UNITED STATES
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
Digital Music Creations, Inc.
(Name of Small Business Issuer in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
88-0406157
(I.R.S. Employer Identification Number)
2209 Fawn Ridge Street, Las Vegas, Nevada 89134
(Address of principal executive offices) (zip code)
Issuer's telephone number: (702)341-9826
Securities to be registered under section 12(b) of the Act:
Title of Each Class Name on each exchange on which
to be so registered each class is to be registered
- ----------------------- ------------------------------
- ----------------------- ------------------------------
Securities to be registered under section 12(g) of the Act:
Common Stock, $0.001 par value per share, 20,000,000 shares
authorized, 885,100 issued and outstanding as of March 31,
1999.
<PAGE>
<TABLE>
[DESCRIPTION]TABLE OF CONTENTS
<CAPTION>TABLE OF CONTENTS
<S> <C> <C>
Page
Part I 3
Item 1. Description of Business 3
Item 2. Management's Discussion and Plan of Operation 7
Item 3. Description of Property 8
Item 4. Security Ownership of Management and Others and
Certain Security Holders 8
Item 5. Directors, Executives, Officers and Significant
Employees 9
Item 6. Executive Compensation 11
Item 7. Certain Relationships and Related Transactions 11
Part II 12
Item 1. Legal Proceedings 12
Item 2. Market for Common Equity and Related Stockholder
Matters 12
Item 3. Recent Sales of Unregistered Securities 13
Item 4. Description of Securities 13
Item 5. Indemnification of Directors and Officers 14
Part F/S 16
Item 1. Financial Statements 16
Item 2. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure 16
Part III 17
Item 1. Index to Exhibits 17
Item 2. Description of Exhibits 20
</TABLE>
<PAGE>
Part I
Item 1. Description of Business
A. Business Development and Summary
Digital Music Creations, Inc. ("DMC" or the "Company"),
a Nevada corporation incorporated on September 29, 1998, is a
developmental stage company with a principal business objective
toof design, develop, and marketing interactive files software for the
control and use of sound on personal computers. The Company's
products will be designed tothat adds music, voice, and other audio
content to a variety of PC environments. At the time of this filing, the
Company has completed the development of its website. The Company, however,
does not have any customers, nor its own products at the design, development, or
marketing stage. The company is filing this Form 10-SB voluntarily with the
intention of establishing the fully reporting status with the SEC. The fully
reporting status with the SEC is a necessary step in accomplishing the Company's
goal of having its stock listed on the OTCBB in the future. Consequently, the
Company will continue voluntarily to file all necessary reports and forms as
required by existing legislation and the SEC rules.
The Company plans to enter a growing and highly-competitive market.
On the demand side,Since 1986, the market for interactive files software for
the control and use of sound on personal computers has expanded from a small
segment of computers used by hobbyists to virtually every computer shipped by
all systems manufacturers. In addition, the growth of the Internet has
accelerated the growth of this market and has created the facility through
which sound, voice messages and music can be used to enhance communications
sent world-wide. On the supply side, several computer audio development tools
are available from various vendors. Additionally, actual audio files are
available from a variety of sources including the World Wide Web, which is
becoming the primary channel of distribution of such products.
The Company believes that it may have an advantage over its competitors in this
market because it will offer a more versatile product: unlike most competitors'
products, the company's software will support several widespread computer audio
formats as opposed to a single format; market its products aggressively but
selectively, using a client-tracking database and focused marketing tools; and
employ cost-effective and wide-reaching distribution channels with primary focus
on the World Wide Web and Internet delivery.
The Company plans to for creating, editing, and controlling all three audio
formats specified for multimedia computers: MIDI, Wave audio and CD
audio. In addition, the Company plans to sell actual MIDI or Wave audio
files that can be downloaded by purchasers via the Internet or sent to
purchasers on a CD in the mail.
B. Business of Issuer
(1) Principal Products and Services and Principal Markets
The Company plans to provide an environment for creating,
editing and controlling all three audio formats specified for
multimedia computers: MIDI, Wave audio and CD audio. In
addition, the Company plans to sell actual MIDI or Wave audio
files that can be downloaded by purchasers via the Internet or
sent to purchasers on a CD in the mail. At the time of this filing, the
Company does not have any tangible products. The company plans to provide a
website in directory format which has listings for (a) providers of software
modules and packages that would allow the user to create, edit, and control the
three most widespread audio formats specified for multimedia computers: MIDI,
Wave audio, and MP3, (b) actual audio files such as music samples, and (c)
websites that offer instruction for the creation of digital music. The three
standards of computer audio that the Company will offer (MIDI, Wave, and MP3)
are different technologies of creating, manipulating, and storing audio signals
in digital format. By supplying software in all three formats, Tthe Company's
products will promote the convergence of sound with other technologies onto
the personal computer. The products would allow users to enhance their
computing experience and to communicate more effectively with and through
computers. The Company believes sound will play an increasing role in all
aspects of computer communications and the Company will continue to develop
products that expand and leverage the use of computer telephony and the
Internet.
(2) Distribution Methods of the Products or Services
The Company will attempt to become the standard for product
offerings related to MIDI, Wave audio, and MIDI files on CD over
the World Wide Web or the Internet. The Company believes that
its success depends in part upon the strength of its distribution
channels and the ability of the Company to maintain close access
to its customers. The Company intends to develop a wide range of
marketing and distribution channels focused on reaching a broad
range of customers in the most cost-effective manner. The
Company plans to market its products and services through (i) a
focused marketing approach and (ii) various advertising and media
channels. The Company intends to continually seek innovative
ways to expand the scope of its marketing channels and to enhance
its ability to identify and retain customers.
Focused Marketing
<PAGE>
To generate customer leads and sales revenues the Company
intends to implement an aggressive marketing campaign. The
campaign will educate targeted markets on the Company's various
technologies and the benefits and reliability obtained through
its use. The campaign will increase brand visibility and product
awareness. To implement this campaign, the Company will need the
following:
Software for Distribution to Customers. The Company intends
to provide its software to consumers to establish awareness of
the Company's products and to build brand recognition.
Management of the Company intends to showcase the ability and
usability of its software to generate consumer interest and
market penetration. The Company intends to focus the majority of
its marketing on web sales to allow customers to download the
software easily over the Internet.
Client tracking database system. A database will allow the
Company to track clients as they register for software purchases.
By obtaining useful demographic information, the Company will be
better able to personalize software interaction and the Company's
web interface. The Company intends to purchase software which
will provide the Company the ability to track the sales effort as
well as monitor expansion phases into new industries.
Advertising and Media Channels
The software industry offers several major magazines aimed
at the Company's prospective market. The Company intends to
advertise in these publications to maximize any future efforts.
An additional media channel the Company intends to implement is
an Internet web site. The page design will be taken from the
Company's marketing brochure, which explains the basic functions
of the Company's software.
The Company has entered into a web site consulting agreement
with Janeva Corporation. Under this agreement, Janeva will
market the Company's web site with the major search engines (e.g.
Yahoo, Lycos, etc.) in order to increase traffic across the
Company's web site. When finished, potential clients may access
the Company's web site by searching under common names on these
search engines. By focusing the majority of its product
marketing on web sales, the Company will be able to sell its
products to consumers who can simply download them directly over
the Internet, thereby eliminating distribution concerns for those
sales opportunities.
(3) Status of Any Announced New Product or Service
The Company has limited operating history. The Company was
organized on September 29, 1998. Activities to date have been
limited primarily to organization, initial capitalization,
finding and securing an appropriate, experienced management team
and board of directors, the development of a business plan and
commencing with initial operational plans.
As of March 31, 1999, the Company has developed a business
plan, recruited and retained a CEO and established what steps
need to be taken to achieve the results set forth in this
Registration Statement. As a start-up and development stage
company, the Company has no new products or services to announce.
(4) Industry Background
Early generations of personal computers had either very
limited or, in many cases, no audio capability. The multimedia
computer boom of the early 1990's brought the audio capabilities
of high quality, low cost sound cards to the average home
computer. The enhanced audio capabilities of today's personal
computer make software applications informative, entertaining,
interactive and easier to use, and
<PAGE>
it is clear that such audio capabilities will continue as a
standard component of all PCs in the future. The Company
believes that the following trends are important to the continued
growth in the use of sound on personal computers and the
expansion of its targeted markets.
- Integration of sound chips into PC motherboards as
standard components;
- Increases in the quality of wave audio with the
migration of sound card and chip resolution from 8 bit to 16
bit;
- Substantial improvement in the quality and richness of
MIDI playback on sound cards with the introduction of
wavetable synthesis;
- Continued increases in microprocessor speeds and the
introduction of the Windows 95 multi-tasking, multi-threaded
operating system which expands the range of music and sound
processing options available to software developers;
- Integration of high speed (14.4 Kbits/sec and 28.8
Kbits/sec) modems into PCs;
- Exponential growth of the Internet and Intranet with
rapid improvement in the tools that make all forms of
communication on the Internet/Intranet possible; and
- Introduction of voice modems which allow the computer
to be used as a telephone.
Further, Original Equipment Manufacturer (OEM) customers are
increasingly licensing system software products so that they can
release products to market faster, increase product content and
reduce or eliminate product development risks and costs. Price
competition and time to market pressures are creating this trend
by OEMs to outsource system software to third parties. The
Company believes that it may benefit from this trend. In
addition, the significant growth of home computer usage, coupled
with the fact that there are approximately 62 million amateur
musicians in the U.S., suggests that music, a non-traditional
segment of the computer industry, is poised for expansion.
(5) Raw Materials and Suppliers
The Company is a software technology business, and thus does
not use raw materials or have any significant suppliers.
(6) Customers
At the time of this filing, the company has no customers. The Company will
provide interactive files software for the control and use of sound onto
users of personal computers. The Company plans to reach these customers
via direct mail, telemarketing, the Internet and the referral process. As of
March 31, 1999, no sales revenues have been generated by the Company. In
addition, the Company does not expect to generate any sales revenues in the
foreseeable future. The Company does not anticipate that its revenues will
be dependent, however, on any one or even a few major customers once its
revenues begin.
(7) Patents, Trademarks, Licenses, Franchises, Concessions,
Royalty Agreements, or Labor Contracts
The Company plans to rely primarily on trade secret,
trademark and copyright laws, treaties and contractual agreements
to protect its proprietary rights. The Company also plans to
endeavor to keep the results of its research and development
program proprietary, as well as to protect its marketed software
products against misappropriation and infringement by third
parties, but the Company may not in all instances be able to
prevent others from misappropriating or infringing upon the
Company's proprietary information and software products, without
compensation to the Company. The Company intends to
<PAGE>
maintain the integrity of its proposed tradename,
trademarks, copyrights and other proprietary rights against
infringement and unfair competition where circumstances warrant.
Although the Company believes that its products do not
infringe on any copyright or other proprietary rights of third
parties, there are currently significant legal uncertainties
relating to the application of copyright and patent law in the
field of software. The Company has no assurance that third
parties will not obtain, or do not have, patents covering
features of the Company's products, in which event the Company or
its customers might be required to obtain licenses to use such
features. If a patent holder refuses to grant a license on
reasonable terms or at all, the Company may be required to alter
certain products or stop marketing them.
(8) Regulation
Although the Company plans on obtaining all federal and
state permits, licenses and bonds to operate its facilities,
there can be no assurance that the Company's operation and
profitability will not be subject to more restrictive regulation
or increased taxation by federal, state or local agencies.
(9) Effect of Existing or Probable Government Regulations
The Company believes that the regulations governing the
software industry will not have a material effect on its current
operations. However, various federal and state agencies may
propose new legislation which may adversely affect the Company's
business, financial condition and results of operations.
(10) Research and Development Activities
The market for software technology has historically been
characterized by frequent technological advances, evolving
industry standards and escalating customer expectations. As a
result, management believes that the Company's future growth and
success will be largely dependent on its ability to develop or
acquire products to meet the evolving needs of its prospective
clients. The Company anticipates that the long-term success of
its product offerings will require intense product development.
The Company expects to continually evaluate its products to
determine what additional products or enhancements are required
by the marketplace. The Company plans to develop and enhance its
products internally to meet clients' needs, but if the Company
can purchase or license proven products at reasonable costs it
will do so in order to avoid the time and expense involved in
developing such products.
The Company has yet to incur any research and development
costs from September 29, 1998 (date of inception) through March
31, 1999. However, the Company expects to incur approximately
$5,000 in research and development expenses in its fiscal year
ending December 31, 1999. The Company's management has agreed to
advance these costs to the Company at no interest until such time
as the Company begins to generate revenue or is able to raise
additional funds.
(11) Impact of Environmental Laws
The Company is not aware of any federal, state or local
environmental laws which would effect its operations.
(12) Employees
<PAGE>
The Company presently has one (1) full-time employee and one
(1) part-time employee. The Company's employees are currently
not represented by a collective bargaining agreement, and the
Company believes that its relations with its employees are good.
(13) Year 2000
Although the Company plans to use only new technologies and systems
developed within the past five years, the Company has never viewed
this as a guarantee of immunity against the millennium "bug." The
Company has developed Year 2000 compliance procedures that
Management believes are sufficient for industry standards. A more
detailed discussion of the issue and the Company's plans for
dealing with it is included in Item 2: Management's Discussion and
Plan of Operation.
Item 2. Management's Discussion and Analysis or Plan of Operation
A. Management's Plan of Operation
(1) In its initial, approximately six (6) month, operating
period ended March 31, 1999, the Company incurred a net loss of
$6,404.00 for selling, general and administrative expenses
related to start-up operations. It has yet to receive any
revenues from operations. On October 2, 1998, one (1) founding
shareholder purchased 700,000 shares of the Company's authorized
treasury stock for cash. This original stock offering was made
pursuant to Section 4(2) of the Securities Act of 1933, as
amended. On October 2, 1998, the Company issued the Company's
founder and CEO, Frank B. Treadway III, an option to purchase
1,000,000 shares of Common Stock of the Company at an option
price of $0.001 per share. This option terminates on May 1,
2000, and has not yet been exercised. Additionally, in December
of 1998, the Company completed an offering of one hundred eighty
five thousand one hundred (185,100) shares of the Common Stock of
the Company to approximately forty-seven (47) affiliated
shareholders. This offering was made in reliance upon an
exemption from the registration provisions of Section 4(2) of the
Securities Act of 1993, as amended, pursuant to Regulation D,
Rule 504 of the Act. As of the date of this filing, the Company
has eight hundred eighty five thousand one hundred (885,100)
shares of its $0.001 par value common voting stock issued and
outstanding which are held by approximately forty eight (48)
shareholders of record. Management fully anticipates that the
proceeds from the sale of all of the Common Shares sold in the
public offering delineated above will be sufficient to provide
the Company's capital needs for the next approximately six (6) to
twelve (12) months. The Company currently has no arrangements or
commitments for accounts and accounts receivable financing.
There can be no assurance that any such financing can be obtained
or, if obtained, that it will be on reasonable terms.
The company intends to establish the fully reporting status with the SEC. The
fully reporting status with the SEC is a necessary step in accomplishing the
Company's goal of having its stock listed on the OTCBB in the future.
Consequently, the Company will continue voluntarily to file all necessary
reports and forms as required by existing legislation and the SEC rules.
This is a developmental stage company. The Company's
initial revenues will be primarily dependent upon the Company's
ability to effectively and efficiently provide software
technology to end-users. The Company designates as its
priorities for the first six (6) to twelve (12) months of
operations as developing and emphasizing its software products to
establish its business in the software and technology market.
The Company's primary interest is the design and development of
interactive files software solutions to enable users to control
and use audio content on a variety of PC environments.
The Company's product development does not involve any intense expenditures
such as significant costs for labor or facilities. The Company will take
existing recorded audio content and convert it into MIDI, Wave, or MP3 format
using computer equipment.
It is important for the Company's success that it enhances its visibility in the
highly crowded and competitive Internet marketplace. With this goal in mind,
the Company is using the service SUBMIT IT to list its website in major search
engines.
Realization of sales of the Company's products, services and/or technology
during the fiscal year ending December 31, 1999, is vital to its plan of
operations. As of March 31, 1999, the Company has yet to generate any revenues,
and there can be no assurance that the Company will generate any revenues over
the next approximately twelve (12) months. In particular, Tthere can be no
assurance thatthe Company will be able to compete successfully or that the
competitive pressures the Company may face (such as a superior competitive
technology or product) will not have a material adverse effect on the
Company's business, results of operations and financial condition.
Additionally, a superiorcompetitive technology or productAll of the above
factors could force the Company out of business in the near future.
As of March 31, 1999, the Company has yet to generate any
revenues. In addition, the Company does not expect to generateany revenues
over the next approximately twelve (12) months.
(2) No engineering, management or similar report has been
prepared or provided for external use by the Company in
connection with the offer of its securities to the public.
(3) Management believes that the Company's future growth and success
will be largely dependent on its ability to develop or acquire products
and technology to meet the evolving needs of its prospective customers. The
Company believes that the long-term success of its product offerings and
technology will require substantial research and development.
The Company has yet to incur any research and development
costs from September 29, 1998 (date of inception) through March
31, 1999. However, the Company expects to incur approximately
$5,000 in research and development expenses in its fiscal year
ending December 31, 1999. The Company's management has agreed to
advance these costs to the Company at no interest until such time
as the Company begins to generate revenue or is able to raise
additional funds.
(4) The office space is provided by an officer and director of the Company at
no cost to the Company. Otherwise, Tthe Company currently does not have
nor expects to purchase any facilities.expect to purchase orsell any of its
facilities or equipment.
(5) Management does not anticipate any significant changes in
the number of employees over the next approximately six (6)
months.
(6) Principal shareholders of the Company have agreed to provide consulting
services to the Company without charging consultant or finders' fees.
(7) YEAR 2000
The Year 2000 issue is actually a combination of several issues -- the ability
of computers and other equipment to, among other things:
- - Accurately recognize a particular year represented in two digits (for example,
to correctly determine that the '01 stored in a computer refers to 2001 rather
than 1901);
- - Make accurate leap year calculations;
- - Accurately distinguish special programming meanings for certain dates
("9/9/99" for example); and
- - Correctly use historical database information that crosses the 1/1/2000
boundary.
The problem began in the early days of computer programming when, in order to
save time, computing memory, and money, computer programmers created computer
programs that used only the last two digits of the year. While this approach
may have saved time and money in the short term, few expected these computer
programming conventions to continue 20, 30, or more years into the future and
past the Year 2000. Companies using computers, software, and other equipment
with date-sensitive computer code must now (wherever feasible) check these items
for potential Year 2000 problems. Products and services provided by outside
vendors and suppliers must also be evaluated in addition to the company's
internal computer hardware and software.
Although the Company plans to use only new technologies and systems developed
within the past five years, the Company has never viewed this as a guarantee of
immunity against the millennium "bug." The Company has developed Year 2000
compliance procedures that Management believes are sufficient for industry
standards. Compliance efforts at this point are limited to the purchase and
use of newer hardware and software systems which have been designed to minimize
Year 2000 issues. The Company is committed to reviewing all new and existing
mission-critical and business-critical systems and applications, including those
supplied by third party vendors and partners. Additionally, the Company'
Management is working with experienced Year 2000 consultants on addressing the
Year 2000 challenge.
In general, a system, application, product or service is Y2K compliant if, when
used in accordance with its associated documentation, it correctly and
accurately processes, provides, and receives date data within and between the
20th and 21st centuries including leap years and special date values
customarily used in computer software, such as 9/9/99, provided that all other
products used in combination with it (e.g., hardware, software and firmware)
properly exchange date data with that item.
The Company's senior management and consultant experts are responsible for
successful completion of testing for Year 2000 issues and the timely
implementation of any necessary Year 2000 solutions.
While most, if not all, of the hardware and software components of the Company's
systems are relatively new and most likely immune to any Year 2000 problems, we
are working to retire, replace, or remediate in-house systems and applications
with date-related issues, and to turn these over for testing for validation and
internal Year 2000 certification. Both the Company-owned, and vendor-supplied
systems will be reviewed although at this point only the Company's systems have
been analyzed.
The Company intends on contacting existing vendors and suppliers to obtain
statements of compliance based upon Year 2000 Compliance Standards.
Non-compliant vendor products are being retired, replaced, or upgraded as needed
to meet Year 2000 requirements. The Company may begin to request as necessary,
that new or prospective vendors and suppliers provide reasonable assurances that
their hardware and software is Year 2000 compliant. In the event that a vendor
or supplier is not able to provide such assurance, The Company may obtain
service from an alternate vendor or supplier who can give such assurances. As
of this date, the Company has not yet contacted vendors or third parties to
ensure such compliance.
The Company is considering contingency plans in all key business areas for
potential Year 2000 problems. Contingency plans cover major business processes,
including operation of the Company network, customer billing, and other mission
and business-critical operations. At this point in time however no such
contingency plans are in effect or in place. We have budgeted for a
contingency, $5,000 for miscellaneous items.
The Company does not anticipate that the Year 2000 will cause disruption in its
ability to provide service. However, if failures do occur, we may hire
additional staff to invoke Year 2000 solutions for unanticipated issues.
Notwithstanding the Company's assessment that Year 2000 issues have been
properly addressed, such problems may in fact arise and substantially jeopardize
the Company's capacity to continue to provide adequate service for its
customers.
The Company does not anticipate charging customers a fee related to its efforts
to achieve Year 2000 compliance.
B. Segment Data
As of March 31, 1999, no sales revenue has been generated by
the Company. Accordingly, no table showing percentage breakdown
of revenue by business segment or product line is included.
Item 3. Description of Property
A. Description of Property
The Company's corporate headquarters are located at 2209
Fawn Ridge Street, Las Vegas, Nevada 89134. The office space is
provided by an officer and director of the Company at no cost to
the Company. The Company does not have any additional
facilities. Additionally, there are currently no proposed
programs for the renovation, improvement or development of the
properties currently being utilized by the Company.
B. Investment Policies
Management of the Company does not currently have policies
regarding the acquisition or sale of assets primarily for
possible capital gain or primarily for income. The Company does
not presently hold any investments or interests in real estate,
investments in real estate mortgages or securities of or
interests in persons primarily engaged in real estate activities.
Item 4. Security Ownership of Management and Certain
Security Holders
A. Security Ownership of Management and Certain Beneficial
Owners
The following table sets forth information as of the date of
this Registration Statement certain information with respect to
the beneficial ownership of the Common Stock of the Company
concerning stock ownership by (i) each director, (ii) each
executive officer, (iii) the directors and officers of the
Company as a group, and (iv) each person known by the Company to
own beneficially more than five percent (5%) of the Common Stock.
Unless otherwise indicated, the owners have sole voting and
investment power with respect to their respective shares.
<PAGE>
<TABLE>
[DESCRIPTION]SHAREHOLDER TABLE
<CAPTION>SHAREHOLDERS
<S> <C> <C> <C> <C>
Amount
Title Name and Address of shares Percent
Of of Beneficial held by of
Class Owner of Shares Position Owner Class
- ------ --------------------- -------------- --------- -------
Common Frank B. Treadway III President, CEO 700,000 79.09%
Chairman, Secretary
Treasurer
Common Bert K. Blevins III Secretary 1,000 0.11%
Common All Executive Officers 701,000 79.20%
and Directors as a Group
(1 Person)
</TABLE>
B. Persons Sharing Ownership of Control of Shares
No person other than Frank B. Treadway owns or shares the
power to vote ten percent (10%) or more of the Company's
securities.
C. Non-voting Securities and Principal Holders Thereof
The Company has not issued any non-voting securities.
D. Options, Warrants and Rights
There is currently one option outstanding to purchase
securities of the Company. Frank B. Treadway, the President and
Chief Executive Officer of the Company was issued an option to
purchase 1,000,000 shares of Common Stock of the Company at an
option price of $0.001 per share. This option terminates on May
1, 2000, and has not yet been exercised.
E. Parents of the Issuer
Under the definition of parent, as including any person or
business entity who controls substantially all (more than 80%) of
the issuers of common stock, the Company has no parents.
Item 5. Directors, Executive Officers and Significant
Employees
A. Directors, Executive Officers and Significant Employees
The names, ages and positions of the Company's directors and
executive officers are as follows:
<TABLE>
[DESCRIPTION]NAMES AND AGES OF OFFICERS
<CAPTION>NAMES AND AGES OF OFFICERS
<S> <C> <C>
Name Age Position
Frank B. Treadway III 39 President, Treasurer, CEO
and Sole Director
Bert K. Blevins III 27 Secretary
</TABLE>
B. Work Experience
<PAGE>
Frank B. Treadway III, President, Treasurer, CEO and Sole
Director - Mr. Treadway is the former CEO of an $8-million per
year sports company, WWTS Worldwide Sports (1994-1997). He has
been a purchasing agent for the 40th largest construction company
in the United States, a position he occupied for 10 years. Since
1997, Mr. Treadway has been an Internet business entrepreneur and
stock market investor.
Bert K. Blevins III, Secretary - Mr. Blevins brings
marketing expertise and leadership to Digital Music. The
internal and external marketing components of Digital Music's
marketing program were created and developed by Mr. Blevins. He
is also currently the President of Janeva Corporation and has
been working exclusively in developing marketing applications for
the online community for the past twenty-four (24) months. Prior
to founding Janeva Corporation, Mr. Blevins was the marketing
coordinator for Harte-Hanks Direct Marketing in Cincinnati, Ohio.
He started as an account executive handling the day to day
coordination and management of national accounts such as:
Matchmaker International, Waccamaw Pottery, Wolohan Lumber,
Scotty's Lumber and Cellular One. Mr. Blevins created electronic
marketing applications and multimedia presentations internally
for sales, training, corporate meetings, as well as externally
for companies such as the GAP and its subsidiary, Banana
Republic. Mr. Blevins created corporate, multimedia
presentations for the CEO, CIO and COO for the $600-million Harte-
Hanks. Also at Harte-Hanks, Mr. Blevins developed the internal
marketing database for the more than 200 employee-sales
organization. This was the first full-scale, database marketing
training program and all of the collateral for the
implementation. Mr. Blevins has executed over 20 business-to-
business direct mail campaigns with Harte-Hanks.
Mr. Blevins received his management training from
Organizational Dynamics International, a leading management
training corporation based in Burlington, MA, as a Quality Action
Team Facilitator and with Quality Management Skills. In
addition, he received consultative sales training from the
Consulting Group in Westport, Connecticut. Before working with
Harte-Hanks, Mr. Blevins attended Western Kentucky University
(WKU) as an Honor Student and studied advertising in the
country's leading School of Journalism. His minors were
marketing and mass communication with an emphasis in law. While
attending WKU, Mr. Blevins was President and Vice President of
Delta Tau Delta Fraternity; Vice President of Student
Government; Treasurer for the exclusive SpiritMasters (School
Ambassadors and Recruiters); and Public Relations for WKU's Inter-
fraternity Council.
C. Family Relationships
None - Not applicable.
D. Involvement on Certain Material Legal Proceedings
During the Last Five Years
(1) No director, officer, significant employee or consultant has
been convicted in a criminal proceeding, exclusive of traffic
violations.
(2) No director, officer or significant employee has been
permanently or temporarily enjoined, barred, suspended or
otherwise limited from involvement in any type of business,
securities or banking activities.
(3) No director, officer or significant employee has been
convicted of violating a federal or state securities or
commodities law.
<PAGE>
Item 6. Executive Compensation
Remuneration of Directors and Executive Officers
The Company does not currently have employment agreements
with its executive officers but expects to sign employment
agreements with each in the next approximately six (6) months.
All executive officers of the Company prior to March 31, 1999,
did not draw a formal salary from the Company. Over the next
twelve (12) months, however, each executive officer is expected
to draw the following annual compensation. The Company does not
currently have an employee stock option plan. However, Frank B.
Treadway currently holds an option to purchase 1,000,000 shares
of Common Stock of the Company at an option price of $0.001 per
share. This option terminates on May 1, 2000, and has not yet
been exercised.
<TABLE>
[DESCRIPTION]COMPENSATION OF DIRECTORS
<CAPTION>COMPENSATION OF DIRECTORS
<S> <C> <C> <C>
(1) Name of Individual Capacities in Which Annual
or Identity of Group Remuneration was Recorded Compensation
Frank B. Treadway III President, Chairman of $20,000
the Board
Bert K. Blevins III Secretary $20,000
</TABLE>
(2) Compensation of Directors
There were no arrangements pursuant to which any director of
the Company was compensated for the period from September 29,
1998 to March 31, 1999, for any service provided as a director.
In addition, no such arrangement is contemplated for the
foreseeable future as the Company's only director is its current
executive officer who is already drawing a salary for the
management of the Company.
Item 7. Certain Relationships and Related Transactions
The Company has entered into a web site consulting agreement
with Janeva Corporation. Under this agreement, Janeva hosts and markets
the Company's website for a total cost of $45 per month. Marketing the
Company's website involves the management of submitting the Company's reference
information to major search engines through the SUBMIT IT and other free search
engine listing services. The agreement with Janeva Corporation also covered an
initial development cost of $1750. will
market the Company's web site with the major search engines (e.g.
Yahoo, Lycos, etc.) in order to increase traffic across the
Company's web site.
<PAGE>
Part II
Item 1. Legal Proceedings
The Company is not currently involved in any legal
proceedings nor does it have knowledge of any threatened
litigation.
Item 2. Market for Common Equity and Related Stockholder
Matters
A. Market Information
(1) The common stock of the Company is currently not traded on
the OTC Bulletin Board (OTCBB) or any other formal or national securities
exchange,. but the Company intends to have its stock traded on the OTCBB in
the future. However, there are no definite plans, proposals, arrangements, or
understandings to implement this intention at the time of this filing. Being a
start-up company, there is no fiscal history to disclose.
(2)(i) Currently, there is Common Stock which is subject to
outstanding options or warrants to purchase, or securities
convertible into, the Company's common stock. Frank B. Treadway,
the President and Chief Executive Officer of the Company was
issued an option to purchase 1,000,000 shares of Common Stock of
the Company at an option price of $0.001 per share. This option
terminates on May 1, 2000, and has not yet been exercised.
(ii) There is currently no common stock of the Company which
could be sold under Rule 144 under the Securities Act of 1933 as
amended or that the registrant has agreed to register for sale by
security holders.
(iii) There is currently no common equity that is being or is
proposed to be publicly offered by the registrant, the offering
of which could have a material effect on the market price of the
issuer's common equity.
B. Holders
As of March 31, 1999, the Company had approximately 48
stockholders of record.
C. Dividend Policy
The Company has not yet adopted any policy regarding payment of dividends.
No dividends have been paid since inception The Company has not
paid any dividends to date. In addition, it the Company does not
anticipate paying dividends in the immediate foreseeable future.
The board of directors of the Company willhas the authority to
determine at a future date and, from time to time, review itsthe Company's
dividend policy from time to time todetermine based on the desirability
and feasibility of paying dividends after giving consideringation to the
Company's earnings, financial condition, capital requirements, and such
other factors as the board may deem relevant.
D. Reports to Shareholders
The Company intends to furnish its shareholders with annual
reports containing audited financial statements and such other
periodic reports as the Company may determine to be appropriate
or as may be required by law. Upon the effectiveness of this
Registration Statement, the Company will be required to comply
with periodic reporting, proxy solicitation and certain other
requirements by the Securities Exchange Act of 1934.
<PAGE>
E. Transfer Agent and Registrar
The Transfer Agent for the shares of common voting stock of
the Company is Shelley Godfrey, Pacific Stock Transfer Company,
5844 S. Pecos, Suite D, Las Vegas, Nevada 89120, (702)-361-3033.
Penny-Stock Limitations
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure in connection with trades in any stock defined as a "penny
stock." The Securities and Exchange Commission (the "Commission") has adopted
regulations that generally define a penny stock to be any equity security that
has a market price of less than $5.00 per share, subject to certain exceptions.
Such exceptions include any equity security listed on NASDAQ and any equity
security issued by an issuer that has: (i) net tangible assets of at least
$2,000,000 if such issuer has been in continuous operation for more than three
years, (ii) net tangible assets of at least $5,000,000 if such issuer has been
in continuous operation for less than three years, or (iii) average annual
revenue of at least $6,000,000 if such issuer has been in continuous operation
for less than three years.
Unless exempt, for any transaction in a penny stock, the new rules require
delivery, prior to any transaction in a penny stock, of a disclosure schedule
prepared by the Commission explaining important concepts involving the penny
stock market, the nature of such market, terms used in such market, the
broker/dealer's duties to the customer, a toll-free telephone number for
inquiries about the broker/dealer's disciplinary history, and the customer's
rights and remedies in case of fraud or abuse in the sale. Disclosure also has
to be made about commissions payable to both the broker/dealer and the
registered representative and current quotations of the securities. Finally,
monthly statements must be send disclosing recent price information for the
penny stock held in the account and information on the limited market in penny
stocks. Non-NASDAQ stocks would not be covered by the definition of penny stock
for (i) issuers who have $2,000,000 in tangible assets ($5,000,000 if the issuer
has not been in continuous operation for three years); (ii) transaction in which
the customer is an institutional accredited investor; and (iii) transactions
that are not recommended by the broker/dealer.
In addition, if the Company's securities are not quoted on NASDAQ or the Company
does not have $2,000,000 in net tangible assets, trading in the Company's
securities would be covered by Rules 15g1 through 15g6 promulgated under the
Exchange Act for non-NASDAQ and non-exchange listed securities. Under such
rules, broker/dealers who recommend such securities to persons other than
established customers and accredited investors must make a special written
suitability determination and obtain the purchaser's written consent prior to
sale. Securities are exempt from these rules if the market price of the
security is at least $5.00 per share.
Because the Company's Common Stock will likely fall inside the scope of the
definition for a penny stock, the market liquidity for the Company's securities
could be severely affected. In such event, the regulations on penny stocks
could limit the ability of broker/dealers to sell the Company's securities and
thus the ability of purchasers of the Company's securities to sell their
securities in the secondary market.
Item 3. Recent Sale of Unregistered Securities
In December of 1998, the Company completed a public offering
of shares of common stock of the Company pursuant to Regulation
D, Rule 504 of the Securities Act of 1933, as amended, whereby it
sold one hundred eighty-five thousand one hundred (185,100)
shares of the Common Stock of the Company to forty-seven (47)
shareholders of record. The Company filed an original Form D
with the Securities and Exchange Commission on or about December
15, 1998. As of March 31, 1999, the Company has 885,100 shares
of common stock issued and outstanding held by 48 shareholders of
record.
Item 4. Description of Securities
A. Common Stock
(1) Description of Rights and Liabilities of Common Stockholders
i. Dividend Rights - the holders of outstanding shares of
common stock are entitled to receive dividends out of assets
legally available therefore at such times and in such amounts as
the board of directors of the Company may from time to time
determine.
ii. Voting Rights - each holder of the Company's common
stock are entitled to one vote for each share held of record on
all matters submitted to the vote of stockholders, including the
election of directors. All voting is noncumulative, which means
that the holder of fifty percent (50%) of the shares voting for
the election of the directors can elect all the directors. The
board of directors may issue shares for consideration of
previously authorized but unissued common stock without future
stockholder action.
iii. Liquidation Rights - upon liquidation, the holders of
the common stock are entitled to receive pro rata all of the
assets of the Company available for distribution to such holders.
iv. Preemptive Rights - holders of common stock are not
entitled to preemptive rights.
v. Conversion Rights - no shares of common stock are currently
subject to outstanding options, warrants or other convertible
securities.
vi. Redemption rights - no redemption rights exist for
shares of common stock.
vii. Sinking Fund Provisions - no sinking fund provisions
exist.
viii. Further Liability For Calls - no shares of common stock
are subject to further call or assessment by the issuer. The
Company has not issued stock options as of the date of this
Registration Statement.
<PAGE>
(2) Potential Liabilities of Common Stockholders to State and
Local Authorities
No material potential liabilities are anticipated to be
imposed on stockholders under state statues. Certain Nevada
regulations, however, require regulation of beneficial owners of
more than five percent (5%) of the voting securities.
Stockholders that fall into this category, therefore, may be
subject to fines in circumstances where non-compliance with these
regulations are established.
B. Debt Securities
The Company is not registering any debt securities, nor are
any outstanding.
C. Other Securities To Be Registered
The Company is not registering any security other than its
common stock.
Item 5. Indemnification of Directors and Officers
The Bylaws of the Company provide for indemnification of its
directors, officers and employees as follows: Every director,
officer, or employee of the Corporation shall be indemnified by
the Corporation against all expenses and liabilities, including
counsel fees, reasonably incurred by or imposed upon him/her in
connection with any proceeding to which he/she may be made a
party, or in which he/she may become involved, by reason of being
or having been 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 the
Corporation, partnership, joint venture, trust or enterprise, or
any settlement thereof, whether or not he/she is a director,
officer, employee or agent at the time such expenses are
incurred, except in such cases wherein the director, officer,
employee or agent is adjudged guilty of willful misfeasance or
malfeasance in the performance of his/her duties; provided that
in the event of a settlement the indemnification herein shall
apply only when the Board of Directors approves such settlement
and reimbursement as being for the best interests of the
Corporation.
The Bylaws of the Company further states that the Company
shall provide to 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 the corporation, partnership, joint venture, trust or
enterprise, the indemnity against expenses of a suit, litigation
or other proceedings which is specifically permissible under
applicable Nevada law. The Board of Directors may, in its
discretion, direct the purchase of liability insurance by way of
implementing the provisions of this Article. However, the
Company has yet to purchase any such insurance and has no plans
to do so.
The Articles of Incorporation of the Company states that a
director or officer of the corporation shall not be personally
liable to this corporation or its stockholders for damages for
breach of fiduciary duty as a director or officer, but this
Article shall not eliminate or limit the liability of a director
or officer for (i) acts or omissions which involve intentional
misconduct, fraud or a knowing violation of the law or (ii) the
unlawful payment of dividends. Any repeal or modification of
this Article by stockholders of the corporation shall be
prospective only, and shall not adversely affect any limitation
on the personal liability of a director or officer of the
corporation for acts or omissions prior to such repeal or
modification.
The Articles of Incorporation of the Company further states
that every person who was or is a party to, or is threatened to
be made a party to, or is involved in any such action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by the reason of the fact that he or she, or a
person
<PAGE>
with whom he or she is a legal representative, is or was a
director of the corporation, or who is serving at the request of
the corporation as a director or officer of another corporation,
or is a representative in a partnership, joint venture, trust or
other enterprise, shall be indemnified and held harmless to the
fullest extent legally permissible under the laws of the State of
Nevada from time to time against all expenses, liability and loss
(including attorneys' fees, judgments, fines, and amounts paid or
to be paid in a settlement) reasonably incurred or suffered by
him or her in connection therewith. Such right of
indemnification shall be a contract right which may be enforced
in any manner desired by such person. The expenses of officers
and directors incurred in defending a civil suit or proceeding
must be paid by the corporation as incurred and in advance of the
final disposition of the action, suit, or proceeding, under
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 or she is not entitled to
be indemnified by the corporation. Such right of indemnification
shall not be exclusive of any other right of such directors,
officers or representatives may have or hereafter acquire, and,
without limiting the generality of such statement, they shall be
entitled to their respective rights of indemnification under any
bylaw, agreement, vote of stockholders, provision of law, or
otherwise, as well as their rights under this article.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
<PAGE>
Part F/S
Item 1. Financial Statements
The following documents are filed as part of this report:
a) Digital Music Creations, Inc.
Page
Report of James E. Slayton, CPA F-1
Balance Sheet as of March 31, 1999 F-2
Statement of Operations for the
period from September 29, 1998
through March 31, 1999 F-3
Statement of Stockholder's Equity
for the period from September 29,
1998 through March 31, 1999 F-4
Statement of Cash Flows for the
period from September 29, 1998
through March 31, 1999 F-5
Notes to Financial Statements F-6
b) Interim Financial Statements are not provided at this time as they are not
applicable at this time
Page
Balance Sheet as of June 30, 1999
and March 31, 1999 F-8
Statement of Operations for the
three months ending June 30, 1999,
and the period from September 29,
1998 through March 31, 1999 F-9
Statement of Cash Flows for the
three months ending June 30, 1999,
and the period from September 29,
1998 through March 31, 1999 F-10
Notes to Financial Statements F-11
c) Financial Statements of Businesses Acquired or to be
Acquired are not provided at this time as they are not applicable at this time
d) Pro-forma Financial Information is not provided at this time
as it is not applicable at this time
Item 2. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure
None -- Not Applicable.
<PAGE>
Digital Music Creations, Inc.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
December 31, 1998
and
March 31, 1999
<PAGE>
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT.................... 1
BALANCE SHEET.............................. 2
STATEMENT OF OPERATIONS........................... 3
STATEMENT OF STOCKHOLDERS' EQUITY................... 4
STATEMENT OF CASH FLOWS........................... 5
NOTES TO FINANCIAL STATEMENTS.................... 6
<PAGE>
James E. Slayton, CPA
3867 WEST MARKET STREET
SUITE 208
AKRON, OHIO 44333
INDEPENDENT AUDITORS' REPORT
Board of Directors June 18, 1999
Digital Music Creations, Inc. (the Company)
Las Vegas, Nevada 89102
I have audited the Balance Sheet of Digital Music Creations,
Inc. (A Development Stage Company), as of December 31, 1998 and
March 31, 1999, and the related Statements of Operations,
Stockholders' Equity and Cash Flows for the period September 29,
1998 (Date of Inception) to December 31, 1998 and the period
ended March 31, 1999. These financial statements are the
responsibility of the Company's management. My responsibility is
to express an opinion on these financial statements based on my
audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis evidence supporting the
amounts and disclosures in the financial statement presentation.
An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation. I
believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Digital Music Creations, Inc., (A Development Stage Company),
as of December 31, 1998 and March 31, 1999, and the results of
its operations and cash flows for the period September 29, 1998
(Date of Inception) to December 31, 1998 and the period ended
March 31, 1999, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared
assuming the Company will continue as a going concern. As
discussed in Note 3 to the financial statements, the Company has
had limited operations and has not established a long term source
of revenue. This raises substantial doubt about its ability to
continue as a going concern. Management's plan in regard to
these matters are also described in Note 3. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
/S/James E. Slayton, CPA
Ohio License ID# 04-1-15582
<PAGE>
Digital Music Creations, Inc.
(A Development Stage Company)
BALANCE SHEET
AS AT
December 31, 1998 and March 31, 1999
March 31 December
1999 31 1998
ASSETS
CURRENT ASSETS
Cash 507.00 6,893.00
Other Current Assets 0.00 0.00
-------- --------
Total Current Assets 507.00 6,893.00
OTHER ASSETS
Organization Costs net of Amortization 3240.00 3420.00
TOTAL ASSETS 507.00 6,893.00
======== ========
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts Payable 0.00 0.00
-------- --------
Total Current Liabilities 0.00 0.00
OTHER LIABILITIES
Due to Shareholder 360.00 360.00
-------- --------
Total Other Liabilities 360.00 360.00
-------- --------
Total Liabilities 360.00 360.00
EQUITY
Capital Stock 885.00 885.00
Additional Paid in Capital 13,870.00 13,870.00
Donated Capital 0.00 0.00
Retained Earnings or (Deficit accumulated during (14,608.00)(8,222.00)
development stage)
-------- --------
Total Stockholders' Equity 147.00 6,533.00
TOTAL LIABILITIES & OWNER'S EQUITY 507.00 6,893.00
======== ========
See accompanying notes to financial statements
-2-
<PAGE>
Digital Music Creations, Inc.
(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR PERIOD
September 29, 1998 (Date of Inception) to December 31, 1998 and the Period
ended March 31, 1999
March 31 December
1999 31 1998
REVENUE
Services 0.00 0.00
COSTS AND EXPENSES
Selling, General and Administrative 6,386.00 7,862.00
Amortization of Organization Costs 180.00 360.00
Amortization of Web Site Development Costs 0.00 0.00
--------- ---------
Total Costs and Expenses 6,386.00 8,222.00
--------- ---------
(6,386.00)
(8,222.00)
Net Ordinary Income or (Loss)
========= =========
Weighted average
number of common
shares outstanding 792,550 792,550
Net Loss
Per Share -0.0081 -0.01
See accompanying notes to financial statements
-3-
<PAGE>
Digital Music Creations, Inc.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR PERIOD
September 29, 1998 (Date of Inception) to December 31, 1998 and the Period
ended March 31, 1999
Deficit
Accumulated
Additional During Total
Common Stock paid-in Development Stockholder
Shares Amount Capital Stage Equity
--------- --------- --------- --------- ---------
October 2, 1998
Issued for cash 700,000 700.00 4,800.00 5,500.00
December 7, 1998
Received stock 185,100 185.10 9,069.90 9,255.00
subscriptions
Net loss
September 29, 1998
(Inception) to
December 31, 1998 (8,222.00) (8,222.00)
--------- --------- --------- --------- ----------
Balances as at
December 31, 1998 885,100 885.10 13,869.90 (8,222.00) 6,533.00
Net loss
January 1, 1999
to March 31, 1999 (6386.00) (6386.00)
--------- --------- --------- --------- ---------
Balances as at
March 31, 1999 885,100 885.10 13,869.90 (14,608.00) (147.00)
========= ========= ========= ========= =========
See accompanying notes to financial statements
-4-
<PAGE>
Digital Music Creations, Inc.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
FOR PERIOD
September 29, 1998 (Date of Inception) to December 31, 1998 and the Period
ended March 31, 1999
March 31 December
1999 31 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers 0.00 0.00
--------- ---------
Net Cash provided by Operating 0.00 0.00
Activities
Cash paid to suppliers and employees 6,386.00 8,222.00
Cash disbursed for Operating 6,386.00 8,222.00
Activities
--------- ---------
Net Cash flow used for Operating (6,386.00)(8,222.00)
Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant assets 0.00 0.00
--------- ---------
Net Cash used by investing 0.00 0.00
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Capital Stock 0.00 14,755.00
Advances from Shareholders 0.00 360.00
--------- ---------
Net cash provided by financing 0.00 14,755.00
activities
Net increase (decrease) in cash (6,386.00) 6,893.00
Balance as at end of period 507.00 6,893.00
See accompanying notes to financial statements
-5-
<PAGE>
Digital Music Creations, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized September 29, 1998 under the laws of the
State of Nevada, as Digital Music Creations, Inc. The Company has no
operations and in accordance with SFAS #7, the Company is considered a
development stage company.
The Company's fiscal year end is December 31.
On October 2, 1998, the company issued 700,000 Shares of its $0.001
par value common stock for cash of $5,500.00.
On December 7, 1998, the company issued 185,100 Shares of its $.001
par value common stock for $9,255.00 pursuant to Regulation D, Rule 504.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
Accounting policies and procedures have not been determined except as
follows:
1. The Company uses the accrual method of accounting.
2. Per SOP 98-5, the cost of organization, $360.00, was expensed as
incurred. The cost of organization, $360.00, is being amortized over a
period of
60 months (October 1998 through September 2003).
3. Earnings per share is computed using the weighted average number of
shares of common stock outstanding.
4. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in
the normal course of business. However, the Company has no current source
of any revenues. This fact and other identified risk factors raise substantial
doubt about the Company's ability Without the realization of additional capital,
it wouldbe unlikely for the Company to continue as a going concern without
realization of additional capital. It is management's plan to seek additional
capital through a private offering of its securities once it gets listed on the
NQB's "Pink Sheets" or the OTC-BB. However, there is no guarantee the company
will be able to raise any additional capital through the offering of securities.
-6-
<PAGE>
Digital Music Creations, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
NOTE 4 - RELATED PARTY TRANSACTION
The Company neither owns or leases any real or personal property.
Office services are provided without charge by a director. Such costs are
immaterial to the financial statements and, accordingly, have not been
reflected therein. The officers and directors of the Company are involved
in other business activities and may, in the future, become involved in
other business opportunities. If a specific business opportunity becomes
available, such persons may face a conflict in selecting between the
Company and their other business interests. The Company has not formulated
a policy for the resolution of such conflicts.
NOTE 5 - WARRANTS AND OPTIONS
The Company issued the Company's founder and CEO, Frank B. Treadway
III, an option to purchase 1,000,000 Shares of common stock of the Company
at an option price of $0.001 per share. This option terminates on May 1,
2000, and the option has not been exercised.
-7-
<PAGE>
Item 1. Interim Financial Statements
Digital Music Creations, Inc.
(A Development Stage Company)
BALANCE SHEET
(UNAUDITED)
AS AT
March 31, 1999 and June 30, 1999
June 30,1999 March 31,1999
ASSETS
CURRENT ASSETS
Cash 627.00 507.00
Other Current Assets 0.00 0.00
Total Current Assets 627.00 507.00
OTHER ASSETS
Organization Costs net of Amortization 0.00 0.00
Total Assets 627.00 507.00
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts Payable 0.00 0.00
Total Current Liabilities 0.00 0.00
OTHER LIABILITIES
Due to Shareholder 360.00 360.00
Total Other Liabilities 360.00 360.00
Total Liabilities 360.00 360.00
EQUITY
Common Stock ($.001 par value, 885,000 shares
issued and outstanding) 885.00 885.00
Additional Paid in Capital 13,870.00 13,870.00
Donated Capital 1,510.00 0.00
Retained Earnings or (Deficit) accumulated
during development stage (15,998.00) (14,608.00)
Total Stockholders' Equity 267.00 147.00
Total Liabilities & Owner's Equity 627.00 507.00
See accompanying notes to financial statements
-8-
<PAGE>
Digital Music Creations, Inc.
(A Development Stage Company)
STATEMENT OF OPERATIONS (UNAUDITED)
for the Three Months Ended June 30, 1999
and
March 31, 1999
June 30,1999 March 31,1999
REVENUE
Services 0.00 0.00
COSTS AND EXPENSES
Selling, General and Administrative 1390.00 6,386.00
Amortization of Organization Costs 0.00 0.00
Amortization of Web Site Development Costs 0.00 0.00
Total Costs and Expenses 1390.00 6,386.00
Net Ordinary Income or (Loss) (1390.00) (6,386.00)
Weighted average number of common shares outstanding 885,100 885,100
Net Loss Per Share -0.00 -0.01
See accompanying notes to financial statements
-9-
<PAGE>
Digital Music Creations, Inc.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(UNAUDITED)
for the Three Months
Ended June 30, 1999 and
March 31, 1999
June 30,1999 March 31,1999
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers 0.00 0.00
Net Cash provided by Operating Activities 0.00 0.00
Cash paid to suppliers and employees 6,386.00
Cash disbursed for Operating Activities 1,390.00 6,386.00
Net Cash flow used for Operating Activities (1,390.00) (6,386.00)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant assets 0.00 0.00
Net Cash used by investing activities 0.00 0.00
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Capital Stock 0.00 0.00
Advances from Shareholders 1,510.00 0.00
Net cash provided by financing activities 1,510.00 0.00
Net increase (decrease) in cash 120.00 (6,386.00)
Balance as at end of period 627.00 507.00
-10-
See accompanying notes to financial statements
<PAGE>
Digital Music Creations, Inc.
(A Development Stage Company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 1999
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized September 29, 1998 under the laws of the State of
Nevada, as Digital Music Creations, Inc. The Company has yet to generate
any revenues and in accordance with SFAS #7, the Company is considered a
development stage company.
The company's fiscal year end is December 31.
On October 2, 1998, the company issued 700,000 Shares of its $0.001 par
value common stock for cash of $5,500.00.
On December 7, 1998, the company issued 185,100 Shares of its $.001 par value
common stock for $9,255.00 pursuant to Regulation D, Rule 504.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
Accounting policies and procedures have not been determined except as
follows:
The Company uses the accrual method of accounting.
Per SOP 98-5, the cost of organization, $360.00, was expensed as incurred.
Earnings per share are computed using the weighted average number of shares of
common stock outstanding.
The Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid since inception.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in
the normal course of business. However, the Company has no current source
of any revenues. This fact and other identified risk factors raise
substantial doubt about the Company's ability to continue as a going
concern without realization of additional capital. It is management's plan
to seek additional capital through a private offering of its securities
once it gets listed on the NQB's "Pink Sheets" or the OTC-BB. However,
there is no guarantee the company will be able to raise any additional
capital through the offering of securities.
NOTE 4 - RELATED PARTY TRANSACTION
The Company neither owns or leases any real or personal property. Office
services are provided without charge by a director. Such costs are immaterial
to the financial statements and, accordingly, have not been reflected therein.
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
NOTE 5 - WARRANTS AND OPTIONS
The Company issued the Company's founder and CEO, Frank B. Treadway III, an
option to purchase 1,000,000 Shares of common stock of the Company at an
option price of $0.001 per share. This option terminates on May 1, 2000,
and the option has not been exercised.
-11-
<PAGE>
Part III
<TABLE>
<CAPTION>INDEX TO EXHIBITS
<S> <C>
Exhibit
Number Name and/or Identification of Exhibit
1. Underwriting Agreement
Not applicable
2. Plan of Acquisition, Reorganization, Arrangement, Liquidation,
or Succession
Not applicable
3. Articles of Incorporation & By-Laws
(a)Articles of Incorporation of the Company filed September 29, 1998
(b)By-Laws of the Company adopted October 2, 1998
4. Instruments Defining the Rights of Security Holders
No instruments other than those included in Exhibit 3
5. Opinion on Legality
Not applicable
6. No Exhibit Required
Not applicable
7. Opinion on Liquidation Preference
Not applicable
8. Opinion on Tax Matters
Not applicable
9. Voting Trust Agreement and Amendments
Not applicable
10. Material Contracts
Web Site Services and Marketing Agreement with Janeva Corporation
11. Statement Re Computation of Per Share Earnings
Not applicable - Computation of per share earnings can be clearly
determined from the Statement of Operations in the Company's
financial statements
12. No Exhibit Required
Not applicable
13. Annual or Quarterly Reports - Form 10-Q
Not applicable
14. Material Foreign Patents
None. Not applicable
15. Letter on Unaudited Interim Financial Information
Not applicable
16. Letter on Change in Certifying Accountant
Not applicable
17. Letter on Director Resignation
Not applicable
18. Letter on Change in Accounting Principles
Not applicable
19. Reports Furnished to Security Holders
Not applicable
20. Other Documents or Statements to Security Holders
None - Not applicable
21. Subsidiaries of Small Business Issuer
None - Not applicable
22. Published Report Regarding Matters Submitted to Vote of
Security Holders
Not applicable
23. Consent of Experts and Counsel
Consents of independent public accountants
24. Power of Attorney
Not applicable
25. Statement of Eligibility of Trustee
Not applicable
26. Invitations for Competitive Bids
Not applicable
27. Financial Data Schedule
Financial Data Schedule of Digital Music Creations ending
March 31, 1999
28. Information from Reports Furnished to State Insurance
Regulatory Authorities
Not applicable
29. Additional Exhibits
Option agreement between Frank Treadway III and
Digital Music Creations
</TABLE>
<PAGE>
<TABLE>
<CAPTION>DESCRIPTION OF EXHIBITS
<S> <C>
Exhibit
Number Name and/or Identification of Exhibit
1. Underwriting Agreement
Not applicable
2. Plan of Acquisition, Reorganization, Arrangement, Liquidation,
or Succession
Not applicable
3. Articles of Incorporation & By-Laws
(a)Articles of Incorporation of the Company filed September 29, 1998
(b)By-Laws of the Company adopted October 2, 1998
4. Instruments Defining the Rights of Security Holders
No instruments other than those included in Exhibit 3
5. Opinion on Legality
Not applicable
6. No Exhibit Required
Not applicable
7. Opinion on Liquidation Preference
Not applicable
8. Opinion on Tax Matters
Not applicable
9. Voting Trust Agreement and Amendments
Not applicable
10. Material Contracts
Web Site Services and Marketing Agreement with Janeva Corporation
11. Statement Re Computation of Per Share Earnings
Not applicable - Computation of per share earnings can be clearly
determined from the Statement of Operations in the Company's
financial statements
12. No Exhibit Required
Not applicable
13. Annual or Quarterly Reports - Form 10-Q
Not applicable
14. Material Foreign Patents
None. Not applicable
15. Letter on Unaudited Interim Financial Information
Not applicable
16. Letter on Change in Certifying Accountant
Not applicable
17. Letter on Director Resignation
Not applicable
18. Letter on Change in Accounting Principles
Not applicable
19. Reports Furnished to Security Holders
Not applicable
20. Other Documents or Statements to Security Holders
None - Not applicable
21. Subsidiaries of Small Business Issuer
None - Not applicable
22. Published Report Regarding Matters Submitted to Vote of
Security Holders
Not applicable
23. Consent of Experts and Counsel
Consents of independent public accountants
24. Power of Attorney
Not applicable
25. Statement of Eligibility of Trustee
Not applicable
26. Invitations for Competitive Bids
Not applicable
27. Financial Data Schedule
Financial Data Schedule of Digital Music Creations ending
March 31, 1999
28. Information from Reports Furnished to State Insurance
Regulatory Authorities
Not applicable
29. Additional Exhibits
Option agreement between Frank Treadway III and
Digital Music Creations
</TABLE>
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized.
Digital Music Creations, Inc.
(Registrant)
Date: June 21, 1999
By: /s/ Frank B. Treadway III
Frank B. Treadway III, Chairman of the Board, President and
Chief Executive Officer
By: /s/ Bert K. Blevins
Bert K. Blevins III, Secretary
DIGITAL MUSIC CREATIONS, INC.
A Nevada Corporation
Exhibit 3 (a)
Articles of Incorporation of the Company
Filed September 29, 1998
<PAGE>
ARTICLES OF INCORPORATION
OF
Digital Music Creations, Inc.
1. Name of Company:
Digital Music Creations, Inc.
2. Resident Agent:
The resident agent of the Company is:
Nevada Internet Corporation Enterprises
3110 S. Valley View, Suite 201
Las Vegas, Nevada 89102
3. Board of Directors:
The Company shall initially have one director (1)
who is Frank Treadway; 2209 Fawn Ridge Street; Las Vegas, NV
89134. This individual shall serve as director until their
successor or successors have been elected and qualified.
The number of directors may be increased or decreased by a
duly adopted amendment to the By-Laws of the Corporation.
4. Authorized Shares:
The aggregate number of shares which the
corporation shall have authority to issue shall consist of
20,000,000 shares of Common Stock having a $.001 par value,
and 5,000,000 shares of Preferred Stock having a $.001 par
value. The Common and/or Preferred Stock of the Company may
be issued from time to time without prior approval by the
stockholders. The Common and/or Preferred Stock may be
issued for such consideration as may be fixed from time to
time by the Board of Directors. The Board of Directors may
issue such share of Common and/or Preferred Stock in one or
more series, with such voting powers, designations,
preferences and rights or qualifications, limitations or
restrictions thereof as shall be stated in the resolution or
resolutions.
5. Preemptive Rights and Assessment of Shares:
Holders of Common Stock or Preferred Stock of the
corporation shall not have any preference, preemptive right
or right of subscription to acquire shares of the
corporation authorized, issued, or sold, or to be
authorized, issued or sold, or to any obligations or shares
authorized or issued or to be authorized or issued, and
convertible into shares of the corporation, nor to any right
of subscription thereto, other than to the extent, if any,
the Board of Directors in its sole discretion, may determine
from time to time.
The Common Stock of the Corporation, after the
amount of the subscription price has been fully paid in, in
money, property or services, as the directors shall
determine, shall not be subject to assessment to pays the
debts of the corporation, nor for any other purpose, and no
Common Stock issued as fully paid shall ever be assessable
or assessed, and the Articles of Incorporation shall not be
amended to provide for such assessment.
<PAGE>
Incorporation Continued
6. Directors' and Officers' Liability
A director or officer of the corporation shall not
be personally liable to this corporation or its stockholders
for damages for breach of fiduciary duty as a director or
officer, but this Article shall not eliminate or limit the
liability of a director or officer for (i) acts or omissions
which involve intentional misconduct, fraud or a knowing
violation of the law or (ii) the unlawful payment of
dividends. Any repeal or modification of this Article by
stockholders of the corporation shall be prospective only,
and shall not adversely affect any limitation on the
personal liability of a director or officer of the
corporation for acts or omissions prior to such repeal or
modification.
7. Indemnity
Every person who was or is a party to, or is
threatened to be made a party to, or is involved in any such
action, suit or proceeding, whether civil, criminal,
administrative or investigative, by the reason of the fact
that he or she, or a person with whom he or she is a legal
representative, is or was a director of the corporation, or
who is serving at the request of the corporation as a
director or officer of another corporation, or is a
representative in a partnership, joint venture, trust or
other enterprise, shall be indemnified and held harmless to
the fullest extent legally permissible under the laws of the
State of Nevada from time to time against all expenses,
liability and loss (including attorneys' fees, judgments,
fines, and amounts paid or to be paid in a settlement)
reasonably incurred or suffered by him or her in connection
therewith. Such right of indemnification shall be a
contract right which may be enforced in any manner desired
by such person. The expenses of officers and directors
incurred in defending a civil suit or proceeding must be
paid by the corporation as incurred and in advance of the
final disposition of the action, suit, or proceeding, under
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 or she is not
entitled to be indemnified by the corporation. Such right
of indemnification shall not be exclusive of any other right
of such directors, officers or representatives may have or
hereafter acquire, and, without limiting the generality of
such statement, they shall be entitled to their respective
rights of indemnification under any bylaw, agreement, vote
of stockholders, provision of law, or otherwise, as well as
their rights under this article.
Without limiting the application of the foregoing,
the Board of Directors may adopt By-Laws from time to time
without respect to indemnification, to provide at all times
the fullest indemnification permitted by the laws of the
State of Nevada, and may cause the corporation to purchase
or maintain insurance on behalf of any person who is or was
a director or officer
8. Amendments
Subject at all times to the express provisions of
Section 5 on the Assessment of Shares, this corporation
reserves the right to amend, alter, change, or repeal any
provision contained in these Articles of Incorporation or
its By-Laws, in the manner now or hereafter prescribed by
statute or the Articles of Incorporation or said By-Laws,
and all rights conferred upon shareholders are granted
subject to this reservation.
9. Power of Directors
In furtherance, and not in limitation of those
powers conferred by statute, the Board of Directors is
expressly authorized:
(a) Subject to the By-Laws, if any,
adopted by the shareholders, to make, alter or repeal the By-
Laws of the corporation;
<PAGE>
Incorporation Continued
(b) To authorize and caused to be executed
mortgages and liens, with or without limitations as to
amount, upon the real and personal property of the
corporation;
(c) To authorize the guaranty by the corporation
of the securities, evidences of indebtedness and obligations
of other persons, corporations or business entities;
(d) To set apart out of any funds of the
corporation available for dividends a reserve or reserves
for any proper purpose and to abolish any such reserve;
(e) By resolution adopted by the majority of the
whole board, to designate one or more
committees to consist of one or more directors of the of the
corporation, which, to the extent provided on the resolution
or in the By-Laws of the corporation, shall have and may
exercise the powers of the Board of Directors in the
management of the affairs of the corporation, and may
authorize the seal of the corporation to be affixed to all
papers which may require it. Such committee or committees
shall have name and names as may be stated in the By-Laws of
the corporation or as may be determined from time to time by
resolution adopted by the Board of Directors.
All the corporate powers of the corporation shall
be exercised by the Board of Directors except as otherwise
herein or in the By-Laws or by law.
IN WITNESS WHEREOF, I hereunder set my hand this
Tuesday, September 29, 1998, hereby declaring and certifying
that the facts stated hereinabove are true.
Signature of Incorporator
Name: Thomas C. Cook, Esq.
Address: 3110 S. Valley View, Suite 106
Las Vegas, Nevada 89102
Signature: /s/Thomas C Cook
State of Nevada )
County of Clark )
This instrument was acknowledged before me on
September 29, 1998, by Thomas C. Cook.
/s/Matthew J Blevins
Notary Public Signature
Certificate of Acceptance of Appointment as Resident Agent:
I, ANTHONY M. MELLO III, as a principal of Campbell Mello
Associates, Inc. (CMA), hereby accept appointment of CMA as
the resident agent for the above referenced company.
Signature: /s/Anthony M. Mello III
Anthony M. Mello III
DIGITAL MUSIC CREATIONS, INC.
A Nevada Corporation
Exhibit 3 (b)
By-Laws of the Company Adopted October 2, 1998
<PAGE>
BYLAWS
OF
Digital music creations, Inc.
ARTICLE I
OFFICES
The principal office of the Corporation in the State of
Nevada shall be located in Las Vegas, County of Clark. The
Corporation may have such other offices, either within or
without the State of Nevada, as the Board of Directors may
designate or as the business of the Corporation may require
from time to time.
ARTICLE II
SHAREHOLDERS
SECTION 1. Annual Meeting. The annual meeting of the
shareholders shall be held on the first day in the month of
September in each year, beginning with the year 1999, at the
hour of one o'clock p.m., for the purpose of electing
Directors and for the transaction of such other business as
may come before the meeting. If the day fixed for the
annual meeting shall be a legal holiday, such meeting shall
be held on the next business day. If the election of
Directors shall not be held on the day designated herein for
any annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the
election to be held at a special meeting of the shareholders
as soon thereafter as soon as conveniently may be.
SECTION 2. Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise
prescribed by statute, may be called by the President or by
the Board of Directors, and shall be called by the President
at the request of the holders of not less than fifty percent
(50%) of all the outstanding shares of the Corporation
entitled to vote at the meeting.
SECTION 3. Place of Meeting. The Board of Directors
may designate any place, either within or without the State
of Nevada, unless otherwise prescribed by statute, as
<PAGE>
the place of meeting for any annual meeting or for any
special meeting. A waiver of notice signed by all
shareholders entitled to vote at a meeting may designate any
place, either within or without the State of Nevada, unless
otherwise prescribed by statute, as the place for the
holding of such meeting. If no designation is made, the
place of the meeting will be the principal office of the
Corporation.
SECTION 4. Notice of Meeting. Written notice stating
the place, day and hour of the meeting and, in case of a
special meeting, the purpose or purposes for which the
meeting is called, shall unless otherwise prescribed by
statute, be delivered not less than ten (10) days nor more
than sixty (60) days before the date of the meeting, to each
shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the
shareholder at his/her address as it appears on the stock
transfer books of the Corporation, with postage thereon
prepaid.
SECTION 5. Closing of Transfer Books or Fixing of
Record. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or shareholders
entitled to receive payment of any dividend, or in order to
make a determination of shareholders for any other proper
purpose, the Board of Directors of the Corporation may
provide that the stock transfer books shall be closed for a
stated period, but not to exceed in any case fifty (50)
days. If the stock transfer books shall be closed for the
purpose of determining shareholders entitled to notice of or
to vote at a meeting of shareholders, such books shall be
closed for at least ten (10) days immediately preceding such
meeting. In lieu of closing the stock transfer books, the
Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date
in any case to be not more than fifty (50) days and, in case
of a meeting of shareholders, not less than ten (10) days
prior to the date on which the particular action requiring
such determination of shareholders is to be taken. If the
stock transfer books are not closed and no record date is
fixed for determination of shareholders entitled to notice
of or to vote at a meeting of shareholders, or shareholders
<PAGE>
entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend
is adopted, as the case may be, shall be the record date for
such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders
has been made as provided in this section, such
determination shall apply to any adjournment thereof.
SECTION 6. Voting Lists. The officer or agent having
charge of the stock transfer books for shares of the
Corporation shall make a complete list of the shareholders
entitled to vote at each meeting of shareholders or at any
adjournment thereof, arranged in alphabetical order, with
the address of and the number of shares held by each. Such
list shall be produced and kept open at the time and place
of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting for the
purposes thereof.
SECTION 7. Quorum. A majority of the outstanding
shares of the Corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting
of shareholders. If less than a majority of the outstanding
shares are represented at a meeting, a majority of the
shares so represented may adjourn the meeting from time to
time without further notice. At such adjourned meeting at
which a quorum shall be present or represented, any business
may be transacted which might have been transacted at the
meeting as originally noticed. The shareholders present at
a duly organized meeting may continue to transact business
until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
SECTION 8. Proxies. At all meetings of
shareholders, a shareholder may vote in person or by proxy
executed in writing by the shareholder by his/her duly
authorized attorney-in-fact. Such proxy shall be filed with
the secretary of the Corporation before or at the time of
the meeting.
SECTION 9. Voting of Shares. Each outstanding share
entitled to vote shall be entitled to one vote upon each
matter submitted to a vote at a meeting of shareholders.
<PAGE>
SECTION 10. Voting of Shares by Certain Holders.
Shares standing in the name of another corporation may be
voted by such officer, agent or proxy as the Bylaws of such
corporation may prescribe or, in the absence of such
provision, as the Board of Directors of such corporation may
determine. Shares held by an administrator, executor,
guardian or conservator may be voted by him, either in
person or by proxy, without a transfer of such shares into
his name. Shares standing in the name of a trustee may be
voted by him, either in person or by proxy, but no trustee
shall be entitled to vote shares held by him without a
transfer of such shares into his name.
Shares standing in the name of a receiver may be voted
by such receiver, and the shares held by or under the
control of a receiver may be voted by such receiver without
the transfer thereof into his name, if authority to do so be
contained in an appropriate order of the court by which such
receiver was appointed.
A shareholder whose shares are pledged shall be
entitled to vote such shares until the shares have been
transferred into the name of the pledgee, and thereafter the
pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the Corporation
shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of
outstanding shares at any given time.
SECTION 11. Informal Action by Shareholders. Unless
otherwise provided by law, any action required to be taken
at a meeting of the shareholders, or any other action which
may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by the holders of a
majority of the shares entitled to vote or such greater
proportion as may be required by the laws of the State of
Nevada, the Articles of Incorporation, or these Bylaws, with
respect to the subject matter thereof.
ARTCLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The Board of Directors
shall be responsible for the control and management of the
affairs, property and interests of the Corporation and
<PAGE>
may exercise all powers of the Corporation, except as are in
the Articles of Incorporation or by statute expressly
conferred upon or reserved to the shareholders.
SECTION 2. Number, Tenure and Qualifications. The
number of directors of the Corporation shall be fixed by the
Board of Directors, but in no event shall be less than one
(1). Each director shall hold office until the next annual
meeting of shareholders and until his/her successor shall
have been elected and qualified.
SECTION 3. Regular Meetings. A regular meeting of the
Board of Directors shall be held without other notice than
this Bylaw immediately after, and at the same place as, the
annual meeting of shareholders. The Board of Directors may
provide, by resolution, the time and place for the holding
of additional regular meetings without notice other than
such resolution.
SECTION 4. Special Meetings. Special meetings of the
Board of Directors may be called by or at the request of the
President or any two directors. The person or persons
authorized to call special meetings of the Board of
Directors may fix the place for holding any special meeting
of the Board of Directors called by them.
SECTION 5. Notice. Notice of any special meeting
shall be given at least one (1) day previous thereto by
written notice delivered personally or mailed to each
director at his business address, or by telegram. If
mailed, such notice shall be deemed to be delivered when
deposited in the United States mail so addressed, with
postage thereon prepaid. If notice be given by telegram,
such notice shall be deemed to be delivered when the notice
be given to the telegraph company. Any directors may waive
notice of any meeting. The attendance of a director at a
meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express
purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
SECTION 6. Quorum. A majority of the number of
directors fixed by Section 2 of this Article shall
constitute a quorum for the transaction of business at any
meeting of the Board of Directors, but if less than such
majority is present at a meeting, a majority of the
directors present may adjourn the meeting from time to time
without further notice.
SECTION 7. Telephonic Meeting. A meeting of the Board
of Directors may be had by means of a telephone conference
or similar communications equipment by which
<PAGE>
all persons participating in the meeting can hear each
other, and the participation in a meeting under such
circumstances shall constitute presence at the meeting.
SECTION 8. Manner of Acting. The act of the majority
of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.
SECTION 9. Action Without a Meeting. Any action that
may be taken by the Board of Directors at a meeting may be
taken without a meeting if a consent in writing, setting
forth the action so to be taken, shall be signed before such
action by all of the directors.
SECTION 10. Vacancies. Any vacancy occurring in the
Board of Directors may be filled by the affirmative vote of
a majority of the remaining directors though less than a
quorum of the Board of Directors, unless otherwise provided
by law. A director elected to fill a vacancy shall be
elected for the unexpired term of his/her predecessor in
office. Any directorship to be filled by reason of an
increase in the number of directors may be filled by
election by the Board of Directors for a term of office
continuing only until the next election of directors by the
shareholders.
SECTION 11. Resignation. Any director may resign at
any time by giving written notice to the Board of Directors,
the President or the Secretary of the Corporation. Unless
otherwise specified in such written notice such resignation
shall take effect upon receipt thereof by the Board of
Directors or such officer, and the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 12. Removal. Any director may be removed with
or without cause at any time by the affirmative vote of
shareholders holding of record in the aggregate at least a
majority of the outstanding shares of stock of the
Corporation at a special meeting of the shareholders called
for that purpose, and may be removed for cause by action of
the Board.
SECTION 13. Compensation. By resolution of the Board
of Directors, each director may be paid for his/her
expenses, if any, of attendance at each meeting of the Board
of Directors, and may be paid a stated salary as director or
a fixed sum for
<PAGE>
attendance at each meeting of the Board of Directors or
both. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving
compensation therefor.
SECTION 14. Contracts. No contract or other
transaction between this Corporation and any other
corporation shall be impaired, affected or invalidated, nor
shall any director be liable in any way by reason of the
fact that one or more of the directors of this Corporation
is or are interested in, or is a director or officer, or are
directors or officers of such other corporations, provided
that such facts are disclosed or made known to the Board of
Directors, prior to their authorizing such transaction. Any
director, personally and individually, may be a party to or
may be interested in any contract or transaction of this
Corporation, and no directors shall be liable in any way by
reason of such interest, provided that the fact of such
interest be disclosed or made known to the Board of
Directors prior to their authorization of such contract or
transaction, and provided that the Board of Directors shall
authorize, approve or ratify such contract or transaction by
the vote (not counting the vote of any such Director) of a
majority of a quorum, notwithstanding the presence of any
such director at the meeting at which such action is taken.
Such director or directors may be counted in determining the
presence of a quorum at such meeting. This Section shall
not be construed to impair, invalidate or in any way affect
any contract or other transaction which would otherwise be
valid under the law (common, statutory or otherwise)
applicable thereto.
SECTION 15. Committees. The Board of Directors, by
resolution adopted by a majority of the entire Board, may
from time to time designate from among its members an
executive committee and such other committees, and alternate
members thereof, as they may deem desirable, with such
powers and authority (to the extent permitted by law) as may
be provided in such resolution. Each such committee shall
serve at the pleasure of the Board.
SECTION 16. Presumption of Assent. A director of the
Corporation who is present at a meeting of the Board of
Directors at which action on any corporate matter is taken
shall be presumed to have assented to the action taken
unless his/her dissent shall
<PAGE>
be entered into the minutes of the meeting or unless he/she
shall file written dissent to such action with the person
acting as the Secretary of the meeting before the
adjournment thereof, or shall forward such dissent by
registered mail to the Secretary of the Corporation
immediately after the adjournment of the meeting. Such
right to dissent shall not apply to a director who voted in
favor of such action.
ARTICLE IV
OFFICERS
SECTION 1. Number. The officers of the Corporation
shall be a President, one or more Vice Presidents, a
Secretary, and a Treasurer, each of whom shall be elected by
the Board of Directors. Such other officers and assistant
officers as may be deemed necessary may be elected or
appointed by the Board of Directors, including a Chairman of
the Board. In its discretion, the Board of Directors may
leave unfilled for any such period as it may determine any
office except those of President and Secretary. Any two or
more offices may be held by the same person. Officers may
be directors or shareholders of the Corporation.
SECTION 2. Election and Term of Office. The officers
of the Corporation to be elected by the Board of Directors
shall be elected annually by the Board of Directors at the
first meeting of the Board of Directors held after each
annual meeting of the shareholders. If the election of
officers shall not be held at such meeting, such election
shall be held as soon thereafter as conveniently may be.
Each officer shall hold office until his/her successor shall
have been duly elected and shall have qualified, or until
his/her death, or until he/she shall resign or shall have
been removed in the manner hereinafter provided.
SECTION 3. Resignation. Any officer may resign at any
time by giving written notice of such resignation to the
Board of Directors, or to the President or the Secretary of
the Corporation. Unless otherwise specified in such written
notice, such resignation shall take effect upon receipt
thereof by the Board of Directors or by such officer, and
the acceptance of such resignation shall not be necessary to
make it effective.
<PAGE>
SECTION 4. Removal. Any officer or agent may be
removed by the Board of Directors whenever, in its judgment,
the best interests of the Corporation will be served
thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election
or appointment of an officer or agent shall not of itself
create contract rights, and such appointment shall be
terminable at will.
SECTION 5. Vacancies. A vacancy in any office because
of death, resignation, removal, disqualification or
otherwise, may be filled by the Board of Directors for the
unexpired portion of the term.
SECTION 6. President. The President shall be the
principal executive officer of the Corporation and, subject
to the control of the Board of Directors, shall in general
supervise and control all of the business and affairs of the
Corporation. He/she shall, when present, preside at all
meetings of the shareholders and of the Board of Directors,
unless there is a Chairman of the Board, in which case the
Chairman will preside. The President may sign, with the
Secretary or any other proper officer of the Corporation
thereunto authorized by the Board of Directors, certificates
for shares of the Corporation, any deeds, mortgages, bonds,
contracts, or other instruments which the Board of Directors
has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated
by the Board of Directors or by these Bylaws to some other
officer or agent of the Corporation, or shall be required by
law to be otherwise signed or executed; and in general shall
perform all duties incident to the office of President and
such other duties as may be prescribed by the Board of
Directors from time to time.
SECTION 7. Vice President. In the absence of the
President or in event of his/her death, inability or refusal
to act, the Vice President shall perform 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 President shall perform such other duties as from
time to time may be assigned by the President or by the
Board of Directors. If there is more than one Vice
President, each Vice President shall succeed to the duties
of the President in order of rank as determined by the Board
of Directors. If no such rank has
<PAGE>
been determined, then each Vice President shall succeed to
the duties of the President in order of date of election,
the earliest date having first rank.
SECTION 8. Secretary. The Secretary shall: (a) keep
the minutes of the proceedings of the shareholders and of
the Board of Directors in one or more minute book provided
for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these Bylaws or as
required by law; (c) be custodian of the corporate records
and of the seal of the Corporation and see that the seal of
the Corporation is affixed to all documents, the execution
of which on behalf of the Corporation under its seal is duly
authorized; (d) keep a register of the post office address
of each shareholder which shall be furnished to the
Secretary by such shareholder; (e) sign with the president
certificates for shares of the Corporation, the issuance of
which shall have been authorized by resolution of the Board
of Directors; (f) have general charge of the stock transfer
books of the Corporation; and (g) in general perform all
duties incident to the office of the Secretary and such
other duties as from time to time may be assigned by the
President or by the Board of Directors.
SECTION 9. Treasurer. The Treasurer shall: (a) have
charge and custody of and be responsible for all funds and
securities of the Corporation; (b) receive and give receipts
for moneys due and payable to the Corporation from any
source whatsoever, and deposit all such moneys in the name
of the Corporation in such banks, trust companies or other
depositories as shall be selected in accordance with the
provisions of Article VI of these Bylaws; and (c) in
general perform all of the duties incident to the office of
Treasurer and such other duties as from time to time may be
assigned to him by the President or by the Board of
Directors.
SECTION 10. Salaries. The salaries of the officers
shall be fixed from time to time by the Board of Directors,
and no officer shall be prevented from receiving such salary
by reason of the fact that he/she is also a director of the
corporation.
SECTION 11. Sureties and Bonds. In case the Board of
Directors shall so require any officer, employee or agent of
the Corporation shall execute to the Corporation a bond in
such sum, and with such surety or sureties as the Board of
Directors may direct, conditioned upon the faithful
performance of his/her duties to the Corporation, including
<PAGE>
responsibility for negligence for the accounting for all
property, funds or securities of the Corporation which may
come into his/her hands.
SECTION 12. Shares of Stock of Other Corporations.
Whenever the Corporation is the holder of shares of stock of
any other corporation, any right of power of the Corporation
as such shareholder (including the attendance, acting and
voting at shareholders' meetings and execution of waivers,
consents, proxies or other instruments) may be exercised on
behalf of the Corporation by the President, any Vice
President or such other person as the Board of directors may
authorize.
ARTICLE V
INDEMNITY
The Corporation shall indemnify its directors, officers
and employees as follows:
Every director, officer, or employee of the Corporation
shall be indemnified by the Corporation against all expenses
and liabilities, including counsel fees, reasonably incurred
by or imposed upon him/her in connection with any proceeding
to which he/she may be made a party, or in which he/she may
become involved, by reason of being or having been 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 the Corporation,
partnership, joint venture, trust or enterprise, or any
settlement thereof, whether or not he/she is a director,
officer, employee or agent at the time such expenses are
incurred, except in such cases wherein the director,
officer, employee or agent is adjudged guilty of willful
misfeasance or malfeasance in the performance of his/her
duties; provided that in the event of a settlement the
indemnification herein shall apply only when the Board of
Directors approves such settlement and reimbursement as
being for the best interests of the Corporation.
The Corporation shall provide to 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 the
corporation, partnership, joint venture, trust or
enterprise, the indemnity against expenses of a suit,
litigation or other proceedings which is specifically
permissible under applicable law.
<PAGE>
The Board of Directors may, in its discretion, direct
the purchase of liability insurance by way of implementing
the provisions of this Article.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. Contracts. The Board of Directors may
authorize any officer or officers, agent or agents, to enter
into any contract or execute and deliver any instrument in
the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
SECTION 2. Loans. No loans shall be contracted on
behalf of the Corporation and no evidences of indebtedness
shall be issued in its name unless authorized by a
resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
SECTION 3. Checks, Drafts, etc. All checks, drafts or
other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the
Corporation, shall be signed by such officer or officers,
agent or agents of the Corporation and in such manner as
shall from time to time be determined by resolution of the
Board of Directors.
SECTION 4. Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to
the credit of the Corporation in such banks, trust companies
or other depositories as the Board of Directors may select.
ARTICLE VII
SHARES OF STOCK
SECTION 1. Certificates for Shares. Certificates
representing shares of the Corporation shall be in such a
form as shall be determined by the Board of Directors. Such
certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by
the Board of Directors to do so, and sealed with the
corporate seal. All certificates for shares shall be
consecutively numbered or otherwise identified. The name
and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of
issue, shall be entered on the stock
<PAGE>
transfer books of the Corporation. All certificates
surrendered to the Corporation for transfer shall be
canceled and no new certificate shall be issued until the
former certificate for a like number of shares shall have
been surrendered and canceled, except that in the case of a
lost, destroyed or mutilated certificate, a new one may be
issued therefor upon such terms and indemnity to the
Corporation as the Board of Directors may prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of
the Corporation shall be made only on the stock transfer
books of the Corporation by the holder of record thereof or
by his/her legal representative, who shall furnish proper
evidence of authority to transfer, or by his/her attorney
thereunto authorized by power of attorney duly executed and
filed with the Secretary of the Corporation, and on
surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books
of the Corporation shall be deemed by the Corporation to be
the owner thereof for all purposes. Provided, however, that
upon any action undertaken by the shareholders to elect S
Corporation status pursuant to Section 1362 of the Internal
Revenue Code and upon any shareholders' agreement thereto
restricting the transfer of said shares so as to disqualify
said S Corporation status, said restriction on transfer
shall be made a part of the Bylaws so long as said agreement
is in force and effect.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the Corporation shall begin on the
first day of January and end on the thirty first day of
December of each year.
ARTICLE IX
DIVIDENDS
The Board of Directors may from time to time declare,
and the corporation may pay, dividends on its outstanding
shares in the manner and upon the terms and conditions
provided by law and its Articles of Incorporation.
<PAGE>
ARTICLE X
CORPORATE SEAL
The Board of Directors shall provide a corporate seal
which shall be circular in form and shall have inscribed
thereon the name of the Corporation and the state of
incorporation and the words "Corporate Seal".
ARTICLE XI
WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice
is required to be given to any shareholder or director of
the Corporation under the provisions of these Bylaws or
under the provisions of the Articles of Incorporation or
under the provisions of the applicable Business Corporation
Act, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the
time stated therein, shall be deemed equivalent to the
giving of such notice.
ARTICLE XII
AMENDMENTS
These Bylaws may be altered, amended or repealed and
new Bylaws may be adopted by the Board of Directors at any
regular or special meeting of the Board of Directors.
The above Bylaws are certified to have been adopted by
the Board of Directors of the Corporation on the 2nd day of
October, 1998.
/S/BERT BLEVINS
Secretary
DIGITAL MUSIC CREATIONS, INC.
A Nevada Corporation
Exhibit 10
Web Site Service and Marketing Agreement with Janeva Corporation
<PAGE>
Janeva Corporation INVOICE
------------------
3110 S. Valley View Blvd. Ste. 105 DATE INVOICE #
Las Vegas, NV 89102 2/8/99 3334
(702) 876-5956 ------------------
- --------------------------------------
BILL TO
- --------------------------------------
Digital Music Creations
c/o Frank Treadway
2209 Fawn Ridge St.
Las Vegas, NV 89134
- -------------------------------------- --------------------------
-P.O. NO.--TERMS--PROJECT-
- -------------------------------------- --------------------------
- -- -- -
--------------------------
- --------------------------------------------------------------------------------
DESCRIPTION RATE AMOUNT
- -------------------------------------------------------------------------------
Web Services- Creation of Website for 1,475.00 1,475.00
http:/www.createmusic.net
Marketing- Marketing plan and management of createmusic.net 800.00 800.00
- --------------------------------------------------------------------------------
Total $2,275.00
- --------------------------------------------------------------------------------
DIGITAL MUSIC CREATIONS, INC.
A Nevada Corporation
Exhibit 23
Consents of Independent Public Accountants
<PAGE>
James E. Slayton, CPA
3867 WEST MARKET
STREET SUITE 208
AKRON, OHIO 44333
To Whom It May Concern: June 18, 1999
The firm of James E. Slayton, Certified Public Accountant
consents to the inclusion of my report of June 18, 1999, on the
Financial Statements of Digital Music Creations, Inc. from the
inception date of September 29, 1998 through March 31, 1999, in
any filings that are necessary now or in the near future to be
filed with the U.S. Securities and Exchange Commission.
Professionally,
/s/James E. Slayton,
CPA
Ohio License ID#
04-1-15582
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<CAPTION>
DIGITAL MUSIC CREATIONS, INC.
A Nevada Corporation
Exhibit 27
Financial Data Schedule of Digital Music Creations, Inc.
Ending March 31, 1999
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 507
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 507
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 831
<CURRENT-LIABILITIES> 0
<BONDS> 360
0
0
<COMMON> 885
<OTHER-SE> (414)
<TOTAL-LIABILITY-AND-EQUITY> 831
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6404
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6404)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6404)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6404)
<EPS-BASIC> (0.008)
<EPS-DILUTED> (0.008)
</TABLE>
DIGITAL MUSIC CREATIONS, INC.
A Nevada Corporation
Exhibit 29
Option Agreement Between Frank Treadway III
and Digital Music Creations
<PAGE>
Option Agreement
This Option Agreement ("Agreement") is made this 2 d day of October, 1998
by and between the Frank Treadway III, an individual hereinafter referred
to as "Treadway"; and Digital Music Creations, Inc., a corporation
hereinafter referred to as "DMC".
RECITALS
WHEREAS, Treadway currently holds 100% of the issued and outstanding stock
of DMC; and
WHEREAS, DMC will be conducting a direct public offering of its common
shares of stock pursuant to Regulation D, Rule 504 of the Securities Act,
as amended, and, if that offering is fully sold, Treadway's ownership
percentage will be diluted to approximately 53.85%; and
WHEREAS, it has been determined to be in the best interests of both
Treadway and DMC that Treadway be given the option of increasing his
ownership percentage in DMC.
NOW, THEREFORE, in consideration of the mutual representations, warranties
and covenants herein contained, the parties hereto agree as follows:
1. Grant of Options. DMC hereby agrees to grant to Treadway the option to
purchase up to one million (1,000,000) shares of common stock of DMC, par
value $0.001, for par value. Said option shall be in effect until 5:00 p.m.
Pacific Daylight Time, May 1, 2000. Treadway shall be issued an Option
Certificate substantially in the form of Exhibit A, attached hereto and
incorporated herein by this reference.
2. Amendment and Modification. Subject to applicable law, this Agreement
may be amended, modified or supplemented only by a written agreement signed
by Treadway and DMC.
3. Waiver of Compliance, Consents.
3.1 Any failure of any party to comply with any obligation, covenant,
agreement or condition herein may be waived by the party entitled to the
performance of such obligation, covenant or agreement or who has the
benefit of such condition, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, or agreement or condition will
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
3.2 Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent will be given in a manner consistent with
the requirements for a waiver of compliance as set forth above.
4. Notices. All Notices, requests, demands and other communications
required or permitted hereunder will be in writing and will be deemed to
have been duly given when delivered by (i) hand; (ii) reliable overnight
delivery service; or (iii) facsimile transmission.
1
<PAGE>
If to Treadway, to: 2209 Fawn Ridge Street, Las Vegas, Nevada 89134
If DMC, to: 2209 Fawn Ridge Street, Las Vegas, Nevada 89134
5. Titles and Captions. All section titles or captions contained in this
Agreement are for convenience only and shall not be deemed part of the
context nor effect the interpretation of this Agreement.
6. Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
7. Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
8. Attorneys' 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.
9. Computation of Time. In computing any period of time pursuant to this
Agreement, the day of the act, event or default from which the designated
period of time begins to run shall be included, unless it is a Saturday,
Sunday or a legal holiday, in which event the period shall begin to run on
the next day that is not a Saturday, Sunday or legal holiday.
10. Pronouns and Plurals. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as
the identity of the person or persons may require.
11. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEVADA. THE PARTIES AGREE THAT ANY LITIGATION
RELATING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT MUST BE BROUGHT BEFORE
AND DETERMINED BY A COURT OF COMPETENT JURISDICTION WITHIN THE STATE OF
NEVADA.
12. Arbitration. If at any time 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 hereof, every such dispute,
difference, and disagreement shall be referred to a single arbiter agreed
upon by the 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 and such dispute, difference or disagreement shall
be settled by arbitration in accordance with the then prevailing commercial
rules of the American Arbitration Association, and judgment upon the award
rendered by the arbiter may be entered in any court having jurisdiction
thereof.
2
<PAGE>
13. Presumption. Ibis Agreement or any Section thereof shall not be
construed against any party due to the fact that said Agreement or any
section thereof was drafted by said party.
14. Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action
as may be necessary or appropriate to achieve the purposes of the
Agreement.
15. Parties in Interest. Nothing herein shall be construed to be to the
benefit of any third party, nor is it intended that any provision shall be
for the benefit of any third party.
16. Confidentiality. The parties shall keep this Agreement and its terms
confidential, but any party may make such disclosures as it reasonably
considers are required by law or necessary to obtain financing. In the
event that the transactions contemplated by this Agreement are not
consummated for any reason whatsoever, the parties hereto agree not to
disclose or use any confidential information they may have concerning the
affairs of other parties, except for information which is required by law
to be disclosed. Confidential information includes, but is not limited to,
financial records, surveys, reports, plans, proposals, financial
information, information relating to personnel contracts, stock ownership,
liabilities and litigation.
17 Costs, Expenses and Legal Fees. Whether or not the transactions
contemplated hereby are consummated, each party hereto shall bear its own
costs and expenses (including attorneys' fees).
18. Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws effecting during the
term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid and
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in nature in its terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid
and enforceable.
19. Counterparts and Facsimile Signatures. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. For
purposes of this Agreement, facsimile signatures shall be treated as
originals until such time that applicable pages bearing non-facsimile
signatures are obtained from the relevant party or parties.
1998. IN WITNESS WHEREOF, the parties hereto have set their hands this 2 d
day of October,
DIGITAL MUSIC CREATIONS, INC. FRANK TREADWAY
A Nevada Corporation ("DMC") An individual ("Treadway")
by: by:
/s/Frank B. Treadway III, President /s/Frank B. Treadway III
4
<PAGE>
EXHIBIT A
Option Certificate
<PAGE>
DIGITAL MUSIC CREATIONS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
OPTION CERTIFICATE
This Option Certificate certifies that
Frank B. Treadway III
is the registered holder of
One Million (1,000,000)
Options expiring May 1, 2000, $0.001 par value per share, of Digital Music
Creations, Inc., a Nevada corporation (the "Company"). Each Option entitles
the holder to purchase from the Company on or after the date hereof and on
or before the close of business on May 1, 2000, one fully paid
nonassessable share of Common Stock $0.001 par value per share, of the
Company (the "Shares") at the exercise price (the "Exercise Price") of
$0.001 payable in lawful money of the United States of America upon
surrender of this Option Certificate and payment of the Exercise Price at
the office of the Option Agent at 5844 S. Pecos Road, Suite D, Las Vegas,
Nevada 89120, or at such other place as the Company may designate by notice
to the Holder, but only subject to the conditions set forth herein.
The Company does not have the right to call in the Option prior to the
Option's Expiration Date.
Reference is hereby made to the further provisions of this Option
Certificate set forth on the reverse hereof and such further provisions
shall for all purposes have the same effect as though fully set forth at
this place,
This Option Certificate is not valid unless countersigned by the Transfer
Agent.
WITNESS the seal of the Corporation and the signature of its duly
authorized officers this 2nd day of October, 1998.
/s/Frank B. Treadway, President /s/Bert K. Blevins, Secretary
[SEAL]
<PAGE>
The Options evidenced by this Option Certificate are part of a duly
authorized issue of options expiring May 1, 2000 to purchase shares of
Common Stock, $0.001 par value per share of the Company and are issued
pursuant to a Option Agreement (the "Option Agreement") duly executed and
delivered by the Company to Pacific Stock Transfer Company as Option Agent
(the "Option Agent"), which Option Agreement is hereby incorporated by
reference in and made a part of his instrument and is hereby referred to
for a description of the rights, limitation of rights, obligations, duties
and immunities thereunder of the Option Agent, the Company and the holders
(the words "holders" or "holder" meaning the registered holders or
registered holder) of the Options.
Options may be exercised to purchase Shares from the Company on or after
the date hereof and on or before May 1, 2000, at the Exercise Price set
forth on the face hereof. The holder of Options evidenced by this Option
Certificate may exercise them by surrendering the Option Certificate, with
the form of election to purchase set forth herein properly completed and
executed, together with payment of the Exercise Price at the office of the
Option Agent. In the event that. upon any exercise of Options evidenced
hereby the number of Options exercised shall be less than the total number
of Options evidenced hereby, there shall be issued to the holder hereof or
his assignee a new Option Certificate evidencing the number of Options not
exercised.
The Company does not have the right to call the Options prior to the
Option's Expiration Date.
Option Certificates, when surrendered at the office of the Option Agent, by
the registered holder thereof in person or by legal representative by
attorney duly authorized in writing may be exchanged in the manner and
subject to the limitations provided in the Option Certificate or Option
Certificates of like tenor evidencing in the aggregate a like number of the
Options.
Upon due presentation for registration of transfer of this Option
Certificate at the office of the Option Agent, a new Option Certificate or
Option Certificates of like tenor and evidencing in the aggregate a like
number of Options shall be issued to the transferee in exchange for this
Option Certificate, subject to the limitations provided in the Option
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company and the Option Agent may deem and treat the registered holder
hereof as the absolute owner of this Option Certificate (notwithstanding
any notation of ownership or other writing thereon made by anyone) for the
purpose of any exercise of conversion thereof and for all other purposes,
and neither the Company nor the Option Agent shall be affected by any
notice to the contrary.
