SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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
DESERT WEST MARKETING, INC.,
A Nevada corporation
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
2505 Rancho Bel Air, Las Vegas, Nevada 89107
(Address of registrant's principal executive offices) (Zip Code)
702.240.0124
(Registrant's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of Each Exchange on which
to be so registered: each class is to be registered:
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001
(Title of Class)
Copies to:
Thomas E. Stepp, Jr.
Stepp & Beauchamp LLP
Attorneys-at-Law
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
Page 1 of 46
Exhibit Index is specified on Page 13
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Desert West Marketing, Inc.,
A Nevada Corporation
Index to Form 10-SB Registration Statement
Item Number and Caption Page
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1. Description of Business 3
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 4
3. Description of Property 8
4. Security Ownership of Certain Beneficial Owners and Management 8
5. Directors, Executive Officers, Promoters and Control Persons 8
6. Executive Compensation - Remuneration of Directors and
Officers 9
7. Certain Relationships and Related Transactions 10
8. Legal Proceedings 10
9. Market For Common Equity and Related Shareholder Matters 10
10. Recent Sales of Unregistered Securities 10
11. Description of Securities 11
12. Indemnification of Officers and Directors 12
13. Financial Statements 12
14. Changes in and Disagreements with Accountants 13
15. Financial Statements and Exhibits 13
15(a) Index to Financial Statements 13
Financial Statements F-1 through F-6
15(b) Index to Exhibits 13
Exhibits E-1 through E-26
Signatures 14
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Item 1. Description of Business.
Development of the Company. The Company was incorporated on March 5, 1999,
pursuant to the provisions of General Corporation Law of Nevada. The executive
offices of the Company are located at 2505 Rancho Bel Air, Las Vegas, Nevada
89107. The Company's telephone number is (702)240-0124.
Business of the Company. The Company was organized to engage in the
manufacturing, packaging and sale and distribution of vitamins and nutritional
supplements. The Company anticipates distributing vitamin brands of other
vitamin producers, as well as developing its own vitamin brands. The Company
anticipates developing different vitamin products sold in single vitamin and in
multivitamin combinations with varying potency levels in various forms,
including tablets (both chewable and time released tablets), powders, two-piece
hard shell capsules, and soft gelatin encapsulated capsules ("soft gels"). The
Company anticipates manufacturing its own products.
Employees. The Company currently has no employees. Management of the Company
anticipates using consultants for business, accounting, engineering, and legal
services on an as-needed basis. Because the Company anticipates entering into
licensing and manufacturing agreements with third parties, the Company
anticipates that it will require very few employees, if any, during the next
fiscal year.
Competition. Competition in the vitamin and nutrient supplement industry, and
the related non-regulated medical products industry, is intense. The Company
competes directly with other companies and businesses that have developed and
are in the process of developing technologies and products which will be
competitive with the products developed and offered by the Company. There can be
no assurance that other technologies or products which are functionally
equivalent or similar to the technologies and products of the Company have not
been developed or are not in development. The Company expects that companies or
businesses which may have developed or are developing such technologies and
products as well as other companies and businesses which have the expertise
which would encourage them to develop and market products directly competitive
with those developed and marketed by the Company. Many of these competitors have
greater financial and other resources, and more experience in research and
development, than the Company.
There can be no assurance that competitors have not or will not succeed in
developing technologies and products that are more effective than any which have
been or are being developed by the Company or which would render the products of
the Company obsolete and noncompetitive. Many of the competitors of the Company
have substantially greater experience, financial and technical resources and
production, marketing and development capabilities than the Company. If the
Company commences commercial sales of its products, it will also be competing
with respect to manufacturing efficiency and sales and marketing capabilities.
Reports to Security Holders. Although the Company is not required to deliver an
annual report to security holders, the Company intends to provide an annual
report to its security holders, which will include audited financial statements.
The Company will become a reporting company with the Securities and Exchange
Commission ("SEC") on the effective date of this Registration Statement and,
when the Company becomes a reporting company with the SEC, the public may read
and copy any materials filed with the SEC at the SEC's Public Reference Room at
450 Fifth Street N.W., Washington, D.C. 20549. The public may also obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy
and information statements, and other information regarding issuers that file
electronically with the SEC. The address of that site is http://www.sec.gov. The
Company does not currently maintain its own Internet address.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Company anticipates marketing health related products, including vitamins
and nutritional supplements. The Company currently does not have any existing
marketing agreements. The Company anticipates that its products will be marketed
to alternative medicine practitioners, health food stores and other wholesale
and resale sources. The Company may also acquire the right to sell or distribute
existing products or obtain licensing, marketing, distribution or other rights
to such products.
The Company will focus its initial marketing and distribution efforts in the
vitamin, mineral and herb segment of the health supplement industry. The Company
plans to establish a marketing network and add additional products as
opportunity allows, either through licensing the products of others or through
corporate acquisitions. The Company will seek to establish relationships with
alternative medicine practitioners and others who will sell the Company's
products to the public.
Industry Overview. Based on industry sources, including trade publications, the
Company believes that the retail market for vitamins and nutritional supplements
in the United States presently exceeds $7 billion annually. The Company believes
that approximately 45% of adults in the United States take some form of vitamin
or nutritional supplement. The Company believes that this market will continue
to expand due to increasing consumer awareness of the health benefits of
vitamins and nutritional supplements and the widely publicized reports of
medical research findings indicating a correlation between the consumption of
micro-nutrients, such as vitamin C and vitamin E (antioxidants) and reduced
incidence of diseases such as heart disease, cancer and stroke. However, there
have been studies relating to certain antioxidants with results, which have been
contrary to certain of the favorable indications of other prior and subsequent
studies. Also, as scientific research to date is preliminary, there can be no
assurance of future favorable scientific results and media attention, or the
absence of unfavorable or inconsistent findings.
The Company believes that the market for vitamins and other nutritional
supplements will continue to grow as the nation's demographics continue to shift
towards a more senior-aged population, who have a greater tendency to use
vitamins on a regular basis. Industry sources indicate that approximately 55% of
Americans aged 50 and over are regular vitamin users. It is anticipated that the
50 and over age group will be the fastest growing segment of the United States
population as the baby boom generation continues to mature.
Private Label Industry. Sales of private label (that is, store brand) vitamins
have grown significantly in chain drug stores and have become a key ingredient
in the success of retailers. From the consumer's standpoint, store brand
products offer lower-priced and equal if not better quality alternatives to
nationally advertised brand name products. From the retailer's standpoint, such
products allow for lower retail pricing than national brands and yet provide
retailers with higher profit margins. Industry analysts predict that private
label's share of the overall market should grow significantly over the next 10
years. The Company believes that it is well positioned to participate in this
growth.
Source and Availability of Raw Materials. The principal raw materials used in
the manufacturing process are natural and synthetic vitamins, purchased from
manufacturers primarily in the United States, with certain materials imported
from Japan and Europe. The Company intends to purchase its raw materials from
numerous sources. The Company believes that the materials necessary to produce
its products are readily available from numerous sources and that the loss of
any one supplier would not adversely affect the Company's operations.
Licenses and Consents. The utilization or other exploitation of the products
developed by the Company may require the Company to obtain licenses or consents
from government regulatory agencies or from the
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producers or other holders of patents, copyrights or other similar rights
relating to the products and technologies of the Company. In the event the
Company is unable, if so required, to obtain any necessary license or consent on
terms which management of the Company considers to be reasonable, the Company
may be required to cease developing, utilizing, or exploiting products affected
by government regulation or by patents, copyrights or similar rights. In the
event the Company is challenged by a government regulatory agency, or by the
holders of patents, copyrights or other similar rights, there can be no
assurance that the Company will have the financial or other resources to defend
any resulting legal action, which could be significant.
The Company may rely on certain proprietary technologies, trade secrets, and
know-how that are not patentable. Although the Company may take steps to protect
its unpatented trade secrets and technology, in part through the use of
confidentiality agreements with its employees, consultants and certain of its
contractors, there can be no assurance that (i) these agreements will not be
breached, (ii) the Company would have adequate remedies for any breach or (iii)
the proprietary trade secrets and know-how of the Company will not otherwise
become known or be independently developed or discovered by competitors.
Market Acceptance and Dependence on Principal Products. There can be no
assurance that the products of the Company will achieve a significant degree of
market acceptance, and that acceptance, if achieved, will be sustained for any
significant period or that product life cycles will be sufficient (or substitute
products developed) to permit the Company to recover start-up and other
associated costs. Failure of the products of the Company to achieve or sustain
market acceptance could have a material adverse effect on the business,
financial conditions, and results of operations of the Company.
Dependence on New Product Introductions. The vitamin and nutrient supplement
industry, and the related non-regulated medical products industry, are rapidly
changing through the continuous development and introduction of new products.
The strategy of the Company for growth is substantially dependent upon its
ability to introduce successfully new products. Accordingly, the ability of the
Company to compete may be dependent upon the ability of the Company to
continually enhance and improve its products. There can be no assurance that
competitors will not develop technologies or products that render the products
of the Company obsolete or less marketable. The Company may be required to adapt
to technological changes in the industry and develop products to satisfy
evolving industry or customer requirements, any of which could require the
expenditure of significant funds and resources, and the Company does not have a
source or commitment for any such funds and resources. Development efforts
relating to the production and distribution of the various products to be
developed by the Company are not substantially completed. Accordingly, the
Company might be required to refine and improve those products. Continued
refinement and improvement efforts remain subject to the risks inherent in new
product development, including unanticipated technical or other problems which
could result in material delays in product commercialization or significantly
increase costs. The products to be developed by the Company will be the result
of significant research and development. Although management of the Company
believes that such research and development will proceed satisfactorily, such
research and development may result in errors which become apparent subsequent
to wide spread commercial utilization. In such case, the Company would be
required to modify its products and continue with additional research and
development, which may delay the plans of the Company and cause the Company to
incur additional cost.
Dependence on Third-Party Providers. The Company may become dependent upon
various third parties for one or more significant services or ingredients
required for the products developed by the Company, which services or
ingredients will be provided to the Company pursuant to agreements with such
providers. Inasmuch as the capacity for certain services and ingredients by
certain third parties may be limited, the
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inability of the Company, for economic or other reasons, to continue to receive
services or ingredients from existing providers or to obtain similar ingredients
or services from additional providers could have a material adverse effect on
the Company.
Risk of Product Recall, Product Returns. Product recalls may be issued at the
discretion of the Company or government agencies having regulatory authority for
product sales and may occur due to disputed labeling claims, manufacturing
issues, quality defects or other reasons. No assurance can be given that product
recalls will not occur in the future. Any product recall could materially
adversely affect the Company's business, financial condition or results of
operations. There can be no assurance that future recalls or returns would not
have a material adverse effect upon the Company's business, financial condition
and results of operations.
Compliance with Government Regulations. The vitamin and nutrient supplement
industry, and the related non-regulated medical products industry, have been
under increasing scrutiny by various state and federal regulatory agencies. The
Company may be subject to various forms of government regulations, including
consumer safety laws and environmental safety laws. Any future violation of, and
the cost of compliance with, these laws and regulations could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Risk of Product Liability; Potential Unavailability of Insurance. The business
of the Company will expose it to potential product liability risks that are
inherent in the testing, manufacturing and marketing of vitamin and nutritional
supplement products. The Company does not currently have product liability
insurance, and there can be no assurance that the Company will be able to obtain
or maintain such insurance on acceptable terms or, if obtained, that such
insurance will provide adequate coverage against potential liabilities. The
Company faces an inherent business risk of exposure to product liability and
other claims in the event that the development or use of its technology or
products is alleged to have resulted in adverse effects. Such risk exists even
with respect to those products that are manufactured in licensed and regulated
facilities or that otherwise possess regulatory approval for commercial sale.
There can be no assurance that the Company will avoid significant product
liability exposure. There can be no assurance that insurance coverage will be
available in the future on commercially reasonable terms, or at all, that such
insurance will be adequate to cover potential product liability claims or that a
loss of insurance coverage or the assertion of a product liability claim or
claims would not materially adversely affect the Company's business, financial
condition and results of operations. While the Company has taken, and will
continue to take, what they believe are appropriate precautions, there can be no
assurance that they will avoid significant liability exposure. An inability to
obtain product liability insurance at acceptable cost or to otherwise protect
against potential product liability claims could prevent or inhibit the
commercialization of products developed by the Company. A product liability
claim could have a material adverse effect on the Company's business, financial
condition and results of operations.
The strategy of the Company for growth is substantially dependent upon its
ability to market and distribute products successfully. Other companies,
including those with substantially greater financial, marketing and sales
resources, compete with the Company, and have the advantage of marketing
existing products with existing production and distribution facilities. There
can be no assurance that the Company will be able to market and distribute
products on acceptable terms, or at all. Failure of the Company to market its
products successfully could have a material adverse effect on the Company's
business, financial condition or results of operations.
The non-regulated medical products industry has been under increasing scrutiny
by various state and federal regulatory agencies. While the Company does not
presently require any government approval to promote its
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vitamin, mineral and herb health supplements, the Company may be subject to
various forms of government regulations, including consumer safety laws and
environmental safety laws. Any future violation of, and the cost of compliance
with, these laws and regulations could have a material adverse effect on the
Company's business, financial condition and results of operations.
Liquidity and Capital Resources. During the period from inception through March
31, 1999, the Company realized $10,000 through the sale of common stock. The
cash and equivalents constitute the Company's present internal sources of
liquidity. Because the Company is not generating any revenues from the sale or
licensing of its products, the Company's only external source of liquidity is
the sale of its capital stock.
Sale of the Company's Securities. On or about March 10, 1999, the Company
completed an offering of shares of its $.001 par value common stock common stock
in reliance on an exemption from registration pursuant to the Securities Act of
1933, provided by Rule 504 of Regulation D of that Act. The Company sold a total
of 1,000,000 shares of common stock pursuant to that offering. Gross proceeds
from the offering were $10,000 in cash, obtained from approximately 25
non-accredited investors.
Results of Operations. The Company has not yet realized any revenue from
operations, nor does it expect to in the foreseeable future.
Manufacturing and Marketing the Company's Products. The size and scope of the
health and nutritional food supplement business is difficult to determine.
Certain foods may or may not be considered health foods. Estimates of the health
food industry's gross sales run as high as $120 billion per year. In such a vast
industry there are many segments and crossovers. With that in mind, the Company
plans to focus its initial efforts on the vitamin, mineral and herb segment of
the industry. The Company plans to build a marketing network and add other
products as opportunity and finances allow. The Company will seek to establish
relationships with alternative medicine practitioners and others who will sell
the Company's products to the public.
The Company plans to focus its initial marketing efforts on the states of
Nevada, Utah and California. The Company hopes to become national in scope and
is considering advertising in national publications as it broadens its product
line. The Company plans to market its products by distributing brochures and
price lists through the mails. Follow-up calls will be made to promising
prospects. This approach will be the Company's primary marketing method.
The Company also plans to place advertisements in magazines that promote various
sports and activities. These sources, as well as magazines promoting health
products and targeted to the alternative medicine practitioner, will be the main
focus of the Company's magazine advertising. To support the magazine
advertising, the Company will seek regional marketing contracts with existing
manufacturing representatives. Currently the Company has no contractual
relationships with such representatives and no assurance can be given that such
representation will be available on terms and conditions that will allow the
Company to sell its products profitably.
Impact of the Year 2000. The Year 2000 issue results from the fact that many
computer programs were written using two, rather than four, digits to identify
the applicable year. As a result, computer programs with time-sensitive software
may recognize a two digit code for any year in the next century as related to
this century. For example, "00", entered in a date-field for the year 2000, may
be interpreted as they year 1900 resulting in system failures or miscalculations
and disruptions of operations, including, among other things, a temporary
inability to process transactions or engage in other normal business activities.
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In order to improve operating performance, the Company has undertaken, or will
undertake in the near future, a number of significant systems initiatives. An
ancillary benefit of those systems initiatives is that the resulting systems are
Year 2000 compliant. Based upon a recent assessment, the Company has determined
that the incremental cost of ensuring that its remaining computer systems are
Year 2000 compliant is not expected to have a material adverse effect on the
Company. The Company has completed a preliminary assessment of each of its
operations and their Year 2000 readiness, feels that appropriate actions are
being taken, and expects to complete its overall Year 2000 remediation prior to
any anticipated impact on its operations. The Company has determined that, with
modifications to existing software and conversions to new systems, the Year 2000
issue will not pose significant operational problems for its computer systems.
However, if such modifications and conversions are not made, or are not
completed timely the Year 2000 issue could have a material impact on the
operations of this Company. However, while the Company has initiated formal
communications with a number of its significant suppliers to determine the
extent to which the Company's interface systems are vulnerable to those third
parties' failure to remediate their own Year 2000 issues, and will initiate
similar communication with major customers as well as the balance of its major
suppliers in 1998, there is no guarantee that the systems of other companies on
which the Company's systems rely will be timely converted and would not have an
adverse effect on the Company's systems.
Item 3. Description of Property
Property held by the Company. As of the dates specified in the following table,
the Company held the following property:
================================================================================
Property Sept. 1,1999
- --------------------------------------------------------------------------------
Cash and equivalents $10,000.00
================================================================================
The Company defines cash equivalents as all highly liquid investments with a
maturity of 3 months or less when purchased. The Company does not presently own
any interests in real estate. The Company does not presently own any inventory
or equipment.
Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners. Thomas Krucker owns
1,100,000 shares of the Company's common stock, or approximately 41% of the
Company's issued and outstanding common stock. Albo Ltd., a Turks & Caicos
corporation, owns 550,000 shares of the Company's common stock, or approximately
20.7% of the Company's issued and outstanding common stock.
(b) Security Ownership of Management. The directors and principal executive
officers of the Issuer beneficially own, in the aggregate, none of the Issuer's
common stock, nor do such directors and principal executive officers hold any
rights to purchase such common stock, either by warrant or option.
Changes in Control. Management of the Company is not aware of any arrangements
which may result in "changes in control" as that term is defined by the
provisions of Item 403(c) of Regulation S-B.
Item 5. Directors, Executive Officers, Promoters and Control Persons
The directors and principal executive officers of the Company are as specified
on the following table:
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================================================================================
Name Age Position
- --------------------------------------------------------------------------------
Russell Seedborg 47 President and Director
- --------------------------------------------------------------------------------
Brad Aspin 35 Secretary/Treasurer and a Director
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Biographical Information on Company's Officers and Directors.
Russell Seedborg, age 47, attended Saddleback Junior College in California from
1969 through 1971 and Cal Poly in Pomona, California from 1971 through 1973. He
also attended classes at the University of Nevada at Las Vegas ("UNLV") from
1989 through 1991, where he received a B.S. degree. Mr. Seedborg is currently
employed as a teacher at the Clark County School District in Clark County,
Nevada. In addition to teaching, Mr. Seedborg is attending classes at UNLV where
he expects to receive his Master's Degree.
Brad Aspin, age 35, received his formal education at Orange Coast College and
Arizona State University, graduating in 1983. After graduation he became
self-employed in the healthcare services industry until 1987. From 1987 to 1996
he was employed by EFC Mortgage, eventually becoming a loan officer for EFC in
Orange County, California. From 1996 to 1997 he was an executive with Interstate
Mortgage and Loan, also in Orange County, California. From 1997 to the present
Mr. Aspin has developed his own network marketing business. Mr. Aspin recently
moved to Las Vegas, Nevada.
There are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining either Mr. Seedborg or Mr. Aspin from engaging in or continuing any
conduct, practice or employment in connection with the purchase or sale of
securities, or convicting such person of any felony or misdemeanor involving a
security, or any aspect of the securities business or of theft or of any felony,
nor are either Mr. Seedborg or Mr. Aspin the officers or directors of any
corporation or entity so enjoined.
Item 6. Executive Compensation - Remuneration of Directors and Officers.
Specified below, in tabular form, is the aggregate annual remuneration of the
Company's Chief Executive Officer and the four (4) most highly compensated
executive officers other than the Chief Executive Officer who were serving as
executive officers at the end of the Company's last completed fiscal year.
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================================================================================
Name of individual or Capacities in which Aggregate
Identity of Group remuneration was received remuneration
- --------------------------------------------------------------------------------
None(1) None None
================================================================================
There was no compensation paid to any executive officer of the Company during
the Company's last completed fiscal year.
Item 7. Certain Relationships and Related Transactions
Compensation to Officers and Directors of the Company As of the date of this
Registration Statement, no compensation has been paid or accrued to any of the
officers or directors of the Company.
Item 8. Legal Proceedings
There are no legal actions pending against the Company nor are any such legal
actions contemplated.
Item 9. Market For Common Equity and Related Stockholder Matters
As of the date of this Registration Statement, there were 2,650,000 shares of
the Company's $.001 par value common stock issued and outstanding. There have
been no cash dividends declared on the Company's common stock since the
Company's inception. Dividends are declared at the sole discretion of the
Company's Board of Directors.
Penny Stock Regulation. The Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks". Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system). The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from those rules, deliver a standardized
risk disclosure document prepared by the Commission, which specifies information
about penny stocks and the nature and significance of risks of the penny stock
market. The broker-dealer also must provide the customer with bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. In addition,
the penny stock rules require that prior to a transaction in a penny stock not
otherwise exempt from those rules the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for a stock that becomes subject to the penny stock rules.
If any of the Company's securities become subject to the penny stock rules,
holders of those securities may have difficulty selling those securities.
Item 10. Recent Sales of Unregistered Securities
There have been no sales of unregistered securities within the last three (3)
years which would be required to be disclosed pursuant to Item 701 of Regulation
S-B, except for the following:
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(1) The officers and directors of the Company received no direct
compensation from the Company during the Company's most recent fiscal year. The
officers and directors of the Company are reimbursed for expenses incurred on
behalf of the Company.
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1,000,000 shares of the Company's $.001 par value common stock were issued on or
about March 10, 1999 pursuant to certain exemptions from registration specified
at Rule 504 under the Act. Therefore, any shareholder desiring to transfer his
or her shares of the Company's common stock must furnish the Company with an
opinion of counsel satisfactory to the Company and its counsel to the effect
that the proposed transfer does not violate federal or state securities law. The
certificate evidencing the shares of common stock so issued will specify a
legend which will provide notice of these restrictions. For these reasons, the
right and the opportunity to transfer shares of the Company's common stock will
be very limited. Therefore, a public market for the common shares does not exist
and will not develop. As a consequence, assuming a shareholder could properly
transfer his or her shares of the Company's common stock, there is no assurance
that he or she could find a buyer for those shares of the Company's common
stock.
Item 11. Description of Securities
The Company is authorized to issue 100,000,000 shares of capital stock, $.001
par value. As of the date of this Registration Statement, there are 2,650,000
shares of the Company's capital stock issued and outstanding.
Common Stock. The holders of the Company's common stock are entitled to one vote
for each share held of record on all matters to be voted on by those
shareholders. There is no cumulative voting with respect to the election of
directors of the Company, with the result that the holders of more than 50% of
the Company's common stock voted for the election of directors can elect all of
those directors. The holders of the Company's common stock are entitled to
receive dividends when, as, and if declared by the Company's Board of Directors
from funds legally available therefor. In the event of liquidation, dissolution,
or winding up of the Company, the holders of the Company's common stock are
entitled to share ratably in all assets remaining available for distribution to
them after payment of the Company's liabilities and after provision has been
made for each class of stock, if any, having preference over the Company's
common stock; provided further, however, that all authorized capital stock of
the Company is common stock. Holders of shares of the Company's common stock, as
such, have no conversion, preemptive or other subscription rights, and there are
no redemption provisions applicable to the Company's common stock. All of the
outstanding shares of the Company's common stock are, and the Offered Shares,
when issued for the consideration set forth in this Memorandum will be, fully
paid and nonassessable.
Non-Cumulative Voting. The holders of shares of common stock of the Company will
not have cumulative voting rights, which means that the holders of more than 50%
of the outstanding common stock of the Company, voting for the election of
directors of the Company, may elect all of the directors of the Company to be
elected, if they so desire, and, in such event, the holders of the remaining
common stock of the Company may not be able to elect any of the Company's
directors.
Registration Rights. Existing holders of shares of the Company's common stock
are not entitled to rights with respect to the registration of such shares under
the Securities Act. Additionally, purchasers of the Offered Shares will not
acquire rights with respect to such registration of the Offered Shares.
Dividends. The payment by the Company of dividends, if any, in the future, shall
be determined by the Company's Board of Directors, in its discretion, and will
depend among other things, upon the Company's earnings, the Company's capital
requirements, and the Company's financial condition, as well as other relevant
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factors. The Company has not paid or declared any dividends to date. Holders of
common stock are entitled to receive dividends as declared and paid from time to
time by the Company's Board of Directors from funds legally available therefor.
The Company intends to retain any earnings for the operation and expansion of
its business and does not anticipate paying cash dividends in the foreseeable
future.
Preferred Stock. The Company is not authorized to issue any Preferred Stock.
Transfer Agent. The Company intends to engage the services of Pacific Stock
Transfer, P. O. Box 93385, Las Vegas, NV 89193, telephone 702.361.3033, to serve
as the Transfer Agent for the Company.
Stock Option Plans. The Board of Directors of the Company does not currently
intend to adopt a stock option plan; however, the Board of Directors reserves
the right to adopt such a stock option plan, at its sole discretion, at any time
subsequent to this offering. The terms of any such plan have not been
determined.
Stock Awards Plan. The Company has not adopted a Stock Awards Plan, but may do
so in the future. The terms of any such plan have not been determined.
Item 12. Indemnification of Directors and Officers
The Company's Articles of Incorporation provides that no director or officer of
the Company shall be personally liable to the Company or any of its stockholders
for damages for breach of fiduciary duty as a director or officer involving any
act or omission of any such director or officer; provided, however, that the
foregoing provision does not eliminate or limit the liability of a director or
officer for acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law, or the payment of dividends in violation of Section
78.300 of the Nevada Revised Statutes.
The Company will enter into indemnification agreements with each of its
executive officers pursuant to which the Company agrees to indemnify each such
person for all expenses and liabilities, including criminal monetary judgments,
penalties and fines, incurred by such person in connection with any criminal or
civil action brought or threatened against such person by reason of such person
being or having been an officer or director or employee of the Company. In order
to be entitled to indemnification by the Company, such person must have acted in
good faith and in a manner such person believed to be in the best interests of
the Company and, with respect to criminal actions, such person must have had no
reasonable cause to believe his or her conduct was unlawful.
IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, INDEMNIFICATION FOR
LIABILITIES ARISING PURSUANT TO THE SECURITIES ACT OF 1933 IS CONTRARY TO PUBLIC
POLICY AND, THEREFORE, UNENFORCEABLE.
Item 13. Financial Statements.
Copies of the financial statements specified in Regulation 228.310 (Item 310)
are filed with this Registration Statement, Form 10-SB (see Item 15 below).
12
<PAGE>
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements with the Company's accountants
since the formation of the Company required to be disclosed pursuant to Item 304
of Regulation S-B.
Item 15. Financial Statements and Exhibits
(a) Index to Financial Statements.
Page
----
Report of Independent Auditors F-1
Financial Statements of Desert West Marketing, Inc.:
Balance Sheet, March 31, 1999 F-2
Statements of Operations for the period from
March 5, 1999 (inception) to March 31, 1999 F-3
Statement of Shareholders' Equity for the period from
March 5, 1999 (inception) to March 31, 1999 F-4
Statement of Cash Flows for the period from
March 5, 1999 (inception) to March 31, 1999 F-5
Notes to Financial Statements F-6
(b) Index to Exhibits
Copies of the following documents are filed with this Registration Statement,
Form 10-SB as exhibits:
Index to Exhibits Page
- ----------------- ----
1 Bylaws E-1 through E-21
Instrument defining the rights of
Security Holders)
2 Articles of Incorporation of E-22 through E-26
the Company (Charter document)
13
<PAGE>
SIGNATURES
In accordance with the provisions of Section 12 of the Securities Exchange Act
of 1934, Desert West Marketing, Inc. has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Las Vegas, State of Nevada, on September 17, 1999.
Desert West Marketing, Inc.,
a Nevada corporation
By: Russell Seedberg
President
14
<PAGE>
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying balance sheet of Desert West Marketing, Inc. (a
development stage company) as of March 31, 1999, and the related statement of
operations, shareholders' equity, and cash flows for the period from March 5,
1999 (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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Desert West
Marketing, Inc. (a development stage company) as of March 31, 1999, and the
results of operations and cash flows for the period from March 5, 1999
(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. As discussed in Note 1 to the
financial statements, the Company has no operations, products or facilities and
requires significant resources to implement its plan of operations that raises
substantial doubt about its ability to be a going concern. Management's plan in
regard to these matters is also described in Note 1. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Kelly & Company
Kelly & Company
Newport Beach, California
August 27, 1999
<PAGE>
Desert West Marketing, Inc.
(A Development Stage Company)
Balance Sheet
March 31, 1999
- --------------------------------------------------------------------------------
ASSETS
Stock subscriptions receivable $ 10,000
--------
Total assets $ 10,000
========
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity:
Common stock, $.001 par value; 10,000,000
shares authorized; 1,650,00 shares issued and
outstanding $ 1,650
Common stock subscribed 1,000
Additional paid-in capital 9,000
Accumulated deficit (1,650)
--------
Total shareholders' equity 10,000
--------
Total liabilities and shareholders' equity $ 10,000
========
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
Desert West Marketing, Inc.
(A Development Stage Company)
Statement of Operations
As of March 31, 1999 and
For the Period from March 5, 1999 (Inception) To March 31, 1999
- --------------------------------------------------------------------------------
Revenue --
Cost of sales --
-------
Gross profit --
Other operating costs and expenses $(1,650)
-------
Net (loss) $(1,650)
=======
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Desert West Marketing, Inc.
(A Development Stage Company)
Statement of Shareholders' Equity
For the Period from March 5, 1999 (Inception) To March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Additional
Common Common Stock Paid-in Accumulated
Shares Stock Subscribed Capital Deficit Total
------ ----- ---------- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Formation of corporation, March 5, 1999 -- -- -- -- -- --
Common stock 1,650,000 1,650 -- -- -- $ 1,650
Common stock subscribed -- -- $ 1,000 $ 9,000 -- 10,000
Net (loss) -- -- -- -- $ (1,650) (1,650)
--------- --------- --------- --------- --------- ---------
Balance,
March 31, 1999 1,650,000 $ 1,650 $ 1,000 $ 9,000 $ (1,650) $ 10,000
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Desert West Marketing, Inc.
(A Development Stage Company)
Statement of Cash Flows
For the Period from March 5, 1999 (Inception) To March 31, 1999
- --------------------------------------------------------------------------------
Cash flows from operating activities:
Net loss $ (1,650)
Adjustments to reconcile net income (loss) to net cash:
Increase in liabilities:
Due to founders --
--------
Cash used in operating activities $ (1,650)
--------
Cash flows used in investing activities:
Purchase of property and equipment --
--------
Cash used in investing activities --
--------
Cash flows provided by financing activities:
Issuance of common stock 1,650
--------
Cash provided by financing activities 1,650
--------
Net increase (decrease) in cash --
Cash at inception --
--------
Cash at end of period --
========
Supplemental Disclosure of Cash Flow Information
Interest paid --
Income taxes paid --
Supplemental Schedule of Non-cash Investing and Financing Activities
Common stock subscriptions:
Stock subscriptions receivable $ 10,000
Common stock subscribed $ (1,000)
Additional paid-in capital $ (9,000)
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Desert West Marketing, Inc.
(A Development Stage Company)
Notes to the Financial Statement
For the Period from March 5, 1999 (Inception) To March 31, 1999
- --------------------------------------------------------------------------------
1. Development Stage Operations
Desert West Marketing, Inc. (a development stage company) (the "Company")
was incorporated in the state of Nevada on March 5, 1999 and has no
operating history, no revenues, no employees, no products available for the
market, and no production facilities. The Company's initial business plan
anticipates engaging in the manufacture, packaging, sale, and distribution
of branded and private label vitamins and nutritional supplements. The
implementation of these plans requires, among other things, significant
resources and may involve the use of leased facilities and equipment,
subcontract manufacturing, consultants, outside sales representatives,
and/or merger with an operating entity. While management believes the
Company has adequate cash resources to meet its immediate liquidity needs,
the Company's ability to be a going concern is predicated upon its ability
to raise additional necessary capital to implement its plan, achievement of
successful operations, and/or the completion of a merger with an operating
entity. There is no assurance that any of these will occur or be
successful.
2. Summary of Significant Accounting Policies
Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Start-up Costs
The Company expenses start-up costs as they are incurred.
Disclosures about Fair Value of Financial Instruments
The Company accounts for the value of financial instruments using the fair
value method.
6
<PAGE>
Desert West Marketing, Inc.
(A Development Stage Company)
Notes to the Financial Statement, Continued
For the Period from March 5, 1999 (Inception) To March 31, 1999
- --------------------------------------------------------------------------------
2. Summary of Significant Accounting Policies, Continued
Income Taxes
The Company accounts for deferred income taxes using the liability method
in accordance with Statement of Financial Accounting Standards No. 109.
Deferred income taxes are computed based on the tax liability or benefit in
future years of the reversal of temporary differences in the recognition of
income or deduction of expenses between financial and tax reporting
purposes. The net difference between tax expense and taxes currently
payable will be reflected in the financial statements as deferred taxes.
Deferred tax assets and/or liabilities will be classified as current and
noncurrent based on the classification of the related asset or liability
for financial reporting purposes, or based on the expected reversal date
for deferred taxes that are not related to an asset or liability. For tax
purposes the Company will be all capitalizing incurred during the
development stage.
3. Stock Transactions
The Company issued a total of 1,650,000 common shares to founders in
connection with their formation of the Company and in satisfaction of the
$1,650 paid by them for incorporation of the Company. The Company has
recorded this transaction at the par value of the shares issued and
correspondingly recognized other expense of $1,650.
In March 1999, the Company initiated an offering of its common stock at
$.01 per share under Rule 504 of Regulation D of the securities laws. As of
March 31, 1999, the Company had obtained subscriptions to purchase
1,000,000 shares for a total of $10,000 from twenty-four investors.
Subsequent to March 31, 1999, all of the amounts due from these
subscriptions were received by the Company.
4. Year 2000 Disclosure (Unaudited)
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any software
programs that are time-sensitive might have recognized a date using "00" as
the year 1900 rather than the year 2000. This could have resulted in a
system failure or miscalculations. The Company has not commenced operations
as of March 31, 1999 and believes the Year 2000 problem will not pose
significant operational problems.
7
<PAGE>
(b) Index to Exhibits.
Copies of the following documents are filed with this Registration Statement,
Form 10-SB as exhibits:
Index to Exhibits Page
- ----------------- ----
3.1 Bylaws E-1 through E-21
3.2 Articles of Incorporation of E-22 through E-26
the Company (Charter document)
27 Financial Data Schedule
13
<PAGE>
SIGNATURES
In accordance with the provisions of Section 12 of the Securities Exchange Act
of 1934, Desert West Marketing, Inc. has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Las Vegas, State of Nevada, on September 17, 1999.
Desert West Marketing, Inc.,
a Nevada corporation
By: Russell Seedborg
President
14
BY-LAWS FOR THE REGULATION
EXCEPT AS OTHERWISE PROVIDED BY STATUTE
OR ITS ARTICLES OF INCORPORATION OF
DESERT WEST MARKETING, INC.
* * * * *
ARTICLE I.
Offices
Section 1. PRINCIPAL OFFICE. The principal office for the transaction of
the business of the corporation is hereby fixed and located at Suite 880, Bank
of America Plaza, 50 West Liberty Street, Reno, Nevada 89501, being the offices
of THE NEVADA AGENCY AND TRUST COMPANY. The board of directors is hereby granted
full power and authority to change said principal office from one location to
another in the State of Nevada.
Section 2. OTHER OFFICES. Branch or subordinate offices may at any time be
established by the board of directors at any place or places where the
corporation is qualified to do business.
ARTICLE II.
Meetings of Shareholders
Section 1. MEETING PLACE. All annual meetings of shareholders and all other
meetings of shareholders shall be held either at the principal office or at any
other place within or without the State of Nevada which may be designated either
by
1
E-1
<PAGE>
shareholders entitled to vote thereat, given either before or after the meeting
and filed with the Secretary of the corporation.
Section 2. ANNUAL MEETINGS. The annual meetings of shareholders shall be
held on the __________ day of _________ each year, at the hour of ___:00 o'clock
_.m. of said day commencing with the year 19___ , provided, however, that should
said day fall upon a legal holiday then any such annual meeting of shareholders
shall be held at the same time and place on the next day thereafter ensuing
which is not a legal holiday.
Written notice of each annual meeting signed by the president or a vice
president, or the secretary, or an assistant secretary, or by such other person
or persons as the directors shall designate, shall be given to each shareholder
entitled to vote thereat, either personally or by mail or other means of written
communication, charges prepaid, addressed to such shareholder at his address
appearing on the books of the corporation or given by him to the corporation for
the purpose of notice. If a shareholder gives no address, notice shall be deemed
to have been given to him, if sent by mail or other means of written
communication addressed to the place where the principal office of the
corporation is situated, or if published at least once in some newspaper of
general circulation in the county in which said office is located. All such
notices shall be sent to each shareholder entitled thereto not less than ten
2
E-2
<PAGE>
(10) nor more than sixty (60) days before each annual meeting, and shall specify
the place, the day and the hour of such meeting, and shall also state the
purpose or purposes for which the meeting is called.
Section 3. SPECIAL MEETINGS. Special meetings of the shareholders, for any
purpose or purposes whatsoever, may be called at any time by the president or by
the board of directors, or by one or more shareholders holding not less than 10%
of the voting power of the corporation. Except in special cases where other
express provision is made by statute, notice of such special meetings shall be
given in the same manner as for annual meetings of shareholders. Notices of any
special meeting shall specify in addition to the place, day and hour of such
meeting, the purpose or purposes for which the meeting is called.
Section 4. ADJOURNED MEETINGS AND NOTICE THEREOF. Any shareholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares, the holders of which
are either present in person or represented by proxy thereat, but in the absence
of a quorum, no other business may be transacted at any such meeting.
When any shareholders' meeting, either annual or special, is adjourned for
thirty (30) days or more, notice of the adjourned meeting shall be given as in
the case of an original meeting. Save as aforesaid, it shall not be necessary
3
E-3
<PAGE>
to give any notice of an adjournment or of the business to be transacted at an
adjourned meeting, other than by announcement at the meeting at which such
adjournment is taken.
Section 5. ENTRY OF NOTICE. Whenever any shareholder entitled to vote has
been absent from any meeting of shareholders, whether annual or special, an
entry in the minutes to the effect that notice has been duly given shall be
conclusive and incontrovertible evidence that due notice of such meeting was
given to such shareholders, as required by law and the By-Laws of the
corporation.
Section 6. VOTING. At all annual and special meetings of stockholders
entitled to vote thereat, every holder of stock issued to a bona fide purchaser
of the same, represented by the holders thereof, either in person or by proxy in
writing, shall have one vote for each share of stock so held and represented at
such meetings, unless the Articles of Incorporation of the company shall
otherwise provide, in which event the voting rights, powers and privileges
prescribed in the said Articles of Incorporation shall prevail. Voting for
directors and, upon demand of any stockholder, upon any question at any meeting
shall be by ballot. Any director may be removed from office by the vote of
stockholders representing not less than two-thirds of the voting power of the
issued and outstanding stock entitled to voting power.
Section 7. QUORUM. The presence in person or by proxy of the holders of a
majority of the shares entitled to
4
E-4
<PAGE>
vote at any meeting shall constitute a quorum for the transaction of business.
The shareholders present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
Section 8. CONSENT OF ABSENTEES. The transactions of any meeting of
shareholders, either annual or special, however called and noticed, shall be as
valid as though at a meeting duly held after regular call and notice, if a
quorum be present either in person or by proxy, and if either before or after
the meeting, each of the shareholders entitled to vote, not present in person or
by proxy, sign a written Waiver of Notice, or a consent to the holding of such
meeting, or an approval 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 this meeting.
Section 9. PROXIES. Every person entitled to vote or execute consents shall
have the right to do so either in person or by an agent or agents authorized by
a written proxy executed by such person or his duly authorized agent and filed
with the secretary of the corporation; provided that no such proxy shall be
valid after the expiration of eleven (11) months from the date of its execution,
unless the shareholder executing it specifies therein the length of time for
which such proxy is to continue in force, which in no case shall exceed seven
(7) years from the date of its execution.
5
E-5
<PAGE>
ARTICLE III
Section 1. POWERS. Subject to the limitations of the Articles of
Incorporation or the By-Laws, and the provisions of the Nevada Revised Statutes
as to action to be authorized or approved by the shareholders, and subject to
the duties of directors as prescribed by the By-Laws, all corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
corporation shall be controlled by the board of directors. Without prejudice to
such general powers, but subject to the same limitations, it is hereby expressly
declared that the directors shall have the following powers, to wit:
First - To select and remove all the other officers, agents and employees
of the corporation, prescribe such powers and duties for them as may not be
inconsistent with law, with the Articles of Incorporation or the By-Laws, fix
their compensation, and require from them security for faithful service.
Second - To conduct, manage and control the affairs and business of the
corporation, and to make such rules and regulations therefor not inconsistent
with law, with the Articles of incorporation or the By-Laws, as they may deem
best.
Third - To change the principal office for the transaction of the business
of the corporation from one location to another within the same county as
provided in Article I, Section 1, hereof; to fix and locate from time to time
one or
6
E-6
<PAGE>
more subsidiary offices of the corporation within or without the State of
Nevada, as provided in Article I, Section 2, hereof; to designate any place
within or without the State of Nevada for the holding of any shareholders'
meeting or meetings; and to adopt, make and use a corporate seal, and to
prescribe the forms of certificates of stock, and to alter the form of such seal
and of such certificates from time to time, as in their judgment they may deem
best, provided such seal and such certificates shall at all times comply with
the provisions of law.
Forth - To authorize the issue of shares of stock of the corporation from
time to time, upon such terms as may be lawful, in consideration of money paid,
labor done or services actually rendered, debts or securities canceled, or
tangible or intangible property actually received, or in the case of shares
issued as a dividend, against amounts transferred from surplus to stated
capital.
Fifth - To borrow money and incur indebtedness for the purposes of the
corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidences of debt and securities therefore.
Sixth - To appoint an executive committee and other committees and to
delegate to the executive committee any of the powers and authority of the board
in management of the business and affairs of the corporation, except the power
to declare
7
E-7
<PAGE>
dividends and to adopt, amend or repeal By-Laws. The executive committee shall
be composed of one or more directors.
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number of
directors of the corporation shall be not less than one (1) and no more than
fifteen (15).
Section 3. ELECTION AND TERM OF OFFICE. The directors shall be elected at
each annual meeting of shareholders, but if any such annual meeting is not held,
or the directors are not elected thereat, the directors may be elected at any
special meeting of shareholders. All directors shall hold office until their
respective successors are elected.
Section 4. VACANCIES. Vacancies in the board of directors may be filled by
a majority of the remaining directors, though less than a quorum, or by a sole
remaining director, and each director so elected shall hold office until his
successor is elected at an annual or a special meeting of the shareholders.
A vacancy or vacancies in the board of directors shall be deemed to exist
in case of the death, resignation or removal of any director, or if the
authorized number of directors be increased, or if the shareholders fail at any
annual or special meeting of shareholders at which any director or directors are
elected to elect the full authorized number of directors to be voted for at that
meeting.
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the
8
E-8
<PAGE>
directors. If the board of directors accept the resignation of a director
tendered to take effect at a future time, the board or the shareholders shall
have the 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.
Section 5. PLACE OF MEETING. 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, a regular meeting
shall be held at the principal office of the corporation. Special meetings of
the board may be held either at a place so designated, or at the principal
office.
Section 6. ORGANIZATION MEETING. Immediately following each annual meeting
of shareholders, the board of directors shall hold a regular meeting for the
purpose of organization, election of officers, and the transaction of other
business. Notice of such meeting is hereby dispensed with.
Section 7. OTHER REGULAR MEETINGS. Other regular meetings of the board of
directors shall be held without call on the ___________day of each month at the
hour of ___:00 o'clock __.m. of said day; provided, however, should said day
fall upon a legal holiday, then said meeting shall be held at the same time on
the next day thereafter ensuing which is not a
9
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<PAGE>
legal holiday. Notice of all such regular meetings of the board of directors is
hereby dispensed with.
Section 8. SPECIAL MEETINGS. Special meetings of the board of directors for
any purpose or purposes shall be called at any time by the president, or, if he
is absent or unable or refuses to act, by any vice president or by any two (2)
directors.
Written notice of the time and place of special meetings shall be delivered
personally to the directors or sent to each director by mail or other form of
written communication, charges prepaid, addressed to him at his address as it is
shown upon the records of the corporation, or if it is not shown on such records
or is 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 United States mail or delivered to the telegraph
company in the place in which the principal office of the corporation is located
at least forty-eight (48) hours prior to the time of the holding of the meeting.
In case such notice is delivered as above provided, it shall be so delivered at
least twenty-four (24) hours prior to the time of the holding of the meeting.
Such mailing, telegraphing or delivery as above provided shall be due, legal and
personal notice to such director.
Section 9. NOTICE OF ADJOURNMENT. Notice of the time and place of holding
an adjourned meeting need not be given to absent directors, if the time and
place be fixed at the
10
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<PAGE>
meeting adjourned.
Section 10. ENTRY OF NOTICE. Whenever any director has been absent from any
special meeting of the board of directors, an entry in the minutes to the effect
that notice has been duly given shall be conclusive and incontrovertible
evidence that due notice of such special meeting was give to such director, as
required by law and the By-Laws of the corporation.
Section 11. WAIVER OF NOTICE. The transactions of any meeting of the board
of directors, however called and noticed or wherever held, shall be as valid as
though had a meeting duly held after regular call and notice, if a quorum be
present, and if, either before or after the meeting, each of the directors not
present sign a written waiver of notice or a consent to the holding of such
meeting or an approval 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.
Section 12. QUORUM. A 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.
11
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<PAGE>
Section 13. ADJOURNMENT. A quorum of the directors may adjourn any
directors' meeting to meet again at a 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.
Section 14. FEES AND COMPENSATION. Directors shall not receive any stated
salary for their services as directors, but by resolution of the board, a fixed
fee, with or without expenses of attendance may be allowed for attendance at
each meeting. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise, and receiving compensation therefor.
ARTICLE IV.
Officers
Section 1. OFFICERS. The officers of the corporation shall be a president,
a vice president and a secretary/treasurer. The corporation may also have, at
the discretion of the board of directors, a chairman of the board, one or more
vice presidents, one or more assistant secretaries, one or more assistant
treasurers, and such other officers as may be appointed in accordance with the
provisions of Section 3 of this Article. Officers other than president and
chairman of the board need not be directors. Any person may hold two or more
offices.
12
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<PAGE>
Section 2. ELECTION. The officers of the corporation, except such officers
as may be appointed in accordance with the provisions of Section 3 or Section 5
of this Article, shall be chosen annually by the board of directors, and each
shall hold his office until he shall resign or shall be removed or otherwise
disqualified to serve, or his successor shall be elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC. The board of directors may appoint
such other officers as the business of the corporation may require, each of whom
shall hold office for such period, have such authority and perform such duties
as are provided in the By-Laws or as the board of directors may from time to
time determine.
Section 4. REMOVAL AND RESIGNATION. Any officer may be removed, either with
or without cause, by a majority of the directors at the time in office, at any
regular or special meeting of the board.
Any officer may resign at any time by giving written notice to the board of
directors or to the president, or to the secretary of the corporation. Any such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any
13
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<PAGE>
other cause shall be filled in the manner prescribed in the By-Laws for regular
appointments to such office.
Section 6. CHAIRMAN OF THE BOARD. The chairman of the board, if there shall
be such an officer, shall, if present, preside at all meetings of the board of
directors, and exercise and perform such other powers and duties as may be from
time to time assigned to him by the board of directors or prescribed by the
By-Laws.
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as may be
given by the board of directors to the chairman of the board, if there be such
an officer, the president shall be the chief executive officer of the
corporation and shall, subject to the control of the board of directors, have
general supervision, direction and control of the business and officers of the
corporation. He shall preside at all meetings of the shareholders and in the
absence of the chairman of the board, or if there be none, at all meetings of
the board of directors. He shall be ex-officio a member of all the standing
committees, including the executive committee, if any, and shall have the
general powers and duties of management usually vested in the office of
president of a corporation, and shall have such other powers and duties as may
be prescribed by the board of directors or the By-Laws.
Section 8. VICE PRESIDENT. In the absence or disability of the president,
the vice presidents in order of their rank as fixed by the board of directors,
or if not ranked,
14
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<PAGE>
the vice president designated by the board of directors, shall perform all the
duties of the president and when so acting shall have all the powers of, and be
subject to all the restrictions upon, the president. The vice presidents shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the board of directors or the By-Laws.
Section 9. SECRETARY. The secretary shall keep, or cause to be kept, a book
of minutes at the principal office or such other place as the board of directors
may order, of all meetings of directors and shareholders, with the time and
place of holding, whether regular or special, and if special, how authorized,
the notice thereof given, the names of those present at directors' meetings, the
number of shares present or represented at shareholders' meetings and the
proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal office, a
share register, or a duplicate share register, showing the names of the
shareholders and their addresses; the number and classes of shares held by each;
the number and date of certificates issued for the same, and the number and date
of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all the meetings
of the shareholders and of the board of directors required by the By-Laws or by
law to be given, and he
15
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<PAGE>
shall keep the seal of the corporation in safe custody, and shall have such
other powers and perform such other duties as may be prescribed by the board of
directors or the By-Laws.
Section 10. TREASURER. The treasurer shall keep and maintain, or cause to
be kept and maintained, adequate and correct accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursement, gains, losses, capital, surplus and shares.
Any surplus, including earned surplus, paid-in surplus and surplus arising from
a reduction of stated capital, shall be classified according to source and shown
in a separate account. The books of account shall at all tines be open to
inspection by any director.
The treasurer shall deposit all moneys and other valuables in the name and
to the credit of the corporation with such depositaries as may be designated by
the board of directors. He shall disburse the funds of the corporation as may be
ordered by the board of directors, shall render to the president and directors,
whenever they request it, an account of all of his transactions as treasurer and
of the financial condition of the corporation, and shall have such other powers
and perform such other duties as may be prescribed by the board of directors or
the By-Laws.
ARTICLE V.
Miscellaneous
Section 1. RECORD DATE AND CLOSING STOCK BOOKS.
16
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<PAGE>
The board of directors may fix a time, in the future, not exceeding fifteen (15)
days preceding the date of any meeting of shareholders, and not exceeding thirty
(30) days preceding the date fixed for the payment of any dividend or
distribution, or for the allotment of rights, or when any change or conversion
or exchange of shares shall go into effect, as a record date for the
determination of the shareholders entitled to notice of and to vote at any such
meeting, or entitled to receive any such dividend or distribution, or any such
allotment of rights, or to exercise the rights in respect to any such change,
conversion or exchange of shares, and in such case only shareholders of record
on the date so fixed shall be entitled to notice of and to vote at such
meetings, or to receive such dividend, distribution or allotment of rights, or
to exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after any record date fixed as aforesaid.
The board of directors may close the books of the corporation against transfers
of shares during the whole, or any part of any such period.
Section 2. INSPECTION OF CORPORATE RECORDS. The share register or duplicate
share register, the books of account, and minutes of proceedings of the
shareholders and directors shall be open to inspection upon the written demand
of any shareholder or the holder of a voting trust certificate, at any
reasonable time, and for a purpose reasonably related to his interests as a
shareholder, or as the holder of a voting trust
17
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<PAGE>
certificate, and shall be exhibited at any time when required by the demand of
ten percent (10%) of the shares represented at any shareholders' meeting. Such
inspection may be made in person or by an agent or attorney, and shall include
the right to make extracts. Demand of inspection other than at a shareholders'
meeting shall be made in writing upon the president, secretary or assistant
secretary of the corporation.
Section 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the board of directors.
Section 4. ANNUAL REPORT. The board of directors of the corporation shall
cause to be sent to the shareholders not later than one hundred twenty (120)
days after the close of the fiscal or calendar year an annual report.
Section 5. CONTRACT, ETC., HOW EXECUTED. The board of directors, except as
in the By-Laws otherwise provided, may authorize any officer or officers, agent
or agents, to enter into any contract, deed or lease or execute any instrument
in the name of and on behalf of the corporation, and such authority may be
general or confined to specific instances; and unless so authorized by the board
of directors, no officer, agent or employee shall have any power or authority to
bind the corporation by any contract or engagement or to pledge its
18
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<PAGE>
credit to render it liable for any purpose or to any amount.
Section 6. CERTIFICATES OF STOCK. A certificate or certificates for shares
of the capital stock of the corporation shall be issued to each shareholder when
any such shares are fully paid up. All such certificates shall be signed by the
president or a vice president and the secretary or an assistant secretary, or be
authenticated by facsimiles of the signature of the president and secretary or
by a facsimile of the signature of the president and the written signature of
the secretary or an assistant secretary. Every certificate authenticated by a
facsimile of a signature must be countersigned by a transfer agent or transfer
clerk.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the board of directors or the By-Laws may
provide; provided, however, that any such certificate so issued prior to full
payment shall state the amount remaining unpaid and the terms of payment
thereof.
Section 7. REPRESENTATIONS OF SHARES OF OTHER CORPORATIONS. The president
or any vice president and the secretary or assistant secretary of this
corporation are authorized to vote, represent and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority herein
granted to said officers to vote or represent on behalf of this corporation or
corporations may be exercised either by such officers in person or by any
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<PAGE>
person authorized so to do by proxy or power of attorney duly executed by said
officers.
Section 8. INSPECTION OF BY-LAWS. The corporation shall keep in its
principal office for the transaction of business the original or a copy of the
By-Laws as amended, or otherwise altered to date, certified by the secretary,
which shall be open to inspection by the shareholders at all reasonable times
during office hours.
ARTICLE VI.
Amendments
Section 1. POWER OF SHAREHOLDERS. New By-Laws may be adopted or these
By-Laws may be amended or repealed by the vote of shareholders entitled to
exercise a majority of the voting power of the corporation or by the written
assent of such shareholders.
Section 2. POWER OF DIRECTORS. Subject to the right of shareholders as
provided in Section 1 of this Article VI to adopt, amend or repeal By-Laws,
By-Laws other than a By-Law or amendment thereof changing the authorized number
of directors may be adopted, amended or repealed by the board of directors.
Section 3. ACTION BY DIRECTORS THROUGH CONSENT IN LIEU OF MEETING. 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 the members of the board or of such
committee. Such written consent shall be filed with the minutes
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<PAGE>
of proceedings of the board or committee.
/s/ Illegible
--------------------------------
Secretary
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FILED #C5232-99
MAR 05 1999
IN THE OFFICE OF
/s/ DEAN HELLER
DEAN HELLER SECRETARY OF STATE
ARTICLES OF INCORPORATION
OF
DESERT WEST MARKETING, INC.
* * * * *
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:
DESERT WEST MARKETING, INC.
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:
I. [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.
II. [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.
III. [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
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<PAGE>
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.
ARTICLE FOUR. [CAPITAL STOCK]. The corporation shall have authority to
issue an aggregate of TEN MILLION (10,000,000) Common Capital Shares, PAR VALUE
ONE MILL ($0.001) per share for a total capitalization of TEN THOUSAND DOLLARS
($10,000.00).
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 name and address of the first Board of Director is:
NAME ADDRESS
---- -------
Richard Reincke 1301 Dove Street, Suite 460
Newport Beach, California 92660
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.
2
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<PAGE>
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.
ARTICLE TEN. [STOCKHOLDERS' MEETINGS]. Meetings 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 (l0%) 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
3
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<PAGE>
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 4th day of March, 1999.
/s/ Amanda Cardinalli
---------------------------
AMANDA CARDINALLI
STATE OF NEVADA }
: ss.
COUNTY OF WASHOE }
On the 4th day of March, 1999, before me, the undersigned, a Notary Public
in and for the State of Nevada, personally appeared AMANDA CARDINALLI, known to
me to be the person described in and who executed 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.
/s/ Margaret A. Oliver
-------------------------
NOTARY PUBLIC
Residing in Reno, Nevada
--------------------------------------------------
My Commission Expires: MARGARET A. OLIVER
October 10, 2002 [SEAL] Notary Public - State of Nevada
Appointment Recorded in Washoe County
No. 94-5323-2 - EXPIRES OCT. 10, 2002
--------------------------------------------------
4
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<PAGE>
[STAMP]
FILED #C5232-99
MAR 05 1999
IN THE OFFICE OF
/s/ DEAN HELLER
DEAN HELLER SECRETARY OF STATE
CONSENT TO SERVE AS RESIDENT AGENT
The Nevada Agency and Trust Company, located at 50 West Liberty Street,
Suite 880, Reno, Nevada 69501, hereby consents to serve as Resident Agent in the
State of Nevada for the following Corporation:
DESERT WEST MARKETING, INC.
We understand that as agent for the Corporation, it will be our
responsibility to receive service of process in the name of the Corporation; to
forward all mail to the Corporation; and to immediately notify the office of the
Secretary of State in the event of our resignation, or of any changes in the
registered office of the corporation for which we are an agent.
IN WITNESS WHEREOF, the undersigned authorized representative of The Nevada
Agency and Trust Company has hereunto affixed her signature at Reno, Nevada this
4th day of March, 1999.
/s/ Amanda Cardinalli
---------------------------
AMANDA CARDINALLI
STATE OF NEVADA }
: ss.
COUNTY OF WASHOE }
On the 4th day of March, 1999, before me, the undersigned, a Notary Public
in and for the State of Nevada, personally appeared AMANDA CARDINALLI, known to
me to be the person described in and who executed 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.
/s/ Margaret A. Oliver
-------------------------
NOTARY PUBLIC
Residing in Reno, Nevada
--------------------------------------------------
My Commission Expires: MARGARET A. OLIVER
October 10, 2002 [SEAL] Notary Public - State of Nevada
Appointment Recorded in Washoe County
No. 94-5323-2 - EXPIRES OCT. 10, 2002
--------------------------------------------------
5
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> MAR-05-1999
<PERIOD-END> MAR-31-1999
<CASH> 10,000
<SECURITIES> 1,650
<RECEIVABLES> 0
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0
0
<COMMON> 1,650
<OTHER-SE> 0
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