UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF
SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Source One, Incorporated
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(Name of Small Business Issuer in its charter)
Nevada 88-0379078
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification
number)
236 S. Rainbow Bl., Suite 486, Las Vegas, Nevada 89128
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(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: (702) 363-0066
Securities to be registered under Section 12(b) of the Act:
Title of each class to be so registered: n/a
Name of exchange on which each class is to be registered: n/a
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001 per share
<PAGE>
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Source One, Incorporated (the "Company" or the "Registrant") was organized
as a Nevada corporation on November 18, 1997. The Company sells jewelry
through the Internet and via mail order. To date, the Company has concentrated
on the sale of wholesale jewelry through these avenues.
PRINCIPAL PRODUCTS AND MARKETS
Currently, the Company offers for sale 12 different items of jewelry and
related merchandise. This merchandise consists of one necklace, one ring, five
bracelets, two earrings, one pin, and two jewelry boxes. Prices range from
$2.00 for one of the jewelry boxes to $55.00 for a heart-shaped ruby bracelet.
The jewelry products are all 18 karat (or 14 karat) overlaying sterling
silver, which the jewelry industry refers to as Vermeil. The jewelry products
offered by the Company are 100% guaranteed for wear as to appearance, loss of
stones, and breakage.
The Company markets its products via the Internet and has relied heavily
on positive word of mouth advertising. The nature of the jewelry offered lends
itself to promotional/incentive uses. As such, current clientele of the Company
ranges from independent Mary Kay sales directors, and other direct sales
companies.
The Company intends to investigate other business opportunities in the
jewelry industry such as maintaining a retail store front, purchasing overstock
merchandise from suppliers, and/or investing in other related jewelry
businesses.
METHODS OF DISTRIBUTION
Since February of 1998, the Company has maintained its web-site/online
catalog at http://wizard.com/source1. The Company does not yet offer a secure
web-site wherein purchases may be made online, but intends to offer such a
service in the future. Currently, orders are accepted via e-mail or telephone.
Customers may purchase items using their Mastercard or Visa credit card.
The Company is dependent upon advertising and publicity (via word of
mouth) to bring awareness of the Company's products to its potential clientele.
The Company is able to advertise on the Web in the form of banner ads appearing
on other's web-sites that are hyper-linked to the Company's web-site. The
Company will use on-line advertising provided free by its Internet provider as
its primary source of advertising.
The Company relies upon word-of-mouth and referrals to help establish its
client base. To date the Company has generated a large portion of its client
base from these referrals. When the Company is able to better identify and
focus on more specific markets it will adjust its distribution methods
accordingly. At such time as the Company has built its market profile, it
anticipates advertising through direct mail.
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SUPPLIERS
The Company obtains its merchandise from a number of sources. Its
principal supplier is MK Resources, Inc., a Nevada corporation that acquires
its merchandise from PAJ, Inc. in Dallas, Texas and Gold Rush Jewelry Design in
Las Vegas, Nevada, the Company's supplier of loose gem stones, gold products.
The Company has no exclusive arrangements with any company and therefore, may
obtain its products from any source. Relationships have been established at
executive levels within the Company suppliers in order to ensure quality
products, contain costs, and receive superior service.
COMPETITION
There are a large number of companies and individuals engaged in the
jewelry industry. On one search engine on the Internet, Yahoo.com, there are
over 2600 sites under the topic "Jewelry." The jewelry industry is highly
competitive with respect to name recognition, quality of products, Internet
presentation and advertising.
Mignon Cardenas, President of the Company, is an independent sales
director with Mary Kay Cosmetics. Such a position gives Ms. Cardenas special
insight into the needs of independent consultants to the direct marketing
industry. Management of the Company believes that this gives the Company an
edge in providing promotional types of jewelry products to those individuals
with a need to purchase jewelry and related items for incentives and rewards.
The Company faces competition from a broad range of companies in the
jewelry industry, retail jewelry stores, and promotional & incentive companies
that offer jewelry items. Many of the Company's competitors have achieved
national, regional and local recognition. Many of these competitors engage in
extensive advertising and promotional programs.
The Company is by no means the only such company specializing in this
particular niche. However, Ms. Cardenas has many contacts within the ranks of
the independent sales directors of Mary Kay and has found that word of mouth
advertising among her peers to be a successful competitive tool.
The Company believes that its competitive advantages are as follows:
1. Pricing - The Company prices its products at twenty-five
percent over its cost, depending on the cost of the product. The Company
utilizes this strategy to attract volume buyers verses the one-item purchase.
Also, the Company offers a price brake on certain items when six or more are
purchased.
2. Product Line - The Company believes that its largest
advantage is its specialization in vermeil products. Management believes that
the Company is developing a niche in this market, and that once established in
the vermeil market, it will be able to introduce new product lines to increase
revenues.
3. Lower Overhead - The operating costs for national competitors
can be expensive. Management believes that its lower operational costs will
enable the Company to compete because of the lower overall overhead. Also, the
Company keeps the advertising expense to a minimum by advertising over the
Internet and by reliance on word of mouth advertising.
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SEASONALITY
The business of the Company is somewhat seasonal in that the jewelry
industry in general has traditional holidays that spur seasonal consumer
buying. The fourth calendar quarter is traditionally the highest sales volume
quarter for sales inside the jewelry industry as a whole. However, the Company
has not experienced the traditional spending habits of the industry. Rather,
the first and fourth quarters generate a higher percentage of the company's
annual revenues.
This natural seasonality of the industry may not necessarily be
represented in the patterns of the Company's revenues.
EMPLOYEES
The Company currently has only one employee, its President, Mignon
Cardenas. Ms. Cardenas does not devote her full attention to the affairs of the
Company. As growth of the Company continues, additional employees will be
added when necessary.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
GENERAL
The Company currently operates at 236 S. Rainbow Bl., Suite 486, Las
Vegas, Nevada 89128. The Company's principal business is providing
promotional/incentive types of jewelry through the Internet and mail order.
Results of Operations for the Period Ending December 31, 1998
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The following is a discussion of the results of operations for the year
ended December 31, 1998, compared to the year ended December 31, 1997.
Total revenues for the year ended December 31, 1998 increased $11,510 as
compared to 1997, to $15,801 from $4,291 respectively. The increase achieved
in 1998 represents an increase of approximately 368%. However, the increase is
due to the fact that the Company did not commence business operations until
November 18, 1997.
Total costs and expenses increased for the year ended December 31, 1998
as compared to 1997 by $4,397, to $7,348 from $2,951. Again, this increase was
due to the fact that the Company only operated for approximately 1 1/2 months
during 1997 compared to twelve months during 1998. Operational costs were
increased as a result of the increased sales.
The net income for the year ended December 31, 1998 was $(2,302) and was
associated with the increase in general expenses of the Company. The net
income for 1998, when compared to 1997, decreased due to the increase in other
general and administrative expenses and due to the fact that the Company
commenced business operations on November 18, 1997.
Liquidity and Capital Resources
Cash as of December 31, 1998 was $9,953 as compared to $26,383 as of
December 31, 1997. The change was primarily the net of cash $16,430, used by
operating activities and the purchase of inventory.
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PLAN OF OPERATION
During the next twelve months the Company's plan of operation is to look
to further expansion on the World Wide Web,(WWW), where some 50 million
potential customers are looking to find the products and services they need. The
Company believes the World Wide Web could become the greatest resource for the
Company's future growth and expansion.
The Company's plans include modifying its web site. Management looks to
include an on-line ordering service and to offer a secured site to increase the
Company's on-line e-commerce. The Company intends to continue to develop its
advertising concept on the Web which is currently represented in the form of
banner ads.
During the next twelve months, the Company's cash requirements will
include its lease payments on the Company's office space in Las Vegas, Nevada,
as well as miscellaneous overhead. Management believes that the Company's
existing cash resources and cash generated from operations will be sufficient
to fund the Company's ongoing operations through the remainder of 1999 and be
sufficient to provide for the foregoing cash requirements for day to day
operations in the next twelve months. There is no guarantee that the budgeted
funds will be sufficient to achieve these goals. Management believes that it
will not achieve profitability until it is able to realize approximately $5,000
in gross sales per month. The Company has no guarantee that it will be able to
achieve this goal in the next twelve months.
The Company may require additional funds and time to achieve these goals.
Even if the Company begins generating revenues, it could require additional
funding for expansion. The Company may find it difficult to succeed in
securing additional financing. The Company may be able to attract some
private investors, or an officer and/or director may be willing to make
additional cash contributions, advancements or loans. Or, as an alternative,
the Company could attempt some form of debt or equity financing.
YEAR 2000 ISSUES
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The Company has conducted a comprehensive review of its computer,
telephone and alarm systems to identify the systems that could be affected by
the Year 2000 issue and is developing an implementation plan to resolve the
issue.
The issue pertains to whether or not computer systems will properly
recognize date-sensitive information when the year changes to 2000. Systems
that do not properly recognize such information could generate erroneous data
or cause a system to fail. The company is heavily dependent on computer
processing in the conduct of its business activities.
The Company has identified four areas which could be affected by the Year
2000 issue: computer systems, Internet services, shipping services and
telephone systems.
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A. Computer Systems
The Company uses a variety of computer software packages to operate
the business, the majority of which are small "canned" programs which are used
in day-to-day operations. The Company has reviewed the software it uses (i.e.,
Microsoft Office and related programs) and has been assured by Microsoft
Corporation that its products that it uses are new enough to not be affected by
any Year 2000 issues.
B. Internet Service
@wizard.com, the Company's Internet provider assures the Company
that their computer systems will not be affected by any Y2K issues. @wizard.com
located in Las Vegas, Nevada, uses Sprint, which uses a Nortel DMS 100 system
which will accommodate all Y2K issues.
C. Shipping Services
The Company currently uses the United States Postal Service for
its shipping needs. A spokesperson for U.S. Postal Service assured the
Company that there will be no interruption by the Year 2000 and will not be
affected adversely by any Year 2000 concerns.
D. Telephone Systems
The Company uses the only local carrier in Las Vegas, Sprint, for
its telephone system. Sprint uses a Nortel DMS 100 system which will
accommodate Y2K issues.
The Company will experience no additional costs to upgrade or
modify the phone systems to accommodate any Year 2000 issues.
Based on the review of the computer systems, management does not believe
the cost of remediation will be material to the Company's financial position
and result of operations.
ITEM 3. DESCRIPTION OF PROPERTY
The Company maintains a monthly rental with an organization from which
it rents an address/postal box and telephone answering service. The annual
rental on this space is approximately $180 and includes the use, when
available, of a small desk area. The Company has not signed a lease on this
space but has prepaid the rental through April of 2000. The Company utilizes a
portion of its President's home (705 Vincent Way, Las Vegas, NV 89128) for
storing unsold inventory.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND
PROMOTER
The following table sets forth certain information as of February 20,
1999, with respect to the beneficial ownership of the common stock by each
officer and director of the Company, each person (or group of persons whose
shares are required to be aggregated) known to the Company to be the
beneficial owner of more than five percent (5%) of the common stock, and all
such directors and executive officers of the Company as a group. Unless
otherwise noted, the persons named below have sole voting and investment power
with respect to the shares shown as beneficially owned by them.
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Title of Name and Address Amount & Nature Percent of
Class of Beneficial Owner of Beneficial Owner Class
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Common Mignon Cardenas<F1> 4,500,000<F2> 40%
705 Vincent Way
Las Vegas, NV 89128
Common Sandra Ramirez<F1> -0- -0-
1205 Daytona Lane
Las Vegas, NV 89117
Common Charles R. Powell<F3> 4,500,000<F2> 40%
3172 North Rainbow Blvd.
Suite 308
Las Vegas, NV 89108
Common All Officers and Directors 4,500,000<F2> 40%
as a Group (2 Persons)
<F1> An Officer and Director of the Company.
<F2> These shares are restricted.
<F3> A promoter of the Company.
CHANGES IN CONTROL
The Company has no arrangements which might result in a change in
control of the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
The following table sets forth the directors and executive officers of the
Company, their ages, and all positions with the Company.
Name Age Position
____________________________________________________________________________
Mignon Cardenas 30 President, and a Director
Sandra Ramirez 33 Secretary/Treasurer and a Director
Charles R. Powell 39 A Promoter of the Company
Mignon M. Cardenas, 30, is President and a director of the Company. Ms.
Cardenas received her middle school and high school studies in Mexico. From
1984 to 1988, Ms. Cardenas taught English as a second language to students in
grades 3 to 6 for Escuela Active Integral, a private elementary school, located
in Culiacan, Mexico. During that same period of time, she also opened her own
language academy located in the same city where she taught English as a second
language. Ms. Cardenas sold this business to return to the United States.
From October 1988 to August 1994 she was employed by Citibank Nevada, in Las
Vegas, Nevada, a credit card company, as a customer service representative
specializing in correspondence received in foreign languages. She now has a
business out of her home with Mary Kay Cosmetics, Inc., where she has reached
the level of Independent Sales Director, and is directly involved in managing a
sales force of 40 to 50 members, training, motivating and managing them in
their personal businesses. Ms. Cardenas is also a certified court interpreter
and works as an independent contractor translating and interpreting for the
court system and the legal community.
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Sandra Ramirez, age 33, is Secretary/Treasurer and a director of the
Company. Ms. Ramirez received her high school studies from Riverside High
School in El Paso, Texas. From 1982 until 1985, Ms. Ramirez attended El Paso
Community College located in El Paso, Texas and obtained her Associates Degree
in Data Processing. Ms. Ramirez was employed by Commercial Uniform Co. in
Los Angeles, California from 1986 to 1988 as a bilingual customer service
representative and also assisted with Spanish/English translations. She has
been employed with Citibank Nevada, in Las Vegas, Nevada, from October 1988
until the present, as a customer service representative specializing in card
member disputes. Ms. Ramirez handles customer contacts in Spanish through
telephone and correspondence. She also deals with interbank relationships.
Ms. Ramirez currently has a home based business with Mary Kay Cosmetics, Inc.,
servicing the Hispanic community.
Charles R. Powell, age 39, a promoter, attended Southwestern Community
College in Chula Vista, California taking general study courses from 1979 to
1981. From 1981 to 1982 Mr. Powell attended San Diego State University, San
Diego, California majoring in Business Management. From 1982-1983 Mr. Powell
attended National University in San Diego majoring in Business Management
before embarking on a management career with Carl Karcher Enterprises (Carl's
Jr. restaurants) from 1980 to 1984 supervising stores in San Diego, California
and Dallas, Texas. From 1984 to 1986, Mr. Powell worked as a store manager for
Tandy Corp. (Radio Shack) in Tucson, Arizona and San Diego, California. In
1986, Mr. Powell founded Discount Specialities Inc., a California corporation,
a general merchandise wholesaling company, which he nurtured into a successful
entity before selling the business in 1989. From 1990 to 1992, Mr. Powell was
an independent contractor for The Shell Group, located in Kona Coast, Hawaii.
In 1992, Mr. Powell founded Dollar Mania Inc., a private Nevada corporation,
engaged in the sale of low priced consumer goods and built the company from
one store to sixty three stores in nine states, including Hawaii. By March of
1995, Dollar Mania achieved sustained sales of over $1,000,000 monthly and
was acquired by Bargain Products, Inc., a Nevada corporation, in June of 1995.
Dollar Mania is currently in Chapter 11 Bankruptcy. Mr. Powell is also the
Secretary/Treasurer and a director of Kona Gifts, Inc., a Nevada corporation,
which is currently engaged in the direct sales of Hawaiian gift specialty
items, which is in the process of going public. Mr. Powell is also the
Secretary/Treasurer and a director of Sawbuck Sunglasses, a Nevada corporation,
which is currently engaged in the sale of sunglasses and which is in the
process of going public.
FAMILY RELATIONSHIPS
There are no family relationships among the Company's directors and/or
executive officers.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
To the best of management's knowledge, during the past five years, no
present or former director or executive officer of the Company:
(1) Has filed a petition under federal bankruptcy laws or any state
insolvency law, had a receiver, fiscal agent or similar officer appointed
by a court for the business or property of such person, or any partnership in
which she was a general partner at or within two years before the time of such
filing, or any corporation or business association of which she was an
executive officer at or within two years before the time of such filing;
(2) Was convicted in a criminal proceeding or named the subject of a
pending criminal proceeding (excluding traffic violations and other minor
offences);
(3) Was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining her from or otherwise
limiting her involvement in any type of business, securities or banking
activities; or
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(4) Was found by a court of competent jurisdiction in a civil
action, by the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated any federal or state securities law.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth the compensation received by the Company's
President since inception in November of 1997. There are no other officers
of the Company who have been paid any compensation.
SUMMARY COMPENSATION
Name and Principal All other
Position Year Compensation
- --------------------------------------------------------------------------
Mignon Cardenas 1998 $1,000<F1>
President 1997 -0-
<F1> Ms. Cardenas received $1,000 as non-salary compensation for her
assistance in the organization of the Company. The $1,000 was paid in January
of 1998. No additional compensation in any other form has been paid nor is
there currently any plan or arrangement for future compensation.
OPTIONS/SAR GRANTS
There were no stock options or stock appreciation rights granted to any
executive officer since its inception through the present date.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR END
OPTION/SAR VALUE TABLE
Not applicable.
LONG TERM INCENTIVE PLANS
There are no long term incentive plans in effect and therefore no awards
have been given to any executive officer in the past year.
COMPENSATION OF DIRECTORS
The Company pays no fees to members of the Company's Board of Directors
for the performance of their duties as directors. The Company has not
established committees of the Board of Directors.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS
The Company has no employment contracts in effect with any of the members
of its Board of Directors or its executive officers nor are there any
agreements or understandings with such persons regarding termination of
employment or change-in control arrangements.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no material transactions in the past two years or
proposed transactions to which the Company has been or proposed to be a party
in which any officer, director, nominee for officer or director, or security
holder of more than 5% of the Company's outstanding securities is involved.
The Company has no promoters other than its President, Mignon Cardenas
and Charles Powell. There have been no transactions which have benefitted or
will benefit Ms. Cardenas or Mr. Powell either directly or indirectly.
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ITEM 8. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings and,
to the best of its knowledge, no such action by or against the Company has
been threatened. None of the Company's officers, directors, or beneficial
owners of 5% or more of the Company's outstanding securities is a party adverse
to the Company nor do any of the foregoing individuals have a material interest
adverse to the Company.
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The Company is voluntarily filing the Form 10-SB to obtain listing on the
OTC Bulletin Board, which requires all listed companies to be reporting
companies.
The Company has no public trading market for its common stock. Although
the Company intends to seek a quotation for its common shares on the Over-the-
Counter Bulletin Board in the future, there is no assurance the Company will
do so, nor is there any assurance that should the Company succeed in obtaining
a listing for its securities on the OTC Bulletin Board or on some other
exchange, that a trading market for the Company's stock will develop. There are
no outstanding options, warrants to purchase, or securities convertible into
common equity of the Company outstanding. The Company has not agreed to
register any shares of its common stock for any shareholder.
STOCKHOLDERS
The Company's transfer agent, Silver State Transfer & Registrar, confirms
that, as of February 20, 1999, there are 44 shareholders of record for the
Company.
DIVIDENDS
To date, the Company has not paid any dividends on its common stock. The
payment of dividends, if any, in the future is within the discretion of the
Board of Directors and will depend upon the Company's earnings, its capital
requirements and financial condition, and other relevant factors. The Board
does not intend to declare any dividends in the foreseeable future, but
instead intends to retain all earnings, if any, for use in the Company's
business operations. Under Nevada Corporate Law, dividends may be paid out of
surplus or, in case there is no surplus, out of net profits for the fiscal
year in which the dividend is declared and/or the proceeding fiscal year.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
On November 18, 1997, in connection with its organization, the Company
sold 9,000,000 shares of its common stock at $.001 per share pursuant to
Section 4(2) of the Securities Act of 1933. These securities were issued as
follows: 4,500,000 shares to Charles R. Powell at .001 per share for an
aggregate of $500.00; and 4,500,000 shares to Mignon M. Cardenas at .001 per
share for an aggregate of $500.00.There were no underwriting discounts or
commissions involved in the sale of these securities.
Between December 5, 1997 and December 31, 1997, the Company sold an
aggregate of 2,292,000 shares of its common stock to a total of 42 investors at
a sales prices of $.01 per share pursuant to an exemption from registration
provided by Regulation D, Rule 504 for which a Form D was filed with the SEC on
December 10,1997. These securities were sold for cash. There were no
underwriting discounts or commissions involved in the sale of these securities.
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ITEM 11. DESCRIPTION OF SECURITIES
The Company is presently authorized to issue 20,000,000 shares of common
stock, $.001 par value per share, and 5,000,000 shares of preferred stock,
$.001 par value per share. The Company presently has 11,292,000 shares of
common stock outstanding. The holders of common stock (i) have equal ratable
rights to dividends from funds legally available therefore, when, as and if
declared by the Board of Directors of the Company; (ii) are entitled to
share ratably in all of the assets of the Company available for distribution
or winding up of the affairs of the Company; (iii) do not have preemptive
subscription or conversion rights and there are no redemption or sinking fund
applicable thereto; and (iv) are entitled to one non-cumulative vote per share,
on all matters which Shareholders may vote on at all meetings of Shareholders.
NON-CUMULATIVE VOTING
The holders of Shares of common stock of the Company do not have
cumulative voting rights which means that the holders of more than fifty
percent (50%) of such outstanding Shares, voting for the election of
directors, can elect all of the directors to be elected, if they so choose,
and, in such event, the holders of the remaining Shares will not be able to
elect any of the Company's directors.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Officers and Directors maybe indemnified by the Company for any liability
incurred by them while acting within the scope of their duties as Officers and
Directors of the Company, except for acts of intentional misconduct. As of
the date hereof, the Company has no contracts in effect providing any
indemnity with any specific rights of indemnification although the Company's
bylaws authorize its Board of Directors to enter into and deliver such
contracts to provide an indemnity with specific rights of indemnification in
addition to the rights provided in the Articles and Bylaws to the fullest
extent provided under Nevada law. The Company has no special insurance
against liability although the Company's bylaws provide that the Company may,
unless prohibited by Nevada law, maintain such insurance. The Company has been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy, and is unenforceable.
ITEM 13. FINANCIAL STATEMENTS
SOURCE ONE, INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 1998
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TABLE OF CONTENTS
Page Number
ACCOUNTANT'S REPORT 1
FINANCIAL STATEMENT:
Balance Sheet 2
Statement of Operations and Deficit
Accumulated During the Development Stage 3
Statement of Changes in Stockholders' Equity 4
Statement of Cash Flows 5
Notes to the Financial Statements 6
<PAGE>
DAVID E. COFFEY 3651 Lindell Rd. - Suite H Las Vegas, NV 89103
CERTIFIED PUBLIC ACCOUNTANT (702) 871-3979
To the Board of Directors and Stockholders of
Source One, Incorporated
Las Vegas, Nevada
I have audited the accompanying balance sheet of Source One, Incorporated
(development stage company) as of December 31, 1998 and the related statements
of operations, cash flows and changes in stockholders' equity for the period
from November 18, 1997 to December 31, 1998. These financial statements are
the responsibility of Source One, Incorporated's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit of the financial statements
provide a reasonable basis for my opinion.
In my opinion the accompanying finanicial statements present fairly, in
all material respects, the financial position of Source One, Incorporated as
of December 31, 1998 and the results of operations, cash flows and changes in
stockholders' equity for the year then ended in conformity with generally
accepted accounting principles.
/s/ DAVID COFFEY C.P.A.
David Coffey C.P.A.
February 3, 1999
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SOURCE ONE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
Cash $ 9,953
Deposits 420
Accounts receivable 3,357
Organizational costs less accumulated
amortization of $915 3,270
Inventory 3,886
------
Total Assets $ 20,886
======
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable $ 1,261
-----
Total Liabilities 1,261
Stockholders' Equity
Common stock - authorized 20,000,000 shares
at $.001 par value, issued and outstanding
11,292,000 shares 11,292
Preferred stock, 5,000,000 shares
at $.001 per value, no shares issued
or outstanding 0
Paid-in capital 12,628
Deficit accumulated during
the development stage (4,295)
------
Total Stockholders' Equity 19,625
Total Liabilities and Stockholders' Equity $ 20,886
======
The accompanying notes are an integral part of
these financial statements.
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SOURCE ONE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
FOR THE YEAR ENDED December 31, 1998
(With Cumulative Figures From Inception)
Inception
Year ended Nov. 18, 1997
Dec. 31, 1998 To Date
------------- -------------
Sales $ 15,801 $ 20,092
Cost of goods sold 10,755 14,088
------ ------
Gross profit 5,046 6,004
Expenses
Amortization 837 915
Advertising 550 550
Consulting 1,995 3,995
Fees 547 715
Office expenses 1,441 1,786
Rent 0 210
Telephone 0 150
Travel and meals 1,692 1,692
Uncollectible accounts 286 286
----- ------
Total expenses 7,348 10,299
Net loss (2,302) $ (4,295)
Deficit accumulated,
beginning of year (1,993)
-----
Deficit accumulated during
the development stage (4,295)
=====
The accompanying notes are an integral part of
these financial statements.
-3-
<PAGE>
SOURCE ONE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM November 18,1997 (Date of Inception)
To December 31, 1998
Additional
Common Stock Paid-in
Shares Amount Capital Total
------- ------ ------- -----
Balance,
November 18, 1997 - $ - $ - $ --
Issuance of common 8,000,000 8,000 0 8,000
stock for services
Issuance of common 3,292,000 3,292 20,628 23,920
stock for cash
Less net loss 0 0 0 (1,993)
Less offering costs 0 0 (4,100) (4,100)
---------- ------ ------ -----
December 31, 1997 11,292,000 11,292 16,528 25,827
Less net loss 0 0 0 (2,302)
Less offering cost (3,900) (3,900)
---------- ------ ------ -----
Balance,
December 31, 1998 11,292,000 $ 11,292 $ 12,628 $ 19,625
The accompanying notes are an integral part of
these financial statements.
-4-
<PAGE>
SOURCE ONE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED December 31, 1998
(With Cumulative Figures From Inception)
Inception
Year ended Nov. 18, 1997
Dec. 31, 1998 To Date
-------------- ------------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net loss $ (2,302) $ (4,295)
Noncash expenses included in net loss
Amortization 837 915
Increase in deposits 0 (420)
Increase in inventories (3,886) (3,886)
Increase in accounts receivable (2,979) (3,357)
Decrease in trade payables (4,200) 1,261
----- -----
NET CASH PROVIDED BY
OPERATING ACTIVITIES (12,530) (9,782)
CASH FLOWS USED BY INVESTING ACTIVITIES
Organizational costs 0 4,185
----- -----
NET CASH USED BY
INVESTING ACTIVITIES 0 4,185
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 0 11,292
Paid-in capital 0 20,628
Less offering costs (3,900) (8,000)
----- -----
NET CASH PROVIDED BY
FINANCING ACTIVITIES (3,900) 23,920
----- ------
NET INCREASE IN CASH (16,430) $ 9,953
=====
CASH AT BEGINNING OF PERIOD 26,383
------
CASH AT END OF PERIOD $ 9,953
=====
The accompanying notes are an integral part of
these financial statements.
-5-
<PAGE>
SOURCE ONE, INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1998
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated on November 18, 1997 under
the laws of the state of Nevada. The business purpose of
the Company is to provide wholesale jewelry through mail
order and the Internet.
The Company will adopt accounting policies and procedures
based upon the nature of future transactions.
NOTE B ORGANIZATION COSTS
Organization costs are capitalized and amortized over 60
months.
NOTE C INVENTORY
Inventories are carried at the lower of cost of market on
the first-in, first-out basis.
NOTE D PUBLIC STOCK OFFERING
The Company completed a public stock offering in December
of 1997 and sold 2,292,000 shares of its common stock for
$22,920 at $.01 per share. The net proceeds of the offering
will be used to provide wholesale jewelry through mail
order and the Internet.
NOTE D RELATED PARTY TRANSACTIONS
The Company has agreed to pay two of its officers
$1,000 each for serving in these position during the
initial development stage of the Company.
The Company retained two of its stockholders and issued
them eight million shares of common stock in exchange for
their services in connection with the organization of the
Company and preparation of the business plan. These
services were valued at $8,000 of $.001 per share.
<PAGE>
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
The Company has used the same independent accountant since its inception
in November of 1997 and has not had any disagreements with said independent
accountant.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) The Company's financial statements for the period from inception to
December 31, 1998 are included herein under Item 13 of this Registration
Statement.
(b) The following exhibits are furnished as required by Item 601 of Regulation
S-B.
Exhibit No. Description
3.0 Certificate of Incorporation of Source One, Incorporated
consisting of Articles of Incorporation filed with the Secretary
of State of the State of Nevada on November 18, 1997, filed with
SEC in this Registration Statement.
3.1 By-Laws of Source One, Incorporated, dated November 18, 1997,
are attached hereto, filed with SEC in this Registration
Statement.
4.0 Common Stock certificate, filed with SEC in this Registration
Statement.
27.0 Financial Data Schedule for the period ending 12/31/98, filed
with the SEC in this Registration Statement.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant has caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
Source One, Incorporated
(Registrant)
Date: 5/24/99 By: /s/ MIGNON CARDENAS
--------------------------------
Mignon Cardenas
President, Chief Executive Officer and
Director
-17-
CORPORATE CHARTER
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that SOURCE ONE, INCORPORATED did on November 18, 1997, file in
this office the original Articles of Incorporation; that said Articles are now
on file and of record in the office of the Secretary of State of the State of
Nevada, and further, that said Articles contain all the provisions required by
the law of said State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Great Seal of
State, at my office, in Las Vegas, Nevada, on November 18, 1997.
/s/ DEAN HELLER
Secretary of State
By
/s/ Shoynee Davis
Certification Clerk
<PAGE>
[Filed stamped as follows: "Filed in the office of the Secretary of State of
the State of Nevada, November 18, 1997"]
ARTICLES OF INCORPORATION
OF
SOURCE ONE, INCORPORATED
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, have this day voluntarily associated ourselves
together for the purpose of forming a Corporation under and pursuant to the
laws of the State of Nevada, and we do hereby certify that:
ARTICLE I - NAME: The exact name of this Corporation is:
Source One, Incorporated
ARTICLE II - RESIDENT AGENT:
The Resident Agent of the Corporation is Max C. Tanner, Esq., The Law
Offices of Max C. Tanner, 2950 East Flamingo Road, Suite G, Las Vegas, Nevada
89121.
ARTICLE III - DURATION: The Corporation shall have perpetual existence.
ARTICLE IV - PURPOSES: The purpose, object and nature of the business for
which this Corporation is organized are:
(a) To engage in any lawful activity;
(b) To carry on such business as may be necessary, convenient, or
desirable to accomplish the above purposes, and to do all other things
incidental thereto which are not forbidden by law or by these Articles of
Incorporation.
ARTICLE V - POWERS: The powers of the Corporation shall be those powers
granted by 78.060 and 78.070 of the Nevada Revised Statutes under which this
corporation is formed. In addition, the Corporation shall have the following
specific powers:
(a) To elect or appoint officers and agents of the Corporation and to
fix their compensation;
(b) To act as an agent for any individual, association, partnership,
corporation or other legal entity;
1
(c) To receive, acquire, hold, exercise rights arising out of the
ownership or possession thereof, sell, or otherwise dispose of, shares or
other interests in, or obligations of, individuals, associations,
partnerships, corporations, or governments;
(d) To receive, acquire, hold, pledge, transfer, or otherwise dispose
of shares of the corporation, but such shares may only be purchased, directly
or indirectly, out of earned surplus;
(e) To make gifts or contributions for the public welfare or for
charitable, scientific or educational purposes, and in time of war, to make
donations in aid of war activities.
ARTICLE VI - CAPITAL STOCK:
Section 1. Authorized Shares. The total number of shares which this
Corporation is authorized to issue is 25,000,000 shares of Capital Stock at
$.001 par value per share as set forth in subsections (a) and (b) of this
Section 1 of Article VI.
(a) The total number of shares of Common Stock which this Corporation
is authorized to issue is 20,000,000 shares at $.001 par value per share.
(b) The total number of shares of Preferred Stock which this
Corporation is authorized to issue is 5,000,000 shares at $.001 par value per
share, which Preferred Stock may contain special preferences as determined by
the Board of Directors of the Corporation, including, but not limited to, the
bearing of interest and convertibility into shares of Common Stock of the
Corporation.
Section 2. Voting Rights of Shareholders. Each holder of the Common
Stock shall be entitled to one vote for each share of stock standing in his
name on the books of the Corporation.
Section 3. Consideration for Shares. The Common Stock shall be issued
for such consideration, as shall be fixed from time to time by the Board of
Directors. In the absence of fraud, the judgment of the Directors as to the
value of any property for shares shall be conclusive. When shares are issued
2
upon payment of the consideration fixed by the Board of Directors, such
shares shall be taken to be fully paid stock and shall be non-assessable. The
Articles shall not be amended in this particular.
Section 4. Pre-emptive Rights. Except as may otherwise be provided by
the Board of Directors, no holder of any shares of the stock of the
Corporation, shall have any preemptive right to purchase, subscribe for, or
otherwise acquire any shares of stock of the Corporation of any class now or
hereafter authorized, or any securities exchangeable for or convertible into
such shares, or any warrants or other instruments evidencing rights or options
to subscribe for, purchase, or otherwise acquire such shares.
Section 5. Stock Rights and Options. The Corporation shall have the
power to create and issue rights, warrants, or options entitling the holders
thereof to purchase from the corporation any shares of its capital stock of
any class or classes, upon such terms and conditions and at such times and
prices as the Board of Directors may provide, which terms and conditions shall
be incorporated in an instrument or instruments evidencing such rights. In
the absence of fraud, the judgment of the Directors as to the adequacy of
consideration for the issuance of such rights or options and the sufficiency
thereof shall be conclusive.
ARTICLE VII - ASSESSMENT OF STOCK: The capital stock of this Corporation,
after the amount of the subscription price has been fully paid in, shall not
be assessable for any purpose, and no stock issued as fully paid up shall ever
be assessable or assessed. The holders of such stock shall not be individually
responsible for the debts, contracts, or liabilities of the Corporation and
shall not be liable for assessments to restore impairments in the capital of
the Corporation.
ARTICLE VIII - DIRECTORS: For the management of the business, and for the
conduct of the affairs of the Corporation, and for the future definition,
limitation, and regulation of the powers of the Corporation and its directors
and shareholders, it is further provided:
Section 1. Size of Board. The members of the governing board of the
Corporation shall be styled directors. The number of directors of the
Corporation, their qualifications, terms of office, manner of election, time
and place of meeting, and powers and duties shall be such as are prescribed by
statute and in the by-laws of the Corporation. The name and post office
3
address of the directors constituting the first board of directors, which
shall be One (1) in number are:
NAME ADDRESS
Max C. Tanner 2950 East Flamingo Road
Suite G
Las Vegas, NV 89121
Section 2. Powers of Board. In furtherance and not in limitation of the
powers conferred by the laws of the State of Nevada, the Board of Directors is
expressly authorized and empowered:
(a) To make, alter, amend, and repeal the By-Laws subject to the
power of the shareholders to alter or repeal the By-Laws made by the Board of
Directors.
(b) Subject to the applicable provisions of the ByLaws then in
effect, to determine, from time to time, whether and to what extent, and at
what times and places, and under what conditions and regulations, the accounts
and books of the Corporation, or any of them, shall be open to shareholder
inspection. No shareholder shall have any right to inspect any of the
accounts, books or documents of the Corporation, except as permitted by law,
unless and until authorized to do so by resolution of the Board of Directors
or of the Shareholders of the Corporation;
(c) To issue stock of the Corporation for money, property, services
rendered, labor performed, cash advanced, acquisitions for other corporations
or for any other assets of value in accordance with the action of the board
of directors without vote or consent of the shareholders and the judgment of
the board of directors as to value received and in return therefore shall be
conclusive and said stock, when issued, shall be fully-paid and
non-assessable.
(d) To authorize and issue, without shareholder consent, obligations
of the Corporation, secured and unsecured, under such terms and conditions as
the Board, in its sole discretion, may determine, and to pledge or mortgage,
as security therefore, any real or personal property of the Corporation,
including after-acquired property;
4
(e) To determine whether any and, if so, what part, of the earned
surplus of the Corporation shall be paid in dividends to the shareholders, and
to direct and determine other use and disposition of any such earned
surplus;
(f) To fix, from time to time, the amount of the profits of the
Corporation to be reserved as working capital or for any other lawful purpose;
(g) To establish bonus, profit-sharing, stock option, or other types
of incentive compensation plans for the employees, including officers and
directors, of the Corporation, and to fix the amount of profits to be shared
or distributed, and to determine the persons to participate in any such plans
and the amount of their respective participations.
(h) To designate, by resolution or resolutions passed by a majority
of the whole Board, one or more committees, each consisting of two or more
directors, which, to the extent permitted by law and authorized by the
resolution or the By-Laws, shall have and may exercise the powers of the
Board;
(i) To provide for the reasonable compensation of its own members by
By-Law, and to fix the terms and conditions upon which such compensation will
be paid;
(j) In addition to the powers and authority herein before, or by
statute, expressly conferred upon it, the Board of Directors may exercise all
such powers and do all such acts and things as may be exercised or done by the
corporation, subject, nevertheless, to the provisions of the laws of the State
of Nevada, of these Articles of Incorporation, and of the By-Laws of the
Corporation.
Section 3. Interested Directors. No contract or transaction between
this Corporation and any of its directors, or between this Corporation and any
other corporation, firm, association, or other legal entity shall be
invalidated by reason of the fact that the director of the Corporation has a
direct or indirect interest, pecuniary or otherwise, in such corporation,
firm, association, or legal entity, or because the interested director was
present at the meeting of the Board of Directors which acted upon or in
reference to such contract or transaction, or because he participated in such
5
action, provided that: (1) the interest of each such director shall have
been disclosed to or known by the Board and a disinterested majority of the
Board shall have nonetheless ratified and approved such contract or
transaction (such interested director or directors may be counted in
determining whether a quorum is present for the meeting at which such
ratification or approval is given); or (2) the conditions of N.R.S. 78.140 are
met.
ARTICLE IX - LIMITATION OF LIABILITY OF OFFICERS OR DIRECTORS: The personal
liability of a director or officer of the corporation to the corporation or
the Shareholders for damages for breach of fiduciary duty as a director or
officer shall be limited to acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law.
ARTICLE X - INDEMNIFICATION: Each director and each officer of the
corporation may be indemnified by the corporation as follows:
(a) The corporation may indemnify any person who was or is a party,
or is threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement, actually
and reasonably incurred by him in connection with the action, suit or
proceeding, if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation and
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suite or
proceeding, by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, does not of itself create a presumption that the
person did not act in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the corporation, and that,
with respect to any criminal action or proceeding, he had reasonable cause to
believe that his conduct was unlawful.
6
(b) The corporation may indemnify any person who was or is a party,
or is threatened to be made a party, to any threatened, pending or completed
action or suit by or in the right of the corporation, to procure a judgment in
its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by him in connection with the defense or settlement of the
action or suit, if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to which
such a person has been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals there from, to be liable to the corporation or for
amounts paid in settlement to the corporation, unless and only to the extent
that the court in which the action or suit was brought or other court of
competent jurisdiction determines upon application that in view of all the
circumstances of the case the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
Article, or in defense of any claim, issue or matter therein, he must be
indemnified by the corporation against expenses, including attorney's fees,
actually and reasonably incurred by him in connection with the defense.
(d) Any indemnification under subsections (a) and (b) unless ordered
by a court or advanced pursuant to subsection (e), must be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
(i) By the stockholders;
(ii) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or proceeding;
7
(iii) If a majority vote of a quorum consisting of directors who
were not parties to the act, suit or proceeding so orders, by independent
legal counsel in a written opinion; or
(iv) If a quorum consisting of directors who were not
parties to the act, suit or proceeding cannot be obtained, by independent
legal counsel in a written opinion.
(e) Expenses of officers and directors incurred in defending a civil
or criminal action, suit or proceeding must be paid by the corporation as they
are incurred and in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
(f) The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(i) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the
certificate or articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an action in
his official capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court pursuant to
subsection (b) or for the advancement of expenses made pursuant to subsection
(e) may not be made to or on behalf of any director or officer if a final
adjudication establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action.
(ii) Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs, executors
and administrators of such a person.
8
ARTICLE XI - PLACE OF MEETING; CORPORATE BOOKS: Subject to the laws of the
State of Nevada, the shareholders and the Directors shall have power to hold
their meetings, and the Directors shall have power to have an office or
offices and to maintain the books of the Corporation outside the State of
Nevada, at such place or places as may from time to time be designated in the
By-Laws or by appropriate resolution.
ARTICLE XII - AMENDMENT OF ARTICLES: The provisions of these Articles of
Incorporation may be amended, altered or repealed from time to time to the
extent and in the manner prescribed by the laws of the State of Nevada, and
additional provisions authorized by such laws as are then in force may be
added. All rights herein conferred on the directors, officers and
shareholders are granted subject to this reservation.
ARTICLE XIII - INCORPORATOR: The name and address of the sole incorporator
signing these Articles of Incorporation is as follows:
NAME POST OFFICE ADDRESS
1. Max C. Tanner 2950 East Flamingo Road, Suite G
Las Vegas, Nevada 89121
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 17th day of November, 1997.
/s/ MAX C. TANNER
Max C. Tanner
STATE OF NEVADA )
)ss:
COUNTY OF CLARK )
On November 17,1997, personally appeared before me, a Notary Public, Max
C. Tanner, who acknowledged to me that he executed the foregoing Articles of
Incorporation for Source One, Incorporated, Inc., a Nevada corporation.
/s/ LISE-LOTTE NEWELL
Notary Public
[Notary stamped as follows: Notary Public - State of Nevada, Count of Clark
Lise-Lotte Newell, my commission expires July 25, 2000]
9
<PAGE>
[Filed stamped as follows: "Filed in the office of the Secretary of State of
the State of Nevada, November 18, 1997"]
CERTIFICATE OF ACCEPTANCE
OF APPOINTMENT BY RESIDENT AGENT
IN THE MATTER OF SOURCE ONE, INCORPORATED
I, Max C. Tanner, do hereby certify that on the 17th day of November,
1997, I accepted the appointment as Resident Agent of the above-entitled
corporation in accordance with Sec. 78.090, NRS 1957.
Furthermore, that the principal office in this state is located at The
Law Offices of Max C. Tanner, 2950 East Flamingo Road, Suite G, City of Las
Vegas 89121, County of Clark, State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of
November, 1997.
MAX C. TANNER
By: /s/MAX C. TANNER
Max C. Tanner, Esq.
Resident Agent
10
BY-LAWS OF
SOURCE ONE, INCORPORATED
ARTICLE I
SHAREHOLDERS
Section 1.01 Annual Meeting. The annual meeting of the shareholders
shall be held at such date and time as shall be designated by the board of
directors and stated in the notice of the meeting or in a duly-executed waiver
of notice thereof. If the corporation shall fail to provide notice of the
annual meeting of the shareholders as set forth above, the annual meeting of
the shareholders of the corporation shall be held during the month of November
or December of each year as determined by the Board of Directors, for the
purpose of electing directors of the corporation to serve during the ensuing
year and for the transaction of such other business as may properly come
before the meeting. If the election of the directors is not held on the day
designated herein for any annual meeting of the shareholders, or at any
adjournment thereof, the president shall cause the election to be held at a
special meeting of the shareholders as soon thereafter as is convenient.
Section 1.02 Special Meetings. Special meetings of the shareholders may
be called by the president or the Board of Directors and shall be called by
the president at the written request of the holders of not less than 51% of
the issued and outstanding shares of capital stock of the corporation.
All business lawfully to be transacted by the shareholders may be
transacted at any special meeting at any adjournment thereof. However, no
business shall be acted upon at a special meeting, except that referred to in
the notice calling the meeting, unless all of the outstanding capital stock of
the corporation is represented either in person or by proxy. Where all of the
capital stock is represented, any lawful business may be transacted and the
meeting shall be valid for all purposes.
Section 1.03 Place of Meetings. Any meeting of the shareholders of the
corporation may be held at its principal office in the State of Nevada or such
other place in or out of the United States as the Board of Directors may
designate. A waiver of notice signed by the shareholders entitled to vote may
designate any place for the holding of such meeting.
Section 1.04 Notice of Meetings.
(a) The secretary shall sign and deliver to all shareholders of
record written or printed notice of any meeting at least ten (10) days, but
not more than sixty (60) days, before the date of such meeting; which notice
shall state the place, date and time of the meeting, the general nature of the
business to be transacted, and, in the case of any meeting at which directors
are to be elected, the names of nominees, if any, to be presented for
election.
1
(b) In the case of any meeting, any proper business may be
presented for action, except that the following items shall be valid only if
the general nature of the proposal is stated in the notice or written waiver
of notice:
(1) Action with respect to any contract or transaction
between the corporation and one or more of its directors or another firm,
association, or corporation in which one or more of its directors has a
material financial interest;
(2) Adoption of amendments to the Articles of
Incorporation; or
(3) Action with respect to the merger, consolidation,
reorganization, partial or complete liquidation, or dissolution of the
corporation.
(c) The notice shall be personally delivered or mailed by first
class mail to each shareholder of record at the last known address thereof, as
the same appears on the books of the corporation, and the giving of such
notice shall be deemed delivered the date the same is deposited in the United
States mail, postage prepaid. If the address of any shareholder does not
appear upon the books of the corporation, it will be sufficient to address any
notice to such shareholder at the principal office of the corporation.
(d) The written certificate of the person calling any meeting,
duly sworn, setting forth the substance of the notice, the time and place the
notice was mailed or personally delivered to the several shareholders, and the
addresses to which the notice was mailed shall be prima facie evidence of the
manner and fact of giving such notice.
Section 1.05 Waiver of Notice. If all of the shareholders of the
corporation shall waive notice of a meeting, no notice shall be required, and,
whenever all of the shareholders shall meet in person or by proxy, such
meeting shall be valid for all purposes without call or notice, and at such
meeting any corporate action may be taken.
Section 1.06 Determination of Shareholders of Record.
(a) The Board of Directors may at any time fix a future date as
a record date for the determination of the shareholders entitled to notice of
any meeting or to vote or entitled to receive payment of any dividend or other
distribution or allotment of any rights or entitled to exercise any rights in
respect of any other lawful action. The record date so fixed shall not be
more than sixty (60) days prior to the date of such meeting nor more than
sixty (60) days prior to any other action. When a record date is so fixed,
only shareholders of record on that date are entitled to notice of and to vote
at the meeting or to receive the dividend, distribution or allotment of
rights, or to exercise their rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date.
2
(b) If no record date is fixed by the Board of Directors, then
(1) the record date for determining shareholders entitled to notice of or to
vote at a meeting of shareholders shall be at the close of business on the
business day next preceding the day on which notice is given or, if notice is
waived, at the close of business on the day next preceding the day on which
the meeting is held; (2) the record date for determining shareholders entitled
to give consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is necessary, shall be the day on which
written consent is given; and (3) the record date for determining shareholders
for any other purpose shall be at the close of business on the day on which
the Board of Directors adopts the resolution relating thereto, or the sixtieth
(60th) day prior to the date of such other action, whichever is later.
Section 1.07 Quorum: Adjourned Meetings.
(a) At any meeting of the shareholders, a majority of the issued
and outstanding shares of the corporation represented in person or by proxy,
shall constitute a quorum.
(b) If less than a majority of the issued and outstanding shares
are represented, a majority of shares so represented may adjourn from time to
time at the meeting, until holders of the amount of stock required to
constitute a quorum shall be in attendance. At any such adjourned meeting at
which a quorum shall be present, any business may be transacted which might
have been transacted as originally called. When a shareholders' meeting is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place thereof are announced at the meeting at which
the adjournment is taken, unless the adjournment is for more than ten (10)
days in which event notice thereof shall be given.
Section 1.08 Voting.
(a) Each shareholder of record, such shareholder's duly
authorized proxy or attorney-in-fact shall be entitled to one (1) vote for
each share of stock standing registered in such shareholder's name on the
books of the corporation on the record date.
(b) Except as otherwise provided herein, all votes with respect
to shares standing in the name of an individual on the record date (included
pledged shares) shall be cast only by that individual or such individual's
duly authorized proxy or attorney-in-fact. With respect to shares held by a
representative of the estate of a deceased shareholder, guardian, conservator,
custodian or trustee, votes may be cast by such holder upon proof of capacity,
even though the shares do not stand in the name of such holder. In the case
of shares under the control of a receiver, the receiver may cast votes carried
by such shares even though the shares do not stand in the name of the receiver
provided that the order of the court of competent jurisdiction which appoints
the receiver contains the authority to cast votes carried by such shares. If
shares stand in the name of a minor, votes may be cast only by the
duly-appointed guardian of the estate of such minor if such guardian has
provided the corporation with written notice and proof of such appointment.
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(c) With respect to shares standing in the name of a corporation
on the record date, votes may be cast by such officer or agents as the by-laws
of such corporation prescribe or, in the absence of an applicable by-law
provision, by such person as may be appointed by resolution of the Board of
Directors of such corporation. In the event no person is so appointed, such
votes of the corporation may be cast by any person (including the officer
making the authorization) authorized to do so by the Chairman of the Board of
Directors, President or any Vice President of such corporation.
(d) Notwithstanding anything to the contrary herein contained,
no votes may be cast by shares owned by this corporation or its subsidiaries,
if any. If shares are held by this corporation or its subsidiaries, if any,
in a fiduciary capacity, no votes shall be cast with respect thereto on any
matter except to the extent that the beneficial owner thereof possesses and
exercises either a right to vote or to give the corporation holding the same
binding instructions on how to vote.
(e) With respect to shares standing in the name of two or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, husband and wife as community property, tenants by the entirety,
voting trustees, persons entitled to vote under a shareholder voting agreement
or otherwise and shares held by two or more persons (including proxy holders)
having the same fiduciary relationship respect in the same shares, votes may
be cast in the following manner:
(1) If only one such person votes, the votes of such person
binds all.
(2) If more than one person casts votes, the act of the
majority so voting binds all.
(3) If more than one person casts votes, but the vote is
evenly split on a particular matter, the votes shall be deemed cast
proportionately as split.
(f) Any holder of shares entitled to vote on any matter may cast
a portion of the votes in favor of such matter and refrain from casting the
remaining votes or cast the same against the proposal, except in the case of
elections of directors. If such holder entitled to vote fails to specify the
number of affirmative votes, it will be conclusively presumed that the holder
is casting affirmative votes with respect to all shares held.
(g) If a quorum is present, the affirmative vote of holders of a
majority of the shares represented at the meeting and entitled to vote on any
matter shall be the act of the shareholders, unless a vote of greater number
or voting by classes is required by the laws of the State of Nevada, the
Articles of Incorporation and these By-Laws.
Section 1.09 Proxies. At any meeting of shareholders, any holder of
shares entitled to vote may authorize another person or persons to vote by
proxy with respect to the shares held by an instrument in writing and
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subscribed to by the holder of such shares entitled to vote. No proxy shall
be valid after the expiration of six (6) months from the date of execution
thereof, unless coupled with an interest or unless otherwise specified in the
proxy. In no event shall the term of a proxy exceed seven (7) years from the
date of its execution. Every proxy shall continue in full force and effect
until its expiration or revocation. Revocation may be effected by filing an
instrument revoking the same or a duly-executed proxy bearing a later date
with the secretary of the corporation.
Section 1.10 Order of Business. At the annual shareholders meeting, the
regular order of business shall be as follows:
(1) Determination of shareholders present and existence of
quorum;
(2) Reading and approval of the minutes of the previous
meeting or meetings;
(3) Reports of the Board of Directors, the president,
treasurer and secretary of the corporation, in the order named;
(4) Reports of committee;
(5) Election of directors;
(6) Unfinished business;
(7) New business;
(8) Adjournment.
Section 1.11 Absentees Consent to Meetings. Transactions of any meeting
of the shareholders are as valid as though had at a meeting duly-held after
regular call and notice if a quorum is present, either in person or by proxy,
and if, either before or after the meeting, each of the persons entitled to
vote, not present in person or by proxy (and those who, although present,
either object at the beginning of the meeting to the transaction of any
business because the meeting has not been lawfully called or convened or
expressly object at the meeting to the consideration of matters not included
in the notice which are legally required to be included therein), signs a
written waiver of notice and/or consent to the holding of the meeting or an
approval of the minutes thereof. All such waivers, consents, and approvals
shall be filed with the corporate records and made a part of the minutes of
the meeting. Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when the person objects at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters not included in the notice
if such objection is expressly made at the beginning. Neither the business to
be transacted at nor the purpose of any regular or special meeting of
shareholders need be specified in any written waiver of notice, except as
otherwise provided in Section 1.04(b) of these By-Laws.
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Section 1.12 Action Without Meeting. Any action which may be taken by
the vote of the shareholders at a meeting may be taken without a meeting if
consented to by the holders of a majority of the shares entitled to vote or
such greater proportion as may be required by the laws of the State of Nevada,
the Articles of Incorporation, or these By-Laws. Whenever action is taken by
written consent, a meeting of shareholders needs not be called or noticed.
ARTICLE II
DIRECTORS
Section 2.01 Number, Tenure and Qualification. Except as otherwise
provided herein, the Board of Directors of the corporation shall consist of at
least one (1) but no more than nine (9) persons, who shall be elected at the
annual meeting of the shareholders of the corporation and who shall hold
office for one (1) year or until their successors are elected and qualify.
Section 2.02 Resignation. Any director may resign effective upon giving
written notice to the chairman of the Board of Directors, the president, or
the secretary of the corporation, unless the notice specifies a later time for
effectiveness of such resignation. If the Board of Directors accepts the
resignation of a director tendered to take effect at a future date, the Board
or the shareholders may elect a successor to take office when the resignation
becomes effective.
Section 2.03 Reduction in Number. No reduction of the number of
directors shall have the effect of removing any director prior to the
expiration of his term of office.
Section 2.04 Removal.
(a) The Board of Directors or the shareholders of the
corporation, by a majority vote, may declare vacant the office of a director
who has been declared incompetent by an order of a court of competent
jurisdiction or convicted of a felony.
Section 2.05 Vacancies.
(a) A vacancy in the Board of Directors because of death,
resignation, removal, change in number of directors, or otherwise may be
filled by the shareholders at any regular or special meeting or any adjourned
meeting thereof or the remaining director(s) by the affirmative vote of a
majority thereof. A Board of Directors consisting of less than the maximum
number authorized in Section 2.01 of ARTICLE II constitutes vacancies on the
Board of Directors for purposes of this paragraph and may be filled as set
forth above including by the election of a majority of the remaining
directors. Each successor so elected shall hold office until the next annual
meeting of shareholders or until a successor shall have been duly-elected and
qualified.
(b) If, after the filling of any vacancy by the directors, the
directors then in office who have been elected by the shareholders shall
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constitute less than a majority of the directors then in office, any holder or
holders of an aggregate of five percent (5%) or more of the total number of
shares entitled to vote may call a special meeting of shareholders to be held
to elect the entire Board of Directors. The term of office of any director
shall terminate upon such election of a successor.
Section 2.06 Regular Meetings. Immediately following the adjournment
of, and at the same place as, the annual meeting of the shareholders, the
Board of Directors, including directors newly elected, shall hold its annual
meeting without notice, other than this provision, to elect officers of the
corporation and to transact such further business as may be necessary or
appropriate. The Board of Directors may provide by resolution the place, date
and hour for holding additional regular meetings.
Section 2.07 Special Meetings. Special meetings of the Board of
Directors may be called by the chairman and shall be called by the chairman
upon the request of any two (2) directors or the president of the corporation.
Section 2.08 Place of Meetings. Any meeting of the directors of the
corporation may be held at its principal office in the State of Nevada, or at
such other place in or out of the United States as the Board of Directors may
designate. A waiver or notice signed by the directors may designate any place
for the holding of such meeting.
Section 2.09 Notice of Meetings. Except as otherwise provided in
Section 2.06, the chairman shall deliver to all directors written or printed
notice of any special meeting, at least three (3) days before the date of such
meeting, by delivery of such notice personally or mailing such notice first
class mail, or by telegram. If mailed, the notice shall be deemed delivered
two (2) business days following the date the same is deposited in the United
States mail, postage prepaid. Any director may waive notice of any meeting,
and the attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, unless such attendance is for the express purpose of
objecting to the transaction of business threat because the meeting is not
properly called or convened.
Section 2.10 Quorum: Adjourned Meetings.
(a) A majority of the Board of Directors in office shall
constitute a quorum.
(b) At any meeting of the Board of Directors where a quorum is not
present, a majority of those present may adjourn, from time to time, until a
quorum is present, and no notice of such adjournment shall be required. At
any adjourned meeting where a quorum is present, any business may be
transacted which could have been transacted at the meeting originally called.
Section 2.11 Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting if a written consent thereto is signed by all
of the members of the Board of Directors or of such committee. Such written
7
consent or consents shall be filed with the minutes of the proceedings of the
Board of Directors or committee. Such action by written consent shall have
the same force and effect as the unanimous vote of the Board of Directors or
committee.
Section 2.12 Telephonic Meetings. Meetings of the Board of Directors
may be held through the use of a conference telephone or similar
communications equipment so long as all members participating in such meeting
can hear one another at the time of such meeting. Participation in such a
meeting constitutes presence in person at such meeting.
Section 2.13 Board Decisions. The affirmative vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors.
Section 2.14 Powers and Duties.
(a) Except as otherwise provided in the Articles of
Incorporation or the laws of the State of Nevada, the Board of Directors is
invested with the complete and unrestrained authority to manage the affairs of
the corporation, and is authorized to exercise for such purpose as the general
agent of the corporation, its entire corporate authority in such manner as it
sees fit. The Board of Directors may delegate any of its authority to manage,
control or conduct the current business of the corporation to any standing or
special committee or to any officer or agent and to appoint any persons to be
agents of the corporation with such powers, including the power to
sub-delegate, and upon such terms as may be deemed fit.
(b) The Board of Directors shall present to the shareholders at
annual meetings of the shareholders, and when called for by a majority vote of
the shareholders at a special meeting of the shareholders, a full and clear
statement of the condition of the corporation, and shall, at request, furnish
each of the shareholders with a true copy thereof.
(c) The Board of Directors, in its discretion, may submit any
contract or act for approval or ratification at any annual meeting of the
shareholders or any special meeting properly called for the purpose of
considering any such contract or act, provided a quorum is present. The
contract or act shall be valid and binding upon the corporation and upon all
the shareholders thereof, if approved and ratified by the affirmative vote of
a majority of the shareholders at such meeting.
(d) In furtherance and not in limitation of the powers conferred
by the laws of the State of Nevada, the Board of Directors is expressly
authorized and empowered to issue stock of the Corporation for money,
property, services rendered, labor performed, cash advanced, acquisitions for
other corporations or for any other assets of value in accordance with the
action of the Board of Directors without vote or consent of the shareholders
and the judgment of the Board of Directors as to the value received and in
return therefore shall be conclusive and said stock, when issued, shall be
fully-paid and non-assessable.
Section 2.15 Compensation. The directors shall be allowed and paid all
necessary expenses incurred in attending any meetings of the Board.
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Section 2.16 Board Officers.
(a) At its annual meeting, the Board of Directors shall elect,
from among its members, a chairman to preside at the meetings of the Board of
Directors. The Board of Directors may also elect such other board officers
and for such term as it may, from time to time, determine advisable.
(b) Any vacancy in any board office because of death,
resignation, removal or otherwise may be filled by the Board of Directors for
the unexpired portion of the term of such office.
Section 2.17 Order of Business. The order of business at any meeting of
the Board of Directors shall be as follows:
(1) Determination of members present and existence of
quorum;
(2) Reading and approval of the minutes of any previous
meeting or meetings;
(3) Reports of officers and committeemen;
(4) Election of officers;
(5) Unfinished business;
(6) New business;
(7) Adjournment.
ARTICLE III
OFFICERS
Section 3.01 Election. The Board of Directors, at its first meeting
following the annual meeting of shareholders, shall elect a president, a
secretary and a treasurer to hold office for one (1) year next coming and
until their successors are elected and qualify. Any person may hold two or
more offices. The Board of Directors may, from time to time, by resolution,
appoint one or more vice presidents, assistant secretaries, assistant
9
treasurers and transfer agents of the corporation as it may deem advisable;
prescribe their duties; and fix their compensation.
Section 3.02 Removal; Resignation. Any officer or agent elected or
appointed by the Board of Directors may be removed by it whenever, in its
judgment, the best interest of the corporation would be served thereby. Any
officer may resign at any time upon written notice to the corporation without
prejudice to the rights, if any, of the corporation under any contract to
which the resigning officer is a party.
Section 3.03 Vacancies. Any vacancy in any office because of death,
resignation, removal, or otherwise may be filled by the Board of Directors for
the unexpired portion of the term of such
office.
Section 3.04 President. The president shall be the general manager and
executive officer of the corporation, subject to the supervision and control
of the Board of Directors, and shall direct the corporate affairs, with full
power to execute all resolutions and orders of the Board of Directors not
especially entrusted to some other officer of the corporation. The president
shall preside at all meetings of the shareholders and shall sign the
certificates of stock issued by the corporation, and shall perform such other
duties as shall be prescribed by the Board of Directors.
Unless otherwise ordered by the Board of Directors, the president shall
have full power and authority on behalf of the corporation to attend and to
act and to vote at any meetings of the shareholders of any corporation in
which the corporation may hold stock and, at any such meetings, shall possess
and may exercise any and all rights and powers incident to the ownership of
such stock. The Board of Directors, by resolution from time to time, may
confer like powers on any person or persons in place of the president to
represent the corporation for these purposes.
Section 3.05 Vice President. The Board of Directors may elect one or
more vice presidents who shall be vested with all the powers and perform all
the duties of the president whenever the president is absent or unable to act,
including the signing of the certificates of stock issued by the corporation,
and the vice president shall perform such other duties as shall be prescribed
by the Board of Directors.
Section 3.06 Secretary. The secretary shall keep the minutes of all
meetings of the shareholders and the Board of Directors in books provided for
that purpose. The secretary shall attend to the giving and service of all
notices of the corporation, may sign with the president in the name of the
corporation all contracts authorized by the Board of Directors or appropriate
committee, shall have the custody of the corporate seal, shall affix the
corporate seal to all certificates of stock duly issued by the corporation,
shall have charge of stock certificate books, transfer books and stock
ledgers, and such other books and papers as the Board of Directors or
appropriate committee may direct, and shall, in general perform all duties
incident to the office of the secretary. All corporate books kept by the
secretary shall be open for examination by any director at any reasonable
time.
Section 3.07 Assistant Secretary. The Board of Directors may appoint an
assistant secretary who shall have such powers and perform such duties as may
be prescribed for him by the secretary of the corporation or by the Board of
Directors.
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Section 3.08 Treasurer. The treasurer shall be the chief financial
officer of the corporation, subject to the supervision and control of the
Board of Directors, and shall have custody of all the funds and securities of
the corporation. When necessary or proper, the treasurer shall endorse on
behalf of the corporation for collection checks, notes and other obligations,
and shall deposit all monies to the credit of the corporation in such bank or
banks or other depository as the Board of Directors may designate, and shall
sign all receipts and vouchers for payments made by the corporation. Unless
otherwise specified by the Board of Directors, the treasurer shall sign with
the president all bills of exchange and promissory notes of the corporation,
shall also have the care and custody of the stocks, bonds, certificates,
vouchers, evidence of debts, securities and such other property belonging to
the corporation as the Board of Directors shall designate, and shall sign all
papers required by law, by these By-laws or by the Board of Directors to be
signed by the treasurer. The treasurer shall enter regularly in the books of
the corporation, to be kept for that purpose, full and accurate accounts of
all monies received and paid on account of the corporation and whenever
required by the Board of Directors, the treasurer shall render a statement of
any or all accounts. The treasurer shall at all reasonable times exhibit the
books of account to any directors of the corporation and shall perform all
acts incident to the position of treasurer subject to the control of the Board
of Directors. The treasurer shall, if required by the Board of Directors,give
a bond to the corporation in such sum and with such security as shall be
approved by the Board of Directors for the faithful performance of all the
duties of the treasurer and for restoration to the corporation in the event of
the treasurer's death, resignation, retirement, or removal from office, of all
books, records, papers, vouchers, money and other property belonging to the
corporation. The expense of such bond shall be borne by the corporation.
Section 3.09 Assistant Treasurer. The Board of Directors may appoint an
assistant treasurer who shall have such powers and perform such duties as may
be prescribed by the treasurer of the corporation or by the Board of
Directors, and the Board of Directors may require the assistant treasurer to
give a bond to the corporation in such sum and with such security as it may
approve, for the faithful performance of the duties of assistant treasurer,
and for the restoration to the corporation, in the event of the assistant
treasurer's death, resignation, retirement or removal from office, of all
books, records, papers, vouchers, money and other property belonging to the
corporation. The expense of such bond shall be borne by the corporation.
ARTICLE IV
CAPITAL STOCK
Section 4.01 Issuance. Shares of capital stock of the corporation shall
be issued in such manner and at such times and upon such conditions as shall
be prescribed by the Board of Directors.
Section 4.02 Certificates. Ownership in the corporation shall be
evidenced by certificates for shares of stock in such form as shall be
11
prescribed by the Board of Directors, shall be under the seal of the
corporation and shall be signed by the president or the vice president and
also by the secretary or an assistant secretary. Each certificate shall
contain the name of the record holder, the number, designation, if any, class
or series of shares represented, a statement of summary of any applicable
rights, preferences, privileges, or restrictions thereon, and a statement that
the shares are assessable, if applicable. All certificates shall be
consecutively numbered. The name and address of the shareholder, the number
of shares, and the date of issue shall be entered on the stock transfer books
of the corporation.
Section 4.03 Surrender: Lost or Destroyed Certificates. All
certificates surrendered to the corporation, except those representing shares
of treasury stock, shall be canceled and no new certificates shall be issued
until the former certificate for a like number of shares shall have been
canceled, except that in case of a lost, stolen, destroyed or mutilated
certificate, a new one may be issued therefor. However, any shareholder
applying for the issuance of a stock certificate in lieu of one alleged to
have been lost, stolen, destroyed or mutilated shall, prior to the issuance of
a replacement, provide the corporation with his, her or its affidavit of the
facts surrounding the loss, theft, destruction or mutilation and an indemnity
bond in an amount and upon such terms as the treasurer, or the Board of
Directors, shall require. In no case shall the bond be in amount less than
twice the current market value of the stock and it shall indemnify the
corporation against any loss, damage, cost or inconvenience arising as a
consequence of the issuance of a replacement certificate.
Section 4.04 Replacement Certificate. When the Articles of
Incorporation are amended in any way affecting the statements contained in the
certificates for outstanding shares of capital stock of the corporation or it
becomes desirable for any reason, including, without limitation, the merger or
consolidation of the corporation with another corporation or the
reorganization of the corporation, to cancel any outstanding certificate for
shares and issue a new certificate therefor conforming to the rights of the
holder, the Board of Directors may order any holders of outstanding
certificates for shares to surrender and exchange the same for new
certificates within a reasonable time to be fixed by the Board of Directors.
The order may provide that a holder of any certificate(s) ordered to be
surrendered shall not be entitled to vote, receive dividends or exercise any
other rights of shareholders until the holder has complied with the order
provided that such order operates to suspend such rights only after notice and
until compliance.
Section 4.05 Transfer of Shares. No transfer of stock shall be valid as
against the corporation except on surrender and cancellation by the
certificate therefor, accompanied by an assignment or transfer by the
registered owner made either in person or under assignment. Whenever any
transfer shall be expressly made for collateral security and not absolutely,
the collateral nature of the transfer shall be reflected in the entry of
transfer on the books of the corporation.
Section 4.06 Transfer Agent. The Board of Directors may appoint one or
more transfer agents and registrars of transfer and may require all
certificates for shares of stock to bear the signature of such transfer agent
and such registrar of transfer.
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Section 4.07 Stock Transfer Books. The stock transfer books shall be
closed for a period of ten (10) days prior to all meetings of the shareholders
and shall be closed for the payment of dividends as provided in Article V
hereof and during such periods as, from time to time, may be fixed by the
Board of Directors, and, during such periods, no stock shall be transferable.
Section 4.08 Miscellaneous. The Board of Directors shall have the power
and authority to make such rules and regulations not inconsistent herewith as
it may deem expedient concerning the issue, transfer and registration of
certificates for shares of the capital stock of the corporation.
ARTICLE V
DIVIDENDS
Section 5.01 Dividends may be declared, subject to the provisions of
the laws of the State of Nevada and the Articles of Incorporation, by the
Board of Directors at any regular or special meeting and may be paid in cash,
property, shares of corporate stock, or any other medium. The Board of
Directors may fix in advance a record date, as provided in Section 1.06 of
these By-laws, prior to the dividend payment for the purpose of determining
shareholders entitled to receive payment of any dividend. The Board of
Directors may close the stock transfer books for such purpose for a period of
not more than ten (10) days prior to the payment date of such dividend.
ARTICLE VI
OFFICES; RECORDS; REPORTS; SEAL AND FINANCIAL MATTERS
Section 6.01 Principal Office. The principal office of the corporation
in the State of Nevada shall be the Law Offices of Max C. Tanner, 2950 East
Flamingo Road, Suite G, Las Vegas, Nevada 89121, and the corporation may have
an office in any other state or territory as the Board of Directors may
designate.
Section 6.02 Records. The stock transfer books and a certified copy of
the By-laws, Articles of Incorporation, any amendments thereto, and the
minutes of the proceedings of the shareholders, the Board of Directors, and
committees of the Board of Directors shall be kept at the principal office of
the corporation for the inspection of all who have the right to see the same
and for the transfer of stock. All other books of the corporation shall be
kept at such places as may be prescribed by the Board of Directors.
Section 6.03 Financial Report on Request. Any shareholder or
shareholders holding at least five percent (5%) of the outstanding shares of
any class of stock may make a written request for an income statement of the
corporation for the three (3) month, six (6) month, or nine (9) month period
of the current fiscal year ended more than thirty (30) days prior to the date
of the request and a balance sheet of the corporation as of the end of such
period. In addition, if no annual report for the last fiscal year has been
13
sent to shareholders, such shareholder or shareholders may make a request for
a balance sheet as of the end of such fiscal year and an income statement and
statement of changes in financial position for such fiscal year. The
statement shall be delivered or mailed to the person making the request within
thirty (30) days thereafter. A copy of the statements shall be kept on file
in the principal office of the corporation for twelve (12) months, and such
copies shall be exhibited at all reasonable times to any shareholder demanding
an examination of them or a copy shall be mailed to each shareholder. Upon
request by any shareholder, there shall be mailed to the shareholder a copy of
the last annual, semiannual or quarterly income statement which it has
prepared and a balance sheet as of the end of the period. The financial
statements referred to in this Section 6.03 shall be accompanied by the report
thereon, if any, of any independent accountants engaged by the corporation or
the certificate of an authorized officer of the corporation that such
financial statements were prepared without audit from the books and records of
the corporation.
Section 6.04 Right of Inspection.
(a) The accounting books and records and minutes of proceedings
of the shareholders and the Board of Directors and committees of the Board of
Directors shall be open to inspection upon the written demand of any
shareholder or holder of a voting trust certificate at any reasonable time
during usual business hours for a purpose reasonably related to such holder's
interest as a shareholder or as the holder of such voting trust certificate.
This right of inspection shall extend to the records of the subsidiaries, if
any, of the corporation. Such inspection may be made in person or by agent or
attorney, and the right of inspection includes the right to copy and make
extracts.
(b) Every director shall have the absolute right at any
reasonable time to inspect and copy all books, records and documents of every
kind and to inspect the physical properties of the corporation and/or its
subsidiary corporations. Such inspection may be made in person or by agent or
attorney, and the right of inspection includes the right to copy and make
extracts.
Section 6.05 Corporate Seal. The Board of Directors may, by resolution,
authorize a seal, and the seal may be used by causing it, or a facsimile, to
be impressed or affixed or reproduced or otherwise. Except when otherwise
specifically provided herein, any officer of the corporation shall have the
authority to affix the seal to any document requiring it.
Section 6.06 Fiscal Year. The fiscal year-end of the corporation shall
be the calendar year or such other term as may be fixed by resolution of the
Board of Directors.
Section 6.07 Reserves. The Board of Directors may create, by
resolution, out of the earned surplus of the corporation such reserves as the
directors may, from time to time, in their discretion, think proper to provide
for contingencies, or to equalize dividends or to repair or maintain any
property of the corporation, or for such other purpose as the Board of
Directors may deem beneficial to the corporation, and the directors may modify
or abolish any such reserves in the manner in which they were created.
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ARTICLE VII
INDEMNIFICATION
Section 7.01 Indemnification. The corporation shall, unless prohibited
by Nevada Law, indemnify any person (an "Indemnitee") who is or was involved
in any manner (including, without limitation, as a party or a witness) or is
threatened to be so involved in any threatened, pending or completed action
suit or proceeding, whether civil, criminal, administrative, arbitrative or
investigative, including without limitation, any action, suit or proceeding
brought by or in the right of the corporation to procure a judgment in its
favor (collectively, a "Proceeding") by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other entity or enterprise, against all Expenses and Liabilities actually
and reasonably incurred by him in connection with such Proceeding. The right
to indemnification conferred in this Article shall be presumed to have been
relied upon by the directors, officers, employees and agents of the
corporation and shall be enforceable as a contract right and inure to the
benefit of heirs, executors and administrators of such individuals.
Section 7.02 Indemnification Contracts. The Board of Directors is
authorized on behalf of the corporation, to enter into, deliver and perform
agreements or other arrangements to provide any Indemnitee with specific
rights of indemnification in addition to the rights provided hereunder to the
fullest extent permitted by Nevada Law. Such agreements or arrangements may
provide (i) that the Expenses of officers and directors incurred in defending
a civil or criminal action, suit or proceeding, must be paid by the
corporation as they are incurred and in advance of the final disposition of
any such action, suit or proceeding provided that, if required by Nevada Law
at the time of such advance, the officer or director provides an undertaking
to repay such amounts if it is ultimately determined by a court of competent
jurisdiction that such individual is not entitled to be indemnified against
such expenses, (iii) that the Indemnitee shall be presumed to be entitled to
indemnification under this Article or such agreement or arrangement and the
corporation shall have the burden of proof to overcome that presumption, (iii)
for procedures to be followed by the corporation and the Indemnitee in making
any determination of entitlement to indemnification or for appeals therefrom
and (iv) for insurance or such other Financial Arrangements described in
Paragraph 7.02 of this Article, all as may be deemed appropriate by the Board
of Directors at the time of execution of such agreement or arrangement.
Section 7.03 Insurance and Financial Arrangements. The corporation may,
unless prohibited by Nevada Law, purchase and maintain insurance or make other
financial arrangements ("Financial Arrangements") on behalf of any Indemnitee
for any liability asserted against him and liability and expenses incurred by
him in his capacity as a director, officer, employee or agent, or arising out
of his status as such, whether or not the corporation has the authority to
15
indemnify him against such liability and expenses. Such other Financial
Arrangements may include (i) the creation of a trust fund, (ii) the
establishment of a program of self-insurance, (iii) the securing of the
corporation's obligation of indemnification by granting a security interest or
other lien on any assets of the corporation, or (iv) the establishment of a
letter of credit, guaranty or surety.
Section 7.04 Definitions. For purposes of this Article:
Expenses. The word "Expenses" shall be broadly construed and,
without limitation, means (i) all direct and indirect costs incurred, paid or
accrued, (ii) all attorneys' fees, retainers, court costs, transcripts, fees
of experts, witness fees, travel expenses, food and lodging expenses while
traveling, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service, freight or other transportation fees and expenses,
(iii) all other disbursements and out-of-pocket expenses, (iv) amounts paid in
settlement, to the extent permitted by Nevada Law, and (v) reasonable
compensation for time spent by the Indemnitee for which he is otherwise not
compensated by the corporation or any third party, actually and reasonably
incurred in connection with either the appearance at or investigation,
defense, settlement or appeal of a Proceeding or establishing or enforcing a
right to indemnification under any agreement or arrangement, this Article, the
Nevada Law or otherwise; provided, however, that "Expenses" shall not include
any judgments or fines or excise taxes or penalties imposed under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or other excise
taxes or penalties.
Liabilities. "Liabilities" means liabilities of any type
whatsoever, including, but not limited to, judgments or fines, ERISA or other
excise taxes and penalties, and amounts paid in settlement.
Nevada Law. "Nevada Law" means Chapter 78 of the Nevada Revised
Statutes as amended and in effect from time to time or any successor or other
statutes of Nevada having similar import and effect.
This Article. "This Article" means Paragraphs 7.01 through 7.04 of
these By-Laws or any portion of them.
Power of Stockholders. Paragraphs 7.01 through 7.04, including this
Paragraph, of these By-Laws may be amended by the stockholders only by vote of
the holders of sixty-six and two-thirds percent (66 2/3%) of the entire number
of shares of each class, voting separately, of the outstanding capital stock
of the corporation (even though the right of any class to vote is otherwise
restricted or denied); provided, however, no amendment or repeal of this
Article shall adversely affect any right of any Indemnitee existing at the
time such amendment or repeal becomes effective.
Power of Directors. Paragraphs 7.01 through 7.04 and this Paragraph
of these By-Laws may be amended or repealed by the Board of Directors only by
vote of eighty percent (80%) of the total number of Directors and the holders
16
of sixty-six and two-thirds percent (66 2/3) of the entire number of shares
of each class, voting separately, of the outstanding capital stock of the
corporation (even though the right of any class to vote is otherwise
restricted or denied); provided, however, no amendment or repeal of this
Article shall adversely affect any right of any Indemnitee existing at the
time such amendment or repeal becomes effective.
ARTICLE VIII
BY-LAWS
Section 8.01 Amendment. Amendments and changes of these By-Laws may be
made at any regular or special meeting of the Board of Directors by a vote of
not less than all of the entire Board, or may be made by a vote of, or a
consent in writing signed by the holders of a majority of the issued and
outstanding capital stock.
Section 8.02 Additional By-Laws. Additional by-laws not inconsistent
herewith may be adopted by the Board of Directors at any meeting of the Board
of Directors at which a quorum is present by an affirmative vote of a majority
of the directors present or by the unanimous consent of the Board of Directors
in accordance with Section 2.11 of these By-laws.
CERTIFICATION
I, the undersigned, being the duly elected secretary of the Corporation,
do hereby certify that the foregoing By-laws were adopted by the Board of
Directors on the 18th day of November 1997.
/S/SANDRA RAMIREZ, SECRETARY
Sandra Ramirez, Secretary
17
(in form of certificate, two-sided)
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
Number_________ Shares _________
CUSIP NO. 835915 10 9
SOURCE ONE, INCORPORATED
25,000,000 Authorized Shares
$.001 Par Value
Non-Assessable
THIS CERTIFIES THAT_____________________________________________________
IS THE RECORD HOLDER OF _______________________ Shares of SOURCE ONE,
INCORPORATED Common Stock transferrable on the books of the Corporation in
person or by duly authorized attorney upon surrender of this Certificate
properly endorsed. This Certificate is not valid until countersigned by the
Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:___________________
(seal as follows: "Source One, Incorporated, Corporate Seal, Nevada")
/s/ SANDRA RAMIREZ /s/ MIGNON M. CARDENAS
Secretary President
Countersigned and Registered
Silver State Registrar
P.O. Box 17985 Salt Lake City, Utah 84117
By:____________________________________
Authorized Signature
<PAGE>
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received,________________ hereby sell, assign and transfer unto
Please insert social security or
other identifying number of assignee
______________________
- ----------------------------------------------------------------------------
(Please print or typewrite name and address, including zip code, of assignee)
____________________________________________________________________________
____________________________________________________________________________
_____________________________________________________________________ Shares
of the capital stock represented by the within certificate, and do hereby
irrevocably constitute and appoint __________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated______________________
____________________________________________________
NOTICE: Signature must correspond to the name as written upon the face of this
certificate in every particular, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank, broker or any other
eligible guarantor institution that is authorized to do so under the Securities
Transfer Agents Medallion Program (STAMP) under rules promulgated by the U.S.
Securities and Exchange Commission.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
FINANCIAL STATEMENT DATED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001051353
<NAME> SOURCE ONE INCORPORATED
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 9,953
<SECURITIES> 0
<RECEIVABLES> 3,357
<ALLOWANCES> 0
<INVENTORY> 3,886
<CURRENT-ASSETS> 10,933
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,886
<CURRENT-LIABILITIES> 1,261
<BONDS> 0
0
0
<COMMON> 11,292
<OTHER-SE> 8,333
<TOTAL-LIABILITY-AND-EQUITY> 20,886
<SALES> 15,801
<TOTAL-REVENUES> 15,801
<CGS> 10,755
<TOTAL-COSTS> 10,755
<OTHER-EXPENSES> 7,348
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,302)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,302)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,302)
<EPS-BASIC> (.000)
<EPS-DILUTED> (.000)
</TABLE>
