UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(B)
OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file no. 0001080759
VANCOUVER'S FINEST COFFEE COMPANY
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
Nevada "Applied for"
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Suite 201 - 888 Bute Street V6E 1Y5
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Vancouver, B. C., Canada
(Address of Principal Executive Officer) (Zip Code)
(604) 669-8985
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(ISSUER'S TELEPHONE NUMBER)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.001 per share
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(TITLE OF CLASS)
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TABLE OF CONTENTS
ITEM PAGE
- ---- ----
PART 1
Item 1 Description of Business 3
Item 2 Management's Discussion and Analysis or Plan
of Operation 22
Item 3 Description of the Kiosk System 24
Item 4 Security Ownership of Certain Beneficial
Ownership and Management 25
Item 5 Directors, Executive Officers, Promoters and
Control Persons 27
Item 6 Executive Compensation 28
Item 7 Certain Relationships and Related Transactions 30
Item 8 Description of Securities 31
PART 11
Item 1 Market Price of and Dividends on the Registrant's
Common Equity and Other Stockholders Matters 33
Item 2 Legal Proceedings 34
Item 3 Disagreement With Accountants and Financial Disclosure 34
Item 4 Recent Sales of Unregistered Securities 34
Item 5 Indemnification of Directors and Officers 36
PART F/S
Financial Statements 38
PART 111
Item 1 Index to Exhibits 47
Item 2 Description of Exhibits 47
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DOCUMENTS INCORPORATED BY REFERENCE
Documents incorporated by reference: None
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PART 1
Vancouver's Finest Coffee Company (the "Registrant" or the "Company") is filing
this Form 10-SB on a voluntary basis to:
(1) provide current, public information to the investment community;
(2) to expand the availability of secondary trading exemptions under the Blue
Sky laws and thereby expand the trading market in the Registrant's
securities, and
(3) to comply with prerequisites for listing of the Registrant's securities on
NASDAQ.
ITEM 1. DESCRIPTION OF BUSINESS
HISTORICAL OVERVIEW OF THE REGISTRANT
The Registrant, a Nevada corporation, was incorporated on September 15,
1998. The Registrant has no subsidiaries and no affiliated companies. The
Registrant's executive offices are located at Suite 201 - 888 Bute Street,
Vancouver, B. C., Canada, V6E 1Y5
The Registrant is in the development stage, being a company that is in
the early stages of starting a kiosk system for the distribution of coffee and
coffee related products.
The Registrant is seeking a quotation on the OTC Bulletin Board. Upon
being deemed a registered company, management anticipates filing the necessary
information and documents with the NASD. Presently the Registrant has no market
maker and management has not discussed with any market maker or registered
broker any aspects of the Registrant's operations.
To management's knowledge, the Registrant has not been subject to
bankruptcy, receivership or any similar proceedings.
The Registrant has no revenue to date from the development of its kiosk
system, and its ability to effect its plans for the future will depend on the
availability of financing. Such financing will be required to develop its kiosk
system to a stage where a decision can be made by management as to whether the
project will be successful and what further action should be taken to develop
the system into a profitable enterprise. The Registrant anticipates obtaining
such funds from its directors and officers, financial institutions or by way of
the sale of its capital stock in the future (see Part 1, Item 2 - "Plan of
Operations"), but there can be no assurance that the Registrant
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will be successful in obtaining additional capital from the sale of its capital
stock or in otherwise raising substantial capital.
All dollar amounts stated in this document are in US dollars unless otherwise
noted.
PLANNED BUSINESS
Much of the discussion contained in this section is "forward looking".
Actual results may materially differ from the Registrant's plans as currently
contemplated.
Information concerning all the factors associated with the Registrant
is set forth in this Item 1 and in Items 2 and 3 below. FOR A COMPLETE
UNDERSTANDING OF SUCH FACTORS, THIS ENTIRE DOCUMENT, INCLUDING THE FINANCIAL
STATEMENTS AND THEIR ACCOMPANYING NOTES, SHOULD BE READ IN ITS ENTIRETY.
Overview of Registrant's Operations
The Registrant is a start-up company founded for the purpose of
building a retail premium coffee business that sells premium quality coffee
drinks through Company-owned and operated retail kiosks. The Registrant's
objective is to establish itself as the leading purveyor of premium coffee
kiosks in the Greater Vancouver Area, a market that is not fully exploited at
the current time. Nevertheless, there is definite competition from such retail
store outlets as Starbucks Coffee, The Second Cup, Blenz Coffee, Murchie's Tea &
Coffee Ltd. and an assortment of other establishments.
The Registrant's plan is to locate twenty-five company-owned and
operated retail kiosks in the Greater Vancouver Area in a period of two years.
The twenty-five kiosks will be centrally located and clustered in close
proximity to achieve operating and marketing efficiencies and to enhance
awareness of the VANCOUVER'S FINEST COFFEE COMPANY brand. The Registrant will
locate the twenty-five kiosks in high-foot traffic, high-visibility, key
intercept market locations.
The Registrant will offer only the highest-quality coffee, at the same
time providing the service as quickly as possible, realizing the demand for
coffee drinks to people on the go. All types of espresso coffee drinks will be
served, including iced coffee drinks and various types of premium blended and
ground coffee. The design of VANCOUVER'S FINEST COFFEE COMPANY kiosks will
reflect the Registrant's principal position, that of a local specialty coffee
company, reflecting the feel and style of the city, while providing convenient
and quick access to gourmet coffee drinks.
Industry Overview
Coffee consumption is a commonly accepted, worldwide practice dating
back more that 500 years. Coffee appeals to people across virtually all
demographics - young and old, male and female, lower to upper income, mainstream
to fringe, and a wide range of nationalities and ethnic origins. As a result,
the retail market for coffee
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beverages is continuously growing and highly fragmented, both globally and in
the United States and Canada.
Specialty coffee represents a large and rapidly growing market as well,
with numerous favorable dynamics fueling such growth. Specialty coffees provide
consumers with a considerably higher quality coffee experience for relatively
little additional cost. This results in:
o Significant perceived value
o Price inelasticity
o Staying power
According to the Specialty Coffee Association of America (the SCAA)
specialty coffee sales in the United States - have soared from approximately
$45,000,000 per year in 1969 to an estimated $2,000,000,000 annually in 1998.
This presents a compound annual growth rate of approximately 15% over the course
of 30 years. Sales are expected to approach $5,000,000,000 annually by the turn
of the century, a compounded annual growth rate of more than 30% for the
remainder of the decade. The SCAA expects industry growth not to peak until
around the year 2010.
The results for Canada are not as dramatic as in the United States but
coffee consumption is a thriving business and there appears no reason that this
trend will diminish. The majority of outlets in Vancouver, British Columbia are
retail in nature, being the typical walk-in coffee shops.
The SCAA analysis concludes that coffee cafes, including espresso bars,
kiosks and carts will constitute the fastest growing distribution channel for
specialty coffee well into the coming years. The SCAA projects that more than
2,500 coffee cafes, approximately 3,000 espresso bars, and an estimated 4,500
espresso kiosk and carts, which combined totals more than 10,000 retail
specialty coffee cafes in operation by the year 2000. Even at 10,000 units, the
market remains far from saturated. One publicly traded specialty coffee retailer
has estimated the potential market for specialty coffee cafes in the United
States alone at 40,000 units.
In Canada and especially in British Columbia, the statistics are not as
spectacular as shown above in the United States. Nevertheless, the market has
not yet been saturated. There are numerous kiosk style coffee distributors in
various locations in the lower mainland of British Columbia but these are mainly
single owner-operations. Very few of these operators have more than one location
and none have attempted to build a larger base of kiosks specializing in their
own coffee brands.
The SCAA cites three factors fueling the rapid anticipated growth of
specialty coffee sales through cafes, bars, kiosks, and carts:
o Selling specialty coffee by the cup offers high gross profit margins;
o Espresso-based beverages are difficult for consumers to prepare correctly
at home; and
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o Existing food service locations are slow to upgrade their product quality
to the level of specialty coffee.
The Wall Street Journal, in an article published August 19, 1996
entitled "Coffeehouse Attract the Skateboard Set", highlights the extent to
which employees are leaving their offices to purchase coffee from specialty
shops. The Article states that "a lengthy jaunt to the local coffee house is a
perk many businesses can't afford to offer." By offering high quality specialty
coffee services through a kiosk located in the office complex itself, time spent
on coffee "escapes" is reduced, with people bringing their coffee back to the
workplace rather than sit in a coffee house.
Coffee Drinkers
With the increasing pace and pressures of everyday life, specialty
coffee fits within the "affordable luxury" or "small self indulgence"
categories, and directly addresses a significant trend among consumers to make
low-cost, self-rewarding purchases to temper daily stresses. The Wall Street
Journal, in an article published on August 8, 1998 entitled "Outrageous Perks:
Coffee Breaks Become Coffee Escapes", has described the specialty coffee break
during work as an "escape", and according to a Business Week article on March
17, 1997 entitled "Grabbing Bargains - and a $2 Cup of Coffee", Ernst & Young
points to affordable luxuries, such as specialty coffee, as one of the biggest
trends in the late 1990's.
The trend towards desiring affordable luxuries has also spurred a
secular change in eating patterns, with more people dining out for convenience,
lack of time, and/or relief from the responsibilities of preparing and cleaning
up after meals. Outside-the-home specialty coffee consumption fits directly into
this pattern, with many people relying on a "latte and a muffin on the run" as
their only morning nutrients.
All types of demographics make up the typical gourmet coffee drinker:
o The aging of baby-boom generation demonstrates an affinity for specialty
coffee, and they correlate with high education and income levels. As a
result, the specialty coffee market is benefiting from the large amount of
disposable income in this demographic grouping.
o With the increased scrutiny of alcohol consumption by younger people, many
teenagers and college student have turned to specialty coffee bars for
socializing. Such consumers are often first-time coffee drinkers, and are
adopting preferences for specialty coffee beverages.
o Increasingly lengthy and/or frequent breaks from work provide a demand for
specialty coffee drinks which can be taken back to the office.
The Registrant's Strategy
Each element of the Registrant's strategy is designed to differentiate
and reinforce the VANCOUVER'S FINEST brand and to engineer a high degree of
loyalty among Registrant's customers. The basis of the Registrant's strategy
includes:
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Highest Quality Coffee Drinks and Service
The Registrant will offer only premium coffee to the customer,
while trying to minimize lead time, in a convenient and easily
accessible location.
Coffee Drinks, Beverages and Baked Goods Only
The Registrant will sell only coffee drinks, tea and juices,
as well as freshly baked goods. The Registrant will not sell
coffee merchandise, such as espresso machines, nor will it
sell whole or ground beans. The focus is on producing a high
quality coffee drink, in as little time as possible.
Retail Kiosks Concept
The Registrant will sell its specialty coffees through company-owned
and operated kiosks. The small size of the kiosk, approximately six feet long,
three feet deep and four feet high, enable the kiosks to be located in
non-traditional, key intercept market locations. The low cost and ease of
relocation of these kiosks, enables a short lead time from the setup to the
delivery of coffee drinks to the customer.
Standard equipment on the kiosk includes a two-group espresso machine,
two espresso grinders, a coffee brewer, blender, and cash register, and display
rack for baked goods and other non-coffee items. The basic kiosk is finished in
traditional British Columbia cedar resulting in an upscale design and localized
feel.
Retail kiosks located within downtown buildings will likely be open
from 8 a.m. to 6 p.m. five days per week. Other kiosks, those located in
shopping centers or transportation terminals, for example, will likely be open
to 9 p.m. or later, seven day per week. The typical staff per retail kiosk will
consist of one full-time kiosk manager and two full-time employees. Each
employee will be trained to be knowledgeable about premium gourmet coffee.
Retail kiosk operation will be sales-driven, with training emphasis on customer
service.
Retail Kiosk Design and Cost
The kiosk design will be upscale, emphasizing VANCOUVER'S FINEST
branding and style. The kiosk design will reflect the Registrant's principle
position, of that of a local coffee company, representing the feel and the
attitude of the city and west coast. The cost of building and equipping a kiosk
had been estimated as follows (figures stated in US dollars):
Cost to build the kiosk including B.C. fir, metal,
glass, arborite and labor $ 8,500
Logo design for kiosk, cups and napkins (i) 2,000
Two group express machine - $500 each 1,000
Two express grinders - $450 each 900
One coffee brewer 500
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One blender 350
One cash register (ii) 3,000
Two display racks - $200 each 400
Miscellaneous 1,350
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Total cost $ 18,000
========
(i) The Registrant's logo has already been designed.
(ii) Consideration will be given to renting the cash register rather
than purchase it.
Retail Kiosk Operation
Retail kiosk operations will be service driven, with emphasis on
personalized service while providing a quality product to the customer.
Coffee
Though many specialty coffee companies perform their own roasting at
centralized facilities, the Registrant has chosen to contract out roasting for
the following reasons:
1. Eliminates the need for substantial up-front investment as well as
subsequent investment to follow geographic proliferation of retail sites;
2. Premium coffee grounds are widely available throughout the country at
cost-effective rates by wholesalers focused entirely on providing the best
premium coffee at the most competitive prices, while providing a steady and
predictable supply;
3. Shifts inventory expense and risk to the roaster;
4. Eliminates environmental compliance cost and liability for emissions
generated during the roasting process; and
5. Frees the Registrant to focus on executing its delivery model.
For both its brewed and espresso beverages, the Registrant plans to use
only the premium "Arabica" species of coffee. At present, the brewed coffee
would consist of 100% Columbian Supremo, selected because among the
approximately 30 varieties of specialty coffee world wide, this one commands
approximately 40% to 50% of the premium segment, and is readily available on a
contract basis. The Registrant will engage in testing other brewed coffee
varieties in order to provide greater consumer
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choice and enhance consumer perception of VANCOUVER'S FINEST expertise in
specialty coffee. To represent typical west coast style, the Registrant plans to
use a proprietary dark roast.
Coffee in green bean form is a commodity, and is subject to commodity
price swings, caused by weather conditions, political climate, and similar
supply and demand factors. It is sometimes assumed that margins for specialty
coffee companies are vulnerable to the same factors. However, the price of green
coffee will represent only about 9% of the Registrant's cost of goods sold for
specialty coffee beverages. As a result, if green coffee prices were to double,
the Registrant's costs would increase by only approximately 5 cents per drink,
and generally an increase of such size would be passed along to the customer.
Although the Registrant has a preference for the Arabic coffee bean, it
is not committed to any particular brand. The Registrant does not depend on an
exclusive supply source, in order to ensure that the quality and sustainability
of supply will never be jeopardized.
Cost of Inventory
Each kiosk will require inventory in order for it to maintain its
service to its customers. Basically, initially each kiosk will require the
following inventory prior to the commencement of operations.
Non-food inventory:
Plastic cups - two sizes (minimum 5,000 @ $0.10 each) $ 500
Plastic coffee cup covers - two sizes (minimum of 5,000
@ $0.05 each) 250
Wood or plastic stir sticks (minimum of 5,000 @ $0.02 each) 100
Paper napkins (minimum 10,000 @ $0.04 each) 400
Small paper plates for baked goods (minimum of 5,000 @
$0.10 each) 500
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Total non-food inventory 1,750
Food inventory
Coffee beans - variety of types and prices (estimated) (i) 2,000
Sugar - self contained bags (minimum 10,000 @ $0.05 each) 500
Honey - containers (minimum 20 jars @ $4.00 each) 80
Milk - cream, homogenize and skim - individual containers (ii) 100
Butter for baked goods (ii) 40
Baked goods - assortment of buns and pastries (ii) 200
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Total food inventory 2,920
Total cost of Inventory $ 4,670
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(i) It is estimated that this number of beans is a one month supply
during the first two months after the Registrant has started operation of its
first kiosk.
(ii) Due to no refrigerator being built into the kiosk, milk, butter
and bake goods will have to be purchased daily.
Expansion Plan
The Registrant's expansion plan involves the opening of twenty-five
kiosks in the Greater Vancouver Area over a period of two years. The expansion
plan consists of three phases:
Phase I
At Phase 1, the Registrant will undertake an analysis of the market
relating the acceptable kiosk locations. This will entail communicating with
landlords of office buildings, meeting with managers of transportation terminals
and sporting facilities to determine ideal locations for the installation of
kiosks. In addition, the Registrant will commission an architect to design and
construct the kiosk system. It is estimated this Phase will result in an
expenditure of $20,000. The Registrant has the funds on hand to complete this
Phase before proceeding the next Phase.
Phase 11
At this Phase, the Registrant will commence hiring personal to operate
its first kiosk. An in-house training program will be given to all new employees
that will allow them to fully operate the kiosk and react favorably with the
Registrant's customers. The estimated cost per month for employees to operate
the kiosk has been estimated for the full-time kiosk manager at $3,000 per month
and for one employee at $10 per hour for 50 hour week for a monthly remuneration
of $2,000. Initial the employee cost will be high since the full-time manager of
the kiosk will have to manage only one kiosk but will require another employee
at the kiosk to assist in the distribution of coffee and food products. As more
kiosks are installed the manager will be responsible for overseeing numerous
kiosks. If possible, part time employees will be used rather than full time
employees.
The funds required to train the above noted two employees during the
time, estimated to be a week, prior to the opening of the first kiosk are
available from money raised to date by the Registrant. Nevertheless, the $4,670
to inventory the kiosk for the first month of operations might have to be
raised. These funds can be obtained from the directors and officers, through
bank funding or through the eventual sale of the Registrant's capital stock.
It has been estimated by the Registrant that the sales and operating
costs of the first kiosk on a monthly bases will be as follows:
Revenue - assorted coffees (i) $ 13,200
- baked goods (ii) 990
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Gross revenue 14,190
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Cost of Goods Sold
Coffee beans (iii) 990
Baked goods (iv) 506
Plastic cups (v) 660
Plastic caps for cups (v) 330
Wood or plastic stir sticks (v) 132
Paper napkins (vi) 106
Small paper plates (vii) 66
Sugar, milk, honey and butter (viii) 750
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Total cost of goods sold 3,540
Gross margin 10,650
General operating expenses
Advertising (ix) 300
Amortization of kiosk construction costs (x) 300
Employee's wages (xi) 2,225
Management fees (xii) 2,500
Manager's salary (xiii) 3,350
Rent or Royalty (xiv) 710
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Total expenses for the month 9,385
Net income from operations $ 1,265
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(i) Revenue
Assorted coffees
The Registrant will sell an assortment of specialty coffees. The
actual selection of coffees will depend upon test marketing upon
opening of the first kiosk. As mentioned previously, the Registrant
plans to use only the premium "Arabica" species of coffee. A review of
the coffee prices of Starbucks Coffee in Vancouver, Edgemont Village
outlet, indicates the following price structure (converted to US
dollars at $1.45):
PRICE
--------------------------------
COFFEE SELECTION SMALL MEDIUM LARGE
---------------- ----- ------ -----
Specialty coffees:
Cafe Latte 1.85 $ 2.35 $ 2.75
Cappuccino 1.85 2.35 2.75
Cafe Mocha 2.05 2.60 2.85
Cafe Americano 1.25 1.55 1.85
Carmel Maccheta 2.10 2.65 2.95
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Regular coffees:
Coffee of the day 1.00 1.10 1.35
Express .95 1.25 -
Express Maccheato .95 1.25 -
Coffee Alternatives:
Chai Tea Latte 1.00 1.25 1.50
Hot Chocolate 1.25 1.75 2.25.
Steamed Milk 1.10 1.45 1.75
Extras:
Additional Express shots .55 - -
Add Flavored syrup .30 - -
Cold drinks:
Iced Cafe Latte 2.05 2.30 2.75
Iced Cafe Mocha 1.90 2.25 2.60
Based on the above noted prices the average price for specialty coffees
is approximately $2.00. The Registrant does not plan to offer as wide assortment
as Starbucks Coffee. With the Registrant installing its first kiosk in a high
traffic area near office complexes and transportation facilities, it is
estimated that conservatively 300 cups of coffee will be served each day. This
will result in a daily gross revenue from coffee sales of $600 Assuming a five
day week or the equivalent of 22 days each month, this will earn the Registrant
$13,200 per month from coffee sales.
Baked goods
By having baked goods available to customers will increase kiosk
revenue. Not all customers will select baked goods. It is estimated that only
10% of the customers purchasing coffee will choice some form of baked goods.
This represents 30 baked goods a day. The cost of baked goods is 50% of selling
price. The average baked good will sell at $1.50 each representing sales of $45
and a cost of $23 each day. Monthly revenue from this source will be $990 with a
cost of $506.
(iii) Coffee beans
The Registrant will use one and a half tablespoons of coffee for each
coffee sold. By purchasing coffee beans in bulk and grinding them on location
for freshness purposes, the cost per cup will be reduced from the cost to other
restaurant establishments who purchase ground coffee. It is estimated that for
conservative purposes the average cost for coffee per cup is $0.15 based on the
price of ground coffee.
Therefore the cost for 300 cups of coffee per day is $45 and for the
month is $990.
(iv) Baked goods
The cost of baked goods is 50% of the selling price which will result in
the total cost for the month of $506.
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(v) Plastic cups, plastic caps and wood or plastic stir sticks
Plastic cups
The Registrant will purchase 5,000 plastic cups for 17 days of
operations. The cost for 5,000 plastic cups is $500 which included a paper
sleeve for holding purposes. The individual cost is $0.10 per cup resulting in a
daily charge of $30 or $660 for the 22 days the kiosk is opened in an average
month.
Plastic caps for cups
It is estimated that each cup of coffee purchased will need a plastic
cap. Assorted sizes of coffee will require assorted sizes of plastic caps. Each
cap will have a cost of $0.05. The number of coffee sold each month will be
6,600 that will result in a cost for coffee caps of $330.
Wood or plastic stir sticks
The cost of stir sticks is $0.02 each resulting in 300 being used each
day. The cost monthly will be $132.
(vi) Paper napkins
Cost of each paper napkin is $0.04. It is assumed that each baked good
will have at least one or two paper napkins attached to it and 20% of the coffee
purchasers will also take a napkin. This will result in 60 napkins for bake
goods and 60 napkins for coffee purchasers. The monthly cost is estimated to be
$106.
(vii) Small plates
The Registrant will put a paper plate with each baked goods sold. The
cost of an individual plate is $0.10 that will result in a monthly cost of $66.
(viii) Sugar, milk, honey and butter
The monthly cost of sugar, milk, honey and butter is difficult to
estimate but for conservative purposes has been estimated at $750 per month. It
is anticipated that the cost might be lower than estimated but until operations
commence the actual cost will not be known.
(ix) Advertising
The Registrant will not undertake any extensive advertising other than
introducing its kiosk to potential customers in the immediate area. Advertising
will mainly be fliers and take-away menus. The cost of advertising will decrease
as the kiosk becomes known in its area. It is estimate that printing of
advertising material will not exceed $300 per month.
(x) Amortization of kiosk construction costs
The kiosk construction costs are $18,000. It will be the Registrant's
policy to amortize this cost over five years on a straight-line basis. Therefore
the monthly change over 60 months is $300.
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(xi) Employee's wages
Initially one employee will be hired to assist in the operations of the
first kiosk. The kiosk manager will be act as a second employee during the time
prior to an additional kiosk being constructed and operated. The employee will
work for 50 hours a week for a gross remuneration of $2,000 per month before
benefits. The benefits to be paid by the Registrant will be Canada Pension and
Unemployment Insurance Benefits. The amount so paid will be $225 per month.
Therefore the total cost to the Registrant for its employee will be $2,225.
(xi) Management fees
The President of the Registrant will require compensation for her time
and effort during the period of the first operations of the kiosk. She will be
available to assist in its development and to assure that the operations are
proceeding as planned. It is estimated that a monthly fee of $2,500 will be paid
to her from the operations of the first kiosk.
(xii) Manager's salary
The kiosk manager will be paid a basic salary of $3,000 before
benefits. The benefits are similar to those of the employee but will be $350 per
month which will result in a monthly salary of $3,350.
(xiii) Rent or Royalty
For conservative purposes the projected net income has assumed a
royalty payment of 5% of the gross income or $770. Had a rent been assumed at
$6,000 per annum the monthly charge would have only been $500.
No tax consideration has been given to the projected statement of income for the
month then ended. The Registrant incorporated in the State of Nevada, even
though its business will be done in the Province of British Columbia initially,
due to Nevada having no corporate tax. In British Columbia the Registrant would
be subject to capital tax, based on its issued and outstanding share capital,
and be responsible for paying provincial and federal taxes which could be at the
high rate of 50% once the eligible cumulative deduction level is reached
($500,000). By incorporating in Nevada and operating in British Columbia, the
Registrant would be subject to a 15% tax rate under the Canada/United States
Treaty. If the Registrant management fees, at fair market prices, the majority
of its income to its Nevada parent company the tax payable would be
substantially reduced from the 15% rate.
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Phase 111
- ---------
At this stage the Registrant will consider the operating success of the
first kiosk and determine the number of kiosk to be built and the locations in
which they will be placed. It has been estimated that within a two year period
the Registrant plans to operate twenty five kiosks. Initially the Registrant
will open additional kiosks as the funds are available. Nevertheless it might
not be possible to fund all new kiosks with funds generated from sales.
Therefore the Registrant will have to give consideration to either debt
financing or issuing more of its common stock. At the present time the
Registrant is unable to estimate the funds required at this Phase.
The projected net income for operations for a twelve month period,
assuming various numbers of operating kiosks, can be estimated as follows:
10 KIOSKS 15 KIOSKS 25 KIOSKS
--------- --------- ---------
Revenue - assorted coffees (i) $ 1,584,000 $ 2,376,000 $ 3,960,000
- baked goods (ii) 118,800 179,200 297,000
---------- --------- ---------
Gross revenue 1,702,800 2,555,200 4,257,000
Total Cost of Goods Sold (iii) 425,700 638,800 1,064,250
---------- --------- ---------
Gross Margin 1,277,100 1,916,400 3,192,750
--------- --------- ---------
General operating expenses
Advertising (iv) 18,000 27,000 45,000
Amortization of kiosk construction (v) 36,000 54,000 90,000
Bank charges and interest (vi) 1,200 2,400 3,600
Employees' wages (vii) 534,000 801,000 1,335,000
Office and miscellaneous (viii) 113,100 124,410 136,851
Management fees (ix) 30,000 48,000 72,000
Manager's salary (x) 40,200 80,400 120,600
Rent or royalties (xi) 85,140 127,760 212,850
---------- ---------- ----------
857,640 1,264,970 2,015,901
---------- --------- ---------
Estimated Net Profit from Operations $ 419,460 $ 651,430 $ 1,176,849
========== ========= =========
(i) Revenue
Assorted coffees
Based on the monthly projections of 6,600 cups of coffee purchased in a
given month at a price of $2.00 per cup from one kiosk, the number of coffees
sold by 10 kiosks over a year period would be 792,000. The gross revenue would
be estimated at $1,584,000. With 15 kiosks in operations there would be
1,188,000 coffees sold in a one year period which would result in gross revenues
of $2,376,000. With 25 kiosks in
15
<PAGE>
operations the total number of coffees estimated to be sold would be 1,980,000
which would render a gross profit of $3,960,000.
The number of days might be more than 22 in a given monthly due to some
kiosks being located in transportation facilities, shopping malls and sports
facilities. These locations will be open either six or seven days a week. On the
other hand, statutory holidays will reduce the time the kiosk is operating in
such facilities as office towers. For conservative purposes in preparing the
projected net income, it has been assumed each kiosk will be opened for only 5
days a week.
Baked goods
On a monthly basis the Registrant would realize $990 in gross revenue
from the sale of baked goods. With 10 kiosks in operations for twelve months
each the gross revenue is estimated each year at $118,800. For 15 kiosks the
gross revenue would be estimated at $179,200 and for 25 kiosks at $297,000.
(ii) Cost of goods sold
Based on the monthly cost of goods sold the percentage compared to
gross revenue is 25%. With increased sales the cost of goods sold should not be
affected materially since it should stay within the percentage determined above.
This being the case, the cost of goods sold for 10 kiosks would be estimated at
$425,700, for 15 kiosks would be $638,800 and for 25 kiosks would be estimated
at $1,064,250.
(iii) Advertising
The Registrant will not undertake any substantial advertising program. As
mentioned previously, initially each kiosk will spent $300 to prepare
flyers and one sheet take-a-way menus for distribution around the immediate
area of the kiosk. As the kiosk becomes familiar to the customers the
advertising will only be done in the preparation of menus. With more kiosks
operating the cost for menus will be born by a larger number of kiosks.
Each kiosk will initially incur a $300 expense for the first three months
of operations and thereafter a cost of $100 per month. Estimated
advertising cost is as follows:
NUMBER OF FIRST THREE LAST THREE
KIOSKS MONTHS MONTHS TOTAL
------ ------ ------ -----
10 $ 9,000 $ 9,000 $ 18,000
15 13,500 13,500 27,000
25 22,500 22,500 45,000
(iv) Amortization of kiosk construction.
16
<PAGE>
Each Kiosk has a cost of $18,000 which will be amortized over a 60
month period on a straight line basis at a dollar amount of $300 per month. In a
given year, $3,600 will be expensed against revenue for each kiosk in operation.
Therefore the dollar amortization for 10 operating kiosks is $36,000, for 15
kiosks is $54,000 and for 25 kiosks is $90,000.
(v) Bank charges and interest
The Registrant will incur bank charges from its operations. This amount
is immaterial but has to be considered as an operating expense. An amount of
$100 has been assumed each month for 10 kiosks, $200 a month for 15 kiosks and
$300 per month for 25 kiosks. This will reflect the volume of transactions as
the Registrant expands its operations.
(vi) Employees' wages
Unlike the first kiosk, there will be two employees for each kiosk.
They could be hired on a part time basis or else be full time. For conservative
purposes it is assumed that all employees are full time and that each will earn
$2,000 per month plus benefits for a total of $2,225.
For 10 kiosks there will be 20 employees each earning $2,225 for 12
months for a total cost of $534,000.
For 15 kiosks the cost would be $801,000 based on 30 employees for 12
months.
For 25 kiosks there will be 50 employees who would be paid the
aggregate amount of $1,335,000.
(vii) Office and miscellaneous
With the increase in kiosks it will be no longer suitable to use the
President's personal residents as an office. Additional employees will have to
be hired and office equipment purchased. The cost of renting and operating an
office is determined for a twelve month period as follows:
Office rent - assumed at $2,500 per month based
on size and current rental rates in Vancouver $ 30,000
Receptionist and secretarial person - $2,500 per month
with employee benefits of $300. 33,600
Girl Friday to assist in office - $1,800 plus benefits of
$200 per month 24,000
Amortization of office equipment - $35,000 over a 60
month period 7,000
Lease expense for photocopier and fax 4,500
Paper and general office supplies 5,000
Telephone and fax 4,000
Miscellaneous 5,000
--------
Total estimated office and miscellaneous $113,100
17
<PAGE>
It is assumed an overall increase in office expense will occur at the
rate of 10% per year. For conservative purposes, it has been projected that the
10% cost increase will be reflected at the 15 kiosks stage and again at the 25
kiosks stage.
(viii) Management fees
Initially the President of the Registrant will be compensated at the
monthly rate of $2,500. With the expansion of the kiosk system the President
will be required to devote more time and therefore an increase in salary is
appropriate. At the 15 kiosk stage, the President will earn $4,000 per month and
at the 25 kiosk stage will earn $6,000 per month.
(ix) Managers' salaries
The Registrant will hire one manager for each 10 kiosks. The manager's
duty will be to oversee the operations of the kiosks and to problem solve when
needed. The monthly salary of a manager will be $3,000 with employee benefits of
$350 for a total remuneration of $3,350. Only one manager will be required when
there are only 10 kiosks operating. An additional manager will be hired when the
kiosks exceed 10 and 20. Therefore the estimated cost at each kiosk stage is as
follows: at 10 kiosk manager's salaries will be $40,200, at 15 kiosks the
salaries for two manager will be $80,400 and for three managers at 25 kiosks
will be $120,600.
(x) Rent or royalties
For conservative purposes, a royalty payment of 5% of gross revenue has
been estimated for general operating expenses. If rent of $6,000 a month had
been projected for 10 kiosks this would have resulted in an expense of $60,000
rather than $85,140; being 5% of $1,702,800. From the Registrant's point of view
rent, rather than royalty, is more favorable to its profit margin. Royalty at 15
kiosks is determined at $127,760 and at 20 kiosks at $212,850.
Profitability of Kiosk System
With 25 kiosks in operations, the Registrant will realize a projected
net profit form operations of $1,176,849. With additional kiosks operating, some
of the costs are spread over these additional kiosks thereby increasing per
kiosk the net income. For example, the first kiosk bears the entire charges for
the manager's salary and the management fee paid to the President. As additional
kiosks are placed into operations these charges are spread over the additional
kiosks.
Locations
The Registrant will identify the highest-visibility, highest-foot
traffic key market intercept locations and acquire them where possible. The
small size of the kiosk and its free-standing nature enable the kiosk to be
installed in non-traditional locations. In many cases, the locations sought by
the Registrant are build-outs, anchored by vacant nooks, crannies, or corners;
and, as a result, the locations are not presently occupied, nor do retailers
regard them as location opportunities in general.
18
<PAGE>
The Registrant's initial focus will be key market intercept locations
within the retail malls that anchor the commercial high-rises in the downtown
Vancouver core. The Registrant has estimated the cost of acquiring a good
location will be either approximately $6,000 per kiosk or a monthly royalty at
5% of the kiosk's sales. Expanding revenue in a non-traditional location, where
revenue is not currently being generated, will create a "win-win" solution for
both parties.
Competition
The coffee market is highly competitive in that there are number coffee
houses throughout Vancouver. Such names as Starbucks Coffee, The Second Cup,
Blenz Coffee and Murchie's Tea and Coffee are household names in Vancouver and
command a great following. In addition, every restaurant serves coffee,
theaters, sports facilities, hotels often provide free coffee in each of its
guest rooms and nearly every office offers coffee to visitors while they either
wait or are in a meeting.
To compete against the well such known names of Starbucks Coffee and
The Second Cup will be difficult for the Registrant since these companies have a
strong following of coffee drinkers and can offer, in the majority of cases, a
place for their customers to sit while enjoying their coffee. In addition, they
offer a wide variety of coffee drinks to satisfy every coffee taste. The
Registrant will be limited in the number of different coffee drinks it can
offer.
Against smaller, localized operators, Registrant will compete on the
basis of location, specialization, quality service, branding and professional
management, while taking advantage of Vancouverite's loyalty to their city and
their affinity to support local companies.
There can be no assurance that the Registrant will be able to establish
itself in the Vancouver coffee market by building a solid customer base.
RISK FACTORS
Risk Inherent in the coffee business
There are certain inherent risks in the coffee business from the point
of view of the Registrant and its shareholders as follows:
1. The Registrant has numerous competitors in the market place both large
and small concerns.
2. There is no certainty that any expenditures made in the development of
the kiosk system will result in a profitable operation. Many small
business fail due to being under-capitalized or not being able to
attract long-term customers.
3. Retail food business is a speculative business, marked by a number of
significant risks including, among other things, changes in taste of
the public or new competitors who are better funded and offer a wider
variety of product.
19
<PAGE>
4. Public tastes may change whereby coffee no longer commands the market
it currently does.
The marketability of any coffee drinks may be affected by numerous
factors which are beyond the Registrant's control and which cannot be
accurately predicted, such as market fluctuations in coffee bean
prices, the restriction against selling food and drinks in certain
locations, which are currently acceptable, and the increase in location
rent or royalty charges.
OTHER PROJECTS UNDER CONSIDERATION
The Registrant has not as yet inaugurated any steps towards the
investigation of any other projects, and does not presently have the financial
capacity to do so. The eventual development of its kiosk system might involve
the issuance of substantial blocks of the Registrant's shares.
EMPLOYEES
As at March 31, 1999, the Registrant did not have any employees either
part time or full time. The executive officers of the Registrant are involved in
the affairs of the Registrant as required. They are not employed full time by
the Registrant and presently have other employment. Nevertheless, they were
responsible for incorporating the Registrant, developing the kiosk coffee
concept, engaging the services of professions to assist in the development of
the Registrant, prepare documents as required and undertake other duties which
are normally the responsibility of the executive officers.
The Registrant is not a party to any employment contracts or collective
bargaining agreements. The British Columbia area has a relatively large pool of
people experienced in food preparation and dealing with customers. In addition,
there is no lack of people who have experience in general office duties. The
Registrant, in Phase 11, will commence hiring personnel to operate the various
kiosks.
REPORTS TO SECURITY HOLDERS
Prior to filing this Form 10-SB, the Registrant has not been required
to deliver annual reports. To the extent that the Registrant is required to
deliver annual reports to security holders through its status of a reporting
company, the Registrant shall deliver annual reports. Also, to the extent the
Registrant is required to deliver annual reports by the rules or regulations of
any exchange upon which the Registrant's shares are traded, the Registrant shall
deliver annual reports. If the Registrant is not required to deliver annual
reports, the Registrant will not go to the expense of producing and delivering
such reports. If the Registrant is required to deliver annual reports, they will
contain audited financial statements as required.
20
<PAGE>
Prior to the filing of this Form 10-SB, the Registrant has not filed
reports with the Securities and Exchange Commission. Once the Registrant becomes
a reporting company, management anticipates that Forms 3, 4, 5, 10K-SB, 10Q-SB,
8-K and Schedules 13D along with the appropriate proxy material will have to be
filed as they come due. If the Registrant issues additional shares, the
Registrant may file additional registration statements for those shares.
The public may read and copy any material of the Registrant files with
the Securities and Exchange Commission at the Commission's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. The Commission maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding the issuers that file electronically with the Commission. The Internet
address of the Commission's site is (http://www.sec.gov).
YEAR 2000 COMPUTER PROBLEMS
The Registrant is engaged in and dependent on computer technology in
its business operations. Many existing computer programs use only two digits to
identify a year in the date field; i.e., "98" instead of "1998". These programs
were designed and developed without considering the impact of the upcoming
change in the century, i.e., Year 2000. The Registrant uses computer software
programs and systems that are essential to its business operations. If not
corrected, many computer applications could fail or create erroneous results by
or at the Year 2000. The Registrant has:
(i) diagnosed and repaired the existing and known Year 2000 problems in
its computer software and systems;
(ii) reviewed the possible contingent liabilities the Registrant may have
to third parties as a result of non-compliant systems; and
(iii) examined the extent the Registrant depends on third parties whose
systems may not be Year 2000 compliant.
However, there may be untold numbers of unforeseen circumstances or
unknown factors which the Registrant has not yet identified, determined or
anticipated regarding the Year 2000 computer problems, and such problems could
have a material adverse affect on the Registrant's business operations and
financial condition. Consequently, the Registrant can give no assurance that the
Year 2000 compliance can be fully achieved without costs and uncertainties that
may seriously and substantially adversely affect the Registrant's operations and
financial results.
In summary, the problem is a massive, pervasive, complex, world-wide
phenomena that could, in a worst-case scenario, totally shut down and destroy
the Registrant's business operations.
This discussion contains forward-looking statements regarding the
Registrant's Year 2000 problems and their effect on the Registrant. In this
regard, the Registrant is relying upon the "safe harbor" provided under the
Private Securities Litigation Reform
21
<PAGE>
Act of 1995 for protection from liabilities in the event such statements are not
proven accurate.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
The discussion contained in this Item 2 is "forward looking" since it
includes, without limitation, statements regarding the Registrant's
expectations, beliefs, intentions or strategies regarding future business
operations and projected earnings from its kiosk coffee operations, which are
subject to may risks.
All forward-looking statements included in this document are based on
information available to the Registrant on the date hereof, and the Registrant
assumes no obligation to update any such forward-looking statements. The
Registrar's actual results may differ materially as a result of certain factors,
including those set forth hereafter and elsewhere in this Form 10-SB. Potential
investors should consider carefully the previously stated factors, as well as
the more detailed information contained elsewhere in this Form 10-SB, before
making a decision to invest in the common stock of the Registrant.
The Registrant has not received any revenue from operation since its
inception on September 15, 1998 immediately preceding the filing of this Form
10-SB.
PLAN OF OPERATION
The Registrant has to date concentrated on its kiosk concept. The
Registrant has no plans to seek other investment opportunities other than the
development of its coffee kiosks. Subject to the availability of financing, the
Registrant will seek to increase its inventory of kiosks and, if acceptable to
management, consider expanding to other cities in Western Canada, being mainly
Victoria, Calgary and Edmonton. (See Part 1, Item 1 - "Description of the
Business"). The Registrant will seek to generate such funds through the sale of
securities and/or institutional financing. If an underwriter can be found, a
public offering of common stock will be considered; alternatively the Registrant
will seek to raise funds through a private offering of securities to an
institutional buyer or through a registered broker dealer. The Registrant does
not presently have any financing arranged for nor has any underwriter yet
expressed interest in such an offering, and there can be no assurance that an
underwriter can be found on terms acceptable to the Registrant. In the absence
of such financing, the Registrant may be unable to put its plans into effect.
LIQUIDITY AND CAPITAL RESOURCES
As at March 31, 1999, the Registrant had $30,331 of assets, and $7,444
of liabilities of which $4,500 is due to a director, including cash or cash
equivalents amounting to $30,331.
22
<PAGE>
An analysis of the expenses for the period from inception, being
September 15, 1998, to March 31, 1999:
From September 15, 1998
(date of inception) to
March 31, 1999
--------------
Accounting and audit $ 2,250
Bank charges 124
Incorporation costs written off 670
Management fees 1,000
Office and miscellaneous 102
Rent 750
Telephone 500
Transfer agent's fees 1,215
-----
Total expenses $ 6,611
=====
An analysis of the above expenses is as follows:
Accounting and audit - $2,250
Accounting and audit expenses for the period comprised $750 for
bookkeeping services and $1,500 for audit. Both these expenses were accrued in
the Balance Sheet as at March 31, 1999 and have subsequently been paid.
Bank charges - $124
Represents bank service charges during the period from inception to
March 31, 1999.
Incorporation costs written off - $670
The Registrant decided to write-off the cost of incorporation rather
than capitalize this cost.
Management fees - $1,000
The Registrant has not paid any fees to its directors or officers.
Nevertheless it has recognized that there is a cost associated with the services
rendered by the officers. Therefore, it has accrued $1,000 as an expense and
recognized the credit as capital contribution.
Office and miscellaneous - $102
Office and miscellaneous represents charges paid for photocopying,
faxing and delivery.
Rent - $750
23
<PAGE>
The Registrant pays no rent for office since its office is located in
the personal residence of its President. Nevertheless, it recognizes that there
is rental cost associated with managing a business and therefore has accrued
$750 as an expense with a credit to capital contribution.
Telephone - $500
The Registrant has paid no telephone charges to date since it has been
operating out of the premises of its President. Telephone charges have been
recognized in that $500 has been charges to expenses with an offsetting credit
to capital contribution.
Transfer agent's fees - $1,215
Transfer agent's fees is the annual fee of $1,200. This fee has been
treated as a period cost and written-off in the current period. The balance
represents late fees for filing the Sixty Days Notice of officers and directors
with the Nevada State Government.
The Registrant has no contractual obligations for either lease
premises, employment agreements or work commitments on building the prototype
kiosk and has made no commitments to acquire any asset of any nature.
General operating expenses of the Registrant for 1999 are projected to
be approximately $428,820. This represents six months operations of 10 kiosks as
shown under the projected financial statements under Phase 111.
Management does not believe the Registrant's operations have been
materially affected by inflation.
INVESTMENT POLICY
The Registrant's plan of operations is focused on the continued
development of its kiosk system as more fully described under Item 1 above.
Accordingly, the Registrant has no particular policy regarding each of the
following types of investment:
1. Investment in real estate or interest in real estate;
2. Investment in real estate mortgages; or
3. Securities of or interest in persons primarily engaged in real
estate activities.
ITEM 3. DESCRIPTION OF THE KIOSK SYSTEM
The Registrant's business concept is a system of kiosks located in high
traffic area offering coffee drinks and assorted pastries to customers desiring
to take it to another location for enjoyment. Initially the Registrant will
concentrate its efforts of
24
<PAGE>
developing its kiosk system in the Greater Vancouver area. If it is success it
will consider expanding its operations to other cities in Western Canada. This
decision will only be made if the funds are available and trustworthy employees
can be identified to operate the kiosk system in other cities.
OFFICES
The Registrant's executive offices are located at Suite 201 - 888 Bute
Street, Vancouver, British Columbia, Canada, V6E 1Y5. The office is located in
the personal residents of the Registrant's President.
OTHER PROPERTY
The Registrant does not own any other property. At the present time, the
Registrant has no plans to acquire any other property.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERSHIP AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of each person who is known to the Registrant to be the
beneficial owner of more than 5% of the Registrant's Common Stock as of March
31, 1999.
(1) (2) (3) (4)
Title Name and Address Amount and Nature Percent
of of Beneficial of Beneficial of
Class Owner Ownership (1),(2) Class (2)
----- ------ ----------------- ---------
Common KIRSTEN MIDE WILSON 4,500,000 33.18%
Shares 201 - 888 Bute Street
Vancouver, B.C.
Canada, V6E 1Y5
Common RYAN WILSON 1,000,000 7.37%
Shares 201- 888 Bute Street
Vancouver, B.C.
Canada, V6E 1Y5
- ------------
(1) As of March 31, 1999, there were 13,562,480 common shares outstanding.
Unless otherwise noted, the security ownership disclosed in this table is of
record and beneficial.
(2) Under Rule 13-d under the Exchange Act, shares not outstanding but subject
to options, warrants, rights, conversion privileges pursuant to which such
shares may be acquired in the next 60 days are deemed to be outstanding for
the purpose of computing the percentage of outstanding shares owned by the
persons having such rights, but are not deemed outstanding for the purpose
of computing the percentage for such other persons.
25
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of each officer and director, and of all directors and
executive officers as a group as of March 31, 1999.
(1) (2) (3) (4)
Title Name and Address Amount and Nature Percent
of of Beneficial of Beneficial of
Class Owner Ownership (1),(2) Class (2)
----- ------ ----------------- ---------
Common KIRSTEN MIDE WILSON 4,500,000 (3) 33.18%
Shares 201 - 888 Bute Street
Vancouver, B.C.
Canada, V6E 1Y5
Common RYAN WILSON 1,000,000 (4) 7.37%
Shares 201 - 888 Bute Street
Vancouver, B.C.
Canada, V6E 1Y5
Common FRED BURNS 500,000 (5) 3.69%
Shares 104 - 585 Austin Avenue
Coquitlam, B.C.
Canada, V3K 3N2
All officers and directors as a 6,000,000 44.24%
group (three persons)
- -----------
(1) As of March 31, 1999, there were 13,562,480 common shares outstanding.
Unless otherwise noted, the security ownership disclosed in this table is of
record and beneficial.
(2) Under Rule 13-d under the Exchange Act, shares not outstanding but subject
to options, warrants, rights, conversion privileges pursuant to which such
shares may be acquired in the next 60 days are deemed to be outstanding for
the purpose of computing the percentage of outstanding shares owned by the
persons having such rights, but are not deemed outstanding for the purpose
of computing the percentage for such other persons.
(3) Ms. Wilson is President of the Registrant and one of the controlling
shareholders. This stock is restricted since it was issued in compliance
with the exemption from registration provided by Section 4 (2) of the
Securities Act of 1933, as amended. After this stock has been held for one
(1) year, Ms. Wilson could sell 1% of the outstanding stock every three
months. Therefore, this stock cannot be sold except in compliance with the
provisions of Rule 144.
26
<PAGE>
(4) Mr. Wilson is Secretary Treasurer and a Director of the Registrant and one
of the controlling shareholders. This stock is restricted since it was
issued in compliance with the exemption from registration provided by
Section 4 (2) of the Securities Act of 1933, as amended. After this stock
has been held for one (1) year, Mr. Wilson could sell 1% of the outstanding
stock every three months. Therefore, this stock cannot be sold except in
compliance with the provisions of Rule 144.
(5) Mr. Burns is a Director of the Registrant and one of the controlling
shareholders. This stock is restricted since it was issued in compliance
with the exemption from registration provided by Section 4 (2) of the
Securities Act of 1933, as amended. After this stock has been held for one
(1) year, Mr. Burns could sell 1% of the outstanding stock every three
months. Therefore, this stock cannot be sold except in compliance with the
provisions of Rule 144.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
DIRECTORS AND EXECUTIVE OFFICERS
The following table identifies the Registrant's directors and executive
officers as of March 31, 1999. Directors are elected at the Registrant's annual
meeting of stockholders and hold office until their successors are elected and
qualified. The Registrant's officers are appointed annually by the Board of
Directors and serve at the pleasure of the Board.
Term as Director
Name Position Held Expires
---- ------------- -------
KIRSTEN MIDE WILSON President and Director 1999
FRED BURNS Director 1999
RYAN WILSON Secretary/Treasurer and 1999
Director
KIRSTEN WILSON, 28, is the President and a Director of the Registrant. Having
graduated from Simon Fraser University in 1994 with a Bachelor of Business
Administration and a Bachelor of Applied Science (Communications), Ms. Wilson
entered into the family business; being a general contracting company
specializing in gravel pit sales. Her main function is as office manager and
controller with responsibilities in cost accounting, financial accounting and
various communication functions with the British Columbia Government relating to
the building of highways. From 1995 to 1998 she spearheaded the administrative
and organizational restructuring of that company, resulting in an overhead cost
savings of CDN$1,000,000 per annum. Recently Ms. Wilson has enrolled in the
Certified Management Accountants course in order to obtain her degree in this
area. Ms. Wilson brings private organizational and system management experience
to the Registrant.
RYAN WILSON, 29, is the Secretary Treasurer and a Director of the Registrant.
After having graduated from the University of British Columbia with a Bachelor
of Arts in Economics Mr. Wilson obtained his Masters of Business Administration.
Since
27
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graduation Mr. Wilson has been employed with Schindler Elevators Corp., one of
the Fortune 500 companies, and has risen to the position of Regional Vice
President. His responsibilities include managing all aspect of the regional
business including financial reporting, labor negotiations and strategic
planning. In addition, Mr. Wilson is President and Managing Director of his own
private consulting firm. He brings to the Registrant a vast amount of experience
in operating and managing a business.
FRED BURNS, 54, is a director of the Registrant. Mr. Burns spent five years at
Queens University in Belfast, Ireland where he obtained a Bachelor of Arts
degree in Mechanical Engineering. Upon moving to Canada, Mr. Burns started Burns
Mechanical, a construction plumbing firm, in which he has been president for the
past twenty five years. This is a private company owned by Mr. Burns.
None of the Directors or Executive Officers work full time for the
Registrant, but intend to devote such time as their responsibilities require.
None of the Registrant's Directors are currently directors of other companies
registered under the Securities Exchange Act of 1934.
Ms. Wilson, President of the Registrant, is married to Mr. Wilson,
Secretary of the Registrant. There are no other family relationships between the
directors, executive officers or with any person under consideration for
nomination as a director or appointment as an executive officer of the
Registrant.
CHANGE OF DIRECTOR AND OFFICER
The incorporating Director and President of the Registrant was Mr.
Carsten Mide, father of the present President. Mr. Mide resigned as president
and director on January 9, 1999. The verbal reason for Mr. Mide resigning is
that he became committed to other business interest which would distract him
from the affairs of the Registrant. Ms. Wilson had been active with her father
in the initial development of the Registrant and therefore was appointed as a
Director and President on January 28, 1999.
CHANGES IN CONTROL
There are no arrangements that may result in a change of control.
ITEM 6. EXECUTIVE COMPENSATION
None of the Registrant's executive officers have received compensation
since the Registrant's inception except as noted below.
The following table sets forth compensation paid or accrued by the
Registrant during the period ended March 31, 1999 to the Registrant's President
and shows compensation paid to any other officers or directors.
28
<PAGE>
SUMMARY COMPENSATION TABLE (1998 - 1999)
<TABLE>
<CAPTION>
LONG TERM COMPENSATION (US DOLLARS)
-----------------------------------
PAYOUT ANNUAL COMPENSATION AWARDS
------ ------------------- ------
(A) (B) (C) (E) (F) (G) (H) (I)
RESTRICTED ALL OTHER
OTHER STOCK COMPEN-
ANNUAL AWARDS OPTIONS/ LTIP SATION
NAME AND PRINCI COMP. ($) SAR PAYOUTS ($)
PAL POSITION YEAR SALARY ($) (#) ($)
------------ ---- ------ --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Kirsten Wilson, 1998-1999 -0- -0- -0- -0- -0- -0-
President
Fred Burns, 1998-1999 -0- -0- -0- -0- -0- -0-
Director
Ryan Wilson, 1998-1999 -0- -0- -0- -0- -0- -0-
Secretary/Treasurer
and Director
</TABLE>
There has been no compensation given to any of the Directors or
Officers during 1999 other than $1,000 being accrued as an expenses in
recognition of time and effort spent by the President in attending to the
business of the Registrant. This amount was expensed in the current period and
credited to Capital Contribution in the Shareholders' Equity section of the
Balance Sheet.
There are no stock options outstanding as at March 31, 1999 and no
options have been granted in 1999, but it is contemplated that the Registrant
may issue stock options in the future to officers, directors, advisers and
future employees.
COMPENSATION OF DIRECTORS
Members of the Board of Directors do not receive cash compensation for
their services as Directors. Directors are not presently reimbursed for expenses
incurred in attending Board meetings.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
None of the officers and directors of the Registrant have been involved
in the past five (5) years in any of the following:
(1) Bankruptcy proceedings;
(2) Subject to criminal proceedings or convicted of a criminal act;
(3) Subject to any order, judgment or decree entered by any Court for
violating any laws relating to business, securities or banking
activities; or
29
<PAGE>
(4) Subject to any order for violation of federal or state securities
laws or commercial laws.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the period from September 15, 1998 to March 31, 1999, the
Registrant has not entered into any transactions with a value in excess of
$60,000 with a director, officer or beneficial owner of 5% or more of the
Registrant's capital stock, except as follows:
On or about February 5, 1999, the Registrant approved the issuance of
6,000,000 shares of its common stock for cash consideration at $0.001 per share
between Kirsten Wilson, as to 4,500,000 shares, Ryan Wilson, as to 1,000,000
shares, Fred Burns, as to 500,000 shares. The terms of these transactions was
determined by the Board of Directors at the time there were no other
stockholders. These shares are restricted since they were issued in compliance
with the exemption form registration provided by Section 4 (2) of the Securities
Act of 1933, as amended. After these shares have been held for one (1) year, the
directors, noted above, could sell, in a given three month period, shares based
on 1% of the outstanding stock of the Registrant. Therefore, these shares cannot
be sold except in compliance with the provisions of Rule 144. The share
certificates registered in the names of each of the directors noted above have a
legend affixed to them restricting their sale.
Certain parties interested in the Registrant's success have contributed
and continue to contribute time, office space, telephone, and other expenses,
without compensation or reimbursement. The Registrant has given recognition to
these costs by charging them to expenses in the current period and crediting
Capital Contribution as follows:
Management fee $ 1,000
Rent for office 750
Telephone 500
------
Total charges $ 2,250
======
Certain directors of the Registrant are directors, officers,
stockholders and employees of other companies engaged in various businesses, and
conflicts of interest may arise between their duties as directors of the
Registrant and as directors and officers of other companies. The Registrant has
formulated no policy for the resolutions of such conflicts.
The President of the Registrant advanced the Registrant $4,500 in cash
which has been used for general working capital. These funds have not been paid
back as yet to the President.
ITEM 8. DESCRIPTION OF SECURITIES
The Registrant's articles of incorporation currently provide that the
Registrant is authorized to issue 200,000,000 shares of common stock, par value
$0.001 per share. As at March 31, 1999, 13,562,480 shares were outstanding.
30
<PAGE>
The Registrant issued 6,000,000 shares at a price of $0.001 per share
to three of its directors for a total amount of $6,000. These shares are
restricted since they were issued in compliance with the exemption from
registration provided by Section 4 (2) of the Securities Act of 1933, as
amended. Therefore, these shares cannot be sold except in compliance with the
provisions of Rule 144. The share certificates registered in the names of each
of the directors noted above have a legend affixed to them restricting their
sale.
The Registrant issued 7,500,000 shares at a price of $0.002 per share
to twelve corporation investors unrelated to the directors and officers. None of
these shareholders hold 5% or more of the issued and outstanding stock of the
Registrant and none are US residents or corporations. The cash received amounted
to $15,000.
The Registrant issued 62,480 shares at a price of $0.10 per share to
twenty-nine individual investors for a total cash consideration of $6,248. Out
of the 62,480 shares issued, 1,300 were issued to a wife of a director and are
restricted under Rule 144. The appropriate legend has been affixed to this
specific share certificate thereby restricting its resale. None of these
shareholders are either US residents or citizens. None of these shareholders
hold in excess of 5% of the issued and outstanding share capital of the
Registrant.
For the status of the tradability of the above noted issuances of
shares refer to Part 11, Item 4 - Recent Sales of Unregistered Securities.
COMMON STOCK
Each holder of record of the Registrant's common stock is entitled to
one vote per share in the election of the Registrant's directors and all other
matters submitted to the Registrant's stockholders for a vote. Holders of the
Registrant's common stock are also entitled to share ratably in all dividends
when, as, and if declared by the Registrant's Board of Directors from funds
legally available therefor, and to share ratably in all assets available for
distribution to the Registrant's stockholders upon liquidation or dissolution,
subject in both cases to any preference that may be applicable to any
outstanding preferred stock. There are no preemptive rights to subscribe to any
of the Registrant's securities, and no conversion rights or sinking fund
provisions applicable to the common stock.
Neither the Registrant's Articles of Incorporation nor its Bylaws
provide for cumulative voting. Accordingly, persons who own or control a
majority of the shares outstanding may elect all of the Board of Directors, and
persons owning less than a majority could be foreclosed from electing any.
OPTIONS OUTSTANDING
There are no outstanding options. It is the intention of the Board of
Directors to grant stock options to directors, officers and future employees at
some time in the future. At the present time no consideration has been given to
the granting of stock options.
31
<PAGE>
MARKET INFORMATION
The common stock of the Registrant currently is not trading on any
exchange. Management anticipates that the Registrant's shares will be qualified
on the system of the National Association of Securities Dealers, Inc. ("NASD")
known as the Bulletin Board.
There has been no market for the Registrant's stock in the last two
years. Accordingly, the Registrant has no range of high and low bid prices for
the Registrant's common stock to report.
There is no public market for the shares of the Registrant and there
can be no assurance that an active public market for the shares will develop or
be sustained. In addition, the shares of the Registrant are subject to various
governmental and regulatory body rules that affect the liquidity of the shares.
32
<PAGE>
PART 11
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS
MARKET INFORMATION
The Registrant's stock is not presently traded or listed on any public
market. Upon effectiveness of the Registrant's registration statement under the
Securities Exchange Act of 1934, it is anticipated one or more broker dealers
may make a market in its securities over the counter, with quotations carried on
the "OTC Bulletin Board" subsequently to being approved from trading by the
National Association of Securities Dealers.
There is no established market price for the shares. There are no
common shares subject to outstanding options or warrants or securities
convertible into common equity of the Registrant. The number of shares subject
to Rule 144 is 6,001,300. Each share certificate has the appropriate legend
affixed thereto. There are no shares being offered to the public and no shares
have been offered pursuant to an employee benefit plan or dividend reinvestment
plan.
HOLDERS
The number of record holders of the Registrant's common stock as at
March 31, 1999 was 44 of which 3 are directors. The Registrant has sold no
additional shares since March 31, 1999.
DIVIDENDS
The Registrant has never paid cash dividends on its common stock and
does not intend to do so in the foreseeable future. The Registrant currently
intends to retain any earnings for the operation and expansion of its business.
The Securities and Exchange Commission has adopted regulations which
generally define a "penny stock" to be equity securities that has a market price
(as defined) of less than $5.00 per share, subject to certain exemptions. The
Registrant's Common Stock may be deemed to be a "penny stock" and thus, if and
when it becomes listed and trading, of which there can be no assurance, will
become subject to rules that impose additional sales practice requirements on
broker/dealers who sell such securities to persons other than established
customers and accredited investors, unless the Common Stock is listed on The
NASDAQ Small Cap Market.
Consequently, the "penny stock" rules may restrict the ability of
broker/dealers to sell the Registrant's securities, and may adversely affect the
ability of holders of the Registrant's Common Stock to resell their shares in
the secondary market, assuming such market develops, of which there can be no
assurance.
33
<PAGE>
FINANCIAL INFORMATION
The Registrant will furnish annual financial reports to stockholders,
certified by its independent auditor, and furnish management prepared unaudited
quarterly reports to its shareholders. Contained within this Form 10SB are the
audited financial statements for the period from September 15, 1998, the date of
inception, to March 31, 1999.
The Registrant has elected for a year-end of August 31, 1999 and every
twelve months thereafter.
TRANSFER AGENT
The Registrant's transfer agent is Nevada Agency & Trust Co., 50 West
Liberty Street, Suite 880, Reno, Nevada, 89501.
ITEM 2. LEGAL PROCEEDINGS
There are no legal proceedings to which the Registrant is a party or to
which its assets are subject, nor to the best of management's knowledge are any
material legal proceedings contemplated.
ITEM 3. DISAGREEMENT WITH ACCOUNTANTS AND
FINANCIAL DISCLOSURE
From inception to date, the Registrant's principal accountant is
Andersen Andersen & Strong, L.C. of Salt Lake City, Utah. The firm's report for
the period from inception to March 31, 1999 did not contain any adverse opinion
or disclaimer, nor were there any disagreements between management and the
Registrant's accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The Registrant is registering all of its issued and outstanding shares
of its capital stock with a par value of One Mill ($0.001) per share. From
inception through to March 31, 1999, the Registrant has issued and sold the
following unregistered shares of its common stock (the aggregated value of all
such offerings did not exceed US$1,000,000):
(A) ISSUANCE OF SHARES AT $0.001 PER SHARE
The Registrant offered 6,000,000 shares at a price of $0.001 per share
to its directors and officers for a total cash consideration of $6,000.
These shares were issued pursuant to the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended. The share
certificates issued have a restriction attached thereto and cannot be
traded other than as allowed under Rule 144. The directors in receipt
of these shares are as follows:
34
<PAGE>
Kirsten Mide Wilson 4,500,000 shares
Ryan Wilson 1,000,000 shares
Fred Burns 500,000 shares
(B) ISSUANCE OF SHARES AT $0.002 PER SHARE
The Registrant offered 7,500,000 shares at a price of $0.002 per share
to twelve corporations resident outside of the United States. The total
funds received from the sale of the shares were $15,000. This shares
were issued in accordance with the exemption from registration provided
by Rule 504 of Regulation D of the Securities Act of 1933, as amended
and an appropriate Form D was filed in connection with the issuance of
these shares. None of the shareholders have in excess of 5% of the
issued and outstanding share capital of the Registrant. These
shareholders and their holdings are as follows:
Dortmund Unternehmen GmbH 650,000 shares
Coatsbridge Holdings Ltd. 550,000 shares
Eiserfeld Kapital Management Corp. 637,500 shares
Northwood Industries Ltd. 650,000 shares
Sable International Inc. 662,500 shares
Tudella Desarrollos S.A. 525,000 shares
Groupo Estalla S.A. 625,000 shares
Pancho Ventures S.A. 600,000 shares
Conquet Freres S.A. 662,500 shares
La Fidelidad Corporation 662,500 shares
St. Nazaire Compagnie S.A. 625,000 shares
Gura Partners Ltd. 650,000 shares
(C ISSUANCE OF SHARES AT $0.10 PER SHARE
The Registrant offered 62,480 shares at a price of $0.10 per share to
29 individual shareholders resident outside of the United States for a
total cash consideration of $6,248. All 29 shareholders investing were
either friends, relatives or business associates of one or more of the
directors or officers of the Registrant. These shares were issued in
accordance with the exemption from registration provided by Rule 504 of
Regulation D of the Securities Act of 1933, as amended and an
appropriate Form D was filed in connection with the issuance of these
shares.
Of the 29 shareholders, 1 shareholder is the wife of one of the
directors. Therefore, 1,300 shares been restricted and the applicable
legend has been imprinted on the certificate.
35
<PAGE>
The names of the shareholders subscribing for the 62,480 shares are as
follows:
Ken Payne 1,000 shares
Albert Ezzy 1,000 shares
Mabel Cewe 1,500 shares
Laura Burns (*) 1,300 shares
Judie Mide 1,500 shares
Carsten Mide 2,000 shares
David Burns 1,000 shares
Robin M. Davies 1,000 shares
Tannis Lyle Roop 1,000 shares
Brian Mervyn Clegg 1,180 shares
Ken McCullough 1,000 shares
Carol Finley 500 shares
John W. Walker 1,000 shares
Glyn Hethey 2,000 shares
Robin Hethey 2,000 shares
Mary M. Hethey 18,000 shares
Michael J. Kennaugh 1,500 shares
Stacey Bligh 1,000 shares
Philip Yee 1,000 shares
Raymond Contoli 2,000 shares
Randy Contoli 1,500 shares
Charles Hethey 5,000 shares
James Hethey 7,500 shares
Susan Mide 1,000 shares
Anne Mide 1,000 shares
Eric Mide 1,000 shares
Louise Mide 1,000 shares
Leo Mide 1,000 shares
Ben Forbes 1,000 shares
- ----------------
(*) These shares have a one-year hold period attached due to Laura Burns being
married to Fred Burns, a director of the Registrant.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.751 of the Nevada General Corporation Law allows the
Registrant to indemnify any person who was or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, by reason
of the fact that he or she is or was a director, officer, employee or agent of
the Registrant, or is or was serving at the request of the Registrant as a
director, officer, employee, or agent of any corporation, partnership, joint
venture, trust, or other enterprise. The Registrant's Bylaws provide that such
person shall be indemnified and held harmless to the fullest extent permitted by
Nevada law.
Nevada law permits the Registrant to advance expenses in connection
with defending any such proceedings, provided that the indemnitee undertakes to
repay any such advances if it is later determined that such persons were not
entitled to be indemnified by the Registrant. The Registrant's Bylaws require
that the Registrant advance such funds upon receipt of such an undertaking with
respect to repayment.
36
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in such act, and is
therefore unenforceable.
37
<PAGE>
PART F/S
FINANCIAL STATEMENTS
The following financial statements are filed with this Form 10-SB:
Page
----
Report of Independent Certified Public Accountants 39
Financial Statements of Vancouver's Finest Coffee Company
Balance Sheet as at March 31, 1999 40
Statement of Operations for the Period from September 15, 1998 (Date
of Inception) to March 31, 1999 41
Statement of Cash Flows for the Period from September15, 1998 (Date
of Inception) to March 31, 1999 42
Statement of Changes in Stockholders' Equity for the Period from
September 15, 1998 (Date of Inception) to March 31, 1999 43
Notes to Financial Statements 44
38
<PAGE>
ANDERSEN ANDERSEN & STRONG, L.C. 941 East 3300 South, Suite 220
Certified Public Accountants Salt Lake City, Utah, 84106
Member SEC Practice Section of the AICPA Telephone 801-486-0096
Fax 801-486-0098
E-mail Kandersen @ msn.com
Board of Directors
Vancouver's Finest Coffee Company
Vancouver, B.C., Canada
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheet of Vancouver's Finest Coffee
Company (a development stage company) at March 31, 1999, and the statement of
operations, stockholders' equity, and cash flows for the period from September
15, 1998 (date of inception) to March 31, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits 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 financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Vancouver's Finest Coffee
Company at March 31, 1999, and the results of operations, and cash flows for the
period from September 15, 1998 (date of inception) to March 31, 1999, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is in the development
stage and will need additional working capital for its planned activity, which
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 5. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Salt Lake City, Utah /s/ "Andersen Andersen & Strong"
April 30, 1999
A member of ACF International with affiliated offices worldwide
39
<PAGE>
VANCOUVER'S FINEST COFFEE COMPANY
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
MARCH 31, 1999
================================================================================
ASSETS
CURRENT ASSETS
Cash $ 30,331
------
Total Current Assets $ 30,331
======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - related parties $ 4,500
Accounts payable 2,944
-------
Total Current Liabilities 7,444
-------
STOCKHOLDERS' EQUITY
Common stock
200,000,000 shares authorized, at $0.001 par
value; 13,562,480 shares issued and outstanding 13,562
Capital in excess of par value 15,936
Deficit accumulated during the development stage (6,611)
------
Total Stockholders' Equity 22,887
$ 30,331
The accompanying notes are an integral part of these financial statements.
40
<PAGE>
VANCOUVER'S FINEST COFFEE COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM SEPTEMBER 15, 1998
(DATE OF INCEPTION) TO MARCH 31, 1999
================================================================================
REVENUE $ --
EXPENSES 6,611
------
NET LOSS $ (6,611)
======
NET LOSS PER COMMON SHARE
Basic $ (.001)
=======
AVERAGE OUTSTANDING SHARES
Basic 4,500,000
The accompanying notes are an integral part of these financial statements.
41
<PAGE>
VANCOUVER'S FINEST COFFEE COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM SEPTEMBER 15, 1998
(DATE OF INCEPTION) TO MARCH 31, 1999
================================================================================
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (6,611)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Change in accounts payable 2,944
Capital contribution - expenses 2,250
Net Cash From Operations (1,417)
CASH FLOWS FROM INVESTING
ACTIVITIES: --
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from loan - related party 4,500
Proceeds from issuance of common stock 27,248
------
Net Increase in Cash 30,331
Cash at Beginning of Period --
Cash at End of Period $ 30,331
======
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Capital contributions - expenses $ 2,250
======
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
VANCOUVER'S FINEST COFFEE COMPANY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM SEPTEMBER 15, 1998 (DATE OF INCEPTION)
TO MARCH 31, 1999
================================================================================
<TABLE>
<CAPTION>
Common Stock Capital in
------------------------- Excess of Accumulated
Shares Amount Par Value Deficit
------ ------ --------- -------
<S> <C> <C> <C> <C>
BALANCE SEPTEMBER 15, 1998
(date of inception) -- $ -- $ -- $ --
Issuance of common stock for cash
at $.001 - February 5, 1999 6,000,000 6,000 -- --
Issuance of common stock for cash
at $.002 - February 7, 1999 7,500,000 7,500 7,500 --
Issuance of common stock for cash
at $.001 - February 23, 1999 62,480 62 6,186 --
Capital contribution - expenses -- -- -- 2,250
Net operating loss for the period from
September 15, 1998 to
March 31, 1999 -- -- -- (6,611)
BALANCE MARCH 31, 1999 13,562,480 $ 13,562 $ 15,936 $ (6,611)
========== ====== ====== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
43
<PAGE>
VANCOUVER'S FINEST COFFEE COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCLAL STATEMENTS
================================================================================
1. ORGANIZATION
The Company was incorporated under the laws of the State of Nevada on September
15, 1998 with authorized common stock of 200,000,000 shares at $0.001 par value.
The Company was organized for the purpose of marketing retail specialty coffee
through the establishment of coffee kiosks however it has not started operations
by the report date.
The Company is in the development stage.
Since its inception the Company has completed two Regulation D offerings of
13,562,480 shares of its capital stock for cash.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICILES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
The Company has elected a fiscal year ending August 31 and has not completed an
operating period and therefore has not filed an income tax return.
Earning (Loss) Per Share
Earnings (loss) per share amounts are computed based on the weighted average
number of shares actually outstanding.
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity,
at the time of purchase, of less than three months, to be cash equivalents.
44
<PAGE>
VANCOUVER'S FINEST COFFEE COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
Foreign Currency Translation
The transactions of the Company completed in Canadian dollars have been
translated to US dollars. Assets and liabilities are translated at the year end
exchange rates and the income and expenses at the average rates of exchange
prevailing during the period reported on.
Financial Instruments
The carrying amounts of financial instruments, including cash, mineral leases,
and accounts payable, are considered by management to be their estimated fair
values. These values are not necessarily indicative of the amounts that the
Company could realize in a current market exchange.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
4. RELATED PARTY TRANSACTIONS
Related parties have acquired 44% of the common stock issued for cash.
The officers and directors of the Company are involved in other business
activities and they may, in the future, become involved in additional business
ventures which also may require their attention. If a specific business
opportunity becomes available, such persons may face a conflict in selecting
between the Company and their other business interests. The Company has
formulated no policy for the resolution of such conflicts.
5. GOING CONCERN
Management is currently seeking opportunities to establish coffee kiosks for the
retail sales of a specialty coffee. To be successful in this effort the Company
will need additional working capital.
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital and the management of the Company has developed a
strategy, which it believes will accomplish this objective through additional
equity
45
<PAGE>
VANCOUVER'S FINEST COFFEE COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
5. GOING CONCERN - CONTINUED
funding, and long term financing, which will enable the Company to operate in
the future.
Management recognizes that, if it is unable to raise additional capital, the
Company cannot operate in the future.
46
<PAGE>
PART 111
ITEM 1. INDEX TO EXHIBITS
EXHIBIT
NO.
(2) Charter and By-Laws
(a) Articles of Incorporation of Peppermill Capital Corporation
filed September 14, 1998 (filed herewith, page 49)
(b) Bylaws (filed herewith, page 53)
(3) Instruments Defining Rights of Securities Holders
(a) Text of stock certificates for common stock (filed herewith,
page 64)
(5) Voting Trust Agreements
None
(6) Material Contracts
(a) Not Made in the ordinary course of business
(i) Transfer Agent and Registrant Agreement between
Registrant and Nevada Agency & Trust Co., dated
January 28, 1999 (filed herewith, page 65)
(10) Consent of experts and counsel
(i) Consent of Andersen Andersen & Strong, L.C.,
independent certified public accountants (filed
herewith, page 68)
(11) Statement re computation of per share earnings
Not applicable
(16) Letter of change in certifying accountant
Not applicable
(21) Subsidiaries of the Registrant
Not applicable
(24) Power of Attorney
None
(99) Addition Exhibits
None
ITEM 2. DESCRIPTIONS OF EXHIBITS
[Attached, pages 49 through 68]
47
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant has caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
VANCOUVER'S FINEST COFFEE COMPANY
(Registrant)
by /s/ Kirsten Mide Wilson
------------------------------
President and Director
Dated: May 26, 1999
48
<PAGE>
ARTICLES OF INCORORATION
EXHIBIT NO. 2 (A)
OF
VANCOUVER'S FINEST COFFEE COMPANY
* * * * *
The undersigned, acting as incorporator, pursuant to the provisions of the
laws of the State of Nevada relating to private corporations, hereby adopts the
following Articles of Incorporation:
ARTICLE ONE. [NAME]. The name of the corporation is:
VANCOUVER'S FINEST COFFEE COMPANY
ARTICLE TWO. [RESIDENT AGENT]. The initial agent for service of process is
Nevada Agency and Trust Company, 50 West Liberty Street, Suite 880, City of
Reno, County of Washoe, State of Nevada 89501.
ARTICLE THREE. [PURPOSES]. The purposes for which the corporation is
organized are to engage in any activity or business not in conflict with the
laws of the State of Nevada or of the United States of America, and without
limiting the generality of the foregoing, specifically:
1. [OMNIBUS] . To have to exercise all the powers now or hereafter
conferred by the laws of the State of Nevada upon corporations
organized pursuant to the laws under which the corporation is organized
and any and all acts amendatory thereof and supplemental thereto.
11. [CARRYING ON BUSINESS OUTSIDE STATE). To conduct and carry on its
business or any branch thereof in any state or territory of the United
States or in any foreign country in conformity with the laws of such
state, territory, or foreign country, and to have and maintain in any
state, territory, or foreign country a business office, plant, store or
other facility.
111. [PURPOSES TO BE CONSTRUED AS POWERS] . The purposes specified
herein shall be construed both as purposes and powers and shall be in
no wise limited or restricted by reference to, or inference from, the
terms of any other clause in this or any other article, but the
purposes and powers specified in each of the clauses herein shall be
regarded as independent purposes and powers, and the enumeration of
specific purposes and powers shall not be construed to limit or
restrict in any manner the meaning of general terms or of the general
powers of the corporation; nor shall the expression of one thing be
deemed to exclude another, although it be of like nature not expressed.
49
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ARTICLE FOUR. [CAPITAL STOCK]. The corporation shall have authority to
issue an aggregate of TWO HUNDRED MILLION (200,000,000) Common Capital Shares,
PAR VALUE ONE MILL ($0.001) per share for a total capitalization OF TWO HUNDRED
THOUSAND DOLLARS ($200,000).
The holders of shares of capital stock of the corporation shall not be
entitled to pre-emptive or preferential rights to subscribe to any unissued
stock or any other securities which the corporation may now or hereafter be
authorized to issue.
The corporation's capital stock may be issued and sold from time to time
for such consideration as may be fixed by the Board of Directors, provided that
the consideration so fixed is not less than par value.
The stockholders shall not possess cumulative voting rights at all
shareholders meetings called for the purpose of electing a Board of Directors.
ARTICLE FIVE. [DIRECTORS]. The affairs of the corporation shall be
governed by a Board of Directors of no more than eight (8) nor less than one (1)
person. The names and addresses of the first Board of Director are:
NAME ADDRESS
- ---- -------
Carsten Mide 2453 Philip Place
Burnaby, British Columbia
Canada, V5A 2W1
ARTICLE SIX. [ASSESSMENT OF STOCK]. The capital stock of the corporation,
after the amount of the subscription price or par value has been paid in, shall
not be subject to pay debts of the corporation, and no paid up stock and no
stock issued as fully paid up shall ever be assessable or assessed.
ARTICLE SEVEN. [INCORPORATOR]. The name and address of the incorporator of
the corporation is as follows:
NAME ADDRESS
---- -------
Amanda Cardinalli 50 West Liberty Street, Suite 880
Reno, Nevada 89501
ARTICLE EIGHT. [PERIOD OF EXISTENCE]. The period of existence of the
corporation shall be perpetual.
ARTICLE NINE. [BY-LAWS]. The initial By-laws of the corporation shall be
adopted by its Board of Directors. The power to alter, amend, or repeal the
By-laws, or to adopt new By-laws, shall be vested in the Board of Directors,
except as otherwise may be specifically provided in the By-laws.
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ARTICLE TEN. [STOCKHOLDERS' MEETINGS]. Meeting of stockholders shall be
held at such place within or without the State of Nevada as may be provided by
the By-laws of the corporation. Special meetings of the stockholders may be
called by the President or any other executive officer of the corporation, the
Board of Directors, or any member thereof, or by the record holder or holders of
at least ten percent (10%) of all shares entitled to vote at the meeting. Any
action otherwise required to be taken at a meeting of the stockholders, except
election of directors, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by stockholders having at
least a majority of the voting power.
ARTICLE ELEVEN . [CONTRACTS OF CORPORATION]. No contract or other
transaction between the corporation and any other corporation, whether or not a
majority of the shares of the capital stock of such other corporation is owned
by this corporation, and no act of this corporation shall in any way be affected
or invalidated by the fact that any of the directors of this corporation are
pecuniarily or otherwise interested in, or are directors or officers of such
other corporation. Any director of this corporation, individually, or any firm
of which such director may be a member, may be a party to, or may be pecuniarily
or otherwise interested in any contract or transaction of the corporation;
provided, however, that the fact that he or such firm is so interested shall be
disclosed or shall have been known to the Board of Directors of this
corporation, or a majority thereof; and any director of this corporation who is
also a director or officer of such other corporation, or who is so interested,
may be counted in determining the existence of a quorum at any meeting of the
Board of Directors of this corporation that shall authorize such contract or
transaction, and may vote thereat to authorize such contract or transaction,
with like force and effect as if he were not such director or officer of such
other corporation or not so interested.
ARTICLE.TWELVE. [LIABILITY OF DIRECTORS AND OFFICERS]. No director or
officer shall have any personal liability to the corporation or its stockholders
for damages for breach of fiduciary duty as a director or officer, except that
this Article Twelve shall not eliminate or limit the liability of a director or
officer for (i) acts or omissions which involve intentional misconduct, fraud or
a knowing violation of law, or (ii) the payment of dividends in violation of the
Nevada Revised Statutes.
IN WITNESS WHEREOF, the undersigned incorporator has hereunto affixed her
signature at Reno, Nevada this 14th day of September, 1998.
by /s/ "Amanda Cardinalli"
-------------------------------
AMANDA CARDINALLI
STATE OF NEVADA }
: SS.
COUNTY OF WASHOE }
On the 14th day of September, 1998, before me, the undersigned, a NOTARY
PUBLIC in and for he State of Nevada, personally appeared AMANDA CARDINALLI,
known to me to be the person described in and who executed
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the foregoing instrument, and who acknowledged to me that she executed the same
freely and voluntarily for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
by /s/ "Margaret Oliver"
-----------------------------
NOTARY PUBLIC
Residing in Reno, Nevada
My Commission Expires:
October 10, 1998
- ----------------
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BY LAWS
EXHIBIT NO. 2 (B)
OF
VANCOUVER'S FINEST COFFEE COMPANY
A NEVADA CORPORATION
ARTICLE I
OFFICES
SECTION 1. The registered office of this corporation shall be in the City of
Reno, State of Nevada.
SECTION 2. The Corporation may also have offices at such other places both
within and without the State of Nevada as the Board of Directors may from time
to time determine or the business of the corporation may require.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
SECTION 1. All annual meetings of the stockholders shall be held at the
registered office of the corporation or at such other place within or without
the State of Nevada as the Directors shall determine. Special meetings of the
stockholders may be held at such time and place within or without the State of
Nevada as shall be stated in the notice of the meeting, or in a duly executed
waiver of notice thereof.
SECTION 2. Annual meetings of the stockholders shall be held on the anniversary
date of incorporation each year if not a legal holiday and, and if a legal
holiday, then on the next secular day following, or at such other time as may be
set by the Board of Directors from time to time, at which the stockholders shall
elect by vote a Board of Directors and transact such other business as may
properly be brought before the meeting.
SECTION 3. Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the Articles of Incorporation, may
be called by the President or the Secretary, by resolution of the Board of
Directors or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose of the proposed meeting.
SECTION 4. Notices of meetings shall be in writing and signed by the President
or Vice-President or the Secretary or an Assistant Secretary or by such other
person or persons as the Directors shall designate. Such notice shall state the
purpose or purposes for which the meeting is called and the time and the place,
which may be within or without this State, where it is to be held. A copy of
such notice shall be either delivered personally to or shall be mailed, postage
prepaid, to each stockholder of record entitled to vote at such meeting not less
than ten nor more than sixty days before such meeting. If mailed, it shall be
directed to a stockholder at his address as it appears upon the records of the
corporation and upon such mailing of any such notice,
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the service thereof shall be complete and the time of the notice shall begin to
run from the date upon which such notice is deposited in the mail for
transmission to such stockholder. Personal delivery of any such notice to an
officer of the corporation or association, or to any member of a partnership
shall constitute delivery of such notice to such corporation, association or
partnership. In the event of the transfer of stock after delivery of such notice
of and prior to the holding of the meeting, it shall not be necessary to deliver
or mail such notice of the meeting to the transferee.
SECTION 5. Business transactions at any special meeting of stockholders shall be
limited to the purpose stated in the notice.
SECTION 6. The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the Articles of
Incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcements at the
meeting, until a quorum shall be presented or represented. At such adjourned
meetings at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
SECTION 7. When a quorum is present or represented at any meeting, the vote of
the holders of 10% of the stock having voting power present in person or
represented by proxy shall be sufficient to elect Directors or to decide any
question brought before such meeting, unless the question is one upon which by
express provision of the statute or of the Articles of Incorporation, a
different vote shall govern and control the decision of such question.
SECTION 8. Each stockholder of record of the corporation shall be entitled at
each meeting of the stockholders to one vote for each share standing in his name
on the books of the corporation. Upon the demand of any stockholder, the vote
for Directors and the vote upon any question before the meeting shall be by
ballot.
SECTION 9. At any meeting of the stockholders any stockholder may be represented
and vote by a proxy or proxies appointed by an instrument in writing. In the
event that any such instrument in writing shall designate two or more persons to
act as proxies, a majority of such persons present at the meeting, or, if only
one shall be present, then that one shall have and may exercise all the powers
conferred by such written instruction upon all of the persons so designated
unless the instrument shall otherwise provide. No proxy or power of attorney to
vote shall be voted at a meeting of the stockholders unless it shall have been
filed with the Secretary of the meeting when required by the inspectors of
election. All questions regarding the qualifications of voters, the validity of
proxies and the acceptance of or rejection of votes shall be decided by the
inspectors of election who shall be appointed by the Board of Directors, or if
not so appointed, then by the presiding officer at the meeting.
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SECTION 10. Any action which may be taken by the vote of the stockholders at a
meeting may be taken without a meeting if authorized by the written consent of
stockholders holding at least a majority of the voting power, unless the
provisions of the statute or the Articles of Incorporation require a greater
proportion of voting power to authorize such action in which case such greater
proportion of written consents shall be required.
ARTICLE 3
DIRECTORS
SECTION 1. The business of the corporation shall be managed by its Board of
Directors which may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the Articles of Incorporation
or by these Bylaws directed or required to be exercised or done by the
stockholders.
SECTION 2. The number of Directors which shall constitute the whole board shall
be riot less than one and not more than eight. The number of Directors may from
time to time be increased or decreased to not less than one nor more than eight
by action of the Board of Directors. The Directors shall be elected at the
annual meeting of the stockholders and except as provided in section 2 of this
Article, each Director elected shall hold office until his successor is elected
and qualified. Directors need not be stockholders.
Section 3. Vacancies in the Board of Directors including those caused by an
increase in the number of Directors, may be filed by a majority of the remaining
Directors, though less than a quorum, or by a sole remaining Director, and each
Director so elected shall hold office until his successor is elected at the
annual or a special meeting of the stockholders. The holders of a two-thirds of
the outstanding shares of stock entitled to vote may at any time peremptorily
terminate the term of office of all or any of the Directors by vote at a meeting
called for such purpose or by a written statement filed with the Secretary or,
in his absence, with any other officer. Such removal shall be effective
immediately, even if successors are not elected simultaneously and the vacancies
on the Board of Directors resulting therefrom shall only be filled from the
stockholders.
A vacancy or vacancies on the Board of Directors shall be deemed to exist
in case of death, resignation or removal of any Director, or if the authorized
number of Directors be increased, or if the stockholders fail at any annual or
special meeting of stockholders at which any Director or Directors are elected
to elect the full authorized number of Directors to be voted for at that
meeting.
The stockholders may elect a Director or Directors at any time to fill any
vacancy or vacancies not filled by the Directors. If the Board of Directors
accepts the resignation of a Director tendered to take effect at a future time,
the Board or the stockholders shall have power to elect a successor to take
office when the resignation is to become effective
No reduction of the authorized number of Directors shall have the effect
of removing any Director prior to the expiration of his term of office.
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ARTICLE 4
MEETING OF THE BOARD OF DIRECTORS
SECTION 1. Regular meetings of the Board of Directors shall be held at any place
within or without the State which has been designated from time to time by
resolution of the Board or by written consent of all members of the Board. In
the absence of such designation regular meetings shall be held at the registered
office of the corporation. Special meetings of the Board may be held either at a
place so designated or at the registered office.
SECTION 2. The first meeting of each newly elected Board of Directors shall be
held immediately following the adjournment of the meeting of stockholders and at
the place thereof. No notice of such meeting shall be necessary to the Directors
in order legally to constitute the meeting, provided a quorum be present. In the
event such meeting is not so held, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors.
SECTION 3. Regular meetings of the Board of Directors may be held without call
or notice at such time and at such place as shall from time to time be fixed and
determined by the Board of Directors.
SECTION 4. Special meetings of the Board of Directors may be called by the
Chairman or the President or by the Vice-President or by any two Directors.
Written notice of the time and place of special meetings shall be delivered
personally to each Director, or sent to each Director by mail or by other form
of written communication, charges prepaid, addressed to him at his address as it
is shown upon the records or if not readily ascertainable, at the place in which
the meetings of the Directors are regularly held. In case such notice is mailed
or telegraphed, it shall be deposited in the postal service or delivered to the
telegraph company at least forty-eight (48) hours prior to the time of the
holding of the meeting. In case such notice is delivered or taxed, it shall be
so delivered or taxed at least twenty-four (24) hours prior to the time of the
holding of the meeting. Such mailing, telegraphing, delivery or taxing as above
provided shall be due, legal and personal notice of such Director.
SECTION 5. Notice of the time and place of holding an adjourned meeting need not
be given to the absent Directors if the time and place be fixed at the meeting
adjourned.
SECTION 6. The transaction of any meeting of the Board of Directors, however
called and noticed or wherever held, shall be as valid as though transacted at a
meeting duly held after regular call and notice, if a quorum be present, and if,
either before or after such meeting, each of the Directors not present signs a
written waiver of notice, or a consent of holding such meeting, or approvals of
the minutes thereof. All such waivers, consents or approvals shall be filed with
the corporate records or made a part of the minutes of the meeting.
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SECTION 7. The majority of the authorized number of Directors shall be necessary
to constitute a quorum for the transaction of business, except to adjourn as
hereinafter provided. Every act or decision done or made by a majority of the
Directors present at a meeting duly held at which a quorum is present shall be
regarded as the act of the Board of Directors, unless a greater number be
required by law or by the Articles of Incorporation. Any action of a majority,
although not at a regularly called meeting, and the record thereof, if assented
to in writing by all of the other members of the Board shall be as valid and
effective in all respects as if passed by the Board in regular meeting.
SECTION 8. A quorum of the Directors may adjourn any Directors meeting to meet
again at stated day and hour; provided, however, that in the absence of a
quorum, a majority of the Directors present at any Directors meeting, either
regular or special, may adjourn from time to time until the time fixed for the
next regular meeting of the Board.
ARTICLE 5
COMMITTEES OF DIRECTORS
SECTION 1. The Board of Directors may, by resolution adopted by a majority of
the whole Board, designate one or more committees of the Board of Directors,
each committee to consist of two or more of the Directors of the corporation
which, to the extent provided in the resolution, shall and may exercise the
power of the Board of Directors in the management of the business and affairs of
the corporation and may have power to authorize the seal of the corporation to
be affixed to all papers which may require it. Such committee or committees
shall have such name or names as may be determined from time to time by the
Board of Directors. The members of any such committee present at any meeting and
not disqualified from voting may, whether or not they constitute a quorum,
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member. At meetings of such
committees, a majority of the members or alternate members at any meeting at
which there is a quorum shall be the act of the committee.
SECTION 2. The committee shall keep regular minutes of their proceedings and
report the same to the Board of Directors.
SECTION 3. Any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without a meeting if
a written consent thereto is signed by all members of the Board of Directors or
of such committee, as the case may be, and such written consent is filed with
the minutes of proceedings of the Board or committee.
ARTICLE 6
COMPENSATION OF DIRECTORS
SECTION 1. The Directors may be paid their expenses of attendance at each
meeting of the Board of Directors and may be paid a fixed sum for attendance at
each meeting of the Board of Directors or a stated salary as Director. No such
payment shall
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preclude any Director from serving the corporation in any other capacity and
receiving compensation therefore. Members of special or standing committees may
be allowed like reimbursement and compensation for attending committee meetings.
ARTICLE 7
NOTICES
SECTION 1. Notices to Directors and stockholders shall be in writing and
delivered personally or mailed to the Directors or stockholders at their
addresses appearing on the books of the corporation. Notices to Directors may
also be given by fax and by telegram. Notice by mail, fax or telegram shall be
deemed to be given at the time when the same shall be mailed.
SECTION 2. Whenever all parties entitled to vote at any meeting, whether of
Directors or stockholders, consent, either by a writing on the records of the
meeting or filed with the Secretary, or by presence at such meeting or oral
consent entered on the minutes, or by taking part in the deliberations at such
meeting without objection, the doings of such meeting shall be as valid as if
had at a meeting regularly called and noticed, and at such meeting any business
may be transacted which is not excepted from the written consent to the
consideration of which no objection for want of notice is made at the time, and
if any meeting be irregular for want of notice or such consent, provided a
quorum was present at such meeting, the proceedings of said meeting may be
ratified and approved and rendered likewise valid and the irregularity or defect
therein waived by a writing signed by all parties having the right to vote at
such meeting; and such consent or approval of stockholders may be by proxy or
attorney, but all such proxies and powers of attorney must be in writing.
SECTION 3. Whenever any notice whatever is required to be given under the
provisions of the statute, of the Articles of Incorporation or of these Bylaws,
a waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE 8
OFFICERS
SECTION 1. The officers of the corporation shall be chosen by the Board of
Directors and shall be a President, a Secretary and a Treasurer. Any person may
hold two or more offices.
SECTION 2. The Board of Directors at its first meeting after each annual meeting
of stockholders shall choose a Chairman of the Board who shall be a Director,
and shall choose a President, a Secretary and a Treasurer, none of whom need be
Directors.
SECTION 3. The Board of Directors may appoint a Vice-Chairman of the Board,
Vice-Presidents and one or more Assistant Secretaries and Assistant Treasurers
and such other officers and agents as it shall deem necessary who shall hold
their offices
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for such terms and shall exercise such powers and perform such duties as shall
be determined from time to time by the Board of Directors.
SECTION 4. The salaries and compensation of all officers of the corporation
shall be fixed by the Board of Directors.
SECTION 5. The officers of the corporation shall hold office at the pleasure of
the Board of Directors. Any officer elected or appointed by the Board of
Directors may be removed any time by the Board of Directors. Any vacancy
occurring in any office of the corporation by death, resignation, removal or
otherwise shall be filled by the Board of Directors.
SECTION 6. The CHAIRMAN OF THE BOARD shall preside at meetings of the
stockholders and the Board of Directors, and shall see that all orders and
resolutions of the Board of Directors are carried into effect.
SECTION 7. The VICE-CHAIRMAN shall, in the absence or disability of the Chairman
of the Board, perform the duties and exercise the powers of the Chairman of the
Board and shall perform other such duties as the Board of Directors may from
time to time prescribe.
SECTION 8. The PRESIDENT shall be the chief executive officer of the corporation
and shall have active management of the business of the corporation. He shall
execute on behalf of the corporation all instruments requiring such execution
except to the extent the signing and execution thereof shall be expressly
designated by the Board of Directors to some other officer or agent of the
corporation.
SECTION 9. The VICE-PRESIDENTS shall act under the direction of the President
and in absence or disability of the President shall perform the duties and
exercise the powers of the President. They shall perform such other duties and
have such other powers as the President or the Board of Directors may from time
to time prescribe. The Board of Directors may designate one or more Executive
Vice-Presidents or may otherwise specify the order of seniority of the
Vice-Presidents. The duties and powers of the President shall descend to the
Vice-Presidents in such specified order of seniority.
SECTION 10. The SECRETARY shall act under the direction of the President.
Subject to the direction of the President he shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record the
proceedings. He shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Directors, and will perform
other such duties as may be prescribed by the President or the Board of
Directors.
SECTION 11. The ASSISTANT SECRETARIES shall act under the direction of the
President. In order of their seniority, unless otherwise determined by the
President or the Board of Directors, they shall, in the absence or disability of
the Secretary, perform the duties and exercise the powers of the Secretary. They
shall perform other such
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duties and have such other powers as the President and the Board of Directors
may from time to time prescribe.
12. SECTION The TREASURER shall act under the direction of the President.
Section Subject to the direction of the President he shall have custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all money and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the corporation as may be ordered by
the President or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
corporation.
If required by the Board of Directors, the Treasurer shall give the
corporation a bond in such sum and with such surety as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of his office
and for the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the corporation.
SECTION 13. The ASSISTANT TREASURERS in order of their seniority, unless
otherwise determined by the President or the Board of Directors, shall, in the
absence or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer. They shall perform such other duties and have such
other powers as the President or the Board of Directors may from time to time
prescribe.
ARTICLE 9
CERTIFICATES OF STOCK
SECTION 1. Every stockholder shall be entitled to have a certificate signed by
the President or a Vice- President and the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary of the corporation, certifying the
number of shares owned by him in the corporation. If the corporation shall be
authorized to issue more than one class of stock or more that one series of any
class, the designations, preferences and relative, participating, optional or
other special rights of the various classes of stock or series thereof and the
qualifications, limitations or restrictions of such rights, shall be set forth
in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such stock.
SECTION 2. If a certificate is signed (a) by a transfer agent other than the
corporation or its employees or (b) by a Registrant other than the corporation
or its employees, the signatures of the officers of the corporation may be
facsimiles. In case any officer who has signed or whose facsimile signatures
have been placed upon a certificate shall cease to be such officer before such
certificate is issued, such certificate may be issued with the same effect as
though the person had not ceased to
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be such officer. The seal of the corporation, or a facsimile thereof, may, but
need not be, affixed to certificates of stock.
SECTION 3. The Board of Directors may direct a new certificate or certificates
to be issued in place of any certificate or certificates theretofore issued by
the corporation alleged to have been lost or destroyed upon the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost or
destroyed.
SECTION 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duty endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation, if it is satisfied that all provisions of the laws and
regulations applicable to the corporation regarding transfer and ownership of
shares have been compiled with, to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon its
books.
SECTION 5. The Board of Directors may fix in advance a date not exceeding sixty
(60) days nor less than ten (IO) days preceding the date of any meeting of
stockholders, or the date of the payment of any dividend, or the date of the
allotment of rights, or the date when any change or conversion or exchange of
capital stock shall go into effect, or a date in connection with obtaining the
consent of stockholders for any purpose, as a record date for the termination of
the stockholders entitled to notice of and to vote at any such meeting, and any
adjournment thereof, or entitled to receive payment of any such dividend, or to
give such consent, and in the such case, such stockholders, and only such
stockholders as shall be stockholders of record on the date so fixed, shall be
entitled to notice of and to vote as such meeting, or any adjournment thereof,
or to receive such payment of dividend, or to receive such allotment of rights,
or to exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the corporation after
such record date fixed as aforesaid.
SECTION 6. The corporation shall be entitled to recognize the person registered
on its books as the owner of the share to be the exclusive owner for all
purposes including voting and dividends, and the corporation shall not be bound
to recognize any equitable or other claims to or interest in such shares or
shares on the part of any -other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of Nevada.
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ARTICLE 10
GENERAL PROVISIONS
SECTION 1. Dividends upon the capital stock of the corporation, subject to the
provisions of the Articles of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property or in shares of the capital stock, subject to
the provisions of the Articles of Incorporation.
SECTION 2. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
Directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends or for
repairing and maintaining any property of the corporation, or for such other
purpose as the Directors shall think conducive to the interests of the
corporation, and the Directors may modify or abolish any such reserve in the
manner in which it was created.
SECTION 3. All checks or demands for money and notes of the corporation shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
SECTION 4. The fiscal year of the corporation shall be fixed by resolution of
the Board of Directors.
SECTION 5. The corporation may or may not have a corporate seal, as may be from
time to time determined by resolution of the Board of Directors. If a corporate
seal is adopted, it shall have inscribed thereon the name of the corporation and
the words "Corporate Seal" and "Nevada". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner reproduced.
ARTICLE 11
INDEMNIFICATION
Every person who was or is a party or is a threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or a
person of whom he is the legal representative is or was a Director or officer of
the corporation or is or was serving at the request of the corporation or for
its benefit as a Director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise, shall
be indemnified and held harmless to the fullest legally permissible under the
General Corporation Law of the State of Nevada from time to time against all
expenses, liability and loss (including attorney's fees, judgments, fines and
amounts paid or to be paid in settlement) reasonably incurred or suffered by him
in connection therewith. The expenses of officers and Directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
Director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. Such right of indemnification shall be a contract right which may
be enforced in any manner desired by such person. Such right of indemnification
shall not be exclusive of any other right which such Directors, officers or
62
<PAGE>
representatives may have or hereafter acquire and, without limiting the
generality of such statement, they shall be entitled to their respective rights
of indemnification under any bylaw, agreement, vote of stockholders, provision
of law or otherwise, as well as their rights under this Article.
The Board of Directors may cause the corporation to purchase and
maintain insurance on behalf of any person who is or was a Director or officer
of the corporation, or is or was serving at the request of the corporation as a
Director or officer of another corporation, or as its representative in a
partnership, joint venture. trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or arising out of
such status, whether or not the corporation would have the power to indemnify
such person.
The Board of Directors may form time to time adopt further Bylaws with
respect to indemnification and amend these and such Bylaws to provide at all
times the fullest indemnification permitted by the General Corporation Law of
the State of Nevada.
ARTICLE 12
AMENDMENTS
SECTION 1. The Bylaws may be amended by a majority vote of all the stock issued
and outstanding and entitled to vote at any annual or special meeting of the
stockholders, provided notice of intention to amend shall have been contained in
the notice of the meeting.
SECTION 2. The Board of Directors by a majority vote of the whole Board at any
meeting may amend these Bylaws, including Bylaws adopted by the stockholders,
but the stockholders may from time to time specify particulars of the Bylaws
which shall not be amended by the Board of Directors.
APPROVED AND ADOPTED SEPTEMBER 17,1998.
CERTIFICATE OF THE SECRETARY
I, Ray Paquette, hereby certify that I am the Secretary of VANCOUVER'S FINEST
COFFEE COMPANY, and the foregoing Bylaws, consisting of 12 pages, constitute the
code of Bylaws of this company as duly adopted at a regular meeting of the Board
of Directors of the corporation held on September 17, 1998.
IN WITNESS WHEREOF, I have hereunto subscribed my name on September 17, 1998.
/s/ "Ryan Wilson"
- -------------------------
Secretary
53
<PAGE>
EXHIBIT 3(A)
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
SPECIMEN STOCK CERTIFICATES
NUMBER SHARES
VANCOUVER'S FINEST
COFFEE COMPANY
CUSIP NO. 921655 10 6
Authorized Common Stock: 200,000,000 Shares
Par Value: $0.001
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
-Shares of VANCOUVER'S FINEST COFFEE COMPANY Common Stock - transferable
on the books of the Corporation in person or by duly authorized attorney upon
surrender of this Certificate properly endorsed. This Certificate is not valid
until countersigned by the Transfer Agent and registered by the Registrant.
Witness the facsimile seal of the Corporation and the facsimile of its
duly authorized officers. Dated:
/s/ "Kirsten Wilson"
------------------------------
President
( SEAL )
/s/ "Ryan Wilson"
------------------------------
Secretary
Not valid unless countersigned by transfer agent
Countersigned Registered:
NEVADA AGENCY AND TRUST COMPANY
50 WEST LIBERTY STREET, SUITE 880
RENO, NEVADA, 89501
By ________________________________
Authorized Signature
64
<PAGE>
EXHIBIT 6(A)(I)
TRANSFER AGENT AND REGISITRAR AGREEMENT
THIS AGREEMENT made and entered into this 28th day of January, 1999, by
and between:
NEVADA AGENCY AND TRUST COMPANY, 50 West Liberty Street, Suite 880, Reno, Nevada
89501, hereinafter called "TRANSFER AGENT," and
VANCOUVER'S FINEST COFFEE COMPANY, 320 -1100 Melville Street, Vancouver, B.C.
V6E 4A6, a Nevada corporation, hereinafter called "COMPANY."
NOW THEREFORE, for valuable consideration and the mutual promises herein
contained, the parties hereto agree as follows, to wit:
1. [APPOINTMENT OF TRANSFER AGENT] The COMPANY hereby appointsTRANSFER
AGENT as the Transfer Agent and Registrant for the COMPANY'S Common
Stock,commencing on this 28th day of January, 1999.
2. [COMPANY'S DUTY] The COMPANY agrees to deliver to TRANSFER AGENT a
complete up-to-date stockholder list showing the name of the individual
stockholder, current address, the number of shares and the certificate numbers,
it being specifically understood and agreed that the TRANSFER AGENT is not to be
held responsible for any omissions or error, that may leave occurred prior to
this Agreement whether on the part of the COMPANY itself or its previous
transfer agent or agents. The COMPANY hereby agrees to indemnify TRANSFER AGENT
in this regard.
3. [STOCK CERTIFICATES] The COMPANY agrees to provide an adequate number
of stock certificates to handle the COMPANY'S transfers oil a current basis.
Upon receipt of TRANSFER AGENT'S request, the COMPANY agrees to furnish
additional stock certificates as TRANSFER AGENT deems necessary considering the
volume of transfers. The stork certificates shall be supplied at COMPANY'S cost.
The TRANSFER AGENT agrees to order stock certificates from its printer upon
request of the COMPANY.
4. [TRANSFER AGENT DUTIES] TRANSFER AGENT agrees to handle the
COMPANY'S transfers, record the same, and maintain a ledger, together with a
file containing all correspondence relating to said transfers, which records
shall be kept confidential and be available to the COMPANY and its Board of
Directors, or to any person specifically authorized by the Board of Directors to
review the records which shall be made available by TRANSFER AGENT during the
regular business hours.
5. [TRANSFER AGENT REGISTRATION] TRANSFER AGENT warrants that it is
registered as a Transfer Agent with the United Stakes Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended.
65
<PAGE>
6. [STOCKHOLIDER LIST] From time to time, as necessary for Company
stockholders meeting or mailings, the TRANSFER AGENT will certify and make
available to the current, active stockholders list for COMPANY purposes. it is
agreed that a reasonable charge for supplying such list will be made by TRANSFER
AGENT to the COMPANY. It is further agreed that in the event the TRANSFER AGENT
received a request or a demand from a stockholder or the attorney of agent for a
stockholder, for a list of stockholders, the TRANSFER AGENT will serve notice of
such request by certified mail to the COMPANY. The COMPANY will have forty-eight
(48) hours to respond in writing to the TRANSFER AGENT. If the COMPANY orders
the TRANSFER AGENT to withhold delivery of a list of stockholders as requested,
the TRANSFER AGENT agrees to follow the orders of the COMPANY. The COMPANY will
then follow the procedure set forth in the Uniform Commercial Code to restrain
the TRANSFER AGENT from making delivery of a stockholders list.
7. [TRANSFER FEE] TRANSFER AGENT agrees to assess and collect from the
person requesting a transfer and/or the transferor, a fee of Fifteen and No/100
dollars ($15.00) for each stock certificate issued, except original issues of
stock or warrant certificates, which fees shall be paid by the COMPANY. This fee
may be decreased or increased at any time by the TRANSFER AGENT.
This fee shall be the property of the TRANSFER AGENT.
8. [ANNUAL FEE] The COMPANY agaves to pay the TRANSFER AGENT an annual fee
of TWELVE HUNDRED DOLLARS ($1,200.00) each year. This fee reimburses the
TRANSFER AGENT for the expense and time required to respond to the written and
oral inquiries from brokers and the investing public, as well as maintaining the
transfer books and records of the corporation. The annual fee will be due on 1st
of January of each year and is subject to annual review.
9. [TERMINATION] This Agreement may be terminated by either party given
written notice of such termination to the other party at least ninety (90) days
before the effective date. The TRANSFER AGENT shall return all of the transfer
records to the COMPANY and its duties and obligations as TRANSFER AGENT shall
cease at that time. The TRANSFER AGENT will be paid a Termination Fee of $1.00
per registered stockholder of the Company at the time the written termination
notice is served.
10. [COMPANY STATUS] The COMPANY will promptly advise the TRANSFER AGENT
of any changes or amendments to the Articles of Incorporation, any significant
changes in corporate status, changes in officers, etc., and of all changes in
filing status with the Securities and Exchange Commission, or any state entity,
and to hold the, TRANSFER AGENT harmless from its failure to do so.
11 [INDEMNIFICATION OF TRANSFER AGENT] The COMPANY agrees to indemnify and
hold harmless the TRANSFER AGENT, from any and all loss, liability of damage,
including reasonable attorneys' fees and expenses, arising out of, or resulting
from the assertion against the TRANSFER AGENT of any claims, debts or
obligations in connection with any of the TRANSFER AGENT'S duties as set forth
in the Agreement, and specifically it is understood that the TRANSFER AGENT
shall have the right to apply to
66
<PAGE>
independent counsel at the COMPANY'S expense in following the COMPANY'S
directions and orders.
12. [COUNTERPARTS] This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be an original,
but all such counterparts shall constitute one and the same instrument.
13. [NOTICE] Any notice under this Agreement shall be deemed to have been
sufficiently given if sent by registered or certified mail, postage prepaid,
addressed as follows:
TO THE COMPANY:
Carsten Mide, President
VANCOUVER'S FINEST COFFEE COMPANY
320 - 1100 Melville Street
Vancouver, B.C. V6E 4A9
TO THE TRANSFER AGENT:
NEVADA AGENCY AND TRUST COMPANY 50 West Liberty Street, Suite 880
Reno, Nevada 89501
14. [MERGER CLAUSE] This Agreement supersedes all prior agreements and
understandings between the parties and may not be changed or terminated orally,
and no attempted change, termination or waiver of any of the provisions hereof
shall binding unless in writing and signed by the parties hereto.
15. [GOVERNING LAW] This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
THIS AGREEMENT has been executed by the parties hereto as of the day and
year 1st above written, by the duly authorized officer or officers of said
parties, and the same will be binding upon the assigns and successors in
interest of the parties hereto.
NEVADA AGENCY AND TRUST COMPANY
TRANSFER AGENT
BY /S/ "AMANDA CARDINALLI"
--------------------------------
AMANDA CARDINALLI, VICE PRESIDENT
VANCOUVER'S FINEST COFFEE COMPANY
BY /S/ "K. MIDE WILSON KIRSTEN MIDE
------------------------------------
WILSON - PRESIDENT
67
<PAGE>
EXHIBIT 10 (I)
ANDERSEN ANDERSEN & STRONG, L.C. 941 East 3300 South, Suite 220
Certified Public Accountants Salt Lake City, Utah, 84106
Member SEC Practice Section of the AICPA Telephone 801-486-0096
Fax 801-486-0098
-mail Kandersen @ msn.com
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
VANCOUVER'S FINEST COFFEE COMPANY
We hereby consent to the use of our report dated April 30, 1999, in the
registration statement of Vancouver's Finest Coffee Company filed in Form 10-SB
in accordance with Section 12 of the Securities Exchange Act of 1934.
/s/ L. REX ANDERSEN
ANDERSEN ANDERSEN & STRONG, L.C.
Salt Lake City, Utah
April 7, 1999
A member of ACF International with affiliated offices worldwide
68
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