SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
ENVIROKARE TECH, INC.,
A Nevada corporation
(Exact name of registrant as specified in its charter)
NEVADA 880412549
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
2470 Chandler, Suite 5, Las Vegas, Nevada 89120
(Address of registrant's principal executive offices) (Zip Code)
702.262.1999
(Registrant's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of Each Exchange on which
to be so registered: each class is to be registered:
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par Value $.001
(Title of Class)
Copies to:
Thomas E. Stepp, Jr.
Stepp & Beauchamp LLP
Attorneys-at-Law
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
Page 1 of 60
Exhibit Index is specified on Page 13
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Envirokare Tech, Inc.,
A Nevada corporation
Index to Form 10-SB Registration Statement
Item Number and Caption Page
- ----------------------- ----
1. Description of Business 3
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
3. Description of Property 8
4. Security Ownership of Certain Beneficial Owners
and Management 8
5. Directors, Executive Officers, Promoters and
Control Persons 9
6. Executive Compensation - Remuneration of Directors
and Officers 10
7. Certain Relationships and Related Transactions 10
8. Legal Proceedings 11
9. Market for Common Equity and Related Shareholder
Matters 11
10. Recent Sales of Unregistered Securities 11
11. Description of Securities 12
12. Indemnification of Officers and Directors 12
13. Financial Statements 13
14. Changes in and Disagreements with Accountants 13
15. Financial Statements and Exhibits
15(a) Index to Financial Statements 13
Financial Statements F-1 through F-9
15(b) Index to Exhibits 13
Exhibits E-1 through E-38
Signatures 15
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Item 1. Description of Business.
Development of the Company. Envirokare Tech, Inc., ("Company") was
incorporated under the laws of the State of Nevada on June 15, 1998. The
executive offices of the Company are located at 2470 Chandler, Suite 5, Las
Vegas, Nevada 89120. The Pallet recycling plant is currently located at #4 Kebet
Way, Port Coquitlam, British Columbia, Canada. The Company's telephone number in
Nevada is 702.262.1999. The Company's phone number in Canada is 604.942.2201.
Business of the Company. The Company was originally incorporated for the
purposes of researching and developing techniques for effective environmental
waste management. Although remaining interested in the waste management field,
the Company has nonetheless directed its attention and assets to acquiring
existing technology to allow the Company to enter into the pallet manufacturing
business.
On or about December 15, 1998, the Company purchased certain assets,
including, but not limited to, all of the equipment, rubber molds technology and
the rights to a pending patent for the development of a pallet made of recycled
materials from Real Morel, a businessman operating International Pallet Control
Systems Inc., a private Canadian company ("International Pallet") and The Pallet
Company, a private Canadian company (the "Pallet Company"). Mr. Morel has
accepted a position with the Company as a consultant to provide knowledge and
expertise for the development of the Company's anticipated pallet manufacturing
activities.
In or about 1996, the Pallet Company began researching and testing the
materials necessary to manufacture a rubber pallet (the "Pallet"). After more
than two years of research, the Pallet Company developed molded rubber
technology that creates a molded pallet by mixing granulated rubber from
recycled tires (commonly, referred to as "crumb rubber") with recycled plastics.
The Company believes that the finished product will meet the requirements of
most pallet users. Currently, more than forty prototypes of the Pallet are being
field tested. The Pallet Company has enlisted the services of a press and mold
manufacturer to supply the appropriate facilities to manufacture the Pallet.
The Pallet is produced by using recycled products. The manufacture of the
Pallet begins with the removal of tires from landfills and includes the eventual
recycling of used Pallets, significantly reducing the need to send old Pallets
to landfills. The Pallet is currently manufactured in three main designs: (i)
the "Journeyman", a one piece pallet produced in a standard pallet size of 48
inches by 40 inches; (ii) the "Nomad V", also manufactured in one lightweight
piece; and (iii) the "Roamer", designed to be dissembled after use to promote
the economical use of space. All of the Pallets are molded from strong, elastic
heated crumb rubber. The simplest Pallet is molded as a single piece. The other
models are assembled using U-bolts or bonded rubber plugs from a minimum number
of molded parts. The one-piece versions of the Pallet emphasize durability,
while the multi-piece models are lighter and more versatile.
The Company believes that the rubber Pallet has advantages over traditional
wood pallets. The Pallet is designed to resist damage, has a non-slip surface,
convenient hand-holds and is designed to handle large loads when evenly loaded.
Moreover, the Company anticipates that it will be able to produce, and sell, the
Pallet at a lower price than plastic or metal pallets. The Pallet is designed to
have a standard 48-inch by 40-inch surface, similar in shape and size to the
conventional wood and plastic pallets. The main advantage of the Pallet is that
it is constructed primarily from used tires, a resource that was, until
recently, considered merely another pollution problem. Moreover, when a Pallet
finally wears out, it can be recycled into a new Pallet.
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In the event any domestic or foreign regulatory agency requires approval
and testing of the Pallet prior to its commercial exploitation, the Company
cannot provide any assurance that testing procedures will be successfully
completed or, if completed, such tests will demonstrate that the Pallet meets
the required guidelines. There can also be no assurance that any required
governmental approvals will be obtained. Accordingly, there can be no assurance
that the Company will be able to market the Pallet in the United States or any
foreign country. The same is true for any other products that the Company may
develop. Any failure by the Company or its collaborators or licensees to obtain
any required regulatory approvals or licenses would adversely affect the ability
of the Company to market its products and would have a significant adverse
affect on the Company's revenues.
Employees. The Company currently has no employees. The Company has also
entered into a consulting agreement with Mr. Morel pursuant to which Mr. Morel
has agreed to provide month to month consulting services to the Company.
Management of the Company anticipates using consultants for business, accounting
and engineering services on an as-needed basis.
Competition. The Company currently faces significant competition with
respect to the Pallet, and this competition may increase as new competitors
enter the market. Competition consists mainly of small, single-location pallet
companies with limited resources; however, there are several large pallet
manufacturing and distribution companies. Many of the current pallet
manufacturers produce either wooden or plastic pallets. Several of these
manufacturers have longer operating histories and greater financial, marketing
and other resources than the Company. With respect to all of the Company's
products, there can be no assurance that the Company will be able to compete
successfully with existing or new entrant companies. In addition, new product
introductions or enhancements by the Company's competitors could cause a decline
in sales or loss of market acceptance of the Company's existing products.
Increased competition could also result in intensified price-based competition
resulting in lower prices and profit margins. Such increased competition could
result in lower prices and profit margins could adversely affect the Company's
business and results of operations.
The strategy of the Company for growth is substantially dependent upon its
ability to market and distribute its products successfully. Other companies,
including those with substantially greater financial, marketing and sales
resources, compete with the Company, and have the advantage of marketing
existing products with existing production and distribution facilities. There
can be no assurance that the Company will be able to market and distribute
products on acceptable terms, or at all. Failure of the Company to market its
products successfully could have a material adverse effect on the Company's
business, financial condition or results of operations.
The strategy of the Company for growth may be substantially dependent upon
its ability to expand into new markets. Accordingly, the ability of the Company
to compete may be dependent upon the ability of the Company to continually
enhance and improve its products and/or manufacturing methods. There can be no
assurance that competitors will not develop technologies or products that render
the products of the Company obsolete or less marketable. The Company may be
required to adapt to technological changes in the industry and develop products
to satisfy evolving industry or customer requirements, any of which could
require the expenditure of significant funds and resources, and the Company does
not have a source or commitment for any such funds and resources. The Company
might be required to refine and improve its products. Continued refinement and
improvement efforts remain subject to the risks inherent in product development,
including unanticipated technical or other problems which could result in
material delays in product commercialization or significantly increase costs.
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Compliance with Environmental Laws. The Company has not been materially
impacted by existing government regulation, as the Company is not presently
manufacturing any products. The Company recognizes, however, that its products
and business may be significantly influenced by constantly changing
environmental laws and regulations, which require that certain environmental
standards be met and impose liability for the failure to comply with such
standards. While the Company anticipates taking significant steps to comply with
all applicable environmental laws and regulations, there can be no assurance
that the Company's operations or activities, or historical operations by others
at the Company's locations, will not result in civil or criminal enforcement
actions or private actions that could have a materially adverse effect on the
Company. The Company's costs in complying with environmental laws to date have
been negligible.
Manufacturing processes requiring the use of rubber sometimes require the
use of hazardous solvents in those production processes and result in the
disposal of waste products, such as used solvents. Such manufacturing processes
could subject the Company to Canadian laws and United States federal, state and
local laws and regulations governing the generation, handling, storage,
transportation, treatment and disposal of hazardous wastes. Pursuant to such
laws, a lessee or owner of real property may be liable for, among other things,
(i) the costs of removal or remediation of certain hazardous or toxic substances
located on, in or emanating from, such property, as well as related costs of
investigation and property damage and substantial penalties for violations of
such laws, and (ii) environmental contamination at facilities where its waste is
or has been disposed. Such laws often impose such liability without regard to
whether the owner or lessee knows of, or was responsible for, the presence of
such hazardous or toxic substances. While the Company's operations, to the best
of its knowledge, are in full compliance with all existing laws and regulations,
environmental legislation and regulations have changed rapidly in recent years,
and the Company cannot predict what, if any, impact future changes in such
legislation may have on the Company's liability for past actions that were
lawful at the time taken. As in the case with manufacturing companies in
general, if damage to persons or the environment has been caused, or is in the
future caused, by the Company's use of hazardous solvents or by other hazardous
substances located at the Company's facilities, the Company may be fined or held
liable for the cost of remedying such damage. The levying of such fines or the
imposition of liability may have a material adverse effect on the Company's
business, financial condition and results of operations. Further, changes in
environmental regulations in the future may require the Company to make
significant capital expenditures to change methods of disposal of hazardous
solvents or otherwise alter aspects of its operations.
The Company's management believes that no toxic or hazardous materials will
be byproducts of the manufacturing processes of the Pallet; accordingly,
management of the Company believes that the Company will not have material
expenditures related to the cost of compliance with applicable environmental
laws, rules or regulations. The Company believes that it is presently in
compliance with all applicable federal, state and local environmental laws,
rules and regulations. In the future, the Company may be subject to various laws
and regulations governing the use, manufacture, storage, handling, and disposal
of toxic materials and certain waste products. The risk of accidental
contamination or injury from hazardous materials cannot be completely
eliminated. In the event of such an accident, the Company could be held liable
for any damages that result and any such liability could exceed the financial
resources of the Company. In addition, there can be no assurance that in the
future the Company will not be required to incur significant costs to comply
with environmental laws and regulations relating to hazardous materials. The
Company cannot estimate the potential costs of complying with local, state, and
federal environmental laws.
Reports to Security Holders. The Company will become a reporting issuer
with the Securities and Exchange Commission ("SEC") when this Form 10-SB is
effective and will be obligated to provide an annual report to its security
holders, which will include audited financial statements. The public may read
and copy
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any materials filed with the SEC at the SEC's Public Reference Room at 450 Fifth
Street N.W., Washington, D.C. 20549. The public may also obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC. The address of that site is http://www.sec.gov. The Company does
not currently maintain its own Internet address.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Pallets are base components for most packaging which allows goods to be
transported or warehoused economically by providing a foundation which enables
the use of forklifts and vertical storage. Most commonly associated with a
four-foot square wood platform, pallets are also engineered from other materials
and in varying dimensions. Pallets are key factors in worldwide retail and
industrial distribution. The pallet industry is considered part of the overall
transportation packaging industry and is critical to global commerce. Almost
every item manufactured or processed is shipped or stored on pallets as it is
packaged for distribution. The pallet industry in North America has grown into a
billion dollar business. The industry is characterized by many small, localized,
and/or specialized companies that usually have an operational radius of less
than 100 miles, none of which individually has any appreciable market impact.
The primary industry users of pallets are those that deal in (i) food and
beverages; (ii) paper and fiber; (iii) steel and metal; (iv) automotive; (v)
chemicals and fluid; and (vi) printing.
The Company is negotiating with an international press and mold
manufacturer to supply the appropriate mold for the Company's production
facility. The Company anticipates that its new molded-rubber technology may
capture a small but significant portion of the North American pallet market
during the next few years. The Company believes that there is an increasing
demand for alternate material pallets.
The storage of used tires has become an ever-growing problem. Some
governments have instituted programs to encourage the use of used tire rubber.
One such jurisdiction is the province of British Columbia, Canada which offers
grants to companies that find uses for used tires. Millions of scrap tires are
being recycled annually in Canada. Only two Canadian provinces, Ontario and
Newfoundland, do not have stewardship programs for scrap tires. Various
jurisdictions are also enacting laws aimed at addressing the problem of waste
tire storage. California has fines anywhere from $500 to $10,000 per day for
each violation of its tire storage laws, including imprisonment in some
circumstances. California, as other jurisdictions, supplements the cost of
storing used tires by charging consumers a $.25 per tire fee. Moreover, Arizona
passed a bill in early 1998 that provides incentives for tire recycling.
Oklahoma and Colorado have also passed similar laws. In total, 48 states have
laws regarding scrap tire management. The Company believes that the environment
is appropriate for profitable rubber recycling.
The Company anticipates that its manufacturing processes will produce
significant amounts of crumb rubber, differing in grade and price per pound. The
Company anticipates that the crumb rubber not used to manufacture the Pallet
will be sold as crumb rubber. The major producers of crumb rubber in the United
States are Baker Rubber, EnviroTire, Rouse Rubber and Recovery Technologies. The
Company anticipates that with the cost of rubber increasing during the past five
years, the demand for crumb rubber will increase. Crumb rubber is currently used
for the construction of athletic fields, roadfill, landfill, filler in new
tires, engineering applications and agricultural applications. The Company
anticipates that new and innovative uses for the worlds excess of discarded
tires will continue to be developed.
The Company recognizes that there are certain risks beyond its control that
may have a material effect
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on the Company's business. Some of the possible risks are (i) the price of
natural and synthetic rubber will decline to crumb rubber levels, thereby
eliminating the need for crumb rubber; (ii) government legislation prohibiting
the use of crumb rubber in all products; (iii) market resistance to recycled
materials; (iv) introduction of new, more sophisticated, methods of tire
recycling equipment rendering the Company's system obsolete; and (v) many more
tire recycling companies entering the market lowering the price of crumb rubber
and eliminating tipping fees.
Impact of the Year 2000. The Company anticipates that the Year 2000 ("Y2K")
could impact the business of the Company. Many business software programs use
only the last two digits to indicate the applicable year. Unless these programs
are modified, computers running time-sensitive software may be unable to
distinguish between the year 1900 and the year 2000, resulting in system
failures or miscalculations and disruptions of operations, including, among
other things, a temporary inability to process transactions or engage in other
normal business activities. Many Y2K problems might not be readily apparent when
they first occur, but instead could imperceptibly degrade technology systems and
corrupt information stored in computerized databases, in some cases before
January 1, 2000.
In order to improve operating performance and meet Y2K compliance, the
Company anticipates it will undertake a number of significant computer systems
initiatives. The Company has determined that the incremental cost of ensuring
that its computer systems are Y2K compliant is not expected to have a material
adverse impact on the Company. The Company anticipates completing a preliminary
assessment of each of its operations and their Y2K readiness and feels that the
appropriate actions will be taken. The Company has determined that, with
modifications to existing software and conversions to new computer systems, the
Y2K issue will not pose significant operational problems for its computer
systems. The Company recognizes, however, that if such modifications are not
completed, the Y2K issue could have a material impact on the operations of the
Company. The Company has determined that, at this time, none of the Company's
production processes or technology systems are computer controlled. However, the
Company does recognize that its manufacturing processes will eventually be,
either partially or completely, controlled by computers. The Company anticipates
that the computer processes it utilizes will be Y2K compliant. The Company
anticipates the initiation of formal communications with a number of its
prospective suppliers to determine the extent to which the Company's computer
systems are vulnerable to those third parties' failure to remedy their own Y2K
issues, and anticipates it will initiate similar communications with prospective
customers in 1999. There is no guarantee that the systems of other companies on
which the Company's computer systems rely will be timely converted and will not
have an adverse effect on the Company's computer systems.
Liquidity and Capital Resources. As a point of clarification, as used in
this Registration Statement the word "Dollars" and the symbol "$" means and
refers to the currency of the United States of America, unless otherwise stated.
As used in this Registration Statement the term "CDN$" means and refers to the
currency of Canada, in Canadian dollars. At December 31, 1998, the Company had
cash on hand of $2,388.
Results of Operations. The Company has not yet realized any revenue from
operations.
Manufacturing and Marketing the Company's Products. The Company anticipates
that it will obtain a majority of the resources necessary for the manufacture of
the Pallet from tire dumps. The Company believes that the manufacturing process
will consume four tires per Pallet.
Initially, the Company will focus on establishing a market niche for the
Pallet. Until the demand for the Pallet meets the Company's production of crumb
rubber, the Company anticipates that it will sell the excess crumb rubber to
various manufacturers in need of such a product. The Company hopes that within
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4 years it will be producing 1.25 million pallets a year, with an initial focus
on distribution in western North America, eventually expanding into the central
and eastern regions.
The Company anticipates that it will initially target industries which
traditionally use pallets to transport their products, such as (i) brick; (ii)
stone; (iii) beverage; (iv) automotive; and (v) construction. Initial marketing
efforts will be concentrated in (i) public demonstration samples sent to large
users; (ii) trade shows and testimonials of actual customers; (iii) promotion
with environmental and recycling groups; (iv) press releases; and (v) extensive
research and development for other applications.
Proposed Production Facilities. The majority of the Company's manufacturing
activities will be completed on site by the use of removable prefabricated crumb
rubber and pallet molding plants; thereby conserving the fuel usually expended
moving the resources from one place to another.
Item 3. Description of Property
Property held by the Company. As of the date specified in the following
table, the Company held the following property with the following values:
============================================================
Property December 31, 1998
- ------------------------------------------------------------
Furniture and fixtures $ 1,014
- ------------------------------------------------------------
Office Equipment $ 2,645
- ------------------------------------------------------------
Cash $ 2,388
- ------------------------------------------------------------
Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners. There are no persons
or entities who are currently beneficial owners of 5% or more of the Company's
issued and outstanding common stock:
(b) Security Ownership of Management. The directors and principal executive
officers of the Company beneficially own, in the aggregate, 185,000 shares of
the Company's common stock, or approximately 3.7% of the issued and outstanding
shares, as set forth on the following table:
Title of Class Name and Address Number of shares Percent of
- -------------- of Beneficial Owner and Nature of Class
------------------- Beneficial Owner ----------
----------------
Common Stock Jeannie M. Runnalls 105,000 shares 2.1%
1309 Una Way
Port Coquitlam Vice President
B.C., Canada V3C2V1 Director
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Common Stock Richard Lee Dalon 25,000 shares .5%
310 Village Bay Road
Mayne Island
British Columbia, Canada Chief Financial Officer
V0N2J0 Director
Common Stock Charles W. Thomas 55,000 shares 1.1%
1160 Forum Veneto Drive
Henderson, Nevada President, Secretary
89102 Treasurer, Director
Changes in Control. Management of the Company is not aware of any
arrangements which may result in "changes in control" as that term is defined by
the provisions of Item 403(c) of Regulation S-B.
Item 5. Directors, Executive Officers, Promoters and Control Persons
The directors and principal executive officers of the Company are as
specified on the following table:
================================================================================
Name Age Position
- --------------------------------------------------------------------------------
Charles W. Thomas 66 President, Secretary, Treasurer and Director
- --------------------------------------------------------------------------------
Richard L. Dalon 59 Chief Financial Officer and Director
- --------------------------------------------------------------------------------
Jeannie M. Runnalls 50 Vice President and Director
================================================================================
Charles W. Thomas was the president of Say Yes Foods, Inc. from January
1997 through October 1998, and the secretary of that corporation from February,
1996 through January, 1997. He served as president of Exec-U-Forms from 1984 to
1986 and vice president of that company from May 1986 to December 1994. Mr.
Thomas was the owner and operator of Thomas Service from 1961 through 1983 and
the president and administrator of E.U.F. Investments from 1989 through 1994. He
is currently the president, secretary, treasurer, and a director of the Company.
Richard L. Dalon served as principal of RLD & Associates from 1994 through
1999. He served as president of MRC of the North Shore Ltd. from 1994 through
1996. From 1992 through 1994 he served as chief executive officer of the Legal
Services Society of British Columbia. Mr. Dalon was deputy minister of the
Government of British Columbia Ministry of Environment from 1988 through 1991.
He served as director general of the Federal Government of Canada Department of
Indian and Northern Affairs from 1986 through 1988. From 1985 through 1986 he
served as assistant deputy minister of the Government of Alberta Department of
Adult Education. Mr. Dalon served as executive director of the Government of
Alberta Department of Intergovernment Affairs from 1974 through 1985. In 1968
Mr. Dalon obtained a Bachelor of Arts in Philosophy from Wilkes College. He
obtained a Masters Degree in Philosophy from the University of Alberta in 1970.
In 1974, Mr. Dalon also obtained an Advanced Management Certificate from the
Banff School of Advanced Management. He is currently the chief financial officer
and a director of the Company.
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Jeannie M. Runnalls served as general manager and owner of Taumus
Enterprises, Cave Supper Club Ltd., and International Artists from October 1977
through November 1993. From November 1993 to August 1997, she served as general
manager of operations at the Pallet Factory. From August 1997 through March
1999, she was owner and operator of Pallet Control Systems. In 1967, Ms.
Runnalls studied business at the Vancouver Vocational Institute. She was
appointed Vice President of Administration of the Company in March 1999.
None of the persons specified above share any familial relationship. Other
than the persons specified above, there are no significant employees expected by
the Company to make a significant contribution to the business of the Company.
All directors of the Company serve until the next annual meeting of
stockholders. The Company's executive officers are appointed by the Company's
Board of Directors and serve at the discretion of the Board of Directors.
There are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining Mr. Thomas, Mr. Dalon or Ms. Runnalls from engaging in or continuing
any conduct, practice or employment in connection with the purchase or sale of
securities, or convicting such person of any felony or misdemeanor involving a
security, or any aspect of the securities business, or of theft or of any
felony, nor are Mr. Thomas, Mr. Dalon or Ms. Runnalls the officers or directors
of any corporation or entity so enjoined.
Item 6. Executive Compensation - Remuneration of Directors and Officers.
================================================================================
Name of individual or Capacities in which Aggregate
Identity of Group Remuneration was received Remuneration
- --------------------------------------------------------------------------------
All Executive Officers None None
================================================================================
None of the executive officers or directors of the Company, including the
Chief Executive Officer, currently earn either compensation or remuneration from
the Company for services provided in their official capacities. However, when
Richard Dalon was appointed Chief Financial Officer, it was with the
understanding that he would, at some point, receive compensation for his
services as Chief Financial Officer of the Company. The Company and Mr. Dalon
have yet to finalize the details of such compensation.
Item 7. Certain Relationships and Related Transactions
Transactions with Promoters. There were no transactions with promoters.
Related Party Transactions. As specified above, on or about December 15,
1998, the Company purchased certain assets, including, but not limited to, all
of the equipment, rubber molds technology and the rights to a pending patent for
the development of a pallet made of recycled materials from Real Morel of
International Pallet and The Pallet Company. The Company's obligation to Mr.
Morel is evidenced by a series of unsecured notes payable in favor of Real Morel
totaling CDN$61,965, with interest accruing at 10% per annum. At the time of the
transaction, Mr. Morel operated both International Pallet and the Pallet
Company. At the time of the transaction, Jeannie Runnalls, current vice
president and a director of the Company, was the office manager of International
Pallet.
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On November 1, 1998, the Company entered into a management services
agreement with Madelyn Thomas. According to the terms of that agreement, Mrs.
Thomas is to receive $5,000 per month for the term of the contract which by its
own terms will terminate on October 31, 1999. The consulting agreement also
provides for indemnification against any and all liability for services rendered
to the Company as a consultant, as well as providing for reimbursement of all
expenses incurred on the Company's behalf, with a right of approval by the
Company's Board of Directors for any amount exceeding $5,000. The consulting
agreement states that it may be terminated upon thirty (30) days written notice
by either party. At the time the consulting agreement was entered into, Mrs.
Thomas's husband, Charles W. Thomas, was the president, secretary, treasurer and
a director of the Company.
Item 8. Legal Proceedings
There are no legal actions pending against the Company nor are any such
legal actions contemplated.
Item 9. Market for Common Equity and Related Stockholder Matters
There is currently no market for the Company's common stock, although the
Company anticipates applying to participate in the OTC Bulletin Board Electronic
Quotation System maintained by the National Association of Securities Dealers,
Inc.
On February 22, 1999, the Company effected a reverse stock split of one
share of common stock for every two shares held, reducing the Company's issued
and outstanding common stock from 10,000,000 to 5,000,000 shares.
As of April 21, 1999, there were approximately 96 holders of the Company's
common stock. There have been no cash dividends declared on the Company's common
stock in the last two fiscal years. Dividends are declared at the sole
discretion of the Company's Board of Directors.
Item 10. Recent Sales of Unregistered Securities
There have been no sales of unregistered securities within the last three
(3) years which would be required to be disclosed pursuant to Item 701 of
Regulation S-B, except for the following:
On or about June 16, 1998, the Company sold 10,000,000 shares of its $0.001
par value common stock for $0.001 per share. The shares were issued in reliance
upon the exemption from the registration requirements of the Securities Act of
1933 ("Act") specified by the provisions of Section 3(b) of the Act and Rule 504
of Regulation D promulgated by the Securities and Exchange Commission pursuant
to that Section 3(b). The offering price for the shares was arbitrarily
established by the Company and had no relationship to assets, book value,
revenues or other established criteria of value. The Company realized proceeds
of $10,000. The proceeds of the offering were used to pay for organizational
fees and provide working capital.
On or about March 15, 1999, the Company sold 76,540 shares of its $0.001
par value common stock for $.50 per share. The shares were issued in reliance
upon the exemption from the registration requirements of the Act specified by
the provisions of Section 3(b) of the Act and Rule 504 of Regulation D
promulgated by the Securities and Exchange Commission pursuant to that Section
3(b). The offering price for the shares was arbitrarily established by the
Company and had no relationship to assets, book value, revenues or other
established criteria of value. The Company realized proceeds of $38,270. The
proceeds of the offering were used to pay for organizational fees and provide
working capital.
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Item 11. Description of Securities
The Company is authorized to issue 200,000,000 shares of common stock, with
a stated par value of $.001, each share of common stock having equal rights and
preferences, including voting privileges. As of April 21, 1999, 5,076,540 shares
of the Company's common stock were issued and outstanding.
The shares of $.001 par value common stock of the Company constitute equity
interests in the Company entitling each shareholder to a pro rata share of cash
distributions made to shareholders, including dividend payments. The holders of
the Company's common stock are entitled to one vote for each share of record on
all matters to be voted on by shareholders. There is no cumulative voting with
respect to the election of directors of the Company or any other matter, with
the result that the holders of more than 50% of the shares voted for the
election of those directors can elect all of the Directors. The holders of the
Company's common stock are entitled to receive dividends when, as and if
declared by the Company's Board of Directors from funds legally available
therefor; provided, however, that cash dividends are at the sole discretion of
the Company's Board of Directors. In the event of liquidation, dissolution or
winding up of the Company, the holders of common stock are entitled to share
ratably in all assets remaining available for distribution to them after payment
of liabilities of the Company and after provision has been made for each class
of stock, if any, having preference in relation to the Company's common stock.
Holders of the shares of the Company's common stock have no conversion,
preemptive or other subscription rights, and there are no redemption provisions
applicable to the Company's common stock. All of the outstanding shares of the
Company's common stock are duly authorized, validly issued, fully paid and
non-assessable.
Item 12. Indemnification of Directors and Officers
Currently, there are no provisions in either the Company's Articles of
Incorporation or the Company's Bylaws which provide for the indemnification of
officers and directors from personal liability to the Company or any of its
stockholders for monetary damage for any breach or alleged breach of fiduciary
or professional duty by such person acting in such capacity. The Company
anticipates that it will amend the Company's Articles of Incorporation in order
to provide for such indemnification. Notwithstanding the foregoing, a person who
would be benefitted by the anticipated amendments to the Company's Articles of
Incorporation shall still be liable to the extent provided by applicable law for
acts or omissions which involve intentional misconduct, fraud or a knowing
violation of law, or for the payment of dividends in violation of Nevada Revised
Statutes Section 78.300.
The Company anticipates that it will enter into indemnification agreements
with each of its directors and executive officers pursuant to which the Company
agrees to indemnify each such director and executive officer for all expenses
and liabilities, including criminal monetary judgments, penalties and fines,
incurred by such director and officer in connection with any criminal or civil
action brought or threatened against such director or officer by reason of such
person being or having been an officer or director of the Company. In order to
be entitled to indemnification by the Company, such person must have acted in
good faith and in a manner such officer or director believed to be in the best
interests of the Company and, with respect to criminal actions, the officer or
director must have had no reasonable cause to believe his or her conduct was
unlawful.
12
<PAGE>
IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, INDEMNIFICATION
FOR LIABILITIES ARISING PURSUANT TO THE SECURITIES ACT OF 1933 IS CONTRARY TO
PUBLIC POLICY AND, THEREFORE, UNENFORCEABLE.
Item 13. Financial Statements
Copies of the Company's Financial Statements specified in Regulation
228.310 (Item 310) are filed with this Registration Statement, Form 10-SB (see
Item 15 below).
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements with the Company's
accountants since the formation of the Company required to be disclosed pursuant
to Item 304 of Regulation S-B.
Item 15. Financial Statements and Exhibits
(a) Index to Financial Statements. Page
Independent Auditor's Report F-1
Balance Sheets as of December 31, 1998 F-2
Statement of Operations as of December 31, 1998 F-3
Statement of Shareholders' Equity
for the period ending December 31, 1998 F-4
Statement of Cash Flows for the period ending December 31, 1998 F-5
Notes to Financial Statements F-6 through F-9
(b) Index to Exhibits.
Copies of the following documents are filed with this Registration
Statement, Form 10-SB as exhibits:
Index to Exhibits Page
- ----------------- ----
1 Corporate Charter of E-1
Envirokare Tech, Inc.
(Charter Document)
2 Articles of Incorporation of E-2 through E-4
Envirokare Tech, Inc.
3 Bylaws of Envirokare Tech, Inc. E-5 through E-16
(Instrument defining
the rights of Security holders)
13
<PAGE>
4 Assignment of Assets Agreement Between E-17 through E-29
the Company and Real Morel
5 Promissory Notes Executed by the E-30 through E-34
Company in Favor of Real Morel
6 Management Services Agreement E-35 through E-36
Between the Company and Susan Westfall
7 Management Services Agreement E-37 through E-38
Between the Company and Madelyn Thomas
14
<PAGE>
SIGNATURES
In accordance with the provisions of Section 12 of the Securities Exchange
Act of 1934, the Company has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Henderson, Nevada, on May 12, 1999.
Envirokare Tech, Inc.,
a Nevada corporation
By: /s/ Charles W. Thomas
-----------------------------
Charles W. Thomas
Its: President
15
<PAGE>
[LOGO] Williams & Webster, P.S.
CERTIFIED PUBLIC ACCOUNTANTS
Seafirst Financial Center 601 W. Riverside, Suite 1970 Spokane, WA
99201-0611
Phone: (509) 838-5111 * Fax: (509) 624-5001
Board of Directors
Envirokare Tech, Inc.
2470 Chandler, Suite 5
Las Vegas, Nevada 89120
Independent Auditor's Report
We have audited the accompanying balance sheet of Envirokare Tech, Inc. (a
development stage company) as of December 31, 1998 and the related statements of
operations and accumulated deficit, stockholders' equity and cash flows for the
period from June 15, 1998 (inception) to December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Envirokare Tech, Inc. as of
December 31, 1998, and the results of its operations and its cash flows for the
period from June 15, 1998 (inception) to December 31, 1998, in conformity with
generally accepted accounting principles.
As discussed in Note 2, the Company has been in the development stage since its
inception on June 15, 1998. Realization of a major portion of the assets is
dependent upon the Company's ability to meet its future financing requirements,
and the success of future operations. Management's plans regarding those matters
also are described in Note 2. These factors raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/ WILLIAMS & WEBSTER, P.S.
Williams & Webster, P.S.
Spokane, Washington
February 26, 1999
F-1
<PAGE>
ENVIROKARE TECH, INC.
(A Development Stage Company)
BALANCE SHEET
December 31, 1998
ASSETS
CURRENT ASSETS
Cash $ 2,388
Prepaid expenses 730
--------
TOTAL CURRENT ASSETS 3,118
--------
PROPERTY AND EQUIPMENT
Furniture and fixtures 1,014
Office equipment 2,645
Less accumulated depreciation (149)
--------
TOTAL PROPERTY AND EQUIPMENT 3,510
--------
OTHER ASSETS
Organizational costs, net of $865 amortization 7,782
Patent costs 33,330
--------
TOTAL OTHER ASSETS 41,112
--------
TOTAL ASSETS $ 47,740
========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable - short term $ 61,965
Accrued interest 573
Reimbursement due 1,847
--------
TOTAL CURRENT LIABILITIES 64,385
--------
COMMITMENTS AND CONTINGENCIES --
--------
STOCKHOLDERS' EQUITY
Common stock, 200,000,000 shares authorized,
$.001 par value; 10,000,000 shares issued and
outstanding 10,000
Accumulated deficit during developmental stage (26,645)
--------
TOTAL STOCKHOLDERS' EQUITY (16,645)
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 47,740
========
The accompanying notes are an integral part of these financial statements.
2
F-2
<PAGE>
ENVIROKARE TECH, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
For the Period Ended December 31, 1998
REVENUES $ --
------------
EXPENSES
Interest - notes payable 573
Office 876
Rent 2,920
Telephone and utilities 1,992
Transfer agent fees 1,353
Travel and hotel 1,081
Meals and entertainment 136
Depreciation and amortization 1,014
Consulting fees 16,700
------------
TOTAL EXPENSES 26,645
------------
NET LOSS FROM OPERATIONS (26,645)
ACCUMULATED DEFICIT, BEGINNING BALANCE --
------------
ACCUMULATED DEFICIT, ENDING BALANCE $ (26,645)
============
NET LOSS PER COMMON SHARE $ nil
============
WEIGHTED AVERAGE NUMBER OF
COMMON STOCK SHARES OUTSTANDING 10,000,000
============
The accompanying notes are an integral part of these financial statements.
3
F-3
<PAGE>
ENVIROKARE TECH, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the Period Ended December 31, 1998
<TABLE>
<CAPTION>
Common Stock
------------------------- Total
Number Accumulated Stockholders'
of Shares Amount Deficit Equity
---------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Issuance of common stock in June, 1998:
For cash at $.0Ol per share 10,000,000 $ 10,000 $ -- $ 10,000
Loss for period ending, December 31, 1998 (26,645) (26,645)
---------- ----------- ----------- -----------
Balance
December 31, 1998 10,000,000 $ 10,000 $ (26,645) $ (16,645)
========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
F-4
<PAGE>
ENVIROKARE TECH, INC.
STATEMENT OF CASH FLOWS
For the Period Ended December 31, 1998
Cash flows from operating activities:
Net loss $(26,645)
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation and amortization 1,014
Increase in prepaid expenses (730)
Increase in accrued interest 573
Expenses paid by note payable 2,870
--------
Net cash used by operating activities (22,918)
--------
Cash flows from investing activities:
Equipment (1,047)
Organizational costs (8,647)
--------
Net cash used in investing activities (9,694)
Cash flows from financing activities:
Proceeds from sale of Common Stock 10,000
Proceeds from issuance of notes payable 25,000
--------
Net cash provided by financing activities 35,000
--------
Increase in cash 2,388
--------
Cash, beginning of period --
--------
Cash, end of period $ 2,388
========
Interest paid --
========
Income taxes paid --
========
NON-CASH TRANSACTIONS
Note issued for purchase of property, equipment
and operating expenses $ 3,635
Note issued for pending patent $ 33,330
The accompanying notes are an integral part of these financial statements.
5
F-5
<PAGE>
ENVIROKARE TECH, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998
NOTE 1- ORGANIZATION AND DESCRIPTION OF BUSINESS
Envirokare Tech, Inc., (hereinafter "the Company"), was incorporated in June
1998 under the laws of the State of Nevada. In December 1998, the Company
acquired the property, assets and undertakings of a business manufacturing and
developing a rubber mold technology and rights to a pending patent for the
development of a pallet made of recycled materials. The Company is currently
developing marketing and manufacturing plans for the products acquired. The
Company maintains an office in Las Vegas, Nevada.
The Company is in the development stage, and as of December 31, 1998 had not
realized any significant revenues from its planned operations.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Envirokare Tech, Inc. is
presented to assist in understanding the Company's financial statements. The
financial statements and notes are representations of the Company's management
which is responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
Development Stage Activities
The Company has been in the development stage since its formation in June 1998.
It is primarily engaged in acquisition of a rubber mold technology and rights to
a pending patent for the development of pallets made of recycled materials.
Going Concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.
As shown in the accompanying financial statements, the Company incurred a net
loss of $26,645 for 1998. At December 31, 1998, current liabilities exceed
current assets by $61,267. The Company, being a developmental stage enterprise,
is currently putting technology in place which will, if successful, mitigate
these factors which raise substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might be necessary
in the event the Company cannot continue in existence.
The Company is currently reviewing its options to raise substantial equity
capital. Management is reviewing their options and will adopt a plan in 1999.
6
F-6
<PAGE>
ENVIROKARE TECH, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting.
Loss Per share
Loss per share was computed by dividing the net loss by the weighted average
number of shares outstanding during the period. The weighted average number of
shares was calculated by taking the number of shares outstanding and weighting
them by the amount of time that they were outstanding.
Cash and Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less to
be cash equivalents.
Provision for Taxes
At December 31, 1998, the Company had net operating loss of approximately
$26,645. No provision for taxes or tax benefit has been reported in the
financial statements, as there is not a measurable means of assessing future
profits or losses.
Use of Estimates
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues, and expenses. Such
estimates primarily relate to unsettled transactions and events as of the date
of the financial statements. Accordingly, upon settlement, actual results may
differ from estimated amounts.
7
F-7
<PAGE>
ENVIROKARE TECH, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998
NOTE 3- PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided using the
straight line method over the estimated useful lives of the assets. The useful
lives of property, plant and equipment for purposes of computing depreciation
are five and seven years. The following is a summary of property, equipment and
accumulated depreciation.
Accumulated
Cost Depreciation
Furniture and Fixtures $1,014 $ 50
Office Equipment 2,645 99
------ ----
$3,659 $149
====== ====
NOTE 4 - INTANGIBLE ASSETS
During the period ended December 31, 1998, Envirokare, Tech, Inc. incurred
organization costs of $8,647. These organization costs are being amortized over
the useful life of sixty months beginning July 1, 1998. During the period ending
December 31, 1998, $865 was recorded as amortization of organization costs. The
patent pending was acquired in December 1998 from Real Morel, a board member of
the Company, and his affiliated companies of International Pallet Control
Systems Inc. and The Pallet Company. The patent cost is not being amortized,
since the final patent has yet to be issued. Amortization will begin when the
final patent is granted. If the Company does not obtain the patent, these costs
of acquiring the patent rights from its originator will be charged to
operations.
NOTE 5 - DETAILS OF SHORT-TERM DEBT
Short-term notes payable at December 31, 1998 of $61,965 consist of unsecured
notes bearing no interest from a related party (See Notes 4 and 7).
NOTE 6 - COMMON STOCK
Upon incorporation, 10,000,000 shares of common stock were sold at $.00l per
share under Regulation D, Rule 504. At year's end, the stock was held by 30
shareholders, none of whom held in excess of ten percent of the stock. On
February 22, 1999, the Company completed a reversed stock split of one share of
common stock for every two shares held, reducing the Company's outstanding
common stock to 5,000,000 shares.
8
F-8
<PAGE>
ENVIROKARE TECH, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998
NOTE 7- RELATED PARTIES
Madelyn Thomas, who received $10,000 in consulting fees under the terms of an
ongoing contract (described in Note 8) is the wife of the president of the
Company, Charles W. Thomas.
Real Morel, a member of the Board of Directors, is the developer of the rubber
technology currently seeking patent rights (See Note 4) and is the holder of the
notes payable described in Note 5.
NOTE 8- COMMITMENTS AND CONTINGENCIES
The Company entered into consulting contracts with Susan Westfall and Madelyn
Thomas on November 1, 1998 for the purpose of establishing corporate offices on
behalf of the Company. The terms of Ms. Westfall's contract specify that she
will receive $2,500 per month for the term of the contract, which commences
November 1, 1998 and terminates April 30, 1999. The terms of Mrs. Thomas's
contract specify that she will receive $5,000 per month for the term of the
contract, which commences November 1, 1998 and terminates October 31, 1999. Both
contracts provide indemnification against any and all liability and provide for
reimbursement of expenses up to a specified amount. They may be terminated upon
thirty days written notice by either party.
The Company entered into a lease for office space for the period of thirty six
months beginning October 1, 1998. Monthly payments for the initial year of the
lease are $730 per month, including $40 for utilities. In compliance with the
terms of the lease, the Company has purchased comprehensive public liability
insurance. Future annual minimum lease payments for the term of the lease are as
follows for the years ending December 31:
1999 $8,862
2000 $9,276
2001 $7,200
9
F-9
SECRETARY OF STATE
[SEAL]
CORPORATE CHARTER
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that ENVIROKARE TECH, INC. did on JUNE 15, 1998, 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
JUNE 15, 1998.
/s/ Dean Heller
Secretary of State
By /s/ [ILLEGIBLE]
Certification Clerk
[SEAL]
E-1
[SEAL]
ARTICLES OF INCORPORATION
OF
ENVIROKARE TECH, INC.
KNOW ALL MEN BY THESE PRESENTS:
That we the undersigned, have this day voluntarily associated ourselves
together for the purposes of forming a corporation under the laws of the State
of Nevada and we do hereby certify;
I.
The name of this corporation is ENVIROKARE TECH, INC.
II.
The resident agent of said corporation shall be Pacific Corporate Services,
Inc, 7631 Bermuda Road, Las Vegas NV 89123 and such other offices as may be
determined by the By-Laws in and outside of the State of Nevada.
III.
The objects to be transacted, business and pursuit and nature of the
business, promoted or carried on by this corporation are and shall continue to
be engaged in any lawful activity except banking or insurance.
IV.
The members of the governing board shall be styled Directors and the first
Board of Directors shall consist of one (1). The number of stockholders of said
corporation shall consist of one (1). The number of directors and stockholders
of this corporation may, from time to time, be increased or decreased by an
amendment to the By-Laws of this Corporation in that regard, and without the
necessity of amending these Articles of Incorporation. The names and addresses
of the first Board of Directors and of the incorporators signing these Articles
are as follows:
Kathy Whyte 16688-102 Avenue
Surrey BC CANADA V4N 4X2
V.
The Corporation is to have perpetual existence.
E-2
<PAGE>
VI.
The total authorized capitalization of this Corporation shall be and is the
sum of 200,000,000 shares of Common Stock at $.00l par value, said stock to
carry full voting power and the said shares shall be issued fully paid at such
time as the Board of Directors may designate, in exchange for cash, property, or
services, the stock of other corporations or other values, rights or things, and
the judgment of the Board of Directors as to the value thereof shall be
conclusive.
VII.
The capital stock shall be and remain non-assessable. The private
property of the stockholders shall not be liable for the debts or liabilities of
the Corporation.
IN WITNESS WHEREOF, 1 have set my hand this 12 day of June, 1998.
/s/ Kathy Whyte
------------------------
Kathy Whyte
COUNTY OF )
)
PROVINCE OF BRITISH COLUMBIA )
On this 12 day of June, 1998, before me a notary public in and for said
county and state, personally appeared Kathy Whyte, known to me to be the person
whose name is subscribed to the foregoing instrument, and she duly acknowledged
to me that she executed the same for the purpose therein mentioned.
IN WITNESS WHEREOF, I have set my hand and offered by official seal in said
County and State the day and year in this Certificate first above written.
/s/ Jeffrey P. Andrews
-----------------------------
Notary Public
JEFFREY P. ANDREWS
Barrister & Solicitor
10325- 150th Street
Surrey, B.C. V3R 481
Telephone: 588-6844
E-3
<PAGE>
------------------------------
STATE OF NEVADA
Secretary of State
I hereby certify that this is
a true and complete copy of
the document as filed in this
office
JUN 15 `98
DEAN HELLER
Secretary of State
BY /s/ DEAN HELLER
------------------------------
E-4
BY-LAWS
OF
ENVIROKARE - TECH. INC.
--------------------------------------
A Nevada Corporation
ARTICLE 1 - OFFICES
The registered office of the Corporation in the State of Nevada shall be located
in the City and State designated in the Articles of lncorporation. The
Corporation may also maintain offices at such other places within or without the
State of Nevada as the Board of Directors may, from time to time, determine.
ARTICLE II- MEETING OF SHAREHOLDERS
Section 1 - Annual Meetings: (Chapter 78.310)
The annual meeting of the shareholders of the Corporation shall be held at the
time fixed, from time to time, by the Directors.
Section 2 - Special Meetings: (Chapter 78.310)
Special meetings of the shareholders may be called by the Board of Directors or
such person or persons authorized by the Board of Directors and shall be held
within or without the State of Nevada.
Section 3 - Place of Meetings: (Chapter 78.310)
Meetings of shareholders shall be held at the registered office of the
Corporation, or at such other places, within or without the State of Nevada as
the Directors may from time to time fix. If no designation is made, the meeting
shall be held at the Corporation's registered office in the state of Nevada.
Section 4 - Notice of Meetings: (Section 78.370)
(a) Written or printed notice of each meeting of shareholders, whether annual or
special, signed by the president, vice president or secretary, stating the time
when and place where it is to be held, as well as the purpose or purposes for
which the meeting is called, shall be served either personally or by mail, by or
at the direction of the president, the secretary, or the officer or
- --------------------------------------------------------------------------------
* Unless otherwise stated herein all references to "Sections" in these Bylaws
refer to those sections contained in Title 78 of the Nevada Private Corporations
Law.
NV Bylaws-1
E-5
<PAGE>
the person calling the meeting, not less than ten or more than sixty days before
the date of the meeting, unless the lapse of the prescribed time shall have been
waived before or after the taking of such action, upon each shareholder of
record entitled to vote at such meeting, and to any other shareholder to whom
the giving of notice may be required by law. If mailed, such notice shall be
deemed to be given when deposited in the United States mail, addressed to the
shareholder as it appears on the share transfer records of the Corporation or to
the current address, which a shareholder has delivered to the Corporation in a
written notice.
(b) Further notice to a shareholder is not required when notice of two
consecutive annual meetings, and all notices of meetings or of the taking of
action by written consent without a meeting to him or her during the period
between those two consecutive annual meetings; or all, and at least two payments
sent by first-class mail of dividends or interest on securities during a
12-month period have been mailed addressed to him or her at his or her address
as shown on the records of the Corporation and have been returned undeliverable.
Section 5 - Quorum: (Section 78.320)
(a) Except as otherwise provided herein, or by law, or in the Articles of
Incorporation (such Articles and any amendments thereof being hereinafter
collectively referred to as the "Articles of Incorporation"), a quorum shall be
present at all meetings of shareholders of the Corporation, if the holders of a
majority of the shares entitled to vote on that matter are represented at the
meeting in person or by proxy.
(b) The subsequent withdrawal of any shareholder from the meeting, after the
commencement of a meeting, or the refusal of any shareholder represented in
person or by proxy to vote, shall have no effect on the existence of a quorum,
after a quorum has been established at such meeting.
(c) Despite the absence of a quorum at any meeting of shareholders, the
shareholders present may adjourn the meeting.
Section 6 - Voting and Acting: (Section 78.320 & 78.350)
(a) Except as otherwise provided by law, the Articles of Incorporation, or these
Bylaws, any corporate action, the affirmative vote of the majority of shares
entitled to vote on that matter and represented either in person or by proxy at
a meeting of shareholders at which a quorum is present, shall be the act of the
shareholders of the Corporation.
(b) Except as otherwise provided by statute, the Certificate of Incorporation,
or these bylaws, at each meeting of shareholders, each shareholder of the
Corporation entitled to vote thereat, shall be entitled to one vote for each
share registered in his name on the books of the Corporation.
(c) Where appropriate communication facilities are reasonably available, any or
all shareholders shall have the right to participate in any shareholders'
meeting, by means of conference telephone
NV Bylaws-2
E-6
<PAGE>
or any means of communications by which all persons participating in the meeting
are able to hear each other.
Section 7 - Proxies: (Section 78.355)
Each shareholder entitled to vote or to express consent or dissent without a
meeting, may do so either in person or by proxy, so long as such proxy is
executed in writing by the shareholder himself, his authorized officer,
director, employee or agent or by causing the signature of the stockholder to be
affixed to the writing by any reasonable means, including, but not limited to, a
facsimile signature, or by his attorney-in-fact there unto duly authorized in
writing. Every proxy shall be revocable at will unless the proxy conspicuously
states that it is irrevocable and the proxy is coupled with an interest. A
telegram, telex, cablegram, or similar transmission by the shareholder, or a
photographic, photostatic, facsimile, shall be treated as a valid proxy, and
treated as a substitution of the original proxy, so long as such transmission is
a complete reproduction executed by the shareholder. If it is determined that
the telegram, cablegram or other electronic transmission is valid, the persons
appointed by the Corporation to count the votes of shareholders and determine
the validity of proxies and ballots or other persons making those determinations
must specify the information upon which they relied. No proxy shall be valid
after the expiration of six months from the date of its execution, unless
otherwise provided in the proxy. Such instrument shall be exhibited to the
Secretary at the meeting and shall be filed with the records of the Corporation.
If any shareholder designates two or more persons to act as proxies, a majority
of those persons present at the meeting, or, if one is present, then that one
has and may exercise all of the powers conferred by the shareholder upon all of
the persons so designated unless the shareholder provides otherwise.
Section 8 - Action Without a Meeting: (Section 78.320)
Unless otherwise provided for in the Articles of Incorporation of the
Corporation, any action to be taken at any annual or special shareholders'
meeting, may be taken without a meeting, without prior notice and without a vote
if written consents are signed by a majority of the shareholders of the
Corporation, except however if a different proportion of voting power is
required by law, the Articles of Incorporation or these Bylaws, than that
proportion of written consents is required. Such written consents must be filed
with the minutes of the proceedings of the shareholders of the Corporation.
ARTICLE III - BOARD OF DIRECTORS
Section 1 - Number, Term, Election and Qualifications: (Section 78.115, 78.330)
(a) The first Board of Directors and all subsequent Boards of the Corporation
shall consist of ( ), unless and until otherwise determined by vote of a
majority of the entire Board of Directors. The Board of Directors or
shareholders all have the power, in the interim between annual and special
meetings of the shareholders, to increase or decrease the number of Directors of
the Corporation. A Director need not be a shareholder of the Corporation unless
the Certificate of Incorporation of the Corporation or these Bylaws so require.
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(b) Except as may otherwise be provided herein or in the Articles of
incorporation, the members of the Board of Directors of the Corporation shall be
elected at the first annual shareholders' meeting and at each annual meeting
thereafter, unless their terms are staggered in the Articles of lncorporation of
the Corporation or these Bylaws, by a plurality of the votes cast at a meeting
of shareholders, by the holders of shares entitled to vote in the election.
(c) The first Board of Directors shall hold office until the first annual
meeting of shareholders and until their successors have been duly elected and
qualified or until there is a decrease in the number of Directors. Thereinafter,
Directors will be elected at the annual meeting of shareholders and shall hold
office until the annual meeting of the shareholders next succeeding his
election, unless their terms are staggered in the Articles of Incorporation of
the Corporation (so long as at least one-fourth in number of the Directors of
the Corporation are elected at each annual shareholders' meeting) or these
Bylaws, or until his prior death, resignation or removal. Any Director may
resign at any time upon written notice of such resignation to the Corporation.
(d) All Directors of the Corporation shall have equal voting power unless the
Articles of Incorporation of the Corporation provide that the voting power of
individual Directors or classes of Directors are greater than or less than that
of any other individual Directors or classes of Directors, and the different
voting powers may be stated in the Articles of Incorporation or may be dependent
upon any fact or event that may be ascertained outside the Articles of
Incorporation if the manner in which the fact or event may operate on those
voting powers is stated in the Articles of Incorporation. If the Articles of
Incorporation provide that any Directors have voting power greater than or less
than other Directors of the Corporation, every reference in these Bylaws to a
majority or other proportion of Directors shall be deemed to refer to majority
or other proportion of the voting power of all the Directors or classes of
Directors, as may be required by the Articles of Incorporation.
Section 2 - Duties and Powers: (Section 78.120)
The Board of Directors shall be responsible for the control and management of
the business and affairs, property and interests of the Corporation, and may
exercise all powers of the Corporation, except such as those stated under Nevada
state law, are in the Articles of Incorporation or by these Bylaws, expressly
conferred upon or reserved to the shareholders or any other person or persons
named therein.
Section 3 - Regular Meetings; Notice: (Section 78.310)
(a) A regular meeting of the Board of Directors shall be held either within or
without the State of Nevada at such time and at such place as the Board shall
fix.
(b) No notice shall be required of any regular meeting of the Board of Directors
and, if given, need not specify the purpose of the meeting; provided, however,
that in case the Board of Directors shall fix or change the time or place of any
regular meeting when such time and place was fixed before such change, notice of
such action shall be given to each director who shall not have been present at
the meeting at which such action was taken within the time limited, and in the
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manner set forth in these Bylaws with respect to special meetings, unless such
notice shall be waived in the manner set forth in these Bylaws.
4 - Special Meetings Notice (Section 78.310)
(a) Special meetings of the Board of Directors shall be held at such time and
place as may be specified in the respective notices or waivers of notice
thereof.
(b) Except as otherwise required statute, written notice of special meetings
shall be mailed directly to each Director, addressed to him at his residence or
usual place of business, or delivered orally, with sufficient time for the
convenient assembly of Directors thereat, or shall be sent to him at such place
by telegram, radio or cable, or shall be delivered to him personally or given to
him orally, not later than the day before the day on which the meeting is to be
held. If mailed, the notice of any special meeting shall be deemed to be
delivered on the second day after it is deposited in the United States mails, so
addressed, with postage prepaid. If notice is given by telegram, it shall be
deemed to be delivered when the telegram is delivered to the telegraph company.
A notice, or waiver of notice, except as required by these Bylaws, need not
specify the business to be transacted at or the purpose or purposes of the
meeting.
(c) Notice of any special meeting shall not be required to be given to any
Director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to him, or who submits a signed waiver of
notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.
Section 5 - Chairperson:
The Chairperson of the Board, if any and if present, shall preside at all
meetings of the Board of Directors. If there shall be no Chairperson, or he or
she shall be absent, then the President shall preside, and in his absence, any
other director chosen by the Board of Directors shall preside.
Section 6- Quorum and Adjournments: (Section 78.315)
(a) At all meetings of the Board of Directors, or any committee thereof, the
presence of a majority of the entire Board, or such committee thereof, shall
constitute a quorum for the transaction of business, except as otherwise
provided by law, by the Certificate of Incorporation, or these Bylaws.
(b) A majority of the directors present at the time and place of any regular or
special meeting, although less than a quorum, may adjourn the same from time to
time without notice, whether or not a quorum exists. Notice of such adjourned
meeting shall be given to Directors not present at time of the adjournment and,
unless the time and place of the adjourned meeting are announced at the time of
the adjournment, to the other Directors who were present at the adjourned
meeting.
Section 7 - Manner of Acting: (Section 78.315)
(a) At all meetings of the Board of Directors, each director present shall have
one vote, irrespective of the number of shares of stock, if any, which he may
hold.
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(b) Except as otherwise provided by law, by the Articles of Incorporation, or
these bylaws, action approved by a majority of the votes of the Directors
present at any meeting of the Board or any committee thereof at which a quorum
is present shall be the act of the Board of Directors or any committee thereof.
(c) Any action authorized in writing made prior or subsequent to such action, by
all of the Directors entitled to vote thereon and filed with the minutes of the
Corporation shall be the act of the Board of Directors, or any committee thereof
and have the same force and effect as if the same had been passed by unanimous
vote at a duly called meeting of the Board or committee for all purposes.
(c) Where appropriate communications facilities are reasonably available, any or
all directors shall have the right to participate in any Board of Directors
meeting, or a committee of the Board of Directors meeting, by means of
conference telephone or any means of communications by which all persons
participating in the meeting are able to hear each other.
Section 8 - Vacancies: (Section 78.335)
(a) Unless otherwise provided for by the Articles of Incorporation of the
Corporation, any vacancy in the Board of Directors occurring by reason of an
increase in the number of directors, or by reason of the death, resignation,
disqualification, removal or inability to act of any director, or other cause,
shall be filled by an affirmative vote of a majority of the remaining directors,
though less than a quorum of the Board or by a sole remaining Director, at any
regular meeting or special meeting of the Board of Directors called for that
purpose except whenever the shareholders of any class or classes or series
thereof are entitled to elect one or more Directors by the Certificate of
Incorporation of the Corporation, vacancies and newly created directorships of
such class or classes or series may be filled by a majority of the Directors
elected by such class or classes or series thereof then in office, or by a sole
remaining Director so elected.
(b) Unless otherwise provided for by law, the Articles of Incorporation or these
Bylaws, when one or more Directors shall resign from the board and such
resignation is effective at a future date, a majority of the directors, then in
office, including those who have so resigned, shall have the power to fill such
vacancy or vacancies, the vote otherwise to take effect when such resignation or
resignations shall become effective.
Section 9 - Resignation: (Section 78.335)
A Director may resign at any time by giving written notice of such resignation
to the Corporation.
Section 10 - Removal: (Section 78.335)
Unless otherwise provided for by the Articles of Incorporation, one or more or
all the Directors of the Corporation may be removed with or without cause at any
time by a vote of two-thirds of the shareholders entitled to vote thereon, at a
special meeting of the shareholders called for that purpose, unless the Articles
of Incorporation provide that Directors may only be removed for cause, provided
however, such Director shall not be removed if the Corporation states in its
Articles of Incorporation that its Directors shall be elected by cumulative
voting and there are a
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sufficient number of shares cast against his or her removal, which if
cumulatively voted at an election of Directors would be sufficient to elect him
or her. If a Director was elected by a voting group of shareholders, only the
shareholders of that voting group may participate in the vote to remove that
Director.
Section 11 - Compensation: (Section 78.140)
The Board of Directors may authorize and establish reasonable compensation of
the Directors for services to the Corporation as Directors, including, but not
limited to attendance at any annual or special meeting of the Board.
Section 12 - Committees: (Section 78.125)
Unless otherwise provided for by the Articles of Incorporation of the
Corporation, the Board of Directors, may from time to time designate from among
its members one or more committees, and alternate members thereof as they deem
desirable, each consisting of one or more members, with such powers and
authority (to the extent permitted by law and these Bylaws) as may be provided
in such resolution. Unless the Articles of Incorporation or Bylaws state
otherwise, the Board of Directors may appoint natural persons who are not
Directors to serve on such committees authorized herein. Each such committee
shall serve at the pleasure of the Board and, unless otherwise stated by law,
the Certificate of Incorporation of the Corporation or these Bylaws, shall be
governed by the rules and regulations stated herein regarding the Board of
Directors.
ARTICLE IV - OFFICERS
Section 1 - Number, Qualifications, Election and Term of Office: (Section
78.130)
(a) The Corporation's officers shall have such titles and duties as shall be
stated in these Bylaws or in a resolution of the Board of Directors which is not
inconsistent with these Bylaws. The officers of the Corporation shall consist of
a president, secretary and treasurer, and also may have one or more vice
presidents, assistant secretaries and assistant treasurers and such other
officers as the Board of Directors may from time to time deem advisable. Any
officer may hold two or more offices in the Corporation.
(b) The officers of the Corporation shall be elected by the Board of Directors
at the regular annual meeting of the Board following the annual meeting of
shareholders.
(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have been
duly elected and qualified, subject to earlier termination by his or her death,
resignation or removal.
Section 2 - Resignation:
Any officer may resign at any time by giving written notice of such resignation
to the Corporation.
Section 3 - Removal:
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Any officer elected by the Board of Directors may be removed, either with or
without cause, and a successor elected by the Board at any time, and any officer
or assistant officer, if appointed by another officer, may likewise be removed
by such officer.
Section 4 - Vacancies:
(a) A vacancy, however caused, occurring in the Board and any newly created
Directorships resulting from an increase in the authorized number of Directors
may be filled by the Board of Directors.
Section 5 - Bonds:
The Corporation may require any or all of its officers or Agents to post a bond,
or otherwise, to the Corporation for the faithful performance of their positions
or duties.
Section 6 - Compensation:
The compensation of the officers of the Corporation shall be fixed from time to
time by the Board of Directors.
ARTICLE V - SHARES OF STOCK
Section 1 - Certificate of Stock (Section 78.235)
(a) The shares of the Corporation shall be represented by certificates or shall
be uncertificated shares.
(b) Certificated shares of the Corporation shall be signed, (either manually or
by facsimile), by officers or agents designated by the Corporation for such
purposes, and shall certify the number of shares owned by him in the
Corporation. Whenever any certificate is countersigned or otherwise
authenticated by a transfer agent or transfer clerk, and by a registrar, then a
facsimile of the signatures of the officers or agents, the transfer agent or
transfer clerk or the registrar of the Corporation may be printed or
lithographed upon the certificate in lieu of the actual signatures. If the
Corporation uses facsimile signatures of its officers and agents on its stock
certificates, it cannot act as registrar of its own stock, but its transfer
agent and registrar may be identical if the institution acting in those dual
capacities countersigns or otherwise authenticates any stock certificates in
both capacities. If any officer who has signed or whose facsimile signature has
been placed upon such certificate, shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of its issue.
(c) If the Corporation issues uncertificated shares as provided for in these
Bylaws, within a reasonable time after the issuance or transfer of such
uncertificated shares, and at least annually thereafter, the Corporation shall
send the shareholder a written statement certifying the number of shares owned
by such shareholder in the Corporation.
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(d) Except as otherwise provided by law, the rights and obligations of the
holders of uncertificated shares and the rights and obligations of the holders
of certificates representing shares of the same class and series shall be
identical.
Section 2 - Lost or Destroyed Certificates: (Section 104.8405)
The Board of Directors may direct a new certificate or certificates to be issued
in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed if the owner:
(a) so requests before the Corporation has notice that the shares have been
acquired by a bona fide purchaser,
(b) files with the Corporation a sufficient indemnity bond; and
(c) satisfies such other requirements, including evidence of such loss,
theft or destruction, as may be imposed by the Corporation.
Section 3 - Transfers of Shares: (Section 104.8401, 104.8406 & 104.8416)
(a) Transfers or registration of transfers of shares of the Corporation shall be
made on the stock transfer books of the Corporation by the registered holder
thereof, or by his attorney duly authorized by a written power of attorney; and
in the case of shares represented by certificates, only after the surrender to
the Corporation of the certificates representing such shares with such shares
properly endorsed, with such evidence of the authenticity of such endorsement,
transfer, authorization and other matters as the Corporation may reasonably
require, and the payment of all stock transfer taxes due thereon.
(b) The Corporation shall be entitled to treat the holder of record of any share
or shares as the absolute owner thereof for all purposes and, accordingly, shall
not be bound to recognize any legal, equitable or other claim to, or interest
in, such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise expressly
provided by law.
Section 4 - Record Date: (Section 78.215 & 78.350)
(a) The Board of Directors may fix, in advance, which shall not be more than
sixty days before the meeting or action requiring a determination of
shareholders, as the record date for the determination of shareholders entitled
to receive notice of, or to vote at, any meeting of shareholders, or to consent
to any proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of any dividends, or allotment of any
rights, or for the purpose of any other action. If no record date is fixed, the
record date for shareholders entitled to notice of meeting shall be at the close
of business on the day preceding the day on which notice is given, or, if no
notice is given, the day on which the meeting is held, or if notice is waived,
at the close of business on the day before the day on which the meeting is held.
(b) The Board of Directors may fix a record date, which shall not precede the
date upon which the resolution fixing the record date is adopted for
shareholders entitled to receive payment of any dividend or other distribution
or allotment of any rights of shareholders entitled to exercise any
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rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action.
(c) A determination of shareholders entitled to notice of or to vote at a
shareholders' meeting is effective for any adjournment of the meeting unless the
Board of Directors fixes a new record date for the adjourned meeting.
Section 5 - Fractions of Shares/Scrip: (Section 78.205)
The Board of Directors may authorize the issuance of certificates or payment of
money for fractions of a share, either represented by a certificate or
uncertificated, which shall entitle the holder to exercise voting rights,
receive dividends and participate in any assets of the Corporation in the event
of liquidation, in proportion to the fractional holdings; or it may authorize
the payment in case of the fair value of fractions of a share as of the time
when those entitled to receive such fractions are determined; or it may
authorize the issuance, subject to such conditions as may be permitted by law,
of scrip in registered or bearer form over the manual or facsimile signature of
an officer or agent of the Corporation or its agent for that purpose,
exchangeable as therein provided for full shares, but such scrip shall not
entitle the holder to any rights of shareholder, except as therein provided. The
scrip may contain any provisions or conditions that the Corporation deems
advisable. If a scrip ceases to be exchangeable for full share certificates, the
shares that would otherwise have been issuable as provided on the scrip are
deemed to be treasury shares unless the scrip contains other provisions for
their disposition.
ARTICLE VI - DIVIDENDS (Section 78.215 & 78.288)
(a) Dividends may be declared and paid out of any funds available therefor, as
often, in such amounts, and at such time or times as the Board of Directors may
determine and shares may be issued pro rata and without consideration to the
Corporation's shareholders or to the shareholders of one or more classes or
series.
(b) Shares of one class or series may not be issued as a share dividend to
shareholders of another class or series unless:
(i) so authorized by the Articles of Incorporation;
(ii) a majority of the shareholders of the class or series to be issued
approve the issue; or
(iii) there are no outstanding shares of the class or series of shares that
are authorized to be issued.
ARTICLE VII- FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and shall be subject to
change by the Board of Directors from time to time, subject to applicable law.
ARTICLE VIII - CORPORATE SEAL (Section 78.065)
The corporate seal, if any, shall be in such form as shall be prescribed and
altered, from time to time, by the Board of Directors. The use of a seal or
stamp by the Corporation on corporate
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documents is not necessary and the lack thereof shall not in any way affect the
legality of a corporate document.
ARTICLE IX - AMENDMENTS
Section 1 - By Shareholders:
All Bylaws of the Corporation shall be subject to alteration or repeal, and new
Bylaws may be made, by a majority vote of the shareholders at the time entitled
to vote in the election of Directors even though these Bylaws may also be
altered, amended or repealed by the Board of Directors.
Section 2 - By Directors: (Section 78. 120)
The Board of Directors shall have power to make, adopt, alter, amend and repeal,
from time to time, Bylaws of the Corporation.
ARTICLE X - WAIVER OF NOTICE: (Section 78.375)
Whenever any notice is required to be given by law, the Articles of
Incorporation or these Bylaws, a written waiver signed by the person or persons
entitled to such notice, whether before or after the meeting by any person,
shall constitute a waiver of notice of such meeting.
ARTICLE XI - INTERESTED DIRECTORS: (Section 78.140)
No contract or transaction shall be void or voidable if such contract or
transaction is between the corporation and one or more of its Directors or
Officers, or between the Corporation and any other corporation, partnership,
association, or other organization in which one or more of its Directors or
Officers, are directors or officers, or have a financial interest, when such
Director or Officer is present at or participates in the meeting of the Board,
or the committee of the shareholders which authorizes the contract or
transaction or his, her or their votes are counted for such purpose, if:
(a) the material facts as to his, her or their relationship or interest and
as to the contract or transaction are disclosed or are known to the Board of
Directors or the committee and are noted in the minutes of such meeting, and the
Board or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested Directors, even though the
disinterested Directors be less than a quorum; or
(b) the material facts as to his, her or their relationship or
relationships or interest or interests and as to the contract or transaction are
disclosed or are known to the shareholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
shareholders; or
(c) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified, by the Board of Directors, a
committee of the shareholders; or
(d) the fact of the common directorship, office or financial interest is
not disclosed or known to the Director or Officer at the time the transaction is
brought before the Board of Directors of the Corporation for such action.
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Such interested Directors may be counted when determining the presence of a
quorum at the Board of Directors' or committee meeting authorizing the contract
or transaction.
ARTICLE XII - ANNUAL LIST OF OFFICERS, DIRECTORS AND REGISTERED AGENT: (Section
78.150 & 78.165)
The Corporation shall, within sixty days after the filing of its Articles of
Incorporation with the Secretary of State, and annually thereafter on or before
the last day of the month in which the anniversary date of incorporation occurs
each year, file with the Secretary of State a list of its president, secretary
and treasurer and all of its Directors, along with the post office box or street
address, either residence or business, and a designation of its resident agent
in the state of Nevada. Such list shall be certified by an officer of the
Corporation.
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GENERAL ASSIGNMENT OF ASSETS,
OF THE RUBBER MOLD TECHNOLOGY
THIS ASSIGNMENT dated for reference the 15th day of December 1998
BETWEEN:
Real Morel, (also known as) International Pallet Control Systems Inc. of
Vancouver, British Columbia, Canada.
(the "Assignor")
OF THE FIRST PART
AND:
ENVIROKARE TECH, INC. a company incorporated under the laws of the State of
Nevada, U.S.A.
(the "Assignee")
OF THE SECOND PART
WHEREAS:
A. Immediately prior to the date hereof, the Assignor carried on the business of
manufacturing and developing of a rubber mold technology and related products in
the City of Port Coquitlam, B.C. and elsewhere (the "Business");
B. Concurrently herewith the Assignor has sold, and the Assignee has purchased,
substantially all of the property, assets and undertakings of the business as a
going concern for the price and on the terms and conditions set forth in this
Agreement between the Assignor, as vendor and the Assignee, as purchaser;
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the
premises and other valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Assignor and the Assignee covenant and agree as
follows:
1. Unless otherwise expressly defined herein, expressions herein of which the
first letter is capitalized, shall be deemed to have the meaning ascribed
thereto in the Asset Purchase Agreement. For the purpose of this assignment:
(a) "Benefits" shall collectively mean the Contracts, Goodwill, Licences,
Warranties, Patents and Name;
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(b) "Contracts" shall mean the contracts and equipment leases relating to
the Business described in Schedule "A" and not otherwise specifically
assigned by the Assignor to the Assignee;
(c) "Goodwill" shall mean all of the goodwill of the Business;
(d) "Licenses" shall mean all licences in the possession, control or name
of the Assignor with respect to the Mold;
(e) "Name" shall mean "The Pallet Company" and any other name which may be
created by adding to the name "The Pallet Company" including all trade
names associated therewith;
(f) "Patents" shall mean all necessary licences and patents required for
the present and intended operation of the Business issued to the
Assignor by any government, statutory or other authority having
jurisdiction over the same; and
(g) "Warranties" shall mean all outstanding guarantees, warranties and
indemnities obtained for the benefit of the Assignor in relation to
the business and, without limiting the generality of the foregoing,
shall include those warranties obtained by the Assignor, either
expressly or implied from contractors, subcontractors or suppliers of
mechanical and electrical machinery and equipment comprised in the
business, insofar as such rights can be assigned.
2. As and from the Closing Date, the Assignor grants, assigns, transfers and
makes over absolutely unto the Assignee all of its right, title and interest in
and to:
(a) the Benefits;
(b) any and all benefits and advantages due or accruing due to or at any
time after the Closing Date under the Benefits or any extensions or
renewals thereof; and
(c) the benefit of all covenants, representations and warranties in
respect of the Benefits.
3. The Assignor hereby agrees that the Assignee is to have and to hold the
Benefits and all of the said monies, benefits and advantages to be derived
therefrom and the right to enforce payment or the performance of covenants
thereunder for its sole use and benefit forever.
4. The Assignor warrants, represents and covenants to the Assignee that:
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(a) the Assignor has full right and authority to assign the Benefits and
all benefits and advantages to be derived therefrom; and
(b) the Assignor's interests under the Benefits are free and clear of all
liens, charges, encumbrances and judgments of any nature or kind
whatsoever.
5. The Assignor will indemnify, defend and save harmless the Assignee from any
and all actions, suits, losses, damages, and expenses that the Assignee may
suffer or incur or be put to by reason of any of the warranties, representations
or covenants set forth in paragraph 4 being untrue or incorrect.
6. The Assignee agrees that, as and from the Closing Date, it will assume,
observe, perform, be bound by and be liable under each and every covenant,
agreement, proviso and condition to be observed or performed by the Assignor
under each and every one of the Benefits from and after the Closing Date, and
hereby agrees to indemnify the Assignor of, from and against all obligations,
liabilities, covenants and provisos contained in the Benefits and any losses,
costs or damages, including all legal costs arising therefrom on or after the
Closing Date.
7. The Assignor expressly authorizes the Assignee to collect, demand, sue for,
enforce, recover and receive, dispose of, realize or enforce any of the Benefits
as the Assignee may deem advisable, either in its own name or in the name of the
Assignee without notice to the Assignor and without prejudice to any rights
which the Assignee may have against the Assignor.
8. The Assignor agrees with the Assignee that it will from time to time and at
all times hereafter at the request of the Assignee execute and deliver to the
Assignee such further assurances for the better and more perfect assigning to
the Assignee of the Benefits, or any one of them, as the Assignee may advise.
9. This Assignment and everything herein contained shall extend to, bind and
enure to the benefit of the successors and assigns to each of the parties
hereto.
10. Whenever the context so requires, the neuter gender shall include the
masculine and the feminine and vice versa, and the singular shall include the
plural.
11. The language in all parts of this Assignment shall in all cases by construed
as a whole and neither strictly for nor against any of the parties hereto.
12. The invalidity or unenforceability of any provision of this Assignment or
any part thereof shall not affect the validity of enforceability of the
remainder of this Assignment or such provision.
IN WITNESS WHEREOF this Assignment has been executed under seal this 15th
day of December, 1998.
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SCHEDULE "A"
PALLET MODELS
Of
Envirokare Tech. Inc.
The Company has three pallet designs, which is ready for manufacturing. Each
design uses the same molding technology but is designed for different purposes.
*(Please see attached drawings.)
The Nomand V - the Company designed the Nomand V as an all-around performer. It
combines the patent-applied-for one-piece to deck and bottom deck boards, made
of high-density rubber, with nine strong but low-density rubber edge, corner,
and centre blocks to make a lightweight, durable four-way pallet that resists
damage and lasts a long time.
The Roamer - The Roamer is unique; a fully functional pallet like the Nomad V,
but put together with surface-flush U-bolts that make it easy to disassemble.
Four disassembled pallets can be stacked on one assembled one for empty-load
shipping, increasing the number that can fit into a truck or container by 250%.
Other pallet designs waste space when shipped this way because they are simply
stacked. Fully assembled, with much of the shipping space taken up by empty air.
The Journeyman - The Journeyman is a one-piece, two-way design with a plank-like
top deck and stringer-board undercarriage. It has no nails or joints or any
kind, and is the most durable rubber pallet available. The Envirokare stringer
pallet is designed to meet the majority of all pallet users. The 48X40 flat top
surface has always been a strong demand in the market place. The proprietary
construction material of a special resin polymer crumb rubber and palletized
poly plastics (i.e. milk jugs and similar recycled plastics), the heated
liquefied mixture and is then extruded into a mold and left to cool.
o One piece designed molded pallet;
o Long life - No nails - No breakage;
o Non skid rubberized surface;
o A rubberized 48 X 40 pallet that meets the specification of the brick and
stone hard goods, and grocery industries;
o Outdoor storage
o Top Deck
One piece 1 - 48"X40"X3/8"
Six holes
E-20
<PAGE>
o Stringers
Outside 2 - 4"X3X48"
Center 1 - 40"X3"X48"
o Bottom Deck
Lead Boards 2 - 40"X9"X3/8"
Center Boards 1 - 40"X21"X3/8"
E-21
<PAGE>
SIGNED SEALED & DELIVERED )
By the said REAL MOREL also )
known as INTERNATIONAL PALLET ) [ILLEGIBLE]
CONTROL SYSTEMS INC. ) ------------------------------
)
Kathy Whyte ) ------------------------------
- ----------------------------- )
Witness )
)
)
Assistant )
- ----------------------------- )
Name Address & Occupation )
THE COMMON SEAL of )
ENVIROKARE TECH. INC. was )
hereunto affixed in the presence of: )
)
)
Charles W. Thomas ) c/s
- ----------------------------- )
Authorized Signatory )
)
)
Real Morel )
- ----------------------------- )
Authorized Signatory )
)
E-22
[GRAPHIC]
<PAGE>
E-23
<PAGE>
The Journeyman Top Mould
Top View
All illustrations include an [ILLEGIBLE] factor.
[GRAPHIC]
E-24
<PAGE>
The Journeyman Top Mould
Front View
All illustrations include an [ILLEGIBLE] factor.
[GRAPHIC]
The Journeyman Top Mould
Right View
All illustrations include an [ILLEGIBLE] factor.
[GRAPHIC]
E-25
<PAGE>
The Journeyman Base Mould
Top View
All illustrations include an [ILLEGIBLE] factor.
[GRAPHIC]
E-26
<PAGE>
The Journeyman Base Mould
Front View
All illustrations include an [ILLEGIBLE] factor.
[GRAPHIC]
The Journeyman Base Mould
Right View
All illustrations include an [ILLEGIBLE] factor.
[GRAPHIC]
E-27
<PAGE>
The Journeyman Base Mould #2
Top View
All illustrations include an [ILLEGIBLE] factor.
[GRAPHIC]
E-28
<PAGE>
The Journeyman Base Mould #2
Front View
All illustrations include an [ILLEGIBLE] factor.
[GRAPHIC]
The Journeyman Base Mould #2
Right View
All illustrations include an [ILLEGIBLE] factor.
[GRAPHIC]
E-29
PROMISSORY NOTE
DUE ON DEMAND
For value received, the sufficiency of which is hereby acknowledged, Envirokare
Tech, Inc. (the "Debtor"), hereby acknowledges its indebtedness and promises to
pay to the order of Real Morel, or his nominee the principal sum of Thirty-three
Thousand, Three Hundred and Thirty Dollars ($33,330) together with interest
thereon calculated from and including the 15th day of December, 1998, at a rate
of ten per cent (10%) per annum both before and after default.
IN WITNESS WHEREOF the undersigned has hereunder caused the signatures of its
duly authorized signatories to be affixed on their behalf on this 15th day of
December 1998.
THE COMMON SEAL OF )
ENVIROKARE TECH INC., was )
hereunto affixed in the presence of: )
) c/s
/s/ Charles W. Thomas )
- ------------------------------------ )
Authorized Signatory )
)
Real Morel )
- ------------------------------------ )
Authorized Signatory )
E-30
<PAGE>
DEMAND PROMISSORY NOTE
For value received, the sufficiency of which is hereby acknowledged, Envirokare
Tech, Inc. (the "Debtor"), hereby acknowledges its indebtedness and promises to
pay to the order of Real Morel, or his nominee the principal sum of Ten Thousand
dollars ($10,000) together with interest thereon calculated from and including
the 15th day of December, 1998, at a rate of ten per cent (10%) per annum both
before and after default.
IN WITNESS WHEREOF the undersigned has hereunder caused the signatures of its
duly authorized signatories to be affixed on their behalf on this 15th day of
December 1998.
THE COMMON SEAL OF ENVIROKARE )
TECH INC., )
was hereunto affixed in )
the presence of: )
) c/s
/s/ Charles W. Thomas )
- ------------------------------------ )
Authorized Signatory )
)
Real Morel )
- ------------------------------------ )
Authorized Signatory )
E-31
<PAGE>
DEMAND PROMISSORY NOTE
For value received, the sufficiency of which is hereby acknowledged, Envirokare
Tech, Inc. (the "Debtor"), hereby acknowledges its indebtedness and promises to
pay to the order of Real Morel, or his nominee the principal sum of Three
Thousand Six Hundred and Thirty-five dollars and Two cents ($3,635.02) together
with interest thereon calculated from and including the 18th day of August,
1998, at a rate of ten per cent (10%) per annum both before and after default.
IN WITNESS WHEREOF the undersigned has hereunder caused the signatures of its
duly authorized signatories to be affixed on their behalf on this 18th day of
August, 1998.
THE COMMON SEAL OF ENVIROKARE )
TECH INC., )
was hereunto affixed in )
the presence of: )
) c/s
/s/ Charles W. Thomas )
- ------------------------------------ )
Authorized Signatory )
)
Real Morel )
- ------------------------------------ )
Authorized Signatory )
E-32
<PAGE>
PROMISSORY NOTE
DUE: ON DEMAND
For value received, the sufficiency of which is hereby acknowledged, ENVIROKARE
TECH, INC. (the "Debtor"), hereby acknowledges its indebtedness and promises to
pay to the order of REAL MOREL, or his nominee the principal sum of Five
Thousand dollars ($5,000) together with interest thereon calculated from and
including the 24th day of September, 1998, at a rate of ten per cent (10%) per
annum both before and after default.
SIGNED, at Vancouver, British )
Columbia, Canada, this 24th day of )
September 1998, by )
ENVIROKARETECH INC. )
in the presence of: )
)
/s/ Charles W. Thomas )
- ------------------------------------ )
Signatory )
)
Real Morel )
- ------------------------------------ )
Signatory )
E-33
<PAGE>
PROMISSORY NOTE
DUE: ON DEMAND
For value received, the sufficiency of which is hereby acknowledged, Envirokare
Tech, Inc. (the "Debtor"), hereby acknowledges its indebtedness and promises to
pay to the order of Real Morel, or his nominee the principal sum of Ten Thousand
dollars ($10,000) together with interest thereon calculated from and including
the 16th day of November, 1998, at a rate of ten per cent (10%) per annum both
before and after default.
IN WITNESS WHEREOF the undersigned has hereunder caused the signatures of its
duly authorized signatories to be affixed on their behalf on this 16th day of
November 1998.
THE COMMON SEAL OF )
ENVIROKARE TECH INC., was )
hereunto affixed in the presence of: )
/s/ Charles W. Thomas ) c/s
- ------------------------------------ )
Authorized Signatory )
)
Real Morel )
- ------------------------------------ )
Authorized Signatory )
E-34
CONTRACT AGREEMENT
The following is an Agreement between SUSAN WESTFALL (the "Contractor") having
an address of 731 Autumn Moon Drive, Las Vegas, NV, 89123 and ENVIROKARE TECH,
INC. (the "Company") having an address of 2470 Chandler Ave., Suite #5, Las
Vegas, NV, 89120, wherein the Company has asked the Contractor to assume
responsibilities of providing management services for the Company with duties
and responsibilities as outlined below. This Agreement is effective from the
date of signing as noted below. It is understood by all parties to this
Agreement that the Contractor shall act on behalf of the Company in the capacity
of an independent Contractor and not as an employee of the Company.
POSITION AND RESPONSIBILITIES:
It is agreed that the Contractor will provide management services to the Company
as follows:
1) The Contractor shall assist in the establishment of corporate offices
on behalf of the Company, in Las Vegas, Nevada. In carrying duties,
the Contractor shall take direction from Mrs. Madelyn Thomas. Mrs.
Thomas has been retained by the Company to oversee the establishment
of said corporate offices. It is expected that initial tasks
associated with the establishment of the Company's corporate offices
will be substantially complete by April 30, 1999. It is understood by
both parties to this Agreement that any costs incurred in completion
of design, implementation, establishment and operation of the
Company's corporate offices shall be absorbed by the Company.
2) It is understood by both parties to this Agreement that the Contractor
is free to perform non-Company services during the term of this said
contract. Said non-Company services may be set forth by the Contractor
from time to time and said non-Company services shall take precedence
over Company services, precedence to be determined and remain at the
sole discretion of the Contractor.
TERM OF AGREEMENT:
This Agreement commences November 1, 1998 and terminates April 30, 1999.
COMPENSATION:
In his capacity the Contractor will be compensated by the Company on the
following basis:
1) The Contractor shall receive a monthly payment from the Company of two
thousand and five hundred dollars ($2,500.00) said payment to be made
in the Contractor's name and said payment to be made by the 1st day of
each month for services provided. The first payment shall be for
services rendered in the month of November 1998, at the aforementioned
rate of compensation.
E-35
<PAGE>
2) The Company shall indemnify the Contractor against any and all
liability that may be incurred by either the Company or by the
Contractor his performance of activities of behalf of the Company and
or the Company's clients. It is required that the Company obtain
insurance which indemnifies the Contractor against any and all claims,
legal and otherwise, that may arise and be brought against the
Company. The Company shall pay all legal and associated costs
encountered by the Contractor, as a result of action brought against
the Company or the Contractor in the course of the Contractor
providing services on the Company's behalf.
3) The Company shall reimburse the Contractor for all expenses incurred
on the Company's behalf by the Contractor, on a per expenses item
basis and with incurred expense item to be greater than five hundred
dollars ($500.00). Expense amounts greater than five hundred dollars
($500.00) must be pre-approved by Mrs. Thomas and/or the Company's
Board of Directors, prior to expenditure commitment.
TERMINATION:
Either party, upon thirty (30) days written notice to the other party, may
terminate this Agreement. This notice shall be sent by certified or registered
mail, postage prepaid, return receipt requested, to the parties at the principal
offices of the parties first noted here above. Either party may direct that a
notice, demand or communication shall be sent to a new address by giving written
notice to the other party hereto of such address.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
1st day of November, 1998.
SUSAN WESTFALL ENVIROKARE TECHNOLOGY, INC.
By: /s/ Susan M. Westfall By: /s/ Charles Thomas
------------------------ --------------------------------
Signature Signature
Charles Thomas
--------------------------------
Printed Name
Title: Pres.
--------------------------
E-36
CONTRACT AGREEMENT
The following is an Agreement between MADELYN THOMAS (the "Contractor") having
an address of 1160 Forum Veneto, Henderson, NV, 89012 and ENVIROKARE TECH, INC.
(the "Company") having an address of 2470 Chandler Ave., Suite #5, Las Vegas,
NV, 89120, wherein the Company has asked the Contractor to assume
responsibilities of providing management services for the Company with duties
and responsibilities as outlined below. This Agreement is effective from the
date of signing as noted below. It is understood by all parties to this
Agreement that the Contractor shall act on behalf of the Company in the capacity
of an independent Contractor and not as an employee of the Company.
POSITION AND RESPONSIBILITIES:
It is agreed that the Contractor will provide management services to the Company
as follows:
1) The Contractor shall establish corporate offices on behalf of the
Company, in Las Vegas, Nevada. It is expected that initial tasks
associated with the establishment of the Company's corporate offices
will be substantially complete by April 1, 1999. Further, it is left
to the Contractor's managerial judgement, in determining what shall
constitute necessary office components during the process of
establishing the Company's corporate office. It is understood by both
parties to this Agreement that any costs incurred in completion of
design, implementation, establishment and operation of the Company's
corporate offices shall be absorbed by the Company.
2) The Contractor shall provide additional management services to the
Company. These services may include providing supervisory, financial
advisory, investor, and public relations support to the Company. The
Contractor's reasonable judgement shall determine which services shall
be delivered on behalf of the Company and on what terms and basis. The
Contractor shall be allowed to utilize the premises of the Company to
perform Company and non-Company services, as outlined below.
3) It is understood by both parties to this Agreement that the Contractor
is free to perform non-Company services during the term of this said
contract. Said non-Company services may be set forth by the Contractor
from time to time and said non-Company services shall take precedence
over Company services, precedence to be determined and remain at the
sole discretion of the Contractor. The Contractor is not to be
considered an employee of the Company.
TERM OF AGREEMENT:
This Agreement commences November 1, 1998 and terminates October 31, 1999.
E-37
<PAGE>
COMPENSATION:
In his capacity the Contractor will be compensated by the Company on the
following basis:
1) The Contractor shall receive a monthly payment from the Company of
five thousand dollars ($5,000.00) said payment to be made in the
Contractor's name and said payment to be made by the 1st day of each
month for services provided. The first payment shall be for services
rendered in the month of November 1998, at the aforementioned rate of
compensation.
2) The Company shall indemnify the Contractor against any and all
liability that may be incurred by either the Company or by the
Contractor his performance of activities on behalf of the Company and
or the Company's clients. It is required that the Company obtain
insurance which indemnifies the Contractor against any and all claims,
legal and otherwise, that may arise and be brought against the
Company. The Company shall pay all legal and associated costs
encountered by the Contractor, as a result of action brought against
the Company or the Contractor in the course of the Contractor
providing services on the Company's behalf.
3) The Company shall reimburse the Contractor for all expenses incurred
on the Company's behalf by the Contractor. The Company's Board of
Directors reserves the prior right of approval on all expenses to be
incurred in any amount over five thousand dollars ($5,000.00), on a
per expense item basis.
TERMINATION:
Either party, upon thirty (30) days written notice to the other party, may
terminate this Agreement. This notice shall be sent by certified or registered
mail, postage prepaid, return receipt requested, to the parties at the principal
offices of the parties first noted here above. Either party may direct that a
notice, demand or communication shall be sent to a new address by giving written
notice to the other party hereto of such address.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
1st day of November, 1998.
MADELYN THOMAS ENVIROKARE TECHNOLOGY, INC.
By: /s/ Madelyn Thomas By: /s/ Charles Thomas
----------------------- ------------------------------
Signature Signature
Charles Thomas
------------------------------
Printed Name
Title: Pres.
------------------------------
E-38
