<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or 12 (g) of the Securities Act of 1934
AVANI INTERNATIONAL GROUP INC.
------------------------------------------------
(Name of Small Business Issuer in its charter)
Nevada 88-0367866
------ ----------
(State of (I.R.S. Employer
Incorporation) I.D. Number)
#328-17 Fawcett Road, Coquitlam, B.C. (Canada) V3K 6V2
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer telephone number 604-525-2386.
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Securities to be registered under Section 12 (b) of the Act:
Title of each class Name of exchange on which
to be registered each class is to be registered
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock
--------------------
(Title of Class)
<PAGE>
Part I
Item 1. Description of Business.
-----------------------
Introduction.
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Avani International Group Inc. ("Avani" or "Company") was organized under the
laws of the State of Nevada on November 29, 1995.
Since its inception, the Company has constructed a bottling facility and has
been engaged in the business of developing, manufacturing and distributing an
oxygen enriched, purified bottled water under the trade name "Avani Water".
The Company's executive offices and bottling facility are located at #328-17
Fawcett Road, Coquitlam, British Columbia (Canada) V3K 6V2, and its telephone
number is (604) 525-2386.
General.
- --------
The Company was incorporated in the State of Nevada on November 29, 1995 under
the name Rainfresh Technologies, Inc. and changed its name to Avani
International Group, Inc. on January 14, 1997. The Company has two wholly-owned
subsidiaries, Avani Marketing Corp. and Avani Water Corporation. Avani Marketing
Corp. was organized under the laws of State of Nevada on August 16, 1994. Avani
Water Corporation was organized under the laws of the Province of British
Columbia (Canada) on December 8, 1995. Unless the context indicates otherwise,
(i) all references to the Company herein shall include the Company and its
wholly-owned subsidiaries and (ii) all dollar amounts are expressed in US
dollars. Any reference to Canadian dollars shall be indicated as "Cdn".
Following its incorporation, the Company commenced construction of its bottling
facility in May 1996 which was completed in August 1996. In September 1996, the
Company initiated the production, marketing and sale of its purified, oxygen
enriched water under the brand name "Avani Water". The Company utilizes a unique
technology which injects oxygen into purified water producing an oxygen
enriched, purified bottled water.
The Company sells its product in the greater Vancouver metropolitan area and
internationally to Taiwan, Korea and Singapore. The Company provides home and
business delivery of five gallon bottles in the Vancouver metropolitan area and,
to a limited extent, sells 500 ml and 1.5 liter PET bottles directly to retail
outlets in the Vancouver area. Since December 1996, the Company has exported
both PET sized bottles to Taiwan pursuant to a distribution agreement with a
Taiwan company. In June 1997, the Company initiated distribution to Korea and
Singapore for test marketing purposes pursuant to a distribution agreement with
a local
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Vancouver company. The Company intends to expand its international sales to
other markets, including the Unites States, through licensing agreements,
distribution agreements or joint ventures with third parties.
In December 1995, the Company acquired the exclusive, worldwide rights to the
oxygen enrichment process from a Taiwanese company in exchange for the issuance
of 5,000,000 shares of common stock of the Company. During 1995 and 1996, the
Company raised approximately $2,900,000 from the private placement of its common
stock. The proceeds from such placements were used to construct the bottling
facility and to provide working capital for the Company's operations.
Bottled Water Market.
- ---------------------
The premium bottled water market has experienced rapid growth since the early
1980's as consumers became concerned about the decline in quality of municipal
water available in their homes and offices. This market growth also has been
fueled by an overall health consciousness of the consumer seeking to eliminate
the consumption of foods and beverages containing sugars, calories and
artificial additives, trending instead to consumables with little or no sugars,
calories or additive. Premium bottled water fits squarely within this trend. Per
capita consumption of bottle water rose from 2.8 gallons in 1980 to over 11
gallons per capita in 1995 (Beverage World September 1996). The bottled water
business increased sales by approximately one billion dollars from 1991 to 1996
totaling $3.1 billion in 1996. In 1996, the industry experienced growth of 8.4%,
the second best annual growth in the decade and the PET sized segment grew by
25% (Beverage World April 1997).
The Company considers its product to appeal to consumers of premium bottled
water products and believes that its purity as well as its oxygen enrichment
offers a distinct alternative to other premium bottled waters.
Product and Product Features.
- -----------------------------
The Company manufactures and sells its purified, oxygen enriched water in 500 ml
and 1.5 liter PET bottles and five gallon bottles under the trade name "Avani
Water".
Avani Water contains less than 2 parts per million (ppm) of total dissolved
solids (tds). The tds level of Avani water contrasts to other more recognizable
products such as Evian water with 309 ppm of tds and Perrier water with 505 ppm
of tds. Many regional spring waters fall between 45 and 600 ppm of tds. Total
dissolved solids include metals such as iron, copper and lead, and organic
substances such as herbicides and pesticides. The limited tds content of Avani
water is achieved through a comprehensive filtration process used by the
Company. The
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Company believes that this filtration process together with other aspects of its
bottling process (reverse osmosis, carbon filtration and oxygen enrichment)
enables the Company to deliver a smoother, more polished water when compared to
most other bottled waters.
The Company's unique oxygenation process yields a water containing 26.4 mg/L (or
264 ppm) of dissolved oxygen which is approximately three times higher than the
oxygen content level in Evian brand water or ordinary tap water. Internal tests
performed by the Company indicate that 24 hours after opening a sealed bottle of
Avani water, the oxygen content is reduced to approximately 240 ppm. Ordinary
water and most bottled water (unopened) contain less than 90 ppm of oxygen.
During fiscal year ending December 31, 1996, the Company did not expend any
amounts in research and development costs.
Manufacturing Process.
- ----------------------
The Company purchases its water from the local municipality which is piped to a
holding tank located on premises. From the holding tank, the water flows through
the bottling process at constant pressure. The water initially passes through a
10 micron filter to remove the larger solids and then passes through a series of
finer media filters to remove solids greater than 2 microns in size including
inorganic metals such as iron, copper and lead. The water then passes through
ozonation and carbon filtration processes. Ozonation is the strongest
disinfectant and oxidizing agent available for water treatment and is a standard
disinfectant for bottled water processing. Activated carbon filtration removes
organic compounds such as pesticides and herbicides and associated tastes and
odors. The water next passes through a seven membrane reverse osmosis process
which removes particles greater than 0.001 micron. The water is demagnetized to
remove remaining metals and is exposed to ultraviolet light for aseptic
purposes. The water is then placed in a storage tank where high volumes of
oxygen (O2) is injected into the purified water under pressure creating an
oxygen enriched water product. Following the oxygen enrichment process, the
water is piped to the "clean room". The "clean room" is a completely enclosed
room with an over-balanced ventilation system which feeds filtered, sterile air
to the room. There, the water product is automatically bottled in pre-rinsed
bottles, capped and labeled. The bottles are directed to a case packer which
automatically loads the bottles into shipping cases for distribution.
For quality assurance purposes, the Company tests its product every two hours at
various points in the bottling process, including its finished products.
The Company purchased the plant equipment in 1996. The bottling equipment which
includes a conveyor system together with an automatic rinsing, filling, capping,
labeling and casing system, allows production
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of approximately 100 to 130 bottles per minute of the 500 ml bottles, 30 to 40
bottles per minute for the 1.5 liter bottles and 300 bottles per hour of the
five gallon bottles. The Company is able to produce either the 500 ml or 1.5
liter bottles simultaneously with the 5 gallon bottles. The conversion time to
one of the PET sizes from the other requires approximately one hour. As of June
1997, the plant is operating at 30% of capacity using a one 40 hour shift. Two
additional 40 hour shifts can be added to increase production capacity.
The overall working condition of the Company's plant and equipment is good to
excellent. All of the bottling equipment will operate reliably at the maximum
capacity rated by each respective manufacturer. The Company's trucks and
forklifts are all in good working condition.
The Company is a member in good standing of the Canadian Bottled Water
Association and the International Bottled Water Association.
Sales and Distribution.
- -----------------------
The Company sells its products through its internal sales personnel and through
independent distributors. Its product is sold in the greater Vancouver
metropolitan area and internationally to Taiwan and, as of July 1997, on a
limited basis to Korea and Singapore. The Company provides home and business
delivery of five gallon bottles in the Vancouver metropolitan area and, on a
limited basis, sells 500 ml and 1.5 liter PET bottles directly to retail outlets
in the Vancouver area.
The Company's sales development plan includes an increased local and national
sales to retail outlets, the expansion of existing sales in Taiwan through
existing and other sales channels, and a market expansion to other international
areas, such as the United States and other Pacific Rim countries.
The Company directly markets its five gallon bottles in the greater Vancouver
metropolitan area to business and residential users through its salaried and
commissioned sales staff. In addition, the Company leases water coolers to its
customers which it purchases directly from a manufacturer. Each customer
subscribes for a minimum of 2 bottles per month for a one year period, although
most customers subscribe for 3 or more bottles per month. The customer pays a
minimum charge of $11.80 per month (for two bottles), a one time bottle deposit
charge of $7.35, a one time cooler deposit charge of $73.00 and an annual cooler
lease charge of $73.00. The Company owns and operates two delivery vehicles and
employs two delivery persons to service its customers. As of June 30, 1997, the
Company has approximately 1,200 customers.
The Company also directly markets its 500 ml and 1.5 liter products to a limited
number of specialty food outlets in the Vancouver area. As of June 30, 1997,
direct sales to local retail outlets has been insignificant.
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In addition to its local sales, the Company exports its 500 ml and 1.5 liter
products to Taiwan pursuant to a distribution agreement with Maxzone Enterprises
Co. Ltd., a unaffiliated Taiwanese company. Sales to the distributor commenced
in December 1996 and since such date, sales to the distributor has accounted for
a significant portion of the Company's sales. For fiscal year ended December 31,
1996 and for the six month period ended June 30, 1997, sales to the distributor
accounted for 47% and 64%, respectively, of total bottled water sales.
The Company has limited product distribution of its PET sized products in Canada
and no distribution within the United States. In an effort to develop
distribution channels of these products within Canada and the United States, the
Company has initiated a search for a North American sales manager. The sales
manager will be entrusted with responsibility of developing arrangements with
independent distributors and food brokers servicing large food chains and
convenience stores. As of June 1997, the Company has not hired a North American
sales manager.
Monthly sales to Taiwan has increased from approximately $26,725 for year ended
December 31, 1996 to $171,795 for the six month ended June 30, 1997. The Company
anticipates that sales to Taiwan will continue to increase in the near future
coincident with the continuing marketing efforts undertaken by the distributor.
In the event monthly sales to Taiwan exceed $500,000, the Company anticipates
that it will construct a bottling facility in Taiwan, either independently or in
joint venture with the distributor. At this time, the Company has conducted
limited discussions with the distributor concerning a joint venture facility and
no formal understanding has been reached by the parties. The Company intends to
raise any capital costs required for a bottling facility which may be
independently owned or in a joint venture with third parties through private
transactions. No assurances can be given that the Company will be successful in
these endeavors.
The Company intends to expand its international product sales to other Pacific
Rim markets within the next 12 months. This expansion will be accomplished
through agreements with independent distributors for each targeted territory.
Consistent with this plan, the Company has entered into agreements for product
distribution to Korea and Singapore. In June 1997, the Company entered into an
agreement with a Vancouver company to distribute Avani Water to Korea and
Singapore. In July 1997, shipments of Avani Water were made to both Korea and
Singapore for test marketing purposes. At this time, the Company can not predict
the level of sales which it likely will experience in either of these markets.
Backlog.
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The Company had no backlog for the year ended December 31 1996. There is no
seasonal impact on the Company's sales.
Facilities.
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The Company's maintains it production facilities at its corporate headquarters
located at 328-17 Fawcett Road, Coquitlam, British Columbia (Canada) V3K 6V2.
The total facilities of the Company comprise 14,000 square feet, of which 11,200
square feet is dedicated to production and storage and the remainder dedicated
to its administrative offices.
Competition.
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The bottled water industry is extremely competitive and populated by a
significant number of large regional, national and international companies. Well
established names in the industry, include Evian and Naya, as well as a
significant number of regional products. Many of these companies maintain
significantly greater resources (including financial, technical and personnel)
in all aspects of business than those available to the Company. In addition,
their products have achieved enormous consumer acceptance and loyalty. The
principal competitive factors in the bottled water industry are price, taste,
packaging, name recognition and water source. However, the Company believes that
its smooth taste and its unique oxygen enrichment will enable it to sufficiently
compete in this market.
Product Liability.
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The Company is engaged in a business which could expose it to possible claims
for personal injury resulting from contamination of its water. While the Company
believes that through its regular product testing it carefully inspects the
quality of its water, it may be subject to exposure due to customer or
distributor misuse or storage. The Company maintains product liability insurance
against certain types of claims in amounts which it believes to be adequate. The
Company also maintains an umbrella insurance policy that it believes to be
adequate to cover claims made above the limits of its product liability
insurance. Although no claims have been made against the Company or its
distributors to date and the Company believes its current level of insurance to
be adequate for its present business operations, there can be no assurances that
such claims will not arise in the future or this the Company's policies will be
sufficient to pay for such claims.
Proprietary Rights.
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The Company has not sought patent protection for its proprietary oxygen
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enrichment process, rather, it relies, to the extent it can, upon trade secrets
to protect its proprietary process.
Employees.
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As of June 30, 1997, the Company has 30 employees, which includes two officers.
The Company has no collective bargaining agreements with its employees and
believes its relations with its employees are good.
Item 2. Management's Discussion and Analysis.
------------------------------------
The following discusses the financial results and position of the consolidated
accounts of the Company and its wholly owned subsidiaries for the periods
indicated.
Results of Operations
The Company was organized on November 29, 1995 and commenced the marketing and
sale of Avani Water in September 1996.
The Company did not record revenues for the period of inception (November 29,
1995) through December 31, 1995. For the same period, the Company incurred
consulting and professional fees and salaries in the amount of $9,252.
Revenues for the year ending December 31, 1996 were $68,709 which consisted of
$57,140 in water and supply sales, $4,860 in cooler rentals and $6,709 in cooler
and equipment sales. Of the total revenue for the period, $26,725 (or 38% of
total revenues) represented sales to a Taiwan distributor. Interest income
earned on investment of cash for the period totaled $26,158.
Cost of sales for the year ended December 31, 1996 totaled $155,283 which
consisted of $99,104 in bottled water, supplies, coolers and related equipment
and $56,179 in depreciation. Gross profit (loss) for the period was ($86,574).
General and administrative expenses for the period totaled $522,974 which
consisted of administrative salaries and overhead expenses incurred during its
development and initial operating phase and represents an increase of $513,722
from the prior period ended December 31, 1995. Marketing expenses totaled
$207,794 for the period. Loss from operations for the period was ($817,342).
Revenues for the six month period ended June 30, 1997 were $280,050 which
consisted of $262,928 in water and supply sales, $6,912 in cooler and equipment
sales and $10,210 in cooler rentals. Of the total revenue for the period,
$171,795 (or 64% of total water sales) represented sales
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to a Taiwan distributor. Interest income for the period earned on investment of
cash totaled $10,204. No revenues were recognized for the six month period ended
June 30, 1996.
Cost of sales for the period totaled $210,183 which consisted of $175,037 in
bottled water, supplies, coolers and related equipment and $35,147 in
depreciation. Gross profit for the six month period was $69,867. No cost of
sales were recognized for the six month period ended June 30, 1996.
General and administrative expenses for the six month period ended June 30, 1997
totaled $340,220 which consisted of administrative salaries and overhead
expenses incurred during its development and initial operating phase which
represents an increase of $222,353 from the prior six month period ended June
30, 1996. Marketing expenses totaled $133,779 for the period, representing an
increase of $120,342 from the prior period. Loss from operations for the six
month period was ($407,421).
Liquidity and Capital Resources
Since its inception through June 30, 1997, the Company has raised approximately
$2,941,700 from the private placement of its common stock (net of offering costs
of $314,800). The Company has used these proceeds to fund the construction of
its manufacturing facilities and its working capital requirements. The Company
expects to achieve profitable operations in the forth quarter of 1997. This
expectation is premised upon the projected revenues to be derived from Taiwan
and other markets. No assurances can be given that the Company will achieve
profitability during the period projected. In the event the Company is unable to
achieve profitability in the near term, the Company may be required to seek
additional debt or equity capital to fund any operating deficits. No assurances
can be given that additional capital will be available to the Company.
Property, plant and equipment, net of accumulated depreciation, totaled
$1,662,796 on December 31, 1996. Property, plant and equipment, net of
accumulated depreciation, totaled $1,895,587 on June 30, 1997.
Forward Looking Statements
Certain of the statements contained in this Form 10-SB may be deemed "forward
looking statements" within the meaning of the Securities Exchange Act of 1934.
Although the Company believes the expectations reflected in such forward looking
statements are reasonable, there can be no assurances that such expectations
will prove to be correct. Certain risks and uncertainties are inherent in the
Company's business. These risks include the fact the Company has a limited
operating history and to date has relied upon one distributor and one
geographical market for a significant portion of its revenues.
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Item 3. Description of Property.
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The Company's maintains it production facilities and its corporate headquarters
at #328-17 Fawcett Road, Coquitlam, British Columbia (Canada) V3K 6V2. The total
facilities of the Company comprise 14,000 square feet, of which 11,200 square
feet is dedicated to the production and storage facilities and the remainder is
dedicated to its administrative offices.
The Company owns its facilities subject to existing mortgages and are comprised
of seven adjoining buildings. Five of the buildings were purchased for a total
of $563,740 between April 1996 and June 30, 1996, subject to first mortgages in
the principal amount of $330,687 as of June 30, 1997. The mortgages are
amortized over 25 years and bear interest at the rate of 8.30% per annum. A
balloon payment of $312,544 is due May 2, 2001. The sixth building was purchased
on July 1996 for $119,500 and is subject to first and second mortgages in the
principal amounts of $72,050 and $21,870, respectively, as of June 30, 1997. The
first mortgage is amortized over 25 years and bears interest at the rate of
8.30% per annum. A balloon payment of $67,944 is due July 29, 2001. The second
mortgage bears interest at the rate of 8% and has a balloon payment of remaining
principal due on January 31, 1998. The seventh building was purchased in March
1997 for $119,500 and is subject to first and second mortgages in the principal
amount of $73,164 and $43,200, respectively, as of June 30, 1997. The first
mortgage is amortized over 25 years and bears interest at the rate of 7.00% per
annum. A balloon payment of $66,917 is due March 27, 2002. The second mortgage
bears interest 8% with balloon payments of $26,500 due on March 30, 1998 and
August 30, 1998 and is collateralized by all of the facilities.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
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The following table will identify, as of June 30, 1997, the number and
percentage of outstanding shares of common stock of the Company owned by (i)
each person known to the Company who owns more than five percent of the
outstanding common stock, (ii) each officer and director, and (iii) and officers
and directors of the Company as a group:
Title Name and Address Amount and nature Percent
of Class of Beneficial Owner Beneficial Ownership of Class
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Common Peter Khean(1) 450,000 4.8%
Stock 328-17 Fawcett Road
Coquitlam, B.C. V3K 6V2
Common Nico Huang(2) 450,000 4.8%
Stock 328-17 Fawcett Road
Coquitlam, B.C. V3K 6V2
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Common World Equities Group(3) 1,500,000 15.8%
Stock 9th Floor, No. 36 Lane 30
Hsin Hwa Road
Taipei, Taiwan
Common National Investment(4) 10.6%
Stock Foundation Inc. 1,000,000
70 Lien Hai Road
Kaohsiung, Taiwan
Common Wang Hsiu Yun(5) 2,500,000 26.4%
Stock 8F-1, 110 Hon Ko Street
Taipei, Taiwan
Common Officers and 900,000 9.5%
Stock Directors, as
a group (2 persons)
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(1). Excludes 150,000 shares held by Mrs. Eunice Khean, the wife Mr. Khean. Mr.
Khean disclaims beneficial ownership of such shares.
(2). Excludes 150,000 shares held by Mr. Tomo Hwang, the husband of Mrs. Huang.
Mrs. Huang disclaims beneficial ownership of such shares.
(3). World Equities Group is owned by Su Meichun, who is also a controlling
shareholder of Georgia Pacific Company (see "Certain Relationships and Related
Transactions").
(4). National Investment Foundation Inc. is owned by Chu Meiying, who is also a
controlling shareholder of Georgia Pacific Company (see "Certain Relationships
and Related Transactions").
(5). Wang Hsiu Yun is a controlling shareholder of Georgia Pacific Company (see
"Certain Relationships and Related Transactions").
Item 5. Directors, Executive Officers, Promoters and Control Persons.
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The directors and executive officers of the Company, their ages, and the
positions they hold are set forth below. The directors of the Company hold
office until the next annual meeting of stockholders of the Company and until
their successors in office are elected and qualified. All officers serve at the
discretion of the Board of Directors.
Director/
Officer
Name Age Since Position
- ---- --- ----- --------
Peter Khean 53 1995 President, Secretary
and Chairman
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Nico Huang 48 1995 Vice-President, Treasurer
and Director
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Peter Khean - Mr. Khean has been President, Secretary and Chairman of the
Company since December 1995. From 1985 to December 1995, Mr. Khean has been a
business consultant providing services to individuals and business located in
the Pacific Rim countries. Mr. Khean is a Certified General Accountant in
Canada.
Nico Huang - Ms. Huang has been Vice President, Secretary and Director of the
Company since December 1995. From 1975 until December 1995, Ms. Huang has
operated a family owned health product manufacturing facility located in Taiwan.
Item 6. Executive Compensation.
----------------------
The compensation for all directors and officers individually for services
rendered to the Company for the fiscal year ended December 31, 1996 and 1995,
respectively:
SUMMARY COMPENSATION
Annual Compensation Long Term Compensation
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Awards Payouts
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Name and
Principal Salary Bonus Other Restr. Options
Position Year ($) ($) ($) Stock SARS LTIP Other
- -------- ---- ----- ----- ----- ----- ---- ---- -----
Peter Khean 1995 -- -- -- $450(1) -- -- --
President and 1996 -- -- -- -- -- -- --
Chairman
Nico Huang 1995 -- -- -- $450(1) -- -- --
Vice President and 1996 -- -- -- -- -- -- --
Director
- ------------------------------------------------------------------
(1). Both Peter Khean and Nico Huang received 450,000 shares of common stock of
the Company for services rendered during fiscal years 1995 and 1996. The fair
market value of such stock awards totaled $900.00, which is indicated above.
During 1997, the Company intends to initiate the payment of a monthly salary in
the amount of $7,000 to both Mr. Khean and Ms. Huang. However, the Company has
not established the starting date for the payment or accrual of such salaries.
Other than as indicated above, the Company does not have any other form of
compensation payable to its officers or directors, including any stock option
plans, stock appreciation rights, or long term incentive plan awards for the
periods indicated in the table.
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The Company's directors received no fees for their services as a director,
however, they are reimbursed for expenses incurred by them in connection with
the Company's business.
Item 7. Certain Relationships and Related Transactions.
----------------------------------------------
On December 18, 1995, the Company entered into an agreement with Georgia Pacific
Company, a Taiwanese company ("Georgia Pacific"), to acquire the exclusive
worldwide rights to the technology for the oxygen enrichment process in exchange
for 5,000,000 shares of common stock of the Company. In addition, pursuant to
the agreement, the Company agreed to pay Georgia Pacific a finder's fee in
connection with the sale of the Company's common stock to certain Taiwanese
investors. During 1996, the Company paid Georgia Pacific $218,800 in finder's
fees.
On December 21, 1995, the Company entered into a separate agreement with Georgia
Pacific pursuant to which Georgia Pacific agreed to assist the Company in the
market and sale of its product to the Pacific Rim countries through joint
venture arrangements, licensees or distributors. The consideration payable to
Georgia Pacific is $10,000 per month during the term of the agreement. The term
extends for one year after which it is subject to re-negotiation by the parties.
The controlling shareholders of Georgia Pacific are Chu Meiying, Su Meichum and
Wang Hsiu Yun, each of which, directly or indirectly, own respectively
1,000,000, 2,500,000 and 1,500,000 shares of common stock of the Company.
In 1995, the Company issued 450,000 shares to Peter Khean, 450,000 shares to
Nico Huang, 150,000 to Eunice Khean and 150,000 to Tomo Hwang in exchange for
services rendered to the Company by such parties.
Item 8. Description of Securities.
-------------------------
Common Stock
- ------------
The Certificate of Incorporation of the Company authorizes the issuance of
25,000,000 shares of common stock, $.001 par value, and as of June 30, 1997,
9,456,500 shares are issued and outstanding.
The common stock carries no pre-emptive, conversion or subscription rights and
is not redeemable. In addition, each share of common stock is entitled to one
vote on all matters submitted to a vote of stockholders. On matters submitted to
a shareholder vote, a majority vote of shareholders is required to be
actionable. Cumulative voting in the election of directors is denied. All shares
of common stock are entitled to participate equally in dividends and rank
equally upon liquidation. All shares of common stock when issued are fully paid
and non-assessable
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by the Company. There are no restrictions on repurchases of common stock by the
Company relating to dividend or sinking fund installment arrearage.
Preferred Stock
- ---------------
The Certificate of Incorporation of the Company does not authorize the issuance
of preferred stock. Any amendment of the Certificate of Incorporation to
authorize the issuance of the preferred stock will require the majority vote of
the shareholders.
Part II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
-------------------------------------------------------------------
Related Stockholder Matters.
- ---------------------------
There is no public market for the Company's equity securities. The Company
intends to establish a public market for its common stock in the United States
following the registration of its securities pursuant to this Form 10-SB. As of
June 30, 1997, (i) there are no outstanding warrants or options to purchase, or
securities convertible into common stock of the Company and (ii) there are
9,226,500 shares of common stock which can be sold pursuant to Rule 144.
As of June 30, 1997, there are 104 shareholders of record of the Company's
common stock. Although there are no restrictions on the Company's ability to
declare or pay dividends, the Company has not declared or paid any dividends
since its inception .
Item 2. Legal Proceedings.
-----------------
The Company is not a party to any material legal proceedings.
Item 3. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure.
- --------------------
None.
Item 4. Recent Sales of Unregistered Securities.
---------------------------------------
<TABLE>
<CAPTION>
DATE NAME SHARES CONSIDERATION
<S> <C> <C> <C>
12/18/95 Georgia Pacific 5,000,000 License agreement
Company
12/21/95 Tomo Hwang 150,000 Services
12/21/95 Eunice Khean 150,000 Services
12/21/95 Nico Huang 450,000 Services
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C>
12/21/95 Peter Khean 450,000 Services
1/29/96 Chang-Sen (Jackson) 100,000 $1.00 per share
Chang
1/29/96 Hsi-Yin (Rosa) Wang 90,000 $1.00 per share
1/29/96 Chih- Hao (Howard ) 80,000 $1.00 per share
Chang
1/29/96 Chun-Ting (Danny) Chang 80,000 $1.00 per share
3/8/96 Liang Mei-Chu 10,000 $1.00 per share
3/8/96 Huang Chen-Yuan 10,000 $1.00 per share
3/8/96 Hsu Hui-Mei 7,500 $1.00 per share
3/8/96 Chen Cheng- Hung 7,500 $1.00 per share
4/21/96 Lin Lin Ma Ho 1,000 $1.00 pre share
4/21/96 Chun Hsien Ho 1,000 $1.00 per share
4/21/96 I Chun Ho 1,000 $1.00 per share
4/21/96 Jin Maun Ho 1,000 $1.00 per share
4/30/96 Huang, Ke-Wei 20,000 $1.00 per share
4/30/96 Liu Pai-Wei 5,000 $1.00 per share
4/30/96 Hsieh Kuo-Tai 5,000 $1.00 per share
4/30/96 Wang Gen-Shuh 5,000 $1.00 per share
4/30/96 Huang, Hsieh 100,000 $1.00 per share
Su- Yuan
4/29/96 Chueh, Yung- Huang 5,000 $1.00 per share
4/29/96 Huang, Hsiu- Ling 5,000 $1.00 per share
4/29/96 Chueh, Yen- Jung 5,000 $1.00 per share
4/29/96 Huang, Ying- Feng 5,000 $1.00 per share
5/27/96 Tsai, Chang-Hai 100,000 $1.00 per share
5/27/96 Tsai I-Chen 100,000 $1.00 per share
5/27/96 Cheng, Wen Shun 100,000 $1.00 per share
5/27/96 Cheng Chen Su-Ju 300,000 $1.00 per share
5/27/96 Chang Li-Chen 14,000 $1.00 per share
5/27/96 Szu- Wei Fu 2,000 $1.00 per share
5/27/96 Szu-Wen Fu 2,000 $1.00 per share
5/27/96 Kuo-Chi Fu 1,000 $1.00 per share
5/27/96 Kung-Lung Chao 1,000 $1.00 per share
7/4/96 George Yao 200,000 $1.00 per share
7/4/96 Tiffany Cheng 100,000 $1.00 per share
7/4/96 John Yao 100,000 $1.00 per share
7/4/96 Nancy Yao 100,000 $1.00 per share
8/8/96 Tiffany Cheng 200,000 $1.00 per share
8/8/96 George Yao 100,000 $1.00 per share
8/23/96 Li-Cheng Wang Yuan 1,000 $1.00 per share
8/23/96 Cathrine Chung 1,000 $1.00 per share
8/23/96 Juliana Ting 400 $1.00 per share
8/23/96 Hsieh, Shun- Yi (Jeff) 1,000 $1.00 per share
8/23/96 Hsieh, Shun-Ting (Tina) 300 $1.00 per share
8/23/97 Hsieh, Shun-Chich 100 $1.00 per share
(Jack)
8/23/96 Hsieh, Shun-Ta 5,000 $1.00 per share
( Johnson )
8/23/96 Hsieh, Yong-Song 100 $1.00 per share
(James)
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
8/23/96 Chuang -Hsieh, 1,000 $1.00 per share
Chiu- Mei ( Joy )
8/23/96 Yeh Chin-Tu (Michael) 100 $1.00 per share
8/23/96 Yin, Shaun 100 $1.00 per share
8/23/96 Feng, Chun-Hsien 100 $1.00 per share
(Steven)
8/23/96 Hung, Chien-Hsun- 100 $1.00 per share
8/23/96 Hung, Jong-Jen (Eric) 100 $1.00 per share
8/23/96 Wu, Chao-Ying 100 $1.00 per share
8/23/96 Chen, Li-Hsuh 400 $1.00 per share
8/23/96 Barham, Christopher 100 $1.00 per share
8/23/96 Juan, Peng- Hsu 3,000 $1.00 per share
(Joseph)
8/23/96 Lee, Pei-Yi (Peggy) 3,000 $1.00 per share
8/23/96 Chung, Chien-Huang 100 $1.00 per share
(Max)
8/23/96 Cheng, Shin-Chang 100 $1.00 per share
(Wesley)
8/23/96 Cheng, Shih-Fen 100 $1.00 per share
(Virginia)
8/23/96 Chong, Wai-Yi (Cannis) 100 $1.00 per share
8/23/96 Chen, Su- Ju 1,000 $1.00 per share
( Catherine )
8/23/96 Chiang, Yeuh-YinLu 100 $1.00 per share
8/23/96 Min-Hsin AngelaLin 200 $1.00 per share
8/23/96 Chou, Clairehsing Hsien 300 $1.00 per share
8/23/96 Chou Hsing-Mei 200 $1.00 per share
8/23/96 Chou Hsing-Huei 100 $1.00 per share
8/23/96 Chen Shu 200 $1.00 per share
8/23/96 Chen Chang Amei 200 $1.00 per share
8/23/96 Chen, Shu-Chen 200 $1.00 per share
8/23/96 Chen, Shu-Fen 200 $1.00 per share
8/23/96 Chen, Shu-Chuan 200 $1.00 per share
8/23/96 Kuo, Yan-Tin 100 $1.00 per share
8/23/96 Chang, Fan-Ming 100 $1.00 per share
8/23/96 Lu, Christina 100 $1.00 per share
8/23/96 Cheng, Gwendolyn 100 $1.00 per share
8/23/96 Pei, Ching Chen 100 $1.00 per share
8/23/96 Ting, Kim 200 $1.00 per share
8/23/96 Sam, Mavis 200 $1.00 per share
8/23/96 Tse, Emme 200 $1.00 per share
8/23/96 Tang, Bellissa Hsiao 200 $1.00 per share
8/23/96 Wang, Kevin Ching Lung 100 $1.00 per share
8/23/96 Wu, Hsiang Sheng 300 $1.00 per share
8/23/96 Wu Chang, Chung Fang 200 $1.00 per share
8/23/96 Alex Chen 5,000 $1.00 per share
8/28/96 Chiung- Yen Wang 1,000 $1.00 per share
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
( Joann )
8/28/96 Roger Chang 1,500 $1.00 per share
8/28/96 Lu Lu Wang 2,000 $1.00 per share
8/28/96 Hsu, Ju Jen 100 $1.00 per share
8/28/96 Pei Kan 100 $1.00 per share
10/7/96 Lee Yu-Ying 100 $1.00 per share
10/7/96 Fang Yi Ming 200 $1.00 per share
10/7/96 Lohachitranont 100 $1.00 per share
Compatana
10/7/96 Huang Yen-Ta 100 $1.00 per share
10/7/96 LimLih-Shiann 100 $1.00 per share
12/11/96 Ching Hang Fung 30,000 $1.00 per share
12/20/96 Hsiu Chu Liang 100,000 $1.00 per share
12/20/96 Kikawa Tomokatsu 100,000 $1.00 per share
7/1/97 Mrs.Yueh- Hua, Chen 5,000 $1.00 per share
7/1/97 Shun-Yi(Jeff) Hsieh 2,000 $1.00 per share
7/1/97 Chao-Ying Wu 1,100 $1.00 per share
7/1/97 Yi-Min Fang 800 $1.00 per share
7/1/97 Kikawa Tomokatsu 100,000 $1.00 per share
7/1/97 Tien Chang Enterprises 37,200 $1.00 per share
Ltd
7/1/97 Huang Hsiu-Ling 330,000 $1.00 per share
7/1/97 Huang Ying-Feng 350,000 $1.00 per share
7/1/97 Huang Hsieh Su-Yuan 350,000 $1.00 per share
7/8/97 Loo Lin Pei-Chu 30,000 $1.00 per share
</TABLE>
The shares described above were issued to the respective shareholders located in
China and in Canada from the Company's offices located in Vancouver, Canada.
Consequently, the issuance of such shares are not subject to the jurisdiction of
the Securities Act of 1933, as amended. Alternatively, the shares issued to (i)
Georgia Pacific, Peter Khean, Nico Huang, Eunice Khean and Tomo Huang were
issued in reliance of Section 4(2) of the Securities Act of 1933, as amended
("Act") and other rules and regulations promulgated thereunder and (ii) the
remaining shares were sold to non-US persons under circumstances and
restrictions that exempted the sales from registration pursuant to Regulation S
promulgated under the Act.
Item 5. Indemnification of Directors and Officers.
-----------------------------------------
Section 6 of the Company's Articles of Incorporation eliminates personal
liability in accordance with Section 78.037 of the Nevada Revised Statutes.
Section 78.037 of the NRS provides that a corporation may eliminate personal
liability of an officer or director to the corporation or its stockholders for
breach of fiduciary duty as an officer or director provided that such provision
does not eliminate liability for acts or omissions which involve intentional
misconduct, fraud or a knowing violation of the law; or the payment of
distributions in violation of NRS 79.300.
17
<PAGE>
In so far as indemnification for liability arising from the Securities Act of
1933 may be permitted to Directors, Officers or persons controlling the Company,
it has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
Part F/S
Page
----
- -Independent Auditors' Report of
September 15, 1997..................................................F-1
- -Consolidated Balance Sheets as of December 31, 1995
(audited), December 31, 1996 (audited)
and June 30, 1997 (unaudited).......................................F-2
- -Consolidated Statements of Operations for
Fiscal Years Ended December 31, 1995 (audited),
December 31, 1996 (audited) and
June 30, 1997 (unaudited)...........................................F-3
- -Consolidated Statements of Stockholder's Equity
From inception to December 31, 1996 (audited)
and June 30, 1997 (unaudited).......................................F-4
- -Consolidated Statements of Cash Flows for
Fiscal Years Ended December 31, 1995 (audited),
December 31, 1996 (audited) and Six Month Ended
June 30, 1996 and June 30, 1997 (unaudited).........................F-5
- -Notes to Financial Statements.......................................F-6
18
<PAGE>
AVANI INTERNATIONAL GROUP INC.
(formerly Rainfresh Technologies, Inc.)
AND SUBSIDIARIES
FINANCIAL STATEMENTS
<PAGE>
AVANI INTERNATIONAL GROUP INC.
(formerly Rainfresh Technologies, Inc.)
AND SUBSIDIARIES
C O N T E N T S
---------------
PAGE
----
INDEPENDENT AUDITORS' REPORT F-1
CONSOLIDATED BALANCE SHEETS F-2
CONSOLIDATED STATEMENTS OF OPERATIONS F-3
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY F-4
CONSOLIDATED STATEMENTS OF CASH FLOWS F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-6 to F-11
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders
Avani International Group Inc.
(formerly Rainfresh Technologies, Inc.)
We have audited the accompanying consolidated balance sheets of Avani
International Group Inc. (formerly Rainfresh Technologies, Inc.) (a Nevada
corporation) and Subsidiaries as of December 31, 1995 and 1996 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the period from November 29, 1995 (inception) to December 31, 1995 and for the
year ended December 31, 1996. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairy, in all material respects, the financial position of Avani International
Group Inc. (formerly Rainfresh Technologies, Inc.) and Subsidiaries as of
December 31, 1995 and 1996 and the results of their operations and their cash
flows for the period from inception (November 29, 1995) to December 31, 1995,
and for the year ended December 31, 1996 in conformity with generally accepted
accounting principles.
COGEN SKLAR LLP
Bala Cynwyd, Pennsylvania
September 25, 1997
F-1
<PAGE>
AVANI INTERNATIONAL GROUP INC.
(formerly Rainfresh Technologies, Inc.)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------ JUNE 30,
1995 1996 1997
----------- ----------- -----------
ASSETS (Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS
Cash $ 145,948 $ 898,581 $ 421,189
Accounts receivable -- 43,784 67,040
Goods and services tax receivable -- 75,414 20,875
Subscription receivable 160,000 -- --
Loan receivable 30,000 -- --
Inventory -- 78,069 115,937
Prepaid expenses -- 28,630 54,176
----------- ----------- -----------
TOTAL CURRENT ASSETS 335,948 1,124,478 679,217
----------- ----------- -----------
PROPERTY, PLANT AND EQUIPMENT - NET 10,000 1,662,796 1,895,587
----------- ----------- -----------
OTHER ASSETS
Security deposits -- 1,720 1,720
Trademarks -- 4,593 4,593
License 5,000 5,000 5,000
----------- ----------- -----------
5,000 11,313 11,313
----------- ----------- -----------
TOTAL ASSETS $ 350,948 $ 2,798,587 $ 2,586,117
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ -- $ 63,771 $ 63,496
Accounts payable and accruals 4,000 130,832 278,220
Wages and benefits payable -- 34,944 15,834
Unearned income -- 8,485 11,956
Bottle and cooler deposits -- 27,641 49,934
----------- ----------- -----------
TOTAL CURRENT LIABILITIES 4,000 265,673 419,440
LONG-TERM DEBT - NET OF CURRENT PORTION -- 421,826 477,475
----------- ----------- -----------
TOTAL LIABILITIES 4,000 687,499 896,915
----------- ----------- -----------
STOCKHOLDERS' EQUITY
COMMON STOCK, $.001 par value, 25,000,000 shares authorized;
6,390,000, 9,456,500 and 9,455,500 shares issued and outstanding 6,390 9,457 9,456
ADDITIONAL PAID-IN CAPITAL 189,810 2,938,443 2,937,444
COMMON STOCK SUBSCRIBED 160,000 -- --
ACCUMULATED DEFICIT (9,252) (823,505) (1,245,112)
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- (13,307) (12,586)
----------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY 346,948 2,111,088 1,689,202
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 350,948 $ 2,798,587 $ 2,586,117
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F-2
<PAGE>
AVANI INTERNATIONAL GROUP INC.
(formerly Rainfresh Technologies, Inc.)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period Six Months Ended
November 29, 1995 June 30,
(Inception) to Year Ended ------------------------------
December 31, 1995 December 31, 1996 1996 1997
----------------- ----------------- ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUE
Bottled water and supply sales $ -- $ 57,140 $ -- $ 262,928
Cooler and equipment sales -- 6,709 -- 6,912
Cooler rentals -- 4,860 -- 10,210
----------- ----------- ----------- -----------
-- 68,709 -- 280,050
----------- ----------- ----------- -----------
COST OF GOODS SOLD
Cost of goods sold (excluding
depreciation) -- 99,104 -- 175,037
Depreciation -- 56,179 -- 35,146
----------- ----------- ----------- -----------
-- 155,283 -- 210,183
----------- ----------- ----------- -----------
GROSS PROFIT (LOSS) -- (86,574) -- 69,867
----------- ----------- ----------- -----------
OPERATING EXPENSES
General and administrative 9,252 522,974 117,867 340,220
Marketing -- 207,794 13,437 133,779
Research and development -- -- -- 3,289
----------- ----------- ----------- -----------
9,252 730,768 131,304 477,288
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (9,252) (817,342) (131,304) (407,421)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest income -- 26,158 7,195 10,204
Interest expense -- (23,069) -- (24,390)
----------- ----------- ----------- -----------
-- 3,089 7,195 (14,186)
----------- ----------- ----------- -----------
NET LOSS $ (9,252) $ (814,253) $ (124,109) $ (421,607)
=========== =========== =========== ===========
LOSS PER COMMON SHARE $ -- $ (.10) $ (.02) $ (.04)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF SHARES 6,295,000 7,999,921 6,731,458 9,456,333
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F-3
<PAGE>
AVANI INTERNATIONAL GROUP INC.
(formerly Rainfresh Technologies, Inc.)
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
NOVEMBER 29,1995 (INCEPTION) TO DECEMBER 31, 1996
AND JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Foreign
Common Stock Additional Common Currency
------------------------ Paid-In Stock Accumulated Translation
Shares Amount Capital Subscribed Deficit Adjustment
---------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ISSUANCE OF COMMON STOCK
Founders 6,200,000 $ 6,200 $ -- $ -- $ -- $ --
Cash 190,000 190 189,810 -- -- --
COMMON STOCK SUBSCRIBED -- -- -- 160,000 -- --
NET LOSS FOR THE PERIOD NOVEMBER 29, 1995
(INCEPTION) TO DECEMBER 31, 1995 -- -- -- -- (9,252) --
---------- ----------- ----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1995 6,390,000 6,390 189,810 160,000 (9,252)
ISSUANCE OF COMMON STOCK
Cash 2,906,500 2,907 2,903,593 -- -- --
Under subscription agreement 160,000 160 159,840 (160,000)
COMMISSIONS ON SHARES ISSUED -- -- (314,800) -- -- --
NET LOSS FOR YEAR ENDED DECEMBER 31, 1996 -- -- -- -- (814,253) --
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- -- -- -- -- (13,307)
---------- ----------- ----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1996 9,456,500 9,457 2,938,443 -- (823,505) (13,307)
PURCHASE AND RETIREMENT OF COMMON STOCK (1,000) (1) (999) -- -- --
NET LOSS FOR SIX MONTHS ENDED JUNE 30, 1997 -- -- -- -- (421,607) --
FOREIGN CURRENCY TRANSLATION ADJUSTMENT -- -- -- -- -- 721
---------- ----------- ----------- ----------- ----------- -----------
BALANCE, JUNE 30, 1997 (UNAUDITED) 9,455,500 $ 9,456 $ 2,937,444 $ -- $(1,245,112) $ (12,586)
========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F-4
<PAGE>
AVANI INTERNATIONAL GROUP INC.
(formerly Rainfresh Technologies, Inc.)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period Six Months Ended
November 29, 1995 June 30,
(Inception) to Year Ended ----------------------
December 31, 1995 December 31, 1996 1996 1997
----------------- ----------------- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $ (9,252) $ (814,253) $ (124,109) $ (421,607)
Adjustments to reconcile net loss to net cash
used in operating activities
Stock compensation 1,200 -- --
Depreciation -- 83,889 -- 52,175
(Increase) decrease in assets
Accounts receivable -- (120,271) (25,565) 33,475
Inventory -- (78,772) (12,151) (38,210)
Repaid expenses -- (28,697) -- (25,546)
Other assets -- (1,736) -- --
Increase (decrease) in liabilities
Accounts payable 4,000 162,938 4,169 128,943
Unearned income and deposits -- 36,451 -- 25,997
----------- ----------- ----------- -----------
Net cash used in operating activities (4,052) (760,451) (157,656) (244,773)
----------- ----------- ----------- -----------
INVESTING ACTIVITIES
Acquisition of property, plant and equipment (10,000) (1,752,251) (1,093,360) (285,835)
Investment in trademarks and patents -- (4,634) -- --
Loan (receivable) repayment (30,000) 30,000 (104,500) --
----------- ----------- ----------- -----------
Net cash used in investing activities (40,000) (1,726,885) (1,197,860) (285,835)
----------- ----------- ----------- -----------
FINANCING ACTIVITlES
Proceeds from mortgages payable -- 529,608 409,886 139,758
Payments of mortgages payable -- (39,637) (345) (84,411)
Issuance of common shares 190,000 2,751,700 1,334,600
Purchase of common shares -- -- -- (1,000)
----------- ----------- ----------- -----------
Net cash provided by financing activities 190,000 3,241,671 1,744,141 54,347
----------- ----------- ----------- -----------
EFFECT OF EXCHANGE RATES ON CASH -- (1,702) (19) (1,131)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 145,948 752,633 388,606 (477,392)
CASH - BEGINNING OF PERIOD -- 145,948 145,948 898,581
----------- ----------- ----------- -----------
CASH - END OF PERIOD $ 145,948 $ 898,581 $ 534,554 $ 421,189
=========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash paid for:
Interest $ -- $ 23,095 $ 2,892 $ 20,286
=========== =========== =========== ===========
Income taxes $ -- $ -- $ -- $ --
=========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF NON-
CASH FINANCING ACTIVITIES
Issuance of common stock for license $ 5,000 $ -- $ -- $ --
=========== =========== =========== ===========
Subscription receivable $ 160,000 $ -- $ -- $ --
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F-5
<PAGE>
AVANI INTERNATIONAL GROUP INC.
(formerly Rainfresh Technologies, Inc.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND JUNE 30, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Avani International Group, Inc. (the "Company"), a Nevada corporation, formerly
Rainfresh Technologies, Inc. has constructed a bottling facility and has been
engaged in the business of developing, manufacturing and distributing an oxygen
enriched, purified bottled water under the trade name "Avani Water".
The Company changed its name from Rainfresh Technologies, Inc. to Avani
International Group, Inc. on January 14, 1997. The Company has two wholly-owned
subsidiaries, Avani Marketing Corp., organized under the laws of Nevada, and
Avani Water Corporation, organized under the laws of British Columbia (Canada).
A technology, which injects oxygen into purified water is utilized by the
Company to produce an oxygen enriched, purified bottled water. The exclusive
worldwide rights to the oxygen enrichment process were acquired from a Taiwanese
company, in December 1995 for the issuance of common stock. The product is sold
in the greater Vancouver metropolitan area and internationally in Taiwan.
International sales for the year ended December 31, 1996 and six months ended
June 30, 1997 were $26,725 and $173,209.
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of the Company and
all wholly-owned subsidiaries. All significant intercompany transactions have
been eliminated in consolidation.
Estimates
- ---------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Foreign Currency Translation
- ----------------------------
Assets and liabilities of the foreign subsidiaries have been translated using
the exchange rate at the balance sheet date. The average exchange rate for the
period has been used to translate revenues and expenses. Translation adjustments
are reported separately and accumulated in a separate component of equity
(foreign currency translation adjustment).
Financial Intruments
- --------------------
The carrying amount of cash, accounts receivable, accounts payable, other
liabilities and deposits approximates fair value as of December 31, 1996 because
of their short maturities.
The carrying value of the fixed rate long-term debt approximates fair value
since the interest rate associated with the long-term debt approximates the
current market interest rate.
Accounts Receivable and Bad Debts
- ---------------------------------
The Company considers accounts receivable to be fully collectible; accordingly,
no allowance for doubtful accounts is required. If amounts become uncollectible,
they will be charged to operations when that determination is made. Bad debts
have not been material.
Inventory
- ---------
Inventory is stated at the lower of cost (determined by the first-in, first-out
method) or market. Inventory is comprised of small bottles, packaging
containers, supplies for resale and water coolers.
F-6
<PAGE>
AVANI INTERNATIONAL GROUP INC.
(formerly Rainfresh Technologies, Inc.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND JUNE 30, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property, Plant and Equipment
- -----------------------------
The cost of property, plant and equipment is depreciated over the estimated
useful lives of the related assets. Depreciation is computed using accelerated
methods. Five liter bottles are amortized over their estimated useful lives.
Revenue Recognition
- -------------------
Revenue on sales of bottled water and coolers is recognized upon delivery.
Leases of water coolers and filters are accounted for under the operating method
and, accordingly, rental income is reported over the terms of the leases.
Income Taxes
- ------------
The Company accounts for its income taxes under SFAS No. 109, "Accounting for
Income Taxes", which requires recognition of deferred tax liabilities and assets
for the estimated future tax effects of events that have been recognized in the
financial statements or income tax returns. Under this method, deferred tax
liabilities and assets are determined based on differences between the financial
accounting and income tax bases of assets and liabilities, and the use of
carryforwards, if any, using enacted tax rates in effect for the years in which
the differences and carryforwards are expected to reverse and be utilized.
Loss Per Share
- --------------
Loss per share was computed by dividing net loss by the weighted average number
of common shares outstanding during the respective periods.
Recoverability of Long Lived Assets
- -----------------------------------
Effective January 1, 1996, the Company adopted SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
The Statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. The Company is not aware of any events or circumstances which
indicate the existence of an impairment which would be material to the Company's
annual financial statements.
Accounting for Stock-Based Compensation
- ---------------------------------------
Compensation costs attributable to stock option and similiar plans are
recognized based on any difference between the quoted market price of the stock
on the date of the grant over the amount the employee is required to pay to
acquire the stock (the intrinsic value method under Accounting Principles Board
Opinion 25). Such amount, if any, is accrued over the related vesting period, as
appropriate.
Effective January 1, 1996, the Company implemented SFAS No. 123, "Accounting for
Stock-Based Compensation." The Statement encourages employers to account for
stock compensation awards based on their fair value on their date of grant.
Entities may choose not to apply the new accounting method but instead, disclose
in the notes to the financial statements the pro forma effects on net income and
earnings per share as if the new method had been applied. The Company has
adopted the disclosure-only approach of the Standard.
Recently Issued Accounting Pronouncements
- -----------------------------------------
During February 1997, the FASB issued SFAS No. 128, "Earnings Per Share". This
statement establishes standards for computing and presenting EPS, replacing the
presentation of currently required primary EPS with a presentation of Basic EPS.
For entities with complex capital structures, the statement requires the dual
presentation of both Basic EPS and Diluted EPS on the face of the statement of
operations. Under this new standard, Basic EPS is computed based on weighted
average shares outstanding and excludes any potential dilution; Diluted EPS
reflects potential dilution from the exercise or conversion
F-7
<PAGE>
AVANI INTERNATIONAL GROUP INC.
(formerly Rainfresh Technologies, Inc.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND JUNE 30, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Issued Accounting Pronouncements (Continued)
- -----------------------------------------
of securities into common stock and is similar to the currently required fully
diluted EPS, SFAS 128 is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods, and earlier
application is not permitted. Adoption of SFAS 128 is not expected to have a
material effect on the Company's loss per share.
During June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income". This statement establishes standards for reporting and display of
comprehensive income and its components. The reporting and display requirements
of SFAS No. 130 are effective for fiscal years beginning after December 15,
1997. The Company presently intends to comply with this statement for its year
ended December 31, 1998.
During June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of
an Enterprise and Related Information". This statement establishes standards for
the way that public business enterprises report information about operating
segments in annual financial statements and related disclosures about products
and services, geographic areas and major customers. The reporting and disclosure
requirements of SFAS No. 131 are effective for periods beginning after December
15, 1997. The Company presently intends to comply with this statement for its
year ended December 31, 1998.
Interim Periods Presented
- -------------------------
The interim financial statements for the six months ended June 30, 1997 and 1996
are unaudited. Accordingly, they do not include all of the information and notes
required by generally accepted accounting principles for complete financial
statements. In the opinion of the Company, these unaudited financial statements
reflect all adjustments necessary, consisting of normal recurring adjustments,
for fair presentation of such data on a basis consistent with that of the
audited data presented herein. The results of operations for interim periods are
not necessarily indicative of the results for a full year.
NOTE 2 - CONCENTRATION OF CREDIT RISK INVOLVING CASH
The Company maintains its cash balances in a bank located in Canada. These
balances are insured.
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is comprised of the following:
<TABLE>
<CAPTION>
December 31,
------------ June 30,
1995 1996 1997
------- ---------- ----------
(Unaudited)
<S> <C> <C> <C>
Land $ - $ 136,230 $ 160,109
Building - 815,204 911,998
Plant equipment 10,000 698,679 857,239
Office furniture and equipment - 74,800 79,427
Vehicles - 21,773 21,773
------- ---------- ----------
10,000 1,746,686 2,030,540
Less: Accumulated depreciation - 83,890 134,954
------- ---------- ----------
Property, Plant and Equipment - Net $10,000 $1,662,796 $1,895,587
======= ========== ==========
</TABLE>
F-8
<PAGE>
AVANI INTERNATIONAL GROUP INC.
(formerly Rainfresh Technologies, Inc.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND JUNE 30, 1997
NOTE 4 - LONG TERM DEBT
Following is a summary of long-term debt:
<TABLE>
<CAPTION>
December 31,
----------- June 30,
1995 1996 1997
-------- -------- --------
(Unaudited)
<S> <C> <C> <C>
Mortgage payable due in monthly installments of $2,624 including interest at
8.3%, balloon payment of $309,992 due May 1, 2001, secured by land
and building with a net book value of $550,700. $ - $332,885 $330,687
Second mortgage payable, interest only, interest 10% per annum, principal
payments due $36,450 on December 31, 1996 and June 30, 1997, secured
by land and building with a net book value of $550,700. - 36,450 -
Mortgage payable due in monthly installments of $563 including interest at 8.3%,
due July 2001, secured by land and building with a net book
value of $ 117,950. - 72,522 72,050
Second mortgage payable, interest only, interest at 8% per annum, principal payments
due $21,870 on June 30, 1997 and January 1, 1998, secured by
land and building with a net book value of $ 117,950. - 43,740 21,870
Mortgage payable due in monthly installments of $504 including interest at 7%,
balloon payment of $66,789 due March 2002, secured by land and
building with a net book value of $ 118,798. - - 73,164
Second mortgage payable, interest only, interest at 8% per annum, principal
payments due $21,600 on March 30, 1998 and August 30, 1998,
secured by land and building with a net book value of $118,798.
- - 43,200
-------- -------- --------
- 485,597 540,971
Less: Current portion - 63,771 63,496
-------- -------- --------
$ - $421,826 $477,475
======== ======== ========
</TABLE>
The minimum annual repayment requirements on long-term debt as of December 31,
1996 are as follows:
YEARS ENDING
DECEMBER 31, AMOUNT
------------ ------
1997 $ 63,771
1998 27,782
1999 6,414
2000 6,957
2001 380,673
---------
$ 485,597
=========
F-9
<PAGE>
AVANI INTERNATIONAL GROUP INC.
(formerly Rainfresh Technologies, Inc.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND JUNE 30, 1997
NOTE 5 - INCOME TAXES
There is no income tax benefit for operating losses for the period from November
29, 1995 (inception) to December 31, 1995 and the year ended December 31, 1996
due to the following:
Current tax benefit - the operating losses cannot be carried back to
earlier years.
Deferred tax benefit - the deferred tax assets were offset by a
valuation allowance. Management believes that a valuation allowance is
considered necessary since it is more likely than not that the deferred
tax asset will not be realized through future taxable income.
The components of the net deferred tax assets (liabilities) are as follows:
1995 1996
-------- ----------
Property, plant and equipment $ - $ (29,700)
Net operating loss carryforwards 3,700 355,400
Valuation allowance (3,700) (325,700)
-------- ----------
$ - $ -
======== ==========
Avani International Group, Inc. and Avani Marketing Corp. file a consolidated
corporate income tax return in the United States and Avani Water Corporation
files a corporate income tax return in Canada.
The use of net operating loss carryforwards for United States income tax
purposes is limited when there has been a substantial change in ownership (as
defined) during a three year period. Because of the recent and contemplated
changes in common stock, such a change may occur in the future. In this event,
the use of net operating losses each year would be restricted to the value of
the Company on the date of such change multiplied by the federal long-term rate
("annual limitation"); unused annual limitations may then be carried forward
without this limitation.
At December 31, 1996 the Company had net operating loss carryforwards of
approximately $175,000 for U.S. income tax purposes, which if not used will
expire during the years 2010 and 2011. At December 31, 1996, the Company had net
operating loss carryforwards of approximately $713,000 for Canadian income tax
purposes, which if not used will expire during the years 2002 and 2003.
NOTE 6 - COMMON STOCK
In December 1995, the Company originally issued 6,200,000 shares of common stock
at $.001 par value to its founders, of which $5,000 was assigned as the value to
the license for the rights to the oxygen enrichment process and $1,200 as
compensation.
From December 1995 through December 1996, the Company raised $2,941,700, net of
offering costs of $314,800 from a private placement of its common stock. In
December 1995, the Company received subscriptions for 350,000 shares of common
stock at $1.00 per share, of which $190,000 in cash was received in December
1995 and the remainder of $160,000 was received in January 1996. During 1996,
the Company issued and sold an additional 2,906,500 shares of common stock at
$1.00 per share for $2,906,500.
F-10
<PAGE>
AVANI INTERNATIONAL GROUP INC.
(formerly Rainfresh Technologies, Inc.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND JUNE 30, 1997
NOTE 7 - RELATED PARTY TRANSACTIONS
In December 1995, the Company entered into two agreements with the Taiwanese
company from which the worldwide rights were acquired. The Company agreed to pay
a 10% finder's fee in connection with the sale of the Company's common stock to
Taiwanese investors. During the year ended December 31, 1996, the Company paid
the Taiwanese company $218,800. In addition, the Company entered into a
marketing agreement for a term of one year at $10,000 per month. Consulting fees
incurred for the year ended December 31, 1996 amounted to $120,000, of which
$30,000 was payable at December 31, 1996.
NOTE 8 - LEASES
For the period from November 29, 1995 (inception) to December 31, 1995, the year
ended December 31, 1996 and the six months ended June 30, 1997 and 1996, total
rental expenses under leases amounted to $-0-, $19,155, $26,001, and $-0-. At
December 31, 1996, the Company was obligated under various noncancelable
operating lease arrangements for vehicles as follows:
YEARS ENDING LEASE
DECEMBER 31, OBLIGATIONS
------------ -----------
1997 $ 51,941
1998 52,260
1999 39,036
2000 3,825
2001 319
-------
$147,381
===========
NOTE 9 - MAJOR CUSTOMERS AND SUPPLIER
The Company sells a substantial portion of its product to one customer. During
the year ended December 31, 1996 and the six months ended June 30, 1997, sales
to this customer aggregated $26,725, and $171,795. At December 31, 1996 and June
30, 1997, amounts due from this customer included in trade accounts receivable
were $26,506 and $27,714. If this customer was lost, it is unlikely that the
Company would be able to replace the lost revenue in the near term.
During the year ended December 31, 1996 and the six months ended June 30, 1997,
the Company purchased approximately 54% and 46% of its materials from one
supplier. At December 31, 1996 and June 30, 1997 amounts due to that supplier
were $60,869, and $-0. If the supplier ceased doing business with the Company,
management believes that other sources of materials are available.
F-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this Form 10-SB to be signed on its behalf
by the undersigned, thereunto duly authorized.
Avani International Group, Inc.
- --------------------------------- ----------------
Nico Huang Date
Treasurer
<PAGE>
Part III
Index to Exhibits
Exhibit
- -------
3.(i)(a) Articles of Incorporation, as amended of the
Company.
3.(i)(b) Articles of Incorporation, as amended of
Avani Marketing Corp.
3.(i)(c) Articles of Avani Water Corporation and Certificate of Name Change.
3.(ii)(a) By-Laws of the Company.
3.(ii)(b) By-Laws of Avani Marketing Corp.
10.(i) Mortgage in favor of International Commercial
Bank of Cathay (Canada) dated May 2, 1996. P
10.(ii) Mortgage in favor of International Commercial
Bank of Cathay (Canada) dated July 26, 1996. P
10.(iii) Mortgage in favor of Riversedge Holding Corp.
dated July 26, 1996. P
10.(iv) Mortgage in favor of International Commercial
Bank of Cathay (Canada) dated March 25, 1997. P
10.(v) Mortgage in favor of Riversedge Holding Corp.
dated March 26, 1997. P
10.(vi) Agreement dated December 18, 1995 between the
Company and Georgia Pacific Company. P
10.(vii) Agreement dated December 21, 1995 between the
Company and Georgia Pacific Company. P
10.(viii) Distribution Agreement dated December 14, 1996
between the Company and Yueh Long Enterprise
Co., LTD. P
10.(ix) Distribution Agreement dated June 13, 1997 between
the Company and Beon Top Enterprises Ltd. P
10.(x) Distribution Agreement dated January 16, 1997 between
the Company and Orient Enterprises Ltd.
21.(i) Subsidiaries of the registrant.
<PAGE>
FILED IN THE OFFICE Articles of Incorporation
OF THE SECRETARY OF (Pursuant to NRS 78)
STATE OF THE STATE OF STATE OF NEVADA
NEVADA
NOV 29 1995 SEAL
20861-95
Dean Heller STATE OF NEVADA
Secretary of State Secretary of State
/s/
- --------------------------------------------------------------------------------
1. NAME OF CORPORATION: Rainfresh Technologies, Inc.
2. RESIDENT AGENT:
Name of Residing Agent: The Corporation Trust Company of
Nevada.
Street Address: One East First Street, Reno, Nevada, 89501.
3. SHARES:
Number of shares with par value: 25,000,000 Par Value: .001
4. GOVERNING BOARD: Shall be styled as Directors.
The FIRST BOARD OF DIRECTORS shall consist of one (1) members and the
names and addresses are as follows:
Peter Khean Ste 777, 916 Broadway
Vancouver, BC V52 1K7
5. PURPOSE: The purpose of the corporation shall be:
6. PERSONAL LIABILITY (Pursuant to NRS 78.037): Check one:
_X_ Accept _________ Decline.
6(a) If you chose accept, please check one: _________ Limiting
____X___ Eliminating
7. OTHER MATTERS: Any other matters to be included in these articles may
be noted on separate pages and incorporated by reference herein as a
part of these articles: Number of pages attached none.
----
<PAGE>
8. SIGNATURES OF INCORPORATORS: The names and addresses of each of the
incorporators signing the articles: (signature must be notarized)
Stuart Stout
--------------------------------
Name
520 Pike St., Seattle, WA 98101
--------------------------------
Address
/s/
--------------------------------
Signature
Subscribed and sworn to before me this 28th day of November, 1995.
/s/
------------------------------------
Kathleen C. Gariepy Notary Public
9. CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT
The Corporation Trust Company of Nevada hereby accept appointment as
Resident Agent for the above named corporation.
The Corporation Trust Company of Nevada
/s/ November 28, 1995
------------------------ -------------------
John P. Stout Date
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
RAINFRESH TECHNOLOGIES INC., a corporation organized under the laws of
the State of Nevada, by its president (or vice-president) and secretary (or
assistant secretary) does hereby certify:
1. That the board of directors of said corporation at a meeting duly
convened and held on the 16th day of December, 1996, passed a resolution
declaring that the following change and amendment in the articles of
incorporation is advisable.
RESOLVED that article 1 of said articles of incorporation be
amended to read as follows: "AVANI INTERNATIONAL GROUP INC."
2. That the number of shares of the corporation outstanding and
entitled to vote on an amendment to the articles of incorporation is 8,755,900;
that the said change and amendment has been consented to and authorized by the
written consent of stockholders holding at least a majority * of each class of
stock outstanding and entitled to vote thereon.
IN WITNESS WHEREOF, the said RAINFRESH TECHNOLOGIES INC. has caused
this certificate to be signed by its president (or vice-president) and its
secretary (or assistant secretary) and its corporate seal to be hereto affixed
this 16th day of December, 1996.
By /s/
----------------------------
Peter Khean, President
/s/
----------------------------
Secretary (or Assis. Sec.)
<PAGE>
PROVINCE OF BRITISH COLUMBIA, CANADA
COUNTY OF NEW WESTMINSTER
On December 16, 1996 personally appeared before me, a Notary Public,
Peter Khean, who acknowledged that he/she executed the above instrument.
JOSEPH M. SCHWARZ __________________/s/_________________
Barrister & Solicitor Notary
Public
206-2922 Glen Drive
Coquitlam, B.C. V3B 2P7
Phone: 942-8880
<PAGE>
FILED IN THE ARTICLES OF INCORPORATION
OFFICE OF THE
SECRETARY OF STATE OF
OF THE STATE OF
NEVADA TRANSPACIFIC EQUITIES NC.
AUG 16 1994
Secretary of State * * * * * *
/s/
No. 12726-94
---------------
FIRST: The name of the corporation is TRANSPACIFIC EQUITIES
INC.
SECOND: Its registered office in the state of Nevada is located at One
East First Street, Reno, Nevada 89501. The name of its resident agent at that
address is The Corporation Trust Company of Nevada.
THIRD: The total number of shares which the corporation is
authorized to issue is fifty million (50,000,000) common of the
par value of one cent ($.01) each.
FOURTH: The governing board of this corporation shall be known as
directors and the number of directors may from time to time be increased or
decreased in such manner as shall be prescribed by the bylaws of this
corporation.
The name and address of the first board of directors, which shall be
one in number, is as follows:
Name Address
---- -------
Peter Khean 916 West Broadway
Suite 777
Vancouver, B.C. V5Z 1K7
Canada
Charlie Muzio 63 Jeffrey Drive
Manahawkin, NJ 08050
The board of directors is hereby authorized to prescribe by resolution the
voting powers, designations, preferences,
<PAGE>
limitations, restrictions, relative rights and distinguishing designations of
each of the above class or series of stock.
FIFTH: The name and address of each of the incorporators
signing the Articles of Incorporation are as follows:
Name Address
---- -------
L. Nordeen 520 Pike Street
Seattle, WA 98101
V. Horst 520 Pike Street
Seattle, WA 98101
SIXTH: In all elections for directors every shareholder entitled to
vote shall have the right to vote, in person or by proxy, the number of shares
of stock owned by him, for as many persons as there are directors to be elected,
or to cumulate the vote of said shares, and give one candidate as many votes as
the number of directors multiplied by the number of his shares of stock shall
equal, or to distribute the votes on the same principle among as many candidates
as he may see fit.
SEVENTH: A director of the corporation shall not be personally liable
to the corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director except for liability (i) for any breach of the
directors' duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 78.300 of the Nevada revised
statutes, or (iv) for any transaction from which the director derived any
improper personal benefit.
<PAGE>
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Nevada, do make and file these Articles of
Incorporation, hereby declaring and certifying that the facts herein stated are
true, and accordingly have hereunto set our hands this 16th day of August, 1994.
/s/
---------------------------
L. Nordeen
/s/
---------------------------
V. Horst
STATE OF WASHINGTON )
)
COUNTY OF KING )
On this 16th day of August, 1994, before me, a Notary Public,
personally appeared L. Nordeen and V. Horst, and who severally acknowledged that
they executed the above instrument.
NOTARY /s/
STAMP -------------------------------------
J.P. Stuart Stout, Notary Public in
and for the State of Washington,
County of King, residing at Kent,
Worthington.
My commission expires 2/29/96
RECEIVED
August 16 1994
11:15 PM
------------------
SECRETARY OF STATE
<PAGE>
FILED IN THE OFFICE OF
THE SECRETARY OF STATE OF
THE STATE OF NEVADA
C 12726-94
JUL 05 1996
No. ______________
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
Transpacific Equities, Inc.
We the undersigned, Peter Khean, President, and Peter Khean,
Secretary, of Transpacific Equities, Inc. do hereby certify:
That the Board of Directors of said corporation at a meeting duly
convened, held on the 13th day of May, 1996, adopted a resolution to amend the
original articles as follows:
Article First is hereby amended to read as follows:
First: The name of the corporation is AVANI MARKETING CORP.
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 10,000; that the said
change(s) and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority vote of each class of stock
outstanding and entitled to vote thereon.
/s/
-------------------------
President and Secretary
<PAGE>
PROVINCE OF BRITISH COLUMBIA)
SS.
CITY OF VANCOUVER )
On June 20, 1996, personally appeared before me, a Notary Public, Peter
Khean, who acknowledged that they executed the above instrument.
/s/
------------------------------
Signature of Notary
Attested to only without M.A. MUSTONEN
prejudice as to form NOTARY PUBLIC
and substance. No advice 3353 KINGSWAY
or opinion rendered. VANCOUVER, B.C.
V5R 5K6
433-1194
<PAGE>
EXHIBIT 3.(i)c
PROVINCE OF BRITISH COLUMBIA
"COMPANY ACT"
ARTICLES
- of -
RAINFRESH MOUNTAIN WATER INC.
PART I - INTERPRETATION
1.1 In these Articles, unless the context otherwise requires:
(a) "Board of Directors" or "Board" means the
Directors of the Company for the time being;
(b) "The Act" means the Company Act of the Province of
British Columbia from time to time in force and all
amendments thereto and includes all regulations and
amendments thereto made pursuant to that Act;
(c) "directors" means the Directors of the Company
for the time being;
(d) "month" means calendar month;
(e) "ordinary resolution" has the meaning assigned
thereto by The Act;
(f) "register" means the register of members to be
kept pursuant to The Act;
(g) "registered address" of a member shall be his
address as recorded in the register;
(h) "registered address" of a Director means his address
as recorded in the Company's register of Directors to
be kept pursuant to The Act;
(i) "seal" means the common seal of the Company,
if the Company has one;
(j) "special resolution" has the meaning assigned
thereto by The Act;
(k) "Registrar" means the Registrar of Companies
for the Province of British Columbia appointed
pursuant to The Act;
<PAGE>
2
(l) "registrar" means the registrar of the
Company's shares appointed pursuant to Part 4
of these Articles;
(m) "Securities Act" means the Securities Act of the
province of British Columbia from time to time in
force and all amendments thereto and includes all
regulations and amendments thereto made pursuant to
the Act.
1.2 Expressions referring to writing shall be construed as including references
to printing, lithography, typewriting, photography and other modes of
representing or reproducing words in a visible form.
1.3 Words importing the singular include the plural and vice versa; and words
importing a male person include a female person and a corporation.
1.4 The definitions in The Act shall with the necessary changes and so far as
applicable apply to these Articles.
1.5 The regulations contained in Table A in the First Schedule to The Act shall
not apply to the Company.
1.6 The Rules of Construction contained in the Interpretation Act shall apply,
mutatis mutandis, to the interpretation of these Articles.
PART 2 - SHARES AND SHARE CERTIFICATES
2.1 Every member is entitled, without charge, to one certificate representing
the share or shares of each class held by him or upon paying a sum not exceeding
the amount permitted by The Act, as the Directors may from time to time
determine, or several certificates each for one or more of those shares;
provided that, in respect of a share or shares held jointly by several persons,
the Company shall not be bound to issue more than one certificate, and delivery
of a certificate for a share to one of several joint holders or to his duly
authorized agent shall be sufficient delivery to all; and provided further that
the Company shall not be bound to issue certificates representing redeemable
shares, if the shares are to be redeemed within one month of the date on which
they were allotted. Any share certificate may be sent through the post by
registered prepaid mail to the member entitled thereto at his registered
<PAGE>
3
address, and the Company shall not be liable for any loss occasioned to the
member as a result of any share certificate sent being lost in the post or
stolen.
2.2 If a share certificate:
(a) is worn out or defaced, the Directors may, upon production to
them of that certificate and upon other terms if any, as they
may think fit, order the certificate to be cancelled and may
issue a new certificate in lieu thereof;
(b) is lost, stolen, or destroyed, then upon proof thereof to the
satisfaction of the Directors and upon such indemnity, if any,
as the directors deem adequate being given, a new share
certificate in place thereof shall be issued to the person
entitled to the lost, stolen or destroyed certificate; or
(c) represents more than one share and the registered owner
thereof surrenders it to the Company with a written request
that the Company issue registered in his name two or more
certificates each representing a specified number of shares
and in the aggregate representing the same number of shares as
the certificate surrendered, the Company shall cancel the
certificate surrendered and issue in place thereof
certificates in accordance with the request.
A sum, if any, not exceeding that permitted by The Act, as the Directors may
from time to time fix, shall be paid to the company for each certificate issued
under this Article.
2.3 Except as required by law or statute or these Articles, no person shall be
recognized by the Company as holding any share upon any trust, and the Company
shall not be bound by or compelled in any way to recognize (even when having
notice) any equitable, contingent, future or partial interest in any share or
any interest in any fractional part of a share or (except only as by law or
statute or these Articles provided or as ordered by a court of competent
jurisdiction) any other rights in respect of any share except an absolute right
to the entirety in the registered holder.
2.4 Every share certificate shall be signed manually by at least one Officer or
Director of the Company, or by or on behalf of a registrar, branch registrar,
transfer agent or branch transfer agent of the Company and any additional
signatures may be printed or otherwise mechanically reproduced and a
<PAGE>
4
certificate signed in either of those fashions shall be as valid as if signed
manually, notwithstanding that any person whose signature is printed or
mechanically reproduced on a share certificate has ceased to hold the office
that he is stated on the certificate to hold at the date of the issue of a share
certificate.
2.5 Save as provided by The Act, the Company shall not give financial assistance
by means of a loan, guarantee, the provision of security or otherwise for the
purpose of or in connection with the purchase of or subscription by any person
for shares or debt obligations issued by the Company or an affiliate of the
Company or upon the security, in whole or in part, of a pledge or other charge
upon the shares or debt obligations issued by the Company or an affiliate of the
Company.
2.6 Every share certificate issued by the Company shall be in a form as the
Directors approve and shall comply with The Act.
2.7 The certificates for shares registered in the name of two or more persons
shall be delivered to the person first named on the register.
2.8 The Company may issue warrants and options for the purchase of shares on
terms and conditions and for consideration as the Directors may determine; and
the Company may pay a commission to any person in consideration of his
purchasing or procuring the purchase of a warrant or option.
PART 3 - ISSUE OF SHARES
3.1 Subject to The Act and to any direction to the contrary contained in a
resolution passed at a general meeting authorizing any increase of capital, the
issue of shares shall be under the control of the Directors who may, subject to
the rights of the holders of the shares of the Company for the time being
issued, allot or otherwise dispose of, and grant options on, shares authorized
but not yet issued at times and to persons, including Directors, and in a manner
and upon terms and conditions, and at a price or for a consideration, as the
Directors, in their absolute discretion, may determine.
3.2 The Directors on behalf of the company may pay a commission or allow a
discount to any person in consideration of his subscribing or agreeing to
subscribe, whether absolutely or conditionally, for any shares with a par value
<PAGE>
5
in the Company, or procuring or agreeing to procure subscriptions, whether
absolutely or conditionally, for any shares provided that the rate of the
commission or discount shall not in the aggregate exceed 25% of the subscription
price of the shares, or an amount equivalent to the percentage. The Company may
also pay brokerage as may be lawful.
3.3 No share may be issued until it is fully paid by the receipt by the Company
of the full consideration therefor in cash, property or past services actually
performed for the Company. a document evidencing indebtedness of the person to
whom the shares are allotted is not property for the purposes of this Article.
The value of property and services for the purposes of this Article shall be the
value determined by the Directors by resolution to be, in all circumstances of
the transaction, the fair market value thereof.
PART 4 - REGISTERS
4.1 The Company shall keep or cause to be kept a register of members, a register
of transfers and a register of allotments within British Columbia, all as
required by The Act, and may combine one or more of such registers. If the
Company's capital shall consist of more than one class of shares, a separate
register of members, register of transfers and register of allotments may be
kept in respect of each class of shares. The Directors on behalf of the Company
may appoint a trust company to keep the register of members, register of
transfers and register of allotments or, if there is more than one class of
shares, the Directors may appoint a trust company, which need not be the same
trust company, to keep the register of members, the register of transfers and
the register of allotments for each class of share. The Directors on behalf of
the Company may also appoint one or more trust companies, including the trust
company which keeps the said registers of its shares or such class thereof, as
the case may be, and the same or another trust company or companies as registrar
for its shares or such class thereof, as the case may be. The Directors may
terminate the appointment of any trust company at any time and may appoint
another trust company in its place.
4.2 Unless prohibited by The Act, the Company may keep or cause to be kept one
or more branch registers of members at a place or places as the Directors may
from time to time determine.
4.3 The Company shall not at any time close its register of members save and
except as permitted by The Act.
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6
4.4 The Company shall keep or cause to be kept within the Province of British
Columbia in accordance with The Act a register of its debentures and a register
of debentureholders, which registers may be combined, and, subject to the
provisions of The Act, may keep or cause to be kept one or more branch registers
of its debentureholders at a place or places as the Directors may from time to
time determine and the Directors may by resolution, regulation or otherwise,
make provisions as they think fit respecting the keeping of branch registers.
PART 5 - TRANSFER AND TRANSMISSION OF SHARES
5.1 Subject to the provisions of the Memorandum and of these Articles that may
be applicable, any member may transfer any of his shares by instrument in
writing executed by or on behalf of the member and delivered to the Company or
its transfer agent. The instrument of transfer of any share of the Company shall
be in the form, if any, on the back of the Company's share certificates or in
any other form as the Directors may from time to time approve. Except to the
extent that The Act may otherwise provide, the transferor shall be deemed to
remain the holder of the shares until the name of the transferee is entered in
the register of members or a branch register of members in respect thereof. If
the Directors require, each instrument of transfer shall be in respect of only
one class of share.
5.2 The signature of the registered owner of any shares, or of his duly
authorized attorney, upon an authorized instrument of transfer shall constitute
a complete and sufficient authority to the Company, its Directors, Officers and
agents to register, in the name of the transferee as named in the instrument of
transfer, the number of shares specified or, if no number is specified, all the
shares of the registered owner represented by share certificates deposited with
the instrument of transfer. If no transferee is named in the instrument of
transfer, the instrument of transfer shall constitute a complete and sufficient
authority to the Company, its Directors, Officers and agents to register, in the
name of the person in whose behalf any certificate for the shares to be
transferred is deposited with the Company for the purpose of having the transfer
registered, the number of shares specified in the instrument of transfer or, if
no number is specified, all the shares represented by all share certificates
deposited with the instrument of transfer.
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7
5.3 Neither the Company nor any Director, Officer or client shall be bound to
enquire into the title of the person noted in the form of transfer as
transferee, or, if no person is named therein as transferee, of the person on
whose behalf the certificate is deposited with the company for the purpose of
having the transfer registered or be liable to any claim by such registered
owner or by any intermediate owner or holder of the certificate or of any of the
shares represented thereby or any interest therein for registering the transfer,
and the transfer, when registered, shall confer upon he person in whose name the
shares have been registered a valid title to the shares.
5.4 Every instrument of transfer shall be executed by the transferor and left at
the registered office of the Company or at the office of its transfer agent or
registrar for registration together with the share certificate for the shares to
be transferred and other evidence as the Directors or the transfer agent or
registrar may require to prove the title of the transferor or his right to
transfer the shares and the right of the transferee to have the transfer
registered. All instruments of transfer where the transfer is registered shall
be retained by the Company or its transfer agent or registrar and any instrument
of transfer, where the transfer is not registered, shall be returned to the
person depositing the same together with the share certificate which accompanied
the same when tendered for registration.
5.5 There shall be paid to the Company in respect of the registration of any
transfer a sum, if any, as the Directors may from time to time determine, not
exceeding that permitted by the Act.
5.6 In the case of the death of a member, the survivor or survivors where the
deceased was a joint registered holder, and the legal personal representative of
the deceased where he was the sole holder, shall be the only persons recognized
by the Company as having any title to his interest in the shares. Before
recognizing any legal personal representative the Directors may require him to
deliver to the Company the original or a court-certified copy of a Grant of
Probate or Letters of Administration in British Columbia or other evidence and
documents as the Directors consider appropriate in order to establish the right
of the personal
5.7 Upon the death or bankruptcy of a member, his personal representative or
trustee in bankruptcy, although not a member, shall have the same rights,
privileges and obligations that attach to the shares formerly held by the
deceased or bankrupt member if the documents required by The Act and these
Articles shall have been deposited with the Company. This Article does not apply
on the death of a member with respect to shares registered in his name and the
name of another person in joint tenancy.
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8
5.8 Any person becoming entitled to a share in consequence of the death or
bankruptcy of a member shall, upon documents and evidence being produced to the
Company as The Act and these Articles require or who becomes entitled to a share
as a result of an order of a Court of competent jurisdiction or a Statute, has
the right either to be registered as a member in his representative capacity in
respect of the share, or, if he is a personal representative, instead of being
registered himself, to make a transfer of the share as the deceased or bankrupt
person could have made; but the directors shall, as regards a transfer by a
personal representative or trustee in bankruptcy, have the same right, if any,
to decline or suspend registration of a transferee as they would have in the
case of a transfer of a share by the deceased or bankrupt person before the
death or bankruptcy.
PART 6 - ALTERATION OF CAPITAL
6.1 The Company may be either special or ordinary resolution filed with the
Registrar amend its Memorandum to increase the share capital of the Company by:
(a) creating shares with par value or shares without
par value, or both;
(b) increasing the number of shares with par value or
shares without par value, or both;
(c) increasing the par value of a class of shares with par value,
if no shares of that class are issued.
6.2 The Company may by special resolution alter its Memorandum to subdivide,
consolidate, change from shares with par value to shares without par value, or
from shares without par value to shares with par value, or change the
designation of, all or any of its shares but only to the extent, in the manner
and with the consent of members holding a class of shares which is the subject
of or affected by the alteration, as The Act provides.
6.3 The Company may alter its Memorandum or these Articles:
(a) by special resolution, to create, define and attach
special rights or restrictions to any shares, and
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9
(b) by special resolution and by otherwise complying
with any applicable provision of its Memorandum or
these Articles, to vary or abrogate any special
rights and restrictions attached to any shares and
in each case by filing a certified copy of the
resolution with the Registrar but no right or
special right attached to any issued shares shall
be prejudiced or interfered with unless all members
holding shares of each class whose right or special
right is prejudiced or interfered with consent
thereto in writing, or unless a resolution
consenting is passed at a separate class meeting of
the holders of the shares of each class by a
majority of three-fourths, or such greater majority
as may be specified by the special rights attached
to the class of shares, of the issued shares of the
class.
6.4 Notwithstanding any consent in writing or resolution, no alteration shall be
valid as to any part of the issued shares of any class unless the holders of all
of the issued shares of the class either all consent in writing or consent by a
resolution passed by the votes of members holding three-fourths of the shares.
6.5 Except as otherwise provided by conditions imposed at the time of creation
of any new shares or by these Articles, any addition to the authorized capital
resulting from the creation of new shares shall be subject to the provisions of
these Articles.
6.6 If the Company is or becomes a reporting company, no resolution to create,
vary or abrogate any special right or conversion attaching to any class of
shares shall be submitted to any meeting of members unless, if required by The
Act, the Office of the Superintendent of Brokers for British Columbia shall have
consented to the resolution.
PART 7 - PURCHASE AND REDEMPTION OF SHARES
7.1 Subject to the special rights and restrictions attached to any class of
shares, the Company may, by a resolution of the Directors and in compliance with
The Act, purchase any of its shares at the price and upon the terms specified in
such resolution or redeem any class of its shares in accordance with the special
rights and restrictions attaching thereto. No purchase or redemption shall be
made if the Company is insolvent at the time of the proposed purchase or
redemption or if the proposed purchase or redemption would render the Company
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10
insolvent. Unless the shares are to be purchased through a stock exchange or
from a bona fide employee or bona fide former employee, of the Company of an
affiliate, or from his personal dissenting members pursuant to the requirements
of The Act, the Company shall make its offer to purchase pro rata to every
member who holds shares of the class or kind, as the case may be, to be
purchased.
7.2 If the Company proposes at its option to redeem some but not all of the
shares of any class, the Directors may, subject to the special rights and
restrictions attached to the class of shares, decide the manner in which the
shares to be redeemed shall be selected.
7.3 Subject to the provisions of The Act, any shares purchased or redeemed by
the Company may be sold or issued by it, but, while such shares are held by the
Company, it shall not exercise any vote in respect of, or pay any dividend on
those shares.
PART 8 - BORROWING POWERS
8.1 The Directors may from time to time on behalf of the Company:
(a) borrow money in a manner and amount, on any
security, from any source and upon any terms and
conditions;
(b) issue bonds, debentures, and other debt obligations either
outright or as security for any liability or obligation of the
Company or any other person; and
(c) mortgage, charge, whether by way of specific or floating
charge, or give other security on the undertaking, or on the
whole or any part of the property and assets, of the Company
(both present and future).
8.2 Any bonds, debentures or other debt obligations of the Company may be issued
at a discount, premium or otherwise, and with any special privileges as to
redemption, surrender, drawing, allotment of or conversion into or exchange for
shares or other securities, attending any voting at general meetings of the
Company, appointment of Directors or otherwise and may by their terms be
assignable free from any equities between the Company and the person to whom
they were issued or any subsequent holder thereof, all as the Directors may
determine.
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11
8.3 Every bond, debenture or other debt obligation of the Company shall be
signed manually by at least one Director or Officer of the Company or by or on
behalf of a trustee, registrar, branch registrar, transfer agent or branch
transfer agent for the bond, debenture or other debt obligation appointed by the
Company or under any instrument under which the bond, debenture or other debt
obligation is issued and any additional signatures may be printed or otherwise
mechanically reproduced thereon and a bond, debenture or other debt obligation
signed in that manner is as valid as if signed manually notwithstanding that any
person whose signature is so printed or mechanically reproduced shall have
ceased to hold the office that he is stated on the bond, debenture or other debt
obligation to hold at the date of the issue thereof.
8.4 If the Company is or becomes a reporting company, the Company shall keep or
cause to be kept a register of its indebtedness to every Director or Officer of
the Company or an associate of any of them in accordance with the provisions of
The Act.
PART 9 - GENERAL MEETING
9.1 Subject to Article 9.2 and to The Act, the first annual general meeting
shall be held within 15 months from the date of incorporation and the following
annual general meetings shall be held once in every calendar year at a time, not
being more than 13 months after the holding of the last preceding annual general
meeting, and at a place as the Directors shall appoint. In default of the
meeting being held, the meeting shall be called by any two members in the same
manner as nearly as possible as that in which meetings are to be called by the
Directors.
9.2 If the Company is not a reporting company and if all members entitled to
attend and vote at the annual general meeting or the Company consent in writing
each year to the business required to be transacted at the annual general
meeting, that business shall be as valid as if transacted at an annual general
meeting duly convened and held and, it is not necessary for the Company to hold
an annual general meeting that year.
9.3 The Directors may, whenever they think fit, convene a general meeting. A
general meeting, if requisitioned in accordance with The Act, shall be convened
by the Directors or, if not convened by the Directors, may be convened by the
requisitionists as provided in The Act.
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12
9.4 Not less than 21 days' notice of any general meeting specifying the time and
place of meeting and in case of special business, the general nature of that
business shall be given in the manner mentioned in Article 22, or in such other
manner, if any, as may be prescribed by ordinary resolution whether previous
notice has been given or not, to any person as may by law or under these
Articles or other regulations of the Company entitled to receive the notice from
the Company. But the accidental omission to give notice of any meeting to, or
the non-receipt of any notice, by any person shall not invalidate any
proceedings at that meeting.
9.5 Persons entitled to notice of a general meeting may waive or reduce the
period of notice convening the meeting, by unanimous consent in writing, and may
give such waiver before, during or after the meeting.
PART 10 - PROCEEDINGS AT GENERAL MEETINGS
10.1 Subject to Article 10.2, a quorum shall be one member or one proxyholder,
representing members holding not less than one-twentieth of the issued shares
entitled to be voted at that meeting. If there is only one member of the
Company, the quorum is one person present and being, or representing by proxy,
such member.
10.2 If within one-half hour from the time appointed for a meeting a quorum is
not present, the meeting, if convened by requisition of the members, shall be
dissolved. In any other case it shall stand adjourned to the same day in the
next week at a time and place determined by the Board of Directors. If at the
adjourned meeting a quorum is not present within one-half hour from the time
appointed, the members present shall be a quorum.
10.3 The Chairman of the Board, if any, or in his absence, the President of the
Company, or their appointee, if approved by the shareholders, shall be entitled
to preside as Chairman at every general meeting of the Company.
10.4 If at any meeting neither the Chairman of the Board, if any, nor the
President is present within fifteen minutes after the time appointed for holding
the meeting or is willing to act as Chairman, the Directors present shall choose
someone to be Chairman. If no Director be present or if all the directors
present decline to take the chair or shall fail to choose, the members present
shall choose one of their number to be Chairman.
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13
10.5 The Chairman of the meeting may, with the consent of any meeting at which a
quorum is present and shall if so directed by the meeting, adjourn the meeting
from time to time and from place to place, but no business shall be transacted
at any adjourned meeting other than the business left unfinished at the meeting
from which the adjournment took place. When a meeting is adjourned for 30 days
or more, seven days' notice of the adjourned meeting shall be given, otherwise
notice is not required.
10.6 Subject to the provisions of The Act, every question submitted to a general
meeting shall be decided on a show of hands unless a poll is, before or on the
declaration of the result of the show of hands, directed by the Chairman or
demanded by a member entitled to vote who is present in person or by proxy, and
the Chairman shall declare to the meeting the decision on every question in
accordance with the result of the show of hands or the poll, and the decision
shall be entered in the book of proceedings of the Company. A declaration by the
Chairman that a resolution has been carried or carried unanimously or by a
particular majority, or lost or not carried by a particular majority, and an
entry to that effect in the book containing the minutes of the proceedings of
the Company shall be conclusive evidence of the fact without proof of the number
or proportion of the votes recorded in favor of or against the resolution.
10.7 No resolution proposed at a meeting need be seconded and the Chairman of
any meeting (provided he is entitled to vote) shall be entitled to move or
second a resolution, without the necessity of relinquishing the chair.
10.8 In case of an equality of votes at a general meeting, the Chairman shall
not, either on a show of hands or on a poll, have a casting or a second vote in
addition to the vote or votes to which he may be entitled as a member.
10.9 No poll may be demanded on the election of a Chairman. A poll demanded on a
question of adjournment shall be taken forthwith. A poll demanded on any other
question shall be taken as soon as, in the opinion of the Chairman, is
reasonably convenient, but in no event later than seven days after the meeting
and at a time and place and in a manner as the Chairman of the meeting directs.
the result of the poll shall be deemed to be the resolution of and passed at the
meeting at which the poll was demanded. Any business other than that upon which
the poll has been demanded may be proceeded with pending the taking of the poll.
A demand for a poll may be withdrawn. In any dispute as to the admission or
rejection of a vote, the decision of the Chairman made in good faith shall be
final an conclusive.
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14
10.10 A member entitled to more than one vote need not, if he votes, use all his
votes or cast all the votes he uses in the same way.
10.11 The demand of a poll shall not prevent the continuance of a meeting for
the transaction of any business other than the question on which a poll has been
demanded.
10.12 Every ballot cast upon a poll, and every proxy appointing a proxyholder
who cast a ballot upon a poll, shall be retained by the Secretary for at least
three months and be subject to inspection as The Act may provide.
PART 11 - VOTES OF MEMBERS
11.1 Subject to any special voting rights or restrictions attached to any class
of shares and the restrictions on joint registered holders of shares, on a show
of hands every member who is present in person and entitled to vote shall have
one vote and on a poll every member shall have one vote for each share of which
he is the registered holder and may exercise his vote either in person or by
proxy.
11.2 Any person who is not registered as a member but is entitled to vote at any
general meeting in respect of a share, may vote the share in the same manner as
if he were a member; but, unless the Directors have previously admitted his
right to vote at that meeting in respect of the share, he shall satisfy the
Directors of his right to vote the share before the time for holding the
meeting, or adjourned meeting, as the case may be, at which he proposes to vote.
11.3 Any corporation, not being a subsidiary of the Company which is a member of
the Company, may by resolution of its Directors or other governing body
authorize any person as it thinks fit to act as its representative at any
general meeting or class meeting. The person authorized shall be entitled to
exercise in respect of and at the meeting the same powers on behalf of the
corporation which he represents as that corporation could exercise if it were an
individual member of the Company personally present, including, without
limitation, the right, unless restricted by the resolution, to appoint a
proxyholder to represent the corporation, and shall be counted for the purpose
of forming a quorum if present at the meeting. Evidence of the appointment of
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15
any representative may be sent to the Company by written instrument, telegram,
telex or any method of transmitting legibly recorded messages. Notwithstanding
the foregoing, a corporation being a member may appoint a proxyholder.
11.4 In the case of joint registered holders of a share, the vote of the senior
who exercises a vote, whether in person or by proxyholder, shall be accepted to
the exclusion of the votes of the other joint registered holders; and for this
purpose seniority shall be determined by the order in which the names stand in
the register of members. Several legal personal representatives of a deceased
member whose shares are registered in his sole name shall for the purpose of
this Article be deemed joint registered holders.
11.5 A member, in respect of whom an order has been made by any court having
jurisdiction, may vote, whether on a show of hands or on a poll, by his
committee, curator bonis, or other person in the nature of a committee or
curator bonis appointed by that court, and his committee, curator bonis, or
other person may appoint a proxyholder.
11.6 A member holding more than one share in respect of which he is entitled to
vote shall be entitled to appoint one or more (but not more than five)
proxyholders to attend, act and vote for him on the same occasion. If a member
should appoint more than one proxyholder for the same occasion, he shall specify
the number of shares each proxyholder shall be entitled to vote. A member may
also appoint one or more alternate proxyholders to act in the place and stead of
an absent proxyholder.
11.7 A proxy shall be in writing under the hand of the appointor or of his
attorney duly authorized in writing, or, if the appointor is a corporation,
either under the seal of the corporation or under the hand of a duly authorized
officer or attorney. A proxyholder need not be a member of the Company if:
(a) the Company is at the time a reporting company; or
(b) the member appointing the proxyholder is a
corporation; or
(c) the Company shall have at the time only one member;
or
(d) the persons present in person or by proxy and entitled to vote
at the meeting by resolution permit the proxyholder to attend
and vote; for the purpose of the resolution, the proxyholder
shall be counted in the quorum but shall not be entitled to
vote;
and in all other cases, a proxyholder must be a member.
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16
11.8 Unless the directors otherwise determine, the instrument appointing a
proxyholder and the power of attorney or other authority, if any, under which it
is signed or a notarially certified copy shall be deposited at a place specified
for that purpose in the notice convening the meeting not less than forty-eight
hours before the time for holding the meeting at which the proxyholder proposes
to vote, or shall be deposited with the Chairman of the meeting prior to the
commencement of the meeting.
11.9 Unless The Act or any other statute or law which is applicable to the
Company or to any class of its shares requires any other form of proxy, a proxy,
whether for a specified meeting or otherwise, shall be in the form following,
but may also be in any other form that the Directors or the chairman of the
meeting shall approve:
(Name of Company)
The Undersigned, being member of the above named Company, here
by appoints or failing him as proxyholder for the undersigned
to attend, act and vote for and on behalf of the undersigned
at the general meeting of the Company to be held on the day of
and at any adjournment thereof.
Signed this day of 19 .
(Signature of Member).
11.10 A vote given in accordance with the terms of a proxy is valid
notwithstanding the previous death or incapacity of the member giving the proxy
or the revocation of the proxy or of the authority under which the form of proxy
was executed or the transfer of the share in respect of which the proxy is
given, provided that no notification in writing of the death, incapacity,
revocation or transfer shall have been received at the registered office of the
Company or by the chairman of the meeting or adjourned meeting for which the
proxy was given before the vote is taken.
11.11 Every proxy may be revoked by an instrument in writing:
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17
(a) executed by the member giving the same or by his attorney
authorized in writing or, where the member is a corporation,
by its duly authorized officer or attorney of the corporation;
and
(b) delivered either at the registered office of the
Company at any time up to and including the last
business day preceding the day of the meeting, or
any adjournment at which the proxy is to be used,
or to the chairman of the meeting on the day of the
meeting or any adjournment before any vote in
respect of which the proxy is to be used shall have
been taken;
or in any other manner provided by law.
11.12 If and for as long as the Company shall be a reporting company and before
permitting a registrant to vote on a resolution or motion proposed at a meeting
of the Company, the chairman of the meeting may require the registrant (or his
proxyholder, as the case may be) to produce evidence in writing acceptable to
the chairman (in the form of a statutory declaration or otherwise) that the
registrant:
(a) is the beneficial owner or the share; or
(b) has complied with The Act vis-a-vis the beneficial
owner of the share.
11.13 The provision of this part shall be applicable mutatis mutandis to class
meetings.
PART 12 - DIRECTORS
12.1 The subscribers of the Memorandum of the Company are the first Directors.
The Directors to succeed the first Directors may be appointed in writing by a
majority of the subscribers to the memorandum or at a meeting of the
subscribers, or if not appointed, they shall be elected by the members entitled
to vote on the election of Directors and the number of directors shall be the
same as the number of Directors appointed or elected. The number of Directors,
excluding additional directors, may be fixed or changed from time to time by
ordinary resolution, whether previous notice has been given or not, but the
number of Directors shall never be less than one or, if the Company is or
becomes a reporting company, less than three.
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18
12.2 The remuneration of the Directors as such may from time to time be
determined by the Directors of, if the Directors shall decide, by the members.
The remuneration may be in addition to any salary or other remuneration may be
in addition to any salary or other renumeration paid to any Officer or employee
of the Company as such who is also a Director. The Directors shall be repaid
reasonable travelling, hotel and other expenses as they incur in and about the
business of the Company and if any Director shall perform any professional or
other services for the Company that in the opinion of the directors are outside
the ordinary duties of a director or shall otherwise be specially occupied in or
about the Company's business, he may be paid a remuneration to be fixed by the
Board, or, at the option of the Director, by the Company in general meeting, and
the remuneration may be either in addition to, or in substitution of any other
remuneration that he may be entitled to receive. The Directors on behalf of the
Company, unless otherwise determined by ordinary resolution, may pay a gratuity
or pension or allowance on retirement to any Director who has held any salaried
office or place of profit with the Company or to his spouse or dependents and
may make contributions to any fund and pay premiums for the purchase or
provision of any gratuity, pension or allowance.
12.3 A Director shall not be required to hold a share in the capital of the
Company as qualification for his office but shall be qualified as required by
The Act, to become or act as a Director.
PART 13 - ELECTION AND REMOVAL OF DIRECTORS
13.1 At each annual general meeting of the Company all Directors shall retire
and the members entitled to vote shall elect a Board of Directors consisting of
the number of Directors for the time being fixed pursuant to these Articles. If
the Company is, or becomes, a company that is not a reporting company and the
business to be transacted at any annual general meeting is consented to in
writing by the members who are entitled to attend and vote at this annual
general meeting shall be deemed for the purpose of this Part to have been held
on the written consent becoming effective.
13.2 A retiring Director shall be eligible for re-election.
13.3 Where the Company fails to hold an annual general meeting in accordance
with The Act, the Directors then in office shall be deemed to have been elected
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19
or appointed as Directors on the last day on which the annual general meeting
could have been held pursuant to these Articles and they may hold office until
other Directors are appointed or elected or until the day on which the next
annual general meeting is held.
13.4 If, at any general meeting at which an election of Directors ought to take
place, the places of the retiring Directors are not filled up, those of the
retiring Directors as may be requested by the newly elected Directors shall, if
willing, continue in office until further new Directors are elected at a general
meeting specially convened for that purpose or at the annual general meeting in
the next or some subsequent year, unless it is determined to reduce the number
of Directors.
13.5 Any casual vacancy occurring in the Board of Directors may be filled by the
remaining Directors or Director.
13.6 Between successive annual general meetings the Directors shall have power
to appoint one or more additional Directors, but not more than one-third of the
number of Directors elected or appointed at the last annual general meeting at
which Directors were elected. Any director appointed shall hold office only
until the next following annual general meeting of the Company, but shall be
eligible for election at the meeting and so long as he is an additional Director
the number of directors shall be increased accordingly.
13.7 Any Director may be instrument in writing delivered to the Company appoint
any person to be his alternate to act in his place at meetings of the Directors
at which he is not present unless the Directors shall have reasonably
disapproved the appointment of the person as an alternate Director and shall
have given notice to that effect to the Director appointing the alternate
Director within a reasonable time after delivery of the instrument to the
Company. Every alternate shall be entitled to notice of meetings of the
Directors and to attend and vote as a Director at a meeting at which the person
appointing him is not personally present, and, if he is a Director, to have a
separate vote on behalf of the Director he is representing in addition to his
own vote. A director may at any time by instrument, telegram, telex or any
method of transmitting legibly recorded messages delivered to the Company revoke
the appointment of an alternate appointed by him. The remuneration payable to an
alternate shall be payable out of the remuneration of the Director appointing
him.
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13.8 The office of Director shall be vacated if the Director;
(a) resigns his office by notice in writing delivered
to the registered office of the Company; or
(b) ceases to be qualified to act as a Director
pursuant to The Act.
13.9 The Company may by special resolution remove any Director before the
expiration of his period of office, and may by an ordinary resolution appoint
another person in his stead.
PART 14 - POWERS AND DUTIES OF DIRECTORS
14.1 The Directors shall manage, or supervise the management of, the affairs and
business of the Company and shall have the authority of exercise all powers of
the Company as are not, by The Act or by the Memorandum or these Articles,
required to be exercised by the Company in general meeting.
14.2 The Directors may from time to time by power of attorney or other
instrument under the seal, appoint any person to be the attorney of the Company
for purposes, and with powers, authorities and discretions (not exceeding those
vested in or exercisable by the directors under these Articles and excepting the
powers of the Directors relating to the constitution of the Board and of any of
its committees and the appointment or removal of Officers and the power to
declare dividends) and for a period, with renumeration and subject to conditions
as the Directors may think fit, and any appointment may be made in favor of any
of the directors or any of the members of the Company or in favor of any
corporation, or of any of the members, Directors, nominees or managers of any
corporation, firm or joint venture and any power of attorney may contain
provisions for the protection or convenience of persons dealing with the
attorney as the Directors may think fit. Any attorney may be authorized by the
Directors to sub-delegate all or any of the powers, authorities and discretions
for the time being vested in him.
PART 15 - DISCLOSURE OF INTEREST OF DIRECTORS
15.1 A Director who is, in any way, directly or indirectly interested in an
existing or proposed contract or transaction with the Company or who holds any
office or possesses any property, directly or indirectly, where a duty or
<PAGE>
21
interest might be created to conflict with his duty or interest as a Director,
shall declare the nature and extent of his interest in the contract or
transaction or of the conflict or potential conflict with his duty and interest
as a Director in accordance with the provisions of The Act.
15.2 A Director shall not vote in respect of the approval of any contract or
transaction with the Company in which he is interested and if he shall do so his
vote shall not be counted, but he shall be counted in the quorum present at the
meeting at which the vote is taken. This Article and Article 15.1 shall not
apply in circumstances where a Director is, under the provisions of The Act,
deemed not to be interested in a proposed contract or transaction.
15.3 A Director may hold any office or place of profit with the Company (other
than the office of auditor of the Company) in conjunction with his office of
Director for a period and on terms (as to remuneration or otherwise) as the
Directors may determine and no Director or intended Director shall be
disqualified by his office from contracting with the Company either with regard
to his tenure of any other office or place of profit or as vendor, purchaser or
otherwise, and, subject to compliance with the provisions of The Act, no
contract or transaction entered into by or on behalf of the Company in which a
Director is in any way interested shall be liable to be voided by reason
thereof.
15.4 Subject to compliance with the provisions of The Act, a Director or his
firm may act in a professional capacity for the Company (except as auditor of
the Company) and he or his firm shall be entitled to remuneration for
professional services as if he were not a Director.
15.5 A Director may be or become a Director or other Officer or employee of, or
otherwise interested in, any corporation or firm in which the Company may be
interested as a shareholder or otherwise, and, subject to compliance with the
provisions of The Act, the Director shall not be accountable to the Company for
any remuneration of other benefits received by him as Director, Officer or
employee of, or from his interest in, such other corporation or firm, unless the
Company in general meeting otherwise directs.
PART 16 - PROCEEDINGS OF DIRECTORS
16.1 The Chairman, of the Board, if any, or in his absence, the President, shall
preside as chairman at every meeting or the Directors, or if there is no
<PAGE>
22
Chairman of the board or neither the Chairman of the board nor the President is
present within fifteen minutes of the time appointed for holding the meeting or
is willing to act as chairman, or, if the Chairman of the Board, if any, and the
President have advised the Secretary that they will not be present at the
meeting, the Directors present shall choose one of their number to be chairman
of the meeting.
16.2 The Directors may meet together for the dispatch of business, adjourn and
otherwise regulate their meetings, as they think fit. Questions arising at any
meeting shall be decided by a majority of votes. In case of an equality of votes
the chairman shall not have a second or casting vote. Meetings of the Board held
at regular intervals may be held at a place, at a time and upon notice (if any)
as the Board may by resolution from time to time determine.
16.3 A Director may participate in a meeting of the Board or of any committee of
the Directors by means of conference telephones or other communication
facilities by means of which all Directors participating in a meeting in
accordance with this Article shall be deemed to be present at the meeting, to
have agreed, shall be counted in the quorum and be entitled to speak and vote.
16.4 A Director may at any time, and the Secretary upon the written request of a
Director, shall call a meeting of the directors. Notice specifying the time and
place of the meeting shall be mailed, postage prepaid, addressed to each of the
Directors at his registered address at least 48 hours before the time fixed for
the meeting or a lesser period as may be reasonably under the circumstances, or
the notice may be give to each Director either personally or by leaving it at
his usual business or residential address or by telephone, telegram, telex or
other method of transmitting visually recorded messages, at least 48 hours
before the time or the lesser period as may be reasonable under the
circumstances. It shall not be necessary to give to any director notice of a
meeting of directors immediately following a general meeting at which the
director has been elected or notice of a meeting of Directors at which the
Director shall have been appointed. Accidental omission to give notice of a
meeting of Directors to, or the non-receipt of notice by, any Director shall not
invalidate the proceedings at that meeting.
16.5 Any Director of the Company may file with the Secretary a document executed
by him waiving notice of any past, present or future meeting or meetings of the
directors being, or required to have been, sent to him and may at any time
<PAGE>
23
withdraw the waiver with respect to future meetings. After filing the waiver
with respect to future meetings and until the waiver is withdrawn no notice need
be given to the Director and, unless the director otherwise requires in writing
to the Secretary, to his alternate Director of any meeting of Directors and all
meetings of the directors held shall be deemed to be property called or
constituted even though notice was given to the director or alternate Director.
16.6 The quorum necessary for the transaction of the business of the Directors
may be fixed by the Directors and if not fixed shall be two Directors or, if the
number of Directors is fixed at one, shall be one Director.
16.7 The continuing Directors may act notwithstanding any vacancy in their body,
but, if and so long as their number is reduced below the number fixed pursuant
to these Articles as the necessary quorum of directors, the continuing Directors
may act for the purpose of increasing the number of directors to that number, or
of summoning a general meeting of the Company, but for no other purpose.
16.8 Subject to the provisions of The Act, all acts done by any meeting of the
directors or of a committee of Directors, or by any person acting as a Director,
shall, notwithstanding that it be afterwards discovered that there was some
defect in the qualifications, election or appointment of any Directors or of the
members of a committee or persons acting as aforesaid, or that they or any of
them were disqualified, be as valid as if every person had been duly elected or
appointed and was qualified to be a Director.
16.9 A resolution consented to in writing, whether by document, telegram, telex
or any method of transmitting legibly recorded messages or other means, by all
of the directors shall be as valid and effectual as if it had been passed at a
meeting of the directors duly called and held. A resolution shall be dated and
may be in two or more counterparts which together shall be deemed to constitute
one resolution in writing. The resolution shall be filed with the minutes of the
proceedings of the directors and shall be effective on the date stated on the
resolution or on the latest date stated on any counterpart.
PART 17 - EXECUTIVE AND OTHER COMMITTEES
17.1 The Directors may by resolution appoint an Executive Committee to consist
of a member or members of their body as they think fit, which committee shall
have, and may exercise during the intervals between the meetings of the Board,
<PAGE>
24
all the powers vested in the Board except the power to fill vacancies in the
Board, the power to change the membership of, or fill vacancies in, the
Committee or any other committees of the Board and any other powers as may be
specified in the resolution. The Committee shall keep regular minutes of its
transactions and shall cause them to be recorded in books kept for that purpose,
and shall report the same to the Board of Directors at times as the Board of
Directors may from time to time require. The board shall have the power at any
time to revoke or override the authority given to or acts done by the Committee
except as to acts done before such revocation or overriding and to terminate the
appointment or change the membership of the Committee and to fill vacancies in
it. The Committee may make rules for the conduct of its business and may appoint
assistants as it may deem necessary. A majority of the members of the Committee
shall constitute a quorum.
17.2 The Directors may by resolution appoint one or more committees consisting
of a member or members of their body as they think fit and may delegate to any
committee between meetings of the board those powers of the board (except the
power to fill vacancies in the board and the power to change the membership of
or fill vacancies in any committee of the board and the power to appoint or
remove Officers appointed by the Board) subject to conditions as may be
prescribed in the resolution, and all committees appointed shall keep regular
minutes of their transactions and shall cause them to be recorded in books kept
for that purpose, and shall report to the Board of Directors as the Board of
Directors may from time to time require. The directors shall also have a power
at any time to revoke or override any authority given to or acts to be done by
any committees except as to acts done before such revocation or overriding and
to terminate the appointment or change the membership of a committee and to fill
vacancies in it. Committees may make rules for the conduct of their business and
may appoint assistants as they deem necessary. A majority of the members of a
committee shall constitute a quorum.
17.3 The Executive Committee and any other committees may meet and adjourn as it
thinks proper. Questions arising at any meeting shall be determined by a
majority of votes of the members of the committee present, and in case of an
equality of votes, the chairman shall not have a second or casting vote. A
resolution approved in writing by all the members of the Executive Committee or
any other committee shall be as valid and effective as if it had been passed at
a meeting of the Committee duly called and constituted. A resolution shall be
dated and may be in two or more counterparts which together shall be deemed to
<PAGE>
25
constitute one resolution in writing. The resolution shall be filed with the
minutes of the proceedings of the committee and shall be effective on the date
stated on the resolution or on the latest date stated in any counterpart.
PART 18 - OFFICERS
18.1 The Directors shall, from time to time, appoint a President and a Secretary
and any other officers as the Directors shall determine and the directors may,
at any time, terminate any appointment. No officer shall be appointee unless he
is qualified in accordance with the provisions of The Act.
18.2 One person may hold more than one of the offices except that the offices of
President and Secretary must be held by different persons unless the Company has
only one member. Any person appointed as the chairman of the Board, the
President or the Managing Director shall be a director. the other officers need
not be Directors. The remuneration of the officers of the Company as such and
the terms and conditions of their tenure of office or employment shall from time
to time be determined by the Directors; the remuneration may be by way of
salary, fees, wages, commission or participation in profits or any other means
or all of these modes and an officer may in addition to the remuneration be
entitled to receive after he ceases to hold the office or leaves the employment
of the Company a pension or gratuity. The Directors may decide what functions
and duties each officer shall perform and may entrust to and confer upon him any
of the powers exercisable by them upon terms and conditions and with
restrictions as they think fit and may from time to time revoke, withdraw, alter
or vary all or any of the functions, duties and powers. The Secretary shall,
inter alia, perform the functions of the Secretary specified in the Act.
18.3 Every officer of the Company who holds any office or possesses any
property, whether directly or indirectly, where duties or interest might be
created in conflict with his duties or interests as an officer of the Company
shall, in writing, disclose to the President the fact and nature and extent of
the conflicts.
<PAGE>
26
PART 19 - INDEMNITY AND PROTECTION
OF DIRECTORS, OFFICERS AND EMPLOYEES
19.1 Subject to the provisions of The Act, the Directors shall cause the Company
to indemnify a Director or former director of the Company and the Directors may
cause the Company to indemnify a director or former director of a corporation of
which the Company is or was a shareholder and the heirs and personal
representatives of any former director against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a judgment, actually and
reasonably incurred by him or them including an amount paid to settle an action
or satisfy a judgment in a civil, criminal or administrative action or
proceeding to which he is or they are made a party by reason of this being or
having been a Director including any action brought by the Company. Each
Director of the Company on being elected or appointee shall be deemed to have
contracted with the Company on the terms of this indemnity.
19.2 Subject to the provisions of The Act, the Directors may cause the Company
to indemnify any officer, employee or agent of the Company to indemnify any
officer, employee or agent of the Company or of a corporation of which the
Company is or was a shareholder (notwithstanding that he is also a director) and
his heirs and personal representatives against all costs, charges and expenses
whatsoever incurred by him or them and resulting form his acting as an officer,
employee or agent of the Company or the corporation. In addition, the Company
shall indemnify the Secretary or an assistant Secretary of the Company (if he
shall not be a full time employee of the Company and notwithstanding that he is
also a Director) and his respective heirs and legal representatives against all
costs, charges and expenses whatsoever incurred by him or them an arising out of
the functions assigned to the Secretary by The Act or these Articles.
19.3 The failure of a Director or officer of the Company to comply with the
provisions of The Act or of the Memorandum or these Articles shall not
invalidate any indemnity to which he is entitled under this Part.
19.4 The Directors may cause the Company to purchase and maintain insurance for
the benefit of any person who is or was serving as a Director, officer, employee
or agent of the Company or as a director, officer, employee or agent of any
corporation of which the Company is or was a shareholder and his heirs or
personal representatives against any liability incurred by him as a Director,
officer, employee or agent.
<PAGE>
27
PART 20 - DIVIDENDS AND RESERVE
20.1 The Directors may from time to time declare and authorize payment of
dividends as they may deem advisable and need not give notice to any member. No
dividend shall be paid otherwise than out of funds or assets properly available
for the payment of dividends and a declaration by the Directors as to the amount
of the funds or assets available for dividends shall be conclusive. The Company
may pay any such dividend wholly or in part by the distribution of specific
assets and in particular by paid up shares, bonds, debentures or other
securities of the Company or any other corporation or in any one or more ways as
may be authorized by the Company or the directors and where any difficulty
arises with regard to a distribution the Directors may settle the difficulty as
they think expedient, and in particular may fix the value for distribution of
the specific assets or any part, and may determine that cash payments in
substitution for all or any part of the specific assets to which any members are
entitled shall be made to any members on the basis of the value fixed in order
to adjust the rights of all parties and may vest any specific assets in trustees
for the persons entitled to the dividend as may seem expedient to the Directors.
20.2 Any dividend declared on shares of any class by the Directors may be made
payable on a date as is fixed by the Directors.
20.3 Subject to the rights of members holding shares with special rights as to
dividends, all dividends on shares of any class shall be declared and paid
according to the number of shares held.
20.4 The Directors may, before declaring any dividend, set aside out of the
funds properly available for the payment of dividends a sum as they think proper
as a reserve which shall, at the discretion of the directors, be applicable for
meeting contingencies, or for equalizing dividends, or for any other purpose to
which the funds of the Company may be properly applied, and pending the
application may, at the like discretion, either be employed in the business of
the Company or be invested in investments as the Directors may from time to time
think fit. The Directors may also, without placing the same in reserve, carry
forward such funds, which they think prudent not to distribute.
20.5 If several persons are registered as joint holders of any share, any one of
them may give an effective receipt for any dividend, bonus or other money
payable in respect of the share.
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28
20.6 No dividend shall bear interest against the Company. Where the dividend to
which a member is entitled includes a fraction of a cent, such fraction shall be
disregarded in making payment and the payment shall be deemed to be payment in
full.
20.7 Any dividend, bonus or other money payable in cash in respect of shares may
be paid by cheque or money order sent through the post directed to the
registered address of the holder, or in the case of joint holders, to the
registered address of that one of the joint holders who is first named on the
register, or to a person and to an address as the holder or joint holders may
direct in writing. Every cheque or money order shall be made payable to the
order of the person to whom it is sent. The mailing of the cheque or money order
shall, to the extent of the sum represented thereby (plus the amount of any tax
required by law to be deducted), discharge all liability for the dividend,
unless the cheque or money order shall not be paid on presentation or the amount
of tax deducted shall not be paid to the appropriate taxing authority.
20.8 Notwithstanding anything contained in these Articles, the Directors may
from time to time capitalize any undistributed surplus on hand of the Company
and may from time to time issue as fully paid and non-assessable any unissued
shares, or any bonds, debentures or debt obligations of the Company as a
dividend representing all or any part of the undistributed surplus on hand.
PART 21 - DOCUMENTS, RECORDS AND REPORTS
21.1 The Company shall keep at its records office or at any other place as The
Act may permit, the documents, copies, registers, minutes, and records which the
Company is required by The Act to keep at its records office or any other place,
as the case may be.
21.2 The Company shall cause to be kept proper books of account and accounting
records in respect of all financial and other transactions of the Company in
order to record the financial affairs and condition of the Company and to comply
with The Act.
21.3 Unless the Directors determine otherwise, or unless otherwise determined by
an ordinary resolution, no member of the Company shall be entitled to inspect
the accounting records of the Company.
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29
21.4 The Directors shall from time to time at the expense of the Company cause
to be prepared and laid before the Company in general meeting the financial
statements and reports as are required by The Act.
21.5 Every member shall be entitled to be furnished, once, gratis, on demand,
with a copy of the latest annual financial statements of the Company and, if so
required by The Act, a copy of each annual financial statement and interim
financial statement shall be mailed to each member.
PART 22 - NOTICES
22.1 A notice, statement or report may be given or delivered by the Company to
any member either by delivery to him personally or by sending it by mail to him
to his address as recorded in the register of members. Where a notice, statement
or report is sent by mail, service or delivery of the notice, statement or
report shall be deemed to be effected by properly addressing, prepaying and
mailing the notice, statement or report and to have been given on the day,
Saturdays, Sundays and holidays excepted, following the date of mailing. A
certificate signed by the secretary or other officer of the Company or of any
other corporation acting in that behalf for the Company that the letter or
envelope containing the notice, statement or report was addressed, prepaid and
mailed shall be conclusive evidence of mailing.
22.2 A notice, statement or report may be given or delivered by the Company to
the joint holders of a share by giving the notice to the joint holder first
named in the register of members in respect of the share.
22.3 A notice, statement or report may be given or delivered by the Company to
the persons entitled to a share in consequence of the death, bankruptcy or
incapacity of a member by sending it through the mail prepaid addressed to them
by name or by the title of representatives of the deceased or incapacitated
person or trustee of the bankrupt, or by any like description, at the address
(if any) supplied to the Company for the purpose by the persons claiming to be
entitled, or (until the address has been supplied) by giving the notice in a
manner in which the same might have been given if the death, bankruptcy or
incapacity had not occurred.
22.4 Notice of every general meeting or meeting of members holding a class of
shares shall be given to every member.
<PAGE>
30
PART 23 - RECORD DATES
23.1 The Directors may fix in advance a date, which shall not be more than the
maximum number of days permitted by The Act preceding the date of any meeting of
members or any class or of the payment of any dividend or of the proposed taking
of any other proper action requiring the determination of the members entitled
to notice of, or to attend and vote at, any meeting and any adjournment, or
entitled to receive payment of any dividend or for any other proper purpose and,
in such case, notwithstanding anything elsewhere contained in these Articles,
only members of record on the date fixed shall be deemed to be members for the
purposes aforesaid.
23.2 Where no record date is fixed for the determination of members, the date on
which the notice is mailed or on which the resolution declaring the dividend is
adopted, as the case may be, shall be the record date for such determination.
PART 24 - SEAL
24.1 The Directors may provide a seal for the Company and shall provide for the
safe custody of the seal which shall not be affixed to any instrument except in
the presence of a Director or a person or persons as the Directors may from time
to time by resolution appoint and the Director, or person or persons in whose
presence the seal is so affixed to an instrument shall sign such instrument. For
the purpose of certifying under seal true copies of any document or resolution
the seal may be affixed in the presence of any Director or Officer.
24.2 To enable the seal of the Company to be affixed to any bonds, debentures,
share certificates, or other securities of the Company on which facsimiles of
any of the signatures of the directors or officers of the Company are, in
accordance with The Act and these Articles printed or otherwise mechanically
reproduced, there may be delivered to the firm or company employed to engrave,
lithograph or print the bonds, debentures, share certificates or other
securities one or more unmounted dies reproducing the Company's seal and the
Chairman of the Board, the President, the Managing Director or a Vice- president
and the Secretary, Treasurer, Secretary-Treasurer, an Assistant Secretary, an
Assistant Treasurer, or an Assistant Secretary-Treasurer may by a document
authorize the firm or Company to cause the Company's seal to be affixed to the
bonds, debentures, share certificates or other securities by the use of the
dies. Bonds, debentures, share certificates or other securities to which the
Company's seal has been affixed shall for all purposes be deemed to be under and
to bear the Company's seal lawfully affixed.
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31
24.3 The Company may have for use in any other province, state, territory or
country an official seal which shall have on its face the name of the Province,
State, Territory or Country where it is to be used.
PART 25 - DEATH OF SOLE DIRECTOR AND MEMBER
25.1 In the event that the Company has only one member (exclusive of the
Company, if the Company shall be the owner of issued shares of the Company), and
if the member is the only Director of the Company, then he may from time to time
file at the records office of the Company a notice in writing designating one or
more persons to act as Directors in the event of his death. The notice shall be
accompanied by the written consent of the designated persons to act and to be
Directors of the Company. Upon the death of the Director (and provided that at
the date of the death no other person is a member of the Company and no other
person is a Director of the Company), each person designated as a Director as
aforesaid shall be deemed to have been duly elected as a Director of the Company
as of the date of death of such deceased director; provided, however, that the
election or appointment of a person designated as aforesaid shall be invalid and
of no effect in the event of his rescinding his consent to be or to act as a
Director or in the event of his being disqualified from being or acting as a
Director.
25.2 In the event that a sole Director fails to appoint a successor pursuant to
Article 25.1 (or having designated a person pursuant to Article 25.1, the person
fails or refuses to act as a Director or is otherwise disqualified from acting
as or being a Director), and in the event of the death of the Director at a time
when he is still the sole member of the Company (exclusive of the Company, if
the Company shall be the owner of issued shares of the Company):
(a) A general meeting of the Company may be convened
by:
i) the solicitor or auditor for the Company; or
ii) any person entitled as at the intended date of the
meeting to apply for Letters Probate of the last Will
of the deceased member (if he died testate); or
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32
iii) the person first entitled as at the intended date of
the meeting to apply for Letters of Administration of
the estate of the deceased member (whether or not he
in fact died intestate);
(b) Notice of such meeting shall be given no less than twenty-one
days before the intended date of the meeting to:
i) all persons named as beneficiaries in the last
will (if any) of the deceased member (whether
or not letters probate have been granted in
respect of such Will);
ii) all persons who would be entitled to share in the
estate of the deceased member if he had died
intestate (whether or not he in fact died intestate);
iii) the parent or guardian of any person referred
to in i) or ii) above who is an infant as at
the intended date of the meeting; and
iv) if any of the persons referred to in i) or ii)
above shall be a class of persons whose
identity cannot be readily ascertained, then
to a solicitor acting on behalf of the class;
(c) At the general meeting, the persons named in (b) above who are
personally present at the meeting shall be entitled, upon
unanimous vote, to determine the number of Directors of the
Company and to elect Directors of the Company;
(d) The persons elected Directors of the Company
pursuant to this Article 25.2 shall have authority
to manage the business of the Company; but, while
the persons are Directors of the Company, they
shall not suffer nor permit any of the following
until at least one hundred and twenty days
following the transmission of the shares of the
deceased member to his lawful representative
(having Letters probate or Letters of
Administration in British Columbia) without first
obtaining an Order of the Supreme Court of British
Columbia approving the same:
i) the sale, allotment or issuance by the Company
of any issued or unissued shares;
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33
ii) the issuance by the Company of any bonds,
debentures, warrants or options to purchase
shares;
iii) any agreement by the Company to allot or issue
shares, debentures, warrants or options to purchase
shares (whether issued or unissued);
iv) the purchase or redemption by the Company of
any of its shares or any agreement by the
Company to purchase or redempt any of its
shares;
v) the alteration of the Company's Memorandum or
Articles; or
vi) the sale by the Company of the whole or a
substantial part of its business or
undertaking.
25.3 The provisions of Articles 25.1 and 25.2 shall apply mutatis mutandis in
the event of there being more than one Director and member and in the event of
the death of all members and Directors without other provision having been made
for the appointment of successor Directors.
25.4 The accidental omission to give notice to a person specified in Article
25.2(b) shall not invalidate the election of Directors pursuant to Article
25.2(c).
PART 26 - PROHIBITIONS
26.1 If the Company is not a reporting company, no shares or debt obligations
issued by the Company shall be offered for sale to the public, except under the
provisions pursuant to the Securities Act and regulations.
26.2 No shares shall be transferred without the previous consent of the
Directors expressed by a resolution of the Board and the Directors shall not be
required to give any reason for refusing to consent to any proposed transfer.
<PAGE>
Number 509677
Seal
Certificate
of
Change of Name
Canada
Province of British Columbia
I Hereby Certify that
RAINFRESH MOUNTAIN WATER INC.
has this day changed its name to
AVANI WATER CORPORATION
Issued under my hand at Victoria, British Columbia
on February 21, 1996
/s/ John S. Powell
Seal -------------------
John S. Powell
Registrar of Companies
<PAGE>
RAINFRESH TECHNOLOGIES, INC.
BY - LAWS
* * * * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be in Reno,
Nevada.
Section 2. The corporation may also have offices at such other places
both within and without the State of Nevada as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All annual meetings of the stockholders shall be held within
and without the State of Nevada as the board of directors may from time to time
determine or the business of the corporation may require. Special meetings of
the stockholders may be held at such time and place within or without the State
of Nevada as shall be stated in the notice of meeting, or in a duly executed
waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held at such time
and on such day as shall be determined by the board of directors, at which they
shall elect by a plurity vote, a
<PAGE>
board of directors, and transact such other business as may properly be brought
before the meeting.
Section 3. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 4. Notices of meetings shall be in writing and signed by the
president or a vice president, or the secretary, or an assistant secretary, or
by such other person or persons as the directors shall designate. Such notice
shall state the purpose or purposes for which the meeting is called and the time
when and the place where it is to be held. A copy of such notice shall be either
delivered personally to or shall be mailed, postage prepaid, to each stockholder
of record entitled to vote at such meeting not less than ten nor more than sixty
days before such meeting. If mailed, it shall be directed to a stockholder at
his address as it appears upon the records of the corporation and upon such
mailing of any such notice, the service thereof shall be complete, and the time
of the notice shall begin to run from the date upon which such notice is
deposited in the mail for transmission to such stockholder. Personal delivery of
any such notice to any officer of a corporation or association, or to any
<PAGE>
member of a partnership shall constitute delivery of such notice to such
corporation, association or partnership. In the event of the transfer of stock
after delivery or mailing of the notice of and prior to the holding of the
meeting it shall not be necessary to delivery or mail notice of the meeting to
the transferee.
Section 5. Business transacted at any special meeting of the
stockholders shall be limited to the purposes stated in the notice.
Section 6. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
articles of incorporation. If, however such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 7. When a quorum is present or represented at any meeting, the
vote of the holders of a majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
statutes
<PAGE>
or of the articles of incorporation a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 8. Every stockholder of record of the corporation shall be
entitled at each meeting of stockholders to one vote for each share of stock
standing in his name on the books of the corporation.
Section 9. At any meeting of the stockholders, any stockholder may be
represented and vote by a proxy or proxies appointed by an instrument in
writing. In the event that any such instrument in writing shall designate two or
more persons to act as proxies, a majority of such persons present at the
meeting, or, if only one shall be present, then that one shall have and may
exercise all of the powers conferred by such written instrument upon all of the
persons so designated unless the instrument shall otherwise provide. No such
proxy shall be valid after the expiration of six months from the date of its
execution, unless coupled with an interest, or unless the person executing it
specifies therein the length of time for which it is to continue in force, which
in no case shall exceed seven years from the date of its execution. Subject to
the above, any proxy duly executed is not revoked and continues in full force
and effect until an instrument revoking it or a duly executed proxy bearing a
later date is filed with the secretary of the corporation.
Section 10. Any action, which may be taken by the vote of the
stockholders at a meeting, may be taken without a meeting if
<PAGE>
authorized by the written consent of stockholders holding at least a majority of
the voting power, unless the provisions of the statutes or of the articles of
incorporation require a greater proportion of voting power to authorize such
action in which case such greater proportion of written consents shall be
required.
ARTICLE III
DIRECTORS
Section 1. The number of directors shall be neither more than seven nor
less than two. The number of directors is to be fixed by a vote of the
shareholders. The directors shall be elected at the annual meeting of the
stockholders, and except as provided in Section 2 of this article, each director
elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
Section 2. Vacancies, including those caused by an increase in the
number of directors, may be filled by a majority of the remaining directors
though less than a quorum. When one or more directors shall give notice of his
or their resignation to the board, effective at a future date, the board shall
have power to fill such vacancy or vacancies to take effect when such
resignation or resignations shall become effective, each director so appointed
to hold office during the remainder of the term of office of the resigning
director or directors.
<PAGE>
Section 3. The business of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the articles of
incorporation or by these bylaws directed or required to be exercised or done by
the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Nevada.
Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held
without notice at such time and place as shall from
<PAGE>
time to time be determined by the board. Teleconferencing will
be used.
Section 7. Special meetings of the board of directors may be called by
the president or secretary on the written request of two directors. Written
notice of special meetings of the board of directors shall be given to each
director at least 7 days before the date of the meeting.
Section 8. A majority of the board of directors, at a meeting duly
assembled, shall be necessary to constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the board of directors, except as
may be otherwise specifically provided by statute or by the articles of
incorporation. Any action required or permitted to be taken at a meeting of the
directors may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all of the directors entitled to vote
with respect to the subject matter thereof.
COMMITTEES OF DIRECTORS
Section 9. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation, which, to the extent
provided in the resolution, shall have and may exercise the powers of the board
of directors in the management of the business and affairs of the corporation,
and may have power to authorize the seal of
<PAGE>
the corporation to be affixed to all papers on which the corporation desires to
place a seal. Such committee or committees shall have such name or names as may
be determined from time to time by resolution adopted by the board of directors.
Section 10. The committees shall keep regular minutes of their
proceedings and report the same to the board when required.
COMPENSATION OF DIRECTORS
Section 11. 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
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholders shall be in writing
and delivered personally or mailed to the directors or stockholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by facsimile telecommunication.
<PAGE>
Section 2. Whenever all parties entitled to vote at any meeting,
whether of directors or stockholders, consent, either by a writing on the
records of the meeting or filed with the secretary, or by presence at such
meeting and oral consent entered on the minutes, or by taking part in the
deliberations at such meeting without objection, the doings of such meeting
shall be as valid as if had at a meeting regularly called and noticed, and at
such meeting any business may be transacted which is not excepted from the
written consent or to the consideration of which no objection for want of notice
is made at the time, and if any meeting be irregular for want of notice or of
such consent, provided a quorum was present at such meeting, the proceedings of
said meeting may be ratified and approved and rendered likewise valid and the
irregularity or defect therein waived by a writing signed by all parties having
the right to vote at such meetings; and such consent or approval of stockholders
may be by proxy or attorney, but all such proxies and powers of attorney must be
in writing. Teleconferencing voting by directors is acceptable.
Section 3. Whenever any notice whatever is required to be given under
the provisions of the statutes, of the articles of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
<PAGE>
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board
of directors and shall be a president, a vice president, a secretary and a
treasurer. Any person may hold two or more offices.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a president, a vice president, a
secretary and a treasurer, none of whom need be a member of the board.
Section 3. The board of directors may appoint additional vice
presidents, and assistant secretaries and assistant treasurers and such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise shall be filled by the
board of directors.
<PAGE>
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation, and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENT
Section 8. The vice president shall, in the absence or disability of
the president, perform the duties and exercise the powers of the president and
shall perform such other duties as the board of directors may from time to time
prescribe.
THE SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all
<PAGE>
meetings of the stockholders and special meetings of the board of directors, and
shall perform such other duties as may be prescribed by the board of directors,
and shall perform such other duties as may be prescribed by the board of
directors or president, under whose supervision he shall be. He shall keep in
safe custody the seal of the corporation and, when authorized by the board of
directors, affix the same to any instrument requiring it and, when so affixed,
it shall be attested by his signature or by the signature of the treasurer or an
assistant secretary.
THE TREASURER
Section 10. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 11. He shall disburse the funds of the corporation as may be
ordered by the board of directors taking proper vouchers for such disbursements,
and shall render to the president and the board of directors, at the regular
meetings of the board, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 12. If required by the board of directors, he shall give the
corporation a bond in such sum and with such
<PAGE>
surety or sureties as shall be satisfactory to the board of directors for the
faithful performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every stockholder shall be entitled to have a certificate,
signed by the president or a vice president and the treasurer or an assistant
treasurer, or the secretary or an assistant secretary of the corporation,
certifying the number of shares owned by him in the corporation. If the
corporation is authorized to issue shares of more than one class or more than
one series of any class, there shall be set forth upon the face or back of the
certificate, or the certificate shall have a statement that the corporation will
furnish to any stockholders upon request and without charge, a full or summary
statement of the designations, preferences and relative, participating, optional
or other special rights of the various classes of stock or series thereof and
the qualifications, limitations or restrictions of such rights, and, if the
corporation shall be authorized to issue only special stock, such certificate
shall set forth in full or summarize the rights of the holders of such stock.
<PAGE>
Section 2. Whenever any certificate is countersigned or otherwise
authenticated by a transfer agent or transfer clerk, and by a registrar, then a
facsimile of the signatures of the officers or agents of the corporation may be
printed or lithographed upon such certificate in lieu of the actual signatures.
In case any officer or officers who shall have signed, or whose facsimile
signature or signatures shall have been used on, any such certificate or
certificates shall cease to be such officer or officers of the corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the corporation, such certificate or
certificates may nevertheless be adopted by the corporation and be issued and
delivered as though the person or persons who signed such certificate or
certificates, or whose facsimile signature or signatures shall have been used
thereon, had not ceased to be an officer or officers of such corporation.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the board of directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate
<PAGE>
or certificates, or his legal representative, to advertise the same in such
manner as it shall require and/or give the corporation a bond in such sum as it
may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost or
destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for share duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
CLOSING OF TRANSFER BOOKS
Section 5. The directors may prescribe a period not exceeding sixty
days prior to any meeting of the stockholders during which no transfer of stock
on the books of the corporation may be made, or may fix a day not more than
sixty days prior to the holding of any such meeting as the day as of which
stockholders entitled to notice of and to vote at such meeting shall be
determined; and only stockholders of record on such day shall be entitled to
notice or to vote at such meeting.
<PAGE>
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Nevada.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the articles of incorporation, if any, may be declared by
the board of directors at any regular or special meeting pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the
<PAGE>
interest of the corporation, and the directors may modify or abolish any such
reserves in the manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporation seal shall have inscribed thereon the name
of the corporation, the year of its incorporation and the words "Corporate Seal,
Nevada." I, the undersigned, being the Secretary of RAINFRESH TECHNOLOGIES INC.,
do hereby certify the foregoing to be the by-laws of said corporation, as
adopted at a meeting of the Directors held on December 6, 1995 in Vancouver,
British Columbia, Canada.
/s/
- ----------------------
Secretary
<PAGE>
EXHIBIT 3.(ii)b
TRANSPACIFIC EQUITIES INC.
* * * * * *
B Y - L A W S
* * * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be in Reno, Nevada.
Section 2. The corporation may also have offices at such other places
both within and without the State of Nevada as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS.
Section 1. All annual meetings of the stockholders or special meetings
of the stockholders, may be held at such time and place within or without the
State of Nevada as shall be stated in the notice of meeting, or in a duly
executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year
1995, shall be held at such time and such date as determined by the Board of
directors, if not a legal holiday, and if a legal holiday, then on the next
secular day following, at which they shall elect by a plurity vote a board of
<PAGE>
directors, and transact such other business as may be properly brought before
the meeting.
Section 3. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 4. Notices of meetings shall be in writing and signed by the
president or a vice president, or the secretary, or an assistant secretary, or
by such other person or persons as the directors shall designate. Such notice
shall state the purpose or purposes for which the meeting is called and the time
when and the place where it is to be held. A copy of such notice shall be either
delivered personally to or shall be mailed, postage prepaid, to each stockholder
of record entitled to vote at such meeting not less than ten nor more than sixty
days before such meeting. If mailed, it shall be directed to a stockholder at
his address as it appears upon the records of the corporation and upon such
mailing of any such notice, the service thereof shall be complete, and the time
of the notice shall begin to run from the date upon which such notice is
deposited in the mail for transmission to such stockholder. Personal delivery of
any such notice to any officer of a corporation or association, or to any
<PAGE>
member of a partnership shall constitute delivery of such notice to such
corporation, association or partnership. In the event of the transfer of stock
after delivery or mailing of the notice of and prior to the holding of the
meeting it shall not be necessary to delivery or mail notice of the meeting of
the transferee.
Section 5. Business transacted at any special meeting of the
stockholders shall be limited to the purposes stated in the notice.
Section 6. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
articles of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 7. When a quorum is present or represented at any meeting, the
vote of the holders of a majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
<PAGE>
statutes or of the articles of incorporation a different vote is required in
which case such express provision shall govern and control the decision of such
question.
Section 8. Except as hereinafter provided, every stockholder of record
of the corporation shall be entitled at each meeting of stockholders to one vote
for each share of stock standing in his name on the books of the corporation. At
all elections of directors each holder of stock possessing voting power shall be
entitled to as many votes as shall equal the number of his shares of stock
multiplied by the number of directors to be elected, and he may cast all of such
votes for a single director or may distribute them among the number to be voted
for or any two or more of them, as he may see fit.
Section 9. At any meeting of the stockholders, any stockholder may be
represented and vote by a proxy or proxies appointed by an instrument in
writing. In the event that any such instrument in writing shall designate two or
more persons to act as proxies, a majority of such persons present at the
meeting, or, if only one shall be present, then that one shall have an may
exercise all of the powers conferred by such written instrument upon all of the
persons so designated unless the instrument shall otherwise provide. No such
proxy shall be valid after the expiration of six months from the date of its
execution, unless coupled with an interest, or unless the person executing it
specifies therein the length of time for which it is to continue in force, which
in no case shall exceed seven years from the date of its execution. Subject to
<PAGE>
the above, any proxy duly executed is not revoked and continues in full force
and effect until an instrument revoking it or a duly executed proxy bearing a
later date is filed with the secretary of the corporation.
Section 10. Any action, which may be taken by the vote of the
stockholders at a meeting, may be taken without a meeting if authorized by the
written consent of stockholders holding at least a majority of the voting power,
unless the provisions of the statutes or of the articles of incorporation
require a greater proportion of voting power to authorize such action in which
case such greater proportion of written consents shall be required.
ARTICLE III
DIRECTORS
Section 1. The number of directors shall be neither more than 10 nor
less than 2. The number of directors is to be fixed by a vote of the
shareholders. The directors shall be elected at the annual meeting of the
stockholders, and except as provided in Section 2 of this article, each director
elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
Section 2. Vacancies, including those caused by an increase in the
number of directors, may be filled by a majority of the remaining directors
though less than a quorum. When one or more directors shall give notice of his
<PAGE>
or their resignation to the board, effective at a future date, the board shall
have power to fill such vacancy or vacancies to take effect when such
resignation or resignations shall become effective, each director so appointed
to hold office during the remainder of the term of office of the resigning
director or directors.
Section 3. The business of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the articles of
incorporation or by these bylaws directed or required to be exercised or done by
the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Nevada.
Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the even such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
<PAGE>
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held
without notice at such time and place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board of directors may be called by
the president or secretary on the written requires of two directors. Written
notice of special meetings of the board of directors shall be given to each
director at least one days before the date of the meeting.
Section 8. A majority of the board of directors, at a meeting duly
assembled, shall be necessary to constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the board of directors, except as
may be otherwise specifically provided by statute or by the articles of
incorporation. Any action required or permitted to be taken at a meeting of the
directors may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all of the directors entitled to vote
with respect to the subject matter thereof.
COMMITTEES OF DIRECTORS
Section 9. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation, which, to the extent
<PAGE>
provided in the resolution, shall have and may exercise the powers of the board
of directors in the management of the business and affairs of the corporation,
and may have power to authorize the seal of the corporation to be affixed to all
papers on which the corporation desires to place a seal. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the board of directors.
Section 10. The committees shall keep regular minutes of their
proceedings and report the same to the board when required.
COMPENSATION OF DIRECTORS
Section 11. 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
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholders shall be in writing
and delivered personally or mailed to the directors or stockholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
<PAGE>
deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by facsimile telecommunication.
Section 2. Whenever all parties entitled to vote at any meeting,
whether of directors or stockholders, consent, either by a writing on the
records of the meeting or filed with the secretary, or by presence at such
meeting and oral consent entered on the minutes, or by taking part in the
deliberations at such meeting without objection, the doings of such meeting
shall be as valid as if had at a meeting regularly called and noticed, and at
such meeting any business may be transacted which is not excepted from the
written consent or to the consideration of which no objection for want of notice
is made at the time, and if any meeting be irregular for want of notice or of
such consent, provided a quorum was present at such meeting, the proceedings of
said meeting may be ratified and approved and rendered likewise valid and the
irregularity or defect therein waived by a writing signed by all parties having
the right to vote at such meetings; and such consent or approval of stockholders
may be by proxy or attorney, but all such proxies and powers of attorney must be
in writing.
Section 3. Whenever any notice whatever is required to be given under
the provisions of the statutes, of the articles of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
<PAGE>
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board
of directors and shall be a president, a vice president, a secretary and a
treasurer. Any person may hold two or more offices.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a president, a vice president, a
secretary and a treasurer, none of whom need be a member of the board.
Section 3. The board of directors may appoint additional vice
presidents, and assistant secretaries and assistant treasurers and such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise shall be filled by the
board of directors.
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THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation, and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE PRESIDENT
Section 8. The vice president shall, in the absence or disability of
the president, perform the duties and exercise the powers of the president and
shall perform such other duties as the board of directors may from time to time
prescribe.
THE SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
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the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors, and
shall perform such other duties as may be prescribed by the board of directors
or president, under whose supervision he shall be. He shall keep in safe custody
the seal of the corporation and, when authorized by the board of directors,
affix the same to any instrument requiring it and, when so affixed, it shall be
attested by his signature or by the signature of the treasurer or an assistant
secretary.
THE TREASURER
Section 10. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 11. He shall disburse the funds of the corporation as may be
ordered by the board of directors taking proper vouchers for such disbursements,
and shall render to the president and the board of directors, at the regular
meetings of the board, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 12. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
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satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every stockholder shall be entitled to have a certificate,
signed by the president or a vice president and the treasurer or an assistant
treasurer, or the secretary or an assistant secretary of the corporation,
certifying the number of shares owned by him in the corporation. If the
corporation is authorized to issue shares of more than one class or more than
one series of any class, there shall be set forth upon the face or back of the
certificate, or the certificate shall have a statement that the corporation will
furnish to any stockholders upon request and without charge, a full or summary
statement of the designations, preferences and relative, participating, optional
or other special rights of the various classes of stock or series thereof and
the qualifications, limitations or restrictions of such rights, and, if the
corporation shall be authorized to issue only special stock, such certificate
shall set forth in full or summarize the rights of the holders of such stock.
<PAGE>
Section 2. Whenever any certificate is countersigned or otherwise
authenticated by a transfer agent or transfer clerk, and by a registrar, then a
facsimile of the signatures of the officers or agents of the corporation may be
printed or lithographed upon such certificate in lieu of the actual signatures.
In case any officer or officers who shall have signed, or whose facsimile
signature or signatures shall have been used on, any such certificate or
certificates shall cease to be such officer or officers of the corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the corporation, such certificate or
certificates may nevertheless be adopted by the corporation and be issued and
delivered as though the person or persons who signed such certificate or
certificates, or whose facsimile signature or signatures shall have been used
thereon, had not ceased to be an officer or officers of such corporation.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the board of directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
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lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for share duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
CLOSING OF TRANSFER BOOKS
Section 5. The directors may prescribe a period not exceeding sixty
days prior to any meeting of the stockholders during which no transfer of stock
on the books of the corporation may be made, or may fix a day not more than
sixty days prior to the holding of any such meeting as the day as of which
stockholders entitled to notice of and to vote at such meeting shall be
determined; and only stockholders of record on such day shall be entitled to
notice or to vote at such meeting.
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REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Nevada.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the articles of incorporation, if any, may be declared by
the board of directors at any regular or special meeting pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserves in the
manner in which it was created.
<PAGE>
CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporation seal shall have inscribed thereon the name
of the corporation, the year of its incorporation and the words "Corporate Seal,
Nevada."
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered or repealed at any regular
meeting of the stockholders or of the board of directors or at any special
meeting of the stockholders or of the board of directors if notice of such
alternation or repeal be contained in the notice of such special meeting.
<PAGE>
I, the undersigned, being the Secretary of TRANSPACIFIC EQUITIES INC. DOES
HEREBY CERTIFY the foregoing to be the by-laws of said corporation, as adopted
at a meeting of the Directors held on August 30, 1994.
/s/
- -------------------------
Secretary
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EX 21 (i)
Subsidiaries of registrant
Avani Marketing Corp., a Nevada corporation
Avani Water Corporation, a British Columbia corporation
