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 (g) of the Securities Exchange Act of 1934)
TWIN FACES EAST ENTERTAINMENT CORPORATION
(Exact name of registrant as specified in charter)
Nevada 22-337-4562
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5510 Sepulveda Blvd. Suite 136
Sherman Oaks, CA 91411
(Address of Principal Executive Office) (Zip Code)
(818) 989-7392
( Telephone Number)
Securities To Be Registered Under Section 12(b) of the Act:
Title of each Class Name of each Exchange on which
To Be Registered each Class is to be Registered
None None
Securities To Be Registered Under Section 12(g) of the Act:
Common Stock, $0.001 Par Value
(Title of Class)
The number of shares outstanding of each of the registrant's classes of
voting stock, as of February 16, 1999 was: 3,544,349
Common Stock, par value $0.001
<PAGE>
TABLE OF CONTENTS
Item 1. Description of Business
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Description of Property
Item 4. Security Ownership of Certain Beneficial Owners and Management
Item 5. Directors, Executive Officers, and Control Persons
Item 6. Executive Compensation
Item 7. Certain Relationships and Related Transactions
Item 8. Legal Proceedings
Item 9. Market for Common Equity and Related Stockholder Matters
Item 10. Recent Sales of Unregistered Securities
Item 11. Description of Securities
Item 12. Indemnification of Directors and Officers
Item 13. Financial Statements
Item 14. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure
Item 15. Financial Statements and Exhibits
<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS
Overview
The Company, TWIN FACES EAST ENTERTAINMENT CORPORATION, a Nevada
corporation (the "Company") is a development stage company formed in 1997
to develop its asset base of intellectual properties, a high technology
proprietary "euthetic captioning" entertainment vehicle, and various
animated children's made for television stories and multi-series programs.
The Company was incorporated under the laws of the State of Delaware on
December 5, 1997 and reincorporated under the laws of the State of Nevada
on June 17, 1998.
The Company has implemented a dual commercialization strategy for its
products. The first element of this strategy entails the development of its
pages from a Rabbit Journal TV series for children. The company plans to
use the films to launch its ReadSpeakT program. ReadSpeakT is the Company's
proprietary program for inserting captioning into films in a manner that
will enable kids to learn to read at a faster pace, enable people to learn
foreign languages as well as to make it more appealing for the hearing
impaired to watch a "close captioned" film or TV show. The second part of
the Company's strategy involves the implementation of the company's
characters for sale as a licensing vehicle for use in other markets. A
kid's prosthetic company has been licensed a logo for embedding in
prosthetics for kids.
The Company has ownership of extensive film footage of Einstein, which
has not been viewed by the public to date. The company has received
numerous requests for development of the footage into books, a documentary,
photo exhibits, and similar entertainment venues.
The worldwide market for entertainment and film products is
substantial. Production of Children's television programming has continued
to increase annually. The demand for products to enhance the reading
ability of children has always been at a high level. The demand for
products that would aid the learning of a foreign language has been on the
increase as the global population becomes less isolated. The demand for an
enhanced close captioning tool has been high. The company's products
encompass all of the above abilities. ReadSpeakT. ReadSpeakT is a method of
captioning audio/visual media intended to facilitate a viewer/listener
(v/l) in making an association between spoken and written words.
ReadSpeakT technology deploys "euthetic captions" to produce written words
that are esthetically positioned on the viewing screen, such that the
written word appears to emerge from the speakers mouth at the precise
moment it is spoken thereby facilitating the association between the spoken
and written word. ReadSpeakT offers a way of unobtrusively presenting the
written language in audio/visual media such that one of three things should
happen:
1. A viewer/listener should learn to read a language
2. A viewer/listener should learn to speak a language
3. A viewer/listener should receive a meaning in "stereo" i.e. though two
sensory portals rather than the usual tone.
<PAGE>
ReadSpeakT is then a bi-directional tool. The ReadSpeakT plan calls
for operations as both a service bureau, providing the application of
"euthetic captions" to audio video media, and as a licensor, particularly
where a transaction calls for application to a pre-existing product, such
as a previously released animated feature film. ReadSpeakT is fortunate to
have the support and endorsement of numerous educators, cognitive
scientists, and institutions. Unlike other literary assistance concepts
that have been offered to the market, ReadSpeakT has been endorsed by the
professional community first.
Einstein Properties. Peter A, Buckey, the son of one of Albert Einstein's
oldest and closest friends, provides a rare insight into the Albert
Einstein's private life, opinions, and foibles that are now folded into
unique and rare videos. The Company owns original 16mm film footage of
rare moments such as the family vacation when Einstein wrote that fateful
letter to Franklin D. Roosevelt that led to the Manhattan Project. Peter
was Einstein's driver, and companion initiating extensive dialogue, keeping
copious notes, and storing and recording priceless memories. Here up close
and personal is the sailor who couldn't swim, the youth recalling a
professor's admonishment not to pursue physics due to his single-
mindedness. The Company has ownership of the film, still photos, narration
by Mr. Buckey, and has received numerous requests for development of the
various products into books, a documentary, photo exhibits, and similar
entertainment venues.
Pages From A Rabbit JournalT. Dr. Smolanoff, a director of the Company has
created a story, character, and themes in a children's book titled "Pages
From A Rabbit Journal". The story is of The Rabbit Family adventures in
their travels through the forest with many character developments along the
path of their journey. The story has been turned into a series of twenty-
two minute animated video episodes, each a cliff-hanger and with a positive
children's message. The initial video episode, will serve as a pilot for a
television series which is contracted through Nightwing Entertainment
Group, Inc. to be shown on Fox Children's Network and/or Nickelodeon. In
addition, Channel America, through a contract with Nightwing Entertainment
Group, Inc. has agreed to show between 13 to 65 episodes of the series.
Further an agreement is in place with Nightwing Entertainment Group, Inc.
that provides for Congress Home Video to distribute a minimum of twelve of
each episode into approximately 22,000 video stores nationwide.
Properties for Future Development
"Hidden Treasures of the World"T. This is a series of one hour made for
television specials showcasing specific geographic locations in the world
where billion dollar plus treasure discoveries were made. The first
documentary "St. Lavra" from Kiev Russia is complete.
"Jungle Bunch"T. "The Adventures of the Jungle Bunch"T is a children's
story for animation that follows the adventures of five young animals
searching for their families. These five babies are brought together as a
result of a terrible storm, which separates them from their families. It
is a continuing series that focuses on the concept of teamwork which is
somewhat unique in the children's story teaches our children in an
entertaining and receptive environment to overcome their differences and
work together for a common goal...return to their families. This series is
made for television and home video placement.
"Bixbee"T. This is an animated CD ROM game that could easily evolve into a
television special. Your child can be scanned into this interactive
program for fun and adventures with "Bixbee"T.
<PAGE>
"The Town That Arrested Santa Claus"T. A charming fully illustrated
children's story with a merry cast of Christmas characters in the newly
discovered village of Forgottenville. Children of all ages will delight in
this unique classic tale, rich with the true meaning and tradition of
Christmas. Santa and Forgottenville's citizens are almost tricked by Dr.
S.Near but all is well that end well when a young child comes to Santa's
rescue. This is bound to become a Christmas classic and will be available
in book, audio cassette and to become a television animated special.
Business Strategy
The Company intends to use the pages from a Rabbit Journal films as
its launching pad for the capitalization of the marketing of some of its
other products. The Company's ReadSpeakT program will be launched through
the Rabbit Journal sequence as well. The Company believes that its
completion of the Rabbit Journal films combined with the ReadSpeakT
technology will create a demand for both the films and the technology for
use in other products and films.
Sales and Marketing
The Company's product is geared to meet both National and International
market requirements. Therefore, the entire geographical United States is the
market for TWIN FACES EAST ENTERTAINMENT CORPORATION and for that matter,
the entire civilized world. The Company has targeted market segments and
geographical locations conducive to high product demand, without the company
incurring large advertising, and research and development expenses.
Strategic Alliances
The success of the Company will be dependent in part upon a number of
strategic relationships that the Company intends to enter. At present, the
Company is in discussions with several companies, both locally and
internationally. The amount and timing of resources which future strategic
partners devote to assisting the Company will not be within the control of
the Company. There can be no assurance that strategic partners will perform
their obligations as expected or that any revenue will be derived from
strategic arrangements. If any of the Company's strategic partners breaches
or terminates an agreement with the Company, or otherwise fails to conduct
its collaborative activities in a timely manner, the development,
commercialization, or marketing of the product,which is the subject of the
agreement may be delayed and the Company may be required to undertake
unforeseen additional responsibilities or to devote additional resources to
development, commercialization or marketing of its products.
The inability to enter into strategic relationships or the failure of
a strategic partner to perform its obligations could have a material
adverse effect on the Company's business, financial condition and results
of operations. There can be no assurance that the Company will be able to
negotiate acceptable strategic agreements in the future. Or that the
resulting relationships will be successful, or that the Company will
continue to maintain or develop strategic relationships, or to replace
strategic partners in the event any such relationships are terminated. The
Company's failure to maintain any strategic relationship could materially
and adversely affect the Company's business, financial condition and
results of operations.
<PAGE>
Customer Support
In addition to ongoing client prospecting and product demonstrations
through direct sales, one of the most cost-effective sales tools for the
Company's systems is a satisfied customer. The Company's customers will
generally require significant support and training with respect to the
Company's products, particularly in the initial deployment and
implementation stage. The Company intends to provide support, via
telephone, teleconference or on-site visits, and anticipates hiring
additional staff as its customer base grows. Next to product quality and
ease of use, the Company will always place customer satisfaction and
technical support as its highest marketing priorities. However, the
Company has limited experience with widespread deployment of its products
to a diverse customer base, and there can be no assurance that it will
have adequate personnel to provide the levels of support that its
customers may require during initial product deployment or on an ongoing
basis. An inability to provide sufficient support to its customers could
delay or prevent the successful deployment of the Company's products.
Failure to provide adequate support could have an adverse impact on the
Company's reputation and relationship with its customers, could prevent
the Company from gaining new customers and could have a material adverse
effect on the Company's business, financial condition or results of
operations.
Competition
The Company competes with numerous other entertainment and film
production companies. Many of these competitors have substantially greater
resources than the Company. The Company has identified a niche in the
market. Should a larger and better financed company decide to directly
compete with the Company, and be successful in its competitive efforts, the
Company's business could be adversely affected.
Developing and Changing Market
The market for films and entertainment products and peripheral
technologies is continually evolving and changing. The Company does not
believe that these risks are material at this time However, there can be no
assurance that the Company's assessment of the market place is correct, nor
that the Company's products will continue to be accepted in the future.
Intellectual Property
Many of the processes and much of the know-how of importance to the
Company's technology depend upon the non-patentable technology, knowledge,
and experience of its technical personnel and collaborators. To help
protect its rights, the Company requires employees, collaborators, and
significant consultants and advisors with access to confidential
information, to enter into confidentiality agreements with the Company.
There can be no assurance, however, that these agreements will provide
adequate protection for the Company's trade secrets, know-how or
proprietary information in the event of any unauthorized use or disclosure.
The Company's success and ability to compete is dependent in part upon its
proprietary technology. The Company relies on a combination of copyrights,
trade secret laws and non-disclosure agreements to protect its proprietary
technology.
The Company's success will depend to a significant degree on its
ability to obtain and maintain copyright protection for its ReadSpeakT
technology, preserve its trade secrets, and operate without infringing on
the proprietary rights of third parties. The Company plans to achieve a
competitive advantage as the only provider of ReadSpeakT, pages from a
Rabbit Journal, the Einstein properties and the "St. Lavra" documentary
properties. There can be no assurance that the Company will obtain any
copyright protection covering the products the Company plans to market, or
that any copyrights that may be issued to the Company will provide
<PAGE>
substantial protection or be of commercial benefit to the Company. A great
deal of research and development work has taken place regarding the
ReadSpeakT technology.
The company also seeks to protect its intellectual property rights by
limiting access to the distribution of its software, documentation and
other proprietary information. There can be no assurance that the steps
taken by the Company in this regard will be adequate to prevent
misappropriation of its technology or that the Company's competitors will
not independently develop technologies that are substantially equivalent or
superior to the Company's technologies.
Employees
As of December 31, 1998, the Company had no paid employees. The
Company is dependent upon Michael Smolanoff, President of the Company, and
Stan Teeple, VP and Secretary/Treasurer. The Company's future success also
depends on its ability to attract and retain other qualified personnel,
for which competition is intense. The loss of Mr. Smolanoff, Mr. Teeple
or the Company's inability to attract and retain other qualified employees
could have material adverse effect on the Company.
Business Outlook
This Form 10-SB includes "forward-looking statements" within the
meaning of the "safe-harbor" provisions of the Private Securities
Litigation Reform Act of 1995. Such statements are based on management's
current expectations and are subject to a number of factors and
uncertainties that could cause actual results to differ materially from
those described in the forward looking statements. All statements other
than statements of historical facts included in this Form, including
without limitation, statements under "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business" regarding
the Company's financial position, business strategy and plans and
objectives of management of the Company for future operations, are forward-
looking statements. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from
the Company's expectations ("Cautionary Statements") are disclosed
elsewhere in this Form, including without limitation in conjunction with
the forward-looking statements included in this Form. All subsequent
written and oral forward -looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by
the Cautionary Statements.
Risks Associated with Year 2000 Problem
In less than one year, computer systems and/or software used by many
companies may need to be upgraded to accept four digit entries to
distinguish 21st century dates from 20th century dates. As is the case with
most other companies using computers in their operations, the Company
recognizes the need to ensure that its operations will not be adversely
impacted by software and/or system failures related to such "Year 2000"
noncompliance. Within the past twelve months, the Company has been
upgrading components of its own internal computer and related information
and operational systems and continues to assess the need for further system
redesign and believes it is taking the appropriate steps to ensure Year
<PAGE>
2000 compliance. Based on information currently available, the Company
believes that the costs associated with Year 2000 compliance, and the
consequences of incomplete or untimely resolution of the Year 2000 problem,
will not have a material adverse effect on the Company's business,
financial condition and results of operations in any given year. However,
even if the internal systems of the Company are not materially affected by
the Year 2000problem, the Company's business, financial condition and
results of operations could be materially adversely affected through
disruption in the operation of the enterprises with which the Company
interacts. There can be no assurance that third party computer products
used by the Company are Year 2000 compliant. Further, even though the
Company believes that its current products are Year2000 compliant, there
can be no assurance that under actual conditions such products will perform
as expected or that future products will be Year 2000compliant.
Any failure of the Company's products to be Year 2000 compliant could
result in the loss of or delay in market acceptance of the Company's
products and services, increased service and warranty costs to the Company,
or payment by the Company of compensatory or other damages which could have
a material adverse effect on the Company's business, financial condition
and results of operations.
Additional Information
The Company intends to provide an annual report to its security
holders, and to make quarterly reports available for inspection by its
security holders. The annual report will include audited financial
statements.
Concurrent with this filing and upon its effectiveness, the Company
will be subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith,
will file reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information may be
inspected at public reference facilities of the Commission at Judiciary
Plaza, 450 Fifth Street N.W., Washington D.C. 20549; Northwest Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; 7
World Trade Center, New York, New York, 10048; and 5670 Wilshire Boulevard,
Los Angeles, California90036. Copies of such material can be obtained from
the Public Reference Section of the Commission at Judiciary Plaza, 450
Fifth Street N.W., Washington, D.C.20549 at prescribed rates.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Following discussion should be read in conjunction
with, and is qualified in its entirety by the Financial Statements section
included below.
With the exception of historical matters, the matters discussed herein
are forward looking statements that involve risks and uncertainties.
Forward looking statements include, but are not limited to, statements
concerning anticipated trends in revenues and net income, the date of
introduction or completion of the Company's products, projections
concerning operations and available cash flow. The Company's actual results
<PAGE>
could differ materially from the results discussed in such forward looking
statements. The following discussion of the Company's financial condition
and results of operations should be read in conjunction with the Company's
financial statements and the related notes thereto appearing elsewhere
herein.
Overview
The Company, which was organized in December 1997, is a Development
Stage Company, focusing its development efforts on film production,
peripheral licensing of its products and its ReadSpeakT technology. The
Company has a limited operating history and has not generated revenues from
the sale of any products. The Company's activities have been limited to the
development of prototypes and analyzing the market conditions for the
proprietary services and products. Consequently, the Company has incurred
the expenses of start-up. Future operating results will depend on many
factors, including the ability of the Company to raise adequate working
capital, demand for the Company's services and products, the level of
competition and the Company's ability to deliver company services and
products while maintaining quality and controlling costs.
Results of Operations
Period from December 5, 1997 (Inception) to December 31, 1998
The first year of operation for the Company achieved two main goals.
The formation of the Company's organization to pursue its business strategy
and the transfer of intellectual properties to the Company from its
predecessor, Michael Smolanoff.
Revenues. The Company is a development stage enterprise as defined in
SFAS #7, and has yet to generate any revenues. The Company is devoting
substantially all of its present efforts to: (1) developing its ReadSpeakT
technology and other programs, (2) developing its market, and (3)
obtaining sufficient capital to commence full operations.
Pre-Operating Expenses. Pre-Operating expenses for the period from
December 5, 1997 to December 31, 1998 were $292,236, of which $132,800 was
accrued to be paid to Michael Smolanoff for his services as President, and
Stanley L. Teeple for his services as Executive Vice President.
Liquidity and Capital Resources
Cash and cash equivalents will be increasing primarily due to
commencement of operations. The receipt of funds from Private Placement
Offerings and loans obtained through private sources by the Company are
anticipated to offset the near term cash equivalents of the Company. Since
inception, the Company has financed its cash flow requirements through
issuance of common stock, and minimal cash balances. As the Company
expands its activities, it may continue to experience net negative cash
flows from operations, pending receipt of sales revenues. Additionally
the Company may be required to obtain additional financing to fund
operations through Common Stock offerings and bank borrowings, to the
extent available, or to obtain additional financing to the extent
necessary to augment its working capital.
<PAGE>
Over the next twelve months, the Company intends to increase its
revenues by releasing its products under development to its target markets.
However, the Company will continue the research and development of its
products, increase the number of its employees, and expand its facilities
where necessary to meet product development and completion deadlines. The
Company believes, that existing capital and anticipated funds from
operations will not be sufficient to sustain operations and planned
expansion in the next twelve months. Consequently, the Company will seek
additional financing in order to such additional funds will be available or
that, if available, such additional funds will be on terms acceptable to
the Company.
The Company shall be required to seek additional capital in the future
to fund growth and expansion through additional equity or debt financing or
credit facilities. No assurance can be made that such financing would be
available, and if available it may take either the form of debt or equity.
In either case, the financing could have negative impact on the financial
conditions of the Company and its Shareholders.
The Company anticipates that it will incur operating losses in the
next twelve months. The Company's lack of operating history makes
predictions of future operating results difficult to ascertain. The
Company's prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early stage of
development, particularly companies in new and rapidly evolving markets.
Such risks for the Company include, but are not limited to, an evolving
and unpredictable business model and the management of growth. To address
these risks, the Company must, among other things, obtain a customer base,
implement and successfully execute its business and marketing strategy,
continue to develop and upgrade its technology and products, provide
superior customer services and order fulfillment, respond to competitive
developments, and attract, retain and motivate qualified personnel. There
can be no assurance that the Company will be successful in addressing such
risks, and the failure to do so can have a material adverse effect on the
Company's business prospects, financial condition and results of
operations.
Initial financing is only to provide funds to prove the business
concept and to finish the development of products. Additional funds will
be necessary to take the product to market. The Company hopes to enter
into additional funding arrangements through strategic partnerships,
merger, equity offering or debt offering. Nothing has been secured as of
this time.
ITEM 3. DESCRIPTION OF PROPERTY
The Company currently utilizes 600 square feet of executive office
space at 5510 Sepulveda Blvd., Suite 136, Sherman Oaks, California 91411,
which is provided by one of the directors at no charge to the Company. The
Company anticipates it will require additional space in the future but
anticipates no difficulty in obtaining such space in its immediate vicinity
at favorable rates.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners.
The following table sets forth certain information as of February 16,
1999 with respect to the beneficial ownership of Common Stock by (i) each
person who to the knowledge of the Company, beneficially owned or had the
right to acquire more than 5% of the Outstanding Common Stock, (ii) each
director of the Company and (iii) all executive offices and directors of
the Company as a group.
<PAGE>
<TABLE>
Name of Beneficial Owner (1) Number Percent
of Shares Of Class
(2)
<S> <C> <C>
Michael Smolanoff 1,264,000 36%
121 Red Hill Road
Holmdel, NJ 07733
Stan Teeple 1,088,000 31%
8112 S. Farm Brook Dr.
Sandy, Utah 84093
Bruce Taffet 24,000 1%
5644 Irish Pat Murphy Dr.
Parker, Co 80134
Hyman Shwartzberg 24,000 1%
621 Montgomery St.
Brooklyn, NY 1125
Daniel Covell 200,000 6%
233 Webster Ave. Suite 3
Seaside Heights, NJ 08751
A-NET, Inc. 200,000 6%
3312 S. McCarran, Suite 190
Reno, NV 89502
----------- ---------
All Directors & Officers as a Group 2,800,000 81%
----------- ---------
</TABLE>
(1) As used in this table, "beneficial ownership" means the sole or shared
power to vote, or to direct the voting of, a security, or the sole or
shared investment power with respect to a security (i.e., the power to
dispose of, or to direct the disposition of, a security). In
addition, for purposes of this table, a person is deemed, as of any
date, to have "beneficial ownership" of any security that such person
has the right to acquire within 60 days after such date.
(2) Figures are rounded to the nearest percentage.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
<TABLE>
Name Age Title
<S> <C> <C>
Michael Smolanoff 55 Chief Executive Officer, President,
Director
Stan Teeple 50 Executive VP, Secretary, Treasurer,
Director
Hyman Shwartzberg, MD 32 Director
Bruce Taffet 51 Director
</TABLE>
Duties, Responsibilities and Experience
Michael Smolanoff- Michael Smolanoff has been President and a Director of
the Company since its inception. Dr. Michael Smolanoff has over 30 years of
experience in creative development fields. He is a Juilliard graduate and
past professor Rutgers University and Philadelphia Music Academy. He has
written and produced a plethora of music albums, concerts, children's
programs, and works for the theatre. He is listed in the International
Who's Who of music, Who's Who in America, Men of Achievement, Outstanding
<PAGE>
Young Men of America, and the Dictionary of Distinguished Americans. He is
the creator and developer of the "Tales of a Rabbit Journal" and
responsible for contract development to place this animated series with the
Fox Kids Network as well as distribution agreements for placement into
retail video stores nationwide. He is a member of the National Academy of
Television Arts and Sciences, and the American Society of Composers,
Authors and Publishers.
Stanley L. Teeple- Stan Teeple. is Executive Vice President, Secretary and
Treasurer. Stan has recently joined Dr. Smolanoff for development of the
various assets and interests in the marketplace. Stan attended Business
School at the University of Colorado and has a strong national brands
corporate background. In Stan's 20 plus year career as a management
consultant, sales and marketing consultant, and turnaround specialist
counts among his business specialties, entertainment, intellectual
property licensing, food manufacturing, the travel industry and retailing
of everything from apparel to fast food. His recent client list includes,
United Artists Theatre Circuit, General Mills, Inc., United Airlines, Inc.,
Kellogg's USA, Warner Lambert and Premiere Innovations, Inc.
Bruce Taffet Bruce Taffet, Director, has approximately 30 years experience
in the entertainment industry. Starting in 1969, Bruce was the
owner/operator of the Orkin Taffet Theatres in Jackson, Mississippi. Since
1979, Bruce has assisted in the building of United Artists Theatre Circuit
into one of the largest theatre circuits in North America. Bruce is
Executive Vice President of Concessions, Marketing, and Purchasing for
United Artists. Mr. Taffet has served as an officer or director with the
National Association of Theatre Operators, National Association of
Concessionaires, Variety Club of America, The 2% Club, and MPP Pioneers.
Hyman Shwarzberg, MD. Hyman Shwarzberg, MD, is a physician, entrepreneur
and investor. Dr. Shwarzberg is a graduate of Yeshiva University
Undergraduate School and a graduate of Albert Einstein College of Medicine.
Dr. Shwarzberg is Assistant Professor and Director of Radiology at Mount
Sinai Medical Center-Queens Hospital Center Affiliate in New York.
Jim R. Houba Jr.- Jim had his beginning as a freelance illustrator
primarily for advertising and production companies in the New York area.
He is a specialist in airbrush with acrylics technology and has taken
products and concepts from creative through the development process to
finished product. He is a graduate of Rowan College with an Art Major. He
has been on the creative and development staff for such Twin Faces East
properties as "Jungle Bunch"T, "Bixbee"T, "NCMEC Child I.D. Kit"T. His
prior engagements include design layouts for clothing lines, including the
1986 Olympics, murals, and various advertising assignments.
Daniel P. Covell- Dan has been a creative partner with Dr. Smolanoff on
various Twin Faces East projects over the last two years including "Jungle
Bunch"T, "Bixbee"T, and the "NCMEC Child I.D. Kit"T. He has developed on
his own several animated series, and a movie script.
Contract Support Staff
Mark Simon is part of our freelance production team in charge of animation.
He has many production credits including most recently with Universal
Studios doing the feature work on "101 Dalmatians".
<PAGE>
Buffy Saint Marie is another of our freelance talent specializing in
narration and character voices. She has won an Academy Award for
"Officer and a Gentleman" and numerous additional industry awards. She
is the narrator for our "Pages From A Rabbit Journal"T.
Len Morris has been directing, producing, and editing film and video
productions for over 20 years. His programs have been syndicated, shown on
ABC, NBC, PBS, HBO, and distributed on home video and in educational
markets. His awards and accolades for film and made for television would
span pages but include a Cine Golden Eagle, Cindy Award, and nominations
from Cable Ace Award, a Major Armstrong Award, and Best Documentary of the
Year Award.
John Lord was a producer and writer at NBC for over 14 years. He has
corporate experience as a Vice President with Air Time International and
has collaborated with Solvinfilm of Moscow on several movie packages. His
television and film credits include history, geography, current events,
documentaries, live production special events, and winning Golden Eagle
Awards and four Christopher Awards. He also an accomplished and published
writer of many books, journals, and articles.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth the cash compensation of the Company's
executive officers and directors during each of the fiscal years since
inception of the Company. The remuneration described in the table does not
include the cost to the Company of benefits furnished to the named
executive officers, including premiums for health insurance and other
benefits provided to such individual that are extended in connection with
the conduct of the Company's business. The value of such benefits cannot be
precisely determined, but the executive officers named below did not
receive other compensation in excess of the lesser of $50,000 or 10% of
such officer's cash compensation.
Summary Compensation Table
<TABLE>
Long Term
Annual Compensation Compensation
Name and
Principal Other Annual Restricted
Position Year Salary(1) Bonus Compensation stock Options
<S> <C> <C> <C> <C> <C> <C>
Michael
Smolanoff 1998 $64,000 0 4,800 0 TBD(2)
Stan Teeple 1998 $64,000 0 4,800 588,000 TBD(2)
Bruce Taffet 1998 $0 0 0 24,000 TBD(3)
Hyman Swartzberg 1998 $0 0 0 24,000 TBD(3)
</TABLE>
(1) Both Stan Teeple and Michael Smolanoff, pursuant to employment
agreements dated May 1, 1998, have been accruing salary at a rate of
$8,000 per month until funds are available for payment.
(2) No options have been granted as of this date.
(3) Out of the Non-employee Director's Plan, although no shares have been
issued, certain Non-employee Directors may have certain vested shares.
(4) Stan Teeple and Michael Smokanoff receive a $600 per month vehicle
allowance per month. The payment for Stan Teeple has been accruing since
May of 1998.
<PAGE>
Key Officer Employment Agreements
Michael Smolanoff, Chief Executive Officer and President, pursuant to a
written agreement dated May 1, 1998, in consideration for his services to
the Company, Mr. Smolanoff will receive an annual base Salary of $180,000.
Mr. Smolanoff has agreed to reduce his salary to $8,000 per month until the
Company becomes profitable, at which time the salary limits under the
employment agreement become effective. Additionally, the salary of $8,000
per month is to accrue until funds are available. As additional
compensation, Mr. Smolanoff receives an auto allowance of $600 per month.
Stan Teeple, Vice President and Secretary/Treasurer, pursuant to a written
agreement dated May 1, 1998, in consideration for his services to the
Company, Mr. Teeple will receive an annual base Salary of $162,000. Mr.
Teeple has agreed to reduce his salary to $8,000 per month until the
Company becomes profitable, at which time the salary limits under the
employment agreement become effectiveAdditionally, the salary of $8,000 per
month is to accrue until funds are available. As additional compensation,
Mr. Teeple receives an auto allowance of $600 per month, such allowance
will accrue and be paid when funds are available.
Compensation of Directors
All directors will be reimbursed for expenses incurred in attending
Board or committee meetings.
Stock Option Plan and Non-Employee Directors' Plan
The following descriptions apply to stock option plans which the
Company has adopted; however, no options have been granted as of this date.
The Company has reserved for issuance an aggregate of 500,000 shares
of Common Stock under a Stock Option Plan (the "Stock Option Plan") and Non-
Employee Directors' Plan described below (the "Directors' Plan") which has
been adopted by the Company. These plans are intended to encourage
directors, officers, employees and consultants of the Company to acquire
ownership of Common Stock. The opportunity so provided is intended to
foster in participants a strong incentive to put forth maximum effort for
the continued success and growth of the Company, to aid in retaining
individuals who put forth such efforts, and to assist in attracting the
best available individuals to the Company in the future.
Stock Option Plan
Officers (including officers who are members of the Board of
Directors), directors (other than members of the Stock Option Committee
(the "Committee") to be established to administer the Stock Option Plan and
the Directors' Plan) and other employees and consultants of the Company and
its subsidiaries (if established) will be eligible to receive options under
a the planned Stock Option Plan. The Committee will administer the Stock
Option Plan and will determine those persons to whom options will be
granted, the number of options to be granted, the provisions applicable to
each grant and the time periods during which the options may be exercised.
No options may be granted more than ten years after the date of the
adoption of the Stock Option Plan.
<PAGE>
Unless the Committee, in its discretion, determines otherwise, non-
qualified stock options will be granted with an option price equal to the
fair market value of the shares of Common Stock to which the non-qualified
stock option relates on the date of grant. In no event may the option
price with respect to an incentive stock option granted under the Stock
Option Plan be less than the fair market value of such Common Stock to
which the incentive stock option relates on the date the incentive stock
option is granted.
Each option granted under the Stock Option Plan will be exercisable
for a term of not more than ten years after the date of grant. Certain
other restrictions will apply in connection with this Plan when some awards
may be exercised. In the event of a change of control (as defined in the
Stock Option Plan), the date on which all options outstanding under the
Stock Option Plan may first be exercised will be accelerated. Generally,
all options terminate 90 days after a change of control.
Directors Plan
The planned Directors' Plan is intended to enable the Company to
secure persons of requisite business experience to serve on the Board of
Directors, to motivate directors to enhance the future growth of the
Company by furthering their identification with the interests of the
Company and its stockholders and to assist in retaining directors.
The Directors' Plan will provide for the grant of stock options to
persons who are members of the Board of Directors and who at the time they
joined the Board of Directors were not employees of the Company or any of
its affiliates ("Non-Employee Directors"). The Committee will administer
the Directors' Plan. Each of the Non-Employee Directors will receive an
option to purchase 50,000 shares of Common Stock. The options will be
exercisable at fair market value of the Common Stock on the date of grant.
Options granted under the Directors' Plan may not be exercised more than
five years after the date of grant. No option may be granted more than ten
years after the date of the adoption of the Directors' Plan. In the event
of a change of control (as defined in the Directors' Plan), the date on
which all options outstanding under the Directors' Plan may first be
exercised is accelerated. Generally, all options will terminate 90 days
after a change of control.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Contribution Agreement. Pursuant to the terms and conditions of the
Contribution Agreement, entered into by and between the Company and Michael
Smolanoff, dated March 15, 1998, Michael Smolanoff contributed, in exchange
for 1,764,000 common shares of the Company, all Michael Smolanoff's right,
title and interest to the following agreements: License Agreement dated
August 8, 1996, between Rabbit Liability Company and Spring Ford Knitting
Company; and, License Agreement dated November 25th, 1996, between Pages
from a Rabbit's Journal and Channel America Television Network, Inc.
Business Consultants. The Company has relied on A-NET, Inc. and Daniel
Covell as key business consultants while in its development stage. A-NET,
Inc. has been vital in business development as introduction to funding
sources and has also developed an outline for the Company to follow on its
way from being a private company to a public company, for this invaluable
assistance the Company has issued 200,000 shares of Common Stock to A-NET,
<PAGE>
Inc. In addition, Daniel Covell has provided the computer animation and
story-line development with Michael Smolanoff, President of the Company, in
creation of the Bixby Series, Rabbit Journal and other Company intellectual
properties, for his assistance the Company has issued 200,000 share of
Common Stock to Mr. Covell.
Legal Counsel. Donald J. Stoecklein, counsel to the Company, and his firm
have received 320,889 shares in exchange for certain legal services
performed for the Company. Currently Mr. Stoecklein's firm retains 168,889
shares.
Property Lease. The Company currently utilizes 600 square feet of executive
office space at 5510 Sepulveda Blvd., Suite 136, Sherman Oaks, California
91411, which is provided by one of the directors at no charge to the
Company. The estimated value of the contributed rent is approximately $600
per month. The Company anticipates it will require additional space in the
future but anticipates no difficulty in obtaining such space in its
immediate vicinity at favorable rates.
ITEM 8. LEGAL PROCEEDINGS
The Company is not presently a party to any litigation, nor to the
knowledge of management is any litigation threatened against the Company,
which would materially affect the Company.
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's shares of Common Stock are not registered with the U.S.
Securities and Exchange Commission under the Securities Act of 1933, as
amended (hereinafter referred to as the "Act"), and with the exception of
certain shares issued pursuant to Regulation D-504, are "restricted
securities." Rule 144 of the Act provides, in essence, that holders of
restricted securities for a period of one year (unless an affiliate of the
Company) may, every three months, sell to a market maker or in ordinary
brokerage transactions an amount equal to one percent of the Company's then
outstanding securities. Affiliates may be required to hold for two years.
Nonaffiliates of the Company who hold restricted securities for a period of
two years may sell their securities without regard to volume limitations or
other restriction. A total of 544,349 shares are unrestricted and the
balance of 3,000,000 shares of Common Stock will be available for resale
under Rule 144 commencing in July 1999. Sales of shares of Common Stock
under Rule 144 may have a depressive effect on the market price of the
Company's Common Stock, should a public market develop for such stock.
Such sales might also impede future financing by the Company.
Since its inception in 1997, the Company has not paid cash dividends
on its Common Stock. It is the present policy of the Company not to pay
cash dividends and to retain future earnings to support the Company's
growth. Any payments of cash dividends in the future will be dependent
upon, among other things, the amount of funds available therefor, the
Company's earnings, financial condition, capital requirements, and other
factors which the Board of Directors deem relevant.
As of February 16, 1999 there were approximately 57 Common
Shareholders of record.
<PAGE>
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
Private Placements.
* In March of 1998 the Company completed an exempt placement of
securities of 2,860 shares of common stock, pursuant to Rule 504, with
attached warrants at a price of $2.75 per share for a total of $7,865.
* In June of 1998, the Company completed an exempt placement of
securities of 40,000 shares of common stock, Pursuant to Rule 504, at a
price of $.02 per share for a total of $800.
* In September of 1998, the Company completed an exempt placement of
securities of 45,255 shares of common stock, pursuant to Rule 504, at a
price of $2.50 per share for a total of $113,137.50.
* In November of 1998, the Company completed an exempt placement of
securities of 57,000 shares of common stock, pursuant to Rule 504, at a
price of $.625 (post 4:1 split) per share for a total of $35,625.
* In February 1999, the Company sold 133,289 shares of common stock,
pursuant to Rule 504, at a price of $.5625 per share for a total capital
investment of $74,975.
ITEM 11. DESCRIPTION OF SECURITIES
Common Stock
The Company's Articles of Incorporation authorizes the issuance of
20,000,000 shares of common stock, $.001par value per share, of which
3,544,349 shares were outstanding as of the date of this Prospectus. In
addition, the Company is authorized to issue 5,000,000 shares of preferred
stock. At this time there is no outstanding shares of preferred stock.
Holders of shares of common stock are entitled to one vote for each share
on all matters to be voted on by the stockholders. Holders of common stock
have no cumulative voting rights. Holders of shares of common stock are
entitled to share ratably in dividends, if any, as may be declared, from
time to time by the Board of Directors in its discretion, from funds
legally available therefor. In the event of a liquidation, dissolution or
winding up of the Company, the holders of shares of common stock are
entitled to share pro rata all assets remaining after payment in full of
all liabilities. Holders of common stock have no preemptive rights to
purchase the Company's common stock. There are no conversion rights or
redemption or sinking fund provisions with respect to the common stock.
All of the outstanding shares of common stock are validly issued, fully
paid and non-assessable.
In October 1998, the Company effected a four-for-one stock split.
Concurrent with the stock split, the founding stockholders retired
9,000,000 shares of common stock at the common stock's par value.
Preferred Stock
The Company's Articles of Incorporation authorizes the issuance of
5,000,000 shares of preferred stock, $0.001 par value per share, of which
no shares were outstanding as of the date of this filing. The Preferred
Stock may be issued from time to time by the Board of Directors as shares
of one or more classes or series. Subject to the provisions of the
Company's Certificate of Incorporation and limitations imposed by law, the
<PAGE>
Board of Directors is expressly authorized to adopt resolutions to issue
the shares, to fix the number of shares and to change the number of shares
constituting any series, and to provide for or change the voting powers,
designations, preferences and relative, participating, optional or other
special rights, qualifications, limitations or restrictions thereof,
including dividend rights (including whether dividends are cumulative),
dividend rates, terms of redemption (including sinking fund provisions),
redemption prices, conversion rights and liquidation preferences of the
shares constituting any class or series of the Preferred Stock, in each
case without any further action or vote by the stockholders.
One of the effects of undesignated Preferred Stock may be to enable
the Board of Directors to render more difficult or to discourage an attempt
to obtain control of the Company by means of a tender offer, proxy contest,
merger or otherwise, and thereby to protect the continuity of the Company's
management. The issuance of shares of Preferred Stock pursuant to the Board
of Director's authority described above may adversely affect the rights of
holders of Common Stock. For example, Preferred stock issued by the Company
may rank prior to the Common Stock as to dividend rights, liquidation
preference or both, may have full or limited voting rights and may be
convertible into shares of Common Stock. Accordingly, the issuance of
shares of Preferred Stock may discourage bids for the Common Stock at a
premium or may otherwise adversely affect the market price of the Common
Stock.
Description of Warrants
Included in the purchase of 2,860 shares of common stock, at a price
of $2.75 per share, are 2,860 warrants. Each warrant permits the holder to
purchase one share of the Company's common stock at a price of $5.00 per
share during a period beginning on March 27, 1998 and ending March 27,
2003.
Dividend Policy
The Company has never declared or paid cash dividends on its Common
Stock. The Company currently anticipates that it will retain all future
earnings for use in the operation and expansion of its business and does
not anticipate paying any cash dividends in the foreseeable future.
Transfer Agent
The transfer agent for the common stock is Pacific Stock Transfer,
5844 South Pecos Road, Suite D, Las Vegas, Nevada 89120.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation for the Company do contain provisions for
indemnification of the officers and directors; in addition, Section 78.751
of the Nevada General Corporation Laws provides as follows:
78.751 Indemnification of officers, directors, employees and agents;
advance of expenses.
<PAGE>
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 at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enter2prise, 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 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, he must be indemnified by
the corporation against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered by
a court or advanced pursuant to subsection 5, must be made by the
corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper
in the circumstances. The determination must be made:
(a) By the stockholders:
(b) By the board of directors by majority vote of a quorum consisting o
directors who were not parties to act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were not
parties to the act, suit or proceeding so orders, by independent legal
counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the act,
suit or proceeding cannot to obtained, by independent legal counsel in a
written opinion; or
<PAGE>
5. The articles of incorporation, the bylaws or an agreement made by
the corporation may provide that the expenses of officers and directors
incurred in defending a civil or criminal, suit or proceeding must be paid
by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount
if it is ultimately determined by a court of competent jurisdiction that he
is not entitled to be indemnified by corporation. The provisions of this
subsection do not affect any rights to advancement of expenses to which
corporate personnel other than the directors or officers may be entitled
under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses 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 subsection 2 or
for the advancement of expenses made pursuant to subsection 5, may not be
made to or on behalf of any director or officer if a final adjudication
establishes that his act or omissions involved intentional misconduct,
fraud or a knowing violation of the law and was material to the cause of
action.
(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.
ITEM 13. FINANCIAL STATEMENTS
The 1998 Audited Financial Statement of the Company, prepared by the
Accounting Firm Grobstein Horwath & Company, LLP, required by Regulation S-
X commence on page F-1 hereof in response to this Item 13 of this
Registration Statement on Form 10SB and are incorporated herein by this
reference.
Audited Financial Statements of Twin Faces Entertainment Corporation
Independent Auditors' Report F-1
Balance Sheet as of December 31, 1998 F-2
Statements of Operations and Deficit
Accumulated during Development Stage
for the period from December 5, 1997
(Inception) through December 31, 1998 F-3
Statements of Changes in Stockholders'
Deficit for the period from
December 5, 1997 (Inception) through
December 31, 1998 F-4
Statement of Cash Flows for the period from December 5, 1997
(Inception) through December 31, 1998 F-5
Notes to Financial Statements F-6 - F-12
<PAGE>
Independent Auditors' Report
Board of Directors and Stockholders
Twin Faces East Entertainment Corporation
We have audited the accompanying balance sheet of Twin Faces East
Entertainment Corporation (a development stage company) as of December
31, 1998, and the related statements of operations and deficit
accumulated during the development stage, changes in stockholders'
deficit, and cash flows for the period from December 5, 1997 (inception)
through December 31, 1998, in accordance with standards established by
the American Institute of Certified Public Accountants. All information
included in these financial statements is the representation of the
management of Twin Faces Entertainment Corporation. Our responsibility
is to express an opinion on these financial statements based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Twin Faces
East Entertainment Corporation (a development stage company) as of
December 31, 1998, and the results of its operations and cash flows for
the period from December 5, 1997 (inception) through December 31, 1998.
Grobstein, Horwath & Company LLP
Sherman Oaks, California
February 9, 1999, except for Note 7
which is as of February 15, 1999
<PAGE>
<TABLE>
TWIN FACES EAST ENTERTAINMENT CORPORATION
(A Development Stage Company)
Balance Sheet
December 31, 1998
Assets
<S> <C>
Current Assets
Cash $ 5,578
--------------
Total Current Assets 5,578
Deferred Offering Costs (Note 3) 85,625
Net Property and Equipment (Notes 1 and 4) 1,029
--------------
Total Assets $ 92,232
==============
</TABLE>
<TABLE>
Liabilities and Stockholders' Deficit
<S> <C>
Current Liabilities
Accrued officers' salaries and benefits (Note 5) $ 132,800
Stockholders' advances (Note 6) 39,748
--------------
Total Current Liabilities 172,548
--------------
Stockholders' Deficit
Preferred stock, $.001 par value, 5,000,000 shares
authorized, no shares issued and outstanding (Note 7) --
Common stock, $.001 par value, 20,000,000 shares
authorized, 3,411,060 shares issued and outstanding (Note 3,411
7)
Additional paid-in capital 208,022
Deficit accumulated during development stage (Notes 1 and (291,749)
2) -------------
Total Stockholders' Deficit (80,316)
-------------
Total Liabilities and Stockholders' Deficit $ 92,232
==============
</TABLE>
<PAGE>
<TABLE>
TWIN FACES EAST ENTERTAINMENT CORPORATION
(A Development Stage Company)
Statement of Operations and Deficit Accumulated During Development Stage
Period from December 5, 1997 (Inception) through
December 31, 1998
<S> <C>
Pre-Operating Revenue
Interest income $ 487
------------
Pre-Operating Expenses
Officers' salaries $ 128,000
Travel 55,916
Automobile 25,423
Professional services 22,983
Transportation 17,017
Office and postage 12,510
Telephone 9,473
Pre-production costs 9,050
Miscellaneous 5,406
Entertainment and meals 4,635
Advertising 1,823
-----------
Total pre-operating expenses 292,236
-----------
Net Loss and Net Deficit Accumulated
During Development Stage $ (291,749)
============
Basic Net Loss and Net Deficit Accumulated
During Development Stage per Common Share (Note 1) $ (0.16)
============
Weighted Average Number of Common Shares 1,813,390
============
</TABLE>
<PAGE>
<TABLE>
TWIN FACES EAST ENTERTAINMENT CORPORATION
(A Development Stage Company)
Statement of Changes in Stockholders' Deficit
Period from December 5, 1997 (Inception) through
December 31, 1998
Common Stock
Shares Addition Total
Issued al Accumulate Stockholders'
And Amount Paid-In d Equity
Outstanding Capital Deficit (Deficit)
<S> <C> <C> <C> <C> <C>
Issuance of
common stock
for cash -
March through
September 1998 88,115 $88 $94,330 $- $94,418
Issuance of
common stock
for
intellectual
property rights
contributed to
the Company -
June 1998 (Note
7) 1,764,000 1,764 (1,764) - -
Issuance of
common stock
for services
rendered on
behalf of the
Company -
June 1998 (Note
7) 1,236,000 1,236 97,054 - 98,290
Four-for-one
stock split -
October 1998 9,264,345 9,264 (9,264) - -
Stock retired -
October
1998 (Note 7) (9,000,000) (9,000) 9,000 - -
Issuance of
common stock
for cash -
November 1998 1,600 2 3,098 - 3,100
Issuance of
common stock
for
services
rendered on
behalf
of the Company
- - November
through
December 1998
(Note 7) 57,000 57 15,568 - 15,625
Net loss for
the period from
December 5,
1997
(inception)
through
December 31,
1998 - - - (291,749) (291,749)
----------- ------ -------- ---------- ------------
Balance,
December 31,
1998 3,411,060 $3,411 $208,022 $(291,749) $(80,316)
=========== ======= ======== ========== ============
</TABLE>
<PAGE>
<TABLE>
TWIN FACES EAST ENTERTAINMENT CORPORATION
(A Development Stage Company)
Statement of Cash Flows
Period from December 5, 1997 (Inception) through
December 31, 1998
<S> <C>
Operating Activities
Net loss $ (291,749)
Adjustments to reconcile net loss to
net cash used in operating activities:
Non cash portion of pre-operating expenses 28,900
Depreciation 73
Sources and (uses) of cash from changes in
operating assets and liabilities:
Accrued officers' salaries and benefits 132,800
-------------
Net Cash Used in Operating Activities (129,976)
-------------
Investing Activities
Expenditures for property and equipment (1,102)
-------------
Financing Activities
Stockholders' advances 113,007
Repayment of stockholders' advances (73,259)
Proceeds from issuance of common stock 96,908
------------
Net Cash Provided by Financing Activities 136,656
------------
Net Increase in Cash and Ending Cash $ 5,578
=============
</TABLE>
Supplemental Disclosures of Cash Flow Information and Non Cash Investing
and Financing Activities
The Company issued 1,764,000 shares of common stock at par value in
exchange for intellectual property rights contributed to the Company.
The Company issued 1,293,000 shares of common stock at par value and
credited additional paid-in capital for $113,915 in exchange for
services rendered on behalf of the Company, including $85,625 of
deferred offering costs.
<PAGE>
TWIN FACES EAST ENTERTAINMENT CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
NOTE 1 - Business Activity and Summary of Significant Accounting
Policies
This summary of significant accounting policies is presented to
assist the reader in understanding and evaluating the financial
statements. These policies are in conformity with generally
accepted accounting principles and have been applied consistently
in all material respects. 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.
Formation and Business Activity
Twin Faces East Entertainment Corporation (the Company) was
incorporated under the laws of the State of Delaware on December
5, 1997, and has adopted a December 31st fiscal year end. Results
of operations for the period from December 5, 1997 through
December 31, 1997 were not material. On June 17, 1998, the
Company reincorporated in the State of Nevada.
The Company has been in the development stage since its inception.
The Company plans to engage in the marketing of various
entertainment properties, including intellectual films and
children's animated programming to networks in the United States.
Operations are expected to commence during the year ended December
31, 1999.
Property and Equipment
Property and equipment is stated at cost. Additions and
betterments are charged to the property accounts, while
maintenance and repairs, which do not enhance the useful life of
the respective assets, are expensed as incurred. Depreciation is
provided on the straight-line method based on the estimated useful
lives of the assets, which is five years.
<PAGE>
Notes to the Financial Statements (continued)
NOTE 1 - Business Activity and Summary of Significant Accounting
Policies
(continued)
Income Taxes
Deferred income taxes are recognized using the asset and liability
method by applying income tax rates to cumulative differences
based on when and how they are expected to affect the tax return.
Deferred tax assets and liabilities are adjusted for income tax
rate changes.
Earnings Per Share
Earnings per common share are computed in accordance with SFAS No.
128 "Earnings per Share." Basic earnings per common share are
computed based on the weighted average number of common shares and
dilutive common share equivalents outstanding during the period.
Fully diluted loss per common share was not presented as there
were no dilutive potential common shares outstanding during the
period.
Stock Options
The Company intends to adopt SFAS No. 123, "Accounting for Stock-
Based Compensation," upon the granting of stock options as
disclosed in Note 7.
NOTE 2 - Development Stage Activities
The Company has been in the development stage since its inception.
As shown in the accompanying financial statements, the Company has
incurred a net loss since its inception, which has resulted in a
deficit accumulated during the development stage of $291,749 as of
December 31, 1998. Capital and advances from stockholders are the
Company's only current source of funds. As such, the Company's
continued existence is dependent upon obtaining sufficient
investor interest and financing in order to commence development
of its entertainment industry business, and achieving future
profitable operations.
Management believes it has obtained sufficient investor interest
to undertake the successful development of its film business.
<PAGE>
Notes to the Financial Statements (continued)
NOTE 3 - Deferred Offering Costs
Costs incurred in connection with the Company's securities
offering pursuant to Rule 504 of Regulation D (Regulation D) of
the Securities and Exchange Commission, are deferred and will be
charged against stockholders' equity upon completion of the
securities offering (see Note 7).
NOTE 4 - Property and Equipment
Property and equipment consists of the following:
Computer equipment $1,102
Less accumulated depreciation (73)
---------
$1,029
=========
Depreciation expense for the period from December 5, 1997
(inception) through December 31, 1998 was $73.
NOTE 5 - Accrued Officers' Salaries and Benefits
Accrued officers' salaries and benefits include amounts payable to
the following officers for the period from May 1, 1998 through
December 31, 1998:
Michael Smolanoff, Chief Executive Officer
and President $64,000
Stanley L. Teeple, Executive Vice President,
Secretary and Treasurer 68,800
---------
$132,800
=========
NOTE 6 - Stockholder Advances
The advances are non-interest bearing and are expected to be
repaid prior to December 31, 1999.
<PAGE>
Notes to the Financial Statements (continued)
NOTE 7 - Preferred and Common Stock
Under the terms of the Company's original articles of
incorporation, the Company was permitted to issue up to 1,500
shares of no par value common stock. The Company's
reincorporation in the State of Nevada on June 17, 1998 provided
for the issuance of up to 20,000,000 shares of $.001 par value
common stock, and up to 5,000,000 shares of $.001 par value
preferred stock.
The preferred stock may be issued from time to time by the Board
of Directors as shares of one or more classes or series. Subject
to the provisions of the Company's Certificate of Incorporation
and limitations imposed by law, the Board of Directors is
expressly authorized to adopt resolutions to issue the shares, to
fix the number of shares and to change the number of shares
constituting any series, and to provide for or change the voting
powers, designations, preferences and relative, participating,
optional or other special rights, qualifications, limitations or
restrictions thereof, including dividend rights, dividend rates,
terms of redemption, redemption prices, conversion rights and
liquidation preferences of the shares constituting any class or
series of the preferred stock, in each case without any further
action or vote by the stockholders. As of December 31, 1998,
there were no preferred shares outstanding.
One of the effects of undesignated preferred stock may be to
enable the Board of Directors to render more difficult or to
discourage an attempt to obtain control of the Company by means of
a tender offer, proxy contest, merger or otherwise, and thereby to
protect the continuity of the Company's management. The issuance
of shares of preferred stock pursuant to the Board of Director's
authority described above may adversely effect the rights of
holders of common stock. For example, preferred stock issued by
the Company may rank prior to the common stock as to dividend
rights, liquidation preference or both, may have full or limited
voting rights and may be convertible into shares of common stock.
Accordingly, the issuance of shares of preferred stock may
discourage bids for the common stock at a premium or may otherwise
adversely effect the market price of the common stock.
1,293,000 shares of common stock were issued to the founding
stockholders, the Company's securities counsel and other financial
advisors for various promotional and professional services
provided on behalf of the Company. All stock was issued for
approximately the fair market value of the consideration received.
<PAGE>
Notes to the Financial Statements (continued)
NOTE 7 - Preferred and Common Stock (continued)
1,764,000 shares of common stock were issued in exchange for
certain intellectual property rights contributed by the Company's
Chief Executive Officer. Under generally accepted accounting
principles, contributed intangibles shall be valued at the
contributor's cost, which is currently not determinable.
Accordingly, the contributed property rights were valued at the
common stock's par value.
In October 1998, the Company effected a four-for-one stock split.
Concurrent with the stock split, the founding stockholders
voluntarily retired 9,000,000 shares of common stock at the common
stock's par value.
In March 1998, the Company completed an exempt placement of
securities of 2,860 shares of common stock and 2,860 warrants
pursuant to Regulation D. Each warrant permits the holder to
purchase one share of the Company's common stock at a price of
$5.00 per share during a period beginning on March 27, 1998 and
ending March 27, 2003. In June 1998, the Company completed an
exempt placement of securities of 40,000 shares of common stock,
pursuant to Regulation D. In September 1998, the Company
completed an exempt placement of securities of 45,255 shares of
common stock, pursuant to Regulation D. In November 1998, the
Company completed an exempt placement of securities of 57,000
shares of common stock, pursuant to Regulation D. On February 1,
1999, the Company commenced offering for sale up to 500,000 shares
of common stock pursuant to Regulation D at a price of $.5625
share, and has sold 133,289 shares of common stock through
February 15, 1999.
NOTE 8 - Stock Option Plans
The Company has reserved for issuance an aggregate of 500,000
shares of common stock for issuance under an Employee Performance-
Based Stock Option Plan (the Stock Option Plan), and a Non-
Employee Directors' Plan (the Directors' Plan). Generally, all
options terminate ninety days after a change in control of the
Company. No stock options have been granted as of December 31,
1998.
Stock Option Plan - Non-qualified stock options may be granted to
officers, directors, other employees and consultants at an option
price equal to the fair market value of the shares of common stock
on the date of grant. Each option granted will be exercisable for
a term not more than ten years after the date of grant, and are
anticipated to be fully vested at the date of grant.
<PAGE>
Notes to the Financial Statements (continued)
NOTE 8 - Stock Option Plans (continued)
Directors' Plan - Each non-employee director will receive an
option to purchase 50,000 shares of common stock. The options of
non-employee directors will be exercisable according to the Stock
Option Plan, except that options granted under the Directors' Plan
may not be exercised more than five years after the date of grant.
NOTE 9 - Employment Contracts
The Company has entered into employment contracts with certain
officers. The contracts are for a period of five years each. In
consideration, the officers have agreed that they would not
directly or indirectly compete against the Company for a period
of one year following any termination of employment.
NOTE 10 - Income Taxes
The principal temporary difference between financial and income
tax reporting is the period in which accrued officers' salaries
and benefits are deductible for income tax reporting purposes.
The tax effects of deductible temporary differences which give
rise to significant portions of deferred tax assets are as
follows:
Current deferred tax assets:
Accrued officers' salaries and benefits $ 52,000
Net operating loss carryforward 62,000
--------
Gross deferred tax assets 114,000
Valuation allowance (114,000)
---------
$ --
==============
As of December 31, 1998, the Company had available unused Federal
and Utah state net operating loss carryforwards of approximately
$159,000, which may be applied to reduce future taxable income in
years ending through 2018 and 2013, respectively. Deferred income
tax assets have been fully offset by a valuation allowance, as
realization is not assured.
<PAGE>
Notes to the Financial Statements (continued)
NOTE 11 - Facilities
The Company currently utilizes a small amount of office space at
one location which is provided by a stockholder at no cost to the
Company.
<PAGE>
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSUERE
NOT APPLICABLE
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
Exhibit Description
Number
<S> <C>
(3)(i)* Articles of Incorporation
(a) Articles of Incorporation, as amended for, a
Delaware corporation
(a)(1) Amended Articles of Incorporation Changing
Domicile to Nevada
(3)(ii)* Bylaws
(a) Bylaws, a Nevada corporation
(4)* Instruments defining the rights of security holders:
(4)(i)* (a) Articles of Incorporation for, a Nevada
Corporation
(b) Bylaws of, a Nevada Corporation
(c) Securities Stock Specimen
(10)(i)* Material Contracts
(a) Employment Agreement-Michael Smolanoff
(b) Employment Agreement-Stanley L. Teeple
(c) 1998 Stock Option Plan
(d) Contribution Agreement
(24)* Consents of expert
(a) Grobstein Horwath & Company, LLP.-Auditors
(27)* Financial Data Schedule
*Filed herewith
</TABLE>
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant caused this Registration Statement to be signed in its behalf by the
undersigned, therunto duly authorized.
February 16, 1999 TWIN FACES EAST ENTERTAINMENT CORPORATION
(Registrant)
By: /s/ Michael Smolanoff
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
Signature Title Date
<S> <C> <C>
/s/Michael Smolanoff CEO, President February 16, 1999
Michael Smolanoff
/s/Stan Teeple Exec. VP, Secretary/Tereasurer February 16, 1999
Stan Teeple
/s/Hyman Shwartzberg Director February 16, 1999
Hyman Shwartzberg,MD
/s/Bruce Taffet Director February 16, 1999
Bruce Taffet
</TABLE>
CERTIFICATE OF INCORPORATION
OF
Twin Faces East Entertainment Corporation
FIRST: The name of this corporation is Twin Faces East Entertainment
Corporation
SECOND: Its registered office in the State of Delaware is to located
at 1313 N. Market Street, Wilmington DE 19801-1151, County of New Castle.
The registered agent in charge thereof is The Company Corporation, address
"same as above".
THIRD: The nature of the business and , the objects and purposes
proposed to be transacted, promoted and carried on, are to do any or all
the things herein mentioned as fully and to the same extent as natural
persons might or could do, and in any part of the world, viz.:
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 amount of the total authorized capital stock if this
corporation is divided into 1,500 Shares of stock at NO par value.
FIFTH: The name and mailing address of the incorporator is as
follows:
Regina Cephas, 1313 N. Market St., Wilmington DE 19801-1151
SIXTH: The Directors shall have power to make and to alter or amend the By-
laws; to fix the amount to be reserved as working capital, and to
authorize and cause to be executed, mortgages and liens without limit as
to the amount, upon the property and franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the holders of
a majority of the capital stock issued and outstanding, the Directors shall
have the authority to dispose, in any manner, of the whole property of this
corporation.
The By-Laws shall determine whether and to what extent the accounts
and books of this corporation or any of them shall be open to the
inspection of the stockholder and no stockholder shall have any right of
inspecting any account or document of this Corporation, except as conferred
by the law of the By-Laws or by resolution of the stockholders.
The stockholders and directors shall have power to hold their meetings
and keep the books, documents and papers of the Corporation outside of the
State of Delaware, at such places as may be from time to time designated by
the By-Laws or by resolution of the stockholders directors, except as
otherwise required by the laws of Delaware.
SEVENTH: Directors of the corporation shall not be liable to either
the corporation or its stockholders for monetary damages for a breach of
fiduciary duties unless the breach involves: (1) a director's duty of
loyalty to the corporation or its stockholders: (2) acts or omissions not
in good faith or which involve intentional misconduct or a knowing
violation of law: (3) liability for unlawful payments or dividends or
unlawful stock purchase or redemption by the corporation; or (4) a
transaction from which the director derived an improper personal benefit.
I, THE UNDERSIGNED, for the purpose of forming a Corporation under the
laws of the State of Delaware do make, file and record this Certificate
and do certify that the facts herein are true; and I have accordingly
hereunto set my hand.
DATED: December 5, 1997 /s/Regina Cephas
------------------------
Regina Cephas
ARTICLES OF INCORPORATION
OF
TWIN FACES EAST ENTERTAINMENT CORPORATION
AND
CHANGE OF CORPORATE DOMICILE FROM DELAWARE TO NEVADA
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, being at least eighteen (18) years of age and
acting as the incorporator of the Corporation hereby being formed under and
pursuant to the laws of the State of Nevada, does hereby certify that:
Article I - NAME
The exact name of this corporation is:
TWIN FACES EAST ENTERTAINMENT CORPORATION
Article II - REGISTERED OFFICE AND RESIDENT AGENT
The registered office and place of business in the State of
Nevada of this corporation shall be located at 1850 E. Flamingo Rd., Suite
111, Las Vegas, Nevada. The resident agent of the corporation is DONALD J.
STOECKLEIN, whose address is 1850 E. Flamingo Rd., Suite 111, Las Vegas,
Nevada 89119.
Article III - DURATION
The Corporation shall have perpetual existence.
Article IV - PURPOSES
The purpose, object and nature of the business for which this
corporation is organized are:
<PAGE>
(a) To engage in any lawful activity, (b) To carry on such
business as may be necessary, convenient, or desirable to accomplish
the above purposes, and to do all other things incidental thereto
which are not forbidden by law or by these Articles of Incorporation.
Further, the corporation incorporated pursuant to the laws of the
State of Delaware. By filing these Articles of Incorporation, the
Corporation has changed its corporate domicile to the State of Nevada.
Article V - POWERS
This Corporation is formed pursuant to Chapter 78 of the Nevada
Revised Statutes. The powers of the Corporation shall be those powers
granted by 78.060 and 78.070 of the Nevada Revised Statutes under which
this corporation is formed. In addition, the corporation shall have the
following specific powers:
(a) To elect or appoint officers and agents of the corporation
and to fix their compensation; (b) To act as an agent for any
individual, association, partnership, corporation or other legal
entity; (c) To receive, acquire, hold, exercise rights arising out of
the ownership or possession thereof, sell, or otherwise dispose of,
shares or other interests in, or obligations of, individuals,
association, partnerships, corporations, or governments; (d) To
receive, acquire, hold, pledge, transfer, or otherwise dispose of
shares of the corporation, but such shares may only be purchased,
directly or indirectly, out of earned surplus; (e) To make gifts or
contributions for the public welfare or for charitable, scientific or
educational purposes.
<PAGE>
Article VI - CAPITAL STOCK
Section 1. Authorized Shares. The total number of shares which
this corporation is authorized to issue is 20,000,000 shares of Common
Stock of $.001 par value and 5,000,000 shares of Preferred Stock of
$.001 par value.
Section 2. Voting Rights of Stockholders. Each holder of the
Common Stock shall be entitled to one vote for each share of stock
standing in his name on the books of the corporation.
Section 3. Consideration for Shares. The Common Stock shall be
issued for such consideration, as shall be fixed from time to time by
the Board of Directors. In the absence of fraud, the judgment of the
Directors as to the value of any property or services received in full
or partial payment for shares shall be conclusive. When shares are
issued upon payment of the consideration fixed by the Board of
Directors, such shares shall be taken to be fully paid stock and shall
be non-assessable. The Articles shall not be amended in this
particular.
Section 4. Stock Rights and Options. The corporation shall have
the power to create and issue rights, warrants, or options entitling
the holders thereof to purchase from the corporation any shares of its
capital stock of any class or classes, upon such terms and conditions
and at such times and prices as the Board of Directors may provide,
which terms and conditions shall be incorporated in an instrument or
instruments evidencing such rights. In the absence of fraud, the
judgment of the Directors as to the adequacy of consideration for the
issuance of such rights or options and the sufficiency thereof shall
be conclusive.
<PAGE>
Article VII - MANAGEMENT
For the management of the business, and for the conduct of the affairs
of the corporation, and for the future definition, limitation, and
regulation of the powers of the corporation and its directors and
stockholders, it is further provided:
Section 1. Size of Board. The initial number of the Board of
Directors shall be four (4). Thereafter, the number of directors
shall be as specified in the Bylaws of the corporation, and such
number may from time to time be increased or decreased in such manner
as prescribed by the Bylaws. Directors need not be stockholders.
Section 2. Powers of Board. In furtherance and not in
limitation of the powers conferred by the laws of the State of Nevada,
the Board of Directors is expressly authorized and empowered:
(a) To make, alter, amend, and repeal the Bylaws subject to the
power of the stockholders to alter or repeal the Bylaws made by the
Board of Directors;
(b) Subject to the applicable provisions of the Bylaws then in
effect, to determine, from time to time, whether and to what extent,
and at what times and places, and under what conditions and
regulations, the accounts and books of the corporation, or any of
them, shall be open to stockholder inspection. No stockholder shall
have any right to inspect any of the accounts, books or documents of
the corporation, except as permitted by law, unless and until
authorized to do so by resolution of the Board of Directors or of the
stockholders of the Corporation;
(c) To authorize and issue, without stockholder consent,
obligations of the Corporation, secured and unsecured, under such
terms and conditions as the Board, in its sole discretion, may
determine, and to pledge or mortgage, as security therefore, any real
or personal property of the corporation, including after-acquired
property;
<PAGE>
(d) To determine whether any and, if so, what part of the earned
surplus of the corporation shall be paid in dividends to the
stockholders, and to direct and determine other use and disposition of
any such earned surplus;
(e) To fix, from time to time, the amount of the profits of the
corporation to be reserved as working capital or for any other lawful
purpose;
(f) To establish bonus, profit-sharing, stock option, or other
types of incentive compensation plans for the employees, including
officers and directors, of the corporation, and to fix the amount of
profits to be shared or distributed, and to determine the persons to
participate in any such plans and the amount of their respective
participations.
(g) To designate, by resolution or resolutions passed by a
majority of the whole Board, one or more committees, each consisting
of two or more directors, which, to the extent permitted by law and
authorized by the resolution or the Bylaws, shall have and may
exercise the powers of the Board;
(h) To provide for the reasonable compensation of its own
members by Bylaw, and to fix the terms and conditions upon which such
compensation will be paid;
(i) In addition to the powers and authority hereinbefore, or by
statute, expressly conferred upon it, the Board of Directors may
exercise all such powers and do all such acts and things as may be
exercised or done by the corporation, subject, nevertheless, to the
provisions of the laws of the State of Nevada, of these Articles of
Incorporation, and of the Bylaws of the corporation.
<PAGE>
Section 3. Interested Directors. No contract or transaction
between this corporation and any of its directors, or between this
corporation and any other corporation, firm, association, or other
legal entity shall be invalidated by reason of the fact that the
director of the corporation has a direct or indirect interest,
pecuniary or otherwise, in such corporation, firm, association, or
legal entity, or because the interested director was present at the
meeting of the Board of Directors which acted upon or in reference to
such contract or transaction, or because he participated in such
action, provided that: (1) the interest of each such director shall
have been disclosed to or known by the Board and a disinterested
majority of the Board shall have, nonetheless, ratified and approved
such contract or transaction (such interested director or directors
may be counted in determining whether a quorum is present for the
meeting at which such ratification or approval is given); or (2) the
conditions of N.R.S. 78.140 are met.
Section 4. Names and Addresses. The name and post office
address of the first Board of Directors which shall consist of four
(4) persons who shall hold office until their successors are duly
elected and qualified, are as follows:
NAME ADDRESS
STANLEY L. TEEPLE 8112 South Farm Brook Way
Sandy, Utah 84093
BRUCE M. TAFFET 5644 Irish Pat Murphy
Parker, CO 80134
MICHAEL SMOLANOFF 11 Ocean Pathway
Ocean Grove, NJ 07756
DR. HYMAN SHWARZBERG
<PAGE>
Article VIII - PLACE OF MEETING; CORPORATE BOOKS
Subject to the laws of the State of Nevada, the stockholders and the
directors shall have power to hold their meetings, and the directors shall
have power to have an office or offices and to maintain the books of the
Corporation outside the State of Nevada, at such place or places as may
from time to time be designated in the Bylaws or by appropriate resolution.
Article IX - AMENDMENT OF ARTICLES
The provisions of these Articles of Incorporation may be amended,
altered or repealed from time to time to the extent and in the manner
prescribed by the laws of the State of Nevada, and additional provisions
authorized by such laws as are then in force may be added. All rights
herein conferred on the directors, officers and stockholders are granted
subject to this reservation.
Article X - INCORPORATOR
The name and address of the incorporator signing these Articles of
Incorporation are as follows:
NAME POST OFFICE ADDRESS
MICHAEL SMOLANOFF 11 Ocean Pathway
Ocean Grove, NJ 07756
Article XI - LIMITED LIABILITY OF OFFICERS AND DIRECTORS
Except as hereinafter provided, the officers and directors of the
corporation shall not be personally liable to the corporation or its
stockholders for damages for breach of fiduciary duty as a director or
officer. This limitation on personal liability shall not apply to acts or
omissions which involve intentional misconduct, fraud, knowing violation of
law, or unlawful distributions prohibited by Nevada Revised Statutes
Section 78.300.
IN WITNESS WHEREOF, the undersigned incorporator has executed
these Articles of Incorporation this 11th day of May, 1998.
/s/Michael Smolanoff
_________________________________
Michael Smolanoff
STATE OF NEVADA )
) ss:
COUNTY OF CLARK )
On May 11, 1998, personally appeared before me, a Notary Public,
MICHAEL SMOLANOFF, who acknowledged to me that he executed the foregoing
Articles of Incorporation.
/s/Debra K. Amigone
_________________________________
NOTARY PUBLIC
BYLAWS
OF
TWIN FACES EAST ENTERTAINMENT CORPORATION,
a Nevada corporation
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICES. The principal office shall be
in the County of Clark, State of Nevada.
Section 2. OTHER OFFICES. The board of directors may at any
time establish branch or subordinate offices at any place or places where
the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of stockholders shall
be held at any place within or without the State of Nevada designated by
the board of directors. In the absence of any such designation,
stockholders' meetings shall be held at the principal executive office of
the corporation.
Section 2. ANNUAL MEETINGS. The annual meetings of
stockholders shall be held at a date and time designated by the board of
directors. (At such meetings, directors shall be elected and any other
proper business may be transacted by a plurality vote of stockholders.)
Section 3. SPECIAL MEETINGS. A special meeting of the
stockholders, for any purpose or purposes whatsoever, unless prescribed by
statute or by the articles of incorporation, may be called at any time by
the president and shall be called by the president or secretary at the
request in writing of a majority of the board of directors, or at the
request in writing of stockholders holding shares in the aggregate entitled
to cast not less than a majority of the votes at any such meeting.
The request shall be in writing, specifying the time of such
meeting, the place where it is to be held and the general nature of the
<PAGE>
business proposed to be transacted, and shall be delivered personally or
sent by registered mail or by telegraphic or other facsimile transmission
to the chairman of the board, the president, any vice president or the
secretary of the corporation. The officer receiving such request forthwith
shall cause notice to be given to the stockholders entitled to vote, in
accordance with the provisions of Sections 4 and 5 of this Article II, that
a meeting will be held at the time requested by the person or persons
calling the meeting, not less than thirty-five (35) nor more than sixty
(60) days after the receipt of the request. If the notice is not given
within twenty (20) days after receipt of the request, the person or persons
requesting the meeting may give the notice. Nothing contained in this
paragraph of this Section 3 shall be construed as limiting, fixing or
affecting the time when a meeting of stockholders called by action of the
board of directors may be held.
Section 4. NOTICE OF STOCKHOLDERS' MEETINGS. All notices of
meetings of stockholders shall be sent or otherwise given in accordance
with Section 5 of this Article II not less than ten (10) nor more than
sixty (60) days before the date of the meeting being noticed. The notice
shall specify the place, date and hour of the meeting and (i) in the case
of a special meeting the general nature of the business to be transacted,
or (ii) in the case of the annual meeting those matters which the board of
directors, at the time of giving the notice, intends to present for action
by the stockholders. The notice of any meeting at which directors are to
be elected shall include the name of any nominee or nominees which, at the
time of the notice, management intends to present for election.
If action is proposed to be taken at any meeting for approval of
(i) contracts or transactions in which a director has a direct or indirect
financial interest, (ii) an amendment to the articles of incorporation,
(iii) a reorganization of the corporation, (iv) dissolution of the
corporation, or (v) a distribution to preferred stockholders, the notice
shall also state the general nature of such proposal.
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
Notice of any meeting of stockholders shall be given either personally or
by first-class mail or telegraphic or other written communication, charges
prepaid, addressed to the stockholder at the address of such stockholder
appearing on the books of the corporation or given by the stockholder to
the corporation for the purpose of notice. If no such address appears on
the corporation's books or is given, notice shall be deemed to have been
given if sent by mail or telegram to the corporation's principal executive
office, or if published at least once in a newspaper of general circulation
in the county where this office is located. Personal delivery of any such
notice to any officer of a corporation or association or to any member of a
partnership shall constitute delivery of such notice to such corporation,
association or partnership. Notice shall be deemed to have been given at
the time when delivered personally or deposited in the mail or sent by
telegram or other means of written communication. In the event of the
transfer of stock after delivery or mailing of the notice of and prior to
the holding of the meeting, it shall not be necessary to deliver or mail
notice of the meeting to the transferee.
<PAGE>
If any notice addressed to a stockholder at the address of such
stockholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the
stockholder at such address, all future notices or reports shall be deemed
to have been duly given without further mailing if the same shall be
available to the stockholder upon written demand of the stockholder at the
principal executive office of the corporation for a period of one year from
the date of the giving of such notice.
An affidavit of the mailing or other means of giving any notice
of any stockholders' meeting shall be executed by the secretary, assistant
secretary or any transfer agent of the corporation giving such notice, and
shall be filed and maintained in the minute book of the corporation.
Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 6. QUORUM. The presence in person or by proxy of the
holders of a majority of the shares entitled to vote at any meeting of
stockholders shall constitute a quorum for the transaction of business,
except as otherwise provided by statute or the articles of incorporation.
The stockholders present at a duly called or held meeting at which a quorum
is present may continue to do business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum, if any
action taken (other than adjournment) is approved by at least a majority of
the shares required to constitute a quorum.
Section 7. ADJOURNED MEETING AND NOTICE THEREOF. Any
stockholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of
the shares represented at such meeting, either in person or by proxy, but
in the absence of a quorum, no other business may be transacted at such
meeting.
When any meeting of stockholders, either annual or special, is
adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place thereof are announced at a meeting
at which the adjournment is taken. At any adjourned meeting the
corporation may transact any business which might have been transacted at
the original meeting.
Section 8. VOTING. Unless a record date set for voting
purposes be fixed as provided in Section 1 of Article VII of these bylaws,
only persons in whose names shares entitled to vote stand on the stock
records of the corporation at the close of business on the business day
next preceding the day on which notice is given (or, if notice is waived,
at the close of business on the business day next preceding the day on
which the meeting is held) shall be entitled to vote at such meeting. Any
stockholder entitled to vote on any matter other than elections of
<PAGE>
directors or officers, may vote part of the shares in favor of the proposal
and refrain from voting the remaining shares or vote them against the
proposal, but, if the stockholder fails to specify the number of shares
such stockholder is voting affirmatively, it will be conclusively presumed
that the stockholder's approving vote is with respect to all shares such
stockholder is entitled to vote. Such vote may be by voice vote or by
ballot; provided, however, that all elections for directors must be by
ballot upon demand by a stockholder at any election and before the voting
begins.
When a quorum is present or represented 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 brought before
such meeting, unless the question is one upon which by express provision of
the statutes 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. Every stockholder of record of the corporation
shall be entitled at each meeting of stockholders to one vote for each
share of stock standing in his name on the books of the corporation.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT
STOCKHOLDERS. The transactions at any meeting of stockholders, either
annual or special, however called and noticed, and wherever held, shall be
as valid as though had at a meeting duly held after regular call and
notice, if a quorum be present either in person or by proxy, and if, either
before or after the meeting, each person entitled to vote, not present in
person or by proxy, signs a written waiver of notice or a consent to a
holding of the meeting, or an approval of the minutes thereof. The waiver
of notice or consent need not specify either the business to be transacted
or the purpose of any regular or special meeting of stockholders, except
that if action is taken or proposed to be taken for approval of any of
those matters specified in the second paragraph of Section 4 of this
Article II, the waiver of notice or consent shall state the general nature
of such proposal. All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
Attendance of a person at a meeting shall also constitute a
waiver of notice of such meeting, except when the person objects, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened, and except that attendance at a
meeting is not a waiver of any right to object to the consideration of
matters not included in the notice if such objection is expressly made at
the meeting.
Section 10. STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A
MEETING. Any action which may be taken at any annual or special meeting of
stockholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the
holders of outstanding shares 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. All
such consents shall be filed with the secretary of the corporation and
shall be maintained in the corporate records. Any stockholder giving a
<PAGE>
written consent, or the stockholder's proxy holders, or a transferee of the
shares of a personal representative of the stockholder of their respective
proxy holders, may revoke the consent by a writing received by the
secretary of the corporation prior to the time that written consents of the
number of shares required to authorize the proposed action have been filed
with the secretary.
Section 11. PROXIES. Every person entitled to vote for
directors or on any other matter shall have the right to do so either in
person or by one or more agents authorized by a written proxy signed by the
person and filed with the secretary of the corporation. A proxy shall be
deemed signed if the stockholder's name is placed on the proxy (whether by
manual signature, typewriting, telegraphic transmission or otherwise) by
the stockholder or the stockholder's attorney in fact. A validly executed
proxy which does not state that it is irrevocable shall continue in full
force and effect unless revoked by the person executing it, prior to the
vote pursuant thereto, by a writing delivered to the corporation stating
that the proxy is revoked or by a subsequent proxy executed by, or
attendance at the meeting and voting in person by the person executing the
proxy; provided, however, that no such proxy shall be valid after the
expiration of six (6) months from the date of such proxy, unless coupled
with an interest, or unless the person executing it specifies therein the
length of time for which it is to continue in force, which in no case shall
exceed seven (7) years from the date of its execution. Subject to the
above and the provisions of Section 78.355 of the Nevada General
Corporation Law, any proxy duly executed is not revoked and continues in
full force and effect until an instrument revoking it or a duly executed
proxy bearing a later date is filed with the secretary of the corporation.
Section 12. INSPECTORS OF ELECTION. Before any meeting of
stockholders, the board of directors may appoint any persons other than
nominees for office to act as inspectors of election at the meeting or its
adjournment. If no inspectors of election are appointed, the chairman of
the meeting may, and on the request of any stockholder or his proxy shall,
appoint inspectors of election at the meeting. The number of inspectors
shall be either one (1) or three (3). If inspectors are appointed at a
meeting on the request of one or more stockholders or proxies, the holders
of a majority of shares or their proxies present at the meeting shall
determine whether one (1) or three (3) inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to
act, the vacancy may be filled by appointment by the board of directors
before the meeting, or by the chairman at the meeting.
The duties of these inspectors shall be as follows:
(a) Determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence
of a quorum, and the authenticity, validity, and effect of proxies;
<PAGE>
(b) Receive votes, ballots, or consents;
(c) Hear and determine all challenges and questions in any
way arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine the election result; and
(f) Do any other acts that may be proper to conduct the
election or vote with fairness to all stockholders.
ARTICLE III
DIRECTORS
Section 1. POWERS. Subject to the provisions of the Nevada
General Corporation Law and any limitations in the articles of
incorporation and these bylaws relating to action required to be approved
by the stockholders or by the outstanding shares, the business and affairs
of the corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the board of directors.
Without prejudice to such general powers, but subject to the same
limitations, it is hereby expressly declared that the directors shall have
the power and authority to:
(a) Select and remove all officers, agents, and employees
of the corporation, prescribe such powers and duties for them as may not be
inconsistent with law, with the articles of incorporation or these bylaws,
fix their compensation, and require from them security for faithful
service.
(b) Change the principal executive office or the principal
business office from one location to another; cause the corporation to be
qualified to do business in any other state, territory, dependency, or
foreign country and conduct business within or without the State; designate
any place within or without the State for the holding of any stockholders'
meeting, or meetings, including annual meetings; adopt, make and use a
corporate seal, and prescribe the forms of certificates of stock, and alter
the form of such seal and of such certificates from time to time as in
their judgment they may deem best, provided that such forms shall at all
times comply with the provisions of law.
(c) Authorize the issuance of shares of stock of the
corporation from time to time, upon such terms as may be lawful, in
consideration of money paid, labor done or services actually rendered,
<PAGE>
debts or securities cancelled, tangible or intangible property actually
received.
(d) Borrow money and incur indebtedness for the purpose of
the corporation, and cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust,
mortgages, pledges, hypothecations, or other evidences of debt and
securities therefor.
Section 2. NUMBER OF DIRECTORS. The authorized number of
directors shall be no fewer than two (1) nor more than seven (7). The
exact number of authorized directors shall be set by resolution of the
board of directors, within the limits specified above. The maximum or
minimum number of directors cannot be changed, nor can a fixed number be
substituted for the maximum and minimum numbers, except by a duly adopted
amendment to this bylaw duly approved by a majority of the outstanding
shares entitled to vote.
Section 3. QUALIFICATION, ELECTION AND TERM OF OFFICE OF
DIRECTORS. Directors shall be elected at each annual meeting of the
stockholders to hold office until the next annual meeting, but if any such
annual meeting is not held or the directors are not elected at any annual
meeting, the directors may be elected at any special meeting of
stockholders held for that purpose, or at the next annual meeting of
stockholders held thereafter. Each director, including a director elected
to fill a vacancy, shall hold office until the expiration of the term for
which elected and until a successor has been elected and qualified or until
his earlier resignation or removal or his office has been declared vacant
in the manner provided in these bylaws. Directors need not be
stockholders.
Section 4. RESIGNATION AND REMOVAL OF DIRECTORS. Any
director may resign effective upon giving written notice to the chairman of
the board, the president, the secretary or the board of directors of the
corporation, unless the notice specifies a later time for the effectiveness
of such resignation, in which case such resignation shall be effective at
the time specified. Unless such resignation specifies otherwise, its
acceptance by the corporation shall not be necessary to make it effective.
The board of directors may declare vacant the office of a director who has
been declared of unsound mind by an order of a court or convicted of a
felony. Any or all of the directors may be removed without cause of such
removal is approved by the affirmative vote of a majority of the
outstanding shares entitled to vote. No reduction of the authorized number
of directors shall have the effect of removing any director before his term
of office expires.
Section 5. VACANCIES. Vacancies in the board of directors,
may be filled by a majority of the remaining directors, though less than a
quorum, or by a sole remaining director. Each director so elected shall
hold office until the next annual meeting of the stockholders and until a
successor has been elected and qualified.
<PAGE>
A vacancy in the board of directors exists as to any authorized
position of directors which is not then filled by a duly elected director,
whether caused by death, resignation, removal, increase in the authorized
number of directors or otherwise.
The stockholders may elect a director or directors at any time to
fill any vacancy or vacancies not filled by the directors, but any such
election by written consent shall require the consent of a majority of the
outstanding shares entitled to vote. If the resignation of a director is
effective at a future time, the board of directors may elect a successor to
take office when the resignation becomes effective.
If after the filling of any vacancy by the directors, the
directors then in office who have been elected by the stockholders shall
constitute less than a majority of the directors then in office, any holder
or holders of an aggregate of five percent or more of the total number of
shares at the time outstanding having the right to vote for such directors
may call a special meeting of the stockholders to elect the entire board.
The term of office of any director not elected by the stockholders shall
terminate upon the election of a successor.
Section 6. PLACE OF MEETINGS. Regular meetings of the board
of directors shall be held at any place within or without the State of
Nevada that has been designated from time to time by resolution of the
board. In the absence of such designation, regular meetings shall be held
at the principal executive office of the corporation. Special meetings of
the board shall be held at any place within or without the State of Nevada
that has been designated in the notice of the meeting or, if not stated in
the notice or there is not notice, at the principal executive office of the
corporation. Any meeting, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in such meeting can hear one another, and all such directors
shall be deemed to be present in person at such meeting.
Section 7. ANNUAL MEETINGS. Immediately following each
annual meeting of stockholders, the board of directors shall hold a regular
meeting for the purpose of transaction of other business. Notice of this
meeting shall not be required.
Section 8. OTHER REGULAR MEETINGS. Other regular meetings of
the board of directors shall be held without call at such time as shall
from time to time be fixed by the board of directors. Such regular
meetings may be held without notice, provided the notice of any change in
the time of any such meetings shall be given to all of the directors.
Notice of a change in the determination of the time shall be given to each
director in the same manner as notice for special meetings of the board of
directors.
Section 9. SPECIAL MEETINGS. Special meetings of the board
of directors for any purpose or purposes may be called at any time by the
chairman of the board or the president or any vice president or the
secretary or any two directors.
<PAGE>
Notice of the time and place of special meetings shall be
delivered personally or by telephone to each director or sent by
first-class mail or telegram, charges prepaid, addressed to each director
at his or her address as it is shown upon the records of the corporation.
In case such notice is mailed, it shall be deposited in the United States
mail at least four (4) days prior to the time of the holding of the
meeting. In case such notice is delivered personally, or by telephone or
telegram, it shall be delivered personally or by telephone or to the
telegraph company at least forty-eight (48) hours prior to the time of the
holding of the meeting. Any oral notice given personally or by telephone
may be communicated to either the director or to a person at the office of
the director who the person giving the notice has reason to believe will
promptly communicate it to the director. The notice need not specify the
purpose of the meeting nor the place if the meeting is to be held at the
principal executive office of the corporation.
Section 10. QUORUM. A majority of the authorized number of
directors shall constitute a quorum for the transaction of business, except
to adjourn as hereinafter provided. Every act or decision done or made by
a majority of the directors present at a meeting duly held at which a
quorum is present shall be regarded as the act of the board of directors,
subject to the provisions of Section 78.140 of the Nevada General
Corporation Law (approval of contracts or transactions in which a director
has a direct or indirect material financial interest), Section 78.125
(appointment of committees), and Section 78.751 (indemnification of
directors). A meeting at which a quorum is initially present may continue
to transact business notwithstanding the withdrawal of directors, if any
action taken is approved by at least a majority of the required quorum for
such meeting.
Section 11. WAIVER OF NOTICE. The transactions of any meeting
of the board of directors, however called and noticed or wherever held,
shall be as valid as though had at a meeting duly held after regular call
and notice if a quorum be present and if, either before or after the
meeting, each of the directors not present signs a written waiver of
notice, a consent to holding the meeting or an approval of the minutes
thereof. The waiver of notice of consent need not specify the purpose of
the meeting. All such waivers, consents and approvals shall be filed with
the corporate records or made a part of the minutes of the meeting. Notice
of a meeting shall also be deemed given to any director who attends the
meeting without protesting, prior thereto or at its commencement, the lack
of notice to such director.
Section 12. ADJOURNMENT. A majority of the directors present,
whether or not constituting a quorum, may adjourn any meeting to another
time and place.
Section 13. NOTICE OF ADJOURNMENT. Notice of the time and
place of holding an adjourned meeting need not be given, unless the meeting
is adjourned for more than twenty-four (24) hours, in which case notice of
such time and place shall be given prior to the time of the adjourned
meeting, in the manner specified in Section 8 of this Article III, to the
directors who were not present at the time of the adjournment.
<PAGE>
Section 14. ACTION WITHOUT MEETING. Any action required or
permitted to be taken by the board of directors may be taken without a
meeting, if all members of the board shall individually or collectively
consent in writing to such action. Such action by written consent shall
have the same force and effect as a unanimous vote of the board of
directors. Such written consent or consents shall be filed with the
minutes of the proceedings of the board.
Section 15. FEES AND COMPENSATION OF DIRECTORS. Directors and
members of committees may receive such compensation, if any, for their
services, and such reimbursement of expenses, as may be fixed or determined
by resolution of the board of directors. Nothing herein contained shall be
construed to preclude any director from serving the corporation in any
other capacity as an officer, agent, employee, or otherwise, and receiving
compensation for such services. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
ARTICLE IV
COMMITTEES
Section 1. COMMITTEES OF DIRECTORS. The board of directors
may, by resolution adopted by a majority of the authorized number of
directors, designate one or more committees, each consisting of one or more
directors, to serve at the pleasure of the board. The board may designate
one or more directors as alternate members of any committees, who may
replace any absent member at any meeting of the committee. Any such
committee, to the extent provided in the resolution of the board, shall
have all the authority of the board, except with regard to:
(a) the approval of any action which, under the Nevada
General Corporation Law, also requires stockholders' approval or approval
of the outstanding shares;
(b) the filing of vacancies on the board of directors or in
any committees;
(c) the fixing of compensation of the directors for serving
on the board or on any committee;
(d) the amendment or repeal of bylaws or the adoption of
new bylaws;
(e) the amendment or repeal of any resolution of the board
of directors which by its express terms is not so amendable or repealable;
<PAGE>
(f) a distribution to the stockholders of the corporation,
except at a rate or in a periodic amount or within a price range determined
by the board of directors; or
(g) the appointment of any other committees of the board of
directors or the members thereof.
Section 2. MEETINGS AND ACTION BY COMMITTEES. Meetings and
action of committees shall be governed by, and held and taken in accordance
with, the provisions of Article III, Sections 6 (place of meetings), 8
(regular meetings), 9 (special meetings and notice), 10 (quorum), 11
(waiver of notice), 12 (adjournment), 13 (notice of adjournment) and 14
(action without meeting), with such changes in the context of those bylaws
as are necessary to substitute the committee and its members for the board
of directors and its members, except that the time or regular meetings of
committees may be determined by resolutions of the board of directors and
notice of special meetings of committees shall also be given to all
alternate members, who shall have the right to attend all meetings of the
committee. The board of directors may adopt rules for the government of
any committee not inconsistent with the provisions of these bylaws. The
committees shall keep regular minutes of their proceedings and report the
same to the board when required.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the corporation shall
be a president, a secretary and a treasurer. The corporation may also
have, at the discretion of the board of directors, a chairman of the board,
one or more vice presidents, one or more assistant secretaries, one or more
assistant treasurers, and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article V. Any two or
more offices may be held by the same person.
Section 2. ELECTION OF OFFICERS. The officers of the
corporation, except such officers as may be appointed in accordance with
the provisions of Section 3 or Section 5 of this Article V, shall be chosen
by the board of directors, and each shall serve at the pleasure of the
board, subject to the rights, if any, of an officer under any contract of
employment. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, a vice president, a
secretary and a treasurer, none of whom need be a member of the board. The
salaries of all officers and agents of the corporation shall be fixed by
the board of directors.
<PAGE>
Section 3. SUBORDINATE OFFICERS, ETC. The board of directors
may appoint, and may empower the president to appoint, such other officers
as the business of the corporation may require, each of whom shall hold
office for such period, have such authority and perform such duties as are
provided in the bylaws or as the board of directors may from time to time
determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. The officers
of the corporation shall hold office until their successors are chosen and
qualify. Subject to the rights, if any, of an officer under any contract
of employment, any officer may be removed, either with or without cause, by
the board of directors, at any regular or special meeting thereof, or,
except in case of an officer chosen by the board of directors, by any
officer upon whom such power or removal may be conferred by the board of
directors.
Any officer may resign at any time by giving written notice to
the corporation. Any such resignation shall take effect at the date of the
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective. Any such resignation is without
prejudice to the rights, if any, of the corporation under any contract to
which the officer is a party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office
because of death, resignation, removal, disqualification or any other cause
shall be filled in the manner prescribed in these bylaws for regular
appointments to such office.
Section 6. CHAIRMAN OF THE BOARD. The chairman of the board,
if such an officer be elected, shall, if present, preside at all meetings
of the board of directors and exercise and perform such other powers and
duties as may be from time to time assigned to him by the board of
directors or prescribed by the bylaws. If there is no president, the
chairman of the board shall in addition be the chief executive officer of
the corporation and shall have the powers and duties prescribed in
Section 7 of this Article V.
Section 7. PRESIDENT. Subject to such supervisory powers, if
any, as may be given by the board of directors to the chairman of the
board, if there be such an officer, the president shall be the chief
executive officer of the corporation and shall, subject to the control of
the board of directors, have general supervision, direction and control of
the business and the officers of the corporation. He shall preside at all
meetings of the stockholders and, in the absence of the chairman of the
board, of if there be none, at all meetings of the board of directors. He
shall have the general powers and duties of management usually vested in
the office of president of a corporation, and shall have such other powers
and duties as may be prescribed by the board of directors or the bylaws.
He 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.
<PAGE>
Section 8. VICE PRESIDENTS. In the absence or disability of
the president, the vice presidents, if any, in order of their rank as fixed
by the board of directors or, if not ranked, a vice president designated by
the board of directors, 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 upon, the president. The vice presidents shall have such
other powers and perform such other duties as from time to time may be
prescribed for them respectively by the board of directors or the bylaws,
the president or the chairman of the board.
Section 9. SECRETARY. The secretary shall attend all
meetings of the board of directors and all meetings of the stockholders and
shall record, keep or cause to be kept, at the principal executive office
or such other place as the board of directors may order, a book of minutes
of all meetings of directors, committees of directors and stockholders,
with the time and place of holding, whether regular or special, and, if
special, how authorized, the notice thereof given, the names of those
present at directors' and committee meetings, the number of shares present
or represented at stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent or
registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all
stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates issued for the same, and the
number and date of cancellation of every certificate surrendered for
cancellation.
The secretary shall give, or cause to be given, notice of all
meetings of stockholders and of the board of directors required by the
bylaws or by law to be given, and he shall keep the seal of the corporation
in safe custody, as may be prescribed by the board of directors or by the
bylaws.
Section 10. TREASURER. The treasurer shall keep and maintain,
or cause to be kept and maintained, adequate and correct books and records
of accounts of the properties and business transactions of the corporation,
including accounts of its assets, liabilities, receipts, disbursements,
gains, losses, capital, retained earnings and shares. The books of account
shall at all reasonable times be open to inspection by any director.
The treasurer shall deposit all moneys and other valuables in the
name and to the credit of the corporation with such depositaries as may be
designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to
the president and directors, whenever they request it, an account of all of
his transactions as treasurer and of the financial condition of the
corporation, and shall have other powers and perform such other duties as
may be prescribed by the board of directors or the bylaws.
<PAGE>
If required by the board of directors, the treasurer shall give
the corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the board of directors for the faithful
performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTS
Section 1. ACTIONS OTHER THAN BY THE CORPORATION. The
corporation may indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative,
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
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, has 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.
Section 2. ACTIONS BY THE CORPORATION. The corporation may
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses, including
amounts paid in settlement and attorneys' fees, actually and reasonably
incurred by him in connection with the defense or settlement of the action
or suit if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to which
such a person has been adjudged by a court of competent jurisdiction, after
<PAGE>
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.
Section 3. SUCCESSFUL DEFENSE. 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 1 and 2, or in defense of any claim, issue or
matter therein, he must be indemnified by the corporation against expenses,
including attorneys' fees, actually and reasonably incurred by him in
connection with the defense.
Section 4. REQUIRED APPROVAL. Any indemnification under
Sections 1 and 2, unless ordered by a court or advanced pursuant to Section
5, must be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances. The determination must
be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or
proceeding;
(c) If a majority vote of a quorum consisting of directors
who were not parties to the act, suit or proceeding so orders, by
independent legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not
parties to the act, suit or proceeding cannot be obtained, by independent
legal counsel in a written opinion.
Section 5. ADVANCE OF EXPENSES. The articles of
incorporation, the bylaws or an agreement made by the corporation may
provide that the expenses of officers and directors incurred in defending a
civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of
the action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he is not entitled to
be indemnified by the corporation. The provisions of this section do not
affect any rights to advancement of expenses to which corporate personnel
other than directors or officers may be entitled under any contract or
otherwise by law.
<PAGE>
Section 6. OTHER RIGHTS. The indemnification and advancement
of expenses authorized in or ordered by a court pursuant to this
Article VI:
(a) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses 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 2 or for the advancement of expenses made pursuant to Section 5,
may not be made to or on behalf of any director or officer if a final
adjudication establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action.
(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.
Section 7. INSURANCE. The corporation may purchase and
maintain insurance 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
for any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under the provisions of this Article VI.
Section 8. RELIANCE ON PROVISIONS. Each person who shall act
as an authorized representative of the corporation shall be deemed to be
doing so in reliance upon the rights of indemnification provided by this
Article.
Section 9. SEVERABILITY. If any of the provisions of this
Article are held to be invalid or unenforceable, this Article shall be
construed as if it did not contain such invalid or unenforceable provision
and the remaining provisions of this Article shall remain in full force and
effect.
Section 10. RETROACTIVE EFFECT. To the extent permitted by
applicable law, the rights and powers granted pursuant to this Article VI
shall apply to acts and actions occurring or in progress prior to its
adoption by the board of directors.
<PAGE>
ARTICLE VII
RECORDS AND BOOKS
Section 1. MAINTENANCE OF SHARE REGISTER. The corporation
shall keep at its principal executive office, or at the office of its
transfer agent or registrar, if either be appointed and as determined by
resolution of the board of directors, a record of its stockholders, giving
the names and addresses of all stockholders and the number and class of
shares held by each stockholder.
Section 2. MAINTENANCE OF BYLAWS. The corporation shall keep
at its principal executive office, or if its principal executive office is
not in this State at its principal business office in this State, the
original or a copy of the bylaws as amended to date, which shall be open to
inspection by the stockholders at all reasonable times during office hours.
If the principal executive office of the corporation is outside this state
and the corporation has no principal business office in this state, the
secretary shall, upon the written request of any stockholder, furnish to
such stockholder a copy of the bylaws as amended to date.
Section 3. MAINTENANCE OF OTHER CORPORATE RECORDS. The
accounting books and records and minutes of proceedings of the stockholders
and the board of directors and any committee or committees of the board of
directors shall be kept at such place or places designated by the board of
directors, or, in the absence of such designation, at the principal
executive office of the corporation. The minutes shall be kept in written
form and the accounting books and records shall be kept either in written
form or in any other form capable of being converted into written form.
Every director shall have the absolute right at any reasonable
time to inspect and copy all books, records and documents of every kind and
to inspect the physical properties of this corporation and any subsidiary
of this corporation. Such inspection by a director may be made in person
or by agent or attorney and the right of inspection includes the right to
copy and make extracts. The foregoing rights of inspection shall extend to
the records of each subsidiary of the corporation.
Section 4. ANNUAL REPORT TO STOCKHOLDERS. Nothing herein
shall be interpreted as prohibiting the board of directors from issuing
annual or other periodic reports to the stockholders of the corporation as
they deem appropriate.
Section 5. FINANCIAL STATEMENTS. A copy of any annual
financial statement and any income statement of the corporation for each
quarterly period of each fiscal year, and any accompanying balance sheet of
the corporation as of the end of each such period, that has been prepared
by the corporation shall be kept on file in the principal executive office
of the corporation for twelve (12) months.
<PAGE>
Section 6. ANNUAL LIST OF DIRECTORS, OFFICERS AND RESIDENT
AGENT. The corporation shall, on or before June 17th of each year, file
with the Secretary of State of the State of Nevada, on the prescribed form,
a list of its officers and directors and a designation of its resident
agent in Nevada.
ARTICLE VIII
GENERAL CORPORATE MATTERS
Section 1. RECORD DATE. For purposes of determining the
stockholders entitled to notice of any meeting or to vote or entitled to
receive payment of any dividend or other distribution or allotment of any
rights or entitled to exercise any rights in respect of any other lawful
action, the board of directors may fix, in advance, a record date, which
shall not be more than sixty (60) days nor less than ten (10) days prior to
the date of any such meeting nor more than sixty (60) days prior to any
other action, and in such case only stockholders of record on the date so
fixed are entitled to notice and to vote or to receive the dividend,
distribution or allotment of rights or to exercise the rights, as the case
may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date fixed as aforesaid, except as otherwise
provided in the Nevada General Corporation Law.
If the board of directors does not so fix a record date:
(a) The record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close
of business on the day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the business day next
preceding the day on which the meeting is held.
(b) The record date for determining stockholders entitled
to give consent to corporate action in writing without a meeting, when no
prior action by the board has been taken, shall be the day on which the
first written consent is given.
(c) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the
board adopts the resolution relating thereto, or the sixtieth (60th) day
prior to the date of such other action, whichever is later.
Section 2. CLOSING OF TRANSFER BOOKS. The directors may
prescribe a period not exceeding sixty (60) days prior to any meeting of
the stockholders during which no transfer of stock on the books of the
corporation may be made, or may fix a date not more than sixty (60) days
prior to the holding of any such meeting as the day as of which
stockholders entitled to notice of and to vote at such meeting shall be
determined; and only stockholders of record on such day shall be entitled
to notice or to vote at such meeting.
<PAGE>
Section 3. REGISTERED STOCKHOLDERS. The corporation shall be
entitled to recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends, and to vote as such
owner, and to hold liable for calls and assessments a person registered on
its books as the owner of shares, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part
of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Nevada.
Section 4. CHECKS, DRAFTS, EVIDENCES OF INDEBTEDNESS. All
checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the
corporation, shall be signed or endorsed by such person or persons and in
such manner as, from time to time, shall be determined by resolution of the
board of directors.
Section 5. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED.
The board of directors, except as in the bylaws otherwise provided, may
authorize any officer or officers, agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances; and, unless so authorized or ratified by the board of directors
or within the agency power or authority to bind the corporation by any
contract or engagement or to pledge its credit or to render it liable for
any purpose or to any amount.
Section 6. STOCK CERTIFICATES. A certificate or certificates
for shares of the capital stock of the corporation shall be issued to each
stockholder when any such shares are fully paid, and the board of directors
may authorize the issuance of certificates or shares as partly paid
provided that such certificates shall state the amount of the consideration
to be paid therefor and the amount paid thereon. All certificates shall be
signed in the name of the corporation by the president or vice president
and by the treasurer or an assistant treasurer or the secretary or any
assistant secretary, certifying the number of shares and the class or
series of shares owned by the stockholder. When the corporation is
authorized to issue shares of more than one class or more than one series
of any class, there shall be set forth upon the face or back of the
certificate, or the certificate shall have a statement that the corporation
will furnish to any stockholders upon request and without charge, a full or
summary statement of the designations, preferences and relatives,
<PAGE>
participating, optional or other special rights of the various classes of
stock or series thereof and the qualifications, limitations or restrictions
of such rights, and, if the corporation shall be authorized to issue only
special stock, such certificate must set forth in full or summarize the
rights of the holders of such stock. Any or all of the signatures on the
certificate may be facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon
a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if such person were an officer,
transfer agent or registrar at the date of issue.
No new certificate for shares shall be issued in place of any
certificate theretofore issued unless the latter is surrendered and
cancelled at the same time; provided, however, that a new certificate may
be issued without the surrender and cancellation of the old certificate if
the certificate thereto fore issued is alleged to have been lost, stolen or
destroyed. In case of any such allegedly lost, stolen or destroyed
certificate, the corporation may require the owner thereof or the legal
representative of such owner to give the corporation a bond (or other
adequate security) sufficient to indemnify it against any claim that may be
made against it (including any expense or liability) on account of the
alleged loss, theft or destruction of any such certificate or the issuance
of such new certificate.
Section 7. DIVIDENDS. Dividends upon the capital stock of
the corporation, subject to the provisions of the articles of
incorporation, if any, 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, subject to the provisions
of the articles of incorporation.
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 purpose as the directors shall think conducive to the interest
of the corporation, and the directors may modify or abolish any such
reserves in the manner in which it was created.
Section 8. FISCAL YEAR. The fiscal year of the corporation
shall be fixed by resolution of the board of directors.
Section 9. SEAL. The corporate seal shall have inscribed
thereon the name of the corporation, the year of its incorporation and the
words "Corporate Seal, Nevada."
Section 10. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
The chairman of the board, the president, or any vice president, or any
other person authorized by resolution of the board of directors by any of
the foregoing designated officers, is authorized to vote on behalf of the
corporation any and all shares of any other corporation or corporations,
foreign or domestic, standing in the name of the corporation. The
authority herein granted to said officers to vote or represent on behalf of
the corporation any and all shares held by the corporation in any other
<PAGE>
corporation or corporations may be exercised by any such officer in person
or by any person authorized to do so by proxy duly executed by said
officer.
Section 11. CONSTRUCTION AND DEFINITIONS. Unless the context
requires otherwise, the general provisions, rules of construction, and
definitions in the Nevada General Corporation Law shall govern the
construction of the bylaws. Without limiting the generality of the
foregoing, the singular number includes the plural, the plural number
includes the singular, and the term "person" includes both a corporation
and a natural person.
ARTICLE IX
AMENDMENTS
Section 1. AMENDMENT BY STOCKHOLDERS. New bylaws may be
adopted or these bylaws may be amended or repealed by the affirmative vote
of a majority of the outstanding shares entitled to vote, or by the written
assent of stockholders entitled to vote such shares, except as otherwise
provided by law or by the articles of incorporation.
Section 2. AMENDMENT BY DIRECTORS. Subject to the rights of
the stockholders as provided in Section 1 of this Article, bylaws may be
adopted, amended or repealed by the board of directors.
<PAGE>
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting secretary of TWIN
FACES EAST ENTERTAINMENT CORPORATION_, a Nevada corporation; and
2. That the foregoing Amended and Restated Bylaws, comprising
twenty (20) pages, constitute the Bylaws of said corporation as duly
adopted and approved by the board of directors of said corporation by a
Unanimous Written Consent dated as of June 17, 1998 and duly adopted and
approved by the stockholders of said corporation at a special meeting held
on June, 1998.
IN WITNESS WHEREOF, I have hereunto subscribed my name and
affixed the seal of said corporation this 17th day of June, 1998.
/s/Stanley L. Teeple
_________________________________
STANLEY L. TEEPLE, Secretary
TWIN FACES EAST
ENTERTAINMENT CORPORATION
INCORPORATED UNDER THE LAWS OF THIS STATE OF NEVADA
20,000,000 SHARES COMMON STOCK AUTHORIZED, $.001 PAR VALUE
THIS
CERTIFIES CUSIP 901481 10 1
THAT SEE REVERSE FOR
CERTAIN DEFINITIONS
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF
TWIN FACES EAST ENTERTAINMENT CORPORATION
transferable on the books of the corporation in person or by duly
authorized attorney upon surrender of this certificate properly endorsed.
This certificate and the shares represented hereby are subject to the laws
of this State of Nevada, and to the Certificate of Incorporation and Bylaws
of the Corporation, as now hereafter amended. This certificate is not
valid unless countersigned by the Transfer Agent. WITNESS the facsimile
seal of the Corporation and the signature of its duly authorized officers.
DATE
Twin Faces East Entertainment Corporation
Corporate Seal
Nevada
SECRETARY
EMPLOYMENT AGREEMENT
This Agreement is made this date, by and between TWIN FACES EAST
ENTERTAINMENT CORPORATION ("Employer") and Michael Smolanoff ("Employee").
WHEREAS, the Employer is engaged in the business of development of
intellectual and entertainment properties; and
WHEREAS, the Employer desires to retain the services of the Employee in the
capacity as its President.
NOW THEREFORE IT IS AGREED AS FOLLOWS:
Section 1. Employment. The Employer agrees to employ the Employee and
the Employee agrees to accept the employment described in this Agreement.
Section 2. Duties. The Employee shall serve as President of the
Employer, with such duties as are customarily associated with such
position. The Employee shall be responsible for day-to-day operations,
strategic planning, and implementation of the Employer's business. The
Employee shall not be entitled to additional compensation by reason of
service as a director of the Employer or as a fiduciary of an employee
benefit plan of the Employer. The Employee's duties shall include the
following:
Operating as President of the Employer's Corporation as provided in
the By Laws of the Corporation.
Section 3. Extent of Services. The Employee shall devote the majority
of his working time, attention, and energies to the performance of his
duties and shall not be engaged in any competing business activity, whether
or not pursued for gain. The Employee shall at all times faithfully and to
the best of his ability perform his duties under this Agreement. The
duties shall be rendered either at the Employer's offices in southern
California or from his home, or at other place or places of business and at
such times as the needs of the Employer may dictate.
Section 4. Term. The term of this agreement shall begin on May 1,
1998 ("Effective Date") and shall continue for a five year period. The
parties presently anticipate that the employment relationship may continue
beyond this five year term. This Agreement shall not give the Employee and
enforceable right to employment beyond this term.
Section 5. Compensation.
5.1 Base Compensation. The Employee will receive a base salary of
$180,000 per year, payable in accordance with the Employer's standard
payroll procedures. The Employee is eligible for performance based
bonuses, but there is no assurance or expectation that the bonuses will be
paid. Bonuses will be paid, if at all, in the sole discretion of the Board
of Directors.
<PAGE>
5.2 Benefits. The Employee shall receive immediate family medical and
dental insurance coverage, life insurance equal to thrice (three times) the
annual base salary, disability insurance and other fringe benefits provided
to full time, non-union employees of the Employer. An auto allowance will
be provided, or alternately, a leased vehicle for company use at a cost not
to exceed $600 per month plus insurance, fuel, and operating maintenance.
5.3 Expenses. The Employer shall reimburse the Employee for reasonable
out-of-pocket expenses incurred by the Employee in fulfilling his duties.
The Employer shall, within its financial means and constraints, provide the
Employee with suitable office facilities, equipment, supplies, and staff.
Section 6. Termination.
6.1 For Cause. The Employer may terminate the Employee's employment at
any time "for cause" with immediate effect upon delivering written notice
to the Employee. For purposes of this Agreement, "for cause" shall
include: (a) embezzlement, theft, larceny, material fraud, or other acts of
dishonesty; (b) material violation by Employee of any of his obligations
under this Agreement; ( c) conviction of or entrance of a plea of guilty or
nolo contendere to a felony or other crime which has or may have a material
adverse effect on the Employee's ability to carry out his duties under this
Agreement or upon the reputation of the Employer; (d) conduct involving
moral turpitude; (e) gross insubordination or repeated insubordination
after written warning by the Chair of the Board; or (f) material and
continuing failure by the Employee to perform duties described in this
Agreement in a quality and professional manner for at least sixty (60) days
after written warning by the Board of Director or its Chair. Upon
termination "for cause", the Employer's sole and exclusive obligation will
be to pay the Employee his compensation earned through the date of
termination, and the Employee shall not be entitled to any compensation
after the date of termination.
6.2 Upon Death. In the event of the Employee's death during the term of
this Agreement, the Employer's sole and exclusive obligation will be to pay
the Employee's spouse, if living, or his estate, if his spouse is not then
living, the Employee's compensation earned through he date of death, plus 3
months base compensation severance.
6.3 Upon Disability. The Employer may terminate the Employee's employment
upon the Employee's total disability. The Employee shall be deemed to be
totally disabled if he is unable to perform his duties under the Agreement
by reason of mental or physical illness or accident, for a period of three
consecutive months. Upon termination by reason of the Employee's
disability, the Employer's sole and exclusive obligation will be to pay the
Employee his compensation earned through the date of termination plus three
months base compensation severance.
<PAGE>
Section 7. Covenant Not to Compete.
7.1 Covenant. For a period of five years from the Effective Date of this
Agreement, and for such period after five years as the Employee continues
to be employed by the Employer, and for a one year period after the
Employee's employment with the Employer has been terminated by either
party, the Employee will not directly or indirectly:
A. enter into or attempt to enter into "Restricted Business" (as
defined below) in the entertainment business;
B. induce or attempt to persuade any former, current or future
employee, agent, manager, consultant, director, or other participant in the
Employer's business to terminate such employment or other relationship in
order to enter into any relationship with the Employee, any business
organization in which the Employee is a participant in any capacity
whatsoever, or any other business organization in competition with the
Employer's business; or
C. use contracts, proprietary information, trade secrets,
confidential information, customer lists, mailing lists, goodwill, or other
intangible property used or useful in connection with the Employer's
business.
7.2 Indirect Activity. The term "indirectly" as used in section 7.1
above, includes acting as a paid or unpaid director, officer, agent,
representative, employee of, or consultant to any enterprise, or acting as
a proprietor of an enterprise, or holding any direct or indirect
participation in any enterprise as an owner, partner, limited partner,
joint venturer, shareholder, or creditor.
7.3 Restricted Business. The term "Restricted Business" means the
entertainment industry. Nevertheless, the Employee may own not more than
five percent of the outstanding equity securities of a corporation that is
engaged in the Restricted Business if the equity securities are listed for
trading on a national stock exchange or is a reporting company under the
Securities Exchange Act of 1934.
Section 8. Severability. The covenants set forth in this Agreement
above shall be construed as a series of separate covenants, one for each
county in each of the states of the United States to which such restriction
applies. If, in any judicial proceeding, a court of competent jurisdiction
shall refuse to enforce any of the separate covenants deemed included in
this Agreement, or shall find that the term or geographical scope of one or
more of the separate covenants is unreasonably broad, the parties shall use
their best good faith efforts to attempt to agree on a valid provision
which shall be a reasonable substitute for the invalid provision. The
reasonableness of the substitute provision shall be considered in light of
the purpose of the covenants and the reasonable prospectable interests of
the Employer and the Employee. The substitute provision shall be
incorporated into this Agreement. If the parties are unable to agree on a
substitute provision, then the invalid or unreasonably broad provision
shall be deemed deleted or modified to the minimum extent necessary to
permit enforcement.
<PAGE>
Section 9. Confidentiality. The Employee acknowledges that he will
develop and be exposed to information that is or will be confidential and
proprietary to the Employer. The information includes customer lists,
marketing plans, pricing data, product plans, software, and other
intangible information. Such information shall be deemed confidential to
the extend not generally known within the trade. The Employee agrees to
make use of such information only in performance of his duties under this
Agreement, to maintain such information in confidence and to disclose the
information only to persons with a need to know.
Section 10. Remedies. The Employee acknowledges that monetary damages
would be inadequate to compensate the Employer for any breach by the
Employee of the covenants set forth in this Agreement. The Employee agrees
that, in addition to other remedies which may be available, the Employer
shall be entitled to obtain injunctive relief against the threatened breach
of this Agreement or the continuation of any breach, or both, without the
necessity of proving actual damages.
Section 11. Waiver. The waiver by the Employer of the breach of any
provision of this Agreement by the Employee shall not operate or be
construed as a waiver of any subsequent breach by the Employee.
Section 12. Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada.
Section 13. Arbitration. If at anytime during the term of this
Agreement any dispute, difference, or disagreement shall arise upon or in
respect of this Agreement, and the meaning and construction thereof, every
such dispute, difference, and disagreement shall be referred to a single
arbiter agreed upon by both parties, or if no single arbiter can be agreed
upon, an arbiter or arbiters shall be selected in accordance with the rules
of the American Arbitration Association (AAA) and such dispute, difference,
or disagreement shall be settled by arbitration in accordance with the then
prevailing commercial rules of the AAA, and judgment upon the award
rendered by the arbiter may be entered in any court having jurisdiction
thereof.
Section 14. Attorney Fees. In the event an arbitration, suit or action
is brought by any party under this Agreement to enforce any of its terms,
or in any appeal therefrom, it is agreed that the prevailing party shall be
entitled to reasonable attorneys fees to be fixed by the arbitrator, trial
court, and/or appellate court.
This Agreement is made and entered this 1st day of May 1998.
Employer: Employee:
Twin Faces East Entertainment Corporation
by
/s/Stanley Teeple /s/Michael Smolanoff
- --------------------------- -------------------------
Stanley L. Teeple, Executive Vice President Michael Smolanoff
Date: May 1, 1998 Date: May 1, 1998
EMPLOYMENT AGREEMENT
This Agreement is made this date, by and between TWIN FACES EAST
ENTERTAINMENT CORPORATION ("Employer") and Stanley L. Teeple ("Employee").
WHEREAS, the Employer is engaged in the business of development of
intellectual and entertainment properties; and
WHEREAS, the Employer desires to retain the services of the Employee in the
capacity as its Executive Vice President, Corporate Secretary, and
Corporate Treasurer.
NOW THEREFORE IT IS AGREED AS FOLLOWS:
Section 1. Employment. The Employer agrees to employ the Employee and
the Employee agrees to accept the employment described in this Agreement.
Section 2. Duties. The Employee shall serve as Executive Vice
President of the Employer, with such duties as are customarily associated
with such position. The Employee shall be responsible for day-to-day
operations, strategic planning, and implementation of the Employer's
business. The Employee shall not be entitled to additional compensation by
reason of service as a director of the Employer or as a fiduciary of an
employee benefit plan of the Employer. The Employee's duties shall include
the following:
Operating as Executive Vice President of the Employer's Corporation as
provided in the By Laws of the Corporation.
Section 3. Extent of Services. The Employee shall devote the majority
of his working time, attention, and energies to the performance of his
duties and shall not be engaged in any competing business activity, whether
or not pursued for gain. The Employee shall at all times faithfully and to
the best of his ability perform his duties under this Agreement. The
duties shall be rendered either at the Employer's offices in southern
California or from his home, or at other place or places of business and at
such times as the needs of the Employer may dictate.
Section 4. Term. The term of this agreement shall begin on May 1,
1998 ("Effective Date") and shall continue for a five year period. The
parties presently anticipate that the employment relationship may continue
beyond this five year term. This Agreement shall not give the Employee and
enforceable right to employment beyond this term.
Section 5. Compensation.
5.1 Base Compensation. The Employee will receive a base salary of
$162,000 per year, payable in accordance with the Employer's standard
payroll procedures. The Employee is eligible for performance based
bonuses, but there is no assurance or expectation that the bonuses will be
paid. Bonuses will be paid, if at all, in the sole discretion of the Board
of Directors.
<PAGE>
5.2 Benefits. The Employee shall receive immediate family medical and
dental insurance, life insurance equal to twice the annual base salary,
disability insurance and other fringe benefits provided to full time, non-
union employees of the Employer. An auto allowance will be provided, or
alternately, a leased vehicle for company use at a cost not to exceed $600
per month plus insurance, fuel, and operating maintenance.
5.3 Expenses. The Employer shall reimburse the Employee for reasonable
out-of-pocket expenses incurred by the Employee in fulfilling his duties.
The Employer shall, within its financial means and constraints, provide the
Employee with suitable office facilities, equipment, supplies, and staff.
Section 6. Termination.
6.1 For Cause. The Employer may terminate the Employee's employment at
any time "for cause" with immediate effect upon delivering written notice
to the Employee. For purposes of this Agreement, "for cause" shall
include: (a) embezzlement, theft, larceny, material fraud, or other acts of
dishonesty; (b) material violation by Employee of any of his obligations
under this Agreement; ( c) conviction of or entrance of a plea of guilty or
nolo contendere to a felony or other crime which has or may have a material
adverse effect on the Employee's ability to carry out his duties under this
Agreement or upon the reputation of the Employer; (d) conduct involving
moral turpitude; (e) gross insubordination or repeated insubordination
after written warning by the Chair of the Board; or (f) material and
continuing failure by the Employee to perform duties described in this
Agreement in a quality and professional manner for at least sixty (60) days
after written warning by the Board of Director or its Chair. Upon
termination "for cause", the Employer's sole and exclusive obligation will
be to pay the Employee his compensation earned through the date of
termination, and the Employee shall not be entitled to any compensation
after the date of termination.
6.2 Upon Death. In the event of the Employee's death during the term of
this Agreement, the Employer's sole and exclusive obligation will be to pay
the Employee's spouse, if living, or his estate, if his spouse is not then
living, the Employee's compensation earned through he date of death, plus 3
months base compensation severance.
6.3 Upon Disability. The Employer may terminate the Employee's employment
upon the Employee's total disability. The Employee shall be deemed to be
totally disabled if he is unable to perform his duties under the Agreement
by reason of mental or physical illness or accident, for a period of three
consecutive months. Upon termination by reason of the Employee's
disability, the Employer's sole and exclusive obligation will be to pay the
Employee his compensation earned through the date of termination plus three
months base compensation severance.
<PAGE>
Section 7. Covenant Not to Compete.
7.1 Covenant. For a period of five years from the Effective Date of this
Agreement, and for such period after five years as the Employee continues
to be employed by the Employer, and for a one year period after the
Employee's employment with the Employer has been terminated by either
party, the Employee will not directly or indirectly:
A. enter into or attempt to enter into "Restricted Business" (as
defined below) in the entertainment business;
B. induce or attempt to persuade any former, current or future
employee, agent, manager, consultant, director, or other participant in the
Employer's business to terminate such employment or other relationship in
order to enter into any relationship with the Employee, any business
organization in which the Employee is a participant in any capacity
whatsoever, or any other business organization in competition with the
Employer's business; or
C. use contracts, proprietary information, trade secrets,
confidential information, customer lists, mailing lists, goodwill, or other
intangible property used or useful in connection with the Employer's
business.
7.2 Indirect Activity. The term "indirectly" as used in section 7.1
above, includes acting as a paid or unpaid director, officer, agent,
representative, employee of, or consultant to any enterprise, or acting as
a proprietor of an enterprise, or holding any direct or indirect
participation in any enterprise as an owner, partner, limited partner,
joint venturer, shareholder, or creditor.
7.3 Restricted Business. The term "Restricted Business" means the
entertainment industry with Mr. Teeple's current ownership of his company
Stan Teeple Inc., d.b.a. Stan Teeple & Associates and EMCI being
exceptions. Nevertheless, the Employee may own not more than five percent
of the outstanding equity securities of a corporation that is engaged in
the Restricted Business, with the above exception noted, if the equity
securities are listed for trading on a national stock exchange or is a
reporting company under the Securities Exchange Act of 1934.
Section 8. Severability. The covenants set forth in this Agreement
above shall be construed as a series of separate covenants, one for each
county in each of the states of the United States to which such restriction
applies. If, in any judicial proceeding, a court of competent jurisdiction
shall refuse to enforce any of the separate covenants deemed included in
this Agreement, or shall find that the term or geographical scope of one or
more of the separate covenants is unreasonably broad, the parties shall use
their best good faith efforts to attempt to agree on a valid provision
which shall be a reasonable substitute for the invalid provision. The
reasonableness of the substitute provision shall be considered in light of
the purpose of the covenants and the reasonable prospectable interests of
the Employer and the Employee. The substitute provision shall be
incorporated into this Agreement. If the parties are unable to agree on a
substitute provision, then the invalid or unreasonably broad provision
shall be deemed deleted or modified to the minimum extent necessary to
permit enforcement.
<PAGE>
Section 9. Confidentiality. The Employee acknowledges that he will
develop and be exposed to information that is or will be confidential and
proprietary to the Employer. The information includes customer lists,
marketing plans, pricing data, product plans, software, and other
intangible information. Such information shall be deemed confidential to
the extend not generally known within the trade. The Employee agrees to
make use of such information only in performance of his duties under this
Agreement, to maintain such information in confidence and to disclose the
information only to persons with a need to know.
Section 10. Remedies. The Employee acknowledges that monetary damages
would be inadequate to compensate the Employer for any breach by the
Employee of the covenants set forth in this Agreement. The Employee agrees
that, in addition to other remedies which may be available, the Employer
shall be entitled to obtain injunctive relief against the threatened breach
of this Agreement or the continuation of any breach, or both, without the
necessity of proving actual damages.
Section 11. Waiver. The waiver by the Employer of the breach of any
provision of this Agreement by the Employee shall not operate or be
construed as a waiver of any subsequent breach by the Employee.
Section 12. Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada.
Section 13. Arbitration. If at anytime during the term of this
Agreement any dispute, difference, or disagreement shall arise upon or in
respect of this Agreement, and the meaning and construction thereof, every
such dispute, difference, and disagreement shall be referred to a single
arbiter agreed upon by both parties, or if no single arbiter can be agreed
upon, an arbiter or arbiters shall be selected in accordance with the rules
of the American Arbitration Association (AAA) and such dispute, difference,
or disagreement shall be settled by arbitration in accordance with the then
prevailing commercial rules of the AAA, and judgment upon the award
rendered by the arbiter may be entered in any court having jurisdiction
thereof.
Section 14. Attorney Fees. In the event an arbitration, suit or action
is brought by any party under this Agreement to enforce any of its terms,
or in any appeal therefrom, it is agreed that the prevailing party shall be
entitled to reasonable attorneys fees to be fixed by the arbitrator, trial
court, and/or appellate court.
This Agreement is made and entered this 1st day of May 1998.
Employer: Employee:
Twin Faces East Entertainment Corporation
by
/s/Michael Smolanoff /s/Stanley L. Teeple
- ------------------------- --------------------------
Michael Smolanoff, President Stanley L. Teeple
Date: May 1, 1998 Date: May 1, 1998
1998 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Twin Faces East Entertainment
Corporation 1998 Stock Option Plan (the "Plan") is to strengthen Twin Faces
East Entertainment Corporation, a Nevada corporation ("Corporation"), by
providing to employees, officers, directors, consultants and independent
contractors of the Corporation or any of its subsidiaries (including
dealers, distributors, and other business entities or persons providing
services on behalf of the Corporation or any of its subsidiaries) added
incentive for high levels of performance and unusual efforts to increase
the earnings of the Corporation. The Plan seeks to accomplish this purpose
by enabling specified persons to purchase shares of the common stock of the
Corporation, $.001 par value, thereby increasing their proprietary interest
in the Corporation's success and encouraging them to remain in the employ
or service of the Corporation.
2. CERTAIN DEFINITIONS. As used in this Plan, the following words
and phrases shall have the respective meanings set forth below, unless the
context clearly indicates a contrary meaning:
2.1 "Board of Directors": The Board of Directors of the
Corporation.
2.2 "Committee": The Committee which shall administer the Plan
shall consist of the entire Board of Directors.
<PAGE>
2.3 "Fair Market Value Per Share": The fair market value per
share of the Shares as determined by the Committee in good faith. The
Committee is authorized to make its determination as to the fair market
value per share of the Shares on the following basis: (i) if the Shares
are traded only otherwise than on a securities exchange and are not quoted
on the National Association of Securities Dealers' Automated Quotation
System ("NASDAQ"), but are quoted on the bulletin board or in the "pink
sheets" published by the National Daily Quotation Bureau, the greater of
(a) the average of the mean between the average daily bid and average daily
asked prices of the Shares during the thirty (30) day period preceding the
date of grant of an Option, as quoted on the bulletin board or in the "pink
sheets" published by the National Daily Quotation Bureau, or (b) the mean
between the average daily bid and average daily asked prices of the Shares
on the date of grant, as published on the bulletin board or in such "pink
sheets;" (ii) if the Shares are traded only otherwise than on a securities
exchange and are quoted on NASDAQ, the greater of (a) the average of the
mean between the closing bid and closing asked prices of the Shares during
the thirty (30) day period preceding the date of grant of an Option, as
reported by the Wall Street Journal and (b) the mean between the closing
bid and closing asked prices of the Shares on the date of grant of an
Option, as reported by the Wall Street Journal; (iii) if the Shares are
admitted to trading on a securities exchange, the greater of (a) the
average of the daily closing prices of the Shares during the ten (10)
trading days preceding the date of grant of an Option, as quoted in the
Wall Street Journal, or (b) the daily closing price of the Shares on the
date of grant of an Option, as quoted in the Wall Street Journal; or (iv)
if the Shares are traded only otherwise than as described in (i), (ii) or
(iii) above, or if the Shares are not publicly traded, the value determined
by the Committee in good faith based upon the fair market value as
determined by completely independent and well qualified experts.
<PAGE>
2.4 "Option": A stock option granted under the Plan.
2.5 "Incentive Stock Option": An Option intended to qualify for
treatment as an incentive stock option under Code Sections 421 and 422A,
and designated as an Incentive Stock Option.
2.6 "Nonqualified Option": An Option not qualifying as an
Incentive Stock Option.
2.7 "Optionee": The holder of an Option.
2.8 "Option Agreement": The document setting forth the terms
and conditions of each Option.
2.9 "Shares": The shares of common stock $.001 par value of the
Corporation. 2.10 "Code": The Internal Revenue Code of 1986, as
amended.
2.11 "Subsidiary": Any corporation of which fifty percent (50%)
or more of total combined voting power of all classes of stock of such
corporation is owned by the Corporation or another Subsidiary (as so
defined).
3. ADMINISTRATION OF PLAN.
3.1 In General. This Plan shall be administered by the
Committee. Any action of the Committee with respect to administration of
the Plan shall be taken pursuant to (i) a majority vote at a meeting of the
Committee (to be documented by minutes), or (ii) the unanimous written
consent of its members.
3.2 Authority. Subject to the express provisions of this Plan,
the Committee shall have the authority to: (i) construe and interpret the
Plan, decide all questions and settle all controversies and disputes which
<PAGE>
may arise in connection with the Plan and to define the terms used therein;
(ii) prescribe, amend and rescind rules and regulations relating to
administration of the Plan; (iii) determine the purchase price of the
Shares covered by each Option and the method of payment of such price,
individuals to whom, and the time or times at which, Options shall be
granted and exercisable and the number of Shares covered by each Option;
(iv) determine the terms and provisions of the respective Option Agreements
(which need not be identical); (v) determine the duration and purposes of
leaves of absence which may be granted to participants without constituting
a termination of their employment for purposes of the Plan; and (vi) make
all other determinations necessary or advisable to the administration of
the Plan. Determinations of the Committee on matters referred to in this
Section 3 shall be conclusive and binding on all parties howsoever
concerned. With respect to Incentive Stock Options, the Committee shall
administer the Plan in compliance with the provisions of Code Section 422A
as the same may hereafter be amended from time to time. No member of the
Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any Option.
4. ELIGIBILITY AND PARTICIPATION.
4.1 In General. Only officers, employees and directors who are
also employees of the Corporation or any Subsidiary shall be eligible to
receive grants of Incentive Stock Options. Officers, employees and
directors (whether or not they are also employees) of the Corporation or
<PAGE>
any Subsidiary, as well as consultants, independent contractors or other
service providers of the Corporation or any Subsidiary shall be eligible to
receive grants of Nonqualified Options. Within the foregoing limits, the
Committee, from time to time, shall determine and designate persons to whom
Options may be granted. All such designations shall be made in the
absolute discretion of the Committee and shall not require the approval of
the stockholders. In determining (i) the number of Shares to be covered by
each Option, (ii) the purchase price for such Shares and the method of
payment of such price (subject to the other sections hereof), (iii) the
individuals of the eligible class to whom Options shall be granted,
(iv) the terms and provisions of the respective Option Agreements, and
(v) the times at which such Options shall be granted, the Committee shall
take into account such factors as it shall deem relevant in connection with
accomplishing the purpose of the Plan as set forth in Section 1. An
individual who has been granted an Option may be granted an additional
Option or Options if the Committee shall so determine. No Option shall be
granted under the Plan after June 11, 2008, but Options granted before such
date may be exercisable after such date.
4.2 Certain Limitations. In no event shall Incentive Stock
Options be granted to an Optionee such that the sum of (i) aggregate fair
market value (determined at the time the Incentive Stock Options are
granted) of the Shares subject to all Options granted under the Plan which
are exercisable for the first time during the same calendar year, plus (ii)
the aggregate fair market value (determined at the time the options are
granted) of all stock subject to all other incentive stock options granted
to such Optionee by the Corporation, its parent and Subsidiaries which are
exercisable for the first time during such calendar year, exceeds One
Hundred Thousand Dollars ($100,000). For purposes of the immediately
<PAGE>
preceding sentence, fair market value shall be determined as of the date of
grant based on the Fair Market Value Per Share as determined pursuant to
Section 2.3.
5. AVAILABLE SHARES AND ADJUSTMENTS UPON CHANGES IN
CAPITALIZATION.
5.1 Shares. Subject to adjustment as provided in Section 5.2
below, the total number of Shares to be subject to Options granted pursuant
to this Plan shall not exceed Five Hundred Thousand (500,000) Shares.
Shares subject to the Plan may be either authorized but unissued shares or
shares that were once issued and subsequently reacquired by the
Corporation; the Committee shall be empowered to take any appropriate
action required to make Shares available for Options granted under this
Plan. If any Option is surrendered before exercise or lapses without
exercise in full or for any other reason ceases to be exercisable, the
Shares reserved therefore shall continue to be available under the Plan.
5.2 Adjustments. As used herein, the term "Adjustment Event"
means an event pursuant to which the outstanding Shares of the Corporation
are increased, decreased or changed into, or exchanged for a different
number or kind of shares or securities, without receipt of consideration by
the Corporation, through reorganization, merger, recapitalization,
reclassification, stock split, reverse stock split, stock dividend, stock
consolidation or otherwise. Upon the occurrence of an Adjustment Event,
(i) appropriate and proportionate adjustments shall be made to the number
and kind of shares and exercise price for the shares subject to the Options
which may thereafter be granted under this Plan, (ii) appropriate and
<PAGE>
proportionate adjustments shall be made to the number and kind of and
exercise price for the shares subject to the then outstanding Options
granted under this Plan, and (iii) appropriate amendments to the Option
Agreements shall be executed by the Corporation and the Optionees if the
Committee determines that such an amendment is necessary or desirable to
reflect such adjustments. If determined by the Committee to be
appropriate, in the event of an Adjustment Event which involves the
substitution of securities of a corporation other than the Corporation, the
Committee shall make arrangements for the assumptions by such other
corporation of any Options then or thereafter outstanding under the Plan.
Notwithstanding the foregoing, such adjustment in an outstanding Option
shall be made without change in the total exercise price applicable to the
unexercised portion of the Option, but with an appropriate adjustment to
the number of shares, kind of shares and exercise price for each share
subject to the Option. The determination by the Committee as to what
adjustments, amendments or arrangements shall be made pursuant to this
Section 5.2, and the extent thereof, shall be final and conclusive. No
fractional Shares shall be issued under the Plan on account of any such
adjustment or arrangement.
6. TERMS AND CONDITIONS OF OPTIONS.
6.1 Intended Treatment as Incentive Stock Options. Incentive
Stock Options granted pursuant to this Plan are intended to be "incentive
stock options" to which Code Sections 421 and 422A apply, and the Plan
shall be construed and administered to implement that intent. If all or
any part of an Incentive Stock Option shall not be an "incentive stock
option" subject to Sections 421 or 422A of the Code, such Option shall
<PAGE>
nevertheless be valid and carried into effect. All Options granted under
this Plan shall be subject to the terms and conditions set forth in this
Section 6 (except as provided in Section 5.2) and to such other terms and
conditions as the Committee shall determine to be appropriate to accomplish
the purpose of the Plan as set forth in Section 1.
6.2 Amount and Payment of Exercise Price.
6.2.1 Exercise Price. The exercise price per Share for
each Share which the Optionee is entitled to purchase under a Nonqualified
Option shall be determined by the Committee but shall not be less than
eighty-five percent (85%) of the Fair Market Value Per Share on the date of
the grant of the Nonqualified Option. The exercise price per Share for
each Share which the Optionee is entitled to purchase under an Incentive
Stock Option shall be determined by the Committee but shall not be less
than the Fair Market Value Per Share on the date of the grant of the
Incentive Stock Option; provided, however, that the exercise price shall
not be less than one hundred ten percent (110%) of the Fair Market Value
Per Share on the date of the grant of the Incentive Stock Option in the
case of an individual then owning (within the meaning of Code Section
425(d)) more than ten percent (10%) of the total combined voting power of
all classes of stock of the Corporation or of its parent or Subsidiaries.
6.2.2 Payment of Exercise Price. The consideration to
be paid for the Shares to be issued upon exercise of an Option, including
the method of payment, shall be determined by the Committee and may consist
of promissory notes, shares of the common stock of the Corporation or such
other consideration and method of payment for the Shares as may be
permitted under applicable state and federal laws.
<PAGE>
6.3 Exercise of Options.
6.3.1 Each Option granted under this Plan shall be
exercisable at such times and under such conditions as may be determined by
the Committee at the time of the grant of the Option and as shall be
permissible under the terms of the Plan; provided, however, in no event
shall an Option be exercisable after the expiration of ten (10) years from
the date it is granted, and in the case of an Optionee owning (within the
meaning of Code Section 425(d)), at the time an Incentive Stock Option is
granted, more than ten percent (10%) of the total combined voting power of
all classes of stock of the Corporation or of its parent or Subsidiaries,
such Incentive Stock Option shall not be exercisable later than five (5)
years after the date of grant.
6.3.2 An Optionee may purchase less than the total
number of Shares for which the Option is exercisable, provided that a
partial exercise of an Option may not be for less than One Hundred (100)
Shares and shall not include any fractional shares.
6.4 Nontransferability of Options. All Options granted under
this Plan shall be nontransferable, either voluntarily or by operation of
law, otherwise than by will or the laws of descent and distribution, and
shall be exercisable during the Optionee's lifetime only by such Optionee.
6.5 Effect of Termination of Employment or Other Relationship.
Except as otherwise determined by the Committee in connection with the
grant of Nonqualified Options, the effect of termination of an Optionee's
employment or other relationship with the Corporation on such Optionee's
rights to acquire Shares pursuant to the Plan shall be as follows:
<PAGE>
6.5.1 Termination for Other than Disability or Cause.
If an Optionee ceases to be employed by, or ceases to have a relationship
with, the Corporation for any reason other than for disability or cause,
such Optionee's Options shall expire not later than three (3) months
thereafter. During such three (3) month period and prior to the expiration
of the Option by its terms, the Optionee may exercise any Option granted to
him, but only to the extent such Options were exercisable on the date of
termination of his employment or relationship and except as so exercised,
such Options shall expire at the end of such three (3) month period unless
such Options by their terms expire before such date. The decision as to
whether a termination for a reason other than disability, cause or death
has occurred shall be made by the Committee, whose decision shall be final
and conclusive, except that employment shall not be considered terminated
in the case of sick leave or other bona fide leave of absence approved by
the Corporation.
6.5.2 Disability. If an Optionee ceases to be employed
by, or ceases to have a relationship with, the Corporation by reason of
disability (within the meaning of Code Section 22(e)(3)), such Optionee's
Options shall expire not later than one (1) year thereafter. During such
one (1) year period and prior to the expiration of the Option by its terms,
the Optionee may exercise any Option granted to him, but only to the extent
such Options were exercisable on the date the Optionee ceased to be
employed by, or ceased to have a relationship with, the Corporation by
reason of disability and except as so exercised, such Options shall expire
at the end of such one (1) year period unless such Options by their terms
expire before such date. The decision as to whether a termination by
<PAGE>
reason of disability has occurred shall be made by the Committee, whose
decision shall be final and conclusive.
6.5.3 Termination for Cause. If an Optionee's
employment by, or relationship with, the Corporation is terminated for
cause, such Optionee's Option shall expire immediately; provided, however,
the Committee may, in its sole discretion, within thirty (30) days of such
termination, waive the expiration of the Option by giving written notice of
such waiver to the Optionee at such Optionee's last known address. In the
event of such waiver, the Optionee may exercise the Option only to such
extent, for such time, and upon such terms and conditions as if such
Optionee had ceased to be employed by, or ceased to have a relationship
with, the Corporation upon the date of such termination for a reason other
than disability, cause, or death. Termination for cause shall include
termination for malfeasance or gross misfeasance in the performance of
duties or conviction of illegal activity in connection therewith or any
conduct detrimental to the interests of the Corporation. The determination
of the Committee with respect to whether a termination for cause has
occurred shall be final and conclusive.
6.6 Withholding of Taxes. As a condition to the exercise, in
whole or in part, of any Options the Board of Directors may in its sole
discretion require the Optionee to pay, in addition to the purchase price
of the Shares covered by the Option an amount equal to any Federal, state
or local taxes that may be required to be withheld in connection with the
exercise of such Option.
<PAGE>
6.7 No Rights to Continued Employment or Relationship.
Nothing contained in this Plan or in any Option Agreement shall obligate
the Corporation to employ or have another relationship with any Optionee
for any period or interfere in any way with the right of the Corporation to
reduce such Optionee's compensation or to terminate the employment of or
relationship with any Optionee at any time.
6.8 Time of Granting Options. The time an Option is granted,
sometimes referred to herein as the date of grant, shall be the day the
Corporation executes the Option Agreement; provided, however, that if
appropriate resolutions of the Committee indicate that an Option is to be
granted as of and on some prior or future date, the time such Option is
granted shall be such prior or future date.
6.9 Privileges of Stock Ownership. No Optionee shall be
entitled to the privileges of stock ownership as to any Shares not actually
issued and delivered to such Optionee. No Shares shall be purchased upon
the exercise of any Option unless and until, in the opinion of the
Corporation's counsel, any then applicable requirements of any laws or
governmental or regulatory agencies having jurisdiction and of any
exchanges upon which the stock of the Corporation may be listed shall have
been fully complied with.
6.10 Securities Laws Compliance. The Corporation will diligently
endeavor to comply with all applicable securities laws before any Options
are granted under the Plan and before any Shares are issued pursuant to
Options. Without limiting the generality of the foregoing, the Corporation
may require from the Optionee such investment representation or such
agreement, if any, as counsel for the Corporation may consider necessary or
advisable in order to comply with the Securities Act of 1933 as then in
effect, and may require that the Optionee agree that any sale of the
Shares will be made only in such manner as is permitted by the Committee.
The Committee in its discretion may cause the Shares underlying the Options
to be registered under the Securities Act of 1933, as amended, by the
filing of a Form S-8 Registration Statement covering the Options and Shares
underlying such Options. Optionee shall take any action reasonably
requested by the Corporation in connection with registration or
qualification of the Shares under federal or state securities laws.
<PAGE>
6.11 Option Agreement. Each Incentive Stock Option and
Nonqualified Option granted under this Plan shall be evidenced by the
appropriate written Stock Option Agreement ("Option Agreement") executed by
the Corporation and the Optionee in a form substantially the same as the
appropriate form of Option Agreement attached as Exhibit I or II hereto
(and made a part hereof by this reference) and shall contain each of the
provisions and agreements specifically required to be contained therein
pursuant to this Section 6, and such other terms and conditions as are
deemed desirable by the Committee and are not inconsistent with the purpose
of the Plan as set forth in Section 1.
7. PLAN AMENDMENT AND TERMINATION.
7.1 Authority of Committee. The Committee may at any time
discontinue granting Options under the Plan or otherwise suspend, amend or
terminate the Plan and may, with the consent of an Optionee, make such
modification of the terms and conditions of such Optionee's Option as it
shall deem advisable; provided that, except as permitted under the
provisions of Section 5.2, the Committee shall have no authority to make
any amendment or modification to this Plan or any outstanding Option
thereunder which would: (i) increase the maximum number of shares which
may be purchased pursuant to Options granted under the Plan, either in the
aggregate or by an Optionee (except pursuant to Section 5.2); (ii) change
the designation of the class of the employees eligible to receive Incentive
Stock Options; (iii) extend the term of the Plan or the maximum Option
period thereunder; (iv) decrease the minimum Incentive Stock Option price
or permit reductions of the price at which shares may be purchased for
Incentive Stock Options granted under the Plan; or (v) cause Incentive
Stock Options issued under the Plan to fail to meet the requirements of
<PAGE>
incentive stock options under Code Section 422A. An amendment or
modification made pursuant to the provisions of this Section 7 shall be
deemed adopted as of the date of the action of the Committee effecting such
amendment or modification and shall be effective immediately, unless
otherwise provided therein, subject to approval thereof (1) within twelve
(12) months before or after the effective date by stockholders of the
Corporation holding not less than a majority vote of the voting power of
the Corporation voting in person or by proxy at a duly held stockholders
meeting when required to maintain or satisfy the requirements of Code
Section 422A with respect to Incentive Stock Options, and (2) by any
appropriate governmental agency. No Option may be granted during any
suspension or after termination of the Plan.
7.2 Ten (10) Year Maximum Term. Unless previously terminated by
the Committee, this Plan shall terminate on June 11, 2008, and no Options
shall be granted under the Plan thereafter.
7.3 Effect on Outstanding Options. Amendment, suspension or
termination of this Plan shall not, without the consent of the Optionee,
alter or impair any rights or obligations under any Option theretofore
granted.
8. EFFECTIVE DATE OF PLAN. This Plan shall be effective as of June
11, 1998, the date the Plan was adopted by the Board of Directors, subject
to the approval of the Plan by the affirmative vote of a majority of the
issued and outstanding Shares of common stock of the Corporation
represented and voting at a duly held meeting at which a quorum is present
within twelve (12) months thereafter. The Committee shall be authorized
and empowered to make grants of Options pursuant to this Plan prior to such
approval of this Plan by the stockholders; provided, however, in such event
the Option grants shall be made subject to the approval of both this Plan
and such Option grants by the stockholders in accordance with the
provisions of this Section 8.
<PAGE>
9. MISCELLANEOUS PROVISIONS.
9.1 Exculpation and Indemnification. The Corporation shall
indemnify and hold harmless the Committee from and against any and all
liabilities, costs and expenses incurred by such persons as a result of any
act, or omission to act, in connection with the performance of such
persons' duties, responsibilities and obligations under the Plan, other
than such liabilities, costs and expenses as may result from the gross
negligence, bad faith, willful conduct and/or criminal acts of such
persons.
9.2 Governing Law. The Plan shall be governed and construed in
accordance with the laws of the State of Nevada and the Code.
9.3 Compliance with Applicable Laws. The inability of the
Corporation to obtain from any regulatory body having jurisdiction
authority deemed by the Corporation's counsel to be necessary to the lawful
issuance and sale of any Shares upon the exercise of an Option shall
relieve the Corporation of any liability in respect of the non-issuance or
sale of such Shares as to which such requisite authority shall not have
been obtained.
As approved by the Board of Directors of
TWIN FACES EAST ENTERTAINMENT
CORPORATION on June 11, 1998.
By:/s/Stanley Teeple
________________________________
Stanley L. Teeple, Secretary
TWIN FACES EAST, INC.
ASSET & PROPERTY PROFILE
CONFIDENTIAL
1- Read SpeakT technology to be launched with Tales from a Rabbit
JournalT but also available for:
* Education
* Animated
* Language Training
* Foreign Films
* Subtitle Replacement
2- Tales From A Rabbit JournalT (Pro Forma attached):
* Need $500K for pilot
* Fox Kids Agreement to show series (Channel America)
* Video distribution agreements in place (Congress Home Video)
* Audio tape opportunities
* Book and TV scripts written
* Character merchandise licensing
* Artists View Entertainment (No. Hollywood) agreement
3- Einstein products:
* Limited Edition Photo Book available for Einstein Medical College
fundraiser
* Auction 16 mm film (Pioneer Auction)
* Retain specialty market licensing rights
* Jewish National University
* PBS Documentary - need $300 K to produce
4- Hidden Treasure of the WorldT
* PBS or National Geographic Series
* Video rights via TV sales
* St. Lavra story - ownership
<PAGE>
5- Apparel line of Dog & Cat items
* T-Shirts and hats
* Ties
* Licensing opportunities
6- CartoonvelopesT line of stationery and envelopes for kids
* Sold into Woolworths
* Donation to St. Jude's Hospital for endorsement
* Hospital gifts - florists - gift shops
* Character on hospital garments gowns etc.
* J.C. Penny's carry line
* Tie to Rabbit Promotion
7- Jungle BunchT animated cartoon series
* Cable series
* Video opportunities
* Licensing opportunities
8- BixsbeeT animated stories
* Cable series
* Video opportunities
* Licensing opportunities
* CD ROM interactive game
* Mall Kiosk to place child into story
9- The Town That Arrested Santa ClausT
* One hour animated made for TV story
* Children book sales
<PAGE>
BILL OF SALE
I, MICHAEL SMOLANOFF, of Ocean Grove, New Jersey, in consideration of
1,764,000 shares of common stock of TWIN FACES EAST ENTERTAINMENT
CORPORATION, a Nevada Corporation, receipt of which is hereby acknowledged,
has sold and assigned and by this Bill of Sale does grant, assign and set
over to TWIN FACES EAST ENTERTAINMENT CORPORATION, a Nevada Corporation,
all of his right, title and interest in and to those certain assets more
particularly described on Exhibit "A" attached hereto and made a part
hereof by reference.
To have and to hold the same unto TWIN FACES EAST ENTERTAINMENT
CORPORATION, its representatives, successors and assigns forever.
The undersigned hereby covenants that he is the lawful owner of said
goods, free from the rightful claims of others and that he shall defend
title to said goods against each and every person and persons whomsoever.
IN WITNESS WHEREOF, I have hereinafter set my hand this 6th day of
July, 1998
/s/ Michael Smolanoff
----------------------------
MICHAEL SMOLANOFF
<PAGE>
EXHIBIT "A"
To Bill of Sale
from
Michael Smolanoff
to
Twin Faces East Entertainment Corporation
1- READSPEAK
2- PAGES FROM A RABBIT JOURNAL
3- EINSTEIN FILM
4- HIDDEN TREASURES OF THE WORLD (ST. LAURA)
5- CARTOONVELOPES
6- THE JUNGLE BUNCH
7- BIXBEE
8- THE TOWN THAT ARRESTED SANTA CLAUS
9- DISTRIBUTION AGREEMENT: CONGRESS HOME VIDEO
10- DISTRIBUTION AGREEMENT: CHANNEL AMERICA
11- DISTRIBUTION AGREEMENT: ARTIST VIEW ENTERTAINMENT
12-
13-
14-
15-
/s/ Michael Smolanoff 7/6/98
- ------------------------------ ----------------------
Michael Smolanoff, President Date
<PAGE>
GENERAL ASSIGNMENT
I, Michael Smolanoff,
Individual (title)
-----------------------------------------------
of (company),
hereby represent that I have clear and unconditional title to the asset,
contract, agreement, or property described below and confer such asset or
property free of any encumbrance or lien to TWIN FACES EAST ENTERTAINMENT
CORPORATION.
Description of asset, contract, agreement or property:
READSPEAK PRODUCT
/s/Michael Smolanoff
Michael Smolanoff Company Name
July 6, 1998
Title Date
<PAGE>
GENERAL ASSIGNMENT
I, Michael Smolanoff,
President (title)
of American Entertainment International (company),
hereby represent that I have clear and unconditional title to the asset,
contract, agreement, or property described below and confer such asset or
property free of any encumbrance or lien to TWIN FACES EAST ENTERTAINMENT
CORPORATION.
Description of asset, contract, agreement or property:
"Pages From a Rabbit Journal" book/music and characters created by Michael
Smolanoff.
I own 100% of American Entertainment a NJ Corporation
/s/Michael Smolanoff American Entertainment International
Michael Smolanoff Company Name
President July 6, 1998
Title Date
<PAGE>
GENERAL ASSIGNMENT
I, Michael Smolanoff,
President (title)
of Panther Mountain Entertainment (company),
hereby represent that I have clear and unconditional title to the asset,
contract, agreement, or property described below and confer such asset or
property free of any encumbrance or lien to TWIN FACES EAST ENTERTAINMENT
CORPORATION.
Description of asset, contract, agreement or property:
Original Film of Albert Einstein from 1933/34.
I am the sole owner of Panther Mountain Entertainment
/s/Michael Smolanoff Panther Mountain Entertainment
- ------------------------- -------------------------------
Michael Smolanoff Company Name
July 6, 1998
Title Date
<PAGE>
GENERAL ASSIGNMENT
I, Michael Smolanoff,
President (title)
of American Entertainment International (company),
hereby represent that I have clear and unconditional title to the asset,
contract, agreement, or property described below and confer such asset or
property free of any encumbrance or lien to TWIN FACES EAST ENTERTAINMENT
CORPORATION.
Description of asset, contract, agreement or property:
St. Laura project
I am the sole owner of American Entertainment
/s/Michael Smolanoff American Entertainment International
- -------------------- --------------------------------------
Michael Smolanoff Company Name
President July 6, 1998
- ------------------------- ----------------------
Title Date
<PAGE>
GENERAL ASSIGNMENT
I, Michael Smolanoff,
President (title)
of Real To Reel Production (company),
hereby represent that I have clear and unconditional title to the asset,
contract, agreement, or property described below and confer such asset or
property free of any encumbrance or lien to TWIN FACES EAST ENTERTAINMENT
CORPORATION.
Description of asset, contract, agreement or property:
Cartoonvelopes - creative stationary for children
I am the sole owner of Real To Reel Productions
/s/Michael Smolanoff Real To Reel Productions
- ------------------------- ----------------------------
Michael Smolanoff Company Name
President July 6, 1998
- --------------------- -------------------------
Title Date
<PAGE>
GENERAL ASSIGNMENT
I, Michael Smolanoff,
President (title)
of American Entertainment International (company),
hereby represent that I have clear and unconditional title to the asset,
contract, agreement, or property described below and confer such asset or
property free of any encumbrance or lien to TWIN FACES EAST ENTERTAINMENT
CORPORATION.
Description of asset, contract, agreement or property:
The Jungle Bunch - stories for animation.
I am the sole owner of American Entertainment International
/s/Michael Smolanoff American Entertainment International
- ------------------------ ------------------------------------
Michael Smolanoff Company Name
President July 6, 1998
- --------------------- --------------------------
Title Date
<PAGE>
GENERAL ASSIGNMENT
I, Michael Smolanoff,
President (title)
of American Entertainment International (company),
hereby represent that I have clear and unconditional title to the asset,
contract, agreement, or property described below and confer such asset or
property free of any encumbrance or lien to TWIN FACES EAST ENTERTAINMENT
CORPORATION.
Description of asset, contract, agreement or property:
Bixbee - a CD ROM game and animation
I am the sole owner of American Entertainment International
/s/Michael Smolanoff American Entertainment International
- ------------------------- -------------------------------------
Michael Smolanoff Company Name
President July 6, 1998
- --------------------- -----------------------------
Title Date
<PAGE>
GENERAL ASSIGNMENT
I, Michael Smolanoff,
President (title)
of American Entertainment International (company),
hereby represent that I have clear and unconditional title to the asset,
contract, agreement, or property described below and confer such asset or
property free of any encumbrance or lien to TWIN FACES EAST ENTERTAINMENT
CORPORATION.
Description of asset, contract, agreement or property:
The Town that Arrested Santa Claus
I am the writer and composer of this project.
I am the sole owner of the company.
/s/Michael Smolanoff American Entertainment International
- -------------------------- ------------------------------------
Michael Smolanoff Company Name
President July 6, 1998
- ------------------- --------------------------
Title Date
<PAGE>
GENERAL ASSIGNMENT
I, Michael Smolanoff,
President (title)
of American Entertainment International (company),
hereby represent that I have clear and unconditional title to the asset,
contract, agreement, or property described below and confer such asset or
property free of any encumbrance or lien to TWIN FACES EAST ENTERTAINMENT
CORPORATION.
Description of asset, contract, agreement or property:
Distribution agreement for Pages From a Rabbit Journal with Nightwing
Entertainment Group.
I am the sole owner of American Entertainment
Re: Congress Home Video
/s/Michael Smolanoff American Entertainment International
- ------------------------ -------------------------------------
Michael Smolanoff Company Name
President July 6, 1998
- ----------------------- ------------------------
Title Date
<PAGE>
GENERAL ASSIGNMENT
I, Michael Smolanoff,
President (title)
of American Entertainment International (company),
hereby represent that I have clear and unconditional title to the asset,
contract, agreement, or property described below and confer such asset or
property free of any encumbrance or lien to TWIN FACES EAST ENTERTAINMENT
CORPORATION.
Description of asset, contract, agreement or property:
Distribution agreement for Pages From a Rabbit Journal with Nightwing
Entertainment Group.
I am the sole owner of American Entertainment
Re: Channel America
/s/Michael Smolanoff American Entertainment International
- ------------------------- --------------------------------------
Michael Smolanoff Company Name
President July 6, 1998
- ---------------------- ------------------------
Title Date
<PAGE>
GENERAL ASSIGNMENT
I, Michael Smolanoff,
President (title)
of Panther Mountain Entertainment (company),
hereby represent that I have clear and unconditional title to the asset,
contract, agreement, or property described below and confer such asset or
property free of any encumbrance or lien to TWIN FACES EAST ENTERTAINMENT
CORPORATION.
Description of asset, contract, agreement or property:
Pages From a Rabbit Journal distribution agreement.
I am the sole owner of Panther Mountain Entertainment
/s/Michael Smolanoff Panther Mountain Entertainment
- ------------------------- ---------------------------------
Michael Smolanoff Company Name
President July 6, 1998
- -------------------- --------------------------
Title Date
Independent Auditors' Consent
We consent to the incorporation in the Registration Statement of Twin Faces
East Entertainment Corporation on Form 10-SB of our report dated February
9, 1999, except for Note 7 which is as of February 15, 1999.
Grobstein, Horwath & Company LLP
Sherman Oaks, California
February 18, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 5,578
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,578
<PP&E> 1,102
<DEPRECIATION> 73
<TOTAL-ASSETS> 92,232
<CURRENT-LIABILITIES> 172,548
<BONDS> 0
0
0
<COMMON> 3,411
<OTHER-SE> 208,022
<TOTAL-LIABILITY-AND-EQUITY> 92,232
<SALES> 0
<TOTAL-REVENUES> 487
<CGS> 0
<TOTAL-COSTS> 292,236
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (291,749)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (291,749)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (291,749)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)
</TABLE>
