Filed: September 8, 1998
U. S. Securities and Exchange Commission
Washington D.C. 20549
Form SB-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
THE LIVING CARD COMPANY, INC.
----------------------------------------------
(Name of small business issuer in its charter)
Nevada NEVADA 87-0583192
- ------------------------ -------------------------- ----------------------
(State or jurisdiction (Primary Standard Industrial (I.R.S. Identifi-
of incorporation or Classification Code Number) cation No.)
organization)
1174 East 2700 South, #16, Salt Lake City, Utah 84106; (801) 485-0430
- -----------------------------------------------------------------------
(Address and telephone number of principal executive offices)
Same as above
- ----------------------------------------------------------------------
(Address of principal place of business or intended principal
place of business)
James C. Lewis,10 West 100 South,Suite 600 Salt Lake City, 84101;(801)530-0447
- ------------------------------------------------------------------------------
(Name, address and telephone number of agent for service)
Approximate date of proposed sale to the public: as soon as practicable
following effectiveness of the Registration Statement.
If any of the securities being registered on this Form are to be offered
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] .
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] .
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [ ] .
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
------------------------------
Title of
Each Proposed Proposed
Class of Dollar Maximum Maximum
Securities Amount Offering Aggregate Amount of
Being to be Price Per Offering Registration
Registered Registered Unit Price Fee
- ----------- ----------- --------- -------- -----------
Common Stock $150,000 $.10 $150,000 $100*
*minimum fee
<PAGE>
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933, as amended, or until the
registration statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
Disclosure alternative used (check one): Alternative 1[ ]; Alternative 2 [X ]
The Exhibit Index is on page 28.
Please send a copy of communications to:
James C. Lewis, Esq.
Lewis Law Offices
600 Crandall Building
10 West 100 South
Salt Lake City, Utah 84101
(801) 530-0447
<PAGE>
LIVING CARD COMPANY, INC.
1174 East 2700 South, #16, Salt Lake City, Utah 84106
(801) 485-0430
1,500,000 Shares of Common Stock
Price per security (share): $0.10 Per Share
Maximum Number of Securities Offered: 1,500,000 shares
Minimum Number of Securities Offered: 1,000,000 shares
Living Card Company, Inc. (the "Company") is offering a total of
1,500,000 shares of common stock, par value $0.001 per share, at an offering
price of $.10 per share. (See "DESCRIPTION OF SECURITIES.")
INVESTMENT IN SMALL BUSINESSES INVOLVES A HIGH DEGREE OF RISK, AND
INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD
TO LOSE THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS" FOR THE RISK FACTORS THAT
MANAGEMENT BELIEVES PRESENT THE MOST SUBSTANTIAL RISKS TO AN INVESTOR IN THIS
OFFERING.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING MERITS AND
RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED OR APPROVED BY ANY
FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE,
THESE AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE U.S. SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS
OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON
THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR SELLING LITERATURE.
______________________________________________________________________________
Offering Price Proceeds
to Public Commissions(1) to Company(2)
______________________________________________________________________________
Per Share $0.10 $0.00 $0.10
Total(3)
Minimum $100,000 $0.00 $100,000
Maximum $150,000 $0.00 $150,000
The Company anticipates sales to the public will commence on or about ____,
1998.
(1) The Company plans to offer the Common Stock in this offering through its
officers and directors, who will receive no compensation for such
activities. (See "PLAN OF DISTRIBUTION".)
(2) Before deducting expenses of the offering payable by the Company
estimated at $30,000.
The date of this Prospectus is , 1998.
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(3) The offering is being conducted on a "1,000,000 share minimum, 1,500,000
share maximum" basis. In the event that the minimum of 1,000,000 shares
of Common Stock having a gross subscription price of $100,000 is not
sold within four months of the effective date of this prospectus, all
proceeds raised will be promptly returned to investors, without paying
interest and without deducting any sales commissions or expenses of the
offering. All proceeds from the sale of the shares will be placed in
escrow with Brighton Bank, 311 South State Street, Salt Lake City, Utah,
84111, no later than noon of the next business day following receipt.
Subscribers will not have the use of their funds, will not earn interest
on funds in escrow, and will not be able to obtain return of funds
placed in escrow unless and until the minimum offering period expires.
(See "PLAN OF DISTRIBUTION.") In the event the minimum number of shares
is sold within the offering period, the offering will continue until
five months following the date of this prospectus, all offered shares
are sold, or the offering is terminated by the Company, whichever occurs
first.
The issuer is not a reporting company under the Securities Exchange Act
of 1934, as amended.
The Company intends to furnish to its stockholders with annual reports
containing financial statements audited and reported upon by its independent
accounting firm, and such other periodic reports as the Company may determine
to be appropriate or as may be required by law.
A copy of the documents incorporated by reference other than exhibits to
such documents (unless such exhibits are specifically incorporated by
reference in the information contained in this Prospectus), will be provided
without charge to each person, including any beneficial owner, to whom a copy
of this Prospectus has been delivered upon the written request or oral request
of such person. Requests for copies should be made to Living Card Company,
Inc., 1174 East 2700 South, #16, Salt Lake City, Utah 84106, Attention:
Secretary, telephone number (801) 485-0430.
Prior to this offering there has been no market for any securities of the
Company, and there is no assurance that any market will exist after the
offering. The public offering price has been arbitrarily determined by the
Company and bears no relationship to the assets or book value of the Company
or any other recognized criteria of value. (See "RISK FACTORS" and "PLAN OF
DISTRIBUTION.")
ALL SUBSCRIBERS' CHECKS SHOULD BE MADE PAYABLE TO "BRIGHTON BANK-- LIVING CARD
COMPANY, INC., ESCROW ACCOUNT."
__________________________________________________________________________
UNTIL , 199 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
The Shares are offered subject to prior sale and withdrawal or cancellation of
the offering, without notice. Offers to purchase and sales by the Company are
subject to: (a) acceptance by the Company; (b) the sale of the minimum number
of Shares specified herein; (c) the release and delivery to the Company of the
proceeds of this offering; (d) the delivery of the securities; and (e) the
right of the Company to reject any and all offers to purchase.
Changes in the offering which occur after the date hereof, if any, will
necessitate the filing with the Securities and Exchange Commission (the
"Commission") of an amendment to the registration statement of which this
prospectus forms a part (the "Registration Statement") and review and
declaration of effectiveness by the Commission of such amendment. There can
be no assurance that any such amendment will become effective.
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NO OFFICER OR DIRECTOR OF THE COMPANY, OR OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL.
_____________________________________________________________________________
INTRODUCTION
_____________________________________________________________________________
Living Card Company, Inc. (the "Company"), was organized as a Nevada
corporation on May 8, 1998. Following organization of the Company, John F.
Lund and R. Blair Lund, officers and directors, contributed to the Company all
of their rights to certain self-contained garden greeting cards designed,
created and developed by them over the past two years. On organization of the
Company, a total of 6,000,000 shares of Common Stock was issued to John F.
Lund and R. Blair Lund in consideration of their contribution of the product
line, and $10,000 in cash to the Company. Since the date of incorporation,
John F. Lund, President, has loaned the Company an additional $35,000 to fund
the Company's initial operations.
The Company is a Salt Lake City based corporation organized for the
purpose of specializing in the creation, development and marketing of unique,
educational and low-cost "garden" greeting cards. Management believes the
Company has a unique line of products which combine greeting card themes with
a variety of plants or flowers in a package which can be shipped by U.S. mail.
The Company plans to compete in the greeting card industry, by attempting to
establish a niche market for its unique products. The Company will offer its
products through the establishment of a broker network throughout the United
States, and through direct sales to various retail markets and outlets. There
can be no assurance the Company will be successful in these efforts. (See
"BUSINESS.")
The net proceeds from this offering will be approximately $120,000 if the
maximum offering is sold, and approximately $70,000 if only the minimum
offering is sold. Such net proceeds will be used by the Company to fund
product purchases, repay a portion of indebtedness to the Company's President,
cover general and administrative expenses for a period of four months, and to
market and promote the Company's products. The proceeds from this offering
may not be sufficient to adequately cover the necessary start-up costs of the
Company. (See "USE OF PROCEEDS").
This offering involves significant risks to investors, including those
generally associated with a new venture without any operating history or
history of profitable operations; substantial dilution to investors; the fact
that there is no public market for any of the Company's securities; the
extremely limited capital resources of the Company; the specific risks
attendant the greeting card industry; and other factors. (See "RISK
FACTORS").
This offering involves substantial and immediate dilution in the book
value of the Common Stock from the public offering price per share. (See
"DILUTION").
The Company's offices are located at 1174 East 2700 South, #16, Salt Lake
City, Utah 84106, where its telephone number is (801) 485-0430.
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_____________________________________________________________________________
RISK FACTORS
_____________________________________________________________________________
The purchase of the securities offered hereby involves a high degree of
risk. Each prospective investor should consider, in addition to the negative
implications of all material set forth herein, the following specific risks,
particularly in relation to his own financial circumstances and his ability to
suffer the loss of his entire investment.
RISK FACTORS RELATING TO THE COMPANY'S BUSINESS
- ------------------------------------------------
New Business; Extremely Limited Operating History
-------------------------------------------------
The Company was organized in May, 1998, and has only recently commenced
business operations. To date, the Company's activities have been limited to
acquiring the rights to the Living Card products from its officers and
directors, establishing relationships with suppliers, and ordering initial
supplies. The Company is in the development stage in that it has not received
revenues from its planned principal activities. The Company has not been in
business long enough to enable an investor to make an informed judgment as to
its future performance. It can be anticipated that the Company will operate
at a loss for a period of at least several months, until the Company has
established a broker network for the marketing of its products. Therefore,
the Company faces all of the risks inherent in the formation and operation of
a new business, and there can be no assurance that the proposed business of
the Company will be developed successfully or that the Company will be able to
operate profitably.
Need for Additional Financing
-----------------------------
The ability of the Company to implement its business activities is
dependent on obtaining funding through this offering. The net proceeds from
this offering will only be sufficient to fund the Company's operations for a
period of six months, if the entire offering is sold, and four months, if only
the minimum offering is sold. While the Company believes the funds from the
offering will be sufficient to fund initial inventory, to cover certain
general and administrative expenses and marketing costs, and to repay a
portion or all of its debt to its President, for a period of a few months, the
proceeds will be insufficient to cover expanded marketing efforts or to fund
any of these costs thereafter. While management believes the net proceeds
from this offering will be sufficient for the Company to implement its
business plan, the Company will be in need of additional funds thereafter,
unless the Company achieves a positive cash flow from the sale of Living Card
products within a few months from the date of this Prospectus. There can be
no assurance that such profitability will be achieved, and unforeseen
circumstances could occur which could compel the Company to seek additional
funds, particularly if only the minimum offering is sold. Even if the Company
does achieve a positive cash flow within a few months from the date of this
Prospectus, of which there is no assurance, the Company will have very limited
funds available for expanded operations. No assurance can be given that
additional financing will be available if needed, or if available, that it can
be obtained on terms favorable to the Company. The terms of any such
additional financing may result in additional dilution to the Company's
shareholders. In addition, it may be anticipated that the decision to conduct
any future financings will be essentially at the discretion of the board of
directors and the Company's shareholders will not have the right to vote on or
approve any such transactions. (See "USE OF PROCEEDS").
Proceeds of Offering To Be Used in Part to Repay Debt
-----------------------------------------------------
The Company's President, John Lund, has loaned to the Company a total of
$55,000 as of the date of this Prospectus, in addition to capital
contributions of $10,000 made to the Company by Mr. Lund and Blair Lund,
Secretary/Treasurer. The Company and Mr. Lund have agreed that this
indebtedness will be repaid, without interest, from the proceeds of this
offering. If only the minimum offering is sold, substantially all of the
proceeds
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will be used for the repayment of such indebtedness. (See "USE OF PROCEEDS").
Dependence on Management and Key Employee
-----------------------------------------
The Company will be particularly dependent on John F. Lund, President,
and Blair Lund, Secretary/Treasurer, in the development and management of the
business of the Company. John Lund will devote substantially all of his time
to the affairs of the Company. Blair Lund will devote a substantial portion
of his time to the Company's business, but has other business interests which
will require a portion of his time. While these individuals have a varied
business background, neither one of them has extensive experience in the
particular business the Company is undertaking. In addition to these
individuals, the Company's success will depend, in large part, on the efforts
of Craig M. Weston, vice president of marketing, in developing and
implementing the Company's marketing plan. The Company has not obtained
keyman insurance on the lives of any of these individuals, and does not intend
to do so in the foreseeable future. The loss of the services of any one of
these individuals could have a substantial detrimental impact on the Company.
(See "MANAGEMENT").
No Assurance of Market Acceptance of Product Line
-------------------------------------------------
The Company has not conducted any formal independent research or market
study to ascertain whether, and to what extent, its products will be accepted
by consumers. The Company's business is being undertaken solely on
management's evaluation that the Company has a very unique product which will
be attractive to consumers in the greeting card market. There can be no
assurance that the Company's products will be well received in the
marketplace, or that the Company will be able to create, through its marketing
efforts, a demand for its products. (See "BUSINESS").
New Product Introduction
-----------------------
The Company's success is dependent upon its ability to design and deliver
new products, and to successfully introduce the Company's products into the
marketplace. Demand and market acceptance of new products are subject to
substantial uncertainty. Achieving market acceptance for the Company's
products may require substantial marketing and other efforts and the
expenditure of significant funds to create product appeal and acceptance. As
indicated throughout this Prospectus, the Company has very limited funding for
such purposes. There can be no assurance the Company will be successful in
these efforts. The failure of any of the Company's products to gain market
acceptance could adversely affect the image of the Company and demand for
other products.
Competition
-----------
Competition in the greeting card industry is intense. The Company will
be competing with traditional greeting companies such as Hallmark Cards and
American Greetings, which are extremely large and financially healthy
companies, have a substantial market share and brand name recognition, and
easy access to marketing outlets and capital and capital markets. Many of
these companies are able to frequently able to update and expand product lines
and introduce new products, and to diversify product offerings. Because of
the uniqueness and relative permanency of its products, as compared to
traditional greeting cards, the Company believes there is a good possibility
that it will be able to initially capture the new "niche" market for garden-
style greeting cards. However, there can be no assurance that other companies
with substantially greater financial, creative and marketing resources, and
proven histories, will not effectively compete in this market. (See
"BUSINESS: Competition").
Dependence on Suppliers
-----------------------
The Company will utilize certain raw materials and supplies, including
plastics products, packaging, seed envelopes and seeds, peat moss cubes and
miscellaneous items provided by various suppliers. In addition, the Company
will rely on a Salt Lake City-based firm for its assembly, warehousing and
shipping. The Company does
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not expect to have any long-term purchase contracts with any of its suppliers.
Alternative sources exist for each of the materials used in the Company's
products, and for such assembly, warehousing and shipping services.
Nonetheless, the Company cannot give any assurance that supply or service
relationships with alternative sources can be established or that such
relationships could provide timely and sufficient quantity or quality of
materials. In addition, the Company may incur additional costs and business
delays and interruptions, in sourcing supplies and materials from alternative
sources. (See "BUSINESS: Suppliers").
Dependence on Distributors/Brokers
----------------------------------
The Company's principal plan for distributing its Living Card products,
is through the establishment of a network of brokers or distributors
throughout the United States, which are involved in, or associated with, the
greeting card business. Although the Company has identified a number of
brokerage firms in various market regions throughout the country, and
conducted initial discussions with many of these firms regarding a distributor
relationship, no brokerage agreements or arrangements have been entered into
as of the date of this Prospectus. The Company's ability to effectively
market and distribute its products will depend, in large part, on the
Company's ability to establish an effective and experienced network of
brokers. There can be no assurance the Company will be successful in these
efforts, or, if successful, that the brokers will be successful in
distributing the Company's products. (See "BUSINESS: Marketing").
GENERAL RISKS RELATING TO INVESTMENT
- ------------------------------------
"Best Efforts" Offering
-----------------------
The Shares of Common Stock are offered on a "best efforts" basis, and no
individual, firm, or corporation has agreed to purchase any of the offered
Shares. No assurance can be given that any or all of the Units will be sold.
Provisions have been made to deposit in escrow the funds received from the
purchase of Shares, and in the event $100,000 is not received within four
months of the effective date of this prospectus, proceeds so collected will be
promptly refunded to investors without paying interest and without deducting
sales commissions or expenses. During this escrow period, subscribers will
not have use of or derive benefits from their escrowed funds. (See "PLAN OF
DISTRIBUTION.")
No Public Market for the Company's Securities
---------------------------------------------
At the present time, there is no public market for the Company's
securities. There can be no assurance that a public market for the Company's
Common Stock will develop following the offering. As a result, purchasers of
the Common Stock offered hereby may not be able to liquidate their investment
readily, if at all. (See "PLAN OF DISTRIBUTION.")
No Underwriter
--------------
The Company has not engaged the services of an underwriter with respect
to this offering and, as a result, the due diligence review of the Company and
its affairs which would customarily be performed by an underwriter and its
legal counsel has not been performed with respect to the Company or this
offering. In addition, the management of the offering by the Company rather
than by an underwriter is likely to increase the risk that no market for the
Company's securities will develop following the offering. (See "PLAN OF
DISTRIBUTION".)
Dependence on Successful Completion of Offering
-----------------------------------------------
The Company is dependent on successful completion of this offering to
implement its proposed business plan. Furthermore, if the offering is
unsuccessful, it is likely that present shareholders of the Company will lose
their entire investment since the company will have little or no working
capital after paying certain expenses
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associated with this offering.
Disproportionate Risks
----------------------
On sale of all Shares offered hereby (assuming allocation of the public
offering price solely to the Common Stock), present shareholders would own
approximately 80% of the then outstanding shares of the Company, for which
they would have paid $10,000, and a contribution of the products designed and
developed by management, or approximately 6% of the then invested capital of
the Company (not including the intangible value of the products contributed to
the Company), and the persons purchasing Shares of Common Stock in this
offering would then own 20% of the then outstanding shares, for which they
will have paid $150,000 or approximately 94% of the then invested capital. If
only the minimum number of Shares is sold, existing shareholders would own
approximately 85.7% of the stock outstanding for which they would have paid
approximately 9.1% of the total capital invested, as compared to public
shareholders who would own approximately 14.3% of the stock outstanding for
which they would have paid $100,000 or approximately 91.9% of the total
capital invested. Consequently, purchasers in this offering will bear a
disproportionately greater risk investing in the Company than its present
shareholders. (See "COMPARATIVE DATA.")
Substantial and Immediate Dilution to Public
--------------------------------------------
Persons purchasing Shares in this offering will suffer a substantial and
immediate dilution to the net tangible book value of their shares below the
public offering price. Giving effect to the sale of all offered Shares, the
Company would have a net tangible book value of approximately of $0.015 per
share so that persons purchasing Shares in the offering would suffer an
immediate dilution of $0.085 per share or 85% from the offering price of $.10
per Share. Giving effect to the sale of the minimum number of Shares, the net
tangible book value of the Company would be approximately $0.01 per share or a
similar dilution to the public investors of $0.09 per share or 90% of the
public offering price. (See "DILUTION.")
Lack of Revenues and Dividends
------------------------------
The Company has had no earnings and cannot predict when, if ever, it will
realize any material revenue or realize a profit from any operations it may
subsequently undertake. The Company has paid no dividends and does not
propose to do so in the foreseeable future.
Arbitrary Offering Price
------------------------
The offering price of the Shares of Common Stock does not bear any
relationship to the assets, book value, or net worth of the Company or any
other generally accepted criteria of value, and should not be considered to be
an indication of the actual value of the Company. The offering price of the
Shares has been arbitrarily determined by the Company. (See "PLAN OF
DISTRIBUTION.")
Possible Sale of Common Stock Pursuant to Rule 144
--------------------------------------------------
All of the Company's 6,000,000 shares of Common Stock presently
outstanding are "restricted securities" within the meaning of the Securities
Act of 1933. As such, in the event a public market for the Common Stock
develops in the future, a portion of such stock may be sold as early as May,
1999, in reliance on Rule 144 adopted under the Securities Act, if certain
specific requirements are met. Investors should be aware that sales under
Rule 144 may have a depressive effect on the price of the Company's stock in
any market which may develop. (See "DESCRIPTION OF SECURITIES.")
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_____________________________________________________________________________
DILUTION
_____________________________________________________________________________
As of June 30, 1998, the net tangible book value (total tangible assets
less total liabilities) of the Company was ($1,814), or approximately $0 per
share. The following table sets forth the dilution to persons purchasing
Shares in this offering without taking into account any changes in the net
tangible book value of the Company after June 30, 1998, except the sale of the
minimum and maximum number of Shares offered at the public offering price and
receipt of the net proceeds therefrom.
Assuming Minimum Assuming Maximum
Shares Sold Shares Sold
---------------- ----------------
Public offering price
per share(1) $.100 $.100
Net tangible book value
before offering(2) $0 $0
Increase attributable to
purchase of Shares by
new investors $0.01 $0.015
Pro forma net tangible book
value after offering(2)(3)(4) $0.01 $0.015
Dilution per share to new
investors $0.09 $0.085
(1) Offering price per share before deduction of offering expenses and
commissions.
(2) Determined by dividing the number of shares of Common Stock outstanding
into the net tangible book value of the Company.
(3) After deduction of offering expenses estimated at $30,000.
(4) These figures do not take into account any events after June 30, 1998,
notwithstanding that the Company has borrowed an additional $30,000 from
its President since June 30, 1998. Of such amount, most of such
borrowed funds have been used by the Company for the purchase of
materials and inventory. (See "BUSINESS" and "INTEREST OF MANAGEMENT AND
OTHERS IN CERTAIN TRANSACTIONS").
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______________________________________________________________________________
COMPARATIVE DATA
______________________________________________________________________________
The following chart illustrates percentage ownership in the Company held
by the present shareholders and by the public investors in this offering and
sets forth a comparison of the amounts paid by the present shareholders and by
the public investors.
Total Total
Shares Purchased Consideration(1) Average
---------------- ---------------- Price Per
Number % Amount % Share
--------- ----- ---------- ---- ----------
Present Shareholders
- --------------------
Minimum Offering 6,000,000 85.7 $10,000 9.10 $.0017
Maximum Offering 6,000,000 80.0 $10,000 6.25 .0017
New Investors
- -------------
Minimum Offering 1,000,000 14.3 $100,000 90.90 .100
Maximum Offering 1,500,000 20.0 $150,000 93.75 .100
__________
1) The price per share of the present shareholders considers only the cash
contribution by such shareholders, and does not take into account other
contributions by such shareholders, including the contribution of the products
of the Company, and services contributed.
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_____________________________________________________________________________
USE OF PROCEEDS
_____________________________________________________________________________
The net proceeds to be received by the Company from the sale of all
1,500,000 shares of common stock are estimated at approximately $120,000, if
the entire offering is sold, after deducting expenses of this offering. If
only the minimum offering is sold, the Company will receive net proceeds of
approximately $70,000, after deduction of such offering expenses.
The Company proposes to use the net proceeds from this offering in the
following general amounts and order of priority:
Assuming Assuming
Minimum Maximum
Shares Shares
Item Sold(1) Sold(1)
---- -------- ---------
1. General and administrative expenses,
telephone, reproduction, and general
office costs (2)(3) $ 8,000 $ 8,000
2. Repayment of Indebtedness to Officer
and Director(4) 25,000 55,000
3. Marketing and Promotional Costs(5) 12,000 20,000
4. Management Compensation (6) 10,000 17,000
5 Materials, Supplies - Product Costs (7) 15,000 20,000
-------- --------
TOTAL $ 70,000 $120,000
______________
(1) The foregoing expenditures represent estimates based on the Company's
present intentions for the Company's first six months of operations. None of
the items set forth in the above table is a firm commitment by the Company.
(2) The Company contemplates that these costs will increase proportionately
if more than the minimum offering is sold, in order to cover additional
general and administrative costs necessary as a result of expanded operations.
(3) The Company's current overhead is limited to telephone, telefax,
reproduction, mailing and other miscellaneous expenses.
(4) The Company's President, John F. Lund, has loaned to the Company the sum
of $55,000, which has been used to fund the Company's start-up operations, and
to purchase materials for Living Card products. If the maximum offering is
sold, he will be repaid in full, without interest, from the net proceeds of
the offering. If only the minimum offering is sold, Mr. Lund has agreed to
accept a $25,000 payment from the net proceeds, and to be repaid on the
balance, without interest, at such time as the Company has sufficient funds
from operations or from another future financing. (See "INTEREST OF
MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS").
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(5) Represents amounts for travel to establish a distributor network; the
preparation and production of promotional materials; and other general
marketing and promotional activities. (See "BUSINESS: Marketing").
(6) See "DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES AND PARTIES:
Remuneration of Officers and Directors").
(7) Represents amounts to be utilized to purchase materials for products.
Does not include amounts previously expended by the Company for materials.
The net proceeds from this offering will fund the Company's operations
for period of only six (6) months. If only the minimum offering is sold, the
net proceeds may fund the Company for an even shorter period. Therefore,
within a few months from the completion of the offering, the Company will
either need to be operating profitably so as to fund its operations from cash
flow, or be required to seek additional debt or equity capital. In
addition, financial circumstances could occur which could compel the Company
to seek additional funds even sooner. Moreover, the Company will need
additional capital should it decide to significantly expand operations. There
is no assurance that additional funds will be available when needed, or if
available, on terms favorable to the Company.
The Company does not intend to become an investment company under the
Investment Company Act of 1940 and, therefore, may be limited in the temporary
investments it can make with the proceeds of this offering. To the extent
that the net proceeds of this offering are not utilized immediately, they will
be invested in money market accounts, savings deposits, short-term obligations
of the United States government, or other temporary interest bearing
investments in commercial financial institutions.
11
<PAGE>
_____________________________________________________________________________
BUSINESS
_____________________________________________________________________________
GENERAL
- -------
The Living Card Company (the "Company") is a Nevada Corporation organized
for the purpose of specializing in creative, educational, and low-cost
"garden" greeting cards. Upon organization in May, 1998, the Company acquired
from John F. Lund and R. Blair Lund, officers and directors, all of the rights
to certain "garden greeting cards" designed and developed over the past two
years. The Company is conducting this offering to provide it with funding to
further develop and market its products.
The Company's products were created as a result of the belief by
management that a substantial "niche" market exists in the greeting card
industry, for unique products. The Company's products, or "Living Cards," are
self-contained gardens, designed as relatively low-cost and unique greeting
cards. Management believes its Living Cards offer an affordable alternative
to traditional greeting card and gift products by providing a combination of a
conventional greeting card with a variety of plants or flowers which are
packaged for shipping by U.S. mail.
The Company has completed the development of its initial product line,
and has established relationships with suppliers of the various materials
comprising the Living Card products. The Company has established a
relationship with a Salt Lake City packaging firm, which will provide the
Company with packaging, warehousing and distribution services. Over the next
few weeks, the Company will seek to establish a distributor network with
brokerage firms involved in the greeting card industry throughout the country.
The Company has also undertaken efforts to market its products through various
retail markets, including convenience stores, fundraising activities, gift and
specialty stores and direct sales through a toll-free number. To date, the
Company has not generated any significant revenue. There can be no assurance
the Company will be successful in any of these efforts.
The Company is a newly organized corporation, and has no history of
operations.
PLAN OF OPERATIONS
- ------------------
The Company has completed the development of its initial product line,
and plans to devote its efforts in the next twelve months, to establishing a
sales network, marketing and promoting its products for the purpose of
establishing the Company's products in the marketplace, and maintaining, to
the extent the Company's funds allow, the production of its products to meet
anticipated demand. As soon as reasonably practicable following this
offering, the Company plans to enter into distributor arrangements with
carefully selected brokers in the industry, in different regions of the
country. At the same time, the Company will continue with efforts to directly
market its products to other retail markets. To the extent the Company's
funds allow, the Company will design and develop new living card products, to
meet different special events or niche markets.
If the maximum offering is completed, the Company believes it will have
sufficient funding to satisfy the Company's cash requirements for the next six
(6) months. If only the minimum offering is sold, the Company may need to
seek additional debt or equity capital to meet its cash requirements, unless
net revenue from sales of products generates sufficient capital. There can be
no absolutely no assurance that revenue from operations will provide the
Company with funds sufficient to meet the Company's cash requirements.
INDUSTRY AND MARKET OVERVIEW
- -----------------------------
According to The Greeting Card Association in its most recent industry
research, the greeting card industry currently generates approximately
$7,000,000,000 in annual sales, and has been expanding at the rate of
approximately 6% per year for the past 8 years. The Company believes that
"niche" markets within the industry
12
<PAGE>
have driven much of this growth, as many consumers appear to want alternatives
to the traditional disposable card. The Company and its management believe
that because of the consumers' desire for unique alternatives, the Company may
be able to enjoy at least a temporary competitive advantage by offering what
they believe to be the first producer of garden-style cards - the Living Card.
Although the Company has not conducted any formal market studies or
analyses of the greeting card industry in undertaking its business, management
believes a few trends are apparent. First, the type and range of greeting
cards have expanded considerably over the past several years as new
technologies have created new methods of presenting greeting card information.
Consequently, management believes that alternatives to traditional greeting
cards have, in large part, driven the industry's growth in recent years, and
card producers have sought smaller, untapped niche markets for profit
potential. Secondly, the greeting card industry in general has enjoyed nearly
twenty consecutive years of growth, notwithstanding a number of business
cycles during such period, and it appears that it will continue to grow. The
greeting card industry does not appear to be impacted as significantly by
general economic conditions as many other industries, due to the relatively
modest cost of greeting cards, the opportunity in the industry to diversify in
range and non-seasonality, and other factors. Thirdly, greeting cards have
both pre-planned and impulse purchases, thereby creating numerous unique
marketing opportunities.
Due to the factors described above, management believes that the greeting
card industry offers potential for both the large-scale card producers, and
the smaller, niche market producers like the Company. The Company believes it
has an opportunity to address both the traditional seasonal and holiday
markets with an emphasis on the uniqueness of its products, and to expand into
alternative, non-seasonal niche markets.
PRODUCTS
- --------
Each "Living Card" in the Company's product line has been designed to
provide the buyer with an alternative to the typically short-lived personal
greeting card, which is generally disposed of shortly after the event which it
commemorates (e.g., Christmas, birthdays, Valentine's Day). Each "Living
Card" is designed as a small garden, which will grow with minimal care. The
Living Cards are self-contained gardens, designed to be relatively low cost,
educational and entertaining cards. The Living Cards are packaged for low-
cost shipping via U.S. mail.
The Company has initially created eight styles of cards for a variety of
themes and holiday occasions, as follows:
1. The Amazing Pop-Up Garden
2. My Very First Garden
3. Mom's Magic Herb Garden
4. Mom's Magic Tea Garden
5. Happy Birthday
6. Thinking of You
7. Get Well Soon
8. Missing You
Additional Living Card garden products, covering a variety of additional
holiday events or themes, are in design, and will be introduced into the
market as the Company's financial situation and operating and marketing
results dictate. All aspects of the cards, including the peat, box, plastic
containers, and seeds, are adaptable to additional holidays, themes, corporate
logos, educational needs, and events.
Each Living Card contains a pop-up box (shippable package); bio-soil peat
cubes, which is the peat source for the plants or flowers; a plastic container
(rectangular-shaped); and seed packets containing a variety of flowering and
foliage seeds.
13
<PAGE>
The products come with simple instructions which describe a basic four-
step process for growing the "Living Card." If the instructions are followed,
the Living Cards are guaranteed to germinate within three to five days and to
continue to grow for approximately six months. Seed stamps are date-stamped
with a three-year shelf-life; peat cubes actually improve with age and have no
shelf life.
The Company purchases the materials and supplies used in its products,
including plastics products, packaging, seed envelopes and seeds, peat moss
cubes and miscellaneous items, from various suppliers. Except for the
Company's supplier of peat cubes, located in Hasselfors, Switzerland, and its
supplier of seeds, located in Cambridge, New York, all of these suppliers are
located in the Salt Lake City area. In addition, the Company uses the
services of a Salt Lake City based firm for assembly, warehousing and shipping
of the Company's products. The Company does not currently have, and does not
expect to have, any long-term purchase contracts with any of its suppliers or
providers. Alternative sources exist for each of the materials used in the
Company's products, and for such assembly, warehousing and shipping services.
However, the Company cannot give any assurance that supply or service
relationships with alternative sources can be established or that such
relationships would provide timely and sufficient quantity or quality of
materials or services. In addition, the Company may incur additional costs
and business delays and interruptions, if an existing relationship with a
supplier were to terminate, for whatever reason, and sourcing supplies and
materials from alternative sources became necessary.
MARKETING
- ---------
According to statistics from the Greeting Card Association, in 1996 about
7,400,000,000 greeting cards were purchased by Americans, resulting in
approximately $6,850,000,000 in sales. While cards may range in price from
$.50 to $10, the average price is around $2. About half of all cards sold are
seasonal purchases, and the remaining one-half are everyday cards which
include both alternative and non-occasion cards. Approximately 85% to 90% of
card purchases are made by women, with the typical purchaser being a middle-
aged woman. However, these customer demographics have been changing in recent
years to reflect a greater proportion of other groups.
While the Company has not conducted its own market study or research
pertaining to the greeting card industry, management believes a number of
trends exist which potentially create an opportunity for the Company in the
"niche" market in which it will compete. Based on historical data over the
past twenty years, the overall greeting card market will continue to grow, and
will be driven to some extent by the "alternative card" market - or the
consumer's need for something different than the traditional greeting card.
Management believes that the market for non-seasonal or non-event greeting
cards will continue to grow, as more product alternatives become readily
available for "impulse" purchases, and as a larger segment of the consumer
market (i.e., males, the younger population) captures a larger market share.
While the Company anticipates that the greeting card market will continue
its recent rate of steady growth, although there is no guarantee of this
continuing growth. Historically card producers have expanded into two main
areas, by focusing on traditional holiday themes, and by expanding into niche
markets. Market analyses suggest that much of the recent growth in card sales
has been in the niche areas. The Company plans to exploit both these areas in
offering a unique and more permanent greeting card.
Greeting cards can be both pre-planned and impulse purchases. Typical
pre-planned purchases are for Christmas, Mother's Day, Father's Day, Easter
and St. Valentine's Day, among others. However, there is also a strong market
for "get well" and condolence cards, etc., which by their very nature cannot
be pre-planned. The Company hopes to offer an attractive alternative to the
disposable cards with its product by appealing to both the pre-planned and
impulse purchasers with differently themed cards.
Distributor Network
The Company plans to establish an extensive broker network to market
Living Cards throughout the United States. The Company plans to carefully
select brokers with experience and contacts in the greeting card industry.
Management believes this marketing approach offers a number of advantages in
launching the Company's product
14
<PAGE>
line. First, because brokerage firms will already have working relationships
with retailers with retailers throughout their markets, Living Card products
may be quickly and relatively inexpensively introduced to current accounts
while new accounts are cultivated. Secondly, each brokerage account will be
selected by the Company to have an in-house merchandising department allowing
it to monitor Living Card product sales in each retail outlet, thus providing
sales information, allowing the Company to assess broker and product success,
and enabling the Company to more accurately control production and inventory
and respond to customer preferences and demand. Thirdly, by utilizing brokers
and distributors to market Company products, the Company will have less
overhead and utilize less management and marketing resources, and will be
better able to focus on production, product development and quality control.
Finally, management believes that the use of a broker network affords the
Company considerable flexibility in its marketing strategy, because the
Company will be able to engage firms on renewable 30-day contracts based on
performance.
The Company has identified six initial market regions in the western
United States which will be the initial market areas the Company offers its
products. Firms with substantial experience in the greeting card industry
have been identified as prospective brokers for the Company's products, and
discussions are underway with a number of these firms. The Company plans to
offer each of these firms renewable 30-day contracts, to allow for quick
response if sales do not meet expectations.
There can be no assurance that the Company will be successful in its
efforts to establish a network or broker representatives, as described.
Moreover, even if a network is established, there can be no assurance that the
brokers involved will be motivated or successful in selling the Company's
products.
Retail Markets
In addition to the broker network described above, the Company plans to
target several different channels through which its products can be sold. A
few of the markets the Company intends to develop are described below:
-- Grocery Stores. Management believes that grocery stores may offer the
most successful approach because of their high traffic volume and numerous
product display locations. Several areas in the grocery store are believed to
be suitable for placement of the products, including the front-end
merchandising area (next to the cash register) for impulse purchases; the
traditional greeting card section; the "power-panel" merchandising sections at
the end of shopping aisles; seasonal/promotional sections; and the general
merchandise sections--perhaps next to gift or gardening sections.
-- Convenience Stores. Convenience stores may prove to be attractive
marketing venues for three principal reasons. First, the industry is
constantly looking for new and unique products with high profit margins.
Secondly, the convenience store consumer is oftentimes an impulse buyer.
Thirdly, there are over 90,000 convenience stores in the United States.
-- Gift Stores/Specialty Stores. The Company believes its products fit
into this "niche" market. Some examples of this market include American
Greeting Card stores, Michael's, copy store outlets, and the like.
-- Direct Sales. Each Living Card box has a toll-free number customers
may use for direct orders. Phone orders will be handled by customer service
during business hours and/or by Alert Communications, an answering service
with which the Company has contracted, on a 24 hour basis. When orders are
received, customer information is entered into the Company's database and
orders are mailed within five (5) business days. The Company eventually plans
to use the database records for catalog mailings and new product
introductions.
-- Fundraising Activities. Numerous organizations seek unique items for
their fundraising activities. Management believes the Company's products are
particularly suitable to this market, because of their unique nature,
affordability, and the ability to adapt the products to the needs of a
particular organization.
Future Marketing Plans
15
<PAGE>
The Company is exploring a number of additional marketing strategies
which it will implement in the future, a few of which are described below:
-- Modified Plastic Molds. The Company may acquire or develop a number
of different plastic molds for a variety of container shapes, to reflect
specific holidays or events or common greeting card themes. (e.g., pumpkins
for Halloween; hearts for Valentine's Day, etc. Additionally, modified
plastic containers can be used as "start-up" gardens, after which plants can
be transplanted into existing gardens.
-- Education. The Company is reviewing a number of different strategies
to offer the products into the educational market. The Company's products may
be used to introduce young children to plant growth and/or gardening.
-- Corporate Opportunities. Living Card products may be designed to
serve as promotional material for corporations or large enterprises, designing
the plastic container to display company logos, colors and/or specific
messages or themes.
-- Gardening. Living Card products may be used to enhance home gardens.
Living Cards may be modified to accommodate larger plants such as tomatoes,
and sold with garden-specific seeds.
-- International sales. Greeting cards are popular throughout the world,
and international markets offer considerable opportunity for future sales.
There is no assurance whatever that the Company will be successful in
entering into any of the markets described above. Due to the Company's
extremely limited resources, the Company will not be able to pursue many of
these markets simultaneously without substantial additional capital.
Pricing and Profit
The Company's products will be uniformly priced, which management
believes is the most effective way to sell low-cost consumer products. In
pricing products uniformly, management believes consumers will choose between
products rather than prices, which will translate into greater purchasing
ease. The Company will attempt to price its products so as to achieve a gross
product margin of 40% or more.
COMPETITION
- -----------
The business in which the Company will compete is intensely competitive.
The Company will be competing with large companies in the industry, such as
Hallmark Cards and American Greetings, which have established reputations,
name recognition and market share, and the ability to update and expand
product lines. Most, if not all, of the companies with which the Company will
compete, have significantly greater management, marketing, and creative and
financial resources.
Management believes that the larger, established greeting card companies
do not enjoy the same advantage in the "niche" markets in the industry, due to
their traditional approach to the market. While the Company realizes that it
is in a significant disadvantage in the marketplace due to its limited
resources and experience, the Company believes it will be able to compete in
the industry because of the uniqueness of its product line.
EMPLOYEES
- ---------
The Company presently employs its officers and directors, and certain
clerical staff on an "as needed" basis. As the Company's business grows, the
Company anticipates that it will need to employ additional salaried clerical
staff, and sales personnel, who will be paid based on sales.
16
<PAGE>
OFFICES
- -------
The Company presently utilizes office space and related equipment and
resources, of its Secretary/Treasurer. The Company believes that this office
space and related equipment is adequate for its foreseeable needs. As soon as
Company revenue allows, which is expected to be within three months following
the offering, the Company will pay a reasonable rental rate, estimated at
between $400 to $500 per month.
_____________________________________________________________________________
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
_____________________________________________________________________________
The following table sets forth, as of the date of this prospectus, the
aggregate number of shares of Common Stock of the Company owned of record or
beneficially by each person who owned of record, or is known by the Company to
own beneficially, more than 5% of the Company's Common Stock, and the name and
shareholdings of each officer and director and all officers and directors as a
group:
Percent
---------------------
Name and Address of 5% Number of After Offering (2)
Shareholders, Officers Shares Before ----------------------
and Directors Owned(1) Offering Minimum Maximum
- ----------------------- --------- --------- ----------- -----------
PRINCIPAL SHAREHOLDERS:
John F. Lund 3,000,000 50.0 42.9 40.0
R. Blair Lund 3,000,000 50.0 42.9 40.0
OFFICERS AND DIRECTORS:
John F. Lund --------- See above --------
R. Blair Lund --------- See above --------
All officers and directors
as a group (2 persons) 6,000,000 100.0 85.7 80.0
____________________________
(1) All shares are held beneficially and of record, and each record
shareholder has sole voting, investment, and dispositive power.
(2) R. Blair Lund is the father of John Lund.
17
<PAGE>
_____________________________________________________________________________
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES AND PARTIES
_____________________________________________________________________________
OFFICERS AND DIRECTORS
- ----------------------
The following table sets forth the names, age, and position of each
director and executive officer of the Company.
Name Age Position and Office Held
----------------- ---- ------------------------
John F. Lund 41 President and Director
R. Blair Lund 71 Secretary/Treasurer and Director
__________________
Each of the above individuals, became an officer and director of the
Company in connection with its organization. The term of office of each
officer and director is one year and until his successor is elected and
qualified.
BIOGRAPHICAL INFORMATION
- -------------------------
Set forth below is biographical information for each of the Company's
officers and directors. No person other than the Company's officers and
directors will perform any management functions for the Company.
John F. Lund has been involved in developing the products for Living Card
Company for the past two years. He founded Vertical Gardens, a unique garden
products firm located in Salt Lake City, Utah of which he served as president
from 1993 to 1996. While with Vertical Gardens, Mr. Lund was responsible for
design and product development; marketing; and all accounting and financial
matters. For a period of approximately eleven years prior to his position
with Vertical Gardens, Mr. Lund was employed by BSD Medical Corporation, a
medical electronics firm, as purchasing manager. From 1978 to 1982, Mr. Lund
was employed as regional manager of Evans Specialty Company, a specialty
hardware and fastener firm, where he was responsible for managing the
company's regional office and warehouse, including overseeing inventory
management and control, training, accounting, scheduling, marketing, and
public and customer relations. From 1977 to 1978, Mr. Lund was the owner and
operator of Amex Systems Corporation, a building products company. Through
his various employment positions over the years, Mr. Lund has developed a
broad range of experience in product development, marketing, management,
procurement, and finance. Mr. Lund attended the University of Utah from 1975
through 1978, where he took courses in business management, marketing and
finance before leaving prior to receiving a degree, to pursue private business
concerns.
R. Blair Lund is the father of John F. Lund. For the past several years,
Mr. Lund has been involved in a number of private business ventures. Since
1992, he has served as Secretary/Treasurer of Material Processing, Inc., a
publicly held corporation engaged in soil sterilization and environmental
clean up activities. For a period of approximately 26 years through 1978, Mr.
Lund was involved in the consumer finance industry. He was an officer,
director and founder of Industrial Credit, Inc., a Utah thrift and loan and
finance company. From 1976 to 1978, he served as an officer and director of
Western States Thrift and Loan, a Utah thrift and loan. Mr. Lund has been
self-employed over the past several years as a consultant for several small
manufacturing firms. From approximately 1972 to 1974, he served as president
of the Utah Consumer Finance Association. From 1947 to 1951, Mr. Lund
attended the University of Utah and the University of Colorado, Boulder, where
he took courses in banking and finance.
18
<PAGE>
REMUNERATION OF OFFICERS AND DIRECTORS
- --------------------------------------
There are no employment agreements between the Company and any member of
management, and it is not anticipated that any employment agreements will be
entered into during at least the first year of operations following the
offering. During the first twelve months of operations following the
offering, the Company will pay to John F. Lund and R. Blair Lund, salaries of
$3,000 and $1,500 per month, respectively. Blair Lund has agreed, however, to
forego a salary during the first six months following the offering, in the
event only the minimum offering is sold.
There are no agreements or arrangement, express or implied, between any
officer or director and the Company, regarding any other form of compensation,
including stock options, warrants, employments incentives, or the like.
SIGNIFICANT EMPLOYEE
- --------------------
Except for its officers and directors, the Company's only significant
employee is Craig Weston, vice president of marketing. Management believes
Mr. Weston's efforts will be significant in the development of the Company's
marketing plans.
Craig M. Weston has focused most of his professional career in marketing
and sales. From August 1997 until he began employment with the Company in
June, 1998, Mr. Weston was employed by Excellent Foods, Inc., a food
distributor, as national sales manager. In this position, Mr. Weston was
responsible for all aspects of sales for the Foodservice/Convenience store
market segments, including division pricing and profitability. From 1996
until his position with Excellent Foods, Inc., he served as national sales
manager for Modern Health Strategies, a supplier of health supplements, where
assisted in product development and implementation, an helped to establish a
marketing plan, and new markets, for the company in convenience stores, retail
outlets and other markets. From 1993 to 1996, Mr. Weston was employed by
Harmony Foods, as national sales manager of foodservice/C-Store division. In
this position, Mr. Weston originated and helped launch a convenience store
program, created a training program for brokers and sales staff, and helped
recruit and manage 5 regional sales managers and support personnel.
SIGNIFICANT PARTIES
- -------------------
Set forth below are the names and business and residential addresses, as
applicable, for the following "significant parties" as required under Item 2
of Form SB-1:
(1) Officers and Directors - see above.
(2) Record owners and beneficial owners of 5 percent or more of any
class of the Company's securities: See "SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN SECURITYHOLDERS."
(3) Promoters - None, except for officers and directors.
(4) Affiliates of the Company - None, except for officers and directors.
(5) Counsel to the issuer - James C. Lewis, Lewis Law Offices, 600
Crandall Building, 10 West 100 South, Salt Lake City, Utah, 84101.
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<PAGE>
_____________________________________________________________________________
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
_____________________________________________________________________________
PURCHASE OF STOCK AT ORGANIZATION
- ----------------------------------
In connection with organizing the Company, John Lund, President and a
director, and Blair Lund, Secretary and a director, and the father of John
Lund, contributed all of the rights to the Living Card products, and paid an
aggregate of $10,000 in cash, in exchange for the issuance of a total of
3,000,000 shares each of the Common Stock of the Company. These transactions
were not the result of arm's length negotiation.
All of the shares of Common Stock presently issued and outstanding are
"restricted securities" as that term is defined under the Securities Act and,
as such, may not be sold in the absence of registration under the Securities
Act or the availability of an exemption therefrom. Under current law, such
shares could not be sold for a period of at least one year from the date on
which they are purchased, and then only under limited circumstances. (See
"DESCRIPTION OF SECURITIES.")
LOANS FROM PRESIDENT
- --------------------
From the date of organization of the Company, John F. Lund, President,
has loaned to the Company a total of $55,000 in cash, to fund Company
operations. A majority of these funds have been used to purchase materials
and packaging for Living Card products. The Company will repay this
indebtedness, without interest, to Mr. Lund if the entire offering is sold.
If less than the entire offering is sold, Mr. Lund will be paid from available
funds, and the balance of the indebtedness to him will be repaid, without
interest, at such time as the Company has funds available from operations or
an additional financing in the future.
______________________________________________________________________________
DESCRIPTION OF SECURITIES
______________________________________________________________________________
GENERAL
- -------
The Company is authorized to issue 25,000,000 shares, consisting of
20,000,000 shares of Common Stock, par value $0.001 per share, of which
6,000,000 shares are issued and outstanding, and 5,000,000 shares of preferred
stock, par value $0.01 (the "Preferred Stock"), of which no shares have been
issued.
COMMON STOCK
- ------------
Holders of Common Stock are entitled to one vote per share on each matter
submitted to a vote at any meeting of shareholders. Shares of Common Stock do
not carry cumulative voting rights and, therefore, holders of a majority of
the outstanding shares of Common Stock will be able to elect the entire board
of directors, and, if they do so, minority shareholders would not be able to
elect any members to the board of directors. The Company's board of directors
has authority, without action by the Company's shareholders, to issue all or
any portion of the authorized but unissued shares of Common Stock, which would
reduce the percentage ownership in the Company of its shareholders and which
may dilute the book value of the Common Stock.
Shareholders of the Company have no pre-emptive rights to acquire
additional shares of Common Stock. The Common Stock is not subject to
redemption and carries no subscription or conversion rights. In the event of
liquidation of the Company, the shares of Common Stock are entitled to share
equally in corporate assets after satisfaction of all liabilities. The shares
of Common Stock, when issued, will be fully paid and non-assessable.
20
<PAGE>
Holders of Common Stock are entitled to receive such dividends as the
board of directors may from time to time declare out of funds legally
available for the payment of dividends. The Company has not paid dividends on
its Common Stock and does not anticipate that it will pay dividends in the
foreseeable future.
PREFERRED STOCK AND PREFERENCE STOCK
- -------------------------------------
The Company's board of directors has authority, without action by the
shareholders, to issue all or any portion of the authorized but unissued
Preferred Stock and/or Preference Stock in one or more series and to determine
the voting rights, preferences as to dividends and liquidation, conversion
rights, and other rights of such series. The Preferred Stock and Preference
Stock, if and when issued, may carry rights superior to those of the Common
Stock.
The Company does not have any plans to issue any shares of preferred
stock. However, the Company considers it desirable to have a class or more of
preferred stock to provide it with greater flexibility in the future in the
event that the Company elects to undertake an additional financing, and in
meeting corporate needs which may arise. If opportunities arise that would
make it desirable to issue Preferred or Preference Stock through either public
offerings or private placements, the provision for these classes of stock in
the Company's certificate of incorporation would avoid the possible delay and
expense of a shareholder's meeting, except as may be required by law or
regulatory authorities. Issuance of the Preferred or Preference Stock would
result, however, in a series of securities outstanding that may have certain
preferences with respect to dividends, liquidation, redemption, and other
matters over the Common Stock which would result in dilution of the income per
share and net book value of the Common Stock. Issuance of additional Common
Stock pursuant to any conversion right which may be attached to the Preferred
or Preference Stock may also result in the dilution of the net income per
share and net book value of the Common Stock. The specific terms of any
series of Preferred or Preference Stock will depend primarily on market
conditions, terms of a proposed acquisition or financing, and other factors
existing at the time of issuance. Therefore, it is not possible at this time
to determine the respects in which a particular series of Preferred or
Preference Stock will be superior to the Company's Common Stock. The board of
directors does not have any specific plan for the issuance of Preferred or
Preference Stock at the present time and does not intend to issue any such
stock on terms which it deems are not in the best interests of the Company and
its shareholders.
RESALE OF OUTSTANDING SHARES
- ----------------------------
All 6,000,000 shares of the Common Stock presently issued and outstanding
are "restricted securities" as that term is defined in Rule 144 adopted under
the Securities Act. Rule 144 provides, in essence, that as long as there is
publicly available current information about the Company, a person holding
restricted securities for a period of at least one year may sell in each 90-
day period, provided he is not part of a group acting in concert, an amount
equal to the greater of the average weekly trading volume of the stock during
the four calendar weeks preceding the sale or 1% of the Company's outstanding
Common Stock. Consequently, in May, 1999, shares of Common Stock currently
issued and outstanding will have been held for one year within the meaning of
Rule 144 and may be eligible for resale in accordance with such volume
restrictions. In addition, in May, 2000, all 6,000,000 shares now issued and
outstanding will be eligible for resale without regard to such restrictions if
the holders of such shares are not then affiliates of the Company and have not
been so for three months prior to such sale. The Company and management
contemplate that John Lund and Blair Lund, officers and directors and holders
of the outstanding shares of the Company, will continue to be affiliates of
the Company over the next several years, and will be, therefore, subject to
the restrictions described above. Sales under Rule 144 or otherwise may, in
the future, have a depressive effect on the price of the Company's Common
Stock in any market which may develop.
TRANSFER AND WARRANT AGENT
- --------------------------
The transfer agent for the Company's securities is Interwest Transfer
Company, Inc., 1981 East Murray-Holladay Road, Holladay, Utah 84117.
21
<PAGE>
_____________________________________________________________________________
PLAN OF DISTRIBUTION
_____________________________________________________________________________
The Company is offering its Common Stock to the public on a "best
efforts, 1,000,000 Share Minimum--1,500,000 Share Maximum" basis. There can
be no assurance that any of the Shares will be sold. If the Company fails to
sell at least 1,000,000 Shares within the offering period (four months from
the date of this prospectus), the offering will be terminated and subscription
payments will be promptly refunded in full to subscribers, without paying
interest or deducting expenses. If the minimum number of Shares is sold
within the specified period, the offering will continue until five months
following the date of this prospectus, all offered Shares are sold, or
terminated by the Company, whichever occurs first.
All subscription payments should be made payable to "Brighton Bank--
Living Card Company, Inc. Escrow Account." The Company will deposit
subscription payments no later than noon of the next business day following
receipt in the escrow account maintained by Brighton Bank, 311 South State
Street, Salt Lake City, Utah 84111, as escrow agent, pending the sale of at
least 1,000,000 Shares within the specified period. Such subscription
payments will only be released from the escrow account if the minimum number
of Shares is sold or for the purpose of refunding subscription payments to the
subscribers. Subscribers will not have the use or right to return of such
funds during the escrow period, which may last as long as four months.
The Shares of Common Stock in this offering will be offered and sold by
the officers and directors of the Company who will receive no compensation
therefor, except reimbursement of expenses actually incurred in connection
with such activities.
There are no formal arrangements between the issuer and its officers and
directors pursuant to which Shares in the offering will be reserved for sale
to person(s) designated by such officers and directors or their affiliates.
However, officers and directors of the Company, and their affiliates, may
purchase Shares in the offering in an aggregate amount of not more than 20% of
all offered Shares. Since Shares may be offered and sold by officers and
directors, it is likely that officers, directors, or their affiliates desiring
to purchase Units in the offering will be able to do so.
Since the Company is not utilizing the services of an underwriter for the
offer and sale of the Units in this offering, the independent "due diligence"
review of the Company, and its affairs and financial condition which is
usually performed by the underwriter has not been performed with respect to
the Company or this offering. In addition, since the offering is not being
underwritten by a broker-dealer which would ordinarily be expected to publish
quotations for and make a market in the offered securities following the
offering, no assurance can be given that any market for the Company's
securities will develop following the offering or, that if such a market
should develop, it will be maintained.
Prior to this offering, there has been no established market for the
securities of the Company. The initial public offering price of the Shares
has been arbitrarily determined by the Company and bear no relationship to the
book value of the Company, earnings, or any other recognized criteria of
value.
_____________________________________________________________________________
LEGAL PROCEEDINGS
_____________________________________________________________________________
The Company is not a party to any pending legal proceedings, or
governmental agency proceedings, and no such action by or, to the best of its
knowledge, against the Company has been threatened.
22
<PAGE>
_____________________________________________________________________________
EXPERTS
_____________________________________________________________________________
The Company has not engaged any expert or attorney on a contingent basis,
nor is any expert or attorney to receive a direct or indirect interest in the
Company. In addition, no expert or attorney is, or was, a promoter,
underwriter, voting trustee, director, officer, or employee of the Company.
Lewis Law Offices, 10 West 100 South, #600, Salt Lake City, Utah 84101,
counsel to the Company, will render an opinion that the Common Stock being
offered hereby, when issued, will be fully paid and non-assessable under the
Nevada Revised Statutes.
The financial statement included in this Prospectus, to the extent and
for the period indicated in its report, has been included herein and in the
Registration Statement in reliance on the report of Jones, Jensen &
Associates, the Company's independent certified public accountants, given on
the authority of such firm as experts in accounting and auditing.
_____________________________________________________________________________
INDEMNIFICATION OF OFFICERS AND DIRECTORS
_____________________________________________________________________________
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act) may be permitted to directors, officers,
and controlling persons of the Company pursuant to the foregoing provisions,
or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
_____________________________________________________________________________
FURTHER INFORMATION
_____________________________________________________________________________
The Company has filed with the Securities and Exchange Commission, a
Registration Statement on Form SB-1, SEC File No. , under the
Securities Act with respect to the securities offered by this prospectus.
This prospectus omits certain information contained in the Registration
Statement. For further information, reference is made to the Registration
Statement and to the exhibits and other schedules filed therewith. Statements
contained in this prospectus as to the contents of any contract or other
document referred to are not necessarily complete, and where such contract or
other document is an exhibit to the Registration Statement, each such
statement is deemed to be qualified and amplified in all respects by the
provisions of the exhibit. Copies of the complete Registration Statement,
including exhibits may be examined at the office of the Securities and
Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, or
copies may be obtained from this office on payment of the usual fees for
reproduction.
23
<PAGE>
_______________________________________
TABLE OF CONTENTS
________________________________________
[outside back cover]
SECTION PAGE
- ----------- ----
INTRODUCTION 3
RISK FACTORS 4 LIVING CARD COMPANY
DILUTION 8
COMPARATIVE DATA 9
USE OF PROCEEDS 10
BUSINESS 12
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN SECURITYHOLDERS 17
DIRECTORS, EXECUTIVE OFFICERS AND
SIGNIFICANT EMPLOYEES AND PARTIES 18
INTEREST OF MANAGEMENT AND
OTHERS IN CERTAIN TRANSACTIONS 20 1,500,000 Shares
DESCRIPTION OF SECURITIES 20
PLAN OF DISTRIBUTION 22
LEGAL PROCEEDINGS 22
EXPERTS 23
INDEMNIFICATION OF OFFICERS
AND DIRECTORS 23
FURTHER INFORMATION 23
______________________________________
No person has been authorized in
connection with this offering to
give any information or to make
any representations other than as
contained in this prospectus and,
if given or made, such informa-
tion or representation must not
be relied on as having been auth-
orized by the Company. This pro-
spectus does not constitute an
offer to sell or the solicitation
of an offer to buy any securities
covered by this prospectus in any
state or other jurisdiction to
any person to whom it is unlawful
to make such offer or solicita-
tion in such state or jurisdiction. , 1998
24
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
_____________________________________________________________________________
ITEM 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS
_____________________________________________________________________________
Section 78.7502 of the Nevada Revised Statutes provides in relevant
part as follows:
1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation,
or is or was serving a the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
in connection with the action, suit or proceeding if he acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by him in connection with the defense or settlement of the
action or suit if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to which
such a person has been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the corporation or for
amounts paid in settlement to the corporation, unless and only to the extent
that the court in which the action or suit was brought or other court of
competent jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense
of any claim, issue or matter therein, the corporation shall indemnify him
against expenses, including attorneys' fees, actually and reasonably incurred
by him in connection with the defense.
The Company's articles of incorporation do not contain a specific
indemnification provision for its officers, directors and employees. However,
Article V of the Company's articles of incorporation provides that an officer
and director of the Company does not have any personal liability to the
Corporation or its shareholders for breach of fiduciary duty as a director or
officer, except for damages for breach of fiduciary duty resulting from (a)
acts or omissions which involve intentional misconduct, fraud, or a knowing
violation of law; or (b) the payment of dividends in violation of section
78.300 of the Nevada Revised Statutes as amended from time to time.
Accordingly, the Company intends to limit the liability of its officers and
directors to the full extent allowed under Nevada corporate law.
25
<PAGE>
Insofar as indemnification by the Company for liabilities arising under
the Securities Act may be permitted to officers and directors of the Company
the Company is aware that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by an officer or director in the
successful defense of any action, suit, or proceeding) is asserted by such
officer or director in connection with the securities being registered hereby,
the Company will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue. (See "ITEM 26. UNDERTAKINGS.")
_____________________________________________________________________________
ITEM 2. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
_____________________________________________________________________________
The following table sets forth an itemized estimate of expenses to be
incurred in connection with the sale and distribution of the securities being
registered, other than discounts and commissions:
1. SEC filing fee $ 100
2. Auditing fees 1,000
3. Legal fees 20,000
4. Blue Sky fees and expenses
(including counsel fees) 1,500
5. Transfer agent's fees 2,000
6. Printing, including
registration statement 3,000
and prospectus
7. Miscellaneous costs and expenses 2,400
-----------
TOTAL $ 30,000
===========
Except for the SEC filing fees, all of the foregoing items are estimates.
_____________________________________________________________________________
ITEM 3. UNDERTAKINGS
_____________________________________________________________________________
POST-EFFECTIVE AMENDMENTS [Regulation S-B, Item 512(a)]
- -------------------------------------------------------
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any fact or events arising after
the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement, including
(but not limited to) addition or deletion of a managing underwriter.
26
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
INDEMNIFICATION [Regulation S-B, Item 512(b)]
- ---------------------------------------------
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
____________________________________________________________________________
ITEM 4. UNREGISTERED SECURITIES ISSUED OR SOLD WITHIN ONE YEAR
_____________________________________________________________________________
The Company sold 6,000,000 shares of its Common Stock to John Lund and
Blair Lund, officers, directors, and four other persons in connection with
organization of the Company. The Common Stock was sold for cash at an
aggregate price of $10,000, and no commissions or discounts were paid or given
in connection therewith. See prospectus under the caption, "INTRODUCTION" and
"CERTAIN TRANSACTIONS: Purchase of Stock at Organization," which is
incorporated herein by reference.
The Common Stock was issued in the transactions described above in
reliance on the exemption from registration and the prospectus delivery
requirements of the Securities Act provided in Section 4(2) thereof and
applicable exemptions thereunder. All persons who purchased Common Stock of
the Company in these transactions were officers and directors. All such
persons were aware of all material information concerning the Company's
proposed business and financial affairs at the time of the transactions and
were in a position to obtain information necessary to verify the information
disclosed by the registrant. Both of these individuals executed an investment
letter in connection with his purchase of shares of the Company, whereby each
of them acknowledged that he was obtaining "restricted securities" as defined
in Rule 144 under the Securities Act; that such shares cannot be transferred
without appropriate registration or exemption therefrom; that they must bear
the economic risk of the investment for an indefinite period of time; that
they would not sell the securities without registration or exemption
therefrom; and that the Company would restrict the transfer of the securities
in accordance with such representations. Each person agreed that any
certificate representing such shares would be stamped with the usual legend
restricting the transfer of such shares. Each certificate representing such
shares bears a legend prohibiting the sale of such shares pursuant to Rule 144
until one year after the purchase of such shares and full payment therefor.
27
<PAGE>
____________________________________________________________________________
ITEM 5. INDEX TO EXHIBITS
_____________________________________________________________________________
S.E.C. Exhibit
Ref. No. Page No. Name of Exhibit
- --------------- -------- ---------------------
1 Underwriting Agreement - Not Applicable
2 Charter and Bylaws - Articles of Incorporation
and Bylaws
3 Items defining rights of Security holders - see
above
4 Subscription Agreement
5 Voting Trust Agreement - Not Applicable - none
6 Material Contracts - none
7 Material Foreign Patents - none
8 Plain of Acquisition, reorganization,
arrangement, liquidation or successor - Not
Applicable - none
9 Escrow Agreement
10 Consents:
- Opinion and Consent of Lewis Law Offices
- Consent of Jones, Jensen & Associates
28
<PAGE>
_____________________________________________________________________________
ITEM 6. DESCRIPTION OF EXHIBITS
____________________________________________________________________________
Exhibit No. Description of Exhibit
------------ -------------------------
2.01 Articles of Incorporation
2.02 Bylaws
4 Subscription Agreement
9 Escrow Agreement
10.01 Opinion and Consent of
Lewis Law Offices
10.02 Consent of Jones, Jensen
& Associates
29
<PAGE
_____________________________________________________________________________
SIGNATURES
_____________________________________________________________________________
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-1 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
City of Salt Lake, State of Utah, on August 20, 1998.
REGISTRANT:
LIVING CARD COMPANY, INC.
By /s/ John F. Lund
--------------------------------------------
John F. Lund, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
and on the dates stated.
/s/ John F. Lund
------------------------------------------
John F. Lund, President, Principal Executive
Officer, Director
DATE: August 20, 1998
-------------------
/s/ R. Blair Lund
----------------------------------------------
R. Blair Lund, Secretary/Treasurer, Principal
Financial and Accounting Officer and Director
Financial Officer)
DATE: August 20, 1998
--------------------------------
30
<PAGE>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
June 30, 1998
<PAGE>
CONTENTS
Independent Auditors' Report........................................... 3
Balance Sheet.......................................................... 4
Statement of Operations................................................ 5
Statement of Stockholders' Equity (Deficit)............................ 6
Statement of Cash Flows................................................ 7
Notes to the Financial Statements...................................... 8
<PAGE>
[Letterhead Jones Jensen & Company
Certified Accountants and Consultants
50 South Main Street
Suite 1450
Salt Lake City, Utah 84144
Telephone (801) 328-4408
Facsimile (801) 328-4461
INDEPENDENT AUDITORS' REPORT
-----------------------------
To the Stockholders of
Living Card Company, Inc.
(A Development Stage Company)
Salt Lake City, Utah
We have audited the accompanying balance sheet of Living Card Company, Inc. (a
development stage company) as of June 30, 1998 and the related statements of
operations, stockholders' equity (deficit) and cash flows from inception on
May 8, 1998 through June 30, 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 audits provide 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 Living Card Company, Inc. (a
development stage company) as of June 30, 1998 and the results of its
operations and its cash flows from inception on May 8, 1998 through June 30,
1998 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company is a development stage company with no
significant operating results to date, which raises substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 3. The financial statements do not
include any adjustments that might result from the outcome of the uncertainty.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
July 15, 1998
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Balance Sheet
ASSETS
------
June 30,
1998
--------------
CURRENT ASSETS
Cash $ 26,586
--------------
Total Current Assets 26,586
--------------
TOTAL ASSETS $ 26,586
==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 3,400
Note payable-related party (Note 4) 25,000
-------------
Total Current Liabilities 28,400
-------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: $0.01 par value,
5,000,000 shares authorized
no shares issued and outstanding -
Common stock: $0.001 par value,
20,000,000 share authorized;
6,000,000 shares issued and outstanding 6,000
Additional paid-in capital 4,006
Deficit accumulated during the development stage (11,820)
-------------
Total Stockholders' Equity (Deficit) (1,814)
------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 26,586
============
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Statement of Operations
From
Inception on
May 8, 1998
Through
June 30,
1998
--------------
REVENUES $ -
EXPENSES 11,820
--------------
NET LOSS $ (11,820)
==============
NET LOSS PER SHARE OF COMMON STOCK $ (0.00)
==============
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
From Inception on May 8, 1998 through June 30, 1998
Deficit
Accumulated
Common Stock Additional During the
---------------------- Paid-in Development
Shares Amount Capital Stage
------------- -------- ---------- -----------
Balance at inception on
May 8, 1998 - $ - $ - $ -
Issuance of 6,000,000 shares
of common stock for cash at
approximately $0.001 per share 6,000,000 6,000 (1,000) -
Contributed capital - - 5,006 -
Net loss from inception on
May 8, 1998 through
June 30, 1998 - - - (11,820)
------------ -------- ---------- -----------
Balance, June 30, 1998 6,000,000 $ 6,000 $ 4,006 $ (11,820)
============ ======== ========== ===========
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Statement of Cash Flows
From
Inception on
May 8, 1998
Through
June 30,
1998
----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (11,820)
Adjustments to reconcile net loss in
operating activities:
Increase in accounts payable 3,400
----------------
Net Cash Used by Operating Activities (8,420)
----------------
CASH FLOWS FROM INVESTING ACTIVITIES -
----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Note payable - related party 25,000
Common stock issued for cash 5,000
Additional capital contributed 5,006
----------------
Net Cash Provided by Financing Activities 35,006
----------------
NET INCREASE IN CASH 26,586
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD -
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 26,586
===============
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Interest paid $ -
Income taxes paid $ -
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 1998
NOTE 1 - NATURE OF ORGANIZATION
The financial statements presented are those of Living Card Company, Inc. (a
development stage company) (The Company). The Company was organized under the
laws of the State of Nevada on May 8, 1998. The Company was organized to
manufacture, merchandise, sell and distribute at wholesale and retail, a
specialized line of greeting cards and other related products.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The financial statements are prepared using the accrual method of accounting.
The Company has elected a June 30, year end.
b. Provision for Taxes
At June 30, 1998, the Company had net operating loss carryforwards of
approximately $12,000 that may be offset against future taxable income from
the year 1998 through 2013. No tax benefit has been reported in the financial
statements because the Company believes that there is a 50% chance or greater
the net operating loss carryforwards will expire unused, therefore, the
potential tax benefits of the loss carryforwards are offset by a valuation
allowance of the same amount.
c. 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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
e. Loss Per Share
The computation of loss per share of common stock is based on the weighted
average number of shares outstanding during the period of the financial
statements.
8
<PAGE>
LIVING CARD COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 1998
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant operations to date,
nor does it have an established source of revenues sufficient to allow it to
continue as a going concern. It is the intent of the Company to complete an
offering of its common stock, see Note 6.
NOTE 4 - NOTE PAYABLE
The Company signed a note to a related party during 1998. The note is payable
on demand and carries no interest, it is unsecured.
NOTE 5 - PREFERRED STOCK
Shares of Preferred Stock may be issued from time to time in one or more
series as may from time to time be determined by the board of directors. Each
series shall be distinctly designated. All shares of any one series of the
Preferred Stock shall be alike in every particular, except that there may be
different dates from which dividends thereon, if any, shall be cumulative, if
made cumulative. The powers, preferences, participating, optional and other
rights of each such series and the qualifications, limitations, or
restrictions thereof, if any, may differ from those of any and all other
series at any time outstanding.
NOTE 6 - PROPOSED STOCK OFFERING
The Company is proposing to file a form SB by which it will offer to the
public $100,000 to $150,000 worth of its common stock. The terms of the
offering are to be determined. The costs incurred in connection with the
offering will be capitalized and charged to the proceeds of the offering upon
its successful completion.
<PAGE>
Dated filed , 1998 SEC File No. _____________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
EXHIBITS
TO
FORM SB-1 REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
THE LIVING CARD COMPANY
Exhibit 2.01
ARTICLES OF INCORPORATION
OF
LIVING CARD COMPANY, INC.
The undersigned incorporators being natural persons more than eighteen
(18) years of age acting as all of the incorporators of the above-named
corporation (the "Corporation") hereby adopt the following articles of
incorporation for the Corporation:
ARTICLE I
NAME
The name of the Corporation shall be:
LIVING CARD COMPANY, INC.
ARTICLE II
PERIOD OF DURATION
The Corporation shall continue in existence perpetually unless sooner
dissolved according to law.
ARTICLE III
PURPOSES AND POWERS
The purposes for which the Corporation is organized are:
(a) To manufacture, merchandise, sell, offer for sale, and
distribute at wholesale and retail, a specialized line of greeting cards and
other related products; and to acquire all such merchandise, supplies,
materials, and other articles as shall be necessary or incidental to such
business;
(b) To borrow money and to execute notes and obligations and
security contracts therefor, and to lend any monies or funds of the
Corporation and to take evidence of indebtedness therefor, and also to
negotiate loans.
(c) To guarantee the payment of dividends or interest on any other
contract or obligation of any corporation whenever proper or necessary for the
business of the Corporation in the judgment of its directors.
(d) To do all and everything necessary, suitable, convenient, or
proper for the accomplishment of any of the purposes, or the attainment of any
one or more of the objects herein enumerated, or incidental to the powers
therein named, or which shall at any time appear conclusive or expedient for
the protection or benefit of the Corporation, either as holders of or
interested in any property, or otherwise; with all the powers hereafter
conferred by the laws under which this Corporation is organized.
(e) To conduct any lawful business for which a corporation may be
organized under the laws of the State of Nevada.
ARTICLE IV
AUTHORIZED SHARES
The Corporation is authorized to issue a total of 25,000,000 shares of
stock, consisting of 5,000,000 shares of preferred stock, $0.01 par value, and
20,000,000 shares of common stock having a par value of $0.001 per share. The
powers, preferences, rights, qualifications, limitations, or restrictions of
the shares of stock of each class and series which the Corporation is
authorized to issue, is as follows:
(a) Preferred Stock. Shares of Preferred Stock may be issued from
time to time in one or more series as may from time to time be determined by
the board of directors. Each series shall be distinctly designated. All
shares of any one series of the Preferred Stock shall be alike in every
particular, except that there may be different dates from which dividends
thereon, if any, shall be cumulative, if made cumulative. The powers,
preferences, participating, optional and other rights of each such series and
the qualifications, limitations, or restrictions thereof, if any, may differ
from those of any and all other series at any time outstanding. Except as
hereinafter provided, the board of directors of this Corporation is hereby
expressly granted authority to fix by resolution or resolutions adopted prior
to the issuance of any shares of each particular series of Preferred Stock,
the designation, powers preferences and relative participating, optional and
other rights, and the qualifications, limitations and restrictions thereof, if
any, of such series, including, without limiting the generality of the
foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute, each series, which number may be
increased (except as otherwise fixed by the board of directors) or decreased
(but not below the number of shares thereof outstanding) from time to time by
action of the board of directors;
(2) The rate and times at which, and the terms and conditions
upon which, dividends, if any, on shares of the series shall be paid, the
extent of preferences or relations, if any, of such dividends to the dividends
payable on any other class or classes of stock of the Corporation or on any
series of Preferred Stock and whether such dividends shall be cumulative or
non-cumulative.
(3) The right, if any, of the holders of shares of the same
series to convert the same into, or exchange the same for, any other class or
classes of stock of the Corporation and the terms and conditions of such
conversion or exchange;
(4) Whether shares of the series shall be subject to
redemption, and the redemption price or prices including, without limitation,
a redemption price or prices payable in shares of any class or classes of
stock of the Corporation, cash, or other property and the time or times at
which, and the terms and conditions on which, shares of the series may be
redeemed;
(5) The rights, if any, of the holders of shares of the series
upon voluntary or involuntary liquidation, merger, consolidation, distribution
or sale of assets, dissolution, or winding up of the Corporation;
(6) The terms of any sinking fund or redemption or purchase
account, if any, to be provided for shares of the series; and
(7) The voting powers, if any, of the holders of shares of the
series which may, without limiting the generality of the foregoing, include
(A) the right to more or less than one vote per share on any or all matters
voted on by the shareholders and (B) the right to vote as a series by itself
or together with other series of Preferred Stock or together with all series
of Preferred Stock as a class, on such matters, under such circumstances, and
on such conditions as the board of directors may fix, including, without
limitation, the right, voting as a series by itself or together with other
series of Preferred Stock or together with all series of Preferred Stock as a
class, to elect one or more directors of the Corporation in the event there
shall have been a default in the payment of dividends on any one or more
series of Preferred Stock or under such other circumstances and on such
conditions as the board of directors may determine.
(b) Common Stock. The Common Stock shall have the following
powers, rights, qualifications, limitations, and restrictions:
(1) After the requirements with respect to preferential
dividends of Preferred Stock, if any, shall have been met and after the
Corporation shall comply with all the requirements, if any, with respect to
the setting aside of funds as sinking funds or redemption or purchase accounts
and subject further to any other conditions which may be required by the laws
of the state of Nevada, then, but not otherwise, the holders of Common Stock
shall be entitled to receive such dividends, if any, as may be declared from
time to time by the board of directors;
(2) After distribution in full of the preferential amount to be
distributed to the holders of Preferred Stock, if any, in the event of
voluntary or involuntary liquidation, distribution or sale of assets,
dissolution or winding up of the Corporation, the holders of the Common Stock
shall be entitled to receive all the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for distribution to
stockholders, ratably in proportion to the number of shares of the Common
Stock held by each; and
(3) Except as may otherwise be required by law or these
articles of incorporation, in all matters as to which the vote or consent of
stockholders of the Corporation shall be required or be taken, including, any
vote to amend the articles of incorporation, to increase or decrease the par
value of any class of stock, effect a stock split or combination of shares, or
later or change the powers, preferences, or special rights of any class or
series of stock, the holders of the Common Stock shall have one vote per share
of Common Stock on all such matters and shall not have the right to cumulate
their votes for any purpose.
(c) Other Provisions.
(1) The board of directors of the Corporation shall have
authority to authorize the issuance, from time to time without any vote or
other action by the stockholders, of any or all shares of the Corporation of
any class at any time authorized, and any securities convertible into or
exchangeable for such shares, in each case to such persons and for such
consideration and on such terms as the board of directors from time to time in
its discretion lawfully may determine; provided, however, that the
consideration for the issuance of shares of stock of the Corporation having
par value shall not be less than such par value. Shares so issued, for which
the full consideration determined by the board of directors has been paid to
the Corporation, shall be fully paid stock, and the holders of such stock
shall not be liable for any further call or assessment thereon.
(2) Unless otherwise provided in the resolution of the board of
directors providing for the issue of any series of Preferred Stock, no holder
of shares of any class of the Corporation or of any security of obligation
convertible into, or of any warrant, option, or right to purchase, subscribe
for, or otherwise acquire, shares of any class of the Corporation, whether now
or hereafter authorized, shall, as such holder, have any pre-emptive right
whatsoever to purchase, subscribe for, or otherwise acquire shares of any
class of the Corporation, whether now or hereafter authorized.
(3) Anything herein contained to the contrary notwithstanding,
any and all right, title, interest, and claim in and to any dividends declared
or other distributions made by the Corporation, whether in cash, stock, or
otherwise, which are unclaimed by the stockholder entitled thereto for a
period of six years after the close of business on the payment date, shall be
and be deemed to be extinguished and abandoned; and such unclaimed dividends
or other distributions in the possession of the Corporation, its transfer
agents, or other agents or depositories, shall at such time become the
absolute property of the Corporation, free and clear of any and all claims of
any person whatsoever.
ARTICLE V
LIMITATION ON LIABILITY
A director or officer of the Corporation shall have no personal liability
to the Corporation or its stockholders for damages for breach of fiduciary
duty as a director or officer, except for damages for breach of fiduciary duty
resulting from (a) acts or omissions which involve intentional misconduct,
fraud, or a knowing violation of law, or (b) the payment of dividends in
violation of section 78.300 of the Nevada Revised Statutes as it may from time
to time be amended or any successor provision thereto.
ARTICLE VI
RESIDENT AGENT
The address of the Corporation's resident agent and registered office is
1475 Terminal Way, Suite E, town of Reno, county of Washoe, state of Nevada.
The name of its initial resident agent in the state of Nevada is Corporate
Service Center. Either the registered office or the resident agent may be
changed in the manner provided by law.
ARTICLE VII
AMENDMENTS
The Corporation reserves the right to amend, alter, change, or repeal all
or any portion of the provisions contained in these articles of incorporation
from time to time in accordance with the laws of the state of Nevada, and all
rights conferred on stockholders herein are granted subject to this
reservation.
ARTICLE VIII
ADOPTION AND AMENDMENT OF BYLAWS
The initial bylaws of the Corporation shall be adopted by the board of
directors. The power to alter, amend, or repeal the bylaws or adopt new
bylaws shall be vested in the board of directors, but the stockholders of the
Corporation may also alter, amend, or repeal the bylaws or adopt new bylaws.
the bylaws may contain any provisions for the regulation or management of the
affairs of the Corporation not inconsistent with the laws of the state of
Nevada now or hereafter existing.
ARTICLE IX
DIRECTORS
The governing board of the Corporation shall be known as the board of
directors. The number of directors comprising the board of directors shall be
fixed and may be increased or decreased from time to time in the manner
provided in the bylaws of the Corporation, except that at no time shall there
be less than two nor more than nine directors. The name and address of each
person who is to serve as a director until the first annual meeting of
stockholders and until his successor is elected and shall qualify is as
follows:
Name Address
------------------- -----------------------------
John F. Lund 1174 East 2700 South, Suite 16
Salt Lake City, Utah 84106
R. Blair Lund 1174 East 2700 South, Suite 16
Salt Lake City, Utah 84106
ARTICLE X
INCORPORATORS
The name and mailing address of the incorporator signing these articles
of incorporation is as follows:
Name Address
-------------------- ------------------------------
John F. Lund 1174 East 2700 South, Suite 16
Salt Lake City, Utah 84106
The undersigned, being the sole incorporator of the Corporation herein before
named, hereby makes and files these articles of incorporation, declaring that
the facts herein are true.
DATED this 4th day of May, 1998.
/s/ John F. Lund
--------------------------
John F. Lund
STATE OF UTAH }
: ss.
COUNTY OF SALT LAKE }
I, Elizabeth Maloy, a notary public, hereby certify that on the 4th day
of May, 1998, personally appeared before me John F. Lund, being by me first
duly sworn, who acknowledged to me that he is the person who signed the
foregoing document as the sole incorporator and that the statements contained
herein are true.
/s/ Elizabeth Maloy
-------------------------
NOTARY PUBLIC
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT
BY RESIDENT AGENT
IN THE MATTER OF LIVING CARD COMPANY, CORPORATE SERVICE CENTER OF NEVADA
hereby certifies that on the 7th day of May, 1998, it accepted
appointment as resident agent of the above-entitled corporation in accordance
with the Nevada Revised Statute.
Furthermore, the principal office in this state is located at 1475
Terminal Way, Suite E, town of Reno, county of Washoe, state of Nevada.
IN WITNESS WHEREOF, the undersigned, acting as assistant secretary and
being duly authorized, has hereunto set his hand this 7th day of May, 1998.
CORPORATE SERVICE CENTER,
Resident Agent
By /s/ signature illegible
----------------------------
Vice President
Exhibit 2.02
BYLAWS
OF
LIVING CARD COMPANY, INC.
A NEVADA CORPORATION
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I OFFICES 1
Section 1.01 Registered Office 1
Section 1.02 Locations of Office 1
ARTICLE II SHAREHOLDERS 1
Section 2.01 Annual Meeting 1
Section 2.02 Special Meeting 1
Section 2.03 Place of Meetings 1
Section 2.04 Notice of Meetings 1
Section 2.05 Waiver of Notice 2
Section 2.06 Fixing Record Date 2
Section 2.07 Voting Lists 2
Section 2.08 Quorum 2
Section 2.09 Vote Required 3
Section 2.10 Voting on Stock 3
Section 2.11 Proxies 3
Section 2.12 Written Consent to Action by Stockholders 3
Section 2.13 Control Share Provision 3
ARTICLE III DIRECTORS 4
Section 3.01 Number, Term, and Qualifications 4
Section 3.02 Vacancies and Newly Created Directorships 4
Section 3.03 General Powers 4
Section 3.04 Regular Meetings 4
Section 3.05 Special Meetings 4
Section 3.06 Meetings by Telephone Conference Call 4
Section 3.07 Notice 4
Section 3.08 Quorum 5
Section 3.09 Manner of Acting 5
Section 3.10 Compensation 5
Section 3.11 Presumption of Assent 5
Section 3.12 Resignations 5
Section 3.13 Written Consent to Action by Directors 5
Section 3.14 Removal 5
ARTICLE IV OFFICERS 5
Section 4.01 Numbers 5
Section 4.02 Election, Term of Office, and Qualification 6
Section 4.03 Subordinate Officers, Etc. 6
Section 4.04 Resignation 6
Section 4.05 Removal 6
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Section 4.06 Vacancies and Newly Created Offices 6
Section 4.07 The Chairman of the Board 6
Section 4.08 The President 6
Section 4.09 The Vice Presidents 7
Section 4.10 The Secretary 7
Section 4.11 The Treasurer 8
Section 4.12 General Manager 8
Section 4.13 Salaries 9
Section 4.14 Surety Bonds 9
ARTICLE V EXECUTION OF INSTRUMENTS, BORROWING OF MONEY,
AND DEPOSIT OF CORPORATE FUNDS 9
Section 5.01 Execution Instrument 9
Section 5.02 Loans 9
Section 5.03 Deposits 9
Section 5.04 Checks, Drafts, Etc. 10
Section 5.05 Bonds and Debentures 10
Section 5.06 Sale, Transfer, Etc. of Securities 10
Section 5.07 Proxies 10
ARTICLE VI CAPITAL STOCK 10
Section 6.01 Stock Certificates 10
Section 6.02 Transfer of Stock 11
Section 6.03 Regulations 11
Section 6.04 Maintenance of Stock Ledger at Principal
Place of Business 11
Section 6.05 Transfer Agents and Registrars 11
Section 6.06 Closing of Transfer Books and Fixing of Record Date 11
Section 6.07 Lost or Destroyed Certificates 12
ARTICLE VII EXECUTIVE COMMITTEE AND OTHER COMMITTEES 12
Section 7.01 How Constituted 12
Section 7.02 Powers 12
Section 7.03 Proceedings 12
Section 7.04 Quorum and Manner of Acting 12
Section 7.05 Resignations 13
Section 7.06 Removal 13
Section 7.07 Vacancies 13
Section 7.08 Compensation 13
ARTICLE VIII INDEMNIFICATION, INSURANCE, AND OFFICER
AND DIRECTOR CONTRACT 13
Section 8.01 Indemnification: Third Party Actions 13
Section 8.02 Indemnification: Corporate Actions 13
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Section 8.03 Determination 14
Section 8.04 Advances 14
Section 8.05 Scope of Indemnification 14
Section 8.06 Insurance 15
Section 8.07 Officer and Director Contracts 15
ARTICLE IX FISCAL YEAR 16
ARTICLE X DIVIDENDS 16
ARTICLE XI AMENDMENTS 16
CERTIFICATE OF SECRETARY 16
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<PAGE>
BYLAWS
OF
LIVING CARD COMPANY, INC.
ARTICLE I
OFFICES
Section 1.01 Registered Office. The registered office shall be in
the city of Reno, county of Washoe, state of Nevada.
Section 1.02 Locations of Offices. The corporation may also have
offices at such other places both within and without the state of Nevada as
the board of directors may from time to time determine or the business of the
corporation may require.
ARTICLE II
STOCKHOLDERS
Section 2.01 Annual Meeting. The annual meeting of the
stockholders shall be held on the second Tuesday of the third month following
the anniversary of incorporation or at such other time designated by the board
of directors and as is provided for in the notice of the meeting, provided,
that whenever such date falls on a legal holiday, the meeting shall be held on
the next succeeding business day, beginning with the year following the filing
of the articles of incorporation, for the purpose of electing directors and
for the transaction of such other business as may come before the meeting. If
the election of directors shall not be held on the day designated herein for
the annual meeting of the stockholders, or at any adjournment thereof, the
board of directors shall cause the election to be held at a special meeting of
the stockholders as soon thereafter as may be convenient.
Section 2.02 Special Meetings. Special meetings of the
stockholders may be called at any time by the chairman of the board, the
president, or by the board of directors, or in their absence or disability, by
a vice president.
Section 2.03 Place of Meetings. The board of directors may
designate any place, either within or without the state of incorporation, as
the place of meeting for any annual meeting or for any special meeting called
by the board of directors. A waiver of notice signed by all stockholders
entitled to vote at a meeting may designate any place, either within or
without the state of incorporation, as the place for the holding of such
meeting. If no designation is made, the place of meeting shall be at the
principal office of the corporation.
Section 2.04 Notice of Meetings. The secretary or assistant
secretary, if any, shall cause notice of the time, place and purpose or
purposes of all meetings of the stockholders (whether annual or special), to
be mailed at least ten days, but not more than sixty days, prior to the
meeting, to each stockholder of record entitled to vote.
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Section 2.05 Waiver of Notice. Any stockholder may waive
notice of any meeting of stockholders (however called or noticed, whether or
not called or noticed and whether before, during, or after the meeting), by
signing a written waiver of notice or a consent to the holding of such
meeting, or an approval of the minutes thereof. Attendance at a meeting, in
person or by proxy, shall constitute waiver of all defects of notice
regardless of whether waiver, consent, or approval is signed or any objections
are made, unless attendance is solely for the purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. All such waivers, consents, or
approvals shall be made a part of the minutes of the meeting.
Section 2.06 Fixing Record Date. For the purpose of
determining stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or stockholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or
entitled to exercise any rights in respect to any change, conversion, or
exchange of stock, or for the purpose of any other lawful action, the board of
directors may fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not more than sixty
days and, in case of a meeting of stockholders, not less than ten days prior
to the date on which the particular action requiring such determination of
stockholders is to be taken. If no record date is fixed for the determination
of stockholders entitled to notice of or to vote at a meeting, the day
preceding the date on which notice of the meeting is mailed shall be the
record date. For any other purpose, the record date shall be the close of
business on the date on which the resolution of the board of directors
pertaining thereto is adopted. When a determination of stockholders entitled
to vote at any meeting of stockholders has been made as provided in this
section, such determination shall apply to any adjournment thereof. Failure
to comply with this section shall not affect the validity of any action taken
at a meeting of stockholders.
Section 2.07 Voting Lists. The officers of the corporation
shall cause to be prepared from the stock ledger at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at such meeting or any adjournment thereof, 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 where the meeting is to be held,
which 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
original 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 in person or by proxy at
any meeting of stockholders.
Section 2.08 Quorum. Stock representing one-half of the voting
power of all outstanding stock of the corporation entitled to vote, present in
person or represented by proxy, shall constitute a quorum at all meetings of
the stockholders for the transaction of business, except as otherwise provided
by statute or by the articles of incorporation. If, however, such quorum
shall not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present
or represented any business may be transacted which might have been transacted
at the meeting as originally notified. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
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Section 2.09 Vote Required. Except as provided in section 3.01
of these bylaws regarding election of directors, when a quorum is present at
any meeting, the vote of the holders of stock having a majority of the voting
power present in person or represented by proxy shall decide any question
brought before such meeting, unless the question is one on which by express
provision of the statutes of the state of Nevada or of the articles of
incorporation a different vote is required, in which case such express
provision shall govern and control the decision of such question.
Section 2.10 Voting of Stock. Unless otherwise provided in the
articles of incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
the capital stock having voting power held by such stockholder, subject to the
modification of such voting rights of any class or classes of the
corporation's capital stock by the articles of incorporation.
Section 2.11 Proxies. At each meeting of the stockholders,
each stockholder entitled to vote shall be entitled to vote in person or by
proxy, provided, however, that the right to vote by proxy shall exist only in
case the instrument authorizing such proxy to act shall have been executed in
writing by the registered holder or holders of such stock, as the case may be,
as shown on the stock ledger of the corporation or by his attorney thereunto
duly authorized in writing. Such instrument authorizing a proxy to act shall
be delivered at the beginning of such meeting to the secretary of the
corporation or to such other officer or person who may, in the absence of the
secretary, be acting as secretary of the meeting. In the event that any such
instrument shall designate two or more persons to act as proxy, a majority of
such persons present at the meeting, or, if only one be present, that one
shall (unless the instrument shall otherwise provide) have all of the powers
conferred by the instrument upon all persons so designated. Persons holding
stock in a fiduciary capacity shall be entitled to vote the stock so held, and
the persons whose shares are pledged shall be entitled to vote, unless the
transfer by the pledgor in the books of the corporation he shall have
expressly empowered the pledgee to vote thereon, in which case the pledgee, or
his proxy, may represent such stock and vote thereon. No proxy shall be voted
or acted on after three years from its date, unless the proxy provides for a
longer period.
Section 2.12 Written Consent to Action by Stockholders. Unless
otherwise provided in the articles of incorporation, any action required to be
taken at any annual or special meeting of stockholders of the corporation, or
any action which may be taken at any annual or special meeting of such
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 all of 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.
Section 2.13 Control Share Provision. The provisions of sections
78.378 to 78.3793 of the Nevada Revised Statutes, or any successor provisions
thereof, pertaining to the acquisition of a controlling interest in the
corporation shall not apply to the corporation or the acquisition of a
controlling interest by any person.
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ARTICLE III
DIRECTORS
Section 3.01 Number, Term, and Qualifications. The number of
directors which shall constitute the whole board shall be not less than one
nor more than nine. Within the limits above specified, the number of
directors shall be determined by resolution of the board of directors or by
the stockholders at the annual meeting of the stockholders or a special
meeting called for such purpose, except as provided in section 3.02 of this
article, and each director elected shall hold office until his successor is
elected and qualified. Directors need not be residents of the state of
incorporation or stockholders of the corporation.
Section 3.02 Vacancies and Newly Created Directorships.
Vacancies and newly created directorships resulting from any increase in the
authorized number of directors may be filled by a majority of the directors
then in office, though less than a quorum, or by a sole remaining director,
and the directors so chosen shall hold office until the next annual election
and until their successors are duly elected and shall qualify. If there are
no directors in office, then an election of directors may be held in the
manner provided by statute.
Section 3.03 General Powers. The business of the corporation
shall be managed under the direction of its board of directors which may
exercise all such powers of the corporation and do all such lawful acts and
things as are not by statute, the articles of incorporation, or bylaws
directed or required to be exercised or done by the stockholders.
Section 3.04 Regular Meetings. A regular meeting of the board
of directors shall be held without other notice than this bylaw immediately
following, and at the same place as, the annual meeting of shareholders. The
board of directors may provide by resolution, the time and place either within
or without the state of incorporation, for the holding of additional regular
meetings without other notice than such resolution.
Section 3.05 Special Meetings. Special meetings of the board
of directors may be called by or at the request of the chairman of the board,
president, vice president or any two directors. The person or persons
authorized to call special meetings of the board of directors may fix any
place, either within or without the state of incorporation, as the place for
holding any special meeting of the board of directors called by them.
Section 3.06 Meetings by Telephone Conference Call. Members of
the board of directors may participate in a meeting of the board of directors
or a committee of the board of directors by means of conference telephone or
similar communication equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to
this section shall constitute presence in person at such meeting.
Section 3.07 Notice. Notice of any special meeting shall be
given at least five days prior thereto by written notice delivered personally
or mailed to each director at his regular business address or residence, or by
telegram. If mailed, such notice shall be deemed to be delivered when
deposited in United States mail so addressed, with postage thereon prepaid.
If notice be given by telegram, such notice shall be deemed to be delivered
when the telegram is delivered to the telegraph company. Any director may
waive notice of any meeting. Attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends
a meeting solely for the express purpose of objecting to the transaction of
any business because the meeting is not lawfully called or convened.
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Section 3.08 Quorum. A majority of the number of directors
shall constitute a quorum for the transaction of business at any meeting of
the board of directors, but if less than a majority is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice.
Section 3.09 Manner of Acting. The act of a majority of the
directors present at a meeting at which a quorum is present shall be the act
of the board of directors, and individual directors shall have no power as
such.
Section 3.10 Compensation. By resolution of the board of
directors, the directors may be paid their expenses, if any, of attendance at
each meeting of the board of directors, and may be paid a fixed sum for
attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 3.11 Presumption of Assent. A director of the
corporation who is present at a meeting of the board of directors at which
action on any corporate matter is taken shall be presumed to have assented to
the action taken unless his dissent shall be entered in the minutes of the
meeting, unless he shall file his written dissent to such action with the
person acting as the secretary of the meeting before the adjournment thereof,
or shall forward such dissent by registered or certified mail to the secretary
of the corporation immediately after the adjournment of the meeting. Such
right to dissent shall not apply to a director who voted in favor of such
action.
Section 3.12 Resignations. A director may resign at any time
by delivering a written resignation to either the president, a vice president,
the secretary or assistant secretary, if any. The resignation shall become
effective on its acceptance by the board of directors; provided, that if the
board has not acted thereon within ten days from the date presented, the
resignation shall be deemed accepted.
Section 3.13 Written Consent to Action by Directors. Any
action required to be taken at a meeting of the directors of the corporation
or any other action which may be taken at a meeting of the directors or of a
committee, may be taken without a meeting, if a consent in writing, setting
forth the action so taken, shall be signed by all of the directors, or all of
the members of the committee, as the case may be. Such consent shall have the
same legal effect as a unanimous vote of all the directors or members of the
committee.
Section 3.14 Removal. At a meeting expressly called for that
purpose, one or more directors may be removed by a vote of a majority of the
shares of outstanding stock of the corporation entitled to vote at an election
of directors.
ARTICLE IV
OFFICERS
Section 4.01 Number. The officers of the corporation shall be
a president, a secretary, a treasurer, and such other officers as may be
appointed by the board of directors, including, a chairman of the board, one
or more vice presidents, an assistant secretary, an assistant treasurer, or a
general manager.
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Section 4.02 Election, Term of Office and Qualifications. The
officers shall be chosen by the board of directors annually at its annual
meeting. In the event of failure to choose officers at an annual meeting of
the board of directors, officers may be chosen at any regular or special
meeting of the board of directors. Each such officer (whether chosen at an
annual meeting of the board of directors to fill a vacancy or otherwise) shall
hold his office until the next ensuing annual meeting of the board of
directors and until his successor shall have been chosen and qualified, or
until his death or until his resignation or removal in the manner provided in
these bylaws. Any one person may hold any two or more of such offices. No
person holding two or more offices shall act in or execute any instrument in
the capacity of more than one office. The chairman of the board, if any,
shall be and remain director of the corporation during the term of his office.
No other officer need be a director.
Section 4.03 Subordinate Officers, Etc. The board of directors
from time to time may appoint such other officers or agents as it may deem
advisable, each of whom shall have such title, hold office for such period,
have such authority and perform such duties as the board of directors from
time to time may determine. The board of directors from time to time may
delegate to any officer or agent the power to appoint any such subordinate
officer or agents and to prescribe their respective titles, terms of office,
authorities and duties. Subordinate officers need not be stockholders or
directors.
Section 4.04 Resignations. Any officer may resign at any time
by delivering a written resignation to the board of directors, the president,
or the secretary. Unless otherwise specified therein, such resignation shall
take effect upon delivery.
Section 4.05 Removal. Any officer may be removed from office
at any special meeting of the board of directors called for that purpose or at
a regular meeting, by the vote of a majority of the directors, with or without
cause. Any officer or agent appointed in accordance with the provisions of
section 4.03 hereof may also be removed, either with or without cause, by any
officer upon whom such power of removal shall have been conferred by the board
of directors.
Section 4.06 Vacancies and Newly Created Offices. If any vacancy
shall occur in any office by reason of death, resignation, removal,
disqualification or any other cause, or if a new office shall be created, then
such vacancies or newly created offices may be filled by the board of
directors at any regular or special meeting.
Section 4.07 The Chairman of the Board. The chairman of the
board, if there be such an officer, shall have the following powers and
duties:
(a) He shall preside at all stockholders' meetings;
(b) He shall preside at all meetings of the board of
directors; and
(c) He shall be a member of the executive committee, if any.
Section 4.08 The President. The president shall have the
following powers and duties:
(a) If no general manager has been appointed, he shall be the
chief executive officer of the corporation, and, subject to the direction of
the board of directors, shall have general charge of the business, affairs and
property of the corporation and general supervision over its officers,
employees and agents;
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(b) If no chairman of the board has been chosen, or if such
officer is absent or disabled, he shall preside at meetings of the
stockholders and board of directors;
(c) He shall be a member of the executive committee, if any;
(d) He shall be empowered to sign certificates representing
stock of the corporation, the issuance of which shall have been authorized by
the board of directors; and
(e) He shall have all power and perform all duties normally
incident to the office of a president of a corporation and shall exercise such
other powers and perform such other duties as from time to time may be
assigned to him by the board of directors.
Section 4.09 The Vice Presidents. The board of directors may,
from time to time, designate and elect one or more vice presidents, one of
whom may be designated to serve as executive vice president. Each vice
president shall have such powers and perform such duties as from time to time
may be assigned to him by the board of directors or the president. At the
request or in the absence or disability of the president, the executive vice
president or, in the absence or disability of the executive vice president,
the vice president designated by the board of directors or (in the absence of
such designation by the board of directors) by the president, as senior vice
president, shall perform all the duties of the president, and when so acting,
shall have all the powers of, and be subject to all the restrictions on, the
president.
Section 4.10 The Secretary. The secretary shall have the
following powers and duties:
(a) He shall keep or cause to be kept a record of all of
the proceedings of the meetings of the stockholders and of the board of
directors in books provided for that purpose;
(b) He shall cause all notices to be duly given in
accordance with the provisions of these bylaws and as required by statute;
(c) He shall be the custodian of the records and of the
seal of the corporation, and shall cause such seal (or a facsimile thereof) to
be affixed to all certificates representing stock of the corporation prior to
the issuance thereof and to all instruments, the execution of which on behalf
of the corporation under its seal shall have been duly authorized in
accordance with these bylaws, and when so affixed he may attest the same;
(d) He shall see that the books, reports, statements,
certificates and other documents and records required by statute are properly
kept and filed;
(e) He shall have charge of the stock ledger and books of
the corporation and cause the such books to be kept in such manner as to show
at any time the amount of the stock of the corporation of each class issued
and outstanding, the manner in which and the time when such stock was paid
for, the names alphabetically arranged and the addresses of the holders of
record thereof, the amount of stock held by each holder and time when each
became such holder of record; and he shall exhibit at all reasonable times to
any director, on application, the original or duplicate stock ledger. He
shall cause the stock ledger referred to in section 6.04 hereof to be kept and
exhibited at the principal office of the corporation, or at such other place
as the board of directors shall determine, in the manner and for the purpose
provided in such section;
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(f) He shall be empowered to sign certificates representing
stock of the corporation, the issuance of which shall have been authorized by
the board of directors; and
(g) He shall perform in general all duties incident to the
office of secretary and such other duties as are given to him by these bylaws
or as from time to time may be assigned to him by the board of directors or
the president.
Section 4.11 The Treasurer. The Treasurer shall have the
following powers and duties:
(a) He shall have charge and supervision over and be
responsible for the monies, securities, receipts and disbursements of the
corporation;
(b) He shall cause the monies and other valuable effects of
the corporation to be deposited in the name and to the credit of the
corporation in such banks or trust companies or with such banks or other
depositories as shall be selected in accordance with section 5.03 hereof;
(c) He shall cause the monies of the corporation to be
disbursed by checks or drafts (signed as provided in section 5.04 hereof)
drawn upon the authorized depositories of the corporation, and cause to be
taken and preserved property vouchers for all monies disbursed;
(d) He shall render to the board of directors or the
president, whenever requested, a statement of the financial condition of the
corporation and of all of his transactions as treasurer, and render a full
financial report at the annual meeting of the stockholders, if called on to do
so;
(e) He shall cause to be kept correct books of account of
all the business and transactions of the corporation and exhibit such books to
any directors on request during business hours;
(f) He shall be empowered from time to time to require from
all officers or agents of the corporation reports or statements giving such
information as he may desire with respect to any and all financial
transactions of the corporation; and
(g) He shall perform in general all duties incident to the
office of treasurer and such other duties as are given to him by these bylaws
or as from time to time may be assigned to him by the board of directors or
the president.
Section 4.12 General Manager. The board of directors may employ
and appoint a general manager who may, or may not, be one of the officers or
directors of the corporation. The general manager, if any, shall have the
following powers and duties:
(a) He shall be the chief executive officer of the
corporation and, subject to the directions of the board of directors, shall
have general charge of the business affairs and property of the corporation
and general supervision over its officers, employees and agents;
(b) He shall have the exclusive management of the business
of the corporation and of all of its dealings, but at all times subject to the
control of the board of directors;
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(c) Subject to the approval of the board of directors or the
executive committee, if any, he shall employ all employees of the corporation,
or delegate such employment to subordinate officers, or such division chiefs,
and shall have authority to discharge any person so employed; and
(d) He shall make a report to the president and directors
quarterly, or more often if required to do so, setting forth the result of the
operations under his charge, together with suggestions looking to the
improvement and betterment of the condition of the corporation, and shall
perform such other duties as the board of directors shall require.
Section 4.13 Salaries. The salaries or other compensation of the
officers of the corporation shall be fixed from time to time by the board of
directors except that the board of directors may delegate to any person or
group of persons the power to fix the salaries or other compensation of any
subordinate officers or the agents appointed in accordance with the provision
of section 4.03 hereof. No officer shall be prevented from receiving any such
salary or compensation by reason of the fact that he is also a director of the
corporation.
Section 4.14 Surety Bonds. In case the board of directors shall
so require, any officer or agent of the corporation shall execute to the
corporation a bond in such sums and with such surety or sureties as the board
of directors may direct, conditioned upon the faithful performance of his
duties to the corporation, including responsibility for negligence and for the
accounting of all property, monies or securities of the corporation which may
come into his hands.
ARTICLE V
EXECUTION OF INSTRUMENTS, BORROWING OF MONEY
AND DEPOSIT OF CORPORATE FUNDS
Section 5.01 Execution of Instruments. Subject to any limitation
contained in the articles of incorporation or these bylaws, the president or
any vice president or the general manager, if any, may, in the name and on
behalf of the corporation, execute and deliver any contract or other
instrument authorized in writing by the board of directors. The board of
directors may, subject to any limitation contained in the articles of
incorporation or in these bylaws, authorize in writing any officer or agent to
execute and deliver any contract or other instrument in the name and on behalf
of the corporation; any such authorization may be general or confined to
specific instances.
Section 5.02 Loans. No loan or advance shall be contracted on
behalf of the corporation, no negotiable paper or other evidence of its
obligation under any loan or advance shall be issued in its name, and no
property of the corporation shall be mortgaged, pledged, hypothecated,
transferred or conveyed as security for the payment of any loan, advance,
indebtedness or liability of the corporation, unless and except as authorized
by the board of directors. Any such authorization may be general or confined
to specific instances.
Section 5.03 Deposits. All monies of the corporation not
otherwise employed shall be deposited from time to time to its credit in such
banks or trust companies or with such bankers or other depositories as the
board of directors may select, or as from time to time may be selected by any
officer or agent authorized to do so by the board of directors.
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Section 5.04 Checks, Drafts, Etc. All notes, drafts,
acceptances, checks, endorsements, and, subject to the provisions of these
bylaws, evidences of indebtedness of the corporation shall be signed by such
officer or officers or such agent or agents of the corporation and in such
manner as the board of directors from time to time may determine.
Endorsements for deposit to the credit of the corporation in any of its duly
authorized depositories shall be in such manner as the board of directors from
time to time may determine.
Section 5.05 Bonds and Debentures. Every bond and debenture
issued by the corporation shall be evidenced by an appropriate instrument
which shall be signed by the president or a vice president and by the
secretary and sealed with the seal of the corporation. The seal may be a
facsimile, engraved or printed. Where such bond or debenture is authenticated
with the manual signature of an authorized officer of the corporation or other
trustee designated by the indenture of trust or other agreement under which
such security is issued, the signature of any of the corporation's officers
named thereon may be a facsimile. In case any officer who signed, or whose
facsimile signature has been used on any such bond or debenture, shall cease
to be an officer of the corporation for any reason before the same has been
delivered by the corporation, such bond or debenture may nevertheless be
adopted by the corporation and issued and delivered as though the person who
signed it or whose facsimile signature has been used thereon had not ceased to
be such officer.
Section 5.06 Sale, Transfer, Etc. of Securities. Sales,
transfers, endorsements and assignments of stocks, bonds and other securities
owned by or standing in the name of the corporation, and the execution and
delivery on behalf of the corporation of any and all instruments in writing
incident to any such sale, transfer, endorsement or assignment, shall be
effected by the president, or by any vice president, together with the
secretary, or by any officer or agent thereunto authorized by the board of
directors.
Section 5.07 Proxies. Proxies to vote with respect to stock of
other corporations owned by or standing in the name of the corporation shall
be executed and delivered on behalf of the corporation by the president or any
vice president and the secretary or assistant secretary of the corporation, or
by any officer or agent thereunder authorized by the board of directors.
ARTICLE VI
CAPITAL SHARES
Section 6.01 Stock Certificates. Every holder of stock in the
corporation shall be entitled to have a certificate, signed by the president
or any vice president and the secretary or assistant secretary, and sealed
with the seal (which may be a facsimile, engraved or printed) of the
corporation, certifying the number and kind, class or series of stock owned by
him in the corporation; provided, however, that where such a certificate is
countersigned by (a) a transfer agent or any assistant transfer agent, or (b)
registered by a registrar, the signature of any such president, vice
president, secretary, or assistant secretary may be a facsimile. In case any
officer who shall have signed, or whose facsimile signature or signatures
shall have been used on any such certificate, shall cease to be such officer
of the corporation, for any reason, before the delivery of such certificate by
the corporation, such certificate may nevertheless be adopted by the
corporation and be issued and delivered as though the person who signed it, or
whose facsimile signature or signatures shall have been used thereon, has not
ceased to be such officer. Certificates representing stock of the corporation
shall be in such form as provided by the statutes of the state of
incorporation. There shall be entered upon the stock books of the corporation
at
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the time of issuance of each share, the number of the certificate issued, the
name and address of the person owning the stock represented thereby, the
number and kind, class or series of such stock and the date of issuance
thereof. Every certificate exchanged or returned to the corporation shall be
marked "cancelled" with the date of cancellation.
Section 6.02 Transfer of Stock. Transfers of stock of the
corporation shall be made on the books of the corporation by the holder of
record thereof, or by his attorney thereunto duly authorized by a power of
attorney duly executed in writing and filed with the secretary of the
corporation or any of its transfer agents, and on surrender of the certificate
or certificates, properly endorsed or accompanied by proper instruments of
transfer, representing such stock. Except as provided by law, the corporation
and transfer agents and registrars, if any, shall be entitled to treat the
holder of record of any stock 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 stock on the part of any other person whether or
not it or they shall have express or other notice thereof.
Section 6.03 Regulations. Subject to the provisions of the
articles of incorporation, the board of directors may make such rules and
regulations as they may deem expedient concerning the issuance, transfer,
redemption and registration of certificates for stock of the corporation.
Section 6.04 Maintenance of Stock Ledger at Principal Place of
Business. A stock ledger (or books where more than one kind, class or series
of stock is outstanding) shall be kept at the principal place of business of
the corporation, or at such other place as the board of directors shall
determine, containing the names alphabetically arranged of original
stockholders of the corporation, their addresses, their interest, the amount
paid on their shares, and all transfers thereof and the number and class of
stock held by each. Such stock ledgers shall at all reasonable hours be
subject to inspection by persons entitled by law to inspect the same.
Section 6.05 Transfer Agents and Registrars. The board of
directors may appoint one or more transfer agents and one or more registrars
with respect to the certificates representing stock of the corporation, and
may require all such certificates to bear the signature of either or both.
The board of directors may from time to time define the respective duties of
such transfer agents and registrars. No certificate for stock shall be valid
until countersigned by a transfer agent, if at the date appearing thereon the
corporation had a transfer agent for such stock, and until registered by a
registrar, if at such date the corporation had a registrar for such stock.
Section 6.06 Closing of Transfer Books and Fixing of Record
Date.
(a) The board of directors shall have power to close the
stock ledgers of the corporation for a period of not to exceed sixty days
preceding the date of any meeting of the stockholders, or the date for payment
of any dividend, or the date for the allotment of rights, or capital stock
shall go into effect, or a date in connection with obtaining the consent of
stockholders for any purpose.
(b) In lieu of closing the stock ledgers as aforesaid, the
board of directors may fix in advance a date, not exceeding sixty days
preceding the date of any meeting of stockholders, or the date for the payment
of any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or a
date in connection with obtaining any such consent, as a record date for the
determination of the
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stockholders entitled to a notice of, and to vote at, any such meeting and any
adjournment thereof, or entitled to receive payment of any such dividend, or
to any such allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of capital stock or to give such consent.
(c) If the stock ledgers shall be closed or a record date
set for the purpose of determining stockholders entitled to notice of or to
vote at a meeting of stockholders, such books shall be closed for or such
record date shall be at least ten days immediately preceding such meeting.
Section 6.07 Lost or Destroyed Certificates. The corporation may
issue a new certificate for stock of the corporation in place of any
certificate theretofore issued by it, alleged to have been lost or destroyed,
and the board of directors may, in their discretion, require the owner of the
lost or destroyed certificate or his legal representatives, to give the
corporation a bond in such form and amount as the board of directors may
direct, and with such surety or sureties as may be satisfactory to the board,
to indemnify the corporation and its transfer agents and registrars, if any,
against any claims that may be made against it or any such transfer agent or
registrar on account of the issuance of such new certificate. A new
certificate may be issued without requiring any bond when, in the judgment of
the board of directors, it is proper to do so.
ARTICLE VII
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 7.01 How Constituted. The board of directors may
designate an executive committee and such other committees as the board of
directors may deem appropriate, each of which committees shall consist of one
or more directors. Members of the executive committee and of any such other
committee shall be designated annually at the annual meeting of the board of
directors; provided, however, that at any time the board of directors may
abolish or reconstitute the executive committee and of any such other
committee shall hold office until his successor shall have been designated or
until his resignation or removal in the manner provided in these bylaws.
Section 7.02 Powers. During the intervals between meetings of
the board of directors, the executive committee shall have and may exercise
all powers of the board of directors in the management of the business and
affairs of the corporation, except for the power to fill vacancies in the
board of directors or to amend these bylaws, and except for such powers as by
law may not be delegated by the board of directors to an executive committee.
Section 7.03 Proceedings. The executive committee, and such
other committees as may be designated hereunder by the board of directors, may
fix its own presiding and recording officer or officers, and may meet at such
place or places, at such time or times and upon such notice (or without
notice) as it shall determine from time to time. It will keep a record of its
proceedings and shall report such proceedings to the board of directors at the
meeting of the board of directors next following.
Section 7.04 Quorum and Manner of Acting. At all meetings of the
executive committee, and of such other committees as may be designated
hereunder by the board of directors, the presence of members constituting a
majority of the total authorized membership of the committee shall be
necessary and sufficient to constitute a quorum for the transaction of
business, and the act of a majority of the members present at any meeting at
which a quorum is present shall be the act of such committee. The members of
the executive committee, and of such other committees as may be designated
hereunder by
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the board of directors, shall act only as a committee and the individual
members thereof shall have no powers as such.
Section 7.05 Resignations. Any member of the executive
committee, and of such other committees as may be designated hereunder by the
board of directors, may resign at any time by delivering a written resignation
to either the president, the secretary, or assistant secretary, or to the
presiding officer of the committee of which he is a member, if any shall have
been appointed and shall be in office. Unless otherwise specified therein,
such resignation shall take effect upon delivery.
Section 7.06 Removal. The board of directors may at any time
remove any member of the executive committee or of any other committee
designated by it hereunder either for or without cause.
Section 7.07 Vacancies. If any vacancy shall occur in the
executive committee or of any other committee designated by the board of
directors hereunder, by reason of disqualification, death, resignation,
removal or otherwise, the remaining members shall, until the filling of such
vacancy, constitute the then total authorized membership of the committee and
continued to act, unless such committee consisted of more than one member
prior to the vacancy or vacancies and is left with only one member as a result
thereof. Such vacancy may be filled at any meeting of the board or directors.
Section 7.08 Compensation. The board of directors may allow a
fixed sum and expenses of attendance to any member of the executive committee,
or of any other committee designated by it hereunder, who is not an active
salaried employee of the corporation for attendance at each meeting of the
said committee.
ARTICLE VIII
INDEMNIFICATION, INSURANCE, AND
OFFICER AND DIRECTOR CONTRACTS
Section 8.01 Indemnification: Third Party Actions. The
corporation shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending, or completed
action, suit, or proceedings, whether civil, criminal, administrative, or
investigative, except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee, or agent
of the corporation, or is or was serving at the request of the corporation as
a director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise, against expenses, including
attorney's fees, judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with the action, suit, or proceeding,
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit, or proceeding by judgment,
order, settlement, conviction, or on a plea of nolo contendere or its
equivalent, does not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and with respect to any
criminal action or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
Section 8.02 Indemnification: Corporate Actions. The corporation
shall have the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the corporation to procure a judgment in its
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favor by reason of the fact that he is or was a director, officer, employee,
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against expenses,
including attorney's fees, actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he acted
in good faith and in a manner he reasonably believed to be or not opposed to
the best interests of the corporation. Indemnification shall not be made for
any claim, issue, or matter as to which such a person shall have been adjudged
by a court of competent jurisdiction, after exhaustion of all appeals
therefrom, to be liable to the corporation or for amounts paid in settlement
to the corporation, unless and only to the extent that the court in which the
action or suit was brought or other court of competent jurisdiction determines
on application that in view of all circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court
deems proper.
Section 8.03 Determination. To the extent that a director,
officer, employee, or agent of the corporation has been successful on the
merits or otherwise in defense of any action, suit, or proceeding referred to
in sections 8.01 and 8.02 hereof, or in defense of any claim, issue, or matter
therein, he must be indemnified against expenses, including attorney's fees,
actually and reasonably incurred by him in connection the defense. Any
indemnification under sections 8.01 and 8.02, unless ordered by a court or
advanced pursuant to section 8.04, must be made by the corporation only as
authorized in the specific case on a determination that indemnification of the
director, officer, employee, or agent is proper in the circumstances. The
determination must be made: (i) by the board of directors by a majority vote
of a quorum consisting of directors who were not parties to the act, suit, or
proceeding; (ii) if a majority vote of a quorum consisting of directors who
are not parties to the act, suit, or proceeding so orders, by independent
legal counsel in a written opinion; (iii) if a quorum consisting of directors
who are not parties to the act, suit, or proceeding cannot be obtained, by
independent legal counsel in a written opinion; or (iv) by the stockholders by
a majority vote of a quorum of stockholders at any meeting duly called for
such purpose.
Section 8.04 Advances. Expenses incurred in defending a civil or
criminal action, suit, or proceeding may be paid by the corporation as they
are incurred and in advance of the final disposition of the action, suit, or
proceeding on receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation.
Section 8.05 Scope of Indemnification. The indemnification and
advancement of expenses authorized in or ordered by the corporation pursuant
to sections 8.01, 8.02, 8.04:
(a) does not exclude any other rights to which a person
seeking indemnification or advancement of expenses, including corporate
personnel other than directors or officers, may be entitled under the articles
of incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise for either an action in his official
capacity or an action in another capacity while holding his office, except
that indemnification, unless ordered by a court pursuant to section 8.02 or
for the advancement of expenses made pursuant to section 8.04, may not be made
to or on behalf of any director or officer if a final adjudication establishes
that his acts or omissions involved intentional misconduct, fraud, or a
knowing violation of law and was material to the case of action; and
(b) continues for a person who has ceased to be a director,
officer, employee, or agent and inures to the benefit of the heirs, executors,
and administrators of such a person.
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Section 8.06 Insurance. The corporation may purchase and
maintain insurance or make other financial arrangements on behalf of any
person who is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust, or other enterprise against any liability asserted
against him and incurred by him in any such capacity as a director, officer,
employee, or agent, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against any such liability
and expenses. The other financial arrangements made by the corporation
pursuant to this section 8.06 may include the creation of a trust fund, the
establishment of a program of self-insurance, the securing of its obligation
of indemnification by granting a security interest or other lien on any assets
of the corporation, the establishment of a letter of credit, guarantee, or
surety, all as may be determined by resolution of the board of directors;
provided, that no financial arrangement made pursuant to this section 8.06 may
provide protection for a person adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable for intentional
misconduct, fraud, or a knowing violation of law, except with respect to the
advancement of expenses or indemnification ordered by a court.
(a) Any insurance or other financial arrangement made on
behalf of a person pursuant to this section 8.06 may be provided by the
corporation or any other person approved by the board of directors, even if
all or part of the other person's stock or other securities is owned by the
corporation.
(b) In the absence of fraud, the decision of the board of
directors as to the propriety of the terms and conditions of any insurance or
other financial arrangement made pursuant to this section 8.06 and the choice
of the person to provide the insurance or other financial arrangement is
conclusive, and the insurance or other financial arrangement is not void or
voidable and does not subject any director approving it to personal liability
for his action even if a director approving the insurance or other financial
arrangement is a beneficiary of the insurance or other financial arrangement.
Section 8.07 Officer and Director Contracts. No contract or
other transaction between the corporation and one or more of its directors or
officers, or between the corporation and any corporation, firm, or association
in which one or more of the corporation's directors or officers are directors
or officers or are financially interested, is either void or voidable solely
on the basis of such relationship or solely because any such director or
officer is present at the meeting of the board of directors or a committee
thereof which authorized or approved the contract or transaction, or because
the vote or votes of common or interested directors are counted for such
purpose, if:
(a) the fact the common directorship or financial interest
is disclosed or known to the board of directors or committee and noted in the
minutes and the board or committee authorizes, approves, or ratifies the
contract or transaction in good faith by a vote sufficient for the purpose
without counting the vote or votes of such director or directors;
(b) the fact that the common directorship or financial
interest is disclosed or known to the stockholders and they approve or ratify
the contract or transaction in good faith by a majority vote of the shares
voted at a meeting of stockholders called for such purpose or written consent
of stockholders holding a majority of the shares entitled to vote (the votes
of the common
15
<PAGE>
or interested directors or officers shall be counted in any such vote of
stockholders); or
(c) the contract or transaction is fair as to the
corporation at the time it is authorized or approved.
ARTICLES IX
FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors.
ARTICLE X
DIVIDENDS
The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding stock in the manner and upon
the terms and conditions provided by the articles of incorporation and by law.
ARTICLE XI
AMENDMENTS
All bylaws of the corporation, whether adopted by the board of
directors or the stockholders, shall be subject to amendment, alteration, or
repeal, and new bylaws may be made, except that no bylaw adopted or amended by
the stockholders shall be altered or repealed by the board of directors.
CERTIFICATE OF SECRETARY
The undersigned does hereby certify that he/she is the secretary
of , a corporation duly organized and existing
under and by virtue of the laws of the state of Nevada; that the above and
foregoing bylaws of said corporation were duly and regularly adopted as such
by the board of directors of said corporation by unanimous consent dated
, 199 , and that the above and foregoing bylaws are now in full
force and effect and supersede and replace any prior bylaws of the
corporation.
DATED this 20th day of May, 1998.
/s/ R. Blair Lund
--------------
, Secretary
Exhibit 4
SUBSCRIPTION AGREEMENT
OF
THE LIVING CARD COMPANY
1. PURCHASE. The undersigned hereby subscribes for the purchase of
__________________ shares of THE LIVING CARD COMPANY, a Nevada corporation
(the "Company"). With this document the undersigned is submitting the sum of
$ ___________________ in cash, check, money order, or equivalent, as payment
for said shares at the price of $0.10 per share. Checks or money orders are
to be made payable to "Brighton Bank-Escrow Agent for The Living Card Company"
until the offering closes.
2. REPRESENTATIONS. The undersigned hereby represents and warrants
that:
(a) He/she is aware that, pursuant to Section 14 of the
Securities Act of 1933, any provision is void that binds a person acquiring a
security to waive compliance with any provision under the federal securities
law;
(b) The undersigned, if a natural person, is over the age of
twenty-one years;
(c) The undersigned has received and read a copy of the
prospectus of the Company;
(d) The undersigned acknowledges that neither the United
States Securities and Exchange Commission, nor any other state or federal
agency has made any determination as to the merits of purchasing any of such
shares, and that the purchase of any interest involves a very high degree of
risk;
(e) The undersigned acknowledges that the application of
purchase may be accepted in whole or in part or rejected by the Company, and
that, to the extent the application may be rejected, the accompanying payment
will be refunded without the deduction of expenses;
(f) The offer and sale of these shares to the undersigned
were made by means of the Company's prospectus only, and no other documents or
advertisements were used in connection therewith; and
(g) The undersigned was offered and is purchasing these
shares within the state of .
3. TYPE OF OFFERING. The undersigned hereby further acknowledges
that these shares are being offered and sold pursuant to a registration
statement on Form SB-1 under the Securities Act of 1933, as amended, and that
such shares may only be offered and sold in states in which the securities
have been qualified for sale.
AFFIRMATION
THE UNDERSIGNED HEREBY SWEARS AND AFFIRMS THAT HE OR SHE HAS READ THE
FOREGOING SUBSCRIPTION AGREEMENT OF THE LIVING CARD COMPANY AND IS FAMILIAR
WITH THE CONTENTS THEREOF AND THAT ALL OF THE REPRESENTATIONS CONTAINED
THEREIN ARE TRUE AND ACCURATE.
DATED:
________________________________
[Printed Name of Subscriber] [Signature]
_____________________________________ ________________________________
[Street Address and Number] [City, State and Zip Code]
_____________________________________
[Tax Identification or Social
Security Number of Subscriber]
The Company is requested to issue the stock certificate(s) as follows:
Name(s): ________________________________________ No. of Shares
[Please Print]
Name(s):_________________________________________ No. of Shares
[Please Print]
Exhibit 9
PROCEEDS ESCROW AGREEMENT
THIS PROCEEDS ESCROW AGREEMENT (this "Agreement") is made and entered
into this day of , 1998, by and between THE LIVING CARD
COMPANY, a Nevada corporation (the "Company"), and BRIGHTON BANK, a National
banking corporation (the "Escrow Agent").
Premises
The Company proposes to offer for sale to the general public in certain
states a total of Shares of common stock (the "Common Stock"),
par value $0.001, at an offering price of $0.10 per Share in accordance with
the registration provisions of the Securities Act of 1933, as amended, and
pursuant to a registration statement on form SB-1 (the "Registration
Statement") on file with the Securities and Exchange Commission. The Company
agrees herein to offer for sale the Common Stock in accordance with the terms
of the prospectus contained in the Registration Statement. In accordance with
the terms of the Registration Statement, the Company desires to provide for
the escrow of the gross subscription payments for Common Stock until the
amount, as set forth below, has been received.
Agreement
NOW, THEREFORE, the parties hereto agree as follows:
1. Until termination of this Agreement, all funds collected by the
Company or any officer or representative of the Company from subscriptions for
the purchase of Common Stock in the subject offering shall be deposited
promptly with the Escrow Agent, but in any event no later than noon of the
next business day following receipt.
2. Concurrently with transmitting funds to the Escrow Agent, the
Company shall also deliver to the Escrow Agent a schedule setting forth the
name and address of each subscriber whose funds are included in such
transmittal, the number of Shares subscribed for, and the dollar amount paid.
All funds so deposited shall remain the property of the subscriber and shall
not be subject to any lien or charges by the Escrow Agent, or judgments or
creditors' claims against the Company until released to it in the manner
hereinafter provided.
3. If at any time prior to the expiration of the minimum offering
period, as specified in paragraph 4, $100,000 has been deposited pursuant to
this Agreement, the Escrow Agent shall confirm the receipt of such funds to
the Company.
4. If, within four (4) months after the effective date of the
Registration Statement the Company and its agents have not deposited $100,000
in good funds with the Escrow Agent, the Escrow Agent shall so notify the
Company and shall promptly transmit to those investors who subscribed for the
purchase of Shares the amount of money each such investor so paid. The Escrow
Agent shall furnish to the Company an accounting for the refund in full to all
subscribers.
5. If at any time prior to the termination of this escrow the
Escrow Agent is advised by the Securities and Exchange Commission that a stop
order has been issued with respect to the Registration Statement, the Escrow
Agent shall thereon return all funds to the respective subscribers.
6. It is understood and agreed that the duties of the Escrow Agent
are entirely ministerial, being limited to receiving monies from the Company
and its agents and holding and disbursing such monies in accordance with this
Agreement.
7. The Escrow Agent is not a party to, and is not bound by, any
agreement between the Company and any other party which may be evidenced by or
arise out of the foregoing instructions.
8. The Escrow Agent acts hereunder as a depository only, and is not
responsible or liable in any manner whatsoever for the sufficiency,
correctness, genuineness, or validity of any instrument deposited with it, or
with respect to the form or execution of the same, or the identity, authority,
or rights of any person executing or depositing the same.
9. The Escrow Agent shall not be required to take or be bound by
notice of any default of any person or to take any action with respect to such
default involving any expense or liability, unless notice in writing is given
to an officer of the Escrow Agent of such default by the undersigned or any of
them, and unless it is indemnified in a manner satisfactory to it against any
expense or liability arising therefrom.
10. The Escrow Agent shall not be liable for acting on any notice,
request, waiver, consent, receipt, or other paper or document believed by the
Escrow Agent to be genuine and to have been signed by the proper party or
parties.
11. The Escrow Agent shall not be liable for any error of judgment
or for any act done or step taken or omitted by it in good faith, or for any
mistake of fact or law, or for anything which it may do or refrain from doing
in connection herewith, except its own willful misconduct.
12. The Escrow Agent shall not be answerable for the default or
misconduct of any agent, attorney, or employee appointed by it if such agent,
attorney, or employee shall have been selected with reasonable care.
13. The Escrow Agent may consult with legal counsel in the event of
any dispute or question as to the consideration of the foregoing instructions
or the Escrow Agent's duties hereunder, and the Escrow Agent shall incur no
liability and shall be fully protected in acting in accordance with the
opinion and instructions of such counsel.
14. In the event of any disagreement between the undersigned or any
of them, the person or persons named in the foregoing instructions, and/or any
other person, resulting in adverse claims and/or demands being made in
connection with or for any papers, money, or property involved herein or
affected hereby, the Escrow Agent shall be entitled at its option to refuse to
comply with any such claim, or demand so long as such disagreement shall
continue and, in so refusing, the Escrow Agent shall not be or become liable
to the undersigned or any of them or to any person named in the foregoing
instructions for the failure or refusal to comply with such conflicting or
adverse demands, and the Escrow Agent shall be entitled to continue to so
refrain and refuse to so act until:
(a) the rights of adverse claimants have been finally
adjudicated in a court assuming and having jurisdiction of the parties and the
money, papers, and property involved herein or affected hereby; and/or
(b) all differences shall have been adjusted by agreement and
the Escrow Agent shall have been notified thereof in writing signed by all of
the persons interested.
15. The fee of the Escrow Agent is $ , receipt of which is
hereby acknowledged. In addition, if a minimum of $100,000 is not received in
escrow within the escrow period and the Escrow Agent is required to return
funds to investors as provided in section 4, the Escrow Agent shall receive a
fee of $ per check for such service. The fee agreed on for services
rendered hereunder is intended as full compensation for the Escrow Agent's
services as contemplated by this Agreement; however, in the event that the
conditions of this Agreement are not fulfilled, the Escrow Agent renders any
material service not contemplated by this Agreement, there is any assignment
of interest in the subject matter of this Agreement, there is any material
modification hereof, any material controversy arises hereunder, or the Escrow
Agent is made a party to or justifiably intervenes in any litigation
pertaining to this Agreement or the subject matter hereof, the Escrow Agent
shall be reasonably compensated for such extraordinary expenses, including
reasonable attorneys' fees, occasioned by any delay, controversy, litigation,
or event and the same may be recoverable only from the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers, as of the date first
above written.
THE LIVING CARD COMPANY
By ________________________________________
Duly Authorized Officer
Brighton Bank hereby acknowledges receipt of this Agreement and agrees
to act in accordance with said Agreement and on the terms and conditions above
set forth this__________ day of __________, 1998.
BRIGHTON BANK
By _______________________________________
Duly Authorized Officer
Exhibit 10.01
[Letterhead of
Lewis Law Offices
Attorneys At Law
600 Crandall Building
10 West 100 South
Salt Lake City, Utah 84101
Telephone (801) 530-0447
Facsimile (801) 364-6279]
August 28, 1998
The Board of Directors
The Living Card Company
1174 East 2700 South, #16
Salt Lake City, Utah 84106
Re: The Living Card Company
Gentlemen:
We have been retained by The Living Card Company (the "Company") in
connection with the Registration Statement on Form SB-1 filed by the Company
with the Securities and Exchange Commission (the "Registration Statement")
relating to 1,500,000 shares of Common Stock (the "Common Stock"). You have
requested that we render an opinion as to whether the Common Stock to be
issued upon the terms set forth in the Registration Statement will be validly
issued, fully paid and non-assessable.
In connection with this agreement we have examined the following:
1. Articles of Incorporation of the Company;
2. The Registration Statement;
3. The Bylaws of the Company; and
4. Unanimous consents of the board of directors.
We have examined such other corporate records and documents and have
made such other examinations as we deemed relevant.
Based upon the above examination, we are of the opinion that the Common
Stock to be issued pursuant to the Registration Statement, are validly
authorized and, when issued in accordance with the terms set forth therein,
will be validly issued, fully paid, and non-assessable.
<PAGE>
The Board of Directors
The Living Card Company
August 28, 1998
Page 2
We hereby consent to being named in the Prospectus included in the
Registration Statement as having rendered the foregoing opinion and as having
represented the Company in connection with the Registration Statement.
Sincerely yours,
/s/ James C. Lewis
LEWIS LAW OFFICES
Exhibit 10.02
[Letterhead of
Jones, Jensen & Company LLC
Certified Public Accountants and Consultants
50 South Main Street
Suite 1450
Salt Lake City, Utah 84144
Telephone (801) 328-4408
Facsimile (801) 328-4461]
CONSENT OF INDEPENDENT AUDITORS'
The Board of Directors
Living Card Company, Inc.
Salt Lake City, Utah
We consent to the use in this Registration Statement of Living Card Company,
Inc. on Form 10-SB, of our report dated July 15, 1998 of Living Card Company,
Inc. for the period ended June 30, 1998, which are part of this Registration
Statement, and to all references to our firm included in this Registration
Statement.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
August 24, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from audited
finacial statements as of June 30, 1998 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> MAY-08-1998
<PERIOD-END> JUN-30-1998
<CASH> 26,586
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 26,586
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 26,586
<CURRENT-LIABILITIES> 28,400
<BONDS> 0
0
0
<COMMON> 6,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 26,586
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 11,820
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (11,820)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,820)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
