1
U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
General Form For Registration Of Securities Of
Small Business Issuers
Under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934
Graffiti-X, Inc.
(Name of Small Business Issuer in its charter)
Delaware 33-0821967
(State or other jurisdiction of (I.R.S.
Employer
incorporation or organization)
Identification No.)
619 Serrano Lane
Chula Vista, CA 91910
(Address and ZIP code of Principal Office)
(619) 482-7177
(Issuer's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of each class to be so registered: None
Name of each exchange on which each class is to be registered:
None
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of class)
ITEM 1 DESCRIPTION OF BUSINESS
GENERAL
Graffiti-X, Inc. (the "Company") was incorporated under the laws
of the State of Delaware on July 29, 1998. The articles of
incorporation authorize the Company to issue forty million
(40,000,000) shares of Common Stock at a par value of $0.0001 per
share. The Company was formed to manufacture and sell two
chemical products designed to remove graffiti from a variety of
surfaces.
On August 4, 1998 the Company acquired all rights to manufacture
and sell two chemical products designed to remove graffiti from a
variety of surfaces. The Company acquired these rights as well as
an inventory of chemicals used for the manufacture of these
products from the Company's president, Amin Hassan, in exchange
for the issuance of nine hundred and fifty thousand (950,000)
shares of common stock. Also on August 4, 1998 the Company issued
fifty thousand (50,000) shares of common stock to Daniel Masters,
a director, for services provided in connection with the
formation of the Company.
Also on August 4, 1998 the Company filed a Form D with the
Securities and Exchange Commission and initiated an exempt
offering pursuant to Rule 504. The offering was closed on
September 30, 1998. A total of three hundred and eighty-five
thousand (385,000) shares of common stock were subscribed for and
issued in that offering.
On May 10, 1999 the Shareholders of the Company agreed to a stock
split on the basis of six (6) new shares for one (1) old share.
After giving effect to that stock split the Company had 8,310,000
shares of common stock issued and outstanding.
On July 1, 1999 the Company issued an additional 1,000,000 shares
of common stock to the Company's President, Amin Hassan, in
exchange for additional chemicals used in the manufacture of the
Company's graffiti removal products. No other shares have been
issued. Consequently, as of the date of this registration
statement, the Company has 9,310,000 common shares issued and
outstanding.
BUSINESS DESCRIPTION
The Company owns all rights, title and interest to two chemical
formulations known as Graffiti-XL I and Graffiti-XL II (the
Products). The Products were developed by Amin Hassan,
President of the Company.
The Company's two Graffiti-XL products provide fast, effective,
and safe removal of graffiti. Both versions of Graffiti-XL are
environmentally safe solvent substitutes engineered and
formulated for fast, effective removal of a wide range of paints,
inks, waxes, tars, magic markers, etc. from a variety of
surfaces. Both versions of Graffiti-XL are 100% water miscible.
Graffiti-XL I removes graffiti compounds from brick, cinder
block, stucco, wood, metal, cement, rocks, etc.
Graffiti-XL II removes graffiti compounds from polycarbonate and
plastic surfaces.
Graffiti-XL I, the first graffiti removal product developed by
the Company's founder, Amin Hassan, was found to be safe and
effective for use in the great majority of situations, however it
etched the surface of certain plastics and polycarbonates. Hence
the second product, Graffiti-XL II, was developed to remove
graffiti from these surfaces without damaging the underlying
structures.
Advantages to the use of Graffiti-XL include:
Eliminates costly and often unsightly over-painting
Restores surfaces to original appearance
Saves manpower and man-hours compared to painting
Saves thousands of dollars in replacement costs for equipment
and materials
Contains no fumes or strong odors
Free from hazardous chemicals such as chlorinated solvents,
acetone, MEK,
butyl acetate, CFC, etc.
Graffiti-XL has been successfully tested in the following
applications: Freeway and Traffic Signs, Fences, Guard Rails,
Monuments, Doors, Metal Partitions, Railroad Cars, Subways, Farm
Equipment, Automotive Exteriors, Overpass Supports, Walls, Road
Dividers, Windows, Lockers, Buses, Bus Shelters, and Cement
Floors. These applications include virtually every type of
surface which has been plagued by graffiti in the past.
Product Application
The use and application of Graffiti-XL is easy and friendly to
both the user and the environment. The following application
method is suggested: First, spray the affected area with
Graffiti-XL; second, wash off with water. In a few cases it may
be necessary to do some manual brushing. High pressure equipment
need not, and in fact should not, be used.
Manufacturing
The Company currently produces its Graffiti-XL products in very
small quantities which it uses to demonstrate the products to
potential buyers. Production quantities are typically one (1) to
five (5) gallons and are produced at the home of the Company's
president. The Company is currently negotiating for a
manufacturing facility and hopes to be in a position to
manufacture its products on or before September 2000. Both
products are compounded from readily available chemicals, each of
which is sold by multiple suppliers. The Company anticipates no
difficulty in procuring the chemicals used in the production of
Graffiti-XL.
Sales
The Company has no sales to date and is unable to solicit sales
because it lacks the facilities for commercial manufacturing. The
Company's activities to date have been limited to testing the
market through demonstrations of its products to potential
buyers. These demonstrations have been successful and Management
expects to be able to secure several orders when manufacturing
begins.
Market
The largest market for the Company's products is believed to lie
with public agencies. These agencies include city, county, state
and federal governments, school districts, public transportation
departments including bus and subway systems, highway
departments, parks departments, etc.
Competition
Most graffiti removal is accomplished by painting over the
problem or by attempting to remove it using hazardous solvents,
such as paint removers, the use of which is now banned in many
areas. Management knows of no other environmentally safe, solvent
substitute which has been developed for graffiti removal. Nor
does it know of any product which can be used on polycarbonate
and plastic surfaces without etching.
Research and Development
The Company currently spends no funds for research and
development. Nor is the Company actively considering the
development or acquisition of other products at this time.
Employees
The Company has no paid or commissioned staff. No compensation is
currently paid to any of the Company's officers. This situation
may be expected to change when sales commence. It is anticipated
that the Company's president will then take a sales commission of
10% on sales of Graffiti-XL.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS.
Liquidity and Capital Resources
The Company is in the development stage. The Company's capital
consists of chemicals supplied by the Company's founder and
President, Amin Hassan and funds provided by investors. The
opening chemical inventory had a cost basis to Mr. Hassan (and
therefore to the Company) of $1,367. Mr Hassan subsequently
contributed an additional chemical inventory which had a cost
basis to him of $1,461 for a total inventory contribution of
$2,828. Approximately sixty-six percent (66%) of the chemicals
have been expended in the course of demonstrating the Company's
products, however approximately thirty-four percent (34%) remain
available. Of the $3,850 raised in the Companys private
placement $3,697 remains available. The Company's capital is
sufficient to allow it to continue to finance operating
activities in this manner for one to two years to come.
When the Company commences manufacturing it will accept orders
only with a down payment of twenty-five percent (25%) of the
total sales price. This down payment will be sufficient to
provide the necessary working capital to produce and deliver the
product.
Results of Operations
The Company's balance sheet for the five months ended December
31, 1998, which was the Company's first five months, showed total
assets of $4,581 consisting of $3,817 in cash and $764 in
chemical inventory. On August 4, 1998 the Company was capitalized
by its President with a chemical inventory with a cost basis of
$2,828. In August and September of 1998 the Company raised $3,850
in a private placement. Thus inventory decreased by $603 (44%)
and cash decreased by $33 (1%) during the five months following
incorporation.
The Company's balance sheet for the period ending December 31,
1999, the Company's first full year of operation, reflects a cash
asset of $3,697 and inventory of $976 for a total asset value of
$4,673. On July 1, 1999 the Company's President sold an
inventory of chemicals with a cost basis of $1,461 to the Company
in exchange for 1,000,000 shares of common stock. Thus the total
inventory for the year was $2,225 and the ending inventory of
$976 reflected a decrease of $1,249 (56%). Cash decreased by $120
(3%), and total assets decreased by $1,369 (23%) during the year.
The Company cannot predict to what extent its liquidity and
capital resources will be diminished prior to commencement of
manufacturing and sales, however management believes that the
Company's present capital is sufficient to commence those
activities, given the Company's plan to accept orders only with a
partial payment approximately equal to the cost of goods sold.
The Company has not engaged in any significant operations since
inception other than product demonstration, the search for a
manufacturing facility, corporate maintenance activities,
acquisition of capital, and preparation for filing of its
Registration Statement on Form 10-SB. No operating revenues have
been realized by the Company since inception.
The Company anticipates incurring increased expenses in the
current year as a result of costs associated with registration
under the Securities Exchange Act of 1934. However the Company
also expects to generate its first revenues from sales before
September 1, 2000. The Company's marketing efforts indicate that
it should be able to sell its products at a price that is
approximately 400% of manufacturing cost. Management therefore
expects that it will be able to offset the higher operating costs
associated with registration under the Securities Exchange Act
with profits from product sales. Sales, which are expected to
begin in the third quarter, should increase in the fourth
quarter.
Need for Additional Financing
The Company believes that its existing capital will be sufficient
to meet the Company's cash needs through the inception of
manufacturing and sales. The Company believes that profits from
sales will generate sufficient cash for its operating needs by
the end of the third quarter. The Company therefore does not
foresee the need for additional financing in the year ahead.
"CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. Except for historical matters, the matters discussed in
this Form 10-SB are forward-looking statements based on current
expectations, and involve risks and uncertainties.
Forward-looking statements include, but are not limited to,
statements under the following headings:
(i) "Description of Business" - the general description of the
Company's plan to engage in manufacturing and sales of its
Graffiti-XL products.
(ii) "Management's Discussion And Analysis Or Plan Of Operations"
the timing and expected profitable results of manufacturing and
sales and the need for no additional financing.
Item 3. DESCRIPTION OF PROPERTY.
The Company does not currently maintain an office or any other
facilities. It does currently maintain a mailing address at 289
Church Avenue, Suite 105, Chula Vista, California 91910. The
Company pays no rent for the use of this mailing address. The
Company is currently seeking an agreement with a contract
manufacturing facility to produce and warehouse its products. By
using the facilities of another manufacturer in this way,
management believes that the Company will not need to maintain an
office of its own at any time in the foreseeable future.
Item 4. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY
OWNERS.
As of February 14, 2000, the following persons were known by the
Company to be part of Management or to own, of record or
beneficially, 5% or more of the Company's Common Stock.
Name and Address of Class of Number of Percent Owned
Beneficial Owner Shares Shares
Amin Hassan (1) Common 6,700,000 71.9%
913 Calle Nuevo
San Clemente, CA
92673
Daniel Masters (2) Common 300,000 3.2%
619 Serrano Lane
Chula Vista, CA 91910
(1) Amin Hassan serves as President and Director. He may also be
deemed the parent of the Company, as defined by the Securities
and Exchange Commission.
(2) Daniel Masters serves as a Director.
Item 5. DIRECTORS, EXECUTIVE OFFICERS, AND SIGNIFICANT
EMPLOYEES.
The directors and executive officers currently serving the
Company are as follows:
Name and Address Age Title
Amin Hassan 59 President and
913 Calle Nuevo Director
San Clemente, CA 92673
Daniel Hassan 26 Secretary and
913 Calle Nuevo Director
San Clemente, CA 92673
Daniel Masters 54 Director
619 Serrano Lane
Chula Vista, CA 92673
Resumes of the Officers and Directors of the Company are as
follows:
Amin Hassan
President, Director
Mr. Amin Hassan has served as the Company's President and a
Director since it was first incorporated. He also serves as the
President of XXCEL Technology LLC and has done so since its
founding in August 1992. He continues to serve XXCEL Technology
LLC in that capacity today. Prior to incorporating that company,
Mr. Hassan was the sole owner of XXCEL Technology, a sole
proprietorship which Mr. Hassan established in 1989 to engage in
the development of alternative cleaning products. Between 1984
and 1989 he acted as an engineering consultant to large,
industrial manufacturers in the chemical process development
business. From 1978 to 1983 Mr. Hassan worked for Avery
Dennison, a Fortune 200 company, where he was a plant manager of
Durable Film. Prior to Avery Dennison, Mr. Hassan was employed as
a lab manager at Beaver Adhesive where he developed several
innovative products for which patent applications were filed on
behalf of his employer. Mr. Hassan holds a B.Sc. in Chemistry
and Geology and a B.Sc. in Chemical Engineering from Cairo
University. He is the father of Daniel Hassan.
Daniel Hassan
Secretary, Director
Mr. Daniel Hassan is currently enrolled in an M.B.A. program at
Columbia University in New York. From February 1996 until July
1998 he was employed as an associate analyst at National Economic
Research Associates in Cambridge, Massachusetts. From September
1995 to February 1996 Mr. Hassan worked as an internal auditor at
the New York headquarters of Dunn & Bradstreet. Mr. Hassan
graduated from George Washington University with a B.A. in
Economics in 1995. Daniel Hassan is the son of Amin Hassan.
Daniel Masters
Director
Mr. Masters has served as a Director of the Company since its
incorporation. Since January, 1996 he has also worked as an
independent consultant in business and finance. From July, 1993
to January, 1996 he was General Manager of First Canadian
Financial Corporation, a mortgage investment company. From
January, 1990 until joining First Canadian Financial, Mr. Masters
worked as an independent business consultant advising corporate
clients in the United States and Canada. Between 1979 and 1990 he
held a variety of positions in financial management of small
companies, and between 1970 and 1979 he held a series of
positions in college teaching and administration. Mr. Masters
received his A.B. degree in 1967 from Harvard University and his
M.A. in 1970 from the University of North Carolina.
Item 6. EXECUTIVE COMPENSATION
The Company has agreed to pay its President, Mr. Amin Hassan, a
commission on sales of the Company's products equal to 10% of net
sales. There have been no sales to date and no payments have been
made to Mr. Hassan. No other officer or Director of the Company
receives any cash remuneration from the Company.
On August 4, 1998 Mr. Amin Hassan, then President and a Director
of the Company, received 950,000 shares of common stock. These
shares were issued in exchange for the rights to and formulations
of the Graffiti XL products and an inventory of those products
valued at their chemical cost of $1,367. On May 10, 1999 those
shares were split six for one. As a result, Mr. Hassan then held
a total of 5,700,000 shares of common stock. On July 1, 1999 Mr.
Hassan sold an additional inventory of chemical products to the
Company in exchange for an additional 1,000,000 shares of common
stock. The cost basis to Mr. Hassan of those chemicals was
$1,461.
On August 4, 1998 Mr. Daniel Masters, then a Director of the
Company, received 50,000 shares of common stock. These shares
were issued in exchange for services in connection with the
formation and incorporation of the Company. On May 10, 1999 those
shares were split six for one. As a result, Mr. Masters now holds
a total of 300,000 shares of common stock.
There is no annuity, pension or retirement benefits proposed to
be paid to officers, directors or employees of the Company in the
event of retirement.
No remuneration other than that reported in paragraph 1 of this
item is proposed to be paid in the future directly or indirectly
by the Company to any officer or director under any plan which is
presently existing. No options have been granted.
Summary Compensation Table
Name and Yea Salar Bonu Other Restricted
Position r y s Compensation Stock Awards
Amin Hassan 199 $ 0 $ 0 $ 0 950,000
President/Dire 8 shares*
ctor
Daniel Masters 199 $ 0 $ 0 $ 0 50,000
Director 8 shares*
Amin Hassan 199 $ 0 $ 0 $ 0 1,000,000
President/Dire 9 shares
ctor
* On May 10, 1999 these shares were split six (6) for one (1).
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 4, 1998 the Company issued 950,000 shares of its common
stock in a non-public offering to its founder and President, Amin
Hassan. These shares were issued in exchange for the rights to
and formulations of the Graffiti XL products and an inventory of
those products. On May 10, 1999 those shares were split six for
one. As a result, Mr. Hassan then held 5,700,000 shares of common
stock. On July 1, 1999 Mr. Hassan sold an additional inventory of
chemical products to the Company in exchange for an additional
1,000,000 shares of common stock. As a result, Mr. Hassan now
holds a total of 6,700,000 shares of common stock in the Company.
On August 4, 1998 the Company issued 50,000 shares of its common
stock in a non-public offering to a Director, Daniel Masters.
These shares were issued for services rendered to the Company in
connection with its formation. On May 10, 1999 those shares were
split six for one. As a result, Mr. Masters now holds a total of
300,000 shares of common stock.
PART II
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
A. Market Information.
The Common Stock of the Company is not currently traded and has
never been traded in the past. Hence there is no market history.
There is only one class of stock: Common. None of the Company's
stock is subject to options or warrants to purchase, and there
are no securities convertible into the Company's common stock.
There is currently no common equity that is being offered or that
is proposed to be offered by the registrant.
B. Stockholders.
As of February 14, 2000, the number of common shareholders of
record was 39.
C. Dividend Policy.
The Company has not paid any dividends to date, and it does not
expect to pay any dividends at any time in the foreseeable
future. The board of directors of the Company will review its
dividend policy from time to time to determine the desirability
and feasibility of paying dividends after giving consideration to
the Company's earnings, financial condition, capital requirements
and such other factors as the board may deem relevant.
D. Reports to Shareholders.
The Company intends to furnish its shareholders with annual
reports containing audited financial statements and such other
periodic reports as the Company may determine to be appropriate
or as may be required by law. Upon the effectiveness of this
Registration Statement, the Company will be required to comply
with periodic reporting, proxy solicitation, and certain other
requirements under the Securities Exchange Act of 1934 as
amended.
E. Transfer Agent and Registrar.
The transfer agent for the Company's common stock is Interwest
Transfer, P. O. Box 17136, Salt Lake City, Utah, 84117.
ITEM 3. RECENT SALES OF UNREGISTERED SECURITIES
On August 4, 1998 the Company issued 950,000 shares of common
stock to its President, Amin Hassan, in exchange for the rights
to and formulations of the Graffiti XL products and an inventory
of those products. Also on August 4, 1998 the Company issued
50,000 shares of common stock to Daniel Masters, in exchange for
services in incorporating the Company. These shares were issued
in a non-public offering in reliance on Section 4(2) of the
Securities Act of 1933 as amended.
On or about August 4, 1998 the Company filed a Form-D with the
U.S. Securities and Exchange Commission. Between August 4, 1998
and September 30, 1998 the Company offered and sold common shares
to a total of 37 unaffiliated individuals. Those individuals
purchased a total of 385,000 shares for total proceeds of $3,850.
The offers and sales were made pursuant to Rule 504 of Regulation
D under the Securities Act of 1933 as amended. All shares were
subsequently split six (6) for one (1) so that as of February 14,
2000 there were 9,310,000 common shares issued and outstanding
and 39 shareholders of record.
ITEM 4. DESCRIPTION OF SECURITIES
Common Stock
The Company's Certificate of Incorporation authorizes the
issuance of 40,000,000 shares of Common Stock, par value $0.0001
per share, of which 9,310,000 shares were outstanding as of
February 14, 2000.
Description of Rights and Liabilities of Common Stockholders.
Voting Rights - Each record holder of common stock is entitled to
one vote for each share held on all matters to be voted on by the
stockholders. Holders of common stock do not have cumulative
voting rights. Thus the holder of fifty percent (50%) plus one of
the shares voting for the election of directors can elect all of
the directors.
Dividend Rights - Holders of common stock are entitled to share
ratably in such dividends, if any, as may be declared from time
to time by the Board of Directors out of legally available funds.
Liquidation Rights - In the event of liquidation, dissolution or
winding up of the affairs of the Company, holders of shares of
common stock are entitled to share ratably all net assets
remaining after payment in full of all liabilities.
Preemptive Rights - Holders of common stock have no preemptive or
other subscription rights, and there are no conversion or
redemptive rights or sinking fund provisions with respect to such
shares.
Conversion Rights No shares of common stock are currently
subject to outstanding options, warrants, or other convertible
securities.
Redemption Rights No redemption rights exist for the Company's
common stock.
Sinking Fund Provisions No sinking fund provisions exist.
Further Liabilities for Calls No shares of common stock are
subject to further call or assessment by the issuer. The Company
has not issued any stock options as of the date of this
Registration Statement.
Potential Liabilities of Common Stockholders to State and Local
Authorities No material potential liabilities are anticipated
to be imposed on shareholders under state laws. However, certain
Delaware regulations require regulation of beneficial owners of
more than five percent (5%) of voting securities. Shareholders
who fall into this category may be subject to fines in
circumstances where non-compliance with these regulations is
established.
Debt Securities.
The Company is not registering any debt securities and there are
no debt securities currently authorized or outstanding.
Other Securities to be Registered.
The Company is not registering any securities other than its
common stock.
ITEM 5. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The By-Laws of the Company provide indemnification of officers
and directors of the Company as follows:
By-Law 25
The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the
provisions of paragraph (7) of subsection (b) of Section 102 of
the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented.
By-Law 29
The corporation shall, to the fullest extent permitted by the
provisions of Section 145 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented,
indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the
expenses, liabilities, or other matters referred to in or covered
by said section. The indemnification provided for herein shall
not be deemed exclusive of any other rights to which those
indemnified may be entitled under any agreement, vote of
stockholders or disinterested directors, or otherwise. Such
indemnification shall apply both as to action in his official
capacity of one holding office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and
administrators of such a person.
PART F/S
ITEM 1. FINANCIAL STATEMENTS
The following documents are filed as part of this report:
Audited Financial Statement for the years ended
December 31, 1998
December 31, 1999
ITEM 2. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
None.
GRAFITI-X, INC.
FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION TO
DECEMBER 31, 1998
ROBERT J. BLISS
Certified Public Accountant
Chula Vista, California
INDEX TO FINANCIAL STATEMENTS
PAGE
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS:
Balance Sheet as of December 31, 1998 2
Statement of Operations for the period ended
December 31, 1998 3
Statement of Changes in Stockholders Equity
For the period ended December 31, 1998 4
Statement of Cash Flows for the period ended
December 31, 1998 ` 5
NOTES TO FINANCIAL STATEMENTS 6-7
ROBERT J. BLISS, C.P.A.
289 Church Avenue
Chula Vista, California 91910
Tel (619) 585-7595 * Fax (619) 585-7597
Independent Auditor's Report
The Board of Directors and Stockholders of
Graffiti-X, Inc.
I have audited the accompanying balance sheet of Graffiti-X,
Inc., (a Delaware Corporation) as of December 31, 1998 and the
related statements of operations, changes in stockholders'
equity, and cash flows for the period from inception, July 29,
1998 to December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
I conducted my audits in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my
audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Graffiti-X, Inc. as of December 31, 1998 and the results of its
operations and its cash flows for the period ended December 31,
1998, in conformity with generally accepted accounting
principles.
Chula Vista, California
January 31, 1999
GRAFFITI-X, INC.
BALANCE SHEET
December 31, 1998
ASSETS
Cash $ 3,817
Inventory 764
TOTAL ASSETS $ 4,581
LIABILITIES
Accounts payable $ 0
TOTAL LIABILITIES 0
STOCKHOLDERS' EQUITY
Common Stock, $.0001 par value,
40,000,000 shares
authorized; 139
1,385,000 issued and
outstanding
Additional paid-in capital 5,203
Accumulated deficit (761)
TOTAL STOCKHOLDERS' 4,581
EQUITY
TOTAL LIABILITIES AND $ 4,581
STOCKHOLDERS' EQUITY
The accompanying notes are an integral part of these financial
statements.
GRAFFITI-X, INC.
STATEMENT OF INCOME
From Inception
To
December 31,
1998
Net Sales $ 0_
Costs of sales
Gross Profit 0_
Operating Expenses
General and administrative 761_
Total Operating Expenses 761_
Net income (loss) (761)
Income Taxes (Note C) 0_
Net Income $ (761)
Earnings per Share $ (0.0015)
Weighted Average
Shares Outstanding 522,541
The accompanying notes are an integral part of these financial
statements.
GRAFFITI-X, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
December 31, 1998
Additional
Common Stock Paid-In
Accumulated
Shares Amount Capital Deficit
Beginning Balance
July 29, 1998 0 $ 0 $ 0
Issuance of Common
Stock for expenses
And inventory paid
On August 4, 1998 at
$0.0015 per share 1,000,00 $ 100 $ 1,392
0
Issuance of Common
Stock for cash on
September 20, 1998 at
$0.01 per share 385,000 39 3,811
Net income (loss)
For the period ended
December 31, 1998 ________ _______ _______ $ (761)
_
Balance on
December 31, 1998 1,385,00 $ 139 $ 5,203 $ (761)
0
The accompanying notes are an integral part of these financial
statements.
GRAFFITI-X, INC.
STATEMENT OF CASH FLOWS
From inception to December 31, 1998
CASH FLOWS FROM OPERATING
ACTIVITIES $ (761)
Net income (loss)
Adjustments to reconcile
Net
Income to net cash used in
Operating activities: (764)
Increase in Inventory
NET CASH USED IN OPERATING (1,525)
ACTIVITIES
CASH FLOWS FROM INVESTING 0
ACTIVITIES
CASH FLOWS FROM FINANCING 0
ACTIVITIES
PROCEEDS FROM ISSUANCE OF
COMMON STOCK 5,342
NET INCREASE (DECREASE) IN CASH 3,817
CASH-BEGINNING 0
CASH-ENDING $ 3,817
The accompanying notes are an integral part of these financial
statements.
GRAFFITI-X, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
A. Organization and Summary of Significant Accounting
Policies:
Organization
Graffiti-X, Inc., (The Company) was incorporated under the
laws of the State of Delaware on July 29, 1998. The Company was
formed to manufacture and sell two chemical products designed to
remove graffiti from a variety of surfaces. The Company has not
engaged in any significant operations since inception other than
product demonstration, the search for a manufacturing facility,
corporate maintenance activities, and the acquisition of capital.
No operating revenues have been realized by the Company since
inception.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and
liabilities, and reported amounts of revenues and expenses.
Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all investments with a maturity of
three months or less to be cash equivalents.
Earnings Per Share
Earnings per share is provided in accordance with
Accounting Principles board opinion No. 15 (APB No. 15) "Earnings
Per Share". Due to the Company's simple capital structure, only
one earnings per share calculation is presented. Earnings per
share is computed by dividing income available to common
stockholders by the weighted average number of common shares
outstanding during the period.
Income Taxes
Income taxes are provided in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS No. 109),
"Accounting for Income Taxes." A deferred tax asset or liability
is recorded for all temporary differences between financial and
tax reporting and net operating loss carry forwards. Deferred
tax expense (benefit) results from the net change during the year
of deferred tax assets and liabilities.
GRAFFITI-X, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
(Cont.)
Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not
that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for
the effects of changes in tax laws and rates on the date of
enactment. No deferred taxes have been recorded as an asset of
liability.
B. Income Tax Expense:
The Company's provision for income taxes for the year
ended December 31, 1998 is $0. Due to the Company's
incorporation in the State of Delaware, and the fact that it has
an operating loss, there is no tax expense recognized for 1998.
C. Stockholders' Equity:
The Company is authorized to issue 40,000,000 shares of
common stock, par value $0.0001 per share, of which 1,385,000
shares are issued and outstanding.
On August 4, 1998 the company issued 950,000 shares of
common stock to its President, Amin Hassan, in exchange for the
rights to formulations of the Graffiti XL products and an
inventory of chemicals for the manufacture of these products
costing $1,367. Also on that date the Company issued 50,000
shares of common stock to Daniel Masters in exchange for his
services in incorporating the Company.
Also on August 4, 1998 the Company filed a Form-D with the
U.S. Securities and Exchange Commission. Between August 4, 1998
and September 30, 1998 the Company sold 385,000 shares of common
stock at $0.01 per share to 37 individuals for a total proceeds
of $3,850. The offers and sales were made pursuant to Rule 504
of Regulation D under the Securities Act of 1933 as amended.
As a result of these issuances, on December 31, 1998 the
Company had 1,385,000 shares of common stock issued and
outstanding.
D. Need for Additional Financing
The Company believes that its existing capital will be
sufficient to meet the Company's cash needs through the inception
of manufacturing and sales. The Company believes that profits
from sales will generate sufficient cash for its operating needs
once sales commence. The Company therefore does not foresee the
need for additional financing in the year ahead.
GRAFITI-X, INC.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1998 and 1999
ROBERT J. BLISS
Certified Public Accountant
Chula Vista, California
INDEX TO FINANCIAL STATEMENTS
PAGE
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS:
Balance Sheets as of December 31, 1998 and 1999
2
Statements of Operations for the years ended
December 31, 1998 and 1999 3
Statements of Changes in Stockholders' Equity
For the years ended December 31, 1998 and 1999
4
Statements of Cash Flows for the years ended
December 31, 1998 and 1999 5
NOTES TO FINANCIAL STATEMENTS 6-8
ROBERT J. BLISS, C.P.A.
289 Church Avenue
Chula Vista, California 91910
Tel (619) 585-7595 * Fax (619) 585-7597
Independent Auditor's Report
The Board of Directors and Stockholders of
Graffiti-X, Inc.
I have audited the accompanying balance sheet of Graffiti-X,
Inc., (a Delaware Corporation) as of December 31, 1998 and 1999
and the related statements of operations, changes in
stockholders' equity, and cash flows for the period from
inception on July 29, 1998 to December 31, 1998 and for the year
ended December 31, 1999. 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
audits.
I conducted my audits in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my
audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Graffiti-X, Inc. as of December 31, 1998 and 1999 and the results
of its operations and its cash flows for the periods ended
December 31, 1998 and 1999, in conformity with generally accepted
accounting principles.
Chula Vista, California
January 17, 2000
GRAFFITI-X, INC.
BALANCE SHEETS
December 31,
1999 1998
ASSETS
Cash $ 3,697 $ 3,817
Inventory 976 764
TOTAL ASSETS $ 4,673 $ 4,581
LIABILITIES
Accounts payable $ 0 $ 0
TOTAL LIABILITIES 0 0
STOCKHOLDERS' EQUITY
Common Stock, $.0001 par value,
40,000,000 shares
authorized; 931 139
9,310,000 issued and
outstanding
Additional paid-in capital 5,872 5,203
Accumulated deficit (2,130) (761)
TOTAL STOCKHOLDERS' 4,673 4,581
EQUITY
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,673 $ 4,581
The accompanying notes are an integral part of these financial
statements.
GRAFFITI-X, INC.
STATEMENTS OF INCOME
For the years ended
December 31,
1999 1998
Net Sales $ 0_ $ 0_
Costs of sales
Gross Profit 0_ 0_
Operating Expenses
General and administrative 1,369 761_
Total Operating Expenses 1,369 761_
Net income (loss) (1,369) (761)
Income Taxes (Note C) 0_ 0_
Net Income $ (1,369) $ (761)
Earnings per Share $ (0.0002) $ (0.0015)
Weighted Average 6,501,667 522,541
Shares Outstanding
The accompanying notes are an integral part of these financial
statements.
GRAFFITI-X, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
December 31, 1999
Additional
Common Stock Paid-In
Accumulated
Shares Amount Capital Deficit
Beginning Balance
July 29, 1998 $ 0 $ 0 $ 0
Issuance of Common
Stock for expenses
And inventory paid
On August 4, 1998 at
$0.0015 per share 1,000,00 $ 100 $ 1,392
0
Issuance of Common
Stock for cash on
September 20, 1998 at
$0.01 per share 385,000 39 3,811
Net income (loss)
For the period ended
December 31, 1998 ________ _______ _______ $ (761)
_ _ _
Balance on
December 31, 1998 1,385,00 $ 139 $ 5,203 $ (761)
0
Stock split:
Six for One
May 10, 1999 6,925,00 692 (692)
0
Issuance of Common
Stock for merchandise
On July 1, 1999 at
$0.0015 per share 1,000,00 100 1,361
0
Net income (loss)
For the year ended
December 31, 1999 ________ _______ _______ $
_ _ _ (1,369)
Balance on
December 31, 1999 9,310,00 $ 931 $ 5,872 $
0 (2,130)
The accompanying notes are an integral part of these financial
statements.
GRAFFITI-X, INC.
STATEMENT OF CASH FLOWS
For the years ended
December 31,
1999 1998
CASH FLOWS FROM OPERATING
ACTIVITIES $ (1,369) $ (761)
Net income (loss)
Adjustments to reconcile Net
Income to net cash used in
Operating activities:
Increase in Inventory (212) (764)
NET CASH USED IN OPERATING (1,581) (1,525)
ACTIVITIES
CASH FLOWS FROM INVESTING 0 0
ACTIVITIES
CASH FLOWS FROM FINANCING 0 0
ACTIVITIES
PROCEEDS FROM ISSUANCE OF
COMMON STOCK 1,461 5,342
NET INCREASE (DECREASE) IN CASH (120) 3,817
CASH-BEGINNING 3,817 0
CASH-ENDING $ 3,697 $ 3,817
The accompanying notes are an integral part of these financial
statements.
GRAFFITI-X, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
A. Organization and Summary of Significant Accounting
Policies:
Organization
Graffiti-X, Inc., (The Company) was incorporated under the
laws of the State of Delaware on July 29, 1998. The Company was
formed to manufacture and sell two chemical products designed to
remove graffiti from a variety of surfaces. The Company has not
engaged in any significant operations since inception other than
product demonstration, the search for a manufacturing facility,
corporate maintenance activities, acquisition of capital, and
preparation for filing of its Registration Statement Form 10-SB.
No operating revenues have been realized by the Company since
inception.
The Company anticipates incurring increased expenses in
the current year as a result of costs associated with
registration under the Securities Exchange Act of 1934. However
the Company also expects to generate its first revenues from
sales before August 31, 2000. The Company's marketing efforts
indicate that it should be able to sell its products at a price
that is approximately 400% of manufacturing cost. Management
therefore expects that it will be able to offset the higher
operating cost associated with registration under the Securities
Exchange Act with profits from product sales. Management
expects sales to begin in the third quarter and increase in the
fourth quarter of the year 2000.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and
liabilities, and reported amounts of revenues and expenses.
Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all investments with a maturity of
three months or less to be cash equivalents.
Earnings Per Share
Earnings per share is provided in accordance with
Accounting Principles board opinion No. 15 (APB No. 15) "Earnings
Per Share". Due to the Company's simple capital structure, only
one earnings per share calculation is presented. Earnings per
share is computed by dividing income available to common
stockholders by the weighted average number of common shares
outstanding during the period.
GRAFFITI-X, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
(Cont.)
Income Taxes
Income taxes are provided in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS No. 109),
"Accounting for Income Taxes." A deferred tax asset or liability
is recorded for all temporary differences between financial and
tax reporting and net operating loss carry forwards. Deferred
tax expense (benefit) results from the net change during the year
of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not
that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for
the effects of changes in tax laws and rates on the date of
enactment. No deferred taxes have been recorded as an asset or
liability.
B. Income Tax Expense:
The Company's provision for income taxes for the years
ended December 31, 1998 and 1999 is $0. Due to the Company's
operating loss, there is no tax expense recognized for 1998 or
1999.
C. Stockholders' Equity:
The Company is authorized to issue 40,000,000 shares of
common stock, par value $0.0001 per share, of which 9,310,000
shares are issued and outstanding.
On August 4, 1998 the company issued 950,000 shares of
common stock to its President, Amin Hassan, in exchange for the
rights to formulations of the Graffiti XL products and an
inventory of chemicals for the manufacture of these products
costing $1,367. Also on that date the Company issued 50,000
shares of common stock to Daniel Masters in exchange for his
services in incorporating the Company.
On August 4, 1998 the Company filed a Form-D with the U.S.
Securities and Exchange Commission. Between August 4, 1998 and
September 30, 1998 the Company sold 385,000 shares of common
stock at $0.01 per share to 37 individuals for a total proceeds
of $3,850. The offers and sales were made pursuant to Rule 504
of Regulation D under the Securities Act of 1933 as amended.
On May 10, 1999 the shareholders of the Company agreed to
a stock split on the basis of six new shares for one old share.
Therefore, as of that date the Company had 8,310,000 shares of
common stock issued and outstanding.
GRAFFITI-X, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
(Cont.)
On July 1, 1999 the Company issued 1,000,000 shares of
common stock to its President, Amin Hassan, in exchange for an
inventory of chemicals used in the manufacture of Graffiti XL
products costing $1,461. Consequently, at December 31, 1999, the
Company had 9,310,000 shares of common stock issued and
outstanding.
D. Need for Additional Financing
The company believes that its existing capital will be
sufficient to meet the Company's cash needs through the inception
of manufacturing and sales. The Company believes that profits
from sales will generate sufficient cash for its operating needs
by the end of the third quarter, and the Company believes it has
sufficient resources to see it through to that time and beyond if
necessary. The Company therefore does not foresee the need for
additional financing in the year ahead.
PART III
ITEM 1. INDEX TO EXHIBITS
Exhibit No.
Document 2.1
Articles of Incorporation 2.2
Bylaws 3.1
EXHIBIT NO. 2.2
ARTICLES OF INCORPORATION
CERTIFICATE OF INCORPORATION OF
GRAFFITI-X, INC.
FIRST: The name of the corporation is GRAFFITI-X, INC.
SECOND: The address of its registered office in the State of
Delaware is Three Mill Road, Suite 104 in the City of Wilmington,
County of New Castle, 19806-2146. Its registered agent at such
address is The Incorporators Ltd.
THIRD: The purpose of the corporation is to engage in any lawful
act or activity for which corporations may be organized under the
General Corporation Law of Delaware.
FOURTH: The corporation shall have the authority to issue forty
million shares of common stock with a par value of $0.0001.
FIFTH: The Board of Directors is expressly authorized to adopt,
amend, or repeal the By-Laws of the corporation.
SIXTH: The stockholders and directors may hold their meetings and
keep the books and documents of the corporation outside the State
of Delaware, at such places from time to time designated by the
By-Laws, except as otherwise required by the Laws of Delaware.
SEVENTH: The corporation is to have perpetual existence.
EIGHTH: The name and mailing address of the incorporator is
Matthew D. Esteves at Three Mill Road, Suite 104, Wilmington, DE
19806-2146.
NINTH: The number of directors of the corporation shall be fixed
from time to time by its By-Laws and may be increased or
decreased.
TENTH: The Board of Directors is expressly authorized and shall
have such authority as set forth in the By-Laws to the extent
such authority would be valid under Delaware Law.
ELEVENTH: No director of the corporation shall have personal
liability to the corporation or its shareholders for monetary
damages for breach of fiduciary duty as a director, provided that
this provision shall not eliminate or limit the liability of a
director (a) for any breach of the director's duty or loyalty to
the corporation or its stockholders, (b) for acts or omissions
not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under Section 174 of the Delaware
Corporation Law, or (d) for any transaction from which the
director derived an improper personal benefit.
THE UNDERSIGNED Incorporator for the purpose of forming a
corporation pursuant to the laws of the State of Delaware, does
make this Certificate, hereby declaring and certifying that the
facts herein stated are true.
July 29, 1998
BY: /s/ Matthew D. Esteves
Matthew D. Esteves Incorporator
EXHIBIT NO. 3.1
BY-LAWS OF THE CORPORATION
CORPORATE BY-LAWS
OF
GRAFFITI-X, INC.
OFFICES
I - The registered office of the corporation shall be in the
State of Delaware. The resident agent in charge thereof shall be
appointed by the Board of Directors. The corporation may also
have offices at such other places both within and without the
State of Delaware as the Board of Directors may from time to time
determine or the business of the corporation may require.
CORPORATE SEAL
2. The corporation may transact any and all business without
the need for a corporate seal. If a seal is required by law, the
corporation may use a facsimile where inscribed therein is the
name of the corporation, the year of its incorporation, and the
words "Corporate Seal, Delaware". In its discretion, the Board
is permitted to acquire and use a true seal setting forth the
information noted above.
MEETING OF STOCKHOLDERS
3. The annual meeting of stockholders for the election of
directors shall be held on a day during the first six months of
each fiscal year, at a time, and at a place all as set by the
Board of Directors. At said meeting the stockholders shall elect
by plurality vote, a Board of Directors, and may transact such
other business as may come before the meeting.
4. Special meetings of the stockholders may be called at any
time by the President, and shall be called by the President or
Secretary on the request in writing of a majority of the
directors or at the request in writing of a majority in voting
interest of stockholders entitled to vote.
5. All meetings of the stockholders for the elections of
directors shall be held at the office of the corporation in the
State of Delaware, or at such other place as may be fixed by the
Board of Directors, provided that at least ten days' notice be
given to the stockholders of the place so fixed. All other
meetings of the stockholders shall be held at such place or
places, within or without the State of Delaware, as may from time
to time be fixed in the notices or waivers of notice thereof.
6. Stockholders of the corporation entitled to vote shall be
such persons as are registered on the stock transfer books of the
corporation as owners of stock. The Board of Directors may set a
record date for annual meetings, but such record date may not be
more than 45 days prior to the annual meeting.
7. A complete list of stockholders entitled to vote,
arranged in alphabetical order, shall be prepared by the
Secretary or Transfer Agent and shall be open to the examination
of any stockholder at the place of election during the whole time
of the election.
8. Each stockholder entitled to vote shall, at every meeting
of the stockholders, be entitled to one vote for each share held.
Each stockholder entitled to vote may vote in person or by proxy
signed by the stockholder, but no proxy shall be voted on or
after three years from its date, unless it provides for a longer
period. Such right to vote shall be subject to the right of the
Board of Directors to fix a record date for stockholders as
provided by these By-Laws.
9. The holders of 30% of the stock issued and outstanding
and entitled to vote at a meeting of the stockholders, 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 Certificate of
Incorporation. If such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders
entitled to vote at the meeting, present in person or represented
by proxy, shall have the 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 30 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.
10. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power, present
in person or represented by proxy, shall decide any question
properly brought before such meeting, unless the question is one
which by express provision of the statutes of the State of
Delaware or of the Certificate of Incorporation, a different vote
is required, in which case such express provision shall govern
and control the decision of such question.
11. Notice of all meetings shall be mailed by the Secretary
to each stockholder of record entitled to vote at his last known
post office address, for annual meetings fifteen days and for
special meetings ten days prior thereto.
12. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the
notice.
13. Unless otherwise provided in the Certificate 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 consent in writing, setting forth
the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of
voters that would be necessary to authorize or take such action
at a. meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent,
shall be given to those stockholders who have not consented in
writing.
DIRECTORS
14. The property and business of the corporation shall be
managed and controlled by the Board of Directors.
15. The directors shall hold office until the next annual
election and until their successors are elected and qualified.
Directors shall be elected by the stockholders, except that if
there be any vacancies on the Board of Directors by reason of
death, resignation, or otherwise, or if there be any newly
created directorships resulting from any increase in the number
of directors, such vacancies or newly created directorships may
be filled for the unexpired term by a majority of the directors
then in office, though less than a quorum.
POWERS OF DIRECTORS
16. The Board of Directors shall have all such powers as may
be exercised by directors of a Delaware corporation, subject to
the provisions of the statutes of Delaware, the Certificate of
Incorporation, and the By-Laws.
MEETINGS OF DIRECTORS
17. After each annual election of directors, the newly
elected directors may meet for the purpose of organization, the
election of officers, and the transaction of other business, at
such time and place as shall be fixed by the stockholders at the
annual meeting, and, if a majority of the directors be present at
such place and time, no prior notice of such meeting will be
required to be given to the directors. The place and time of such
meeting may also be fixed by written consent of the directors.
18. Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall from time
to time be determined by the Board.
19. Special meetings of the directors may be called by the
president on two days' notice in writing or on one days notice by
telegram to each director and shall be called by the president in
like manner on the written request of two directors.
20. Special meetings of the directors may be held within or
without the State of Delaware at such place as is indicated in
the notice or waiver of notice thereof.
21. A majority of the directors in office at the time of any
regular or special meeting shall constitute a quorum.
22. Any action required or permitted to be taken at any
meeting of the Board of Directors may be taken without a meeting,
if all members of the Board consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of
the Board.
23. Members of the Board of Directors may participate in a
meeting of the Board of Directors by means of a conference
telephone or similar communications equipment by means of which
all persons participating in the meeting may hear one another,
and such participation in a meeting shall constitute presence in
person at the meeting.
COMMITTEES
24. The Board of Directors may, by resolution, create
committees from time to time, which committees shall have and may
exercise all the powers and authority of the Board of Directors
to manage the business and affairs of the corporation. However,
the committees shall not have the power to amend the Certificate
of Incorporation, adopt an agreement of merger or consolidation,
recommend to the stockholders the sale, lease or exchange of all
or substantially all of the corporation's property and assets,
recommend to the stockholders a dissolution of the corporation or
a revocation of a dissolution, amend the By-Laws of the
corporation; and, unless a resolution or the Certificate of
Incorporation expressly so provides, no such committee shall have
the power to declare a dividend or authorize the issuance of
stock.
INDEMNIFICATION
25. The personal liability of the directors of the
corporation is hereby eliminated to the fullest extent permitted
by the provisions of paragraph (7) of subsection (b) of Section
102 of the General Corporation Law of the State of Delaware, as
the same may be amended and supplemented.
OFFICERS OF THE CORPORATION
26. The officers of the corporation shall be a president, a
secretary, a treasurer, and such other officers as may from time
to time be chosen by the Board of Directors. All offices may be
held by the same person.
27. The officers of the corporation shall hold office until
their successors are chosen and qualify in their stead. Any
officer chosen or appointed by the Board of Directors may be
removed either with or without cause at any time by the
affirmative vote of a majority of the whole Board of Directors.
If the office of any officer or officers becomes vacant for any
reason, the vacancy shall be filled by the affirmative vote of a
majority of the whole Board of Directors.
28. In case of the absence or disability of any officer of
the corporation, or for any other reason deemed sufficient by a
majority of the Board of Directors, the duties of that officer
may be delegated by the Board of Directors to any other officer
or to any director.
INDEMNIFICATION
29. The corporation shall, to the fullest extent permitted
by the provisions of Section 145 of the General Corporation Law
of the State of Delaware, as the same may be amended and
supplemented, indemnify any and all persons whom it shall have
power to indemnify under said section from and against any and
all of the expenses, liabilities, or other matters referred to in
or covered by said section. The indemnification provided for
herein shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under any agreement, vote of
stockholders or disinterested directors, or otherwise. Such
indemnification shall apply both as to action in his official
capacity of one holding office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and
administrators of such a person.
SECRETARY
30. The secretary shall attend all meetings of the
corporation, the Board of Directors, and its committees. He shall
act as clerk thereof and shall record all of the proceedings of
such meetings in a book kept for that purpose. He shall have
custody of the corporate seal of the corporation and shall have
authority to affix the seal to any instrument requiring it and
when so affixed, it may be attested by his signature. He shall
give proper notice of meetings of stockholders and directors and
shall perform other such duties as shall be assigned to him by
the president or the Board of Directors.
TREASURER
31. The treasurer shall have custody of the funds and
securities of the corporation and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
corporation. He shall deposit all monies and other valuable
effects in the name and to the credit of the corporation in such
depositories as may be designated by the Board of Directors.
32. The treasurer shall disburse such funds of the
corporation as may be ordered by the Board or the president,
taking proper vouchers for such disbursements, and shall render
to the president and directors, whenever they may require it, an
account of all his transactions as treasurer and of the financial
condition of the corporation, and at the regular meeting of the
Board next preceding the annual members meeting, a like report
for the preceding year.
33. The treasurer shall keep an account of stock registered
and transferred in such manner subject to such regulations as the
Board of Directors may prescribe.
34. The treasurer shall give the corporation a bond if
required by the Board of Directors in such sum and with security
satisfactory to the Board of Directors for the faithful
performance of the duties of his office and the restoration to
the corporation, in the case of his death, resignation, or
removal from office, of all books, paper, vouchers, money and
other property of whatever kind in his possession, belonging to
the corporation. He shall perform such other duties as the Board
of Directors or executive committee may from time to time
prescribe or require.
PRESIDENT
35. The president shall be the chief executive officer of
the corporation. He shall preside at all meetings of the
stockholders and the Board of Directors, and shall have general
and active management of the business of the corporation, and
shall see that all orders and resolutions of the Board of
Directors are carried into effect.
36. The president shall execute bonds, mortgages, and other
contracts requiring a seal, under the seal of the corporation,
except where required or permitted by law to be otherwise signed
and executed, and except where the signing and execution thereof
shall be expressly delegated by the Board of Directors to some
other officer or agent of the corporation.
STOCKS
37. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the
corporation by, the president or secretary of the corporation,
certifying the number of shares owned by him in the corporation.
Certificates may be issued for partly paid shares, and in such
case upon the face or back of the certificates issued to
represent any such partly paid shares, the total amount of the
consideration to be paid therefore, and the amount paid thereon,
shall be specified.
38. Any or all of the signatures on the certificates may be
facsimile.
39. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to
have been lost, stolen, or destroyed, upon the making of an
affidavit of that fact by the person claiming their certificate
of stock to be lost, stolen or destroyed. The Board of Directors
may, in its discretion and as a condition precedent to the
issuance thereof; require the owner of such lost, stolen, or
destroyed certificate or certificates to give the corporation a
bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen, or destroyed.
CHECKS
40. All checks, drafts, or orders for the payment of money
shall be signed by the treasurer or by such other officer or
officers as the Board of Directors may from time to time
designate. No check shall be signed in blank.
BOOKS AND RECORDS
41 The Books, accounts, and records of the corporation,
except as otherwise required by the laws of the State of
Delaware, may be kept within or without the State of Delaware, at
such place or places as may from time to time be designated by
the By-Laws or by the resolutions of the directors.
NOTICES
42 Notice required to be given under the provisions of these
By-Laws to any director, officer or stockholder, shall not be
construed to mean personal notice, but may be given in writing by
depositing the same in a post office or letter box, in a post-
paid sealed wrapper, addressed to such stockholder, officer, or
director at such address as appears on the books of the
corporation, and such notice shall be deemed to be given at the
time when the same shall thus be mailed. Any stockholder,
officer, or director, may waive, in writing, any notice required
to be given under these By-Laws, whether before or after the time
stated therein.
DIVIDENDS
43. Dividends upon the capital stock of the corporation,
subject to the Certificate of incorporation, may be declared by
the Board of Directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property, or
in shares of the capital stock of the corporation, subject to the
provisions of the Certificate of Incorporation.
44. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such
sum or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet
contingencies or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the best
interest of the corporation. The directors may modify or abolish
any such reserve in the manner by which it was created.
FISCAL YEAR
45. The fiscal year of the corporation shall be determined
by the Board of Directors.
AMENDMENT OF BY-LAWS
46. These By-Laws may be amended, altered, repealed, or
added to at any regular meeting of the stockholders or of the
Board of Directors, or at any special meeting called for that
purpose, by affirmative vote of a majority of the stockholders
entitled to vote, or by affirmative vote of a majority of the
whole board, as the case may be.
47. Any and all disputes and controversies by and between
the shareholders or the directors arising out of or with respect
to the business of or affecting the affairs of the corporation,
which disputes and controversies cannot be resolved under the
terms of the corporate By-Laws or Certificate of Incorporation,
because of a tie vote or deadlock between the directors and
shareholders shall be settled by arbitration in the following
manner. Each side of the dispute shall be entitled to name one
arbitrator and both arbitrators so named shall together agree
upon a third arbitrator, with the findings of the arbitration
panel to be binding upon all parties to the dispute. Unless
otherwise mutually agreed by the parties the arbitration shall
take place in accordance with and subject to the provisions of
the Delaware Uniform Arbitration Act., 10 Del. C. "5701 et.seq.
Adopted by the Board of Directors on August 4, 1998.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized.
Graffiti-X, Inc.
By: /s/Daniel Masters, Director
Date: February 14, 2000
