if the Delaware General Corporation Law requires, the payment
of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding,
shall be made only upon delivery to the corporation of an
undertaking, by or on behalf of such director or officer, to repay
all amounts so advanced if it shall ultimately be determined that
such director or officer is not entitled to be indemnified under
this Section or otherwise. The Corporation may, by action of its
Board of Directors, provide indemnification to employees and agents
of the Corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
(b) RIGHT OF CLAIMANT TO BRING SUIT: If a claim under
paragraph (a) of this Section is not paid in full by the
Corporation within thirty days after a written claim has been
received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the
claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the Delaware
General Corporation law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to
the commencement of such action that indemnification of the
claimant is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) that the claimant has not met such
applicable standard or conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable
standard or conduct.
(c) INDEMNIFICATION: Notwithstanding any limitation to the
contrary contained in sub-paragraphs (a) and 8 (b) of this section,
the corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented,indemnify any and all persons
whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities or other matters
referred to in or covered by said section, and the indemnification
provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-law,
agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his 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 director, officer,
employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(d) INSURANCE: The Corporation may maintain insurance, at
its expense, to protect itself and any director, officer, employee
or agent of the Corporation or another corporation, partnership,
joint venture, trust or other enterprise against any such expense,
liability or loss, whether or not the Corporation would have the
power to indemnify such person against such expense, liability or
loss under the Del General Corporation Law.
ARTICLE XII - AMENDMENTS
Section 1. These By-Laws may be amended or repealed by the
vote of directors.
V8(a)bylaws.di
[Stock Certificate Border Graphics]
Number Shares
[No. of Cert] [No. of Shares]
DURWOOD, INC.
Incorporated Under the Laws of the State of Delaware
50,000,000 Common Shares Authorized, $.001 Par Value
THIS CERTIFIES THAT [Name of Shareholder]
IS THE RECORD HOLDER OF [Number of Shares]
transferable on the books of the Corporation in person or by duly
authorized attorney upon surrender of this Certificate properly
endorsed.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate to be signed by its duly authorized officers and its
Corporate Seal to be hereunto affixed
this_______day of________________A.D.______
/s/Darren Heiselt
President
[Graphic of Corporate Seal]
[Border Graphics]
August 5, 1996
Board of Directors
Durwood, Inc.
4085 West 4715 South
Kearns, Utah 84118
Re: Opinion and Consent of Counsel with respect to
Registration Statement on Form SB-2
TO WHOM IT MAY CONCERN:
You have requested the opinion and consent of this law firm, as
counsel, with respect to the proposed issuance and public
distribution of certain securities of the Company pursuant to the
filing of a registration statement on Form SB-2 with the Securities
and Exchange Commission.
The proposed offering and public distribution relates to 200,000
shares of Common Stock, $.001 par value to be offered and sold to
the public at a price of $.50 per share. It is our opinion that
the shares of Common Stock will, when issued in accordance with the
terms and conditions set forth in the registration statement, be
duly authorized, validly issued, fully paid and nonassessable
shares of common stock of the Company in accordance with the
corporation laws of the State of Delaware.
We hereby consent to be named as counsel for the Company in the
registration statement and prospectus included therein.
Sincerely yours,
THOMAS G. KIMBLE & ASSOCIATES
Van L. Butler
SUBSCRIPTION AGREEMENT
DURWOOD, INC.
4085 West 4715 South
Kearns, Utah 84118
THIS SUBSCRIPTION AGREEMENT made this day of
, 1996, by and between Durwood, Inc., a Nevada
corporation (the "Issuer" or "Company"), and
(the "Subscriber"), who, for and in consideration of the mutual
promises and covenants set forth herein, do hereto agree as
follows:
1. Subscription. The Subscriber hereby subscribes for
shares, at a price of $.50 per Share, and
herewith tenders a subscription to the Issuer in the amount of
Dollars ($ ) which
Subscriber has tendered herewith as payment for the Shares. This
Subscription Agreement ("Subscription") is an irrevocable offer
by the Subscriber to subscribe for the securities offered by the
Issuer, and, subject to the terms hereof, shall become a contract
for the sale of said securities upon the acceptance thereof by
the Issuer.
2. Acceptance. This Subscription Agreement is made
subject to the Issuer's discretionary right to accept or reject
the subscription herein, and the Subscriber will be notified upon
closing of the offering (the "Acceptance Date") whether the
subscription has been accepted. If the Issuer shall for any
reason reject this subscription, the Subscription will be
refunded in full, without interest, and this Subscription
Agreement shall be null, void and of no effect. Acceptance of
this subscription by the Issuer will be evidenced by the
execution hereof by an officer of the Issuer.
3. Subscriber Representations. The Subscriber hereby
represents and warrants that:
(a) The Subscriber's representations in this Agreement
are complete and accurate to the best of the Subscriber's
knowledge, and the Company and any sales agent may rely upon
them. The Subscriber will notify the Company and any such agent
immediately if any material change occurs in any of this
information before the sale of the Shares.
(b) The Subscriber hereby agrees that he does not have
the right to cancel this Subscription Agreement, which shall
survive the death, disability, or the cessation of existence as a
legal entity, of the Subscriber. Further, the Subscriber agrees
that he does not have the right, and will not attempt, to
transfer his interest herein.
(c) The Subscriber shall indemnify and hold the Issuer
harmless from all costs and expenses, including reasonable
attorney's fees, incurred by the Issuer as a result of a breach
hereof by the Subscriber. Further, all of the representations
and warranties of the Subscriber contained herein and all
information furnished by the Subscriber to the Issuer are true,
correct and complete in all respects, and the Subscriber agrees
to notify the Issuer immediately of any change in any
representation, warranty or other information set forth herein.
(d) This Agreement when fully executed and delivered
by the Company will constitute a valid and legally binding
obligation of the Subscriber, enforceable in accordance with its
terms. The Subscriber, if it is a partnership, joint venture,
corporation, trust or other entity, was not formed or organized
for the specific purpose of acquiring the Shares. The purchase
of the Shares by the Subscriber, if it is an entity investor, is
a permissible investment in accordance with the Subscriber's
Articles of Incorporation, by-laws, partnership agreement,
declaration of trust or other similar charter document, and has
been duly approved by all requisite action by the entity's
owners, directors, officers or other authorized managers. The
person signing this document and all documents necessary to
consummate the purchase of the Shares has all requisite authority
to sign such documents on behalf of the Subscriber, if it is an
entity investor.
(e) In connection with this offering the Subscriber
has received a prospectus which the Subscriber has reviewed and
is familiar with the contents of.
(f) The Subscriber was offered these securities in the
State of __________.
4. Governing Law. This Subscription shall be governed by
the laws of the State of Nevada.
5. Entire Agreement. This Subscription Agreement
constitutes the entire agreement between the parties with respect
to the matters covered thereby, and may only be amended by a
writing executed by all parties hereto.
6. Survival of Representations. The representations,
warranties, acknowledgments and agreements made by the Subscriber
shall survive the acceptance of this Subscription and run in
favor or, and for the benefit of, the Issuer.
7. Power of Attorney of Spouse. If the Subscriber is a
married person, the Subscriber agrees to cause the Subscriber's
spouse to execute this Agreement at the space provided for that
spouse's signature immediately following the signature of the
Subscriber, and by such signature hereto said spouse certifies
that said spouse is the spouse of the person who signed this
Agreement, that said spouse has read and approves the provisions
hereof and hereby consents and agrees to this Agreement and
agrees to be bound by and accepts such provisions of this
Agreement in lieu of all other interests said spouse may have in
the Company, whether such interests be community property or
otherwise. Said spouse grants to the Subscriber irrevocable
power of attorney to represent said spouse in all matters
connected with the Company to the end that, in all cases, the
Company may rely on any approval, direction, vote or action taken
by the Subscriber, as said spouse's attorney-in-fact. Such power
of attorney is, and shall be deemed to be, coupled with an
interest so that the authority granted hereby may continue during
the entire period of the Company and regardless of the death or
incapacity of the spouse granting the same. Said spouse further
agrees to execute, acknowledge and deliver such other and further
instruments and documents as may be required to evidence such
power of attorney.
8. Waiver. No waiver or modification of any of the terms
of this Agreement shall be valid unless in writing. No waiver of
a breach of, or default under, any provision hereof shall be
deemed a waiver of such provision or of any subsequent breach or
default of the same or similar nature or of any other provision
or condition of this Agreement.
9. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
10. Notices. Except as otherwise required in this
Agreement, any notice required or permitted under this Agreement
shall be given in writing and shall be deemed effectively given
upon personal delivery or upon deposit with the United States
Post Office, by registered or certified mail, postage prepaid,
addressed to the last known address of the party.
11. Non-Assignability. The obligations of the Subscriber
hereunder shall not be delegated or assigned to any other party
without the prior written consent of the Company.
12. Expenses. Each party shall pay all of its costs and
expenses that it incurs with respect to the negotiation,
execution and delivery of this Agreement.
13. Form of Ownership. Please indicate the form of
ownership that the Subscriber desires for the Shares:
Individual
Joint Tenants with Right of Survivorship
Tenants in Common
Community Property
Trust
Corporation
Partnership
Other:
INDIVIDUAL(S) SIGN HERE: SUBSCRIBER:
(Signature)
(Print Name)
(Address)
Social Security No.:
Number of Shares Subscribed for Purchase:
SPOUSE OF SUBSCRIBER:
(Signature)
ORGANIZATIONS SIGN HERE: SUBSCRIBER:
(Print Name of Organization)
By:
(Print Name and Title)
(Address)
Federal ID No.:
Number of Shares Subscribed for Purchase:
Date:
ACCEPTED: Durwood, Inc.
By:
Darren Heiselt, President
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
October 8, 1996
Durwood, Inc.
Dear Sirs:
We hereby consent to the use of our audit report dated August 5,
1996 in the form SB-2 registration statement of Durwood, Inc.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements as of July 31, 1996 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUL-31-1996
<CASH> 10,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> 9,000
<TOTAL-LIABILITY-AND-EQUITY> 10,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
