File No. _____________
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 24, 2000
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934
AUGUST PROJECT 1 CORP.
(Name of Small Business Issuer in Its Charter)
FLORIDA Pending
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
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22 South Links Avenue, Suite 204
Sarasota, Florida 34236
Telephone: (941) 330-8051
Copies to:
Clayton E. Parker, Esq.
Troy J. Rillo, Esq.
Kirkpatrick & Lockhart LLP
201 S. Biscayne Boulevard, Suite 2000
Miami, Florida 33131
Telephone: (305) 539-3300
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Securities to be registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class to be so Registered on Which Each Class is to be Registered
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None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.001 per share
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PART I
FORWARD-LOOKING STATEMENTS. Some of the statements contained in this
Form 10-SB constitute forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 (the "1933 Act"). These statements relate to
future events, and are identified by words such as "may," "will," "should,"
"expect," "scheduled," "plan," "intend," "anticipate," "believe," "estimate,"
"potential," or "continue" or the negative of such terms or other similar words.
You should read these statements carefully because they discuss our future
expectations, and we believe that it is important to communicate these
expectations to our shareholders or potential shareholders. However, these
statements are only anticipations. Actual events may differ materially. In
evaluating these statements, you should specifically consider various factors,
including the factors discussed under "Risk Factors" and "Management's
Discussion and Analysis or Plan of Operation." These factors may cause our
actual results to differ materially from any forward-looking statement.
ITEM 1. DESCRIPTION OF BUSINESS.
OVERVIEW. We are August Project 1 Corp., a Florida corporation. Since
our formation in July 1997, we have been active in seeking potential operating
businesses and business opportunities with the intent to acquire or merge with
such businesses. We have been in the development stage since inception and have
undertaken no business operations to date. Other than issuing stock to our
original shareholders, we have never commenced any operational activities. As
such, we are considered a "shell" corporation, as our principal purpose is to
locate and consummate a merger or acquisition with a private entity. Our company
does not have any cash or other material assets, nor does it have a source of
revenue to cover operating costs and to allow us to continue as a going concern.
Accordingly, our independent accountants have included in our financial
statements a going concern qualification footnote. Further, there can be no
assurance that we will have the ability to acquire or merge with an operating
business, business opportunity or property that will be of material value to us.
Our proposed business activities classify our company as a "blank
check" company. Many states have enacted statutes, rules and regulations
limiting the sale of securities of "blank check" companies in their respective
jurisdictions.
We are voluntarily filling this registration statement because our
primary attraction to a potential merger partner or acquisition vehicle is
expected to be our status as a public company. Any business combination or
transaction will likely result in a significant issuance of stock and
substantial dilution to our present shareholders. A business combination or
transaction will likely result in our shareholders losing a controlling interest
in our company.
Any target acquisition or merger candidate of our company will become
subject to the same reporting requirements as we are upon consummation of any
merger or acquisition. Thus, in the event we successfully complete the
acquisition of or merger with an operating business, such business must provide
audited financial statements for at least the two most recent fiscal years or,
in the event the business opportunity has been in business for less than two
years, audited financial statements will be required from the period of
inception. This could limit our potential target business opportunities due to
the fact that many private business opportunities either do not have audited
financial statements or are unable to produce audited statements without undo
time and expense.
Our principal executive offices are located at 22 South Links Avenue,
Suite 204, Sarasota, Florida 34236, telephone number (941) 330-8051. These
offices are provided for without rent or other expense by our President and sole
Director, Earl T. Ingarfield.
SALE OF CONTROL. On January 27, 2000, Mr. Ingarfield purchased
approximately 97.3% of our outstanding common stock from two shareholders of our
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company. As a result, Mr. Ingarfield is the principal shareholder of our
company, and through his ownership of our common stock, he is able to exert
significant control over our operations, including the election of directors.
SOURCES OF BUSINESS OPPORTUNITIES. Management will use its referral
sources to attempt to identify operating businesses that may be interested in
being acquired by our company. We do not intend to limit our search to any
specific kind of industry or business. Management cannot predict at this time
the status or nature of any venture in which we may participate. A potential
venture might need additional capital or merely desire to have its shares
publicly traded. The most likely scenario for a possible business arrangement
would involve the acquisition of or merger with an operating business that does
not need additional capital, but which merely desires to establish a public
trading market for its shares. Management believes that our company could
provide a potential public vehicle for a private entity interested in becoming a
publicly held corporation without the time and expense typically associated with
an initial public offering.
EVALUATION OF BUSINESS OPPORTUNITIES. If any operating business is
identified as a potential acquisition or merger candidate, management will seek
to determine whether such acquisition or merger is warranted or whether further
investigation is necessary. Such determination will generally be based on
management's knowledge and experience, or with the assistance of outside
advisors and consultants evaluating the preliminary information available to
them. Management may elect to engage outside independent consultants to perform
preliminary analysis of potential business opportunities. However, we may not
have the necessary funds for a complete and exhaustive investigation of any
particular opportunity due to our lack of capital.
Because of our current financial situation, having no assets and no
operating history, in the event we do successfully acquire or merge with an
operating business opportunity, it is likely that our present shareholders will
experience substantial dilution and there will be a probable change in control.
Most likely, the owners of the business opportunity which we acquire or merge
with, if any, will acquire control of our company following such transaction.
Management has not established any guidelines as to the amount of stock it will
offer to prospective business opportunities, rather management will attempt to
negotiate the best possible agreement for the benefit of our shareholders.
Management does not presently intend to borrow funds to compensate any
persons, consultants, promoters, or affiliates in relation to the consummation
of a potential merger or acquisition. However, if we engage outside advisors or
consultants in its search for business opportunities, it may be necessary for us
to attempt to raise additional funds. As of the date hereof, we have not made
any arrangements or definitive agreements to use outside advisors or consultants
or to raise any capital. In the event our company does need to raise capital,
most likely the only method would be the private sale of its securities. These
possible private sales would most likely come from management or persons known
by them or to venture capitalists that would be willing to accept the risks
associated with investing in a company with no current operations. None of these
people have any legal obligation to provide any capital to our company.
In the case of a future acquisition or merger, there exists a
possibility that a condition of such transaction might include the sale of
shares presently held by our officers or directors to parties affiliated with or
designated by the potential business opportunity. Presently, management has no
plans to seek or actively negotiate such terms. However, if this situation does
arise, management is obligated to follow our company's Articles of Incorporation
and all applicable corporate laws in negotiating such an arrangement. If this
situation arises, it is unlikely that similar terms and conditions would be
offered to all other shareholders or that the shareholders would be given the
opportunity to approve such a transaction.
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RIGHTS OF SHAREHOLDERS. Under Florida law, shareholders of a surviving
entity are not entitled to vote to approve a possible acquisition or merger,
except under certain circumstances which are not likely to apply. Furthermore,
certain actions that would routinely be taken at a meeting of shareholders, may
be taken by written consent of shareholders having not less than the minimum
number of votes that would be necessary to authorize or take the action at a
meeting of shareholders. Thus, if shareholders holding a majority of our
company's outstanding stock decide by written consent to consummate an
acquisition or a merger, minority shareholders would not be given the
opportunity to vote on the issue. Our President, Earl T. Ingarfield, owns
approximately 97.3% of our company's common stock and therefore he could alone
approve by written consent any transaction requiring the vote of the holders of
a majority of our company's stock. Regardless of whether an action to acquire or
merge is ratified by written consent or by holding a shareholders' meeting, our
company will provide to its shareholders any disclosure documentation required
by the Securities Exchange Act of 1934 (the "Exchange Act") or Florida law,
which information is likely to include audited financial statements of the
target.
COMPETITION. Because our company has not identified any potential
acquisition or merger candidate, it is unable to evaluate the type and extent of
its likely competition. We are aware that there are other public companies with
only nominal assets that are also searching for operating businesses and other
business opportunities as potential acquisition or merger candidates. Our
business will be in direct competition with these other public companies in our
search for business opportunities and, due to our lack of funds, it may be
difficult to successfully compete with these other companies.
EMPLOYEES. As of the date hereof, our company does not have any
full-time employees and has no plans for hiring employees until such time as our
business warrants the expense, or until we successfully acquire or merge with an
operating business. We may find it necessary to periodically hire part-time
clerical help on an as-needed basis. Our company's management will devote only
such time to our company as necessary to maintain its viability. It is estimated
that management will devote less than ten hours per month to our present
business activities.
FACILITIES. Our company is currently using as its principal place of
business the business office and address of the principal shareholder, Earl T.
Ingarfield, located in Sarasota, Florida. Although we have no written agreement
and pay no rent for the use of this facility, it is contemplated that at such
future time as our company acquires or merges with an operating business, we
will secure commercial office space from which we will conduct business.
However, until such time as we complete an acquisition or merger, the type of
business in which we will be engaged and the type of office and other facilities
that will be required is unknown. We have no current plans to secure such
commercial office space.
INDUSTRY SEGMENTS. No information is presented regarding industry
segments. Our company is presently a development stage company seeking a
potential acquisition of or merger with a yet to be identified business
opportunity. Reference is made to the statements of income included herein in
response to Part F/S of this Form 10-SB for a report of our operating history
for the past two fiscal years.
CERTAIN BUSINESS RISK FACTORS
Our company is subject to various risks which may materially harm our
business, financial condition, and results of operations. YOU SHOULD CAREFULLY
CONSIDER THE RISKS AND UNCERTAINTIES DESCRIBED BELOW AND THE OTHER INFORMATION
IN THIS FILING BEFORE DECIDING TO PURCHASE OUR COMMON STOCK. THESE ARE NOT THE
ONLY RISKS AND UNCERTAINTIES THAT WE FACE. IF ANY OF THESE RISKS OR
UNCERTAINTIES ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION OR OPERATING
RESULTS COULD BE MATERIALLY HARMED. IN THAT CASE, THE TRADING PRICE OF OUR
COMMON STOCK IF ONE DEVELOPS COULD DECLINE AND YOU COULD LOSE ALL OR PART OF
YOUR INVESTMENT.
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WE HAVE NO OPERATING HISTORY OR REVENUE FROM WHICH TO EVALUATE OUR
BUSINESS
We have had no operating history or revenue from operations since
inception. In addition, we have no assets or financial resources. Due to our
lack of operations and revenue, we expect to incur operating losses for the
foreseeable future. Due to our lack of operations, there is limited information
upon which investors can evaluate our business. Our independent auditors have
noted that our company does not have significant cash or a source of revenue to
cover its operating costs and to allow it to continue as a going concern.
External capital will be required for us to continue as a going concern. We have
no commitments or other sources of capital available to us. Our inability to
continue as a going concern could result in a decline of our stock price, and
you could lose money.
BECAUSE WE HAVE NO OPERATIONS OUR FUTURE BUSINESS OPPORTUNITIES ARE
HIGHLY SPECULATIVE
The success of our proposed plan of operation will be highly dependent
on any business opportunity which may be acquired in the future. Because we have
not identified any such business opportunity, the nature of our future business
operations, if any, will be highly speculative. There can be no assurance that
we will be successful in acquiring any business opportunity, and we cannot
predict the type of business operations any such business opportunity may
conduct. You should consider the likelihood of our future success to be highly
speculative in view of our lack of operating history, as well as a lack of any
identifiable business opportunity. Our inability to acquire an operating
business in a timely manner or at all could cause a decline in our stock price.
WE MAY NOT BE ABLE TO IDENTIFY A BUSINESS OPPORTUNITY DUE TO THE
SCARCITY OF AND COMPETITION FOR SUCH BUSINESS OPPORTUNITIES
A large number of established and well-financed entities, including
venture capital firms, are active in mergers and acquisitions of a relatively
small number of suitable business opportunities. Nearly all of these entities
have significantly greater financial resources, technical expertise and
managerial capabilities than we do and, consequently, we will be at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Additional competition for
suitable business opportunities comes from other public "shell" companies,
similar to our company. Our inability to identify and combine with a suitable
business opportunity could cause a decline in our stock price, and you could
lose money.
WE HAVE NO AGREEMENT TO ENTER INTO A BUSINESS COMBINATION OR OTHER
TRANSACTION
We have no agreement to acquire or merge with another entity, and there
can be no assurance that we will be successful in identifying and evaluating
suitable business opportunities or in consummating a business combination. If
identified there can be no assurance that we will be able to negotiate a
business combination on terms favorable to our company. Management has not
identified any particular industry or specific business within an industry for
evaluation by our company. Moreover, we have not established any criteria by
which to judge a business opportunity, including a specific length of operating
history or level of earnings, assets or net worth. Accordingly, we may enter
into a business combination with a business opportunity having no significant
operating history, losses, limited or no potential for earnings, limited assets,
negative net worth, or other negative characteristics. Any of these factors may
cause a decline in our stock price, and you could lose money.
OUR MANAGEMENT IS EXPECTED TO EXERT SIGNIFICANT INFLUENCE OVER THE
DIRECTION OF OUR COMPANY AND WILL DEVOTE A LIMITED AMOUNT OF TIME TO IDENTIFYING
BUSINESS OPPORTUNITIES
Through their stock ownership, management will be able to exert
significant influence over the direction of our company and its business
opportunities. None of our officers has entered into a written employment
agreement with our company, and none is expected to do so in the future. We do
not maintain any key man life insurance. Management is expected to devote about
10 hours per month to the present business of our company. As such, management's
ability to identify a suitable business opportunity will be limited. Despite
these factors, the loss of the services of these individuals, particularly Earl
T. Ingarfield, will jeopardize our ability to identify a suitable business
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opportunity and jeopardize our ability to continue operations. This outcome
would likely cause our stock price to decline.
OUR OPERATIONS LACK DIVERSIFICATION
Our proposed operations, even if successful, will in all likelihood
result in our engaging in a business combination with a business opportunity.
Consequently, our activities may be limited to those engaged in by such a
business opportunity. Our inability to diversify our activities into a number of
areas may subject us to economic fluctuations within a particular business or
industry, which may adversely impact our operations and result in a lower stock
price.
MANAGEMENT MAY PARTICIPATE IN BUSINESS DEALINGS WHICH COMPETE WITH OUR
COMPANY
Management may in the future participate in business dealings which
compete with the operations of our company. This may include the formation of
other public "shell" companies, in which event, management will be able to
choose which public "shell" company should acquire or merge with an identified
business opportunity. If our company acquires or merges with a business
opportunity, then management may have or develop other business dealings which
compete with the operations of such business opportunity. This may make it more
difficult for our company to identify a business opportunity or materially harm
the operations of such business opportunity. These events, if realized, may
cause our stock price to decline.
HOLDERS OF OUR STOCK SHOULD EXPECT A CHANGE IN CONTROL UPON THE
CONSUMMATION OF A BUSINESS COMBINATION, IF ANY
If we are able to consummate a business combination, we expect to be
required to issue shares of stock to the shareholders of the target business. We
believe this stock issuance will result in the shareholders of the target
business obtaining a controlling interest in our company. Any such business
combination may require our management to sell or transfer all or a portion of
his stock in our company or resign as officers and directors. This change of
control would preclude management's participation in the future affairs of our
company.
HOLDERS OF OUR STOCK WILL BE DILUTED UPON CONSUMMATION OF A BUSINESS
COMBINATION, IF ANY
Upon consummation of a business combination, if any, we expect to issue
new stock to the shareholders of the target business. This will reduce the
percentage of stock owned by our shareholders, and may result in a change of
control. In such event, if the price of our stock does not increase by a
corresponding amount, the value of the shareholders stock may decline.
TARGETS WILL BE REQUIRED TO HAVE AUDITED FINANCIAL STATEMENTS, WHICH
REQUIREMENT MAY DELAY OR PRECLUDE AN ACQUISITION OR MERGER
We believe that any potential business opportunity must provide audited
financial statements for up to three years. One or more attractive business
opportunities may choose to forego the possibility of a business combination
with our company, rather than incur the expenses associated with preparing
audited financial statements.
THERE ARE DISADVANTAGES OF A BLANK CHECK OFFERING
We may enter into a business combination with an entity that desires to
establish a public trading market for its stock. A business opportunity may
attempt to avoid what it deems to be adverse consequences of undertaking its own
public offering by seeking a business combination with us. Such consequences
include times delays of the registration process, significant expenses incurred
in such undertaking or loss of voting control to public shareholders. You should
consider these motivations in determining whether to become a shareholder in our
company.
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WE MAY BE SUBJECT TO THE INVESTMENT COMPANY ACT OF 1940, WHICH WOULD
RESULT IN SIGNIFICANT REGISTRATION AND COMPLIANCE COSTS
We do not believe that our company will be subject to the Investment
Company Act of 1940 because we will not be engaged in the business of investing
or trading in securities. If we engage in business combinations in which we end
up holding passive investment interests in a number of entities, we could be
subject to regulation under the Investment Company Act of 1940. In such event,
we would be required to register as an investment company and could be expected
to incur significant registration and compliance costs.
HOLDERS OF RESTRICTED STOCK WILL NOT BE ALLOWED TO DELL SUCH STOCK FOR
90 DAYS
Much of our outstanding common stock constitutes "restricted
securities" under Rule 144 promulgated under the 1933 Act. Restricted securities
are securities acquired from an issuer or an affiliate of an issuer in a
transaction not involving a public offering (i.e., a private placement). Such
securities may be sold in accordance with Rule 144. Upon the effective date of
this filing, our company will become a "reporting" company and will be required
to file periodic reports with the Securities and Exchange Commission. Pursuant
to Rule 144, a reporting company must be subject to the reporting requirements
for a period of at least 90 days immediately prior to a sale of restricted
securities. As such, holders of restricted securities will not be able to rely
on Rule 144 to sell restricted securities for a 90 day period immediately
following the effective date of this filing. Even after the expiration of this
90 day period, holders of restricted securities must, prior to selling such
securities, present our company with a legal opinion in satisfactory form
stating that such securities may be sold in reliance on Rule 144.
OUR COMMON STOCK MAY BE DEEMED TO BE "PENNY STOCK"
Our common stock may be deemed to be "penny stock" as that term is
defined in Rule 3a51-1 promulgated under the Securities Exchange Act of 1934.
Penny stocks are stock:
o With a price of less than $5.00 per share;
o That are not traded on a "recognized" national exchange;
o Whose prices are not quoted on the Nasdaq automated quotation
system (Nasdaq listed stock must still have a price of not less
than $5.00 per share); or
o In issuers with net tangible assets less than $2.0 million (if
the issuer has been in continuous operation for at least three
years) or $5.0 million (if in continuous operation for less than
three years), or with average revenues of less than $6.0 million
for the last three years.
Broker/dealers dealing in penny stocks are required to provide
potential investors with a document disclosing the risks of penny stocks.
Moreover, broker/dealers are required to determine whether an investment in a
penny stock is a suitable investment for a prospective investor. These
requirements may reduce the potential market for our common stock by reducing
the number of potential investors. This may make it more difficult for investors
in our common stock to resell shares to third parties or to otherwise dispose of
them.
This could cause our stock price to decline.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
THE FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE
CONSOLIDATED FINANCIAL STATEMENTS OF OUR COMPANY AND THE NOTES THERETO APPEARING
ELSEWHERE IN THIS FILING.
OVERVIEW. Our company is considered a development stage company which
has had no operations or income since inception in 1997. The costs and expenses
associated with the preparation and filing of this registration statement have
been paid for by funds advanced to our company by an officer pursuant to a note
payable. It is anticipated that we will require capital to maintain our
corporate viability and necessary funds, including funds to cover expenses
associated with being a public company, which will most likely be provided by
management. However, unless we are able to facilitate an acquisition of or
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merger with an operating business or to obtain significant outside financing,
there is substantial doubt about its ability to continue as a going concern.
BALANCE SHEET. At December 31, 1999 and 1998, we had no current or
total assets and no current or total liabilities.
INCOME STATEMENT. We have not had any revenue since inception. No
revenues are anticipated prior to us consummating an acquisition or merger and,
until such time, we will attempt to minimize our expenses. Our main operating
expenses are expected to consist of the costs or complying with the reporting
requirements of the 1933 Act, including legal and accounting fees. For the years
ended December 31, 1999 and 1998, we recorded no expenses. Our net loss was $0.
PLAN OF OPERATION
We intend to seek to acquire assets or stock of an entity actively
engaged in business in exchange for our stock. We have no agreement with any
business opportunity, and we have not engaged in negotiations regarding any such
acquisition.
We have no full time employees. We do not intend to use any employees,
with the possible exception of part-time clerical assistance on an as-needed
basis. Outside advisors or consultants will be used only if they can be obtained
for minimal cost or on a deferred payment basis. Management has agreed to devote
a portion of their time (expected to be approximately 10 hours per month) to the
company's present business plan, without compensation. Management believes that
the present business plan of our company can be implemented by their devoting
minimal time to such business plan. As a result, conflicts of interest may arise
with respect to the limited time commitment by management.
Management may in the future become involved with other companies who
have a business purpose similar to that of our company. As a result, potential
conflicts of interest may arise in the future. See "Risk Factors "Management may
participate in business dealings which compete with our company."
We will only be able to satisfy our present and future cash
requirements prior to a business combination, including the payment of legal and
accounting fees associated with filing requisite reports under the Exchange Act,
if management pays such expenses with their personal funds. These amounts may be
loaned to us, or management may purchase additional stock, in exchange for
paying such expenses on our behalf. We will be permitted to borrow money from,
or to sell stock in one or more private placements to, unrelated parties,
although such proceeds are unlikely to be available to us given our financial
position.
GENERAL BUSINESS PLAN
Our company's purpose is to seek, investigate and acquire an interest
in one or more business opportunities presented to us. We will not restrict our
search to any specific business, industry, or geographical location, and we may
participate in a business venture of virtually any kind or nature. We expect to
be able to participate in only one potential business opportunity because of our
lack of assets and financial resources. This lack of diversification should be
considered a substantial risk to shareholders because it will not permit our
company to offset potential losses from one business opportunity against gains
from another.
We may seek a business opportunity with entities which have recently
commenced operations, or which desire to utilize the public marketplace in order
to raise additional capital. We may acquire assets and establish wholly-owned
subsidiaries in various businesses or acquire existing businesses as
subsidiaries.
We anticipate that the selection of a business opportunity in which to
participate will be complex and extremely risky. Due to general economic
conditions, rapid technological advances, and shortages of available capital, we
believe that there are business opportunities seeking the perceived benefits of
a public corporation. Such perceived benefits may include facilitating or
improving the terms on which additional equity financing may be sought,
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providing liquidity for stock options, or similar benefits to key employees,
providing liquidity for all shareholders and other factors. Potentially,
available business opportunities may occur in many different industries and at
various stages of development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely difficult
and complex.
We have and will likely continue to have no capital with which to
provide to the owners of business opportunities. However, we believe we offer
such owners the opportunity to acquire a controlling ownership interest in a
publicly registered company without incurring the cost and time required to
conduct an initial public offering. The owners of business opportunities will,
however, incur significant legal and accounting costs in connection with
acquisition of a business opportunity, including the costs of preparing Form
8-K's, 10-K's and 10-Q's, agreements and related reports and documents. The
Exchange Act specifically requires that any merger or acquisition candidate
comply with all applicable reporting requirements, which include providing
audited financial statements to be included within the numerous filings relevant
to complying with the Exchange Act. Despite these perceived benefits, we have
not conducted market research and are not aware of statistical data which would
support the perceived benefits of a merger or acquisition transaction for the
owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, our management, none of whom is a professional
business analyst or experienced in such analysis. Management intends to
concentrate on identifying preliminary prospective business opportunities which
may be brought to its attention. In analyzing prospective business
opportunities, we will consider such matters as we deem appropriate, including
the available technical, financial and managerial resources, working capital and
other financial requirements, history of operations, if any, prospects for the
future, nature of present and expected competition, management experience, and
other factors.
Operating expenses will be kept to a minimum in the implementation of
our business plan. The most significant operating expenses are expected to be
the cost of complying with the reporting requirements under the Exchange Act,
including legal and accounting fees.
We cannot accurately predict the structure any future business
combination will take. In structuring a business combination, however, we may
become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement. We may also acquire stock or assets of an existing
business. On the consummation of a transaction, we expect that our current
management and shareholders will no longer be in control of our company.
INFLATION
In the opinion of management, inflation has not and will not have a
material effect on our operations until such time as we successfully complete an
acquisition or merger. At that time, management will evaluate the possible
effects of inflation on our company related to it business and operations
following a successful acquisition or merger.
GOING CONCERN OPINION
Our independent auditors have added an explanatory paragraph to their
audit opinions issued in connection with the 1999 and 1998 financial statements
which states that our company does not have significant cash or other material
assets to cover its operating costs and to allow it to continue as a going
concern. Our ability to obtain additional funding will determine our ability to
continue as a going concern. Our financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
ITEM 3. DESCRIPTION OF PROPERTY.
We have no properties and at this time have no agreement to acquire any
properties. We operate from the offices of our President and sole Director, Earl
T. Ingarfield, at 22 South Links Avenue, Suite 204, Sarasota, Florida 34236.
This space is provided on a rent free basis, and it is anticipated that this
arrangement will remain until such time as we successfully consummate a merger
or acquisition. We believe that this space will meet our needs for the
foreseeable future.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth as of February 21, 2000, the names,
addresses and stock ownership in our company for the current sole director and
named executive officers of our company and every person known to our company to
own five percent (5%) or more of the issued and outstanding shares of the common
stock:
<TABLE>
<CAPTION>
SHARES BENEFICIARY PERCENTAGE
TITLE OF CLASS: NAME AND ADDRESS OF BENEFICIAL OWNER: OWNED: OF CLASS(1):
- -------------- ------------------------------------ ----- -----------
<S> <C> <C> <C>
Common Earl T. Ingarfield 4,867,000 97.3%
22 South Links Avenue, Suite 204
Sarasota, Florida 34236
Common Jerry Busiere 0 0.0%
22 South Links Avenue, Suite 204
Sarasota, Florida 34236
</TABLE>
- ----------------------
(1) Based on the number of shares of common stock outstanding as of February 21,
2000. On such date, we had 5,000,000 shares of common stock outstanding, and we
had no outstanding options or other securities convertible into shares of common
stock.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Information concerning our current executive officers and directors is
set forth in the following table:
NAME: AGE: POSITION:
---- --- --------
Earl T. Ingarfield 40 President, Chief Executive Officer
and Director
Jerry Busiere 65 Secretary
EARL T. INGARFIELD has been the Chief Executive Officer, President and
the sole Director since February 2000. Since June 1998, Mr. Ingarfield has been
the Chief Executive Officer, President and a Director of Avid Sportswear & Golf
Corp., a company which designs, manufactures and markets sports apparel. Since
June 30, 1995, Mr. Ingarfield has also been the owner of Lido Capital
Corporation, a privately-held company in Sarasota, Florida, and a principal
shareholder of our company. From 1979 to 1987, he was a professional hockey
player for the Atlanta Flames, Calgary Flames and Detroit Red Wings. For many
years, he has also been involved in Indy-car racing, offshore boat racing and is
an avid golfer.
JERRY BUSIERE has been the Secretary since February 2000. Since June
1998, Mr. Busiere has been the Secretary, Treasurer and a Director of Avid
Sportswear & Golf Corp., a company which designs, manufactures and markets
sports apparel. From 1997 to July 1998, he was Controller of Lido Capital
Corporation, a privately-held company owned by Mr. Ingarfield. From 1989 to
1995, he was a Senior Rate Analyst and Chief Financial Officer of
Poly-Portables, Inc., a Georgia-based manufacturing company. From 1962 to 1988,
he owned his own accounting practice. He has served as a consultant for numerous
companies, such as Wellcraft Boat Manufacturing, Englewood Disposal Service,
Poly-Portables, Inc., Colony Beach Resort, Buccaneer Inn and Far Horizon
Resorts. He received an A.S. Degree in 1973 from the University of South Florida
in Sarasota, Florida.
ITEM 6. EXECUTIVE COMPENSATION.
No compensation is paid or anticipated to be paid to management. We
have not entered into employment agreements with either Mr. Ingarfield or Mr.
Busiere, and we do not intend to enter into any employment agreements until such
10
<PAGE>
time as we acquire a business opportunity, if at all. Management has agreed to
act without compensation until a business opportunity is acquired, if at all. No
compensation is being accrued for management, and we do not anticipate issuing
stock to management in exchange for their services. If we acquire or merge with
a business opportunity, current management may resign and be replaced by persons
associated with the business acquired. If any member of management remains after
acquiring a business opportunity, that member's time commitment may be adjusted
based on the nature and method of acquisition and location of the business
acquired. Compensation of management will be determined by the new board of
directors, and our shareholders will not have the opportunity to vote on or
approve such compensation.
The sole director does not receive any compensation for his duties as a
director.
No retirement, pension, profit sharing, stock option, or other employee
benefit plan has been adopted by our company for the benefit of its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In connection with our organization, on July 11, 1997, we issued a
total of 5,000,000 shares of stock to our officers, directors, and other
individuals known to our officers and directors. These individuals paid a total
purchase price of $2,000.
Our officers and directors are subject to the doctrine of corporate
opportunities only insofar as it applies to business opportunities in which our
company has indicated an interest, either through its proposed business plan or
by way of an express statement of interest contained in our minutes. If
directors are presented with business opportunities that may conflict with
business interests identified by us, such opportunities must be promptly
disclosed to the Board of Directors and made available to us. In the event the
Board shall reject an opportunity so presented and only in that event, any of
our officers and directors may avail themselves of such an opportunity. Every
effort will be made to resolve any conflicts that may arise in favor of us.
There can be no assurance, however, that these efforts will be successful.
Under Rule 405 promulgated under the 1933 Act, Messrs. Ingarfield and
Busiere may be deemed to be promoters of our company. See "Directors, Executive
Officers, Promoters and Control Persons." Only the participation of the named
officers and sole director will be material to the operations of our company and
no promoters (as that term is defined in Regulation C, Rule 405) exist, other
than the officers and sole director of our company, who will act on our behalf.
There exist no agreements or understandings for any officer or the sole director
to resign at the request of another person and none of the officers or sole
director will act on the behalf of, or at the direction of, any other person.
ITEM 8. DESCRIPTION OF SECURITIES.
AUTHORIZED CAPITAL STOCK. The authorized capital stock of our company
consists of 50,000,000 shares of common stock and 10,000,000 shares of preferred
stock. As of the date hereof, we have 5,000,000 shares of common stock
outstanding. The following description is a summary of our capital stock and is
subject to and qualified in its entirety by reference to the provisions of the
Articles of Incorporation and the Bylaws of our company, which are included as
exhibits to this filing.
COMMON STOCK. Each share of common stock entitles the holder to one
vote on each matter submitted to a vote of our shareholders, including the
election of directors. There is no cumulative voting. Subject to preferences
that may be applicable to any outstanding preferred stock, shareholders are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors. Shareholders have no preemptive, conversion
or other subscription rights. There are no redemption or sinking fund provisions
available to the common stock. In the event of liquidation, dissolution or
winding up of our company, shareholders are entitled to share ratably in all
assets remaining after payment of liabilities, subject to prior distribution
rights of preferred stock, if any, then outstanding.
11
<PAGE>
PREFERRED STOCK. The Board of Directors is authorized, subject to any
limitations prescribed by Florida law, or the rules of any quotation system or
national securities exchange on which stock of our company may be quoted or
listed, to provide for the issuance of shares of preferred stock in one or more
series; to establish from time to time the number of shares to be included in
each such series; to fix the rights, powers, preferences, and privileges of the
shares of such series, without any further vote or action by the shareholders.
Depending upon the terms of the preferred stock established by the Board of
Directors, any or all series of preferred stock could have preference over the
common stock with respect to dividends and other distributions and upon
liquidation of our company or could have voting or conversion rights that could
adversely affect the holders of the outstanding common stock. Our company has no
present plans to issue any shares of preferred stock.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE ARTICLES OF INCORPORATION,
BYLAWS AND FLORIDA LAW
The following provisions of the Articles of Incorporation and Bylaws of
our company could discourage potential acquisition proposals and could delay or
prevent a change in control of our company. Such provisions may also have the
effect of preventing changes in the management of our company.
AUTHORIZED BUT UNISSUED STOCK. The authorized but unissued shares of
common stock and preferred stock are available for future issuance without
shareholder approval. These additional shares may be utilized for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions and employee benefit plans.
BLANK CHECK PREFERRED STOCK. The existence of authorized but unissued
and unreserved shares of preferred stock may enable the Board of Directors to
issue shares to persons friendly to current management which would render more
difficult or discourage an attempt to obtain control of our company by means of
a proxy contest, tender offer, merger or otherwise, and thereby protect the
continuity of our company's management.
FLORIDA BUSINESS COMBINATION LAW. Florida has enacted legislation that
may deter or frustrate takeovers of Florida corporations. This law generally
prohibits a Florida corporation from engaging in a business combination with an
"interested shareholder" (defined generally as any person who beneficially owns
10% or more of the outstanding voting stock of our company or any person
affiliated with such person) for a period of three years following the date that
such shareholder became an interested shareholder, unless the combination or the
purchase of shares made by the interested shareholder on the interested
shareholder's date of acquiring shares is approved by the board of directors of
the corporation before that date. A corporation may not engage in any
combination with an interested shareholder of the corporation after the
expiration of three years after his date of acquiring shares unless:
o The combination or the purchase of shares made by the interested
shareholder is approved by the board of directors of the
corporation before the date such interested shareholder acquired
such shares;
o A combination is approved by the affirmative vote of the holders
of stock representing a majority of the outstanding voting power
not beneficially owned by the interested shareholder proposing
the combination, or any affiliate or associate of the interested
shareholder proposing the combination, at a meeting called for
that purpose no earlier than three years after the interested
shareholder's date of acquiring shares; or
o If the aggregate amount of cash and the market value, as of the
date of consummation, of consideration other than cash to be
received per share by all of the holders of outstanding common
shares of the corporation not beneficially owned by the
interested shareholder, satisfies the fair value requirements of
Florida law.
12
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
Our company's shares of common stock began trading on the National
Quotation Bureau's "pink sheets" on September 16, 1999, under the symbol "AUUI."
No shares of our company's common stock have previously been registered with the
Commission or any state securities agency or authority. Our company's high and
low bid prices by quarter since our stock was first quoted on the pink sheets
are as follows:
CALENDAR YEAR 1999(1)
HIGH BID LOW BID
-------- -------
Fourth quarter $0.50 $0.50
- -------------------------
(1) These quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not necessarily represent actual transactions.
There are no bid or ask prices reported for the period January 1, 2000
to February 22, 2000. On February 21, 2000, our company had approximately 35
shareholders of record. Of the 5,000,000 shares outstanding as of February 22,
2000, 133,000 shares are eligible for resale under Rule 144 promulgated under
the 1933 Act, subject to certain limitations. There are no options or warrants
to purchase, or securities convertible into, the Company's stock.
We have not paid dividends in the past on any class of stock and we do
not anticipate paying dividends in the foreseeable future. There are no
restrictions that limit the payment of future dividends on any class of stock.
We intend to apply to the NASD for quotation on the OTC Bulletin Board.
Our company's application to the NASD will consist of current corporate
information, financial statements and other documents as required by Rule
15c2-11 of the Exchange Act. Inclusion on the OTC Bulletin Board permits price
quotations for our company's shares to be published by such service. Even if the
NASD permits our company's stock to be quoted on the OTC Bulletin Board, there
can be no assurance that an active trading market will ever exist or be
maintained. Also, secondary trading of our company's shares may be subject to
certain state imposed restrictions regarding shares of shell companies. Except
for the application to the OTC Bulletin Board, there are no plans, proposals,
arrangements or understandings with any person concerning the development of a
trading market in any of our company's securities.
The ability of an individual shareholder to trade their shares in a
particular state may be subject to various rules and regulations of that state.
A number of states require that an issuer's securities be registered in their
state or appropriately exempted from registration before the securities are
permitted to trade in that state. Presently, our company has no plans to
register its securities in any particular state. Further, most likely our
company's shares will be subject to the provisions of Section 15(g) and Rule
15g-9 of the Exchange Act, commonly referred to as the "penny stock" rule.
Section 15(g) sets forth certain requirements for transactions in penny stocks
and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in
Rule 3a51-1 of the Exchange Act. See Risk Factors - "Our common stock may be
deemed to be `penny stock."
DIVIDEND POLICY
Our company has not declared or paid cash dividends or made
distributions in the past, and our company does not anticipate that it will pay
cash dividends or make distributions in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS.
None.
13
<PAGE>
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
On July 11, 1997, in connection with the formation of our company, we
issued 5,000,000 shares to thirty five individuals for total consideration of
$2,000 of services provided by such individuals. This transaction was exempt
from registration pursuant to Section 4(2) of the 1933 Act because all such
individuals were believed to be sophisticated and given sufficient access to all
information regarding our company.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to authority conferred by applicable Florida law, our Articles
of Incorporation provide that our directors, officers, and employees be
indemnified to the fullest extent permitted by Florida law.
14
<PAGE>
AUGUST PROJECT I CORP.
(A Development Stage Company)
PART F/S
TABLE OF CONTENTS TO FINANCIAL STATEMENTS:
PAGE
INDEPENDENT AUDITORS' REPORT.....................................F-2
ASSETS...........................................................F-3
LIABILITIES AND STOCKHOLDERS' EQUITY.............................F-4
STATEMENT OF OPERATIONS..........................................F-5
STATEMENT OF STOCKHOLDERS' EQUITY................................F-6
STATEMENT OF CASH FLOWS..........................................F-7
NOTES TO FINANCIAL STATEMENTS..................................F-8-9
F-1
<PAGE>
BARRY L FRIEDMAN, P.C.
CERTIFIED PUBLIC ACCOUNTANT
1582 Tulita Drive Office (702) 361-8414
Las Vegas, Nevada 89123 Fax No. (702) 896-0278
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors
August Project I Corp. February 21, 2000
Miami, Florida
I have audited the accompanying Balance Sheets of August Project I
Corp. (a Development Stage Company), as of December 31, 1999, December 31, 1998,
and December 31, 1997, and the related statements of operations, stockholders'
equity and cash flows for the two years ended December 31, 1999, December 31,
1998, and the period July 10, 1997 (inception), to December 31, 1997. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of August Project I
Corp. (A Development Stage Company) as of December 31, 1999, December 31, 1998,
and December 31, 1997, and the results of its operations and cash flows for the
two years ended December 31, 1999, December 31, 1998, and the period July 10,
1997 (inception), to December 31, 1997, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note #3 to the
financial statements, the Company has no established source of revenue. This
raises substantial doubt about its ability to continue as a going concern.
Management's plan in regard to these matters are also described in Note #3. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Barry L. Friedman
- ---------------------------------
Barry L. Friedman
Certified Public Accountant
F-2
<PAGE>
AUGUST PROJECT I CORP.
(A Development Stage Company)
BALANCE SHEET
-------------
ASSETS
------
December December December
31, 1999 31, 1998 31, 1997
CURRENT ASSETS $ 0 $ 0 $ 0
------- ------- -------
TOTAL CURRENT ASSETS $ 0 $ 0 $ 0
------- ------- -------
OTHER ASSETS $ 0 $ 0 $ 0
------- ------- -------
TOTAL OTHER ASSETS $ 0 $ 0 $ 0
------- ------- -------
TOTAL ASSETS $ 0 $ 0 $ 0
------- ------- -------
The accompanying notes are an integral part of these financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
AUGUST PROJECT I CORP.
(A Development Stage Company)
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
December December December
31, 1999 31, 1998 31, 1997
<S> <C> <C> <C>
CURRENT LIABILITIES $ 0 $ 0 $ 0
---------- --------- ---------
TOTAL CURRENT LIABILITIES $ 0 $ 0 $ 0
---------- --------- ---------
STOCKHOLDERS' EQUITY (Note #1)
Common Stock, $.001 par value authorized
50,000,000 Shares issued and outstanding at
December 31, 1997-5,000,000 shs $ 5,000
December 31, 1998-5,000,000 shs $ 5,000
December 31, 1997-5,000,000 shs $ 5,000
Additional paid in Capital -3,000 -3,000 -3,000
Deficit accumulated during the development stage -2,000 -2,000 -2,000
---------- --------- ---------
TOTAL STOCKHOLDERS' EQUITY $ 0 $ 0 $ 0
---------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 0 $ 0 $ 0
========== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
AUGUST PROJECT I CORP.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Year Year July 10, July 10, 1997
Ended Ended 1997, to (inception) to
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1997 1999
---------- ---------- ---------- --------------
INCOME
<S> <C> <C> <C> <C>
Revenue $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- -------------
EXPENSES
General, Selling and Administrative $ 0 $ 0 $ 2,000 $ 2,000
---------- ---------- ---------- -------------
Total Expenses $ 0 $ 0 $ 2,000 $ 2,000
---------- ---------- ---------- -------------
Net Loss $ 0 $ 0 $ -2,000 $ -2,000
========== ========== ========== ============
Net Loss per weighted share (Note #2) $ NIL $ NIL $ -.0004 $ -.0004
========== ========== ========== ============
Weighted average number of common shares
outstanding 5,000,000 5,000,000 5,000,000 5,000,000
========== ========== ========== ============
</TABLE>
The accompanying notes are in integral part of these financial statements
F-5
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Additional
Common Stock paid-in Accumulated
Shares Amount capital Deficit
------ ------ ------- -------
<S> <C> <C> <C> <C>
July 11, 1997 issued for services 5,000,000 $ 5,000 $ -3,000 $ 0
Net loss, July 10, 1997, to December 31, 1997 -2,000
--------- -------- -------- ---------
Balance, December 31, 1997 5,000,000 $ 5,000 $ -3,000 $ -2,000
Net loss year ended December 31, 1998 0
--------- -------- -------- ---------
Balance, December 31, 1998 5,000,000 $ 5,000 $ -3,000 $ -2,000
Net loss year ended December 31, 1999 0
--------- -------- -------- ==-------
Balance, December 31, 1999 5,000,000 $ 5,000 $ -3,000 $ -2,000
========= ======== ======== =========
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
Year Year July 10, July 10, 1997
Ended Ended 1997, to (inception) to
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1997 1999
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities
Net Loss $ 0 $ 0 $ -2,000 $ -2,000
Adjustment to reconcile net loss to net cash
provided by operating activities 0 0 0 0
Issuance of common stock for services 0 0 +2,000 +2,000
Changes in assets and liabilities
Increase in current liabilities 0 0 0 +0
------- ------- ------ -------
Net cash used in operating activities $ 0 $ 0 $ 0 $ 0
Cash Flows from investing activities 0 0 0 0
Cash Flows from financing activities
Issuance of common stock for cash 0 0 0 0
------- ------- ------ -------
Net increase (decrease) in cash $ 0 $ 0 $ 0 $ 0
Cash, Beginning of period 0 0 0 0
------- ------- ------ -------
Cash, End of period $ 0 $ 0 $ 0 $ 0
======= ======= ====== =======
</TABLE>
F-7
<PAGE>
AUGUST PROJECT I CORP.
(A Development Stage Company)
December 31, 1999, December 31, 1998, and December 31, 1997
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - History and Organization of the Company
The Company was organized July 10, 1997, under the laws of the State of
Florida as August Project I Corp. The Company currently has no operations and,
in accordance with SFAS #7, is considered a development company.
On July 11, 1997, the Company issued 5,000,000 shares of its $.001 par
value common stock for services of $2,000.
NOTE 2 - Accounting Policies and Procedures
The Company has not determined its accounting policies and procedures,
except as follows:
l. The Company uses the accrual method of accounting.
2. Earnings or loss per share is calculated using the weighted averaged
number of shares of common stock outstanding.
3. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
NOTE 3 - Going Concern
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek additional capital
through a merger with an existing operating company.
NOTE 4 - Warrants and Options
There are no warrants or options outstanding to acquire any additional
shares of common stock.
F-8
<PAGE>
AUGUST PROJECT I CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS CONTINUED
December 31, 1999, December 31, 1998, and December 31, 1997
NOTE 5 - Related Party Transactions
The Company neither owns or leases any real or personal property.
Office services are provided without charge by an officer. Such costs are
immaterial to the financial statements and accordingly, have not been reflected
therein. The officers and directors of the Company are involved in other
business activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests.
The Company has not formulated a policy for the resolution of such conflicts.
F-9
<PAGE>
AUGUST PROJECT I CORP.
(A Development Stage Company)
PART III
ITEMS 1 AND 2. INDEX TO EXHIBITS AND DESCRIPTION.
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- --------
2.01 Stock Purchase Agreement dated as of January Provided herewith.
27, 2000 among our company, Lido Capital
Corporation, Eric P. Littman and Dennis Sturm
3.01 Articles of Incorporation filed on July 10, Provided herewith.
1997 with the Florida Secretary of State
3.02 Articles of Amendment to Articles of
Incorporation Provided herewith.
3.03 Bylaws Provided herewith.
11.01 Statement re: Computation of Earnings Not Applicable.
16.01 Letter on Change in Certifying Accountant Not Applicable.
21.01 Subsidiaries of our company Not Applicable.
23.01 Consent of Independent Accountants Provided herewith.
24.01 Power of Attorney Not Applicable.
27.01 Financial Data Schedule Provided herewith.
15
<PAGE>
AUGUST PROJECT I CORP.
(A Development Stage Company)
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunder duly authorized.
Date: February 24, 2000
-------------------
By: /s/ Earl T. Ingarfield
-----------------------------
Name: Earl T. Ingarfield
---------------------------
Title: President
--------------------------
16
EXHIBIT 2.01
------------
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into
on January 27, 2000, by and among LIDO CAPITAL CORP., a Florida corporation
("Lido Capital"), AUGUST PROJECT 1 CORP., a Florida corporation ("August
Project"), and ERIC P. LITTMAN and DENNIS STURM (individually, a "Shareholder"
and collectively, the "Shareholders").
RECITALS:
--------
A. The Shareholders own four million nine hundred sixty-seven thousand
(4,967,000) shares of the $0.001 par value per share common stock (the "August
Project Common Stock") of August Project, which represents 99.34% of all of the
outstanding August Project Common Stock.
B. The Shareholders desire to sell four million eight hundred sixty-seven
thousand (4,867,000) shares of the August Project Common Stock (the "Shares"),
which represents 97.34% of all of the outstanding August Project Common Stock,
in exchange for One Hundred Fifty Thousand Dollars (US $150,000.00) on the terms
and conditions set forth herein.
AGREEMENT:
---------
NOW, THEREFORE, in consideration of the mutual agreements, covenants and
premises set forth herein for certain other good and valuable consideration, the
receipt and adequacy which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. STOCK PURCHASE, PURCHASE PRICE AND RELATED TRANSACTIONS.
-------------------------------------------------------
1.1. Purchase Price and Sale. Lido Capital shall acquire and the
Shareholders shall sell the Shares to Lido Capital.
1.2. Purchase Price. In consideration of the purchase by Lido
Capital of the Shares, Lido Capital shall pay to the Shareholders at the Closing
(as defined herein) the aggregate purchase price of One Hundred Fifty Thousand
Dollars (US $150,000.00) (the "Purchase Price").
1.3. Closing and Effective Date. The closing shall take place at the
offices of Kirkpatrick & Lockhart llp, Miami Center, 20th Floor, 201 South
Biscayne Boulevard, Miami, Florida 33131 (the "Closing"). The date of the
Closing is the date hereof and is referred to herein as the "Closing Date".
<PAGE>
2. ADDITIONAL AGREEMENTS.
---------------------
2.1. Compliance with Obligations. The Shareholders shall cause
August Project to comply with all obligations of August Project under this
Agreement.
2.2. Confidential Treatment of Information. From and after the date
hereof, the parties hereto shall and shall cause their representatives to hold
in confidence this Agreement (including the Schedules hereto), all matters
relating hereto and all data and information obtained with respect to the other
parties or their business, except such data or information as is published or is
a matter of public record, or as compelled by legal process.
2.3. Public Announcements. The parties will consult with each other
before issuing any press releases or otherwise making any public statement with
respect to this Agreement or any of the transactions contemplated hereby and no
party will issue any such press release or make any such public statement
without the prior written consent of the other parties, except as may be
required by law or by the rules and regulations of any governmental authority or
securities exchange.
2.4. Further Assurances. The parties shall deliver any and all other
instruments or documents required to be delivered pursuant to, or necessary or
proper in order to give effect to, the provisions of this Agreement, including
without limitation, all necessary stock powers and such other instruments of
transfer as may be necessary or desirable to transfer ownership of the Shares to
Lido Capital and to consummate the transactions contemplated by this Agreement.
3. REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE SHAREHOLDERS AND
--------------------------------------------------------------------
AUGUST PROJECT.
- --------------
To further induce Lido Capital to enter into this Agreement and to
consummate the transactions contemplated hereby, August Project and the
Shareholders each hereby jointly and severally represent and warrant to and
covenant with Lido Capital as follows:
3.1. Organization and Qualification: Absence of Subsidiaries. August
Project is a corporation duly organized and validly existing and in good
standing under the laws of the State of Florida and in any other jurisdiction
where qualification is necessary or required and has the requisite power and
authority to own, lease and operate its properties and to carry on its business
as it is currently being conducted. August Project is in good standing in the
State of Florida.
3.2. Capitalization and Related Matters.
3.2.1. Shares; Capitalization. The authorized capital stock of
August Project consists solely of 50,000,000 shares of common stock, $0.001 par
value per share, of which 5,000,000 shares are issued and outstanding and none
are held in its treasury. All of the Shares are owned of record, legally and
beneficially by the Shareholders. The Shares are free and clear of any and all
security interests, encumbrances, and rights of any kind or nature whatsoever
(collectively, "Encumbrances"), and upon delivery of the Shares hereunder, Lido
Capital will acquire title thereto, free and clear of any and all Encumbrances.
2
<PAGE>
There exist no Securities Rights (as defined herein) with respect to the August
Project Common Stock. All rights and powers to vote the Shares are held
exclusively by the Shareholders. All of the August Project Common Stock is
validly issued, fully paid and nonassessable, was not issued in violation of the
terms of any agreement or other understanding, and was issued in compliance with
all applicable federal and state securities or "blue sky" laws and regulations.
The certificates representing the Shares to be delivered to Lido Capital at the
Closing are, and the signatures and endorsements thereof or stock powers
relating thereto will be, valid and genuine. For the purposes of this section,
"Securities Rights" means, with respect to the August Project Common Stock
(whether issued or unissued) or any other securities convertible into or
exchangeable for August Project Common Stock, and includes all written or
unwritten contractual rights relating to the issuance, sale, assignment,
transfer, purchase, redemption, conversion, exchange, registration or voting of
the August Project Common Stock and all rights conferred by August Project's
governing documents and by any applicable agreement.
3.2.2. Liabilities and Obligations. August Project has no debt,
obligation or liability, absolute, fixed, contingent or otherwise, of any nature
whatsoever, whether due or to become due, including any unasserted claim,
whether incurred directly or by any predecessor thereto, and whether arising out
of any act, omission, transaction, circumstance, state of facts or other
condition.
3.3. Articles of Incorporation and By-Laws. August Project has
heretofore made available to Lido Capital a complete and correct copy of the
Articles of Incorporation and the By-Laws of August Project. Such Articles of
Incorporation and By-Laws are in full force and effect.
3.4. Authority Relative to This Agreement. August Project and each
Shareholder has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated by this Agreement. Each Shareholder has full right
and capacity to enter into this Agreement and to carry out his obligations
hereunder. The execution and deliver of this Agreement by August Project and
each Shareholder, the performance by each such Shareholder of his obligations
hereunder and the consummation by August Project of the transactions
contemplated by this Agreement have been duly authorized by all necessary action
on the part of August Project or such Shareholders as are necessary to authorize
this Agreement or to consummate the transactions contemplated by this Agreement.
This Agreement has been duly and validly executed and delivered by August
Project and each Shareholder and constitutes the legal, valid and binding
obligations of August Project and each Shareholder, enforceable against August
Project and each Shareholder in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other similar laws of general application affecting the enforcement of
creditors' rights generally.
3.5. Financial Statements. True and complete copies of the audited
balance sheet of August Project for the fiscal period ended as of July 9, 1999
(the "Balance Sheet Date") and the related audited statements of income,
stockholders' equity and cash flows for the periods then ended, and the audited
balance sheets of August Project for the fiscal periods ended December 31, 1998
and December 31, 1997 and the related statements of operations, stockholders'
3
<PAGE>
equity and cash flows for the periods then ended, with all related notes and
schedules thereto, accompanied by the reports thereon by August Project's
accountants (collectively referred to herein as the "August Project Financial
Statements") have been delivered by August Project. The August Project Financial
Statements (i) were prepared in accordance with the books of account and other
financial records of August Project, (ii) present fairly the financial condition
and results of operations of August Project as of the dates thereof or for the
periods covered thereby, (iii) have been prepared in accordance with U.S. GAAP
(except as may be indicated in the notes thereto) applied on a basis consistent
with the past practices of August Project and (iv) include all adjustments
(consisting only of normal recurring accruals) that are necessary for a fair
presentation of the financial condition of August Project and the results of the
operations of August Project as of the dates thereof or for the periods covered
thereby.
3.6. Absence of Litigation. There is no legal or administrative
action or proceeding pending or, to the knowledge of August Project or the
individual Shareholders after reasonable investigation, threatened against
August Project or the Shares.
3.7. Taxes. August Project has (a) filed all federal, state, local
and foreign tax returns required to be filed by it prior to the date of this
Agreement (taking into account extensions), and (b) paid or accrued all Taxes.
For purposes of this Agreement, "Tax" or "Taxes" means any and all taxes, fees,
levies, duties, tariffs, imposts and other charges of any kind (together with
any and all interest, penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any government or taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature or
excise, withholding, ad valorem, stamp, transfer, value added or gains taxes,
license, registration and documentation fees, and custom duties, tariffs and
similar charges.
3.8. Execution; No Inconsistent Agreements; Etc.
3.8.1. This Agreement is a valid and binding agreement of
August Project and each Shareholder, enforceable against each of them in
accordance with its terms.
3.8.2. The execution and delivery of this Agreement by the
Shareholders and August Project does not, and the consummation of the
transactions contemplated hereby will not, constitute a breach or violation of
the charter or by-laws of August Project, or a default under any of the terms,
conditions or provisions of (or an act or omission that would give rise to any
right of termination, cancellation or acceleration under) any material note,
bond, mortgage, lease, indenture, agreement or obligation to which August
Project or any Shareholder is a party, pursuant to which August Project or any
Shareholder otherwise receives benefits, or to which any of the properties of
August Project or any Shareholder is subject.
3.9. Corporate Records. The statutory records, including the stock
register and minute books of August Project, fully reflect all issuances,
transfers and redemptions of their capital stock, correctly show and will
correctly show the total number of shares of its capital stock issued and
outstanding on the date hereof and on the Closing Date, the charter or other
4
<PAGE>
organizational documents and all amendments thereto, and their by-laws as
amended and currently in force.
3.10. Absence of Changes. Except as described in Schedule 3.10, from
the Balance Sheet Date to the date of this Agreement, there has been no adverse
change in the business, assets, liabilities, results of operations or financial
condition of August Project.
3.11. Contingencies. There are no actions, suits, claims or
proceedings pending, or, to the knowledge of August Project and each Shareholder
after reasonable investigation, threatened against, by or affecting August
Project in any court or before any arbitrator or governmental agency or which
could adversely affect the right or ability of August Project or the
Shareholders to consummate the transactions contemplated hereby. To the
knowledge of each Shareholder after reasonable investigation, there is no valid
basis upon which any such action, suit, claim, or proceeding may be commenced or
asserted against August Project. There are no unsatisfied judgments against
August Project and no consent decrees or similar agreements to which August
Project is subject.
3.12. Environmental Matters. Except as disclosed in Schedule 3.12:
(i) August Project is not in violation, in any material respect, of any
Environmental Law (as defined herein); and (ii) August Project is not liable or
responsible for any clean up, fines, liability or expense arising under any
Environmental Law, as a result of the disposal of Wastes or other materials in
or on the property of August Project (whether owned or leased), or in or on any
other property, including property no longer owned, leased or used by August
Project. As used herein, (a) "Environmental Laws" means, collectively, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, as amended, the
Clean Air Act, as amended, the Clean Water Act, as amended, any other
"Superfund" or "Superlien" law or any other federal, or applicable state or
local statute, law, ordinance, code, rule, regulation, order or decree (foreign
or domestic) regulating, relating to, or imposing liability or standards of
conduct concerning, Wastes, or the environment; and (b) "Wastes" means and
includes any hazardous, toxic or dangerous waste, liquid, substance or material
(including petroleum products and derivatives), the generation, handling,
storage, disposal, treatment or emission of which is subject to any
Environmental Law.
3.13. Full Disclosure. No representation or warranty of August
Project or the Shareholders contained in this Agreement, and none of the
statements or information concerning August Project contained in this Agreement
and any Exhibits and Schedules hereto, contains or will contain any untrue
statement of a material fact nor will such representations, warranties,
covenants or statements taken as a whole omit a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
5
<PAGE>
4. REPRESENTATIONS AND WARRANTIES OF LIDO CAPITAL.
----------------------------------------------
To induce August Project and the Shareholders to enter into this Agreement
and to consummate the transactions contemplated hereby, Lido Capital represents
and warrants to and covenants with August Project and the Shareholders as
follows:
4.1. Organization. Lido Capital is a corporation duly organized,
validly existing and in good standing under the laws of _______________________.
4.2. Execution; No Inconsistent Agreements; Etc.
4.2.1. The execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been or will be prior
to the Closing Date duly and validly authorized and approved by Lido Capital and
this Agreement is a valid and binding agreement of Lido Capital, enforceable
against Lido Capital in accordance with its terms, except as such enforcement
may be limited by bankruptcy or similar laws affecting the enforcement of
creditors' rights generally, and the availability of equitable remedies.
4.2.2. The execution and delivery of this Agreement by Lido
Capital does not, and the consummation of the transactions contemplated hereby
will not, constitute a breach or violation of the charter or by-laws of Lido
Capital, or a default under any of the terms, conditions or provisions of (or an
act or omission that would give rise to any right of termination, cancellation
or acceleration under) any material note, bond, mortgage, lease, indenture,
agreement or obligation to which Lido Capital or any of its subsidiaries is a
party, pursuant to which any of them otherwise receive benefits, or by which any
of their properties may be bound.
4.3. Contingencies. There are no actions, suits, claims or
proceedings pending or, to Lido Capital's knowledge, threatened, against, by or
affecting Lido Capital in any court or before any arbitrator or governmental
agency which could materially and adversely affect the right or ability of Lido
Capital to consummate the transactions contemplated hereby.
4.4. Full Disclosure. No representation or warranty of Lido Capital
contained in this Agreement, and none of the statements or information
concerning Lido Capital contained in this Agreement, contains or will contain
any untrue statement of a material fact nor will such representations,
warranties, covenants or statements taken as a whole omit a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
5. INDEMNIFICATION.
---------------
5.1. Indemnification by Shareholders and August Project. Subject to
Section 5.3, the Shareholders and August Project (hereinafter collectively
called the "Indemnitor") shall jointly and severally defend, indemnify and hold
harmless Lido Capital, its direct and indirect parent corporations, subsidiaries
(including August Project after Closing) and affiliates, their officers,
directors, employees and agents (hereinafter collectively called "Indemnitees")
against and in respect of any and all loss, damage, liability, fine, penalty,
cost and expense, including reasonable attorneys' fees and amounts paid in
settlement (collectively, "Indemnified Losses"), suffered or incurred by any
Indemnitee by reason of, or arising out of:
(a) any misrepresentation, breach of warranty or breach or
non-fulfillment of any agreement of any Shareholder or August Project contained
in this Agreement or in any certificate, schedule, instrument or document
delivered to Lido Capital by or on behalf of the Shareholders or August Project
pursuant to the provisions of this Agreement (without regard to materiality
thresholds contained therein); and
(b) any liabilities of August Project of any nature whatsoever
(including tax liability, penalties and interest), whether accrued, absolute,
contingent or otherwise, not reflected or reserved against in full in the August
Project Financial Statements.
5.2. Indemnification by Lido Capital. Subject to Section 5.3, Lido Capital
(hereinafter called the "Indemnitor") shall defend, indemnify and hold harmless
each Shareholder and August Project (hereinafter called "Indemnitee") against
and in respect of any and all loss, damage, liability, cost and expense,
6
<PAGE>
including reasonable attorneys' fees and amounts paid in settlement
(collectively, "Indemnified Losses"), suffered or incurred by Indemnitee by
reason of or arising out of:
(a) any misrepresentation, breach of warranty or breach or
non-fulfillment of any material agreement of Lido Capital contained in this
Agreement or in any other certificate, schedule, instrument or document
delivered to the Shareholders by or on behalf of Lido Capital pursuant to the
provisions of this Agreement; and
(b) any liabilities of August Project of any nature
whatsoever (including tax liability, penalties and interest), whether accrued,
absolute, contingent or otherwise, arising from Lido Capital's ownership or
operation of August Project after Closing, but only so long as such liability is
not the result of an act or omission, of August Project, or any Shareholder
occurring prior to Closing.
5.3. Limitation on Indemnification. The aggregate liability of the
Shareholders after Closing for Indemnified Losses shall not exceed an amount
equal to the Purchase Price paid to the Shareholders. The aggregate liability of
Lido Capital after Closing for Indemnified Losses shall not exceed an amount
equal to the Purchase Price paid to the Shareholders.
6. MISCELLANEOUS.
-------------
6.1. Notices.
6.1.1. All notices, requests, demands, or other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given upon delivery if delivered in person or if sent by Federal
Express (or similar recognized overnight courier service) to the parties at the
following addresses:
7
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(a) If to Shareholders:
to the addresses contained on the signatures page
of this Agreement
(b) If to Lido Capital:
Lido Capital Corp.
c/o Avid Sportswear & Golf Corp.
22 South Links Avenue
Sarasota, Florida 34236
Attention: Earl Ingarfield
With a copy to:
Clayton E. Parker, Esq.
Kirkpatrick & Lockhart LLP
201 S. Biscayne Blvd.
Suite 2000, Miami Center
Miami, Florida 33131
6.1.2. Notices may also be given in any other manner permitted
by law, effective upon actual receipt. Any party may change the address to which
notices, requests, demands or other communications to such party shall be
delivered or mailed by giving notice thereof to the other parties hereto in the
manner provided herein.
6.2. Survival. The representations, warranties, agreements and
indemnifications of the parties contained in this Agreement or in any writing
delivered pursuant to the provisions of this Agreement shall survive any
investigation heretofore or hereafter made by the parties and the consummation
of the transactions contemplated herein and shall continue in full force and
effect and survive after the Closing.
6.3. Counterparts; Interpretation. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and all of
which shall constitute one instrument. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof, and this Agreement contains the sole and entire agreement among
the parties with respect to the matters covered hereby. All Schedules and
Exhibits hereto shall be deemed a part of this Agreement. This Agreement shall
not be altered or amended except by a written instrument signed by or on behalf
of all of the parties hereto. No ambiguity in any provision hereof shall be
construed against a party by reason of the fact it was drafted by such party or
its counsel. For purposes of this Agreement "herein," "hereby," "hereof,"
"hereunder," "herewith," "hereafter" and "hereinafter" and similar words refer
to this Agreement in its entirety, and not to any particular subsection or
paragraph. References to "including" means including without limiting the
generality of any description preceding such term. Nothing expressed or implied
in this Agreement is intended, or shall be construed, to confer upon or give any
8
<PAGE>
person other than the parties hereto any rights or remedies under or by reason
of this Agreement.
6.4. Governing Law; Venue. The validity and effect of this Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Florida, without regard to principles of conflicts of laws thereof. Any
dispute, controversy or question of interpretation arising under, out of, in
connection with or in relation to this Agreement or any amendments hereof, or
any breach or default hereunder, shall be litigated in the appropriate state or
federal court in Miami-Dade County, Florida. Each of the parties hereby
irrevocably submits to the jurisdiction of any state or federal court located in
Miami-Dade County, Florida, and each party irrevocably waives any objections it
may have to such venue, including without limitation, an objection based on the
assertion that such venue constitutes an inconvenient forum.
6.5. Partial Invalidity and Severability. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only to
the extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any terms of this Agreement not essential to the commercial
purpose of this Agreement shall be held to be illegal, invalid or unenforceable
by a court of competent jurisdiction, it is the intention of the parties that
the remaining terms hereof shall constitute their agreement with respect to the
subject matter hereof and all such remaining terms shall remain in full force
and effect. To the extent legally permissible, any illegal, invalid or
unenforceable provision of this Agreement shall be replaced by a valid provision
which will implement the commercial purpose of the illegal, invalid or
unenforceable provision.
6.6. Waiver. Any term or condition of this Agreement may be waived at any
time by the party which is entitled to the benefit thereof, but only if such
waiver is evidenced by a writing signed by such party. No failure on the part of
a party hereto to exercise, and no delay in exercising, any right, power or
remedy created hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy by any such party
preclude any other future exercise thereof or the exercise of any other right,
power or remedy. No waiver by any party hereto to any breach of or default in
any term or condition of this Agreement shall constitute a waiver of or assent
to any succeeding breach of or default in the same or any other term or
condition hereof.
6.7. Headings. The headings as to contents of particular paragraphs of
this Agreement are inserted for convenience only and shall not be construed as a
part of this Agreement or as a limitation on the scope of any terms or
provisions of this Agreement.
6.8. Expenses. Except as otherwise expressly provided herein, all legal
and other costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by Lido Capital or the
Shareholders as each party incurs such expenses, and none of such expenses shall
be charged to or paid by August Project.
6.9. Finder's Fees. Lido Capital represents to the Shareholders that no
broker, agent, finder or other party has been retained by it in connection with
the transactions contemplated hereby and that no other fee or commission has
been agreed by Lido Capital to be paid for or on account of the transactions
9
<PAGE>
contemplated hereby. Shareholders represent to Lido Capital that no broker,
agent, finder or other party has been retained by Shareholders or August Project
in `connection with the transactions contemplated hereby and that no other fee
or commission has been agreed by the Shareholders or August Project to be paid
for or on account of the transactions contemplated hereby.
6.10. Gender. Where the context requires, the use of the singular form
herein shall include the plural, the use of the plural shall include the
singular, and the use of any gender shall include any and all genders.
6.11. Acceptance by Fax. This Agreement shall be accepted, effective and
binding, for all purposes, when the parties shall have signed and transmitted to
each other, by telecopier or otherwise, copies of the signature pages hereto.
6.12. Attorneys' Fees. In the event of any litigation or other proceeding
arising out of or in connection with this Agreement, the prevailing party or
parties shall be entitled to recover its or their reasonable attorneys' fees and
court costs from the other party or parties.
6.13. NO JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF THIS AGREEMENT.
[SIGNATURE PAGE FOLLOWS]
10
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement or caused this Stock Purchase Agreement to be duly executed by their
duly authorized officers as of the date first above written.
LIDO CAPITAL CORP.
By:______________________________
Name:____________________________
Title:___________________________
AUGUST PROJECT 1 CORP.
By:______________________________
Name:____________________________
Title:___________________________
SHAREHOLDERS:
_________________________________
ERIC P. LITTMAN
Address:_________________________
_________________________________
_________________________________
_________________________________
DENNIS STURM
Address:_________________________
_________________________________
_________________________________
EXHIBIT 3.01
------------
ARTICLES OF INCORPORATION
OF
AUGUST PROJECT 1 CORP.
The undersigned, desiring to form a corporation (the "Corporation") under
the laws of Florida, hereby adopts the following Articles of Incorporation:
ARTICLE I
CORPORATE NAME
The name of the Corporation is AUGUST PROJECT 1 CORP.
ARTICLE II
PURPOSE
The Corporation shall be organized for any and all purposes authorized
under the laws of the State of Florida.
ARTICLE III
PERIOD OF EXISTENCE
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
SHARES
The capital stock of this Corporation shall consist of 50,000,000 shares
of common stock $.001 par value.
ARTICLE V
PLACE OF BUSINESS
The initial address of the principal place of business of this Corporation
in the State of Florida shall be 1428 Brickell Avenue, 8th Floor, Miami, FL
33131. The Board of Directors may at any time and from time to time move the
principal office of this Corporation.
ARTICLE VI
DIRECTORS AND OFFICERS
The business of the Corporation shall be managed by its Board of
Directors. The number of such directors shall be not be less than one (1) and,
subject to such minimum may be increased or decreased from time to time in the
manner provided in the By-Laws.
The number of persons constituting of Directors shall be 1. The Board of
Directors shall be elected by the Stockholders of the Corporation at such time
<PAGE>
and in such manner as provided in the By-Laws. The name and addresses of the
initial Board of Directors and officers are as follows:
Eric P. Littman President/Secretary/Director
1428 Brickell Avenue, 8th Floor
Miami, FL 33131
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No shareholder shall have any right to acquire shares or other securities
of the Corporation except to the extent such right may be granted by an
amendment to these Articles of Incorporation or by a resolution of the Board of
Directors.
ARTICLE VIII
AMENDMENT OF BYLAWS
Anything in these Articles of Incorporation, the By-Laws, or the Florida
Corporation Act notwithstanding, By-Laws shall not be adopted, modified, amended
or repeated by the shareholders of the Corporation except upon the affirmative
vote of a simple majority vote of the holders of all the issued and outstanding
shares of the Corporation entitled to vote thereon.
ARTICLE IX
SHAREHOLDERS
9.1 Inspection of Books. The Board of Directors shall make reasonable
rules to determine at what times and places and under what conditions the books
of the Corporation shall be open to inspection by shareholders or a duly
appointed representative of a shareholder.
9.2 Control Share Acquisition. The provisions relating to any control
share acquisition as contained in Florida Statutes now, or hereinafter amended,
and any successor provision shall not apply to the Corporation.
9.3. Quorum. The holders of shares entitled to one-third of the votes at a
meeting of shareholder's shall constitute a quorum.
9.4. Required Vote. Acts of shareholders shall require the approval of
holders of 50.01% of the outstanding votes of shareholders.
ARTICLE X
LIABILITY AND INDEMNIFICATION DIRECTORS AND OFFICERS
To the fullest extent permitted by law, no director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for damages for breach of any duty owed to the Corporation or its shareholders.
In addition, the Corporation shall have the power, in its By-Laws or in any
resolution of its stockholders or directors, to undertake to indemnify the
2
<PAGE>
officers and directors of this Corporation against any contingency or peril as
may be determined to be in the best interests of this Corporation, and in
conjunction therewith, to procure, at this Corporation's expense, policies of
insurance.
ARTICLE XI
SUBSCRIBER
The name and address of the person signing these Articles of Incorporation
as subscriber is:
Eric P. Littman
1428 Brickell Avenue, 8th Floor
Miami, FL 33131
ARTICLE XII
CONTRACTS
No contract or other transaction between this Corporation and any person,
firm or corporation shall be alleged by the fact that any officer or director of
this Corporation is such other party or is, or at some time in the future
becomes, an of ricer, director or partner of such other contracting party, or
has now or hereafter a direct or indirect interest in such contract.
ARTICLE XIII
RESIDENT AGENT
The name and address of the initial resident agent of this Corporation is:
Eric P. Littman
1428 Brickell Avenue, 8th Floor
Miami FL 33131
IN WITNESS W HEREOF I have hereunto subscribed to and executed these
Articles of Incorporation on July 2, 1997.
_______________________
Eric P. Littman
Subscribed and Sworn on July 2, 1997
Before me:
_______________________
Notary Public
My commission expires:
3
INSERT
EXHIBIT 3.02
------------
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
OF AUGUST PROJECT 1 CORP.
In accordance with the terms of Section 607.1006 of the Florida Business
Corporation Act, AUGUST PROJECT 1 CORP., a Florida corporation (the
"Corporation"), hereby adopts the following amendments to its Articles of
Incorporation:
1. Article IV is hereby amended to read as follows:
ARTICLE IV
SHARES
The maximum number of shares which this Corporation is authorized to issue
is Sixty Million (60,000,000), Fifty Million (50,000,000) of which shall be
shares of Common Stock having a par value of $.001 per share, and Ten Million
(10,000,000) of which shall be shares of Preferred Stock having a par value of
$.001 per share. The relative rights and preferences of the Preferred Stock
shall be as determined from time to time by resolution adopted by the Board of
Directors.
2. Article XIII is hereby amended to read as follows:
ARTICLE XIII
REGISTERED AGENT
The name and address of the registered agent of the Corporation is Clayton
E. Parker, c/o Kirkpatrick & Lockhart, 201 South Biscayne Boulevard, 20th Floor,
Miami, Florida 33131.
3. Article IX is hereby added to read as follows:
ARTICLE IX
INDEMNIFICATION
The officer and directors of the Corporation shall be indemnified to the
fullest extent permitted by the laws of the State of Florida.
<PAGE>
In accordance with Section 607.1003 of the Act, the foregoing amendments
to the Articles of Incorporation was adopted by written consent of the majority
shareholder and sole director of the Corporation dated February ____, 2000, and
therefore, the number of votes cast in favor of the amendments was sufficient
for its approval.
AUGUST PROJECT 1 CORP.,
a Florida corporation
By: ________________________________
Earl T. Ingarfield, President
Date: _________________________, 2000
EXHIBIT 3.03
------------
BY-LAWS
OF
AUGUST PROJECT 1 CORP.
ARTICLE I.
OFFICES
In addition to the office of the corporation registered with the Secretary of
State of Florida, the corporation may also have offices at such places both
within and without the State of Florida as the Board of Directors may from time
to time determine or the business of the corporation may require.
ARTICLE II.
SHAREHOLDERS
------------
SECTION 1. ANNUAL MEETING. A meeting of shareholders shall be held
annually between January 1st and December 31st, inclusive, each year for the
purpose of electing directors, and for transacting any other business coming
before the meeting. If the day designated pursuant to Section 4 of this Article
for the annual meeting is a legal holiday in the State of Florida, such meeting
shall be held on the next business day. If the election of directors is not held
on the day so determined for any annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as convenient.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by law or by the Articles of
Incorporation, may be called by the Chairman of the Board, if any, President or
by the Board of Directors, and shall be called by the President or Secretary at
the written request of a majority of the Board of Directors then in office, or
at the written request of shareholders owning not less than one-tenth of all
shares entitled to vote thereat. Such request shall state the purpose or
purposes of the proposed meeting. Business transacted at any special meeting
shall be limited to the purposes stated in the notice thereof.
SECTION 3. PLACE OF MEETING. The Board of Directors may designate any
place, either within or without the State of Florida unless otherwise prescribed
by law or by the Articles of Incorporation, as the place of meeting for any
annual meeting or for any special meeting of the shareholders. If no designation
is made, or if a special meeting is otherwise called, the place of meeting shall
be the principal business office of the corporation.
SECTION 4. NOTICE OF MEETING. Written or printed notice stating the place,
day and hour of the meeting and, in the case of a special meeting, the purpose
or purposes for which the meeting is called, shall be delivered to each
shareholder of record entitled to vote at such meeting not less than ten (10)
days nor more than sixty (60) days before the date of the meeting, either
personally or by first class mail, by or at the direction of the President, the
Secretary, or the officer or persons calling the meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid.
SECTION 5. WAIVER OF NOTICE OF MEETING. Whenever any notice is required to
be given to any shareholder of the corporation under the provisions of law or
under the provisions of the Articles of Incorporation or under these By-Laws, a
<PAGE>
waiver thereof in writing signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be equivalent to
the giving of such notice. Attendance of a person at a meeting shall constitute
a waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the shareholders need be specified in any written
waiver of notice.
SECTION 6. VOTING LIST. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make, at least ten (10) days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, with the address of
and the number and class and series, if any, of shares held by each. Such list
shall be kept on file at the registered office of the corporation, at the
principal place of business of the corporation, or at the office of the transfer
agent or registrar of the corporation, for a period of ten (10) days prior to
such meeting and shall be subject to inspection by any shareholder at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
shareholder at any time during the meeting. The original stock transfer books
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or transfer books or to vote at any meeting of shareholders.
SECTION 7. QUORUM OF SHAREHOLDERS.
(a) Unless otherwise provided in the Articles of Incorporation, a majority
of the shares entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders, but in no event shall a quorum
consist of less than one-third (1/3) of the shares entitled to vote at the
meeting. When a specified item of business is required to be voted on by a class
or series of stock, a majority of the shares of such class or series shall
constitute a quorum for the transaction of such items of business by that class
or series.
(b) If a quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders, unless the vote of a greater number or
voting by classes is required by law or by the Articles of Incorporation or by
these By-Laws.
(c) After a quorum has been established at a shareholders' meeting, the
subsequent withdrawal of shareholders, so as to reduce the number of shares
entitled to vote at the meeting below the number required for a quorum, shall
not affect the validity of any action taken at the meeting or any adjournment
thereof.
SECTION 8. VOTING OF SHARES.
(a) Each outstanding share, regardless of class, shall be entitled to one
vote on each matter submitted to a vote at a meeting of shareholders, except as
may be otherwise provided in the Articles of Incorporation. If the Articles of
Incorporation provide for more or less than one vote for any share, on any
matter, each reference in these By-Laws to a majority or other proportion of
shares shall refer to such majority or other proportion of votes entitled to be
cast.
(b) Treasury shares, shares of this corporation's own stock owned by
another corporation the majority of the voting stock of which is owned or
controlled by it, and shares of its own stock held by the corporation in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
<PAGE>
SECTION 9. PROXIES.
(a) A shareholder may vote either in person or by proxy executed in
writing by the shareholder or his duly authorized attorney-in-fact.
(b) At each election for directors, every shareholder entitled to vote at
such election shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many persons as there are directors to be elected at
that time and for whose election he has a right to vote.
SECTION 10. INFORMAL ACTION BY SHAREHOLDERS.
(a) Unless otherwise provided in the Articles of Incorporation, any action
required by law to be taken at any annual or special meeting of shareholders of
the corporation, or any action which may be taken at any annual or special
meeting of such shareholders, 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. If any class of shares is entitled to vote thereon as a class, such
written consent shall be required of the holders of a majority of the shares of
each class of shares entitled to vote as a class thereon and of the total shares
entitled to vote thereon.
(b) Within ten (10) days after obtaining such authorization by written
consent, notice must be given to those shareholders who have not consented in
writing. The notice shall fairly summarize the material features of the
authorized action and, if the action is a merger, consolidation or sale or
exchange of assets for which dissenter's rights are provided by law, the notice
shall contain a clear statement of the right of dissenting shareholders to be
paid the fair value of their shares upon compliance with further provisions of
law regarding the rights of dissenting shareholders.
ARTICLE III.
BOARD OF DIRECTORS
------------------
SECTION 1. GENERAL POWERS. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the corporation shall be
managed under the direction of, the Board of Directors except as may be
otherwise provided by law or in the Articles of Incorporation.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors of
the corporation shall be not less than one (1). Each director shall hold office
until the next annual meeting of shareholders and until his successor has been
qualified, unless removed by the shareholders at any general or special meeting.
All directors shall be at least eighteen years old.
SECTION 3. ANNUAL MEETING. The Board of Directors may hold an annual
meeting at the same place as and following each annual meeting of shareholders
for the purpose of electing officers and the transaction of such other business
as may come before the meeting. If a majority of the directors is present at
such place and time, no prior notice of such meeting shall be required to be
given to the directors. The place and time of such meeting may also be fixed by
written consent of the directors.
SECTION 4. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without notice at such time and at such place as shall be determined
from time to time by the Board of Directors.
SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board, if any, the President, the sole
director or, if the Board consists of more than one (1) director, by any two (2)
directors. The person or persons authorized to call special meetings of the
Board of Directors may fix the place for holding any special meetings of the
Board of Directors called by them.
<PAGE>
SECTION 6. NOTICE. Notice of any special meeting shall be given at least
two (2) days prior thereto by written notice delivered personally or mailed to
each director at his business address, or by telegram, cablegram, electronic
mail, telecopy (fax), telex or overnight mail service. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail so
addressed with first class postage prepaid. If notice be given by telegram,
cablegram, electronic mail, telecopy or telex, such notice shall be deemed to be
delivered when the telegram or cablegram is delivered to the telegraph or
cablegraph company or when the telex, telecopy or electronic mail is
acknowledged as having been received. Any director may waive notice of any
meeting, either before, at or after such meeting. The attendance of a director
at a meeting shall constitute a waiver of notice of such meeting, except where a
director states at the beginning of the meeting any objection to the transaction
of business because the meeting is not lawfully called or convened.
SECTION 7. QUORUM. A majority of the number of directors fixed by or in
the manner provided in these By-laws or in the absence of a By-law fixing or
providing for the number of directors, a majority of the number stated in the
Articles of Incorporation, shall constitute a quorum for the transaction of
business unless a greater number is required by the Articles of Incorporation.
SECTION 8. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, unless the act of a greater number is required by the Articles of
Incorporation or these By-Laws.
SECTION 9. VACANCIES. Any vacancy occurring in the Board of Directors
including any vacancy created by reason of an increase in the number of
directors, may be filled by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors. A director
elected to fill a vacancy shall hold office only until the next election of
directors by the shareholders.
SECTION 10. COMPENSATION. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors, or a stated salary as directors. No payment
shall preclude any director from serving the corporation in any other capacity
and receiving compensation therefor.
SECTION 11. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of its Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless he
votes against such action or abstains from voting in respect thereto because of
any asserted conflict of interest. To evidence his vote against any action, a
director may file his written dissent to such action with the person acting as
the secretary of the meeting before the adjournment thereof, or forward such
dissent by registered or certified mail, return receipt requested, to the
Secretary of the corporation immediately following the adjournment of the
meeting. Such right to dissent shall not apply to a director who voted in favor
of such action.
SECTION 12. INFORMAL ACTION BY THE BOARD. Unless otherwise provided by the
Articles of Incorporation, any action required by law or these By-Laws to be
taken at a meeting of the directors of the corporation, or any action which may
be taken at a meeting of the directors or a committee thereof, may be taken
without a meeting, if a consent in writing, setting forth the action so to be
taken, signed by all of the directors, or all the members of the committee, as
the case may be, is filed in the minutes of the proceedings of the board or of
the committee. Such consent shall have the same effect as a unanimous vote.
SECTION 13. TELEPHONE MEETINGS. Except as may be otherwise restricted by
the Articles of Incorporation, members of the Board of Directors may participate
in a meeting of the Board by means of a conference telephone or similar
<PAGE>
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time. Participation by such means shall
constitute presence in person at a meeting.
SECTION 14. REMOVAL OF DIRECTORS. Unless the Articles of Incorporation
otherwise provide, at a meeting of shareholders called expressly for that
purpose, directors may be removed in the manner provided in this section. Any
director or the entire Board of Directors may be removed, with or without cause,
by a vote of the holders of a majority of the shares then entitled to vote at an
election of directors. No such removal shall prejudice the contract rights, if
any, of the person removed.
ARTICLE IV.
OFFICERS
--------
SECTION 1. NUMBER. The officers of the corporation shall be a President, a
Secretary and a Treasurer, each of whom shall be elected by the Board of
Directors. The Board of Directors may elect a Chairman of the Board, one or more
Vice Presidents, one or more Assistant Secretaries and Assistant Treasurers and
such other officers, as the Board of Directors shall deem appropriate. Two or
more offices may be held by the same person.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the Board of Directors at its first meeting after
each annual meeting of the shareholders. If the election of officers is not held
at such meeting, such election shall be held as soon thereafter as convenient.
Each officer shall hold office until his successor is duly elected and
qualified, or until his death, or resignation or removal.
SECTION 3. REMOVAL. Any officer or agent elected or appointed by the Board
of Directors may be removed by the Board whenever in its judgment the best
interests of the corporation will be served thereby. Any such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
SECTION 4. VACANCIES. Any vacancy, however occurring, in any office may be
filled by the Board of Directors.
SECTION 5. DUTIES OF OFFICERS. The Chairman of the Board of the
corporation, or if there shall not be a Chairman of the Board, the President,
shall preside at all meetings of the Board of Directors and of the shareholders.
The Chairman of the Board, or if there shall not be a Chairman of the Board, the
President, shall be the chief executive officer of the corporation. Subject to
the foregoing, the officers of the corporation shall have such powers and duties
as usually pertain to their respective offices and such additional powers and
duties specifically conferred by law, by the Articles of Incorporation, by these
By-Laws, or as may be assigned to them from time to time by the Board of
Directors.
SECTION 6. SALARIES. The salaries of the officers shall be fixed from time
to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
corporation.
SECTION 7. DELEGATION OF DUTIES. In the absence of or disability of any
officer of the corporation or for any other reason deemed sufficient by the
Board of Directors, the Board may delegate such officer's powers or duties to
any other officer or to any other director.
<PAGE>
ARTICLE V.
EXECUTIVE AND OTHER COMMITTEES
------------------------------
SECTION 1. CREATION OF COMMITTEES. The Board of Directors, by resolution
passed by a majority of the full Board, may designate an Executive Committee and
one or more other committees. One or more of the directors of the corporation
shall serve at their election.
SECTION 2. EXECUTIVE COMMITTEE. The Executive Committee, if there shall be
one, shall consult with and advise the officers of the corporation in the
management of its business and shall have and may exercise to the extent
provided in the resolution of the Board of Directors creating such Executive
Committee such powers of the Board of Directors as can be lawfully delegated by
the Board.
SECTION 3. OTHER COMMITTEES. Such other committees shall have such
functions as can be lawfully delegated and may exercise the powers of the Board
of Directors to the extent provided in the resolution or resolutions creating
such committee or committees.
SECTION 4. MEETINGS OF COMMITTEES. Regular meetings of the Executive
Committee and other committees may be held without notice at such time and at
such place as shall from time to time be determined by the Executive Committee
or such other committees, and special meetings of the Executive Committee or
such other committees may be called by any member thereof upon five (5) days
notice to each of the other members of such committee, or on such shorter notice
as may be agreed to in writing by each of the other members of such committee,
given either personally or in the manner provided in Section 6 of Article III of
these By-Laws (pertaining to notice for directors' meetings). Members of the
Executive Committee shall be deemed present at a meeting of such Committee if a
conference telephone or similar communications equipment, by means of which all
persons participating in the meeting can hear each other is used.
SECTION 5. VACANCIES ON COMMITTEES. Vacancies on the Executive Committee
or on such other committees shall be filled by the Board of Directors at any
regular or special meeting.
SECTION 6. QUORUM OF COMMITTEES. At all meetings of the Executive
Committee or such other committees, a majority of the committee's members then
in office shall constitute a quorum for the transaction of business.
SECTION 7. MANNER OF ACTING OF COMMITTEES. The acts of a majority of the
members of the Executive Committee or such other committees, present at any
meeting at which there is a quorum, shall be the act of such committee.
SECTION 8. MINUTES OF COMMITTEES. The Executive Committee, if there shall
be one, and such other committees shall keep regular minutes of their
proceedings and report to the Board of Directors when required.
SECTION 9. COMPENSATION. Members of the Executive Committee and such other
committees may be paid compensation in accordance with the provisions of Section
10 of Article III.
ARTICLE VI.
INDEMNIFICATION OF OFFICERS
DIRECTORS, EMPLOYEES AND AGENTS
-------------------------------
SECTION 1. INDEMNIFICATION. The corporation shall, and does hereby,
indemnify any person who was, is, or becomes a party, or is threatened to be
made a party to any threatened, pending, or completed action, suit or
proceeding:
<PAGE>
(a) 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, 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, including any appeal thereof, if he acted in good faith and in a
manner 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 the manner which he
reasonably believed to be in, or not opposed to, the best interests of the
corporation or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) 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, 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, including any appeal thereof, if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, except that no indemnification shall be made in respect of any
claim, issue, or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless, and only to the extent that, 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 circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such court shall deem proper.
(c) To the extent that such director, officer, employee or agent of the
corporation has been, in whole or in part, successful on the merits or otherwise
in defense of any action, suit, or proceeding referred to in Section 1(a) or
1(b) of this Article, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(d) Any indemnification under Section 1(a) or 1(b) of this Article, unless
pursuant to a determination 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 Section 1(a) or 1(b) of
this Article. Such determination shall be made by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit, or proceeding or by the shareholders by a majority vote of a
quorum consisting of shareholders who were not parties to such action, suit, or
proceedings or, if such quorum of directors or shareholders is not obtainable
or, even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion or regardless of whether such
quorum of directors is obtainable, the directors, by majority vote, may submit
the determination to the American Arbitration Association.
SECTION 2. INTERIM EXPENSES. The corporation may, after a preliminary
determination following one of the procedures set forth in Section 1(d) of this
Article, pay expenses (including attorneys' fees) incurred in defending a civil
or criminal action, suit or proceeding, in advance of the final disposition of
such action, suit or proceeding, provided that such preliminary determination is
to the effect that the director, officer, employee or agent has met the
applicable standard of conduct set forth in Section 1(a) and 1(b) of this
Article, and, upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it be ultimately
determined that he is entitled to be indemnified by the corporation as
authorized in this Article.
<PAGE>
SECTION 3. ADDITIONAL INDEMNIFICATION. The corporation shall have the
power to make any other or further indemnification of an officer, director,
employee or agent, both as to action in his official capacity and as to action
in another capacity while holding such office except an indemnification against
gross negligence or willful misconduct, under the following circumstances:
(a) Pursuant to an agreement between the corporation and such officer,
director, employee or agent; or
(b) Pursuant to the vote of shareholders; or
(c) Pursuant to the vote of disinterested directors; or
(d) Pursuant to the written recommendation of independent legal counsel
when the Board of Directors submits determination to such counsel; or
(e) Pursuant to the written award of the American Arbitration Association
when the Board of Directors and person seeking indemnification submit the
determination to the American Arbitration Association.
SECTION 4. SURVIVAL OF INDEMNIFICATION. The corporation shall and does
hereby, indemnify any person, if the requirements of this Article have been met,
without affecting any other rights to which those indemnified may be entitled
under any By-Law, agreement, vote of shareholders or disinterested directors or
recommendation of counsel or otherwise, both as to actions in such person's
official capacity and as to actions in another capacity while holding such
office, and such indemnity shall continue as to a person who has ceased to be a
director, officer, employee or agent, and shall inure to the benefit of the
heirs, executors and administrators of such a person.
SECTION 5. INSURANCE. The corporation may, if approved by the Board of
Directors or Executive Committee, 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 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 the
provisions of this Article or the provisions of Section 607.0850 of the Florida
Statutes.
SECTION 6. NOTIFICATION OF SHAREHOLDERS. If any expenses or other amounts
are paid by way of indemnification, otherwise than by court order or action by
the shareholders or by an insurance carrier pursuant to insurance maintained by
the corporation, the corporation shall, not later than the time of delivery to
shareholders of written notice of the next annual meeting of shareholders,
unless such meeting is held within three months from the date of such payment,
and, in any event, within fifteen months from the date of such payment, deliver
either personally or by mail to each shareholder of record at the time entitled
to vote for the election of directors a statement specifying the persons paid,
the amounts paid, and the nature and status at the time of such payment of the
litigation or threatened litigation. Such written notice may be contained in any
document distributed to shareholders generally and need not be mailed
separately.
ARTICLE VII.
CERTIFICATES REPRESENTING SHARES
--------------------------------
SECTION 1. CERTIFICATES. Every holder of shares in the corporation shall
be entitled to have a certificate or certificates, representing all shares to
which he is entitled. Such certificate or certificates shall be signed by the
President or a Vice President and the Secretary or an Assistant Secretary of the
<PAGE>
corporation and may be sealed with the seal of the corporation or a facsimile
thereof. The certificates shall be numbered and entered into the books of the
corporation as they are issued.
SECTION 2. FACSIMILE SIGNATURES. The signatures of the President or Vice
President and the Secretary or Assistant Secretary may be facsimiles if the
certificate is manually signed on behalf of a transfer agent or a registrar,
other than the corporation itself or an employee of the corporation. In the case
that any officer who signed or whose facsimile signature has been placed upon
such certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of its issuance.
SECTION 3. TRANSFER OF SHARES. Transfers of shares of the corporation
shall be made upon its books by the holder of the shares in person or by his
lawfully constituted representative, upon surrender of the certificate
representing shares in person or by his lawfully constituted representative,
upon surrender of the certificate representing shares for cancellation. The
person in whose name shares stand on the books of the corporation shall be
deemed by the corporation to be the owner thereof for all purposes and the
corporation shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person, whether or not it shall
have express or other notice thereof, save as expressly provided by the laws of
the State of Florida.
ARTICLE VIII.
TRANSFER BOOKS
--------------
SECTION 1. CLOSING OF TRANSFER BOOKS. To determine shareholders for any
purpose, the Board of Directors of the corporation may provide that the stock
transfer books shall be closed for a stated period but not to exceed, in any
case, sixty (60) days. If the stock transfer books are closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders such books shall be closed for at least ten (10) days immediately
preceding such meeting.
SECTION 2. FIXING RECORD DATE. In lieu of closing the stock transfer
books, the Board of Directors may fix a date as the record date for any such
determination of shareholders, such date in any case to be not more than sixty
(60) days and, in the case of a meeting of shareholders, not less than ten (10)
days prior to the date on which the particular action requiring such
determination of shareholders is to be taken.
SECTION 3. NO RECORD DATE FIXED. If the stock transfer books are not
closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of shareholders.
SECTION 4. ADJOURNMENTS. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this Article,
such determination shall apply to any adjournment thereof, unless the Board of
Directors fixes a new record date under this Article for the adjourned meeting.
ARTICLE IX.
DIVIDENDS
---------
The Board of Directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares of capital stock in the manner and
upon the terms and conditions provided by law and by the Articles of
<PAGE>
Incorporation and these By-Laws. Dividends may be paid in cash, in property, or
in the corporation's own shares, subject to the provisions of the Articles of
Incorporation and to law.
ARTICLE X.
FISCAL YEAR
-----------
The fiscal year of the corporation shall be the twelve month period
selected by the Board of Directors which shall be the taxable year of the
corporation for federal income tax purposes.
ARTICLE XI.
SEAL
----
The corporate seal shall bear the name of the Corporation which shall be
set forth between two concentric circles, and inside of the inner circle the
words "SEAL" and the year of incorporation shall be set forth. An impression of
this seal appears on the margin hereof.
ARTICLE XII.
SHARES IN OTHER CORPORATIONS
----------------------------
Shares in other corporations held by this corporation shall be voted by
such officer or officers of this corporation as the Board of Directors shall
from time to time designate for the purpose or by a proxy thereunto duly
authorized by the Board.
ARTICLE XIII.
AMENDMENTS
----------
The power to adopt, alter, amend or repeal these By-Laws shall be vested
in the Board of Directors unless reserved to the shareholders by the Articles of
Incorporation. By-Laws adopted by the Board of Directors or by the shareholders
may be repealed or changed, new By-Laws may be adopted by the shareholders, and
the shareholders may prescribe in any By-Law made by them that such By-Law shall
not be altered, amended, or repealed by the Board of Directors.
EXHIBIT 23.01
LETTERHEAD OF
[BARRY L. FRIEDMAN, P.C.]
To Whom It May Concern: February 21, 2000
The firm of Barry L. Friedman, P.C., Certified Public Accountant consents
to the inclusion of their report of February 21, 2000, on the Financial
Statements of August Project I Corp., as of December 31, 1999, in any filings
that are necessary now or in the near future with the U.S. Securities and
Exchange Commission.
Very truly yours,
/s/ Barry L. Friedman
Barry L. Friedman
Certified Public Accountant
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
AUGUST PROJECT I CORP.
(A Development Stage Company)
EXHIBIT 27.01
FINANCIAL DATA SCHEDULE
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statement of operations of August
Project 1 Corp. and the notes thereto set forth in the filing. This information
is qualified in its entirety by reference to such financial information.
</LEGEND>
<CIK> 0001045260
<NAME> AUGUST PROJECT 1 CORP.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<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-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
