U. S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
NET EXPRESSIONS, INC.
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(Name of Small Business Issuer in its charter)
Florida 65-0886799
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
222 Lakeview Avenue, Suite 160
West Palm Beach, Florida 33401
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (561) 832-5698
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class to be registered
None
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Securities to be registered under Section 12(g) of the Act:
Common Stock, $.0001 par value
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(Title of class)
Copies of Communications Sent to:
Donald F. Mintmire, Esq.
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Tel: (561) 832-5696
Fax: (561) 659-5371
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TABLE OF CONTENTS
PART I
Item 1 Description of Business.
Item 2 Management's Discussion and Analysis or Plan of Operation.
Item 3 Description of Property.
Item 4 Security Ownership of Certain Beneficial Owners and Management.
Item 5 Directors, Executive Officers, Promoters and Control Persons.
Family Relationships
Business Experience
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Item 6 Executive Compensation.
Compensation of Directors
Item 7 Certain Relationships and Related Transactions.
Item 8 Description of Securities.
Preferred Stock
PART II
Item 1 Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters.
Item 2 Legal Proceedings.
Item 3 Changes In and Disagreements With Accountants.
Item 4 Recent Sales of Unregistered Securities.
Item 5 Indemnification of Directors and Officers.
PART F/S Financial Statements.
PART III
Item 1 Index to Exhibits.
Item 2 Description of Exhibits.
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PART I
Item 1. Description of Business
(a) Development
Net Expressions, Inc. (the "Company" or "NEI") was organized as a
Florida Corporation on October 26, 1998. The Company was organized by Mr. Kevin
Slowick, the executive officer and director of the Company, for the purpose of
engaging in the development and sale of new and improved services in Internet
online tools software, the latest broadcasting support systems, internet
communications, as well as the latest trends in video broadcasting technology.
The Company's executive offices are presently located at 222 Lakeview Avenue,
Suite 243, West Palm Beach, Florida 33401 and its telephone number is (561)
832-5698.
The Company is filing this Form 10-SB on a voluntary basis so that the
public will have access to the required periodic reports on the Company's
current status and financial condition. The Company will file periodic reports
in the Event its obligation to file such reports is suspended under the
Securities and Exchange Act of 1934 (the "Exchange Act").
The Company has conducted organizational and fund raising activities
since its inception. NEI received gross proceeds in the amount of $50,000 from
the sale of a total of 1,000,000 shares of common stock, $.0001 par value per
share (the "Common Stock"), in an offering conducted pursuant to Section 3(b) of
the Securities Act of 1933, as amended (the "Act"), and Rule 504 of Regulation D
promulgated thereunder ("Rule 504"). This offering was made in the State of New
York and France. The Company undertook its offering of shares of Common Stock
pursuant to Rule 504 in February 1999. An offering memorandum was used in
connection with this offerings and the business plan of the Company which was
disclosed to each prospective investor was to provide for the development and
sale of new and improved services in internet online tools software, the latest
broadcasting support systems, as well as the latest trends in video broadcasting
technology. In March 1999, and on August 26, 1999, the Company offered
additional shares of Common Stock in an offering conducted pursuant to Section
4(2) and Rule 506 of Regulation D to a single investor and resident of France,
and received gross subscriptions in the amount of $110,000 from the sale of
500,000 shares of Common Stock.
There are no preliminary agreements or understandings between the
Company and its officers and directors or affiliates or lending institutions
with respect to any loan agreements or arrangements.
The Company intends to offer additional securities under Rule 506 of
Regulation D under the Act ("Rule 506) to fund its short and medium term
expansion plans. (See Part I, Item 1.
"Description of Business - (b) Business of Issuer.").
See (b) "Business of Issuer" immediately below for a description of the
Company's proposed business. As of the date hereof, the Company has no temporary
staff or clients for its contemplated operations.
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(b) Business of Issuer.
General
Since its inception, the Company has conducted organizational
activities and developed its business plan and its offerings of Common Stock
pursuant to which it has received gross offering proceeds in the amount of
$85,000. The Company has had no employees since its organization. It is
anticipated that the Company's sole executive officer and director will receive
a reasonable salary for services as executive officer at such time as the
Company's business operations justifies such commitments. (See Part I, Item 6.
"Executive Compensation.") This individual will devote such time and effort as
may be necessary to participate in the day-to-day management of the Company.
(See Part I, Item 5. "Directors, Executive Officers, Promoters and Control
Persons - Executive Officers and Directors.")
Mr. Slowick decided to pursue the NEI business because of his belief
that his formal training will enable him to develop a successful company which
will have the advantages of, among other things, greater availability of capital
and potential for growth through the vehicle of a public company as compared to
a privately-held company. The time required to be devoted to manage the
day-to-day affairs of the Company is presently estimated to be approximately ten
to twenty hours per week. This time commitment on the part of Mr. Slowick is
expected to increase at such time as NEI develops more business.
The Company will be dependent upon Mr. Slowick to develop the client
base with whom to conduct business. Mr. Slowick has experience in the business
and has consulted in the business for the last two (2) years. While Mr. Slowick
has been successful in the past, there can be no assurance that he will be
successful in building the customer base necessary for the successful operation
of the Company. (See Part I, Item 1. "Description of Business" (b) "Business of
Issuer - Risk Factors", "Dependence on Management.")
The Company intends to initially prospect services to consumers in the
South Florida area, then enlarging to the entire State of Florida and thereafter
nationwide. The Company plans to be able to provide a full spectrum of services
for its clients.
In its initial phase Mr. Slowick will begin by finding clients for the
Company. In the event the Company requires additional capital during this phase,
Mr. Slowick will seek additional funding for the Company.
Due to the limited capital available to the Company, the principal
risks during this phase are that the Company is dependent upon Mr. Slowick'
efforts, and that the Company will not be able to establish a sufficiently
profitable client base to establish the business. (See Part I, Item 1.
"Description of Business," (b) "Business of Issuer - Risk Factors", "Dependence
on Management").
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The Company has not sought as of yet any major debt financing since it
believes that any qualified venture capital firm will not loan any funds to the
Company until such time as it is fully reporting and has completed at least two
years of profitable operations. Once it has met their criteria, the Company
intends to seek out funds from licensed venture capital firms and to negotiate
terms which will fit the financial capabilities of the Company. Since the
Company does not intend to seek additional debt financing until the Company is
operating profitably, it believes that it can negotiate appropriate placement
and repayment terms for such borrowings. However, there can be no assurance that
such funds will be available to it or that suitable terms which are most
advantageous to the Company can be negotiated. In addition, the Company does
not, at this time, anticipate that it will require substantial leverage to fund
the operations. However, in the event the Company did receive debt financing and
in the event the Company is not successful in sustaining operations or meeting
such debt and defaulted in its payments on the debt, then such debt financing
would result in foreclosure upon the Company's assets to the detriment of its
shareholders.
Although the Company is authorized to borrow funds, as discussed, it
does not intend to do so until such time as it has been operating for a given
period of time. At such time as the Company seeks borrowed funds, it does not
intend to use the proceeds to make payments to the Company's promoters (if any),
management (except as reasonable salaries, benefits and out of pocket expenses)
or their respective affiliates or associates, if any. The Company has no present
intention of acquiring any assets or other property owned by any promoter,
management or their respective affiliates or associates or acquiring or merging
with a business or company in which the Company's promoters, management or their
respective affiliates or associates directly or indirectly have an ownership
interest. Existing conflict of interest provisions are set forth in the Articles
of Incorporation for the Company. Management is not aware of any circumstances
under which this policy, through their own initiative, may be changed. Although
there is no present potential for a related party transaction, in the event that
any payments are to be made to promoters and management such will be disclosed
to the security holders and no such payments will be made in breach of the
fiduciary duty such related persons have to the Company.
There are no arrangements, agreements or understandings between
non-management shareholders and management under which non-management
shareholders may directly or indirectly participate in or influence the
management of the Company's affairs. There are no arrangements, agreements or
understandings under which non-management shareholders will exercise their
voting rights to continue to elect the current directors to the Company's Board
of Directors.
As a reporting company the Company is required to file quarterly
reports on Form 10-QSB and annually on Form 10-KSB and in each case, is required
to provide the financial and other information specified in such forms. In
addition, the Company would be required to file on Form 8-K in the event there
was a change of control, if the Company acquires or disposes of assets, if there
is a bankruptcy or receivership, if the Company changes its certified public
accountants, upon the occurrence of other events which may be pertinent to the
security holders, and after certain resignations of directors. Being subject to
such reporting requirements reduces the pool of potential acquisitions or merger
candidates for the Company since such transactions require that certified
financials must be provided for the acquiring, acquired or merging candidate
within a specified period of time. That is why the Company intends to expand
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through internal operations through the short and medium term. At such time as
the Company will seek acquisitions or mergers, it will limit itself to companies
which either already have certified financial statements or companies whose
operations lend themselves to review for a certified audit within the required
time.
Business Strategy
The Company's business strategy is the development and sale of new and
improved services in internet online tools software, the latest broadcasting
support systems, as well as the latest trends in video broadcasting technology.
The Company's primary revenues will be based upon sales of services to the
consuming public. The Company's revenues are dependent on the number of
consumers who will purchase its services, the percentage of non-performing
receivables when such services are financed by the Company and advertising and
linkage revenue.
The Company is a developmental stage enterprise positioning itself to
profit from recent trends in video broadcasting technology and personal
communications on the internet. The Company believes that with a sound marketing
plan and reasonably priced online services, it will find a profitable niche in
this fast-growing international market.
The Company plans to achieve these objectives by continuously
researching the best online tools, software, and the latest broadcasting support
systems. The Company also plans to engage in research and development for new
and improved services. NEI plans to access a full digital production laboratory
in order to meet production demand. Equipment such as digital editing systems,
internet support systems, and sound and video systems will be utilized by the
Company. The NEI team will include internet designers, network developers, video
and editing professionals, computer artists, professional writers, sociologists
and psychologists, and behavioral specialists.
Strategies for Revenue Generation
NEI's marketing and sales strategy consists of dynamic and stand-alone
linking arrangements, advertising, and other promotions whereby links to other
web sites are listed on one's web site, and vice versa. Such linking
arrangements and agreements may or may not be reciprocal. The Company believes
that significant direct revenues will be generated by requesting a variable
service or user fee to each applicant, and by charging maintenance or update
fees when necessary. Significant indirect revenues will be generated by the sale
of advertising space once the traffic on the Web sites begins its growth phase.
The Company will sell banner advertising which can be generated by the Company
from sales of space to each company that wishes to advertise or which could be
generated by Internet advertising systems which rent such space and
automatically place such ads. NEI will arrange to have agreements with other
companies for the reciprocal linkage of their Web sites and related content.
This will generate revenue and increased Web traffic to the Company's sites.
Through such dynamic linking arrangements and opportunities the Company
will expand its indirect content. This indirect content will make its sites more
attractive and valuable to Internet visitors. The dynamic linkages will increase
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site traffic which will increase advertising rates that the Company will be able
to charge. Linkage and banner advertising arrangements will provide the Company
with an augmented revenue stream which does not solely rely upon subscription or
user fees.
Strategic Alliances
The Company intends to arrange various strategic alliances and
partnerships with other companies that will strengthen NEI's market position.
Besides various business and corporate related opportunities NEI will seek out
alliances with various Web sites for cross-promotion, advertising, and content
formation and sharing. The Company also intends on creating strategic alliances
with companies that sell products or services which can be relevant to the
Company's Web sites' content.
Web Sites and Direct Content
All services which NEI provides will be available for a fee on the
Company's parent Web- site, which will be divided into two main sites: "Virtual
Eternity" and "Virtual Feelings". These two main sites will be the method by
which the Company seeks to establish its basic Web presence. Further development
of such sites and the provision of additional add-on sites and content are
contemplated by the Company.
Virtual Eternity
The Virtual Eternity Service will be an eternal resting-place for life.
The Company will be committed to helping people preserve their heritage by
maintaining, via the internet, the biographies of people that may never have
made it into the world's encyclopedias or other biographical works. It is the
Company's belief that the technological medium of the internet may preserve the
wisdom and achievements of the common people of the world for all mankind, both
current and future, to access free of charge for generations. After an initial
donation there is no charge to access the biographies. Normal internet access
fees may apply, however most schools and libraries now provide such service for
free.
NEI plans to maintain an additional storage facility within the
continental United States where copies of all the biographical information that
the Company utilizes will be stored in the event of a natural disaster or
mainframe failure at the Company's primary location.
NEI will also utilize a technologically advanced search engine to make
it easy for the descendants to locate the biography of their choice within
seconds. Each individual biography may be searched either by name, date of
birth, place of birth, place of death, country of origin, occupation, hobbies,
favorite sayings, relationships, or any other key words that the applicant
selects.
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Virtual Feelings
The second division of NEI's main web-site will be the Virtual Feelings
Service. This service will be an online community that will grow continuously
and endlessly. The objective of the Company in providing such a service is to
help people express their feelings and communicate with each other by using
e-mail, video-mail, or any technologically advanced communication medium
available at the time.
NEI plans to capitalize on video-mail technology as part of its overall
business strategy. Video-mail, also known as video e-mail, is part of an
emergent trend that the internet community is embracing. Video-email software
packages currently operate by sending highly compressed audio and video clips as
attachments to e-mail.
NEI will develop three specific themes within the Virtual Feelings Web
site: "Declare Your Flame", "Mea-Culpa", and "My Cyber-News". The Company
believes that these themes will provide a unique strategic and competitive
advantage by their being such themes which are relatively rare on today's World
Wide Web. The Company believes that these personal and intimate themes will
allow the Company to achieve a primary mover advantage which is critical in the
development of successful Web based businesses.
Declare Your Flame
The Declare Your Flame site will not be intended to be comprehensive
but rather unique and intimate in its design. Through this site, people will be
able to access prose and poetry about beauty, love, and romance, and also be
able to send and receive a romantic message and communicate with their current
or future beloved. Applicants will be able to access pre-designed love letters
created by the team and forward them to someone they wish, or simply archive
them on the Company's site for a specific period of time.
Mea-Culpa
The Mea-Culpa theme within the Virtual Feelings site will involve the
internet's unique ability to make it easier than ever for people to send
apologetic-type correspondences. The Company decided to expand this idea by
providing a structured service allowing people to easily and nicely apologize to
someone. Professional letters of apology will be available, with different
levels of customization. These interactive letters will include the use of
photo, video, and animation features.
My Cyber-News
The third theme within the Company's Virtual Feelings site is My Cyber-
News. This site will focus on two of the most important events that affect one's
life: birth and marriage. People will be able to reveal to the world the
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important news that they wish to share by using certain categories such as
"Little Angel", "Happy Birthday!", or "Just Married!" The pre-designed
interactive message may also be archived on the site or forwarded to a
particular address.
Potential Results of Implementing Strategy
The Company's primary direct costs will be (i) salaries to Mr. Slowick
(payroll cost), (ii) marketing and sales related costs, (iii) employment related
taxes and expenses, and (iii) health benefits. (See Part I, Item 1, "Description
of Business,") Such costs will be incurred when the Company decides to place Mr.
Slowick on a payroll or provide other compensation. Employment related taxes
consist of the employer's portion of payroll taxes required under the Federal
Income Contribution Act ("FICA"), which includes Social Security and Medicare,
and federal and state unemployment taxes. The federal tax rates are defined by
the appropriate federal regulations. Health benefits are comprised primarily of
medical insurance costs, but also include costs of other employee benefits such
as prescription coverage, vision care, disability insurance and employee
assistance plans.
The Company's gross profit margin will be determined in part by its
ability to minimize and control operating costs, maximize its market penetration
as to Web-based arts services sales to the consuming public; being able to
provide reliable advertising revenue, linking, and content driven revenue; and,
how successful the Company will be in receivable financing.
The Company's objective is to become a dominant provider of Web-based
communications services first in a select geographic areas and then nationwide.
The Company has not decided which geographic areas will be targeted outside the
State of Florida and New York. To achieve this objective, and assuming that
sufficient operating capital becomes available, the Company intends to: (i)
provide a comprehensive package of Web-based personal and intimate
communications services to individuals and, (ii) focus on strategic partnerships
and alliances with other high technology companies involved in Web site
development.
Management expects in the event NEI achieves commercial success
initially to increase the Company's market penetration through internal
expansion. Management believes that due to the present economic environment,
expansion into markets beyond the United States could be especially attractive
because it is believed that the internal structuring of a successful operation
in the U.S. can be replicated in other select geographic areas with strong
growth opportunities. However, such expansion presents certain challenges and
risks. There is no assurance that NEI, even if it is successful in establishing
a presence in its targeted market, will be able to profitably penetrate these
additional markets.
Management
Mr. Slowick has been managing his own company in the industry for
approximately the past two (2) years. Under Mr. Slowick' direction, the Company
plans to offer clients a full array of internet related services. Mr. Slowick
will continue to fund his personal needs through his outside consulting
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activities, if any. An ongoing project for a current employer is now anticipated
to be completed in December 1999 and Mr. Slowick will devote more time to the
business of the Company thereafter and will not undertake additional work for
that employer.
It is anticipated, and subject to the availability of additional
funding, that the Company will employ a manager, additional clerical support and
an accountant.
The Company believes that its initial success will be due in part to
the familiarity of Mr. Slowick with the business. He will visit potential
strategic allies or partners on a regular schedule to allow for sales
development of the Company's services and to permit strong business
relationships to develop.
Management is unable at this time to forecast with any degree of
certainty the acceptance of the Company's services or the expenses of doing
business; however, NEI intends to aggressively market its programs in the
Company's target markets.
Sales and Marketing
The Company plans to market its service and programs through a
combination of marketing channels including direct sales and strategic
alliances. The Company believes that this multi-channel approach will allow the
Company to quickly acquire a critical mass of customers, penetrate a pool of
individual customers, develop regional awareness and ultimately become a market
leader in the provision of Web-based services. Of the marketing channels
intended to be employed by the Company, direct sales is recognized as the most
common in the industry; furthermore, strategic alliances have often been used.
In addition, linking and advertising is an often used means whereby a company
can further expand its revenue stream not only in obtaining additional outlets
for its services and sales but also by the receipt of such revenues. In
addition, another benefit to such business has been the further recognition of a
company's brand-name in the marketplace by consumers. Nevertheless, there can be
no assurance that any of these techniques will be used or will be successful.
The Company intends to compete, assuming that it is successful in obtaining
sufficient financing, with other companies in its target markets who may
currently provide programs.
The Company anticipates that its initial marketing efforts will be in
the area of direct sales. Good quality presentations and professional follow-up
with consumers will be essential to the Company's success. Initially, Mr.
Slowick will secure the Company's customer base. However, the Company
anticipates that it will employ qualified sales personnel to establish new
customer accounts. The Company believes that by employing its own sales
personnel it will be able to penetrate additional markets at a minimal cost
since sales associates receive compensation in the form of commissions based
upon a customers use of the Company's programs. This commission based
compensation program will reduce overhead costs for the Company.
The Company's ability to develop markets through the efforts of Mr.
Slowick and, eventually a sales force is, of course dependent upon management's
ability to obtain necessary financing, of which there can be no assurance.
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Assuming the availability of adequate funding, NEI intends to stay abreast of
changes in the marketplace by ensuring that it remains in the field and on the
Web, where customers and competitors can be observed firsthand.
The Company will attempt to maintain diversity within its customer and
advertising base in order to decrease its exposure to downturns or volatility in
any particular market segment. As part of this selection strategy, the Company
intends to offer its services to those consumers and strategic partners which
have a reputation for reputable dealings and, eliminating customers and
advertisers that it believes present a higher credit risk. Where feasible, the
Company will evaluate beforehand each customer, supplier, partner, strategic
partner, and advertiser for their creditworthiness.
Risk Factors
Before making an investment decision, prospective investors in the
Company's Common Stock should carefully consider, along with other matters
referred to herein, the following risk factors inherent in and affecting the
business of the Company.
1. Development Stage Enterprise. NEI was only recently organized on
October 26, 1998, and is in the early form of its development stage and must be
considered promotional. Management's efforts, since inception, have been
allocated primarily to organizational and fund raising activities and the
ability of the Company to establish itself as a going concern is dependent upon
the receipt of additional funds from operations or other sources to continue
those activities. Potential investors should be aware of the difficulties
normally encountered by a new enterprise in its development stage, including
under-capitalization, cash shortages, limitations with respect to personnel,
technological, financial and other resources and lack of a client base and
market recognition, most of which are beyond the Company's control. The
likelihood that the Company will succeed must be considered in light of the
problems, expenses and delays frequently encountered in connection with the
competitive environment in which the Company will operate. The Company's success
depends to a large extent on establishing a customer base. There is no guarantee
that the Company's proposed activities will attain the level of recognition and
acceptance necessary for the Company to find a niche in the industry. There are
numerous competitors in the markets that NEI will target, several of which are
large public companies, which are already positioned in the business and which
are better financed than the Company. There can be no assurance that the
Company, with its very limited capitalization, will be able to compete with
these companies and achieve profitability. (See Part I, Item 1. "Description of
Business.")
2. No Operating History, Revenues or Earnings. As of the date hereof,
the Company has not yet commenced operations and, accordingly, has received no
operating revenues or earnings. Since its inception, most of the time and
resources of NEI's management have been spent in organizing the Company,
obtaining funding and developing NEI's business plan. The Company's success is
dependent upon its obtaining additional financing from intended operations, from
placement of its equity or debt or from third party funding sources. The
Company's success in the business is dependent upon the purchasing of services
by consumers, which are not expected for the
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foreseeable future, and/or additional financing to enable the Company to
continue in operation. There is no assurance that NEI will be able to obtain
additional debt or equity financing from any source. The Company, during the
development stage of its operations, can be expected to sustain substantial
operating expenses without generating any operating revenues or the operating
revenues generated can be expected to be insufficient to cover expenses. Thus,
for the foreseeable future, unless the Company attains profitable operations,
which is not anticipated, the Company's financial statements will show an
increasing net operating loss. (See Part I, Item 1. "Description of Business.")
3. Minimal Assets, Working Capital and Net Worth. As of August 31,
1999, the Company had total assets in the amount of $73,430, shareholders equity
totaled $58,430 and accrued expenses totaled $15,000. As a result of its minimal
assets, as of August 31, 1999, the Company has very minimal net worth presently.
Further, NEI's working capital is presently minimal and there can be no
assurance that the Company's financial condition will improve. The Company is
expected to continue to have minimal working capital or a working capital
deficit as a result of current liabilities. The Company, at inception, issued
500,000 shares of the Company's Common Stock to Mr. Kevin Slowick, executive
officer and director of NEI, in consideration and exchange therefore for
services in connection with the organization of NEI performed for the Company by
him. The Company also sold stock pursuant to an exemption to the Securities Act
(See: Part I, Item 10. "Recent Sales of Unregistered Securities"). Even though
management believes, without assurance, that it will obtain sufficient capital
with which to implement its business plan on a limited scale, the Company is not
expected to continue in operation without an infusion of capital. In order to
obtain additional equity financing, management may be required to dilute the
interest of existing shareholders or forego a substantial interest of its
revenues, if any. (See Part I, Item 1. "Description of Business").
4. Need for Additional Capital: Going Concern Emphasis of Matter
included in the report of Independent Certified Public Accountants. Without an
infusion of capital or profits from operations, the Company is not expected to
continue in operation after the expiration of the period of twelve (12) months
from the date hereof. Accordingly the Company is not expected to become a viable
business entity unless additional equity and/or debt financing is obtained. An
explanatory paragraph regarding the Company's ability to continue as a going
concern has been included in the independent auditors report. The Company does
not anticipate the receipt of operating revenues until management successfully
implements its business plan, which is not assured. Further, NEI may incur
significant unanticipated expenditures which deplete its capital at a more rapid
rate because of among other things, the development stage of its business, its
limited personnel and other resources and its lack of a clients and market
recognition. Because of these and other factors, management is presently unable
to predict what additional costs might be incurred by the Company beyond those
currently contemplated to obtain additional financing and achieve market
penetration on a commercial scale in its proposed line of business. NEI has no
identified sources of funds, and there can be no assurance that resources will
be available to the Company when needed.
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5. Dependence on Management: The possible success of the Company is
expected to be largely dependent on the continued services of Mr. Kevin Slowick.
Virtually all decisions concerning the customers and users, advertisers, and
potential strategic partners to begin to contact, the type of services to
promote and direct marketing material to disseminate, and the establishment of a
customer profile database by the Company will be made or significantly
influenced by Mr. Slowick. He is presently serving as manager of his own company
and is required to devote a significant amount of time to the conduct of that
company's business. Mr. Slowick is expected to devote such time and effort to
the business and affairs of the Company as may be necessary to perform his
responsibilities as an executive officer of NEI. The loss of the services of Mr.
Slowick would adversely affect the conduct of the Company's business and its
prospects for the future. The Company presently holds no key-man life insurance
on the life of, and has no employment contract or other agreement with Mr.
Slowick.
6. No Customer Base. The Company was only recently organized. While NEI
intends to engage in the business of providing of Web-based communications
services the Company currently has no users or customers. Further, the very
limited funding currently available to the Company will not permit it to
commence business operations in the industry except on a very limited scale.
There can be no assurance that the debt and/or equity financing, which is
expected to be required by the Company in order for NEI to continue in business
after the expiration of the next twelve (12) months, will be available. The
Company has no users or customers presently and there can be no assurance that
it will be successful in obtaining such in its initial prospective marketing
area encompassing the U.S. NEI does not expect to have long-term contracts with
any customers; thus, management believes that the Company must, in order to
survive, ultimately obtain the loyalty of a large volume of customers. The
Company could be expected to experience substantial difficulty in attracting the
high volume of customers in the prospective target market which would enable NEI
to achieve commercial viability. The Company will be dependent upon Mr. Kevin
Slowick, who has approximately two (2) years of experience in the industry. (See
Part I, Item 1. "Description of Business," (b) "Business of Issuer - Business
Strategy; and - Sales and Marketing.")
7. High Risks and Unforeseen Costs Associated with NEI's Entry into the
Web-based Communications Industry. There can be no assurance that the costs for
the establishment of a customer base or for the obtaining of a substantial
volume of services directly with consumers by NEI will not be significantly
greater than those estimated by Company management. Therefore, the Company may
expend significant unanticipated funds or significant funds may be expended by
NEI without development of a commercially viable business. There can be no
assurance that cost overruns will not occur or that such cost overruns will not
adversely affect the Company. (See Part I, Item 1. "Description of Business,"
(b) "Business of Issuer", and "Seasonality.")
8. Ability to Grow. The Company expects to grow through internal
growth. The Company plans to expand its business from its current location and
by entry into other markets. There can be no assurance that the Company will be
able to create a market presence, or if such market presence is created, to
profitably expand its market presence or successfully enter other markets. The
ability of the Company to grow will depend on a number of factors, including the
availability of working capital to support such growth, existing and emerging
competition and the Company's ability to maintain sufficient profit margins in
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<PAGE>
the face of an increasingly competitive industry. The Company must also manage
costs in a changing regulatory environment, adapt its infrastructure and systems
to accommodate growth and recruit and train qualified personnel.
9. No Dividends. While payments of dividends on the Common Stock rests
with the discretion of the Board of Directors, there can be no assurance that
dividends can or will ever be paid. Payment of dividends is contingent upon,
among other things, future earnings, if any, and the financial condition of the
Company, capital requirements, general business conditions and other factors
which cannot now be predicted. It is highly unlikely that cash dividends on the
Common Stock will be paid by the Company in the foreseeable future.
10. No Cumulative Voting. The election of directors and other questions
will be decided by a majority vote. Since cumulative voting is not permitted and
one-third of the Company's outstanding Common Stock constitute a quorum,
investors who purchase shares of the Company's Common Stock may not have the
power to elect even a single director and, as a practical matter, the current
management will continue to effectively control the Company.
11. Control by Present Shareholders. The present shareholders of the
Company's Common Stock will, by virtue of their percentage share ownership and
the lack of cumulative voting, be able to elect the entire Board of Directors,
establish the Company's policies and generally direct its affairs. Accordingly,
persons investing in the Company's Common Stock will have no significant voice
in Company management, and cannot be assured of ever having representation on
the Board of Directors. (See Part I, Item 4. "Security Ownership of Certain
Beneficial Owners and Managers.")
12. Potential Anti-Takeover and Other Effects of Issuance of Preferred
Stock May Be Detrimental to Common Shareholders. Potential Anti-Takeover and
Other Effects of Issuance of Preferred Stock May Be Detrimental to Common
Shareholders. The Company is authorized to issue up to 10,000,000 shares of
preferred stock. $.0001 par value per share (hereinafter referred to as the
"Preferred Stock"); none of which shares has been issued. The issuance of
Preferred Stock does not require approval by the shareholders of the Company's
Common Stock. The Board of Directors, in its sole discretion, has the power to
issue shares of Preferred Stock in one or more series and to establish the
dividend rates and preferences, liquidation preferences, voting rights,
redemption and conversion terms and conditions and any other relative rights and
preferences with respect to any series of Preferred Stock. Holders of Preferred
Stock may have the right to receive dividends, certain preferences in
liquidation and conversion and other rights; any of which rights and preferences
may operate to the detriment of the shareholders of the Company's Common Stock.
Further, the issuance of any shares of Preferred Stock having rights superior to
those of the Company's Common Stock may result in a decrease in the value of
market price of the Common Stock provided a market exists, and additionally,
could be used by the Board of Directors as an anti-takeover measure or device to
prevent a change in control of the Company.
13. No Secondary Trading Exemption. In the event a market develops in
the Company's shares, of which there can be no assurance, secondary trading in
the Common Stock will not be possible in each state until the shares of Common
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<PAGE>
Stock are qualified for sale under the applicable securities laws of the state
or the Company verifies that an exemption, such as listing in certain recognized
securities manuals, is available for secondary trading in the state. There can
be no assurance that the Company will be successful in registering or qualifying
the Common Stock for secondary trading, or availing itself of an exemption for
secondary trading in the Common Stock, in any state. If the Company fails to
register or qualify, or obtain or verify an exemption for the secondary trading
of, the Common Stock in any particular state, the shares of Common Stock could
not be offered or sold to, or purchased by, a resident of that state. In the
event that a significant number of states refuse to permit secondary trading in
the Company's Common Stock, a public market for the Common Stock will fail to
develop and the shares could be deprived of any value.
14. Possible Adverse Effect of Penny Stock Regulations on Liquidity of
Common Stock in any Secondary Market. In the event a market develops in the
Company's shares, of which there can be no assurance, then if a secondary
trading market develops in the shares of Common Stock of the Company, of which
there can be no assurance, the Common Stock is expected to come within the
meaning of the term "penny stock" under 17 CAR 240.3a51-1 because such shares
are issued by a small company; are low-priced (under five dollars); and are not
traded on NASDAQ or on a national stock exchange. The Securities and Exchange
Commission has established risk disclosure requirements for broker-dealers
participating in penny stock transactions as part of a system of disclosure and
regulatory oversight for the operation of the penny stock market. Rule 15g- 9
under the Securities Exchange Act of 1934, as amended, obligates a broker-dealer
to satisfy special sales practice requirements, including a requirement that it
make an individualized written suitability determination of the purchaser and
receive the purchaser's written consent prior to the transaction. Further, the
Securities Enforcement Remedies and Penny Stock Reform Act of 1990 require a
broker-dealer, prior to a transaction in a penny stock, to deliver a
standardized risk disclosure instrument that provides information about penny
stocks and the risks in the penny stock market. Additionally, the customer must
be provided by the broker-dealer with current bid and offer quotations for the
penny stock, the compensation of the broker-dealer and the salesperson in the
transaction and monthly account statements showing the market value of each
penny stock held in the customer's account. For so long as the Company's Common
Stock is considered penny stock, the penny stock regulations can be expected to
have an adverse effect on the liquidity of the Common Stock in the secondary
market, if any, which develops.
Competitive Environment
The market for the Company's products and services is characterized by
rapidly changing technology, evolving industry standards and frequent
introduction of new products and services. The Company's success will partially
depend upon its ability to enhance its existing products and services and to
introduce new competitive products and services with features that meet changing
consumer requirements. In addition, there can be no assurance that services or
technologies developed by one or more of the Company's present or potential
competitors could not render obsolete both present and future products and
services of the Company.
There also can be no assurance that the Company's services will receive
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<PAGE>
or maintain substantial market acceptance. Changes in customer preferences could
adversely affect levels of market acceptance of the Company's products and
services and the Company's operating results.
The market that the Company operates in is characterized by competition
from new entrants, as well as competition by established participants. Although
the Company believes that it will be able to establish and maintain a sizable
market niche, there can be no assurance that a competitor with greater financial
and human resources than the Company will not enter the Company's market with
products and services similar or identical to those of the Company.
The Company's ability to compete successfully will depend in large part
on its ability to protect any proprietary technology it may develop. The Company
currently has no patents with respect to its product or service designs or
processes, and will attempt to protect its technology by limiting the people
with knowledge of its specifications to those with a need to know and by having
such persons execute confidentiality agreements. The Company will also rely, to
the extent possible, on trade secret law to protect its intellectual property.
There can be no assurance, however, that any intellectual property protection or
trade secret protection will be sufficient to protect the Company and its
business from others seeking to copy or appropriate the Company's proprietary
information.
The Company will compete with a wide range of companies in the
communications, entertainment, information, media, Web-based services,
technology, and electronic commerce fields for subscription, advertising,
commerce revenues, and in the development of technologies needed to serve
Internet consumers.
Some of the present competitors and potential future competitors of the
Company may have greater financial, technical, marketing or personnel resources
than the Company. In addition, as a result of acquisitions, certain competitors
are able to offer both Internet access and other services, such as "chat"
services, e-mail, instant messaging, video teleconferencing, and video
telephony. However, many large Internet providers and Internet access companies
while providing comparable services to those the Company will be providing do so
with a large subscriber base. While this subscriber base may allow better
economies of scale, it lacks the privacy and intimacy that Net Expressions can
provide. The company plans to keep its services and Internet sites in such a
manner as to allow the average Internet consumer to receive a different
experience and therefore level of service than the big Internet service
providers (ISPs) could otherwise provide in their marketing of ancillary
services which compete with Net Expressions.
Dependence on Key Customers and Suppliers
The Company is currently in the development stage and has no material
or critical customers, the loss of whom would have a material impact on
operations. The Company does not anticipate that it will develop such
relationships in the future.
Impact of Technological Change
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The Internet as a whole is characterized by rapidly changing technological
conditions, innovations and frequent new product and service introductions. The
Company's success will depend to a substantial degree on its ability to design,
develop and enhance its web pages and communication services. The Company will
also need to successfully market such services and to attract new customers.
This will require the timely selection, development and marketing of new
products or services and enhancements on a cost-effective basis. There can be no
assurance that the Company will achieve these objectives or that products or
services developed by others will not render the Company's web pages, services
or technologies noncompetitive. A fundamental technological change could have a
material adverse effect upon the Company.
Governmental Approvals and Regulations
The Company believes that no significant governmental approvals are
necessary for any of its products or services. Furthermore, the Company believes
that compliance with federal, state and local laws or regulations which have
been enacted or adopted to regulate the Internet environment has not had, nor
will have, a material effect upon the Company's competitive or financial
position. As an employer, the Company is subject to all federal, state and local
statutes and regulations governing its relationship with its employees and
affecting businesses generally.
A major risk of Internet companies in general is, however, the unknown
but potential regulation and taxation of Internet related activities. The
Internet industry is currently unregulated primarily because it is an
international business and communications network subject to selfregulation by
its participants. The United States government is examining the merits and
disadvantages of e-commerce in the current year and in future years. The Company
presently has no way to determine what the action of the United States
government might have on its future activities and related revenues and profit.
Research and Development
The Company has spent a minimal time to date on research and
development. Rather, the Company has spent its time and resources on developing
the conceptual framework for the Company's services and Web based strategies.
Therefore, Company's main focus to date has been to get the Corporation up and
running and to develop a marketing and sales strategy (which has been outlined
above). None of the costs of research and development were borne directly by
customers.
Employees
The Company has had no employees since its organization. In addition,
Mr. Slowick, (the Company's sole executive officer and director), has served in
those positions without compensation through the date hereof. Mr. Slowick was
compensated, in the form of restricted common stock for management services
relating to the formation of the Company and for financial consulting services.
The Company has not realized significant revenues since its inception
due to the fact that its key executive, Mr. Slowick, has committed to complete a
project with his current employer which was scheduled for completion in August
1999, but is now scheduled for completion in December 1999. Upon finishing his
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<PAGE>
product, Mr. Slowick will pursue internet services business because of the
belief that his prior formal business training, when combined with his years of
experience in the industry, will enable him to develop a successful company
which will have the advantages of among other things, greater availability of
capital and potential for growth through the vehicle of a public company as
compared to a privately-held company.
The Company may, however, from time to time, engage independent
contractors, financial and business consultants, computer and technology related
specialists, temporary employees, other professionals, and once deemed feasible
may hire additional permanent employees.
Reports to Security Holders
The Company will send out audited annual reports to its shareholders if
required by applicable law. Until such time, the Company does not foresee
sending out such reports.
The Company will make certain filings with the SEC as needed, and any
filings the Company makes to the SEC are available and the public may read and
copy any materials the Company files with SEC at the SEC's Public Reference Room
at 450 Fifth Street, N.W. Washington, D.C. 20549. The public may also obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains an Internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC at (http://www.sec.gov).
Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operations
Since its inception, the Company has conducted minimal business
operations except for organizational and capital raising activities. For the
period from inception (October 26, 1998) through August 31, 1999, the Company
had revenue from one project in the amount of $15,000 and operating expenses
amounted to $42,070, resulting in a net loss of $27,070 during this first period
of operation. The Company proposes to aggressively compete in the development
and sale of new and improved services in Internet online system tools software,
the latest broadcasting support systems, internet communications, as well as the
latest trends in video broadcasting technology.
Mr Kevin Slowick, 24 years old, is currently a student at the Academy
Art School. He has a specialty in the cinema business as well as a minor in
horticultural sciences. The Company believes that Mr. Slowick's interest in the
Internet combined with his cinematic interests will provide the Company with a
unique perspective and insight into how best to provide system tools for
internet broadcasting support. Mr. Slowick is interested in developing new and
improved services for Internet online system tools software, the latest
broadcasting support systems, internet communications, as well as the latest
trends in video broadcasting technology, for the following reasons: (i) because
of his belief that a public company could exploit his talents, services and
business reputation to commercial advantage and (ii) to observe directly whether
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<PAGE>
the perceived advantages of a public company, including, among others, greater
ease in raising capital, liquidity of securities holdings and availability of
current public information, would translate into greater profitability for a
public, as compared to a locally-owned company.
If the Company is unable to generate sufficient revenue from operations
to implement its expansion plans, management intends to explore all available
alternatives for debt and/or equity financing, including but not limited to
private and public securities offerings. Depending upon the amount of revenue,
if any, generated by the Company, management anticipates that it will be able to
satisfy its cash requirements for the next six (6) to twelve (12) months without
raising funds via debt and/or equity financing or from third party funding
sources. Accordingly, management expects that it will be necessary for the
Company to raise additional funds in the next twelve (12) months, commencing
approximately four (4) months from the date hereof, in the event that the
Company is unable to generate any revenue from operations and if only a minimal
level of revenue is generated in accordance with management's expectations.
Mr. Slowick, at least initially, will be solely responsible for
developing the Company's Internet online system tools software, the latest
broadcasting support systems, internet communications, as well as video
broadcasting technology. However, at such time, if ever, as sufficient operating
capital becomes available, he expects to employ additional staffing and a
regional sales manager. In addition, the Company expects to continuously engage
in market research in order to monitor new market trends and other critical
information deemed relevant to the Company's business.
In addition, at least initially, the Company intends to operate out of
an office provided by Mr. Slowick. Thus, it is not anticipated that the Company
will lease or purchase office space or computer equipment in the foreseeable
future. The Company may in the future establish its own facilities and/or
acquire computer equipment if the necessary capital becomes available; however,
the Company's financial condition does not permit management to consider the
acquisition of office space or equipment at this time.
Financial Condition, Capital Resources and Liquidity
At August 31, 1999, the Company had assets totaling $73,430 and
liabilities of $15,000 attributable to accrued legal expenses, organization
expenses and professional fees. Since the Company's inception, it has received
$85,000 in cash contributed as consideration for the issuance of shares of
Common Stock.
The Company's working capital is presently minimal and there can be no
assurance that the Company's financial condition will improve. The Company is
expected to continue to have minimal working capital or a working capital
deficit as a result of current liabilities. The Company, at inception, issued
500,000 shares of the Company's Common Stock to Mr. Slowick, the sole executive
officer and director of the Company in exchange for services in connection with
the organization of the Company. In February 1999 the Company received gross
proceeds of $50,000 from the sale of a total of 1,000,000 shares of common
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stock, $.0001 par value per share (the "Common Stock"), in one (1) offering
conducted pursuant to Section 3(b) of the Act, as amended (the "Act"), and Rule
504 of Regulation D promulgated thereunder ("Rule 504") (See: Part II. Item 4.
"Recent Sales of Unregistered Securities). These offerings were made to
residents in the State of New York and European residents. Even though
management believes, without assurance, that it will obtain sufficient capital
with which to implement its business plan on a limited scale, the Company is not
expected to continue in operation without an infusion of capital. In order to
obtain additional equity financing, management may be required to dilute the
interest of existing shareholders or forego a substantial interest of its
revenues, if any. (See Part I, Item 1. "Description of Business"; See Part I,
Item 4. "Security Ownership of Certain Beneficial Owners and Management" and
Part I, Item 7. "Certain Relationships and Related Transactions.")
The Company has no potential capital resources from any outside sources
at the current time. In its initial phase, the Company will operate out of the
facility provided by Mr. Slowick. To attract clients, Mr. Slowick will visit
potential clients in order to determine their needs. The Company will also place
advertising in local area newspapers and directly solicit prospective clients to
increase brand-name awareness. In the event the Company requires additional
capital during this phase, Mr. Slowick has committed to fund the operation until
such time as additional capital is available. The Company believes that it will
require six (6) to nine (9) months in order to determine the market demand
potential.
The ability of the Company to continue as a going concern is dependent
upon its ability to obtain a sufficiently large and profitable client base to
purchase its services. The Company believes that it will be able to expand its
initial operations, hire clerical staff and acquire through purchase or lease a
computer and office equipment to maintain accurate financial accounting and
client data. The Company believes that there is adequate and affordable rental
space available in West Palm Beach, Florida where it can hire sufficiently
trained personnel to provide such clerical services at affordable rates.
Further, the Company believes that the type of office equipment necessary for
the operation is readily accessible at competitive rates.
To implement such plan, also during this initial phase, the Company
intends to initiate a selfdirected private placement under Rule 506 in order to
raise an additional $100,000. In the event such placement is successful, the
Company believes that it will have sufficient operating capital to meet the
initial expansion goals and operating costs for a period of one (1) year. In the
event the Company is not successful in raising such funds, the Company believes
that it will not be able to continue operations past a period of six (6) to
twelve (12) months.
Research and Development Plans
At this time it is uncertain to what extent research and development in
proprietary technologies will occur over the next twelve months. For the next
twelve months there is no significant current plan for funding extensive
research and development efforts. However, if the Company deems it feasible, it
may develop and execute such a plan. There are no current plans to invest in the
purchase or sale of plant and significant equipment. The Company also does not
at this time foresee any expected significant changes in the number of permanent
employees.
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Impact of the Year 2000 Issue
The Year 2000 Issue is the result of potential problems with computer
systems or any equipment with computer chips that use dates where the date has
been stored as just two digits (e.g. 98 for 1998). On January 1, 2000, any clock
or date recording mechanism including date sensitive software which uses only
two digits to represent the year, may recognize the date using 00 as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruption of operations, including among other things,
a temporary inability to process transactions, send invoices, or engage in
similar activities.
The Company determined that the Year 2000 impact is not material to NEI
and that it will not impact its business, operations or financial condition
since all of the internal software utilized by the Company has the capability of
being upgraded to support Year 2000 versions.
The Company believes that it has disclosed all required information
relative to Year 2000 issues relating to its business and operations. However,
there can be no assurance that the systems of other companies on which the
Company's systems rely also will be timely converted or that any such failure to
convert by another company would not have an adverse affect on the Company's
systems.
Forward-Looking Statements
This Form 10-SB includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included or incorporated by reference in
this Form 10-SB which address activities, events or developments which the
Company expects or anticipates will or may occur in the future, including such
things as future capital expenditures (including the amount and nature thereof),
demand for the Company's products and services, expansion and growth of the
Company's business and operations, and other such matters are forward-looking
statements. These statements are based on certain assumptions and analyses made
by the Company in light of its experience and its perception of historical
trends, current conditions and expected future developments as well as other
factors it believes are appropriate in the circumstances. However, whether
actual results or developments will conform with the Company's expectations and
predictions is subject to a number of risks and uncertainties, general economic
market and business conditions; the business opportunities (or lack thereof)
that may be presented to and pursued by the Company; changes in laws or
regulation; and other factors, most of which are beyond the control of the
Company. Consequently, all of the forward-looking statements made in this Form
10-SB are qualified by these cautionary statements and there can be no assurance
that the actual results or developments anticipated by the Company will be
realized or, even if substantially realized, that they will have the expected
consequence to or effects on the Company or its business or operations. The
Company assumes no obligations to update any such forward-looking statements.
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Item 3. Description of Property.
The Company does not currently own any real property. The Company's
executive offices are located at 222 Lakeview Avenue, Suite 160, West Palm
Beach, Florida 33401. The Company pays no rent for this space.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
Security Ownership of Certain Beneficial Owners
The following shareholding information relates to any person or group
who is known to be the beneficial owner of more than five percent of any class
of the issuer's voting securities:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
(4) (2) (3) (4)
Title of Name and Ad- Amount and Percent of
Class dress of Benefi- Nature of Ben- Class
cial Owner eficial Owner
- --------------------------------------------------------------------------------
Common Stock Kevin Slowick(1) 500,000 29.41%
255 North 8 Apt 4R
Brooklyn, NY 11211
- --------------------------------------------------------------------------------
Common Stock Bruno Verganti(1) 200,000 11.76%
BP 177 Domaine Des Pairs
97095 St. Barthelemy FWI
- --------------------------------------------------------------------------------
All Executive Officers, Directors 500,000 29.41%
</TABLE>
(1) Based upon 1,700,000 shares of the Company's Common Stock issued and
outstanding as of August 31, 1999.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
Executive Officers and Directors
Set forth below are the names, ages, positions with the Company and
business experiences of the executive officers and directors of the Company.
Name Age Position(s) with Company
- ------ --- ------------------------
Kevin S. Slowick 24 President, Secretary,
Chief Executive Officer & Director
Directors hold office until the next annual meeting of the Company's
shareholders and until their successors have been elected and qualify. Officers
serve at the pleasure of the Board. Mr.Slowick will devote such time and effort
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to the business and affairs of the Company as may be necessary to perform his
responsibilities as executive officer and/or director of the Company.
Aside from the above officer and director, there are no other persons
whose activities will be material to the operations of the Company at this time.
Mr. Slowick is the sole "promoter" of the Company as such term is defined under
the Act.
Family Relationships
There are no family relationships between or among the executive
officer and director of the Company.
Business Experience
Sole Officer and Director
Kevin Slowick is currently the sole officer (President) and director of
the Company. He has served as the sole Executive of the Company since its
inception. Kevin Slowick is 24 years of age and is currently a student. He is
currently attending the Academy Art School, with a specialty in the cinema
business. His term of office is indefinite or until such time as his death,
retirement, or disability or at such time as there is an applicable shareholder
vote altering such term. Mr. Slowick has no business experience in the internet
software business. His training in the cinema will assist him in the development
of video broadcasting and its technology.
Compliance with Section 16(a) of the Securities Exchange Act of 1934:
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors and persons who own more
than 10% of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission (hereinafter referred to as the
"Commission") initial statements of beneficial ownership, reports of changes in
ownership and annual reports concerning their ownership, of Common Stock and
other equity securities of the Company on Forms 3, 4 and 5, respectively.
Executive officers, directors and greater than 10% shareholders are required by
Commission regulations to furnish the Company with copies of all Section 16(a)
reports they file. To the Company's knowledge, Mr. Slowick comprises all of the
Company's executive officers, directors and greater than 10% beneficial owners
of its common Stock, and has complied with Section 16(a) filing requirements
applicable to him during the Company's fiscal year ended April 30, 1999 up to
the third quarter ended January 31, 1999.
Item 6. Executive Compensation:
The Company, in consideration for various services performed for the
Company, issued to Mr. Slowick, the Company's sole executive officer and/or
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director 500,000 shares of restricted common stock. Except for the
above-described compensation, it is not anticipated that any executive officer
of the Company will receive any cash or non-cash compensation for his or her
services in all capacities to the Company until such time as the Company
commences business operations. At such time as NEI commences operations, it is
expected that the Board of Directors will approve the payment of salaries in a
reasonable amount to its officer for his services. At such time, the Board of
Directors may, in its discretion, approve the payment of additional cash or
non-cash compensation for services to the Company.
The Company does not provide officers with pension, stock appreciation
rights, long-term incentive or other plans but has the intention of implementing
such plans in the future.
Compensation of Directors
The Company has no standard arrangements for compensating the directors
of the Company for their attendance at meetings of the Board of Directors.
Item 7. Certain Relationships and Related Transactions:
On October 26, 1998, at inception, the Company committed to and
subsequently issued 500,000 shares of restricted Common Stock to Mr. Slowick,
the President and Treasurer of the Company and record and beneficial owner of
approximately 29.41 % of the Company's outstanding Common Stock, in
consideration and exchange therefore for services in connection with the
organization of NEI performed for the Company by him.
At the current time, the Company has no provision to issue any
additional securities to management, promoters or their respective affiliates or
associates. At such time as the Board of Directors adopts an employee stock
option or pension plan, any issuance would be in accordance with the terms
thereof and proper approval. Although the Company has a very large amount of
authorized but unissued Common Stock and Preferred Stock which may be issued
without further shareholder approval or notice, the Company intends to reserve
such stock for the Rule 506 offerings contemplated to implement continued
expansion, for acquisitions and for properly approved employee compensation at
such time as such plan is adopted. (See Part I, Item 1. "Description of Business
- - (b) Business of Issuer.")
Item 8. Description of Securities.
The Company is authorized to issue 50,000,000 shares of Common Stock,
$0.0001 par value. The issued and outstanding shares of Common Stock being
registered hereby are validly issued, fully paid and non-assessable. The holders
of outstanding shares of Common Stock are entitled to receive dividends out of
assets legally available therefor at such times and in such amounts as the Board
of Directors may from time to time determine.
All shares of Common Stock have equal voting rights and, when validly
issued and outstanding, have one vote per share in all matters to be voted
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upon by the stockholders. A majority vote is required on all corporate action.
Cumulative voting in the election of directors is not allowed, which means that
the holders of more than 50% of the outstanding shares can elect all the
directors as they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any directors. The shares of Common
Stock have no preemptive, subscription, conversion or redemption rights and can
only be issued as fully paid and non-assessable shares. Upon liquidation,
dissolution or winding-up of the Company, the holders of Common Stock are
entitled to receive a pro rata of the assets of the Company which are legally
available for distribution to stockholders.
Preferred Stock
The Company is authorized to issue 10,000,000 shares of Preferred
Stock, $0.0001 par value. Currently there are no issued and outstanding
preferred shares of the Company.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
Market Information
There is no public trading market currently for the Company's stock.
Shareholders
The approximate number of holders of record of common equity is 32 as
of November 1, 1999.
Dividends
The Company has never declared or paid any cash dividends on its common
stock and does not intend to declare any dividends in the foreseeable future.
Item 2. Legal Proceedings.
The Company is not engaged in any legal proceedings and the Company is
unaware of any legal proceedings against it.
Item 3. Changes in and Disagreements with Accountants.
Because the Company has been generally inactive since its inception, it
did not have and independent accountant until the retention of The DeCarlo Group
Certified Public Accountants and Management Consultants, located at 1001
Brickell Bay Drive, 27th Floor, Miami, FL 33131. There has been no change in the
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Company's independent accountant during the period commencing with the Company's
retention of The DeCarlo Group CPA's through the date hereof.
Item 4. Recent Sales of Unregistered Securities.
On October 26, 1998, the Company issued 500,000 shares of restricted
Common Stock to Mr. Kevin S. Slowick, sole officer and director of the Company
and record and beneficial owner of approximately 29.41% of the Company's
outstanding Common Stock, in consideration and exchange therefore for services
in connection with the organization of NEI performed for the Company by him.
The Company sold an aggregate of 1,000,000 shares of Common Stock for
cash consideration totaling $50,000.00 in an offering conducted pursuant to
Section 3(b) of the Securities Act of 1933, as amended (the "Act"), and Rule 504
of Regulation D promulgated thereunder ("Rule 504"). This offering was made in
the State of New York and France. The Company undertook its offering of shares
of Common Stock pursuant to Rule 504 in February 1999. No underwriter was
employed in connection with the offering and sale of the shares. The Company
claimed the exemption from registration in connection with each of the offerings
provided under Section 3(b) of the Act and Rule 504 of Regulation D promulgated
thereunder, Section 10-5-9(13) of the Georgia Code and Section 517.061(11) of
the Florida Code.
The Company sold an aggregate of 500,000 shares of Common Stock
totaling $110,000.00 in an additional offering conducted pursuant to Section
4(2) and Rule 506 of Regulation D to a single investor and resident of France,
and received gross subscriptions in the amount of $110,000 from the sale of such
shares of Common Stock. The subscription payments through October 31, 1999 total
$85,000.
The facts relied upon the by the Company to make the federal exemption
available include the following: (i) the aggregate offering price for the
offering of the shares of Common Stock did not exceed $1,000,000, less the
aggregate offering price for all securities sold within the twelve months before
the start of and during the offering of the shares in reliance on any exemption
under Section 3(b) of, or in violation of Section 5(a) of, the Act; (ii) no
general solicitation or advertising was conducted by the Company in connection
with the offering of any of the shares; (iii) the fact that the Company has not
been since its inception (a) subject to the reporting requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended; (b) an "Investment
Company" within the meaning of the Investment Company Act of 1940, as amended;
or (c) a development stage Company that either has no specific business plan or
purpose or has indicated that its business plan is to engage in a merger or
acquisition with an unidentified company or companies, or other entity or
person; and (iv) the required number of manually executed originals and true
copies of Form D were duly and timely filed with the U.S. Securities and
Exchange Commission.
The facts relied upon to make the New York Exemption available include
the following: (i) the aggregate number of persons purchasing the Company's
stock during the 12 month period ending on the date of issuance did not exceed
40 persons(including offerees who reside outside the State of New York); (ii)
neither the offer nor the sale of any of the shares was accomplished by a public
26
<PAGE>
solicitation or advertisement; (iii) that at the time of filing no offering had
yet been made to any resident of the State of New York, (iv) that the offering
is to be made to personal friends, relatives and business associates and other
principals of the issuer, (v) these common shares have been issued or sold in
reliance of Section 359-f(2) of the New York General Business Law, (vi) each
purchaser executed a statement to the effect that the securities purchased have
been purchased for their own account and not for the resale to any other
persons; (vii) that they have adequate means of providing for their current
needs and possible personal contingencies; and (viii) they do not have a need
for liquidity of this investment.
Item 5. Indemnification of Directors and Officers.
Article XI of the Company's Articles of Incorporation contains
provisions providing for the indemnification of directors and officers of the
Company as follows:
(a) The corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, of any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is otherwise serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him in connection with such action, suit or proceeding, if he acted
in good faith and in a manner he reasonably believed to be in, or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, has no reasonable cause to believe his conduct is unlawful. The
termination of any action, suit or proceeding, by judgment, order, settlement,
conviction upon a plea of nolo contendere or its equivalent, shall not of itself
create a presumption that the person did not act in good faith in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, had
reasonable cause to believe the action was unlawful.
(b) The corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, to any threatened, pending or completed
action or suit by or in the right of the corporation, to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he acted in
good faith and in a manner he reasonably believed to be in, or not, opposed to,
the best interests of the corporation, except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the corporation, unless, and only to the extent that, the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability, but in view of all circumstances of the
27
<PAGE>
case, such person is fairly and reasonably entitled to indemnification for such
expenses which such court deems proper.
(c) To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections (a) and (b) of this Article,
or in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorney's fees) actually and reasonably incurred by
him in connection therewith.
(d) Any indemnification under Section (a) or (b) of this Article
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the officer,
director and employee or agent is proper in the circumstances, because he has
met the applicable standard of conduct set forth in Section (a) or (b) of this
Article. Such determination shall be made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (ii) if such quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (iii) by the affirmative vote of the holders of
a majority of the shares of stock entitled to vote and represented at a meeting
called for purpose.
(e) Expenses (including attorneys' fees) incurred in defending a civil
or criminal action, suit or proceeding may be paid by the corporation in advance
of the final disposition or such action, suit or proceeding, as authorized in
Section (d) of this Article, upon receipt of an understanding by or on behalf of
the director, officer, employee or agent to repay such amount, unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this Article.
(f) The Board of Directors may exercise the corporation's power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under this Article.
(g) The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under these Amended Articles of Incorporation, the Bylaws, agreements,
vote of the shareholders or disinterested directors, or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office and shall continue as to person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the heirs
and personal representative of such a person.
The Company has no agreements with any of its directors or executive
offices providing for indemnification of any such persons with respect to
liability arising out of their capacity or status as officers and directors.
28
<PAGE>
At present, there is no pending litigation or proceeding involving a
director or executive officer of the Company as to which indemnification is
being sought.
PART F/S
The Financial Statements of NEI required by Item 310 of Regulation SB
commence on page F-1 hereof in response to Part F/S of this Registration
Statement on Form 10-SB and are incorporated herein by this reference.
<PAGE>
NET EXPRESSIONS, INC.
(A Development Stage Enterprise)
AUDITED FINANCIAL STATEMENTS
For Period October 26, 1998 (Date of Inception)
through August 31, 1999
INDEX TO AUDITED FINANCIAL STATEMENTS
<TABLE>
Page
<S> <C>
Report of Independent Certified Public Accountant F-2
Balance Sheet F-3
Statement of Operations F-4
Statement of Changes in Stockholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
</TABLE>
<PAGE>
THE DeCARLO GROUP
CERTIFIED PUBLIC ACCOUNTANTS * MANAGEMENT consultants
MICHAEL A. DECARLO, JR., CPA
Managing Director
[email protected]
KEVIN G. KIRKEIDE, CPA
Director
[email protected]
LAWRENCE H. WOLFE, CPA
Director
[email protected]
PROFESSIONAL MEMBERSHIPS:
AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS
DIVISION OF FIRMS SECURITIES AND
EXCHANGE COMMISSION PRACTICE SECTION
DIVISION OF FIRMS PRIVATE
COMPANIES PRACTICE SECTION
FLORIDA INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
To the Board of Directors
Net Expressions, Inc.
West Palm Beach, FL
We have audited the accompanying balance sheet of Net Expressions, Inc. (A
Development Stage Enterprise) (the "Company") as of August 31, 1999, and the
related statements of operations, changes in stockholders' equity, and cash
flows for the period October 26, 1998 (Date of Inception) through August 31,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Net Expressions, Inc. as of
August 31, 1999, and the results of its operations and its cash flows for the
period then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note A to the
financial statements, the Company is a development stage enterprise that has not
commenced its planned principal operations. Accordingly, the Company's ability
to continue as a going concern is dependent on its ability to obtain financing
for its operations during the development stage. Management's plans in regard to
this matter are also described in Note A. These financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ DeCarlo Group
The DeCarlo Group
November 8, 1999
Miami, FL
F-2
1001 brickell bay drive * 27th FLOOR * MIAMI * FLORIDA * 33131
OFFICE 305-358-9904 * FACSIMILE 305-358-9905
E-MAIL www.decarlogroup.com
<PAGE>
<TABLE>
<CAPTION>
NET EXPRESSIONS, INC.
(A Development Stage Enterprise)
BALANCE SHEET
August 31, 1999
ASSETS
<S> <C>
Cash $ 73,430
TOTAL ASSETS $ 73,430
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued professional fees $ 15,000
TOTAL LIABILITIES 15,000
COMMITMENTS AND
CONTINGENCIES - Notes A, C, D, and E
STOCKHOLDERS' EQUITY - Notes B, C and F
Common stock, par value $.0001 per
share, 50,000,000 shares authorized, 1,700,000
shares issued and outstanding 170
Preferred stock, par value $.0001,
10,000,000 shares authorized -
Additional paid-in capital 85,330
Deficit accumulated during the development
stage (27,070)
Total Stockholders' Equity 58,430
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 73,430
</TABLE>
The accompanying notes are an integeral part of the Finacial Statements
F-3
<PAGE>
<TABLE>
<CAPTION>
NET EXPRESSIONS, INC.
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
For the Period October 26, 1998 (Date of Inception) through August 31, 1999
<S> <C>
Revenues $ 15,000
Expenses - Notes A and C:
Organizational expenses 2,070
Professional fees 15,000
Research and development costs 25,000
Total expenses 42,070
LOSS BEFORE INCOME TAX BENEFIT $(27,070)
Income tax benefit - Notes A and E -
NET LOSS $(27,070)
Loss per share of Common Stock - Note F
Basic $
(0.018)
</TABLE>
The accompanying notes are an integeral part of the Finacial Statements
F-4
<PAGE>
<TABLE>
<CAPTION>
NET EXPRESSIONS, INC.
(A Development Stage Enterprise)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period October 26, 1998 (Date of Inception)
through August 31, 1999
Common Stock - Notes B, C and F
Deficit Accumulated
Par Additional during the
Shares Value Stock Subscriptions Paid-in Development
Date Issued $0.0001 Subscribed Recievable Capital Stage Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE - OCTOBER 26, 1998 - $ - - - $ - - $ -
Common stock issued to
officer for consulting services February
rendered, at $.001 per share 17, 1999 500,000 50 - - 450 - 500
Common stock issued pursuant
to Regulation D Offering February
Memorandum at $.05 per share 17, 1999 1,000,000 100 - - 49,900 - 50,000
Received a Subscription to sell
100,000 restricted shares of
common stock at $.10 per share March 29, 10,000
1999 - - (10,000) - - -
Received cash payment for
Subscription at $.10 per share 100,000
10 (10,000) 10,000 9,990 - 10,000
Received a Subscription to sell
400,000 restricted shares of
common stock at $.25 per share August 26,
1999 - - 100,000 (100,000) - - -
Received installment payment for
Subscription at $.25 per share August 30,
1999 100,000 10 (25,000) 25,000 24,990 - 25,000
Net Loss
- - - - - (27,070) (27,070)
BALANCE - AUGUST 31, 1999 1,700,000 $170 $75,000 $(75,000) $85,330 $(27,070) $58,430
</TABLE>
The accompanying notes are an integeral part of the Finacial Statements
F-5
<PAGE>
<TABLE>
<CAPTION>
NET EXPRESSIONS, INC.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
For the Period October 26, 1998 (Date of Inception)
through August 31, 1999
<S> <C>
Cash flows used in operating activities:
Net loss $(27,070)
Adjustment to reconcile net loss to
cash used by operating activities:
Consulting fees 500
Change in assets and liabilities:
Increase in accrued expenses 15,000
NET CASH USED IN OPERATING ACTIVITIES (11,570)
Cash flows provided by financing activities:
Proceeds on sale of common stock 85,000
CASH PROVIDED BY FINANCING ACTIVITIES 85,000
NET INCREASE IN CASH 73,430
CASH -- BALANCE AT OCTOBER 26, 1998 -
CASH -- BALANCE AT AUGUST 31, 1999 $ 73,430
</TABLE>
The accompanying notes are an integeral part of the Finacial Statements
F-6
<PAGE>
NET EXPRESSIONS, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
For the Period October 26, 1998 (Date of Inception) through August 31, 1999
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Summarized below are the significant accounting policies of Net Expressions,
Inc.
The Company: Net Expressions, Inc. (the "Company"), incorporated in the State of
Florida effective October 26, 1998, maintains its corporate office in West Palm
Beach, Florida. Because the Company meets the criteria of a development stage
enterprise, as discussed more fully below, it must present its financial
statements in accordance with Statements of Financial Accounting Standards
(SFAS) Number 7, Accounting and Reporting by Development Stage Enterprises.
Nature of the Business: The Company plans on engaging in the development and
sale of new and improved services in Internet on-line tools software,
broadcasting support systems, internet communications and video broadcasting
technology. Initial sales and marketing efforts will be focused on South
Florida, with subsequent expansion throughout Florida and nationwide.
Basis of Presentation: In accordance with SFAS No.7, the Company, when
applicable, presents for each accounting period being reported, the cumulative
amounts of revenues and expenses and cash flows for the period from inception
through the most recent period ended.
The Company's financial statements have been prepared assuming the Company will
continue as a going concern. Its short and medium term success is dependent on
its ability to obtain additional financing from the placement of equity or debt
or obtaining funding from other third party sources. The Company's ultimate
success depends on its ability to, among other things, establish a customer
base, obtain customer acceptance, identify suppliers, and find a niche in the
industry, while competing with large companies that are already positioned in
the targeted business of the Company. There are no assurances that the Company
will be able to develop and market its products and services, obtain profitable
operations, or raise the necessary financing. These financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Development Stage Enterprise and Going Concern: The Company is currently
devoting substantially all of its efforts to establishing a new business and its
planned principal operations have not commenced as of November 8, 1999. In their
efforts to establish a new business, management is commencing with the design of
its business and marketing plans that include the following: preparation of a
financial plan, cash forecast and operating budget; identifying markets to raise
additional equity capital; embarking on research and development activities;
performing employment searches,
F-7
<PAGE>
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
Continued
recruiting and hiring technicians, management and industry specialists;
acquiring operational and technological assets; and developing market and
distribution strategies.
Research and Development Cost: Costs that provide no discernible future benefits
and costs to be allocated on the basis of association with revenues or among
several accounting periods that serve no useful purpose, are charged to expense
in the period incurred. The Company is in its development stage and has adopted
SFAS No. 2, Accounting for Research and Development Costs, as an accounting
policy. This policy requires the expensing of certain costs including, but not
limited to, the following: salaries and benefits, certain consulting and
professional fees, depreciation, repairs and maintenance on operational assets
used in the production of prototypes, testing and modifying product and service
capabilities and design and other similar costs.
Start-up Costs: Costs incurred in connection with commencing operations,
including general and administrative expenses, are charged to operations in the
period incurred.
Income Taxes: Income taxes are accounted for using the asset and liability
method, following Statement of Financial Accounting Standards (SFAS) Number 109,
Accounting for Income Taxes. Deferred taxes are recognized for the tax
consequences of "temporary differences" by applying enacted statutory tax rates
applicable to future years to differences between the financial statement
carrying amounts and the tax bases of existing assets and liabilities. The
effect on deferred taxes for a change in tax rates is recognized in income in
the period that includes the enactment date. In addition, SFAS 109 requires the
recognition of future tax benefits to the extent that realization of such
benefits is more likely than not. Realization of future tax benefits related to
deferred tax assets is dependent on many factors, including the Company's
ability to generate taxable income within net operating loss carryforward
periods. Management has considered these factors in reaching its conclusion as
to the valuation allowance for financial reporting purposes.
NOTE B -- CONFIDENTIAL OFFERING CIRCULAR AND ADDITIONAL
OFFERING
On February 17, 1999, the Confidential Offering Circular (the "Offering"),
conducted pursuant to Section 3(b) of the Securities Act of 1933, as amended,
and Rule 504 of Regulation D, promulgated thereunder, was filed with the United
States Securities and Exchange Commission in connection with Form D, Notice of
Sale of Securities.
F-8
<PAGE>
NOTE B -- CONFIDENTIAL OFFERING CIRCULAR AND ADDITIONAL
OFFERING - Continued
The aforementioned Offering was made on a best-efforts-all-or-none basis with
respect to the sale of 1,000,000 shares of the Company's $.0001 par value Common
Stock at an offering price of $0.05 per share. In order to meet the conditions
for exemption from the registration requirement under the securities laws of
certain jurisdictions, accredited investors who are residents of such
jurisdictions may be required to meet certain suitability requirements.
This Offering states that the shares are offered for sale only by its directors
and officers, without compensation, utilizing subscription agreements containing
terms and conditions similar to those disclosed in Note C. In this connection,
the Company filed a Form M-11 with the Bureau of Investor Protection and
Securities New York State (the "State") Department of Law notifying the State
that only the Company's directors and officers will be offering the Company's
securities in New York.
As presented in the Statement of Changes in Stockholders' Equity, the Company
was successful in selling all of the available shares of the above Offering
totaling $50,000.
As more fully described in Note C, on or about March 29, 1999 and August 26,
1999, the Company offered additional shares of Common Stock in an offering
conducted pursuant to Section 4(2) and Rule 506 of Regulation D to a single
investor residing in France. In connection with these two Offerings, the Company
received subscriptions for 500,000 shares of restricted common stock totaling
$110,000.
The Company intends to offer additional securities under Rule 506 of Regulation
D to fund its short and medium term expansion plans.
NOTE C -- STOCKHOLDERS' EQUITY
The Company is authorized to issue 50,000,000 shares of Common Stock at $.0001
par value per share. The holders of the shares of Common Stock do not have
cumulative voting rights. Shares are not issued until paid for in full.
The Company is also authorized to issue 10,000,000 shares of Preferred Stock at
$.0001 par value. The Company has not designated any series of Preferred Stock
and presently has no plans to do so.
F-9
<PAGE>
NOTE C -- STOCKHOLDERS' EQUITY - Continued
Prior to the February 17, 1999 Offering discussed in Note B, the Board of
Directors approved the issuance of 500,000 restricted Rule 144 shares of Common
Stock to the sole officer and director of the Company in consideration for
consulting services rendered in connection with the start-up of the Company.
A third party "qualified investor" (the "Subscriber") executed two separate and
irrevocable Subscription Agreements and Investment Representation of Investors
(the "Subscriptions") containing the following general terms and conditions with
respect to acquiring the following:
March 29, 1999: 100,000 restricted Rule 144 shares of Common Stock at
$.10 per share. The Subscription is paid in full.
August 26, 1999: 400,000 restricted Rule 144 shares of Common Stock at
$.25 per share payable in four monthly installments totaling $25,000
each, on or before August 30th, September 30th, October 30th and
November 30, 1999, respectively. The first three installment payments
have been received and the proportionate number of shares has been
issued to the Subscriber in accordance with the terms of the
Subscription.
The Company filed Form D, concerning these subscriptions on September 17, 1999.
The aggregate number of restricted shares outstanding at August 31, 1999 totaled
700,000 with a carrying amount of $35,000.
In the opinion of management, it is unlikely that the Company will declare or
pay cash dividends in the foreseeable future.
NOTE D -- STOCK TRANSFER AGREEMENT
On March 5, 1999, the Company executed an agreement with a stock transfer and
warrant agent. The Company agreed to pay a one-time fee totaling $825 and an
annual fee to maintain the records and perform other duties. During the period
ended August 31, 1999, the Company paid the agent $850.
NOTE E -- INCOME TAXES
The Company has available a net operating loss carryforward totaling $27,070
that may be offset against future taxable income through 2019. No tax benefit
has been reported in the 1999 financial statements because of the uncertainties
characteristic of a development stage enterprise and those relating to the
ultimate utilization of this loss carryforward.
Accordingly, the $4,000 tax benefit resulting from the loss carryforward has
been offset by a valuation allowance in the same amount.
F-10
<PAGE>
NOTE F - EARNINGS PER SHARE OF COMMON STOCK
Statement of Financial Accounting Standards No. 128, (SFAS No. 128) "Earnings
Per Share" requires the disclosure of Basic and Diluted Earnings per Share
(EPS). Basic earnings per Common share are based on the weighted average number
of Common shares outstanding. The computation of diluted earnings per share is
similar to basic earnings per share, except that the number of shares is
increased to include the number of additional common shares that would have been
outstanding if the potentially dilutive common shares had been issued. The
weighted average number of common shares used to calculate basic earnings per
share is 1,545,689. There is no difference between the Company's basic and
diluted weighted-average shares as of August 31, 1999.
F-11
<PAGE>
Part III
Item 1. Index to Exhibits
3(i).1 Articles of Incorporation of Net Expressions, Inc., effective October
26, 1998
3(ii).1 Bylaws of Net Expressions, Inc.
27.1 Financial Data Schedule
SIGNATURES
----------
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NET EXPRESSIONS, INC.
(Registrant)
Date: November 11, 1999 /s/ Kevin S. Slowick
--------------------------
Kevin S. Slowick, President
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date Signature Title
---- --------- -----
November 11, 1999 By:/s/ Kevin S. Slowick President & Director
-----------------------
Kevin S. Slowick
EXHIBIT 3(i).1
ARTICLES OF INCORPORATION
OF
NET EXPRESSIONS, INC.
The undersigned subscriber to these Articles of Incorporation, a
natural person competent to contract, hereby forms a corporation under the laws
of the State of Florida.
ARTICLE I. NAME
The name of the corporation shall be Net Expressions, Inc.: The
principal place of business of this corporation shall be 222 Lakeview Avenue,
Suite 160- 243, West Palm Beach, FL 33401.
ARTICLE II. NATURE OF BUSINESS
This corporation may engage or transact in any and all lawful
activities or business permitted under the laws of the United States, the State
of Florida or any other state, country, territory or nation.
ARTICLE III. CAPITAL STOCK
The maximum number of shares of stock that this corporation is
authorized to have outstanding at any one time is 50,000,000 shares of common
stock having $.0001 par value per share and 10,000,000 shares of preferred stock
having $.0001 par value per share.
ARTICLE IV. ADDRESS
The street address of the initial registered office of the corporation
shall be 265 Sunrise Avenue, Suite 204, Palm Beach, FL 33480, and the name of
the registered agent of the corporation at that address is Donald F. Mintmire.
ARTICLE V. TERM OF EXISTENCE
This corporation is to exist perpetually.
ARTICLE VI. DIRECTORS
This corporation shall have no Directors, initially. The affairs of the
Corporation will be managed by the shareholders until such time as Directors are
designated as provided by the Bylaws.
<PAGE>
ARTICLE VII.
SPECIAL AUTHORITY OF BOARD OF DIRECTORS AND WAIVER OF DISSENTERS RIGHTS
The Board of Directors shall be and are hereby authorized to enter into
on behalf of the corporation and to bind the corporation without shareholder
approval, any and all acts approving (a) the terms and conditions of a merger
and/or a share exchange; and (b) divisions, combinations and/or splits of shares
of any class or series of stock of the corporation, whether issued or unissued,
with or without any change in the number of authorized shares; and shareholders
affected thereby, shall not be entitled to dissenters rights with respect
thereto under any applicable statutory dissenters rights provisions.
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator to these Articles of
Incorporation is:
Donald F. Mintmire, Esq.
Mintmire & Associates
265 Sunrise Avenue
Suite 204
Palm Beach, Florida 33480.
ARTICLE IX. EFFECTIVE DATE
The corporation shall commence its existence on October 26, 1998.
ARTICLE X. CONFLICT OF INTEREST
Any related party contract or transaction must be authorized, approved
or ratified at a meeting of the Board of Directors by sufficient vote thereon by
directors not interested therein or the transaction must be fair and reasonable
to the Corporation.
ARTICLE XI. INDEMNIFICATION
The Corporation shall indemnify its Officers, Directors, Employees and
Agents in accordance with the following:.
(a) The Corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was otherwise serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement,
actually and reasonably incurred by him in connection with such action, suit or
proceeding, if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, has no reasonable cause to believe
his conduct to be unlawful. The termination of any action, suit or proceeding,
by judgment, order, settlement, conviction upon a plea of nolo contendere or its
equivalent, shall not of itself create a presumption that the person did not act
in good faith in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Corporation and, with respect to any criminal action
or proceeding, had reasonable cause to believe the action was unlawful.
<PAGE>
(b) The Corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, to any threatened, pending or completed
action or suit by or in the right of the Corporation, to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Corporation, except that no indemnification shall be
made in respect of any claim, issue or matter as to whether such person shall
have been adjudged to be liable for negligence or misconduct in the performance
of his duty to the Corporation, unless, and only to the extent that, the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability, but in view of all circumstances of the
case, such person is fairly and reasonably entitled to indemnification for such
expenses which such court deems proper.
(c) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in the defense of any
action, suit or proceeding referred to in Sections (a) and (b) of this Article,
or in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorney's fees) actually and reasonably incurred by
him in connection therewith.
(d) Any indemnification under Section (a) or (b) of this Article
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the officer,
director, employee or agent is proper under the circumstances, because he has
met the applicable standard of conduct set forth in Section (a) or (b) of this
Article. Such determination shall be made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (ii) if such quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (iii) by the affirmative vote of the holders of
a majority of the shares of stock entitled to vote and represented at a meeting
called for that purpose.
(e) Expenses (including attorneys' fees) incurred in defending a civil
or criminal action, suit or proceeding may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding, as authorized in
Section (d) of this Article, upon receipt of an understanding by or on behalf of
the director, officer, employee or agent to repay such amount, unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this Article.
(f) The Board of Directors may exercise the Corporation's power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under this Article.
(g) The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under these Amended
<PAGE>
Articles of Incorporation, the Bylaws, agreements, vote of the shareholders or
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office and
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs and personal
representatives of such a person.
Article XII. Law Applicable to Control-Share Voting Rights.
The provisions set forth in Fl. Stat. 607.0902 do not apply to control-
share acquisitions of shares of the Corporation.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal on this
26th day of October, 1998.
/s/ Donald F. Mintmire
------------------------------
Donald F. Mintmire
STATE OF FLORIDA
COUNTY OF PALM BEACH
The foregoing instrument was acknowledged before me this 26th day of October,
1998 by Donald F. Mintmire, who is personally known to me and who (did/did not)
take an oath.
/s/ Lisa R. Coppa
-------------------------------
Notary Public
Donald F. Mintmire, having been designated to act as Registered Agent, hereby
agrees to act in this capacity.
/s/ Donald F. Mintmire
---------------------------------
Donald F. Mintmire
EXHIBIT 3(ii).1
BY-LAWS
OF
NET EXPRESSIONS, INC.
ARTICLE I
OFFICES
The principal office of the Corporation in the State of Florida shall
be located in the City of West Palm Beach. The Corporation may have such other
offices, either within or without the State of Florida, as the business of the
Corporation may require from time to time.
The Registered Office of the Corporation may be, but need not be,
identical with its principal office in the State of Florida and the address of
the Registered Office may be changed from time to time by the Board of
Directors.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of shareholders shall be
held at such time and place each year as the Board of Directors shall determine
for the purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the election of directors shall not
be held at any annual meeting, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
shareholders to be held as soon thereafter as may be convenient.
SECTION 2. SPECIAL MEETING. Special meetings of the shareholders may
be called by the President, by the Board of Directors or by the holders of not
less than one-fifth (1/5) of the voting power of all shareholders of the
Corporation.
SECTION 3. PLACE OF MEETING. The Board of Directors may designate any
place within or without the State of Florida as the place of meeting for any
annual meeting, or any place either within or without the State of Florida as
the place of meeting for any special meeting called by the Board of Directors.
SECTION 4. NOTICE OF MEETINGS AND WAIVER. Written or printed 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 be
delivered not less than ten (10) nor more than sixty (60) days before the date
of the meeting, either personally or by mail, by or at the direction of the
Chairman of the Board, the President, or the Secretary, or the officer or
persons calling the meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail in a sealed envelope
addressed to the shareholder at his address as it appears on the records of the
Corporation, with postage thereon prepaid. Notice of any shareholders' meeting
<PAGE>
may be waived in writing by any shareholder at any time before or after the
meeting.
SECTION 5. MEETING OF ALL SHAREHOLDERS. If all of the shareholders
shall meet at any time and place, either within or without the State of Florida,
and consent to the holding of a meeting, such meeting shall be valid without
call or notice, and at such meeting any corporate action may be taken.
SECTION 6. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The
Board of Directors of the Corporation may fix in advance a date, not exceeding
sixty (60) and not less than ten (10) days prior to the date of any meeting of
shareholders, or to the date for the payment of any dividend or for the
allotment of rights, or to the date when any exchange or reclassification of
shares shall be effective, as the record date for the determination of
shareholders entitled to receive payment of any such dividend or to receive any
such allotment of rights, or to exercise rights in respect of any exchange or
reclassification of shares; and the shareholders of record on such date shall be
the shareholders entitled to notice of and to vote at, such meeting, or to
receive payment of such dividend or to receive such allotment of rights or to
exercise such rights in the event of an exchange or reclassification of shares,
as the case may be. If no record date is fixed by the Board of Directors, the
date on which notice of the meeting is mailed shall be deemed to be the record
date for the determination of shareholders entitled to vote at such meeting.
Transferees of shares which are transferred after the record date shall not be
entitled to notice of or to vote at such meeting.
SECTION 7. VOTING LISTS. The officer or agent having charge of the
transfer book for shares of the Corporation shall at least ten (10) days before
each meeting of shareholders, make a complete list of the shareholders entitled
to vote at such meeting, arranged in alphabetical order, with the address and
the number of shares held by each shareholder, which list, for a period of ten
(10) days prior to such meeting, shall be kept on file at the office of the
Corporation and shall be subject to inspection by any shareholder at any time
during usual business hours. 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 meeting. The original share ledger or stock transfer
book, or a duplicate thereof kept in this State, shall be prima facie evidence
as to who are the shareholders entitled to examine such list or share ledger or
stock transfer book or to vote at any meeting of shareholders.
SECTION 8. QUORUM. A majority of the outstanding shares of the
Corporation, represented in person or by proxy, shall constitute a quorum at any
meeting of shareholders; provided, that if less than a majority of the
outstanding shares are represented at said meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice.
SECTION 9. PROXIES. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the
<PAGE>
Corporation before or at the time of the meeting. No proxy shall be valid after
eleven (11) months from the date of its execution, unless otherwise provided in
the proxy, and such proxy may be withdrawn at any time.
SECTION 10. VOTING OF SHARES. Each outstanding share of Common Stock
shall be entitled to one vote upon each matter submitted to a vote at a meeting
of shareholders.
SECTION 11. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent or proxy as the By-Laws of such corporation may prescribe, or, in the
absence of such provision, as the Board of Directors of such corporation may
determine.
Shares standing in the name of a deceased person may be voted by his
administrator or executor, either in person or by proxy. Shares standing in the
name of a guardian, conservator, or trustee may be voted by such fiduciary,
either in person or by proxy.
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 joint names of four (4) or more fiduciaries
shall be voted in the manner determined by the majority of such fiduciaries,
unless the instrument or order appointing such fiduciaries otherwise directs.
Shares standing in the name of a receiver may be voted by such
receiver, and 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
is 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 (except that if the right to vote be expressly given in writing to the
pledgee and notice thereof delivered to the Corporation in writing by the
pledgee, the shareholder shall not have the right to vote the shares so pledged)
until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee or his nominee shall be entitled to vote the shares so
transferred.
SECTION 12. INFORMAL ACTION BY SHAREHOLDERS. Unless prohibited by the
Articles of Incorporation, any action required to 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
issued and outstanding capital stock of the corporation.
SECTION 13. ADJOURNMENTS. If a meeting is adjourned to another time or
place, notice of the adjourned meeting need not be given if the time and place
thereof are announced at the meeting at which the adjournment is taken. The
<PAGE>
Corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty (30) days or a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each shareholder of record entitled to vote at the
meeting.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS AND EXECUTIVE COMMITTEE. The business and
affairs of the Corporation shall be managed by its Board of Directors. The Board
of Directors may, by resolution passed by a majority of the whole Board,
designate two (2) or more of its number to constitute an Executive Committee,
who, to the extent provided in the resolution, shall have and exercise the
authority of the Board of Directors in the management of the Corporation. The
Board of Directors may also, by resolution passed by a majority of the whole of
the Board, designate members to constitute other committees, who, to the extent
provided in the resolution, shall have and exercise the designated authority.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors
which shall constitute the whole Board of Directors shall be fixed from time to
time by resolution passed by the Board or by the shareholders (any such
resolution of either the Board of Directors or shareholders being subject to any
later resolution by either of them) but in no event shall such number be less
than one. No resolution shall have the effect of shortening the term of any
incumbent director. Directors shall be elected at the annual meeting of
shareholders and shall continue in office until their successors shall have been
elected and qualified. Directors need not be residents of Florida nor need they
be the holder of any shares of the capital stock of the Corporation.
SECTION 3. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held without other notice than this By-Law, 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, either within or without the
State of Florida, for holding of additional regular meetings without other
notice than such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board, the President
or any two (2) directors. The person or persons authorized to call special
meetings of the Board of Directors may fix any place, either within or without
the State of Florida, as the place for holding any special meeting of the Board
of Directors called by them.
SECTION 5. NOTICE. Written notice of any special meeting shall be
given to each director at least two (2) days before the meeting, either by
personal delivery, telegram, cablegram, or facsimile. Any director may waive
notice of any meeting. The attendance of a director at any meeting shall
<PAGE>
constitute a waiver of notice of such meeting, and a waiver of any and all
objections to the place of meeting, the time of meeting, or the manner in which
it was called or convened, 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. The purpose of and the business to
be transacted at any special meeting of the Board of Directors must be specified
in the notice or waiver or notice of such a meeting.
SECTION 6. QUORUM. A majority of the number of directors fixed by or in
the manner prescribed in the By-Laws shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, provided, that
if less than a majority of the directors are present at that meeting, a majority
of the directors present may adjourn the meeting from time to time without
further notice.
SECTION 7. MANNER OF ACTING. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
SECTION 8. INFORMAL ACTION BY DIRECTORS. Any action required to be
taken at a meeting of the Directors of a corporation or any action which may be
taken at such meeting may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by a majority of all
directors and such consent shall have the same effect as an actual vote.
SECTION 9. VACANCIES. Any vacancy occurring in the Board of Directors
or in a directorship to be filled by reason of an increase in the number 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. A director
elected to fill a vacancy shall be elected for the unexpired term of his
predecessor in office or until the next succeeding annual meeting of
shareholders. 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 until the next election of the directors by the
shareholders.
SECTION 10. COMPENSATION. Directors may by resolution of the Board of
Directors, establish a fixed sum and expenses of attendance, if any, for
attendance at each regular or special meeting of the Board of Directors. Nothing
herein contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
SECTION 11. REMOVAL. At a meeting of shareholders called expressly for
that purpose, directors may be removed, with or without cause, by a vote of the
majority of the shares then entitled to vote at an election of directors.
ARTICLE IV
OFFICERS
SECTION 1. CLASSES. The officers of the Corporation shall be a
President, a Treasurer, and a Secretary, and such other officers and assistant
officers as from time to time may be deemed necessary by the Board of Directors
<PAGE>
and elected in accordance with the provisions of this Article. Any two (2) or
more offices may be held by the same person, except that the offices of
President and Secretary may not be held by the same person. The failure to elect
a President, Secretary or Treasurer shall not affect the existence of this
Corporation.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the Corporation
shall be elected annually by the Board of Directors at the first meeting of the
Board of Directors held after each annual meeting of shareholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as convenient. Vacancies may be filled or new offices
created and filled at any meeting of the Board of Directors. Each officer shall
hold office until his successor shall have been duly elected and shall have
qualified or until his death, his resignation or his removal from office in the
manner hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever, in its
judgment, the best interests of the Corporation would be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed.
SECTION 4. VACANCIES. A vacancy in any office because of death, removal
resignation, disqualification or otherwise may be filled by the Board of
Directors for the unexpired portion of the term.
SECTION 5. PRESIDENT. The President shall be the principal executive
officer of the Corporation and shall in general supervise and control all of the
business and affairs of the Corporation. He shall preside at all meetings of the
shareholders and of the Board of Directors. He 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 have
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
By-Laws 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 6. VICE PRESIDENT. In the absence of the President or in the
event of his 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 to him by the
President or by the Board of Directors.
SECTION 7. TREASURER. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such sum
<PAGE>
and with such surety or sureties as the Board of Directors shall determine. He
shall: (a) have charge and custody of and be responsible for all funds and
securities of the Corporation; (b) receive and give receipts for monies due and
payable to the Corporation from any source whatsoever, and deposit all such
monies 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 V
of these By-Laws; and (c) in general perform all the duties from time to time
assigned to him by the President or the Board of Directors. Nothing herein shall
require the Board of Directors to require a bond.
SECTION 8. SECRETARY. The Secretary shall: (a) keep the minutes of the
shareholders' and of the Board of Directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these By-Laws 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 certificates for shares prior to the issue
thereof and to all documents, the execution of which on behalf of the
Corporation under this seal is duly authorized in accordance with the provisions
of these By-Laws; (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, or Vice President, certificates for shares of the
Corporation, the issue of which shall have been authorized by resolution of the
Board of Directors; (f) sign with the President, or Vice President, certificates
for shares for the Corporation, the issue of which shall have been authorized by
resolution of the Board of Directors; (g) have personal charge of the stock
transfer books of the Corporation; and (h) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 9. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The
Assistant Treasurers shall respectively, if required by the Board of Directors,
give bonds for the faithful discharge of their duties in such sums and with such
sureties as the Board of Directors shall determine. The Assistant Secretaries,
as and if authorized by the Board of Directors, may sign with the President or
Vice President certificates for shares of the Corporation, the issue of which
shall have been authorized by a resolution of the Board of Directors. The
Assistant Treasurers and Assistant Secretaries in general shall perform such
duties as shall be assigned to them by the Treasurer or Secretary, respectively,
or by the President or 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 or she is also a director of
the Corporation.
ARTICLE V
CONTRACTS, LOANS, CHECK 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
<PAGE>
any instruments 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 evidence 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
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 VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of
the Corporation shall be in such form as may be determined by the Board of
Directors. Such certificates shall be signed by the President and Secretary. All
certificates for shares shall be consecutively numbered. The name of the persons
owning the shares represented thereby with the number of shares and date of
issue shall be entered on the books of the Corporation. All certificates
surrendered to the Corporation for transfer shall be cancelled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and cancelled, 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 by the registered holder thereof or by his 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
share. The person in whose name shares stand on the books of the Corporation
shall be deemed the owner thereof for all purposes as regards the Corporation.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be determined by the
resolution of the Board of Directors.
<PAGE>
ARTICLE VIII
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.
ARTICLE IX
SEAL
The Board of Directors shall if needed provide a corporate seal which
shall be in the form of a circle and shall have inscribed thereon appropriate
wording.
ARTICLE X
WAIVER OF NOTICE
Whenever any notice whatever is required to be given under the
provisions of these By-Laws, or under the provisions of the Articles of
Incorporation, or under the provisions of the corporation laws of the State of
Florida or other jurisdiction, 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 XI
AMENDMENTS
The Board of Directors shall have the power and authority to alter,
amend or rescind the By-Laws of the Corporation at any regular or special
meeting at which a quorum is present by a vote of a majority or the whole Board
of Directors, subject to the power of the shareholders to change or repeal such
By-Laws at any annual or special meeting of shareholders at which a quorum is
present, by a vote of a majority of the stock represented at such meeting,
provided, that the notice of such meeting shall have included notice of any
proposed alteration, amendment or rescission.
I certify that these are the By-Laws adopted by the Board of Directors
of the Corporation.
BY: /s/ Kevin S. Slowick
- ------------------------------------
Secretary
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