<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities
of Small Business Issuers Under Section 12(b)
or 12(g) of the Securities Act of 1934
Beach Couch, Inc.
(Name of Small Business Issuer in Its Charter)
Delaware 33-0812709
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
4190 Bonita Rd., Suite 105, Bonita, CA 91902
(Address of Principal Executive Offices) (ZIP Code)
(619) 297-2717
(Issuer'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
Securities to be Registered under Section 12(g) of the Act:
Common Stock
<PAGE> 2
ITEM 1 DESCRIPTION OF BUSINESS
General
1. Beach Couch, Inc., a Delaware corporation ("the Company") was
incorporated on June 4, 1998.
2. On June 5, 1998 the Company acquired all of the stock of California Beach
Couch, Inc. ("CBC") from Edward F. Myers III, the president of the Company in
an exchange of 100,000 shares of the Company's common stock for 10,000 shares
of CBC.
3. The company has not and does not use computers in its business and
therefore does not expect to be impacted by a Y2K problem.
4. Business Description
Mission
The mission of the Company is to create profit by selling its beach couch
product to the general public via retail outlets and a variety of other
marketing methods. The Company may also market its product via the Internet.
Product
The Company's product is a low-to-the ground, two person beach chair made of
nylon strips and tubular aluminum. It is approximately 40 inches wide. The
product allows two people to sit next to each other. It can be folded and
stored in a typical auto back seat or trunk. It can be carried more easily
than two separate chairs and provides a 'togetherness' quality for family and
loved ones. A small child can sleep stretched out.
A specific price for the product has yet to be determined but a price in the
$60.00 to $80.00 range would be most competitive and reasonable.
Market
The beach couch will be marketed initially to local (Southern California)
retail stores, especially in beach communities. This will include small
stores as well as department and discount stores which have beach furniture
departments. An additional market may be mail order in appropriate catalogs.
Since it is a unique product it is expected to attract many consumers as a
novel, convenient and enjoyable product to own and use. It may be necessary
initially to place the product in retail outlets on a consignment basis until
the product catches on. Beach stands are another possibility.
Competition
Currently, as best can be determined, there is no similar product on the
market today. The Southern California area is a prime location for marketing
this product. Unless and until there is another company producing this chair,
the Company should be able to capture a large market share as the 'first' to
develop such a beach 'couch'. It is unlikely that the Company can prevent
competition into the market and will concentrate on early establishment of
business relationships with the customers in the Southern California region.
<PAGE> 3
Patent
On November 25, 1998 Messrs. Myers (president of the Company) and Jordon
("the Inventors") filed a patent application for a "foldable couch seat"
(application No. 29/097,015). On March 9, 1999 the patent was allowed by the
U.S. Patent and Trademark Office. The invention is owned by California Beach
Couch, Inc. a wholly owned subsidiary of the Company.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR
PLAN OF OPERATIONS
Plan of Operation
(i) The Company has sufficient operating capital for the next 12 months.
The Company manufactures its product in batches. Each batch is sold for
sufficient profit to provide both overhead and sufficient monies to
purchasematerial for the next batch.
(ii) The present product is completely developed and the Company plans no
research or development in the next 12 months.
(iii) The Company does not plan to purchase significant plant or equipment
within the next 12 months.
(iv) The Company may hire one employee within the next 12 months.
ITEM 3. DESCRIPTION OF PROPERTY
The Company owns no real property. The Company rents approximately 1000
square feet from a non-affiliated party for $150.00 per month. This space is
used to assemble the product and is considered sufficient for the foreseeable
future. The Company also maintains an address rent free from Califia Realty
at 4190 Bonita Rd.#105, Bonita, CA 91902. This office is primarily for the
delivery of mail.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information concerning the Common
Stock ownership as of June 5, 1998, of each officer, director and who is
known to the Company as management or to be the beneficial owner of more than
five percent of the Company's Common Stock.
Name and Address Amount and Nature of Percent Ownership
of Beneficial Beneficial Ownership
Owner
Edward F. Myers III 125,000 3.1
J. Michael Page 1,925,000 48.1
Edward F. Myers II 1,900,000 47.5
Dal N.R. Grauer 25,000 .6
Gary A. Stannell 25,000 .6
1. Unless otherwise indicated, the named party is believed to be the sole
investor and have voting control of the shares set forth in the above table.
<PAGE> 4
2. Based on 4,222,750 outstanding shares on May 1, 1999.
ITEM 5 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
A. The Directors and Officers of the Company, all of whose terms will expire
one year from their election, or at such a time as their successors shall be
elected and qualified are as follows:
NAME AND ADDRESS AGE POSITION
Edward F. Myers III 31 President and Director
9031 Rosedale Dr.
Spring Valley, Ca 91977
Dal N. R. Grauer 53 Secretary and Director
4190 Bonita Rd. #105
Bonita, CA 91902
J. Michael Page 53 Director
4190 Bonita Rd. #105
Bonita, CA 91902
Gary A. Stannell 45 Director
4190 Bonita Rd. #105
Bonita, CA 91902
B. Resumes of the Directors and Officers of the Company are:
Mr. Edward F. Myers III has served as President and a Director of the Company
since June 5, 1998. Since 1987, he has operated Myers Painting, a sole
proprietorship. Mr. Myers is a licensed contractor in the State of
California. He is an experienced hang gliding pilot whose product is of a
similar tubular construction as the Company product. . Mr. Myers is an
experienced interpreter who has produced many inventions and formed new
companies. In 1997 he developed one of the first publicly available Internet
access machines.
Mr. Dal N. R. Grauer has held the position of Secretary and Director of the
Company since June 5, 1998. From January 1994 to August of 1995 he was
employed by FCN Financial Services, Inc. in the area of stockholder
relations. Between August 1995 and December 1998 he was employed by Airstar
Technologies, Inc. where he was also corporate secretary and a Director.
Airstar Technologies was a public company in the telecommunications field.
At Airstar he was involved in corporate finance and investors relations.
Since the end of 1998 he has not been employed.
Airstar Technologies Inc. filed for a Chapter 11 reorganization on October
13, 1998 in the U.S. Bankruptcy Court in the city of Riverside in the County
of Riverside, California. Airstar Technologies remains in Chapter 11 as of
the date of this filing.
J. Michael Page has been a director of the Company since June 5, 1998. For
the last five years Mr. Page has been a self employed business consultant,
consulting in the area of corporate structure and finance.
<PAGE> 5
Gary A. Stannell has been a Director of the Company since June 5, 1998.
Between 1993 and 1995 he was employed by Autogas Propane Ltd. He was in
charge of merchandising and supply of products for the Provence of British
Columbia, Canada. Since 1995 Mr. Stannell has been President and CEO of
Stannell Petroleum Ltd.("Stannell Ltd"). Stannell Ltd is a supplier of
Marine and Aviation fuels. Stannell Ltd operates a truck stop and fueling
facility at the Vancouver International Airport located in Richmond, B.C.,
Canada.
ITEM 6. EXECUTIVE COMPENSATION
A. None of the officers or directors receives or has received any
remuneration from the Company.
B. There is no annuity, pension or retirements benefit proposed to be paid
to officers, directors or employees of the Company in the event of retirement
at normal retirement date pursuant to any presently existing plan provided or
contributed to by the Company or any of its subsidiaries, if any.
C. No remuneration is proposed to be paid in the future directly or
indirectly by the Company to any officer or director under any plan which is
presently existing. No options have been granted.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 5, 1998 the Company issued 100,000 shares of its common stock to its
president Edward F. Myers III for all the outstanding stock of California
Beach Couch, Inc. The Company valued this transaction at $100.
On June 5, 1998 the company issued 25,000 shares of its common stock to
Edward F. Myers III, J. Michael Page, Dal N.R. Grauer and Gary A. Stannell,
respectively, for par value ($2.50 each).
On June 5, 1998 the Company issued 1,900,000 of its common stock to Edward F.
Myers II for $190.
On June 5, 1998 the Company issued 1,900,000 shares of its common
stock to J. Michael Page for $190.
ITEM 8. LEGAL PROCEEDINGS
None
ITEM 9. NUMBER OF EQUITIES, SECURITIES HOLDINGS
Title of Class Number of Record Holders
Common 49
There is, as of the date of filing, no public market in any class of stock of
the Company.
<PAGE> 6
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
On June 5, 1998 the Company issued 10,000 shares of its common stock to
Edward F. Myers III (the Company's president) in exchange for all of the
outstanding stock of California Beach Couch, Inc., a California corporation.
The issuance was made a non-public offering in reliance on Section 4(2) of
the Securities Act of 1933 as amended ("the Act").
On June 5, 1998 the Company sold 25,000 shares of its common stock for $2.50
to each of its directors. The sale was made as a non-public offering in
reliance on Section 4(2) of the Act.
On June 5, 1998 the Company sold to Edward F. Myers II, 1,900,000 shares
of common stock for $190 and sold to J. Michael Page, a director, 1,900,000
shares of common stock for $190. These sales were made as a non-public
offering in reliance on Section 4(2) of the Act. Between June 15, 1998 and
Dec. 31, 1998 the Company sold 222,750 shares of its common stock to 44
personal acquaintances at $0.08 per common share. These sales were made in
reliance on an exemption from registration contained in Regulation D (504).
ITEM 11. DESCRIPTION OF SECURITIES
The Company is authorized to issue 50,000,000 shares of Common Stock, par
value $0.0001 per share. As of June 5, 1998, the Company had outstanding
4,222,750 shares of Common Stock. All Common Shares are equal to each other
with respect to voting, and dividend rights, and subject to the rights of the
preferred shareholders. There are 20,000,000 shares of preferred par value
$0.0001, none of which are outstanding.
Special meetings of the Shareholders may be called by the officers,
directors, or upon the request of holders of at least ten percent of the
outstanding voting shares. Holders of Common Shares are entitled to one vote
at any meeting of the Shareholders for each Common Share they own as of the
record date. fixed by the Board of Directors. At any meeting of Shareholders,
a majority of the outstanding Common Shares of the Company entitled to vote,
represented in person or by proxy, constitutes a quorum. A vote of the
majority of the Common Shares represented at a meeting will govern, even if
this is substantially less than a majority of the Common Shares outstanding.
Subject to the rights of the preferred shareholders described below, holders
of shares are entitled to receive such dividends as may be declared by the
Board of Directors out of funds legally available therefore, and upon
liquidation are entitled to participate pro rate in a distribution of assets
available for such a distribution to Shareholders. There are no conversion,
preemptive or other subscription rights or privileges with respect to any
share. Reference is made to the Certificate of Incorporation and Bylaws of
the Company as well as to the applicable statutes of the State of Delaware
for a more complete description of the rights and liabilities of holders of
shares. It should be noted that the Bylaws may be amended by the Board of
Directors without notice to the Shareholders.
<PAGE> 7
Non-Cumulative Voting
The shares of the Company do not have cumulative voting rights, which means
that the holders of more than fifty percent of the Common Shares voting for
election of directors may elect all the directors if they choose to do so. In
such event, the holders of the remaining shares aggregating less than fifty
percent will not be able to elect directors.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Certificate of Incorporation of the Company provides for indemnification
of Directors and Officers of the Company as follows:
ARTICLE IX
"The personal liability of the directors of the corporation is hereby
eliminated to the fullest extent permitted by the provisions of paragraph (7)
of subsection (b) of * 102 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented."
ARTICLE X
"The corporation shall, to the fullest extent permitted by the provisions of
* 145 of the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented indemnify any and all persons whom it shall
have power to indemnify under said section from and against any and all of
the expenses, liabilities, or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled
under any Bylaw, agreement, vote of stockholders or disinterested directors
or otherwise, both as to action in his official capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person."
ITEM 13. FINANCIAL STATEMENTS
Audited Financial Statements for the year ended December 31, 1998.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
None.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
a). Audited Financial Statements for the fiscal year ended December 31,
1998.
b) (2) Plan of Acquisition
(3)(i) Articles of Incorporation
(ii) By-Laws
(23) Consent of Auditor
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a) Audited Financial Statements for
the fiscal year ended December 31, 1998.
Harlan & Boettger, LLP
Certified Public Accountants
5415 Oberlin Drive
San Diego, California 92121
Telephone (619) 535-2000, Facsimile (619) 535-2015
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Index to Consolidated Financial Statements
Page
Independendent Auditor's Report F-1
Consloidated Banance Sheet as of December 31, 1998 F-2
Consolidated Statement of Operations of the period form
June 4, 1998 (date of inception) to December 31, 1998 F-3
Consolidated Statement of Changes in Stockholders' Equity for
the period form June 4, 1998 (date of inception)
to December 31, 1998 F-4
Consolidated Statement of Cash Flows for the period form
June 4, 1998 (date of inception) to December 31, 1998 F-5
Notes to Consolidated Financial Statements F6 - F8
<PAGE> 10
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Beach Couch, Inc. and Subsidiary:
We have audited the accompanying consolidated balance sheet of Beach Couch,
Inc. (a development stage company) and subsidiary (collectively, the
"Company") as of December 31, 1998 and the related consolidated statements of
operations, changes in stockholders' equity and cash flows for the period
from June 4, 1998 (date of inception) to December 31, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our 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 consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the
Company as of December 31, 1998 and the results of its operations and its
cash flows for the period from June 4, 1998 (date of inception) to December
31, 1998, in conformity with generally accepted accounting principles.
F-1
San Diego, California
March 4, 1999
<PAGE> 11
BEACH COUCH, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
ASSETS
CURRENT ASSETS
Cash $ 11,230
TOTAL CURRENT ASSETS $ 11,230
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Income taxes payable $ 850
Accounts payable - related party (Note F) 1,500
------------
TOTAL LIABILITIES 2,350
------------
STOCKHOLDERS' EQUITY
Preferred stock, $.0001 par value, 20,000,000 shares
uthorized, none issued and outstanding -
Common stock, $.0001 par value, 50,000,000 shares
authorized, 100,000 issued and outstanding (Note B) 10
Additional paid-in capital 90
Stock to be issued (Note C) 17,820
Deficit accumulated during development stage (9,040)
-----------
TOTAL STOCKHOLDERS' EQUITY 8,880
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,230
==========
The accomp0anying notes are an integral part of these financial statements.
F-2
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BEACH COUCH, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JUNE 4, 1998
(DATE OF INCEPTION) TO DECEMBER 31, 1998
NET SALES $ 315
COSTS OF SALES 3,793
----------
GROSS (LOSS) (3,478)
OPERATING EXPENSES 4,712
----------
LOSS FROM OPERATIONS (8,190)
INCOME TAXES 850
NET LOSS $ (9,040)
=========
BASIC NET LOSS PER COMMON SHARE (Note A) $ (.05)
WEIGHTED AVERAGE SHARES OUTSTANDING 192,922
=========
The accomp0anying notes are an integral part of these financial statements
F-3
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BEACH COUCH, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Deficit
Accumulated
Additional During Total
Common Stock Paid-in Stock to Development Stockholders'
Shares Amount Capital be issued Stage Equity
Balance,
June 4, 1998 - $ - $ - $ - $ - $ -
Common stock
issued for
purchase of
subsidiary 100,000 10 90 - - 100
Proceeds Received
on stock
to be issued - - - 17,820 - 17,820
Net loss - - - (9,040) (9,040)
------ ----- ----- ------- -------- --------
Balance,
December 31, 1998 100,000 $ 10 $ 90 $17,820 $(9,040) $8,880
======== ====== ===== ======= ======== ========
The accomp0anying notes are an integral part of these financial statements
F-4
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BEACH COUCH, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JUNE 4, 1998
(DATE OF INCEPTION) TO DECEMBER 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (9,040)
Adjustments to reconcile net loss to net
cash used in operating activities:
Other 100
Changes in assets and liabilities:
Accounts payable 850
Accounts payable - related party 1,500
---------
NET CASH USED IN OPERATING
ACTIVITIES (6,590)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock to be issued 17,820
---------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 17,820
---------
NET INCREASE IN CASH 11,230
CASH AT BEGINNING OF PERIOD -
--------
CASH AT END OF PERIOD $11,230
========
The accomp0anying notes are an integral part of these financial statements
F5
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BEACH COUCH, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Organization and Summary of Significant Accounting Policies:
Organization
Beach Couch, Inc., a Delaware corporation (the "Company") was incorporated on
June 4, 1998. The Company is a development stage business created to engage
in the development of a unique, low to the ground, two-person beach chair.
Principles of Consolidation
The consolidated financial statements include Beach Couch, Inc., and its
wholly owned subsidiary, California Beach Couch, Inc., which was incorporated
in California on May 19, 1998. All significant intercompany balances and
transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities, and reported amounts of revenues and
expenses. Actual results could differ from those estimates.
Cash and Cash Equivalents
For the purposes of the statement of cash flows, the Company considers all
investments with a maturity of three months or less to be cash equivalents.
Earnings Per Share
Earnings per share are provided in accordance with Statement of Financial
Accounting Standard No.128 (FAS No. 128) "Earnings Per Share". Due to the
Company's simple capital structure, with only common stock outstanding, only
basic earnings per share is presented. Basic earnings per share are computed
by dividing earnings available to common stockholders by the weighted average
number of common shares outstanding plus the weighted average of "common
stock to be issued" during the period. In January 1999, the Company received
$390 for 3,900,000 shares of common stock to be issued. For the purposes of
computing earnings per share, the 3,900,000 shares of common stock to be
issued were not included in earnings per share for the period ended December
31, 1998, but will have a significant impact on future earnings per share.
Accounting for Business Combinations
The acquisition of California Beach Couch, Inc. was recorded as a purchase in
accordance with Accounting Principle Board Opinion No. 16 (APB No. 16)
"Business Combinations". The operating results of the acquired entity are
included in the Company's consolidated financial statements from the date of
acquisition.
F-6
<PAGE> 16
A. Organization and Summary of Significant Accounting Policies:
(continued)
Income Taxes
Income taxes are provided in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes." A
deferred tax asset or liability is recorded for all temporary differences
between financial and tax reporting and net operating loss carryforwards.
Deferred tax expense (benefit) results from the net change during the year of
deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion
of management, it is more likely than not that some portion of all of the
deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on
the date of enactment.
B. Acquisition:
On June 5, 1998, the Company authorized the issuance of 100,000 shares of
Beach Couch, Inc. common stock at par value of $.0001 to acquire 100% of the
outstanding shares of California Beach Couch, Inc. valued at $100 by the
Board of Directors. The purchase of shares has been recorded using the
purchase method of accounting. At the date of the transaction, California
Beach Couch, Inc. had no assets or liabilities. At the date of acquisition,
the President of California Beach Couch, Inc. was also the President of the
Company.
C. Stockholders' Equity:
On June 5, 1998, the Board of Directors authorized the issuance of 400,000
common shares at $.08 per share through a Section 504 (Reg. D) offering. As
of December 31, 1998, the Company had received cash for 222,750 shares but
such shares had not been issued. Cash received on common stock to be issued
is presented as "Stock to be Issued" on the accompanying consolidated balance
sheet.
On December 1, 1998, subsequent to cash received on the issuance of 222,750
shares of common stock, the Board of Directors authorized the sale of
3,900,000 common shares to certain directors of the Company at par value of
$.0001 or $390. Subsequent to December 31, 1998, the Company received $390
in payments for these shares, but had not issued the stock certificates.
D. Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes and interest during the period ended December 31,
1998 were as follows:
Income taxes $ -
Interest -
Noncash investing and financing transactions during the period were as
follows:
<PAGE> 17
During the period ended December 31, 1998, the Company issued 100,000 shares
of its common stock, valued at $100 to acquire 100% of the outstanding shares
of California Beach Couch, Inc. in a stock for stock transaction.
F-7
<PAGE> 18
E. Income Taxes:
The Company's total deferred tax asset at December 31, 1998 is as follows:
Net operating loss carryforward $ 2,200
Valuation allowance (2,200)
---------
$ -
=========
The Company has a net operating loss carryforward of $9,040 which, if not
utilized, will expire in 2012. The valuation allowance increased $2,200
during the period ended December 31, 1998. It is reasonably possible that
the Company's estimate of valuation allowance will change.
F. Related Party Transactions:
A stockholder of the Company is also a stockholder of EFM Venture Group,
Inc., ("EFM"). Included in accounts payable - related party at December 31,
1998, is $1,500 of expenses EFM paid on behalf of the Company.
F-8
<PAGE> 19
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Company has duly caused this disclosure statement to be signed on
its belhal by the undersigned, thereunto duly authorized.
\\ BEACJ CPICJ. OMC\\
\\EDWARD F. MYERS, III \\
Dated: __________________ __________________________
EDWARD F. MYERS, III
President
<PAGE> 20
b) (2) Plan of Acquisition
AGREEMENT OF REORGANIZATION
By and Between
BEACH COUCH, INC.
A Delaware Corporation,
and
Edward F. Myers III
As SHAREHOLDERS
and
CALIFORNIA BEACH COUCH, INC.
A California Corporation
<PAGE> 21
AGREEMENT OF REORGANIZATION
THIS AGREEMENT is made effective June 5, 1998, at San Diego, California, by
and between BEACH COUCH, INC., a Delaware Corporation (hereinafter referred
to as "BEACH COUCH, INC."), Edward F. Myers III, hereinafter referred to as
"SHAREHOLDERS"), and CALIFORNIA BEACH COUCH, INC. a California Corporation
(hereinafter referred to as the "CORPORATION").
WHEREAS, the SHAREHOLDERS have represented that they own all of the
outstanding stock of the CORPORATION, and
WHEREAS, BEACH COUCH, INC. desires to acquire from the SHAREHOLDERS and the
SHAREHOLDERS desire to exchange stock with the owners of California Beach
Couch, Inc., which are 100% of the outstanding stock of the CORPORATION
("the shares"), and
WHEREAS, the CORPORATION desires that this transaction be consummated.
NOW, THEREFORE, in consideration of the mutual covenants, promises,
conditions, agreements, representations and warranties contained in this
Agreement, setting aside all previous agreements both oral and written the
parties agree as follows:
1. PURCHASE AND SALE OF SHARES
1.1. The parties hereto adopt this Agreement as a Type B tax-free plan of
reorganization under Section 368(a)(1)(B) of the Internal Revenue Code
<PAGE> 9
1.2. Subject to the terms and conditions set forth in this Agreement, on
the closing, SHAREHOLDERS will transfer and convey to BEACH COUCH, INC.,
10,000 shares of common stock in the CORPORATION which represents 100% of
the issued and outstanding shares of stock in the CORPORATION.
1.3. As consideration for the transfer of the shares by SHAREHOLDERS,
BEACH COUCH, INC. shall deliver at the closing, certificates representing
100,000 shares of BEACH COUCH, INC.'S common stock.
1.4. The 100,000 shares of BEACH COUCH, INC.' common stock shall be issued
in the amount following each SHAREHOLDER'S name in Schedule "A".
2. REPRESENTATIONS AND WARRANTIES OF THE PARTIES
2.1. The SHAREHOLDERS represent and warrant that the SHAREHOLDERS are
owners, beneficially and of record, of all the shares free and clear of
liens, encumbrances, security agreements, equities, options, claims
charges, and restrictions, other than any restriction set forth by the
California Commissioner of Corporations. SHAREHOLDERS have full power to
transfer the shares to BEACH COUCH, INC. without obtaining the consent or
approval of any other person, governmental authority or the Corporation.
<PAGE> 22
2.2. The SHAREHOLDERS and the CORPORATION to the best of their knowledge,
represent and warrant as follows:
a. CORPORATION is a corporation duly organized validly existing, and in
good standing under the laws of California and has all
necessary corporate powers to own its properties and to operate its
business as now owned and operated by it.
b. The authorized capital stock of the CORPORATION consists of 1,000,000
shares of common stock, having a par value of $0.0001, of which 10,000
shares (the shares) are issued and outstanding. All the shares are validly
issued, fully paid, and non-assessable, and such shares have been so issued
in full compliance with all federal and state securities laws. There are
no outstanding subscriptions, options, rights, warrants, convertible
securities, or other agreements or commitments obligating the CORPORATION
to issue or to transfer from treasury any additional shares of its capital
stock of any class.
c. That there is no suit, action, arbitration, or legal administrative,
or other proceeding, to the best knowledge of CORPORATION; against or
effecting CORPORATION or any other business, assets, or financial
condition.
d. The financial statements in Exhibit B have been prepared in
accordance with generally accepted accounting principles consistently
followed by the CORPORATION as of the respective dates of said financial
statements, and the results of its operation for the respective periods
indicated.
e. That there has not been since the date of the attached financial
statements any material change in the financial condition, liabilities,
assets, business or prospects of the CORPORATION.
f. Since June 5, 1998, that within the times and in the manner
prescribed by law, the CORPORATION has filed all federal, state, and local
tax returns required by law and has paid all taxes assessments, and
penalties due and payable. There are not present disputes as to taxes of
any nature payable by the CORPORATION.
g. The CORPORATION is in possession of all premises leased to it from
others.
h. Neither the SHAREHOLDERS, nor any officer, director, or employee of
the CORPORATION, nor any spouse, child, or other relative of any of these
persons, owns, or has any interest, directly or indirectly, in any of the
real or personal property owned by or leased to the CORPORATION. That the
CORPORATION does not occupy any real property in violation of any law,
regulation, or decree.
i. The execution and delivery of this Agreement by the CORPORATION, and
the performance of its covenants and obligations under it, shall have been
duly authorized by all necessary corporate action, and the CORPORATION
shall have received copies of all resolutions pertaining to that
authorization, certified by the secretary of the CORPORATION.
<PAGE> 23
k. Each SHAREHOLDER is acquiring the stock of the CORPORATION as an
investment and not with a view to distribution, and each hereby consents
that the shares of the CORPORATION, may be legended to the effect that such
shares are not registered under the Securities Act of 1933.
l. The CORPORATION has given no options or other rights to purchase or
subscribe for any shares of stock of the CORPORATION in favor of any
person, firm or corporation. Stockholders do not have preemptive rights.
m. The CORPORATION has no assets or business other than those shown in
these financial statements.
n. The CORPORATION is not party to any employment agreements.
2.3 BEACH COUCH, INC. represents and warrants as follows:
a. BEACH COUCH, INC. is a corporation duly organized, validly existing,
and in good standing under the laws of Delaware and has all necessary
corporate powers to own its properties and to operate its business as now
owned and operated by it; and neither the ownership of its properties nor
the nature of its business requires BEACH COUCH, INC. to be qualified in
any jurisdiction other than the state of its incorporation.
b. The authorized capital stock of BEACH COUCH,INC. consists of
50,000,000 shares of common stock, having a par value of $0.00001 each,
4,000,000 of which are issued and outstanding. Such shares have been so
issued full compliance with all federal and state securities laws. BEACH
COUCH, INC. has also authorized 20,000,000 shares of preferred stock,
having a par value of $0.00001, none of which are issued. There are no
outstanding subscriptions, options, rights, warrants, convertible securities,
or other agreements or commitments obligating BEACH COUCH, INC.
to issue or to transfer from treasury any class of stock.
c. The financial statements in Exhibit A have been prepared in
accordance with generally accepted accounting principles consistently
followed by BEACH COUCH, INC. throughout the periods indicated and fairly
preset the financial position of BEACH COUCH, INC. as of the respective
dates of said financial Statements, and the results of its operations for
the respective periods indicated.
d. That there has not been since the date of the attached financial
statements any material change in the financial condition, liabilities,
assets, business or prospects of BEACH COUCH, INC..
e. That BEACH COUCH, INC. does not have any debt, liability, or
obligation of any nature, whether accrued, absolute, contingent, or
otherwise, and whether due or to become due, that is not reflected in the
financial statements or set forth in Exhibit A to this Agreement, and that
all debts, liabilities, and obligations incurred after that date were
incurred in the ordinary course of business, and are usual and normal in
amount both individually and in the Agreement.
f. That the total liabilities on the part of BEACH COUCH, INC. does not
exceed the approximate amount of $1,000.00.
<PAGE> 24
g. That within the times and in the manner prescribed by law, BEACH
COUCH, INC. has filed all federal, state, and local tax returns required by
law and has paid all taxes, assessments, and penalties which in BEACH
COUCH, INC.'S opinion are due and payable and has made all filings required
by all applicable state and federal laws.
h. That BEACH COUCH, INC. has good and marketable title to all of its
respective assets and interests in assets, whether real, personal, mixed,
tangible, and intangible, which constitute all the assets and interests in
assets that are used in the business of BEACH COUCH, INC.. All these
assets are free and clear of restrictions or of conditions of transfer or
assignment, and free and clear of mortgages, liens, pledges, charges,
encumbrances, equities, claims, easements, rights of way, covenants,
conditions or restrictions, except for (i) these disclosed in BEACH COUCH,
INC. financial statements in Exhibit A to this Agreement; (ii) the lien of
current taxes not yet due and payable; and (iii) possible minor matters
that in the aggregate, are not substantial in amount and do not materially
detract from or interfere with the present or intended use of any of these
assets, nor materially impair business operations. All real property and
tangible personal property of BEACH COUCH, INC. is in good operating
condition and repair, ordinary wear and tear excepted. BEACH COUCH, INC.
is in possession of all premises leased to it from others.
i. That there is no suit, action, arbitration, or legal administrative,
or other proceeding, or governmental investigation pending or, to the best
knowledge BEACH COUCH, INC. threatened, against or affecting BEACH COUCH,
INC., or any of its business, assets, or financial condition.
j. The execution and delivery of this Agreement by BEACH COUCH, INC. and
the performance of its covenants and obligations under it, shall have been
duly authorized by all necessary corporate action, and SHAREHOLDERS have
<PAGE> 12
received copies of allresolutions pertaining to that authorization,
certified by the secretary of BEACH COUCH, INC.
k. That they have had an opportunity to review the financial statements
in Exhibits B to this Agreement and based upon such financial statements
they have entered into this Agreement.
3. DOCUMENTATION, DELIVERY AND COOPERATION
3.1. The CORPORATION will furnish to BEACH COUCH, INC. for its examination
(i) copies of the Article of Incorporation and By-Laws of the CORPORATION;
(ii) the minute books of the CORPORATION containing all records required to
be set forth of all proceedings, consents, actions, and meetings of the
SHAREHOLDERS and Boards of Directors of the CORPORATION; (iii) all permits,
orders, and consents issued with Respect to corporation, or any security,
and all applications for such permits, orders, and consents; and (iv) the
stock transfer books of the CORPORATION setting forth all transfers of any
capital stock.
<PAGE> 25
3.2. At the closing, the SHAREHOLDERS shall deliver to BEACH COUCH, INC.
the following instruments, in form and substance satisfactory to BEACH
COUCH, INC. and its counsel:
a. A certificate or certificates representing the shares, registered in
the names of the SHAREHOLDERS, duly endorsed by the SHAREHOLDERS transfer
or accompanied by an assignment of the shares duly executed by the
SHAREHOLDERS. On submission of that certificate or certificates to the
CORPORATION for transfer, the CORPORATION shall issue to BEACH COUCH, INC.
a certificate representing the shares, registered in the name of BEACH
COUCH, INC..
b. The stock books, stock ledgers, minute books, and corporate seals of
the CORPORATION, and;
3.3. At the closing, BEACH COUCH, INC. shall deliver to SHAREHOLDERS the
following instruments and documents:
a. The share certificates as set forth in paragraph1.3.
3.4. All of the parties further agree that they will do all things
necessary and reasonable to accomplish and facilitate the transfer of the
shares in conformance with any and all governmental bodies and regulatory
agencies, and that they will sign and execute any and all documents
necessary to bring about and perfect the purposes of the Agreement.
4.1. The obligations of the SHAREHOLDERS hereunder are, at the option of
the SHAREHOLDERS, subject to the conditions that on or before the Closing:
a. The SHAREHOLDERS shall not have discovered any material error, or
misstatement or omission in the representations, and warranties made by
BEACH COUCH, INC. herein, and all the terms and conditions of this
Agreement to be complied with and performed by BEACH COUCH, INC. at or
before the Closing shall have been complied with and performed in all
material
respects.
b. The representations and warranties made by BEACH COUCH, INC. in this
Agreement shall be correct in all material respects at and as of the
Closing.
c. The Commissioner of Corporations of the State of California has
issued, if necessary, the appropriate permit or permits pursuant to the
California Corporations Code the qualification of the securities which are
the subject of this Agreement.
4.2. The obligations of BEACH COUCH, INC. hereunder are, at the option of
BEACH COUCH, INC., subject to the conditions that on or before the Closing:
a. BEACH COUCH, INC. shall not have discovered any material error,
misstatement or omission in the presentations and warranties made by the
SHAREHOLDERS of the CORPORATION, and all the terms and conditions of this
Agreement to be complied with and performed by the SHAREHOLDERS and the
CORPORATION on or before the Closing shall have been complied with and
performed in all material respects.
<PAGE> 26
b. The representations and warranties made by the SHAREHOLDERS and the
CORPORATION in this Agreement shall be correct in all material respects at
and as of the Closing.
c. The Commissioner of Corporations of the State of California has, if
necessary, issued the appropriate permit or permits pursuant to the
California Corporations Code for the qualification of the securities which
are the subject of this Agreement.
4.3. The Closing under this Agreement shall take place at the law offices
of Carmine Bua, 3838 Camino Del Rio North Ste. 333, San Diego, CA 92108, or
at such place, time or date, as may be agreed upon by the parties.
This Agreement may be signed in one or more counterparts.
BEACH COUCH, INC. CALIFORNIA BEACH COUCH, INC.
(a Delaware Corporation) (a California Corporation)
STOCKHOLDERS
\\ Edward F. Myers III \\
__________________________
Edward F. Myers III
<PAGE> 27
EXHIBIT A
SELECTED FINANCIAL INFORMATION
SUMMARY BALANCE SHEET DATA: June 5, 1998
Current Assets: $ 0.00
Other Assets: $ 0.00
Total Assets: $ 0.00
Total Liabilities: $ 0.00
Shareholders Equity $ 0.00
SUMMARY STATEMENT OF OPERATIONS DATA: (for period ending Feb. 14, 98)
Total Income $ 0.00
Net Loss $ 0.00
Net Loss Per Share: $ 0.00
<PAGE> 28
Exhibit B
SELECTED FINANCIAL INFORMATION
SUMMARY BALANCE SHEET DATA: June 5, 1998
Current Assets
Cash On Hand $ 000.00
Computer Equipment $ 000.00
Organization Expense $ 715.00
Total Assets: $ 715.00
Total Liabilities: $ 0.00
Shareholders Equity $ 715.00
SUMMARY STATEMENT OF OPERATIONS DATA:
(for period ending June 05, 98)
Total Income $ 0.00
Net Loss $ 0.00
Net Loss Per Share: $ 0.00
<PAGE> 29
Schedule A
Stock Acquired by California Stock Issued
Shareholders Beach Couch, Inc. in Exchange
Edward F. Myers III 10,000 100,000
<PAGE> 30
State of Delaware
Office of the Secretary of State
I, EDWARD j, FREEL, ELAWARE, SECRETARY OF STATE OF THE STATE OF
DELEWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF INCORPORATION OF "BEACH COUCH, INC"
FILED IN THIS OFFICE ON THE FOURTH DAY OF JUNE, A.D. 1998, AT 9
O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE
NEW CASTLE COUNTY RECORDER OF DEEDS.
\\Edward J. Freel\\
Edward J. Freel, Secretary of State
904467 8100 AUTHENTICATION: 9120352
981215147 DATE: 06-04-98
<PAGE> 31
CERTIFICATE OF INCORPORATION
BEACH COUCH, INC
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of
the State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code
and the acts amendatory thereof and supplemental thereto, and known,
identified, and referred to as the "General Corporation Law of the State of
Delaware"), hereby certifies that:.
FIRST: The name of the corporation (hereinafter called "the
corporation") is BEACH COUCH, INC.
SECOND; The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 1013
Centre Road, City of Wilmington 19805, County of New Castle; and the name
of the registered agent of the corporation in the State of Delaware at such
address is Corporation Service Company.
THIRD; The nature of the business and the purpose to be conducted and
promoted by the corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of
the State of Delaware.
FOURTH: The total number of shares which the corporation shall have
authority to issue is 70 million, which are divided into 20 million
Preferred shares of a par value of one hundredth of a cent ($.0001) each
and 50 million Common shares of a par value of one hundredth of a cent
($.0001) each.
Pursuant to the provisions of Section 151 (g) of the Delaware General
Corporation Law, the powers, designations, preferences, and rights of the
Preferred shares, along with any qualifications, limitations, or
restrictions, shall be provided for in a resolution or resolutions adopted
by the Board of Directors of the corporation, and a certificate of
designations setting forth a copy of such resolution or resolutions shall
be executed, acknowledged and filed with the Secretary of State.
Each issued and outstanding Common share shall entitle the holder thereof
to full voting power. Except as any provision of the law may otherwise
require, no share of any series of Preferred shares shall entitle the
holder thereof to any voting power.
FIFTH: The name and the mailing address of the incorporator are as
follows:
NAME MAILING ADDRESS
J. E. Costelloe 5670 Wilshire Blvd., Suite 750
Los Angeles, California 90036
<PAGE> 32
SIXTH; The corporation is to have perpetual existence.
SEVENTH; Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application
in a summary way of this corporation or of any creditor or stockholder
thereof or on the application of any receiver or receivers appointed for
this corporation under Section 291 of Title 8 of the Delaware Code or on
the application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under Section 279 of Title 8 of the Delaware
Code order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority
in number representing three fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and
to any reorganization of this corporation as consequence of such compromise
or arrangement,, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of this
corporation, as the case may be, and also on this corporation.
EIGHTH; For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further
provided:
1. The management of the business and the conduct of the affairs of the
corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be
fixed by, or in the manner provided in, the Bylaws. The phrase "whole
Board" and the phrase "total numberof directors" shall be deemed to have
the same meaning, to wit, the total number of directors which the
corporation would have if there were no vacancies. No election of directors
need be by written ballot.
2. After the original or other Bylaws of the corporation have been
adopted, amended, or repealed, as the case may be, in accordance with the
provisions of Section 109 of the General Corporation Law of the State of
Delaware, and, after the corporation has received any payment for any of
its stock, the power to adopt, amend, or repeal the Bylaws of the
corporation may be exercised by the Board of Directors of the corporation;
provided, however, that any provision for the classification of directors
of the corporation for staggered terms pursuant to the provisions of
subsection (d) of Section 141 of the General Corporation Law of the State
of Delaware shall be set forth in an initial Bylaw or in a Bylaw adopted by
the stockholders entitled to vote of the corporation unless provisions for
such classification shall be set forth in this certificate of
incorporation.
<PAGE> 33
3. Whenever the corporation shall be authorized to issue only one class
of stock, each outstanding share shall entitle the holder thereof to notice
of, and the right to vote at, any meeting of stockholders. Whenever the
corporation shall be authorized to issue more than one class of stock, no
outstanding share of any class of stock which is denied voting power under
the provisions of the certificate of incorporation shall entitle the holder
thereof it the right to vote at any meeting of stockholders except as the
provisions of paragraph (2) of subsection (b) of Section 242 of the General
Corporation Law of the State of Delaware shall otherwise require; provided,
that no share of any such class which is otherwise denied voting power
shall entitle the holder thereof to vote upon the increase or decrease in
the number of authorized shares of said class.
NINTH; The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the provisions of
paragraph (7) of subsection (b) of Section 102 of the General Corporation
Law of the State of Delaware, as the same may be amended and supplemented.
TENTH; The corporation shall, to the fullest extent permitted by the
provisions of Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and
all persons whom it shall have power to indemnify under said section from
and against any and all of the expenses, liabilities, or other matters
referred to in or covered by said section, and the indemnification provided
for herein shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any Bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors, and administrators of such a person.
ELEVENTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the stockholders of the
corporation by this certificate of incorporation are granted subject to the
provisions of this Article ELEVENTH.
Signed on June 3, 1998.
\\ J.E. Castelloe\\
_____________________________________
J. E. Costelloe, Incorporator
<PAGE> 34
b) (3) (ii) Bylaws
BYLAWS OF BEACH COUCH, INC.
(a Delaware corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock in
the corporation shall be signed by, or in the name of, the corporation by
the Chairperson or Vice-Chairperson of the Board of Directors, if any, or
by the President or a Vice-President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the corporation.
Any or all the signatures on any such certificate may be a facsimile. In
case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to
be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if such
person were such officer, transfer agent, or registrar at the date of
issue.
Whenever the corporation shall be authorized to issue more than one class
of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration
of transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares. The corporation
may issue a new certificate of stock or uncertificated shares in place of
any certificate theretofore issued by it, alleged to have been lost,
stolen, or destroyed, and the Board of Directors may require the owner of
the lost, stolen, or destroyed certificate, or such owner's legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance
of any such new certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the
General Corporation Law, the Board of Directors of the corporation may
provide by resolution or resolutions that some or all of any or all classes
or series of the stock of the corporation shall be uncertificated shares.
Within a reasonable time after the issuance or transfer of any
uncertificated shares, the corporation shall send to the registered owner
thereof any written notice prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of
fractional interests by those entitled thereto, (2) pay in cash the fair
value of fractions of a share as of the time when those entitled to receive
such fractions are determined, or (3) issue scrip or warrants in registered
form (either represented by a certificate or uncertificated) or bearer form
(represented by a certificate) which shall entitle the holder to receive a
<PAGE> 35
full share upon the surrender of such scrip or warrants aggregating a full
share. A certificate for a fractional share or an uncertificated
fractional share shall, but scrip or warrants shall not unless otherwise
provided therein, entitle the holder to exercise voting rights, to receive
dividends thereon, and to participate in any of the assets of the
corporation in the event of liquidation. The Board of Directors may cause
scrip or warrants to be issued subject to the conditions that they shall
become void if not exchanged for certificates representing the full shares
or uncertificated full shares before a specified date, or subject to the
conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the
holders of scrip or warrants, or subject to any other conditions which the
Board of Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers
or registration of transfers of shares of stock of the corporation shall be
made only on the stock ledger of the corporation by the registered holder
thereof, or by the registered holder's attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the
corporation or with a transfer agent or a registrar, if any, and, in the
case of shares represented by certificates, on surrender of the certificate
or certificates for such shares of stock properly endorsed and the payment
of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, the Board of Directors may fix
a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date shall not be more than sixty nor less than ten days
before the date of such meeting. If no record date is fixed by the Board
of Directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the
day on which the meeting is held. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the Board
of Directors may fix a new record date for the adjourned meeting. In order
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the Board of Directors may
fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the Board of Directors,
and which date shall not be more than ten days after the date upon which
the resolution fixing the record date is adopted by the Board of Directors.
If no record date has been fixed by the Board of Directors, the record date
for determining the stockholders entitled to consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors
is required by the General Corporation Law, shall be the first date on
which a signed written consent setting forth the action taken or proposed
to be taken is delivered to the corporation by delivery to its registered
<PAGE> 36
office in the State of Delaware, its principal place of business, or an
officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been
fixed by the Board of Directors and prior action by the Board of Directors
is required by the General Corporation Law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action. In order that the
corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date
is adopted, and which record date shall be not more than sixty days prior
to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate
or vote thereat or to consent or dissent in writing in lieu of a meeting,
as the case may be, the term "share" or "shares" or "share of stock" or
"shares of stock" or "stockholder" or "stockholders" refers to an
outstanding share or shares of stock and to a holder or holders of record
of outstanding shares of stock when the corporation is authorized to issue
only one class of shares of stock, and said reference is also intended to
include any outstanding share or shares of stock and any holder or holders
of record of outstanding shares of stock of any class upon which or upon
whom the certificate of incorporation confers such rights where there are
two or more classes or series of shares of stock or upon which or upon whom
the General Corporation Law confers such rights notwithstanding that the
certificate of incorporation may provide for more than one class or series
of shares of stock, one or more of which are limited or denied such rights
thereunder; provided, however, that no such right shall vest in the event
of an increase or a decrease in the authorized number of shares of stock of
any class or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation, except as any provision of
law may otherwise require.
7. STOCKHOLDER MEETINGS.
- - TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the directors, provided, that the first annual
meeting shall be held on a date within thirteen months after the
organization of the corporation, and each successive annual meeting shall
be held on a date within thirteen months after the date of the preceding
annual meeting. A special meeting shall be held on the date and at the
time fixed by the directors.
- - PLACE. Annual meetings and special meetings shall be held at such place,
<PAGE> 37
within or without the State of Delaware, as the directors may, from time to
time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the corporation in the State of
Delaware.
- - CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the
meeting.
- - NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the
place within the city or other municipality or community at which the list
of stockholders of the corporation may be examined. The notice of an
annual meeting shall state that the meeting is called for the election of
directors and for the transaction of other business which may properly come
before the meeting, and shall (if any other action which could be taken at
a special meeting is to be taken at such annual meeting) state the purpose
or purposes. The notice of a special meeting shall in all instances state
the purpose or purposes for which the meeting is called. The notice of any
meeting shall also include, or be accompanied by, any additional
statements, information, or documents prescribed by the General Corporation
Law. Except as otherwise provided by the General Corporation Law, a copy
of the notice of any meeting shall be given, personally or by mail, not
less than ten days nor more than sixty days before the date of the meeting,
unless the lapse of the prescribed period of time shall have been waived,
and directed to each stockholder at such stockholder's record address or at
such other address which such stockholder may have furnished by request in
writing to the Secretary of the corporation. Notice by mail shall be
deemed to be given when deposited, with postage thereon prepaid, in the
United States Mail. If a meeting is adjourned to another time, not more
than thirty days hence, and/or to another place, and if an announcement of
the adjourned time and/or place is made at the meeting, it shall not be
necessary to give notice of the adjourned meeting unless the directors,
after adjournment, fix a new record date for the adjourned meeting. Notice
need not be given to any stockholder who submits a written waiver of notice
signed by such stockholder before or after the time stated therein.
Attendance of a stockholder at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends the
meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
- - STOCKHOLDER LIST. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders, arranged in
alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at
least ten days prior to the meeting, either at a place within the city or
other municipality or community where the meeting is to be held, which
<PAGE> 38
place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by this section or
the books of the corporation, or to vote at any meeting of stockholders.
- - CONDUCT OF MEETING. Meetings of the stockholders shall be presided over
by one of the following officers in the order of seniority and if present
and acting - the Chairperson of the Board, if any, the Vice-Chairperson of
the Board, if any, the President, a Vice-President, or, if none of the
foregoing is in office and present and acting, by a chairperson to be
chosen by the stockholders. The Secretary of the corporation, or in such
Secretary's absence, an Assistant Secretary, shall act as secretary of
every meeting, but if neither the Secretary nor an Assistant Secretary is
present the chairperson of the meeting shall appoint a secretary of the
meeting.
- - PROXY REPRESENTATION. Every stockholder may authorize another person or
persons to act for such stockholder by proxy in all matters in which a
stockholder is entitled to participate, whether by waiving notice of any
meeting, voting or participating at a meeting, or expressing consent or
dissent without a meeting. Every proxy must be signed by the stockholder
or by such stockholder's attorney-in-fact. No proxy shall be voted or
acted upon after three years from its date unless such proxy provides for a
longer period. A duly executed proxy shall be irrevocable if it states
that it is irrevocable and, if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A proxy may be
made irrevocable regardless of whether the interest with which it is
coupled is an interest in the stock itself or an interest in the
corporation generally.
- - INSPECTORS. The directors, in advance of any meeting, may, but need not,
appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails
to appear or act, the vacancy may be filled by appointment made by the
directors in advance of the meeting or at the meeting by the person
presiding thereat. Each inspector, if any, before entering upon the
discharge of duties of inspector, shall take and sign an oath faithfully to
execute the duties of inspector at such meeting with strict impartiality
and according to the best of such inspector's ability. The inspectors, if
any, shall determine the number of shares of stock outstanding and the
voting power of each, the shares of stock represented at the meeting, the
existence of a quorum, the validity and effect of proxies, and shall
receive votes, ballots, or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate
all votes, ballots, or consents, determine the result, and do such acts as
are proper to conduct the election or vote with fairness to all
stockholders. On request of the person presiding at the meeting, the
inspector or inspectors, if any, shall make a report in writing of any
<PAGE> 39
challenge, question, or matter determined by such inspector or inspectors
and execute a certificate of any fact found by such inspector or
inspectors. Except as may otherwise be required by subsection (e) of
Section 231 of the General Corporation Law, the provisions of that Section
shall not apply to the corporation.
- - QUORUM. The holders of a majority of the outstanding shares of stock
shall constitute a quorum at a meeting of stockholders for the transaction
of any business. The stockholders present may adjourn the meeting despite
the absence of a quorum.
- - VOTING. Each share of stock shall entitle the holder thereof to one
vote. Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to
vote on the election of directors. Any other action shall be authorized by
a majority of the votes cast except where the General Corporation Law
prescribes a different percentage of votes and/or a different exercise of
voting power, and except as may be otherwise prescribed by the provisions
of the certificate of incorporation and these Bylaws. In the election of
directors, and for any other action, voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Except as any provision of the
General Corporation Law may otherwise require, any action required by the
General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special
meeting of stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
Action taken pursuant to this paragraph shall be subject to the provisions
of Section 228 of the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the corporation
shall be managed by or under the direction of the Board of Directors of the
corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board"
herein refers to the total number of directors which the corporation would
have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, a
citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of 7 persons. Thereafter the
number of directors constituting the whole board shall be at least one.
Subject to the foregoing limitation and except for the first Board of
Directors, such number may be fixed from time to time by action of the
<PAGE> 40
stockholders or of the directors, or, if the number is not fixed, the
number shall be. The number of directors may be increased or decreased by
action of the stockholders or of the directors.
3. ELECTION AND TERM. The first Board of Directors, unless the members
thereof shall have been named in the certificate of incorporation, shall be
elected by the incorporator or incorporators and shall hold office until
the first annual meeting of stockholders and until their successors are
elected and qualified or until their earlier resignation or removal. Any
director may resign at any time upon written notice to the corporation.
Thereafter, directors who are elected at an annual meeting of stockholders,
and directors who are elected in the interim to fill vacancies and newly
created directorships, shall hold office until the next annual meeting of
stockholders and until their successors are elected and qualified or until
their earlier resignation or removal. Except as the General Corporation
Law may otherwise require, in the interim between annual meetings of
stockholders or of special meetings of stockholders called for the election
of directors and/or for the removal of one or more directors and for the
filling of any vacancy in that connection, newly created directorships and
any vacancies in the Board of Directors, including unfilled vacancies
resulting from the removal of directors for cause or without cause, may be
filled by the vote of a majority of the remaining directors then in office,
although less than a quorum, or by the sole remaining director.
4. MEETINGS.
- - TIME. Meetings shall be held at such time as the Board shall fix, except
that the first meeting of a newly elected Board shall be held as soon after
its election as the directors may conveniently assemble.
- - PLACE. Meetings shall be held at such place within or without the State
of Delaware as shall be fixed by the Board.
- - CALL. No call shall be required for regular meetings for which the time
and place have been fixed. Special meetings may be called by or at the
direction of the Chairperson of the Board, if any, the Vice-Chairperson of
the Board, if any, of the President, or of a majority of the directors in
office.
- - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for
regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings in sufficient time for the convenient assembly of the
directors thereat. Notice need not be given to any director or to any
member of a committee of directors who submits a written waiver of notice
signed by such director or member before or after the time stated therein.
Attendance of any such person at a meeting shall constitute a waiver of
notice of such meeting, except when such person attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the directors need be specified in any
written waiver of notice.
<PAGE>41
- - QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon
a majority of the directors in office shall constitute a quorum, provided,
that such majority shall constitute at least one-third of the whole Board.
A majority of the directors present, whether or not a quorum is present,
may adjourn a meeting to another time and place. Except as herein
otherwise provided, and except as otherwise provided by the General
Corporation Law, the vote of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board. The
quorum and voting provisions herein stated shall not be construed as
conflicting with any provisions of the General Corporation Law and these
Bylaws which govern a meeting of directors held to fill vacancies and newly
created directorships in the Board or action of disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any
such committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons
participating in the meeting can hear each other.
- - CHAIRPERSON OF THE MEETING. The Chairperson of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the Vice-
Chairperson of the Board, if any and if present and acting, or the
President, if present and acting, or any other director chosen by the
Board, shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the
General Corporation Law, any director or the entire Board of Directors may
be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may designate one or more
committees, each committee to consist of one or more of the directors of
the corporation. The Board may designate one or more directors as
alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of any member of any such committee or committees, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board, shall
have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the corporation
with the exception of any power or authority the delegation of which is
prohibited by Section 141 of the General Corporation Law, and may authorize
the seal of the corporation to be affixed to all papers which may require
it.
7. WRITTEN ACTION. Any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board or committee.
<PAGE> 42
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a Secretary,
a Treasurer, and, if deemed necessary, expedient, or desirable by the Board
of Directors, a Chairperson of the Board, a Vice-Chairperson of the Board,
an Executive Vice-President, one or more other Vice-Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other
officers with such titles as the resolution of the Board of Directors
choosing them shall designate. Except as may otherwise be provided in the
resolution of the Board of Directors choosing such officer, no officer
other than the Chairperson or Vice-Chairperson of the Board, if any, need
be a director. Any number of offices may be held by the same person, as
the directors may determine.
Unless otherwise provided in the resolution choosing such officer, each
officer shall be chosen for a term which shall continue until the meeting
of the Board of Directors following the next annual meeting of stockholders
and until such officer's successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform such
duties in the management and operation of the corporation as shall be
prescribed in the resolutions of the Board of Directors designating and
choosing such officers and prescribing their authority and duties, and
shall have such additional authority and duties as are incident to their
office except to the extent that such resolutions may be inconsistent
therewith. The Secretary or an Assistant Secretary of the corporation
shall record all of the proceedings of all meetings and actions in writing
of stockholders, directors, and committees of directors, and shall exercise
such additional authority and perform such additional duties as the Board
shall assign to such Secretary or Assistant Secretary. Any officer may be
removed, with or without cause, by the Board of Directors. Any vacancy in
any office may be filled by the Board of Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors shall
prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
<PAGE> 43
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of incorporation and the
provisions of the General Corporation Law, the power to amend, alter, or
repeal these Bylaws and to adopt new Bylaws may be exercised by the Board
of Directors or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy of
the Bylaws of Beach Couch, Inc., a Delaware corporation, as in effect on
the date hereof.
Dated: June 5, 1998
\\ Betty N. Myers\\
___________________________________
Asst -Secretary of Beach Couch, Inc. (SEAL)
<PAGE> 44
(23) Consent of Auditor
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use of our report included in the Registration
Statement on Form 10 dated March 4, 1999 relating to the financial statements
of Beach Couch Inc. and Subsidiary.
/s/ Harlan & Boettger, LLP
San Diego, California
April 7, 1999
<PAGE> 45
[LEGEND]
THIS SCHEDULE CONTAINS SUMARY FINANCIAL INFORMATION EXTRACTED FRON THE BALANCE
SHEET AND STATEMENT OF OPERATIONS AS OF AND FOR THE SIX MONTHS ENDING
DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIREETY BY FREFERENCE TO
FINANCIAL STATMENTS INCLUDED IN THIS FILING
[LEGEND]
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-mos
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-END] DEC-31-1998
[CASH] 11,230
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 11,230
[PP&E] 0
[DEPRECIATION] 0
[TOTAL-ASSETS] 11,230
[CURRENT-LIABILITIES] 2,350
[BONDS] 0
<PERFERRED-MANDATORY> 0
<PERFERRED> 0
[COMMON] 90
[OTHER-SE] 17,820
[OTHER-SE] (9,040)
[TOTAL-LIABILITY-AND-EQUITY] 11,230
[SALES] 315
[TOTAL-REVENUES] 315
[CGS] 3,793
[TOTAL-COSTS] 3,793
[OTHER-EXPENSES] 4,712
[LOSS-PROVISION] 0
<INTEREST-EXPENSES> 0
[INCOME-PRETAX] (8,190)
[INCOME-TAX] 850
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (9,040)
<ESP-PRIMARY> (.05)
<ESP-DILUTED> (.05)
</TABLE>
