UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
PACIFICTRADINGPOST.COM, INC.
(Name of Small Business Issuer in its charter)
Nevada 91-1944323
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
7402 Mount Joy Drive, Unit B, Huntington Beach, CA 92648
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714)404-2278
Securities to be registered under Section 12(b) of the Act:
_______________________________________
(Title or class)
Securities to be registered under Section 12(g) of the Act:
Title of each class Name of each exchange on which
To be so registered each class is to be registered
Common Stock OTC Bulletin Board
------------ -------------------
_______________________________________
(Title or class)
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TABLE OF CONTENTS
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PART I. Alternative 2 "Transitional Disclosure Format" Page
Items 6-12 of Model B of 1A
ITEM 6. DESCRIPTION OF BUSINESS 3-8
ITEM 7. DESCRIPTION OF PROPERTY 8
ITEM 8. DIRECTORS, EXECUTIVE OFFICERS, SIGNIFICANT EMPLOYEES 8-9
ITEM 9. REMUNERATION OF DIRECTORS AND OFFICERS 9
ITEM 10. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS 9-10
ITEM 11. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 10
ITEM 12. SECURITIES BEING OFFERED 10
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS 11
ITEM 2. LEGAL PROCEEDINGS 11-12
ITEM 3. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 12
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES 12
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS 13
PART F/S
ITEM 1.. FINANCIAL STATEMENTS AND EXHIBITS 13-92
PART III
Item 1. Index to Exhibits
Item 2. Description of Exhibits
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PART I
(Alternative 2 "Transitional Disclosure Format" Items 6-12 of Model B of 1A)
ITEM 6. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
Natural Born Carvers, Inc. was Incorporated on March 22, 1996 under the
laws of the State of Colorado under the name Eyre Trading Group, Ltd. As a
Colorado corporation. On May 8, 1997, the Board of Directors approved a name
change which was filed with the Secretary of State. The name change became
effective May 8, 1997 and the Company name became Natural Born Carvers, Inc. On
May 21, 1998, the Company changed its name from Natural Born Carvers, Inc. to
Carve Industries Incorporated. On November 25, 1998, the Company changed its
name to CARV.COM, INC., and effective March 19, 1999 changed its name to
PacificTradingPost.com, Inc and domicile to Nevada. The Company Pursuant to the
Articles of Incorporation, the Company is authorized to issue 50,000,000 shares
of Common Stock at $.001 par value. As of February 24, 2000 there are 1,033,840
shares of Common Stock outstanding.
The Company is a internet retailer of consumer products devoted to the
extreme sports industry, including surfing, snowboarding and skateboarding. As
the pioneer of online action sports sales, the Company is well positioned in
this profitable sector of e-commerce and benefits from strong market share. Key
elements contributing to the Company's success in online sales include a popular
Internet store (SSS online). The online sales reduce overhead by nearly fifty
percent and generates a forty-sixty percent gross profit margin.
PRODUCTS AND SERVICES
SkateSurfSnow.com, (SSS, e-commerce), is the official merchandising
Internet website, carrying core action sports products, the latest hard and soft
goods, apparel and accessories available in the market. SSS online allows
consumers from all over the world to preview the merchandise, place orders, and
have orders shipped by UPS anywhere.
SkateSurfSnow, the Store (SSS, the Store), is the Company's 2700 square
foot traditional retail store, carrying core action sports products, the latest
hard and soft goods, apparel and accessories available in the market. SSS, the
Store, is located in Huntington Beach, California, one block in from the Pacific
Ocean, in the heart of the skate, surf and snow industries.
STRATEGIC ALLIANCES
The Company is allied with Yahoo, who provides the E-Commerce solution for
its Web storefront. The Company jointly sponsors surf and skate competitions and
demonstrations with leading manufacturers in the industry.
Suppliers of the Company include, but are not limited to: Roxy by
Quicksilver, O'Neill, Rip Curl, HIC (Hawaiian Island Creations), Gotcha,
Birdhouse, Toy Machine, World Industries, DC, Etnic, ES, Globe, Vans, Girl Star,
Gnu, Morrow, Sims, and Northwave. These vendor relationships are in excellent
standing which makes the Company a priority to the manufacturers.
LACK OF OPERATIONS AND PROFITABILITY
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The Company commenced operations approximately four years ago and has
little or no history of operations or profits in the industries in which it
participates.
NEED FOR ADDITIONAL FINANCING
The Company will require additional financing in order to establish
profitable, ongoing operations; there is no assurance that such financing will
be available or, if available, that it can be obtained on terms favorable to the
Company.
DEPENDENCE ON MANAGEMENT
The Company is largely dependent upon the efforts and abilities of
management. However, management has not yet been successful in operating
PacificTradingPost.com, Inc. at a profit, and has no experience in operating a
profitable sports company, nor sports companies on a long-term basis. There is
no assurance that management will be able to manage the Company's transition
from start-up to a profitable company.
COMPETITION
The Company is subject to competition from a number of other companies that
provide the same or similar services. Some of these competitors have been in
the business longer than PacificTradingPost.com, Inc. and may have large
executive and operating staffs. There can be no assurance that the Company's
prospects will not be adversely affected by competition from these companies.
Many of its competitors are well established and have greater financial and
personnel resources than the Company.
OPERATIONS
The Company cannot project with certainty the outcome of its operations.
There are no assurances that the Company will operate profitably.
ECONOMIC RISKS
Local, national and international economic conditions may have a
substantial adverse affect on the efforts of the Company. The Company cannot
guarantee against the possible eventuality of any of these potential adverse
conditions.
PLAN OF OPERATION
The Company intends to be the premier extreme sports e-commerce firm,
currently serving the fast growing skateboard, surfing and snowboard markets.
The Company is the first fully authorized Internet retailer in the industry,
marketing and selling sports related equipment, apparel and accessories.
Additionally, the Company promotes and supports the industry with its training
facility and websites designed to appeal to this affluent market segment, along
with event and team sponsorships and a traditional retail store located in the
heart of the skate, surf and snow capitol of the world, Huntington Beach,
California.
Over the next twelve months, the Company intends on expanding its product
line, increasing website traffic, and generating additional revenue by: (1)
expanding SkateSurfSnow.com ("SSS"), e-commerce and SkateSurfSnow ("SSS"), the
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Store product offerings and sales through the acquisition of specialty
manufacturing and marketing firms catering to the extreme sports industry; (2)
cutting costs associated with buying from intermediate wholesalers; (3)
introducing mainstream e-commerce goods by negotiating with online auctions.
EMPLOYEES
The Company has two full time employees and four part time personnel. The
Company anticipates that the business plan of the Company can be implemented
through the efforts of Frank Drechsler, President and CEO of the Company. See
"ITEM 8 - DIRECTORS, EXECUTIVE OFFICERS, SIGNIFICANT EMPLOYEES."
GENERAL BUSINESS PLAN
The Company's mission is to be the premier extreme sports e-commerce firm,
currently serving the fast growing skateboard, surfing and snowboard markets.
The Company actively encourages consumers to participate in these sports and
currently has a number of cross-promotional events planned with industry
leaders. The Company's goal is to expand exponentially by increasing its
inventory, implementing more marketing and promotional ideas, increase website
traffic and generate additional revenue.
With a whole new look, more products, and solid Internet exposure, the
Company is positioned to experience phenomenal growth in the new millennium.
The Company currently implements a strong sales and promotional strategy,
focusing on superior cross marketing opportunities provide for greater profit
margins, sponsoring competitions, events, high profile and recognized
competitors as well as local amateurs in each category. The Company will focus
on media advertisements and mailers, along with being included in manufacturers'
advertisements, attend consumer trade shows and, of course, utilize the web
sites as a promotional utility vehicle.
The Company realizes that the World Wide Web represents the future of
direct marketing. The Company intends to implement aggressive and innovative
online marketing techniques in order to improve top and bottom line results.
The Company will focus on e-commerce to target the expanding action sports
market, and will offer the young enthusiasts event coverage, contest results,
review of industry leaders, reference guides, athlete profiles, links to various
key sites and much more.
The size of Internet commerce, as measured by University of Texas Center
for Research in Electronic Commerce, was approximately $102 billion in 1998.
the total of all Internet economy indicators was over $301 billion during that
same period. The Internet economy, grew at an estimated rate of 174.5% from
1995 to 1998, compared to the overall world-wide average economic growth rate
(which includes the United States Internet economy) of 3.8%. This puts the
Company and its subsidiaries in an ideal position by maintaining a traditional
retail store and keeping up with rapidly growing, technology age and the World
Wide Web E-Commerce shopping explosion that is happening throughout the world.
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ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, reorganization, joint venture,
franchise or licensing agreement with another corporation or entity. It may
also purchase stock or assets of an existing business. On the consummation of a
transaction, it is possible that the present management and shareholders of the
Company will not be in control of the Company. In addition, a majority or all
of the Company's officers and directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new officers and directors
without a vote of the Company's shareholders.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance on exemptions from registration under applicable Federal and
state securities laws. In some circumstances, however, as a negotiated element
of this transaction, the Company may agree to register such securities either at
the time the transaction is consummated, under certain conditions or at
specified time thereafter. The issuance of substantial additional securities
and their potential sale into any trading market in the Company's Common Stock
may have a depressive effect on such market. While the actual terms of a
transaction to which the Company may be a party cannot be predicted, it may be
expected that the parties to the business transaction will find it desirable to
avoid the creation of a taxable event and thereby structure the acquisition in a
so called "tax free" reorganization under Sections 368(a)(1) or 351 of the
Internal Revenue Code of 1986, as amended (the "Code"). In order to obtain
tax-free treatment under the Code, it may be necessary for the owners of the
acquired business to own 80% or more of the voting stock of the surviving
entity. In such event, the shareholders of the Company, including past and
current investors, would retain less than 20% of the issued and outstanding
shares of the surviving entity, which could result in significant dilution in
the equity of such shareholders.
As part of the Company's investigation, officers and directors of the Company
will meet personally with management and key personnel, may visit and inspect
material facilities, obtain independent analysis or verification of certain
information provided, check reference of management and key personnel, and take
other reasonable investigative measures, to the extent of the Company's limited
financial resources and management expertise. The manner in which each Company
participates in an opportunity will depend on the nature of the opportunity, the
respective needs and desires of the Company and other parties, the management of
the opportunity, and the relative negotiating strength of the Company and such
other management.
With respect to any mergers or acquisitions, negotiations with target company
management will be expected to focus on the percentage of the Company which
target company shareholders would acquire in exchange for their shareholdings in
the target company. Depending upon, among other things, the target company's
assets and liabilities, the Company's shareholders will in all likelihood hold a
lesser percentage ownership interest in the Company following any merger or
acquisition. The percentage ownership may be subject to significant reduction
in the event that the Company acquires a target company with substantial assets.
Any merger or acquisition effected by the Company can be expected to have a
significant dilative effect on the percentage of shares held by the Company's
then shareholders, including past and current investors.
The Company will not have sufficient funds (unless it is able to raise funds in
a subsequent offering) to undertake any significant development, marketing and
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manufacturing of any products which may be acquired. Accordingly, following the
acquisition of any such product, the Company will, in all likelihood, be
required to either seek debt or equity financing or obtain funding from third
parties, in exchange for which the Company would probably be required to give up
a substantial portion of its interest in any acquired product. There is no
assurance that the Company will be able either to obtain additional financing or
interest third parties in providing funding for the further development,
marketing and manufacturing of any products acquired.
It is anticipated that the investigation of specific business opportunities and
the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys and others. If a
decision were made not to participate in a specific business opportunity the
costs therefore incurred in the related investigation would not be recoverable.
Furthermore, even if an agreement is reached for the participation in a specific
business opportunity, the failure to consummate that transaction may result in
the loss of the Company of the related costs incurred.
Management believes that the Company may be able to benefit from the use of
"leverage" in the acquisition of a business opportunity. Leveraging a
transaction involves the acquisition of a business through incurring significant
indebtedness for a large percentage of the purchase price for that business.
Through a leveraged transaction, the Company would be required to use less of
its available funds for acquiring the business opportunity and, therefore, could
commit those funds to the operations of the business opportunity, to acquisition
of other business opportunities or to other activities. The borrowing involved
in a leveraged transaction will ordinarily be secured by the assets of the
business opportunity to be acquired. If the business opportunity acquired is
not able to generate sufficient revenues to make payments on the debt incurred
by the Company to acquire that business opportunity, the lender would be able to
exercise the remedies provided by law or by contract. These leveraging
techniques, while reducing the amount of funds that the Company must commit to
acquiring a business opportunity, may correspondingly increase the risk of loss
to the Company. No assurance can be given as to the terms or the availability
of financing for any acquisition by the Company. During periods when interest
rates are relatively high, the benefits of leveraging are not as great as during
periods of lower interest rates because the investment in the business
opportunity held on a leveraged basis will only be profitable if it generates
sufficient revenues to cover the related debt and other costs of the financing.
Lenders from which the Company may obtain funds for purposes of a leveraged
buy-out may impose restrictions on the future borrowing, distribution, and
operating policies of the Company. It is not possible at this time to predict
the restrictions, if any, which lenders may impose or the impact thereof on the
Company.
COMPETITION
The market for Internet products and services is highly competitive, with
few substantial barriers to entry, and the Company expects that competition will
continue to intensify and then level off.
The Internet and e-commerce are evolving rapidly with increasing numbers of
market entrants providing competing products and services. Though many
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competitors cater to individual components of the skate, surf or snow segments,
the Company is unaware of any company that has an Internet exposure with the
technology advancements contained within PacificTradingPost.com, Inc.'s ("PTRD")
websites, a traditional retail store that is fully automated.
"Recognizing the success PTRD enjoys, competitors are now trying to emulate
the business focus with minimal results due to the Company's strong market share
and solid alliances." (Investor Facts, June 1999)
The Company's main competitor at this point in time is CCS, primarily a
mail order/catalog company and other local surf shops that are breaking into the
skate and snow industries.
The Company acknowledges that sophisticated sites could build systems and
offer competing products and services. PacificTradingPost.com, Inc. is
committed to using the best available technologies, and will continue to strive
to be the first on the market with leading edge programs, services, and systems
that will be difficult and time consuming for competitors to duplicate.
ITEM 7. DESCRIPTION OF PROPERTY.
The Company currently maintains its office at 7402 Mount Joy Drive, Unit B,
Huntington Beach, CA 92648. The Company pays $3,164.00 rent per month.
SkateSurfSnow, the Store (SSS, the Store), is the Company's 2700 square foot
traditional retail store which is maintained at 22311 Brookhurst Street,
Huntington Beach, CA 92646. The Company pays $2,500.00 rent per month for the
store.
ITEM 8. DIRECTORS, EXECUTIVE OFFICERS, SIGNIFICANT EMPLOYEES
OFFICERS AND DIRECTORS
The following table sets forth certain information concerning each of the
Company's directors and executive officers:
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Name Age Position
Frank Drechsler 33 President Chief Executive Officer,
Secretary
Stacie Genchi 33 Director
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Frank Drechsler has served as President, Chief Executive Officer, and a
Director of the Company since October 29, 1999. Frank Drechsler came to the
Company with an e-commerce background in apparel and sports retailing. He has
held management and sales positions at Fortune 500 and mid-size apparel firms
where he was directly responsible for making international sales of $500,000 per
month. It was through this experience that Mr. Drechsler gained extensive
knowledge of global markets. Mr. Drechsler has a strong ability to develop
e-commerce at PacificTradinPost.com, Inc., a major component of the Company's
future growth. He has a Bachelor of Arts degree in International Business from
California State University, Fullerton.
Stacie Genchi, Board Member, came to PTRD as a consultant. Ms. Genchi is
well connected in the skate, surf, and snow industries. In 1995 Ms. Genchi
opened up the first skate, surf, and snow store catering to the female market
and is considered a pioneer for the female movement in these extreme sports. Ms.
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Genchi is heavily involved with the marketing, sales, and operations of the
store, as well as event promotions. She is an avid snowboarder who has traveled
extensively throughout the USA and Canada. She has developed an in depth
knowledge of skateboarding, snowboarding, and surfing especially as it relates
to the female consumer, the fastest growing segment of the extreme sports
market. Ms. Genchi received a Bachelor of Science Degree in Computer Science
from California State University, Fullerton and has professionally worked over
15 years in the computer industry.
INVESTMENT COMPANY ACT OF 1940
Although the Company will be subject to regulation under the Securities Act
of 1933 and the Securities Exchange Act of 1934, management believes the Company
will not be subject to regulation under the Investment Company Act of 1940
insofar as the Company will not be engaged in the business of investing or
trading in securities. In the event the Company engages in business
combinations which result in the Company holding passive investment interests in
a number of entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be required to
register as an investment company and could be expected to incur significant
registration and compliance costs. The Company has obtained no formal
determination from the Securities and Exchange Commission as to the status of
the Company under the Investment Company Act of 1940 and, consequently, any
violation of such Act would subject the Company to material adverse
consequences. The Company presently desires to be exempt from the Investment
Company Act of 1940 via Regulation 3a-2 thereto.
INVESTMENT ADVISOR ACT OF 1940
The Company is not an "investment adviser" under the Federal Investment
Adviser Act of 1940, which classification would involve a number of negative
considerations. Accordingly, the Company will not furnish or distribute advice,
counsel, publications, writings, analysis or reports to anyone relating to the
purchase or sale of any securities within the language, meaning and intent of
Section 2(a)(11) of the Investment Adviser Act of 1940, 15 U.S.C.
ITEM 9. REMUNERATION OF DIRECTORS AND OFFICERS
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
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Other Restricted
Annual Stock
Name & Title Year Salary Compensation Awarded
- ---- ----- ---- ------ ------------ -------
Frank
Drechsler, PRES., 1999 $60,000 $25,000 -1000-
No retirement, pension, profit sharing, stock option or insurance programs or
other similar programs have been adopted by the Company for the benefit of its
employees.
ITEM 10. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of February 23, 2000
regarding the beneficial ownership of the Company's Common Stock by (i) each
stockholder known by the Company to be the beneficial owner of more than 10% of
the Company's Common Stock, (ii) by each Director and executive officer of the
Company and (iii) by all executive officer and Directors of the Company as a
group. Each of the persons named in the table has sole voting and investment
power with respect to Common Stock beneficially owned.
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Number of Percentage of
Shares Owned Shares owned
Officers and Directors
Frank Drechsler, President & CEO 115,200 0.11%
Restricted
Stacie Genchi, Director 2,000 0.002%
Restricted
Officers and Directors as a group 117,200 0.11%
Beneficial Owners as a group 225,000 0.21%
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ITEM 11. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During the year, the Company paid professional fees in amount of $31,453 to
a director of the Company (for the year ended June 30, 1998 - NIL), and
consulting fees in the amount of $56,417 to a director of the Company (for the
year ended June 30, 1998 - NIL).
Long term debt in amount of $68,800 (for the year ended June 30, 1998 -
NIL) from a director and a former director of the Company. (Note 4 of the
audited financial statements)
Due from related party in amount of $4,000 (for the year ended June 30,
1998 - NIL) is from a former director of the Company. Subsequent to the June
30, 1999, the amount has been repaid.
Reference: Part F/S item 11 of Consolidated Financial Statements
ITEM 12. SECURITIES BEING OFFERED
COMMON STOCK
The Company has authorized 50,000,000 million (50,000,000) shares of Common
Stock at $.001 par value. The holders of Common Stock (1) have equal ratable
rights to dividends from funds legally available thereof, when as and if
declared by the Board of Directors of the Company; (2) are entitled to share
ratably in all of the assets of the Company available for distribution to
holders of Common Stock upon liquidation, dissolution or winding up of the
affairs of the Company; (3) do not have preemptive, subscription or conversion
rights and there are no redemption or sinking fund provisions applicable
thereto; and (4) are entitled to one cumulative vote per share on all matters
which shareholders may vote on at all meetings of shareholders. All shares of
Common Stock now outstanding are fully paid for and non-assessable. As of
February 24, 2000, there are 1,033,840 shares of Common Stock outstanding.
<PAGE>
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock has been trading since April 1998. The Company
is currently trading on the NQB Pink Sheets under the symbol PTRD and plans on
having its Common Stock listed on the OTC Bulletin Board. There is no assurance
that a trading market that the Company currently has will continue.
As of February 23, 2000, the number of holders of the Company's Common
Stock was 583.
DIVIDEND POLICY
The payment by the Company of dividends, if any, in the future rests within
the discretion of the Board of Directors and will depend, among other things,
upon the Company's earnings, its capital requirements and its financial
condition as well as other relevant factors. The Company has not paid or
declared any dividends, and in light of its present financial status, and due to
its contemplated financial requirements, does not contemplate or anticipate
paying any dividends on its Common Stock in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS.
The Company is currently the subject of a default judgement issued by the
Los Angeles Superior Court on July 20, 1999.
The underlying action arose from a contract entered into by one of the Company's
acquisitions "Gellis Inc." The plaintiff Ross Williams is a professional surfer
who was to promote Gellis Inc.'s line of shoes.
Gellis Inc. failed to pay per the terms of the contract resulting in the default
judgement for $87,157.30.
The company is currently evaluating options to attack the default and or
negotiate a settlement for a reduced amount.
The Company is currently a party to an American Arbitration Assoc.
(AAA)Arbitration pending in New York. The action was initiated on January 20,
1998 and is a dispute over the conversion of certain convertible securities
issued by the company under its January 2, 1998 504 offering (reference Item 4
and Exhibit 99 i) to Zooley Services Limited, Mercaz Revaj S.A. and Primecap
Management, all off shore entities.
It is the Company's position that the shares were converted per the terms of the
instruments and were satisfied in full by those conversions.
Currently the arbitration is suspended on a procedural issue and no hearing
dates are set.
The claimants seek $500,000.00 plus costs penalties and liquidated damages.
<PAGE>
Negotiation for settlement has narrowed several issues, claimants have
acknowledged converting 500,000 shares of the Company's common stock as payment.
Calculation of value and time of conversion is a central issue. Management
believes that if an unfavorable ruling is received the company's exposure could
be approximately $120,000.00. A favorable ruling could result in an award in
favor of the company, however to date no counter claim has been sought.
The Company is currently a party to action in the superior court of San
Diego, North Court Division.
The plaintiff Greg and Olivia Johnson seek to recover $25,000.00 plus interest
on a Note due September 1, 1999.
The Note is part of the acquisition of Gellis Inc. Gellis Inc. was acquired in
1998.
The company is reluctant to pay the note over concerns that the principles of
Gellis Inc. including Greg and Olivia Johnson misrepresenting the financial
condition of the company at the time of acquisition.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company changed its accountant from Merle Finkel to Ma Nguyen since its
formation due to the following reason: Merle Finkel no longer performs SEC
audits.
Reference: Exhibit 16
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
On January 2, 1998, the Company commenced an offering, pursuant to Regulation D
of the Securities Act of 1933 (the "Act"), Rule 504, of up to 1,000,000 shares
of its common stock at a price of $1.00 per share. This offering was completed
with 500,000 shares being sold and issued for a total of $484,359.00 in net cash
being received by the Company. The proceeds from this offering were used for
working capital to support product lines controlled by the company. Specifically
NBC clothing line, Outcast Wetsuits, Springbok Tents, Gellis Shoe Company and
Xsport Online Internet Store. Also to pay off back debts incurred by acquired
company Gellis Inc. Legal, accounting fees, consulting fees and office
equipment.
On January 21, 1999, the Company commenced an offering, pursuant to Regulation D
of the Securities Act of 1933 (the "Act"), Rule 504, of up to 75,864 shares of
its common stock at a price of $12.50 per share. On April 7, 1999, this offering
was completed with all shares being sold and issued for a total of $948,300.00
in cash and services being received by the Company. The proceeds from this
offering were used for working capital, legal and accounting fees, consulting
fees and office equipment. Working capital of $459,000.00 for inventory,
tradeshows, office lease for Xsports Internet Store and newly acquired line
Clockwork Skateboards. In addition to cash raised shares were issued for the
acquisition of Pacifictradingpost.com Corporation 6,750 shares, Internet web
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design services 4,000 shares, Internet Marketing and Consulting 23,548 shares
and Investment Banking services 4,846 shares.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company shall indemnify to the fullest extent permitted by, and in the
manner permissible under the laws of the State of Indiana, any person made, or
threatened to be made, a party to an action or proceeding, whether criminal,
civil, administrative or investigative, by reason of the fact that he is or was
a director or officer of the Company, or served any other enterprise as
director, officer or employee at the request of the Company. The Board of
Directors, in its discretion, shall have the power on behalf of the Company to
indemnify any person, other than a director or officer, made a party to any
action, suit or proceeding by reason of the fact that he/she is or was an
employee of the Company.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE COMPANY FOR LIABILITIES
ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE AGAINST PUBLIC POLICY BY
THE SECURITIES AND EXCHANGE COMMISSION AND IS THEREFORE UNENFORCEABLE.
PART F/S
The following financial statements of the Company are filed as part of this
Report:
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Auditors Report F-1
Balance Sheet as of June 30, 1999 F-2
Statement of Changes in Stockholders' Equity
For the Period From (Inception) October 7,
1996, through March 31, 1999 F-2
Statements of Operations and Deficit, For the
Years Ended June 30, 1999 and 1998 F-3
Statements of Cash Flows, For the
Years Ended June 30, 1999 and 1998 F-5
Notes to Financial Statements, For the
Years Ended June 30, 1999 and 1998 F-6
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AUDITORS REPORT
To the Board of Directors
PacificTradingPost.com, Inc.
We have audited the consolidated balance sheet of PacificTradingPost.com, Inc.
as of June 30, 1999 and June 30, 1998 and the consolidated statements of
operations and deficit and cash flows for the year ended June 30, 1999 and June
<PAGE>
30, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
Except as explained in the following paragraph, we conducted our audits in
accordance with generally accepted auditing standards. Those standards require
that we plan and perform an audit to obtain reasonable assurance 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.
Since the accounts receivable system in one of its significant subsidiaries,
Gellis Inc. (d.b.a. Pure Juice) was not kept on an orderly basis, we were unable
to confirm or verify by alternative means accounts receivable included in the
consolidated financial statements for the fiscal year ended June 30, 1998.
Since opening accounts receivable enter into the determination of the results
for operations and changes in cash flows for the year ended June 30, 1998, we
were unable to determine whether adjustments to accounts receivable, income
taxes, net income for the year, opening deficit and cash provided from
operations might be necessary for the year ended June 30, 1998.
In our opinion, except for the effects of adjustments, if any, on the financial
statements for the year ended June 30, 1999 and June 30, 1998 which we might
have determined to be necessary had we been able to confirm the accounts
receivable specified in the preceding paragraph, these consolidated financial
statements present fairly, in all material respects, the financial position of
the Company as of June 30, 1999 and June 30, 1998 and the results of its
operations and cash flows for the year ended June 30, 1999 and June 30, 1998 in
accordance with generally accepted accounting principles.
/s/ Nguyen & Co.
Chartered Accountants
Vancouver, BC, Canada
January 18, 2000
PacificTradingPost.com, Inc.
Balance Sheet
<TABLE>
<CAPTION>
PacificTradingPost.com, Inc.
Balance Sheet
June 30, 1999 June 30, 1998
<S> <C> <C>
Assets
Current Assets:
Cash $ 8,019 $ 43,820
Accounts receivable 1,275 168,897
Due from related party (note 11(c)) 4,000 --
Inventories -- 250,000
Prepaid and deposits 3,014 850
--------------- ---------------
Total current assets 16,308 463,567
Capital assets (note 3) $ 13,526 $ 396,851
--------------- ---------------
Total assets $ 29,834 $ 860,418
--------------- ---------------
<PAGE>
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Demand bank loan $ -- $ 510,019
Accounts payable and accrued liabilities 777,664 1,055,634
Current Portion of Long term debt (note 4) 1,066,769 1,163,565
--------------- ---------------
Total current liabilities 1,844,433 2,729,218
Long term debt (note 4) 68,800 --
Shareholders' deficit (note 5)
Not issued and fully paid - common stock
(note 10 8,000 258,618
Preferred stock 4,950,000 5,500,000
Common stock 584 5,744
Additional paid-in capital 4,067,911 1,515,177
Deficit (10,909,894) ( 9,148,339)
--------------- ---------------
Total shareholders' deficit (1,883,399) (1,868,800)
Total liabilities and shareholders' equity
(deficit) $ 29,834 $ 860,418
--------------- ---------------
See accompanying notes to consolidated financial statements
PacificTradingPost.com, Inc.
Statement of Operations and Deficit
June 30, 1999 June 30, 1998
SALES $ 212,265 $ 628,246
COST OF SALES 399,487 925,658
--------------- ---------------
(187,222 (297,412)
OPERATING EXPENSES
Accounting and legal 31,767 60,659
Advertising and promotion 295,123 457,422
Bad debts 10,624 126,865
Bank charges and interest 132,656 145,843
Depreciation 4,188 3,872
General and administrative expenses 736,966 573,742
Rent 44,951 30,989
Wages 192,193 370,005
--------------- ---------------
1,448,468 1,769,397
--------------- ---------------
LOSS BEFORE THE FOLLOWING ITEMS (1,635,690) (2,066,809)
GAIN ON SETTLEMENT OF DEBTS 255,678 --
WRITE OFF OF GOODWILL -- (1,700,373)
WRITE OFF OF PATENTS -- (105,000)
<PAGE>
WRITE OFF OF CAPITAL ASSETS (1,543) (45,642)
WRITE OFF OF NOTE RECEIVABLE -- (5,095,000)
WRITE DOWN OF LAND (note 1 & 3) (380,000) (135,515)
--------------- ---------------
NET LOSS FOR THE YEAR (1,761,555) (9,148,339)
RETAINED EARNINGS (LOSS), BEGINNING OF YEAR (9,148,339) --
--------------- ---------------
RETAINED EARNINGS (LOSS), END OF YEAR $ (10,909,894) $ (9,148,339)
--------------- ---------------
PacificTradingPost.com, Inc.
Statement of Cash Flows
June 30, 1999 June 30, 1998
OPERATING ACTIVITIES
Net loss for the year $ (1,761,555) $ (9,148,339)
Adjustments for items not affecting cash:
Depreciation 4,188 3,872
Gain on settlement of debts ( 118,000) --
Write off of goodwill -- 1,700,373
Write off of patents -- 105,000
Write off of note receivable -- 5,095,000
Write down of land 380,000 135,515
Write off of capital assets 1,543 45,642
--------------- ---------------
(1,493,824) (2,062,937)
Changes in non-cash working capital items ( 376,532) 1,199,171
--------------- ---------------
Cash used in operating activities (1,870,356) ( 863,766)
INVESTING ACTIVITIES
Acquisition of subsidiaries -- (1,154,849)
Acquisition of business -- --
Acquisition of rights -- ( 90,000)
Acquisition of capital assets ( 2,405) ( 8,078)
Acquisition of patents -- ( 105,000)
--------------- ---------------
Cash used in investing activities ( 2,405) (1,357,927)
--------------- ---------------
FINANCING ACTIVITIES
Issuance of capital stock 2,547,574 1,518,630
Not issued and fully paid for (250,618) 258,618
Conversion of Preferred to Common ( 550,000) --
Decrease of long term deb 90,004 484,037
--------------- ---------------
Cash from investing activities 1,836,960 2,261,285
--------------- ---------------
(DECREASE) INCREASE IN CASH DURING THE PERIOD ( 35,801) 39,592
CASH, BEGINNING OF THE PERIOD 43,820 4,228
--------------- ---------------
CASH, END OF THE PERIOD $ 8,019 $ 43,820
--------------- ---------------
</TABLE>
<PAGE>
PacificTradingPost.com, Inc.
Notes to Consolidated Financial Statements
1. Nature of operations and going concern
Natural Born Carvers, Inc. was incorporated on March 22, 1996 under the
laws of the State of Colorado.
On May 21, 1998, the Company changed its name from Natural Born Carvers,
Inc. to Carv Industries Incorporated. On November 25, 1998, the Company
changed its name to CARV.COM, Inc., and effective March 19, 1999 changed
its name to PacificTradingPost.com, Inc.
The Company is a designer, manufacturer and distributor of consumer
products devoted to the extreme sports industry, including surfing, body
boarding, and skateboarding.
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles, which contemplates continuation
of the Company as a going concern. The Company's ability to continue as a
going concern is dependent upon the ability of management to obtain
sufficient financing, and ultimately achieving profitability.
On December 22, 1998, the company reverse split its common shares on a 25:1
basis.
The Company was in default of its long-term debt in the amount of $100,000
as disclosed in notes 3 and 4 and with respect to its acquisition of a
parcel of land located in Perris, California. The creditor has foreclosed
on the property and seized the land.
During the year, the Company disposed its subsidiary, Springbok, Inc. and
its patents to an officer of the Company for the following consideration:
(i) 4,000 restricted common shares of the Company;
(ii) royalty of 6% of the gross sales by Springbok,Inc. up to $200,000
2. Significant accounting policies
(a) Basis of presentation
These consolidated financial statements have been prepared using the
purchase method of consolidation, whereby the assets and liabilities
of the acquired companies are initially recorded at their cost and the
results of operations of the acquired companies are included from the
dates of acquisition.
The following subsidiaries' assets, liabilities and operating results
are included in these consolidated financial statements: Springbok
Incorporated and Gellis Inc.
(b) Depreciation
<PAGE>
Capital assets are recorded at cost and depreciated over their
estimated useful lives. Depreciation is provided on a straight line
basis as follows:
Office equipment 20%
Computer equipment 30%
Significant capital assets additions are depreciated when placed into
use.
(c) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets,
particularly the recoverability of accounts receivable, capital and
intangible assets and accrued liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reported period. Actual results could differ from estimates.
(d) Fair value of financial instruments
The carrying value of certain of the Company's financial instruments,
including cash, accounts receivable and accounts payable and accrued
liabilities approximates fair value due to their short maturity. It is
management's position that the Company is not exposed to significant
interest, currency or credit risks arising from these financial
instruments.
(e) Uncertainty due to the Year 2000 Issue
The Year 2000 issue arises because many computerized systems use two
digits rather than four to identify a year. Date sensitive systems may
recognize the year 2000 dates as 1900 or some other date, resulting in
errors when information using year 2000 dates is processed. In
addition, similar problems may arise in some systems which use certain
dates in 1999 to represent something other than a date. The effects of
the Year 2000 issue may be experienced before, on, or after January 1,
2000, and if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure
which could affect an entity's ability to conduct normal business
operations. It is not possible to be certain that all aspects of the
Year 2000 issue affecting the entity, including those related to the
efforts of customers, suppliers, or other third parties, will be fully
resolved.
(f) Income taxes
The Company follows Statement of Financial Standards No. 109 ("SFAS
109"), "Accounting for income taxes," which requires the Company to
recognize deferred tax assets and liabilities for future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. In addition, SFAS 109 requires recognition
of future tax benefits such as net operating loss carry forwards, to
the extent that realization of such benefits is more likely than not.
Accordingly, the Company has established a policy of 100% valuation
allowance
<PAGE>
against any deferred assets resulting principally from net operating
loss carry forwards until it is more likely than not that the Company
will realize taxable income.
3. Capital assets
<TABLE>
<CAPTION>
June 30, 1999 June 30, 1999
<S> <C> <C>
Land (note 1) $ -- $ 380,000
Office equipment 16,129 15,267
Computer equipment 5,456 5,456
----------------- ---------------
21,585 400,723
Less accumulated depreciation (8,059) (3,872)
----------------- ---------------
Net book value $ 13,526 $ 396,851
4. Long Term Debt
June 30, 1999 June 30, 1998
Non-interest bearing loan without
Specific terms of repayment from
Related parties (note 11(b)) $68,800 $ --
Loan bearing interest at the rate
of 15% per annum secured by land
(note 1) $ -- $ 100,000
Loan bearing interest at the rate
of 10% per annum 1,066,769 1,063,565
----------------- ---------------
The Company currently is in default
On all its long term debts 1,135,569 1,163,565
Less current portion (1,066,769) (1,163,565)
$ 68,800 $ --
----------------- ---------------
</TABLE>
5. Capital Stock
(a) The authorized capital stock of the Company consists of 50,000,000
common shares with a par value of $.001, and 1,500,000 Convertible
Class B preferred shares with a par value of $5.00.
(b) The issued and outstanding preferred shares of the Company are as
follows:
<TABLE>
<CAPTION>
Preferred
Shares Amount
--------- ----------
<S> <C> <C>
Balance, beginning of the period 1,100,000 $5,500,000
Conversion from preferred to common 110,000 550,000
Balance, end of the year 990,000 $4,950,000
</TABLE>
(c) The issued and outstanding common shares of the Company are as
follows:
<TABLE>
<CAPTION>
Additional
Common Par Paid in
Shares Value Capital
----------- ------------- ----------
<S> <C> <C> <C>
Balance, beginning of the year 5,744,000 $ 5,744 $1,515,177
Issued during the year
(Pre-Reverse Split)
<PAGE>
Cash 1,336,623 1,337 477,281
Acquisition of business 509,816 510 509,306
Services 2,523,450 2,523 249,822
----------- ------------- ----------
Balance, before 25:1 Reverse Split 10,113,889 10,114 2,751,586
25:1 Reverse split on Dec. 22, 1998 404,567 404 2,761,296
Issued during the year
(Post-Reverse Split)
Cancellation of shares (32,144) (32) (3,182)
Private Placement 120,708 121 435,335
Conversion of debt 55,000 55 549,945
Services 35,806 36 324,517
----------- ------------- ----------
Balance, end of the year 583,937 $ 584 $3,572,910
</TABLE>
6. Contingent Liability
The Company has been named defendant in an arbitration in the amount of
$500,000, arising from the Company's alleged failure to timely convert
certain debentures and breach of certain provisions contained therein,
along with penalties, interest, and liquidated damages. In the opinion of
management, this claim is without substantial merit and no provision has
been made for these claims in the accounts. However, should any loss result
from the resolution of this claim, such loss would be charged to earnings
in the period in which it occurs.
7. Loss per share
Basic loss per share for the year ended June 30, 1999 was $6.59 (for the
year ended June 30, 1998 - $65.80). The basic loss per share figures is
calculated using the weighted average number of shares outstanding during
the year 267,218 (for the year ended June 30, 1998 - 139,042) taken into
account the 25:1 reverse split on December 22, 1998.
8. Dividend Policy
The Company does not anticipate paying dividends until the Company becomes
profitable.
9. Subsequent events
Gellis, Inc. (d.b.a. Pure Juice) Bankruptcy
During the year, the Company's subsidiary, Gellis, Inc. (d.b.a. Pure Juice)
filed for Chapter 7 bankruptcy protection in the United States Bankruptcy
Court, Southern District of California. On January 10, 2000, United States
Bankruptcy Court, Southern District of California, ordered that the
Debtor's Motion to Dismiss Chapter 7 Bankruptcy be granted for Gellis, Inc.
10. Not Issued and Fully Paid - Common Stock
The Company received $8,000 (June 30, 1998 - $258,618) with respect to a
private placement of common stock which has been completed subsequent to
the year ended.
<PAGE>
11. Related Parties Transactions
(a) During the year, the Company paid professional fees in the amount of
$31,453 to a director of the Company (for the year ended June 30, 1998
- NIL), and consulting fees in the amount of $56,417 to a director of
the Company (for the year ended June 30, 1998 - NIL).
(b) Long term debt in amount of $68,800 (for the year ended June 30, 1998
- NIL) from a director and a former director of the Company. (Note 4)
(c) A receivable in the amount of $4,000 (for the year ended June 30, 1998
- NIL) is due from a former director of the Company. Subsequent to the
June 30, 1999, the amount has been repaid.
12. Commitments
The Company has entered into an operating lease for its premises. The lease
expires on October 2002. The Company is committed to the following minimum
lease payments.
<TABLE>
<CAPTION>
Year Amount
<S> <C>
2000 $15,000
2001 $15,000
2002 $15,000
2003 $15,000
</TABLE>
13. Comparative Figures
Certain comparative figures from the prior period audited financial
statements have been reclassified to conform to the financial statement
presentation used in the current year.
(b) Interim Financial Statements
<TABLE>
<CAPTION>
PACIFICTRADINGPOST.COM, INC.
Consolidated Balance Sheet
(Expressed in US dollars)
(unaudited)
September 30, December 31,
1999 1999
<S> <C> <C>
Assets
Current assets:
Cash $ 4,646 $ 16,474
Accounts receivable 1,275 1,275
Due from related party 4,000 4,000
Inventories 16,525 42,271
Prepaid and deposits 3,014 1,464
Total current assets 29,460 65,484
Capital assets 12,479 11,432
<PAGE>
Total assets $ 41,939 $ 76,916
Liabilities and Shareholders' Equity (Deficit)
Current liabilities
Accounts payable and accrued liabilities $ 814,368 886,103
- ----------------------------------------------------
Current portion of long term debt (note 4) 1,083,073 1,091,073
- ----------------------------------------------------
Total current liabilities 1,897,441 1,977,176
Long term debt 94,095 119,763
- ----------------------------------------------------
Shareholders' deficit
Not issued and fully paid - common stock 8,000 8,000
Preferred stock 4,950,000 4,950,000
Common stock 584 584
Additional paid-in capital 4,067,911 4,067,911
Deficit (10,976,092) (11,046,518)
Total shareholders' deficit (1,949,597) (2,020,023)
Total liabilities and shareholders' equity (deficit) $ 41,939 $ 76,916
</TABLE>
<TABLE>
<CAPTION>
PACIFICTRADINGPOST.COM, INC.
Consolidated Statement of Operations and Deficit
(Expressed in US dollars)
(unaudited)
September 30, December 30,
1999 1999
<S> <C> <C>
SALES $ 59,565 $ 132,968
COST OF SALES 30,941 75,849
- ----------------------------------------------
28,624 57,119
OPERATING EXPENSES
Accounting and legal 7,222 12,861
Advertising and promotion 3,252 10,854
Bad debts 422 510
Bank charges and interest 33,213 66,398
Depreciation 1,047 2,094
General and administrative expenses 14,299 25,404
Rent 11,875 26,997
Wages 23,492 48,625
- ----------------------------------------------
94,822 193,743
NET LOSS (66,198) (136,624)
<PAGE>
RETAINED EARNINGS (DEFICIT), BEGINNING OF YEAR $ (10,909,894) (10,909,894)
RETAINED EARNINGS (DEFICIT), END OF YEAR $ (10,909,894) (11,046,518)
</TABLE>
<TABLE>
<CAPTION>
PACIFICTRADINGPOST.COM, INC.
Consolidated Statement of Cash Flows
(Expressed in US dollars)
(unaudited)
September 30, December 30,
1999 1999
<S> <C> <C>
OPERATING ACTIVITIES
Net loss for the year $ (66,198) $ (136,624)
Adjustments for items not affecting cash:
Depreciation 1,047 2,094
Gain on settlement of debts
Write off of goodwill
Write off of patents
Write off of note receivable
Write off of land
Write off of capital assets
(65,151) (134,530)
Changes in non-cash working capital items 36,483 92,022
- -------------------------------------------
Cash used in operating activities (28,668) (42,508)
INVESTING ACTIVITIES
Acquisition of subsidiaries
Acquisition of business
Acquisition of rights
Acquisition of capital assets
Acquisition of patents
Cash used in investing activities 0 0
- -------------------------------------------
FINANCING ACTIVITIES
Issuance of capital stock
Not issued and fully paid for
Conversion of Preferred to Common
Increase in long term debt 25,295 50,963
Cash from investing activities 25,295 50,963
(DECREASE) INCREASE IN CASH DURING THE YEAR (3,373) 8,455
CASH, BEGINNING OF THE YEAR 8,019 8,019
- -------------------------------------------
CASH, END OF THE YEAR $ 4,646 $ 16,474
- -------------------------------------------
</TABLE>
<PAGE>
PART III
Item 1. Index to Exhibits:
(2)i Articles of Incorporation with Amendments
(2)ii Bylaws
(6) Material Contracts (Employment Contract President)
(10) Consents
(16) Change of Accountants
(99) i 504 Offering January 02,1998
(99) ii 504 Offering January 21,1999
Item 2. Description of Exhibits:
As listed in the above Index, the appropriate exhibits are being filed. The
additional exhibits are marked and filed. The issuer is not a Canadian issuer
and is not filling a written consent and power of attorney.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: March 3, 2000 By: /s/ Frank Drechsler
--------------------------
President, Chief Executive Officer
Treasurer and Director
EXHIBIT 2 (i).
ARTICLES OF INCORPORATION
OF
CARVE INDUSTRIES INC.
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
November 4, 1998
No. C25808-98
DEAN HELLER SECRETARY OF STATE
/S/ DEAN HELLER
<PAGE>
The undersigned natural person of the age of 21 or more acting as incorporator
of a corporation under the Nevada Business Corporation Act, adopts the following
Articles of Incorporation for such a corporation.
ARTICLE I
The name of the corporation hereby formed shall be Carve Industries Inc.
ARTICLE II
The period of its duration shall be perpetual.
ARTICLE III
The purposes for which the Corporation is organized are to engage in any
business, investment, or other pursuit or activity, whether retail or wholesale,
whether commercial or industrial, and to perform any and all other lawful acts
or purposes as are or may be granted to corporate entities under the laws of the
state of Nevada and by any other state or foreign country. The Corporation may
conduct its business anywhere within the states of the United States or in any
foreign country, without in any way limiting the foregoing powers. It is hereby
provided that the corporation shall have the power to do any and all acts and
things that may be reasonably necessary or appropriate to accomplish any of the
foregoing purposes for which the Corporation is formed.
ARTICLE IV
The aggregate number of shares which the Corporation shall have the authority to
issue is 1,000,000 shares of common stock at a par value of $.005 per share, or
a total capitalization of $50,000.00.
There shall be no cumulative voting, and all pre-emptive rights are denied.
Each share shall entitle the holder thereof to one vote at all meetings of the
stockholders.
Stockholders shall not be liable to the Corporation or its creditors for any
debts or obligations of the Corporation.
ARTICLE V
The Corporation shall not commence business until at least $50,000.00 has been
received by it as consideration for the issuance of shares.
ARTICLE VI
The principal place of business and the principal office of the Corporation
shall be 7631 Bermuda Rd., Las Vegas, NV 89123. Branch offices or other places
of business may be established elsewhere in the state of Nevada or without the
state of Nevada and in the United States or without the United States as the
Board of Directors may determine.
ARTICLE VII
Provisions for the regulations of the internal affairs of the Corporation will
be contained in Bylaws appropriately by the Board of Directors.
<PAGE>
ARTICLE VIII
The governing Board shall be known as Directors, the number of Directors may
from time to time be increased or decreased in such manner as shall be provided
by the Bylaws, provided that the number of Directors shall not be reduced to
less than three, except in cases where all the shares of the Corporation are
owned beneficially and of record by one or two stockholders, the number of
Directors may be less than three but not less the number of stockholders.
ARTICLE IX
The address of the initial registered office of the Corporation is 7631 Bermuda
Rd., Las Vegas, NV 89123, and the name of its initial resident agent is Pacific
Corporate Services Inc.
ARTICLE X
The name and post office address of the incorporator and one Director signing
the Articles of Incorporation is as follows: Janet F. Gallison, P.O. Box 2623,
La Jolla, California 92038.
The undersigned, being the incorporator here in before named for the purpose of
forming this Corporation, does make and file these Articles of Incorporation,
hereby declaring and certifying that the facts herein stated are true.
/s/ Janet F. Gallison
October 22, 1998
On Oct. 22, 1998 personally appeared before me, a notary public, who
acknowledged that Janet F. Gallison executed the above instrument.
[NOTARY PUBLIC CALIFORNIA]
[SEAL]
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
CARVE INDUSTRIES INCORPORATED
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
December 2, 1998
No. C25808-98
DEAN HELLER SECRETARY OF STATE
/S/ DEAN HELLER
We the undersigned President and Secretary of CARVE INDUSTRIES INCORPORATED do
hereby certify:
<PAGE>
That the Board of Directors in an action taken on November 25, 1998 adopted
a resolution to amend the original Articles of Incorporation as follows:
Article I is hereby amended to read as follows: "The name of the
Corporation is CARV.COM INC."
The number of shares of the Corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is 1,000,000, that the said
change(s) and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
/s/ Frank Drechsler
/s/ Eben Woodall
November 25, 1998
On November 25th, 1998 before me, Hojin Kyung, Notary Public, personally
appeared Frank Drechsler and Eben Woodall, personally known to me the people who
are subscribed to the within instrument and acknowledged to me that they
executed the same in his authorized capacity, and that by their signature on the
instrument the entity upon behalf of which the people acted, executed the
instrument.
[NOTARY PUBLIC CALIFORNIA]
[SEAL]
ARTICLES OF MERGER
PURSUANT TO NEVADA STATE LAW
CHAPTER 92A
Pursuant to NRA 92A.200 Articles of merger or exchange: Filing and
contents. Please be informed of the following:
1. The name and jurisdiction of organization of each constituent entity.
a. Surviving entity is "Carv.com, Inc." It is incorporated in the
State of Nevada.
b. The acquired entity is "Pacific Trading Post, Inc." It is
incorporated in the State of Nevada.
2. The Board of Directors of each company has approved the exchange and it
has been adopted by the shareholders of the acquired company.
3. Approval of the shareholders of "CARV.com, Inc." was not required.
4. Approval of the shareholders of "Pacific Trading Post, Inc." was
required.
a. By unanimous vote the shareholder(s) of "Pacific Trading Post,
Inc." approved the exchange plan and to be acquired by "Carv.com,
Inc."
b. The plan was submitted to the owner(s) and included:
1. "Pacific Trading Post, Inc." is owned by one shareholder, JG
Consulting, Inc. JG Consulting, Inc. voted in favor of the
Exchange. Therefore, one hundred percent (100%) of the
Shareholders of "Pacific Trading Post, Inc." voted for the plan.
2. The number of votes and percentage of owner's interests cast
for and against the plan by the owners of each class of interests
entitled to vote approved the plan. The vote was unanimous in
favor of the exchange.
<PAGE>
5. This paragraph is not applicable, due to the fact "CARV.com, Inc." and
"Pacific Trading Post, Inc." engaged in an "exchange" not a "merger."
6. The entire plan is not set forth in this filing, however, please be
informed that an executed copy of the entire plan of exchange is on
file at the registered office of both the surviving and acquired
entity.
/s/ Frank Drechsler, President, CARV.com, Inc.
/s/ Eben Woodall, Secretary, CARV.com, Inc.
/s/ Janet F. Gallison, President and Secretary, Pacific Trading Post, Inc.
On 15 Mar 1999, before me, Darla J. Dilbeck, personally appeared Frank
Drechsler, proved to me on the basis of satisfactory evidence to be the person
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity, and that by his signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
[NOTARY PUBLIC CALIFORNIA]
[SEAL]
On March 10, 1999 before me, Hojin Kyung, Notary Public, personally appeared
Janet F. Gallison, personally known to me to be the person who is subscribed to
the within instrument and acknowledged to me that she executed the same in her
authorized capacity, and that by her signature on the instrument the entity upon
behalf of which the person acted, executed the instrument.
[NOTARY PUBLIC CALIFORNIA]
[SEAL]
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
CARV.COM INC.
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
April 21, 1999
No. C25808-98
DEAN HELLER SECRETARY OF STATE
/S/ DEAN HELLER
We the undersigned President and Secretary of CARV.COM INC. do hereby certify:
<PAGE>
That the Board of Directors in an action taken on March 19, 1999 adopted a
resolution to amend the original Articles of Incorporation as follows:
Article I is hereby amended to read as follows: "The name of the
Corporation is PACIFICTRADINGPOST.COM, INC."
The number of shares of the Corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is ; that the said change(s) and
amendment have been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding and
entitled to vote thereon.
/s/ Frank Drechsler
/s/ Eben Woodall
On April 15th, 1999 before me, Tina Marr, Notary, personally appeared Eben
Woodall and Frank Drechsler, proved to me on the basis of satisfactory evidence
to be the persons whose names are subscribed to the within instrument and
acknowledged to me that they executed the same in their authorized capacity, and
that by their signature on the instrument the persons or the entity upon behalf
of which the persons acted, executed the instrument.
WITNESS my hand and official seal
[NOTARY PUBLIC CALIFORNIA]
[SEAL]
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
PACIFICTRADINGPOST.COM, INC.
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
February 18, 2000
No. C25808-98
DEAN HELLER SECRETARY OF STATE
/S/ DEAN HELLER
We the undersigned President and Secretary of CARVE INDUSTRIES INCORPORATED do
hereby certify:
That the Board of Directors in an action taken on February 1, 2000 adopted
a resolution to amend the original Articles of Incorporation as follows:
The authorized share capital of the company is to be changed from one
million (1,000,000) shares of common stock to fifty million (50,000,000) shares
of common stock.
The number of shares of the Corporation outstanding and entitled to vote on an
amendment to the Articles of Incorporation is 1,000,000, that the said change(s)
and amendment have been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding and
entitled to vote thereon.
/s/ Frank Drechsler
February 18, 2000
<PAGE>
EXHIBIT 2 (i).
(A Nevada Corporation)
BYLAWS
ARTICLE 1 - OFFICES
The registered office of the Corporation in the State of Nevada shall be located
in the city and state designated in the Articles of Incorporation. The
Corporation may also maintain offices at such other places within or without the
State of Nevada as the Board of Directors may, from time to time, determine.
ARTICLE II - MEETING OF SHAREHOLDERS
Section 1 - Annual Meetings: (Chapter 78.310)
The annual meeting of the shareholders of the Corporation shall be held at the
time fixed, from time to time, by the Directors.
Section 2 - Special Meetings: (Chapter 78.310)
Special meetings of the shareholders may be called by the Board of Directors or
such person or persons authorized by the Board of Directors and shall be held
within or without the State of Nevada.
Section 3 - Place of Meetings: (Chapter 78.310)
Meetings of shareholders shall be held at the registered office of the
Corporation, or at such other places, within or without the State of Nevada as
the Directors may from time to time fix. If no designation is made, the meeting
shall be held at the Corporation's registered office in the state of Nevada.
Section 4 - Notice of Meetings: (Section 78.370)
(a) Written or printed notice of each meeting of shareholders, whether annual or
special, signed by the President, Vice President or Secretary, stating the time
when and place where it is to be held, as well as the purpose or purposes for
which the meeting is called, shall be served either personally or by mail, by or
at the direction of the President, the Secretary, or the Officer or the person
calling the meeting, not less than ten or more than sixty days before the date
of the meeting, unless the lapse of the prescribed time shall have been waived
before or after the taking of such action, upon each shareholder of record
entitled to vote at such meeting, and to any other shareholder to whom the
giving of notice may be required by law. If mailed, such notice shall be deemed
to be given when deposited in the United States mail, addressed to the
shareholder as it appears on the share transfer records of the Corporation or to
the current address, which a shareholder has delivered to the Corporation in a
written notice.
<PAGE>
(b) Further notice to a shareholder is not required when notice of two
consecutive annual meetings, and all notices of meetings or of the taking of
action by written consent without a meeting to him or her during the period
between those two consecutive annual meetings; or all, and at least two payments
sent by first-class mail of dividends or interest on securities during a
12-month period have been mailed addressed to him or her at his or her address
as shown on the records of the Corporation and have been returned undelivered.
Section 5 - Quorum: (Section 78.320)
(a) Except as otherwise provided herein, or by law, or in the Articles of
Incorporation (such Articles and any amendments thereof being hereinafter
collectively referred to as the "Articles of Incorporation"), a quorum shall be
present at all meetings of shareholders of the Corporation, if the holders of a
majority of the shares entitled to vote on that matter are represented at the
meeting in person or by proxy.
(b) The subsequent withdrawal of any shareholder from the meeting, after the
commencement of a meeting, or the refusal of any shareholder represented in
person or by proxy to vote, shall have no effect on the existence of a quorum,
has been established at such meeting.
(c) Despite the absence of a quorum at any meeting of shareholders, the
shareholders present may adjourn the meeting.
Section 6 - Voting and Acting: (Section 78.320 & 78.350)
(a) Except as otherwise provided by law, the Articles of Incorporation, or these
Bylaws, any corporate action, the affirmative vote of the majority of shares
entitled to vote on that matter and represented either in person or by proxy at
a meeting of shareholders at which a quorum is present, shall be the act of the
shareholders of the Corporation.
(b) Except as otherwise provided by statue, the Certificate of Incorporation, or
these Bylaws, at each meeting of shareholders, each shareholder of the
Corporation entitled to vote thereat, shall be entitled to one vote for each
share registered in his name on the books of the Corporation.
(c) Where appropriate communication facilities are reasonably available, any or
all shareholders shall have the right to participate in any shareholders'
meeting, by means of conference telephone or any means of communications by
which all persons participating in the meeting are able to hear each other.
Section 7 - Proxies: (Section 78.355)
Each shareholder entitled to vote or to express consent or dissent without a
meeting, may do so either in person or by proxy, so long as such proxy is
executed in writing by the shareholder himself, his authorized officer,
director, employee or agent or by causing the signature of the stockholder to be
affixed to the writing by any reasonable means, including, but not limited to, a
<PAGE>
facsimile signature, or by his attorney-in-fact there unto duly authorized in
writing. Every proxy shall be revocable at will unless the proxy conspicuously
states that it is irrevocable and the proxy is coupled with an interest. A
telegram, telex, cablegram, or similar transmission by the shareholder, or a
photographic, photo static, facsimile, shall be treated as a valid proxy, and
treated as a substitution of the original proxy, so long as such transmission is
a complete reproduction executed by the shareholder. If it is determined that
the telegram, cablegram or other electronic transmission is valid, the persons
appointed by the Corporation to count the votes of shareholders and determine
the validity of proxies and ballots or other persons making those determinations
must specify the information upon which they relied. No proxy shall be valid
after the expiration of six months from the date of its execution, unless
otherwise provided in the proxy. Such instruments shall be exhibited to the
Secretary at the meeting and shall be filed with the records of the Corporation.
If any shareholder designates two or more persons to act as proxies, a majority
of those persons present at the meeting, or, if one is present, then that one
has and may exercise all of the powers conferred by the shareholder upon all of
the persons so designated unless the shareholder provides otherwise.
Section 8 - Action Without A Meeting: (Section 78.320)
Unless otherwise provided for in the Articles of Incorporation of the
Corporation, any action to be taken at any annual or special shareholders'
meeting, may be taken without a meeting, without prior notice and without a vote
if written consents are signed by a majority of the shareholders of the
Corporation, except however if a different proportion of voting power is
required by law, the Articles of Incorporation or these Bylaws, than that
proportion of written consents is required. Such written consents must be filed
with the minutes of the proceedings of the shareholders of the Corporation.
ARTICLE III - BOARD OF DIRECTORS
Section 1 - Number, Term, Election & Qualifications: (Section 78.115, 78.330)
(a) The first Board of Directors and all subsequent Boards of the Corporation
shall consist of one, unless and until otherwise determined by vote of a
majority of the entire Board of Directors. The Board of Directors or
shareholders all have the power, in the interim between annual and special
meetings of the shareholders, to increase or decrease the number of Directors of
the Corporation. A Director need not be a shareholder of the Corporation unless
the Certificate of Incorporation of the Corporation or these Bylaws so require.
(b) Except as may otherwise be provided herein or in the Articles of
Incorporation, the members of the Board of Directors shall be elected at the
first annual shareholders' meeting and at each annual meeting thereafter, unless
their terms are staggered in the Articles of Incorporation of the Corporation or
these Bylaws, by a plurality of the votes cast at a meeting of shareholders, by
the holders of shares entitled to vote in the election.
(c) The first Board of Directors shall hold office until the first annual
meeting of shareholders and until their successors have been duly elected and
qualified or until there is a decrease in the number of Directors.
Thereinafter, directors will be elected at the annual meeting of shareholders
<PAGE>
and shall hold office until the annual meeting of the shareholders next
succeeding his election, unless their terms are staggered in the Articles of
Incorporation (so long as at least one - fourth in number of the Directors of
the Corporation are elected at each annual shareholders' meetings) or these
Bylaws, or until his prior death, resignation or removal. Any Director may
resign at any time upon written notice of such resignation to the Corporation.
(d) All Directors of the Corporation shall have equal voting power unless the
Articles of Incorporation of the Corporation provide that the voting power of
individual Directors or classes of Directors are greater than or less than that
of any other individual Directors or classes of Directors, and the different
voting powers may be stated in the Articles of Incorporation or any be dependent
upon any fact or event that may be ascertained outside the Articles of
Incorporation if the manner in which the fact or event may operate on those
voting powers is stated in the Articles of Incorporation. If the Articles of
Incorporation provide that any Directors have voting power greater than or less
than other Directors of the Corporation, every reference in these Bylaws to a
majority or other proportion of Directors shall be deemed to refer to majority
or other proportion of the voting power of all the Directors or classes of
Directors, as may be required by the Articles of Incorporation.
Section 2 - Duties and Powers: (Section 78.120)
The Board of Directors shall be responsible for the control and management of
the business and affairs, property and interests of the Corporation, and may
exercise all powers of the Corporation, except such as those stated under Nevada
state law, are in the Articles of Incorporation or by these Bylaws, expressly
conferred upon or reserved to the shareholders or any other person or persons
named therein.
Section 3 - Regular Meetings; Notice: (Section 78.310)
(a) A regular meeting of the Board of Directors shall be held either within or
without the State of Nevada at such time and at such place as the Board shall
fix.
(b) No notice shall be required of any regular meeting of the Board of Directors
and, if given, need not specify the purpose of the meeting; provided, however,
that in case the Board of Directors shall fix or change the time or place of any
regular meeting when such time and place was fixed before such change, notice of
such action shall be given to each Director who shall not have been present at
the meeting at which such action was taken within the time limited, and in the
manner set forth in these Bylaws with respect to special meetings, unless notice
shall be waived in the manner set forth in these Bylaws.
Section 4 - Special Meetings; Notice: (Section 78.310)
(a) Special meetings of the Board of Directors shall be held at such time and
place as may be specified in the respective notices or waivers of notice
thereof.
(b) Except as otherwise required statute, written notice of special meetings
shall be mailed directly to each Director, addressed to him at his residence or
usual place of business, or delivered orally, with sufficient time for the
<PAGE>
convenient assembly of Directors thereat, or shall be sent to him at such place
by telegram, radio or cable, or shall be delivered to him personally or given to
him orally, not later than the day before the day on which the meetings is to be
held. If mailed, the notice of any special meeting shall be deemed to be
delivered on the second day after it is deposited in the United States, so
addressed, with postage prepaid. If notice is given by telegram, it shall be
deemed to be delivered when the telegram is delivered to the telegraph company.
A notice, or waiver of notice, except as required by these Bylaws, need not
specify the business to be transacted at or the purpose or purposes of the
meeting.
(c) Notice of any special meeting shall not be required to be given to any
Director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to him, or who submits a signed waiver of
notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.
Section 5 - Chairperson:
The Chairperson of the Board, if any and if present, shall preside at all
meetings of the Board of Directors. If there shall be no Chairperson, or he or
she shall be absent, then the President shall preside, and in his absence, any
other Directors chosen by the Board of Directors shall preside.
Section 6 - Quorum and Adjournments: (Section 78.315)
(a) At all meetings of the Board of Directors, or any committee thereof, the
presence of a majority of the entire Board, or such committee thereof, shall
constitute a quorum for the transaction of business, except as otherwise
provided by law, by the Certificate of Incorporation, or these Bylaws.
(b) A majority of the Directors present at the time and place of any regular or
special meeting, although less than a quorum, may adjourn the same from time to
time without notice, whether or not a quorum exists. Notice of such adjourned
meeting shall be given to Directors not present at the time of the adjournment
and, unless the time and place of the adjourned meeting are announced at the
time of the adjournment, to the other Directors who were present at the
adjourned meeting.
Section 7 - Manner of Acting: (Section 78.315)
(a) At all meetings of the Board of Directors, each Director present shall have
one vote, irrespective of the number of shares of stock, if any, which he may
hold.
(b) Except as otherwise provided by law, by the Articles of Incorporation, or
these Bylaws, action approved by a majority of the votes of the Directors
present at any meeting of the Board or any committee thereof, at which a quorum
is present shall be the act of the Board of Directors or any committee thereof.
(c) Any action authorized in writing made prior or subsequent to such action, by
all of the Directors entitled to vote thereon and filed with the minutes of the
Corporation shall be the act of the Board of Directors, or any committee
thereof, and have the same force and effect as if the same had been passed by
unanimous vote at a duly called meeting of the Board or committee for all
purposes.
<PAGE>
(d) Where appropriate communications facilities are reasonably available, any of
all Directors shall have the right to participate in any Board of Directors
meeting, or a committee of the Board of Directors meeting, by means of
conference telephone or any means of communications by which all persons
participating in the meeting are able to hear each other.
Section 8 - Vacancies: (Section 78.355)
(a) Unless otherwise provided for by the Articles of Incorporation of the
Corporation, any vacancy in the Board of Directors occurring by reason of an
increase in the number of Directors, or by reason of the death, resignation,
disqualification, removal or inability to act of any Director, or other cause,
shall be filled by an affirmative vote of a majority of the remaining Directors,
though less than a quorum of the Board or by sole remaining Director, at any
regular meeting or special meeting of the Board of Directors called for that
purpose except whenever the shareholders of any class or classes or series
thereof are entitled to elect one or more Directors by the Certificate of
Incorporation, vacancies and newly created directorships of such class or
classes or series may be filled by a majority of the Directors elected by such
class or classes or series thereof then in office, or by a sole remaining
Director so elected.
(b) Unless otherwise provided for by law, the Articles of Incorporation or these
Bylaws, when one or more Directors shall resign from the Board and such
resignation is effective at a future date, a majority of the Directors, then in
office, including those who have so resigned, shall have the power to fill such
vacancy or vacancies, the vote otherwise to take effect when such resignation or
resignations shall become effective.
Section 9 - Resignation: (Section 78.355)
A Director may resign at any time by giving written notice of such resignation
to the Corporation.
Section 10 - Removal: (Section 78.355)
Unless otherwise provided for by the Articles of Incorporation, one or more or
all the Directors of the Corporation may be removed with or without cause at any
time by a vote of two-thirds of the shareholders entitled to vote thereon, at a
special meeting of the shareholders called for that purpose, unless the Articles
of Incorporation provide that Directors may only be removed for cause, provided
however, such Director shall not be removed if the Corporation states in its
Articles of Incorporation that its Directors shall be elected by cumulative
voting and there are a sufficient number of shares cast against his or her
removal, which if cumulatively voted at an election of Directors would be
sufficient to elect him or her. If a Director was elected by a voting group of
shareholders, only the shareholders of that voting group may participate in the
vote to remove that Director.
Section 11 - Compensation: (Section 78.140)
The Board of Directors may authorize and establish reasonable compensation of
the Directors for services to the Corporation as Directors, including, but not
limited to attendance at any annual or special meeting of the Board.
Section 12 - Committee: (Section 78.125)
<PAGE>
Unless otherwise provided for by the Articles of Incorporation of the
Corporation, the Board of Directors, may from time to time designate from its
members one or more committees, and alternative members thereof, as they deem
desirable, each consisting of one or more members, with such powers and
authority (to the extent permitted by law and these Bylaws) as may be provided
in such resolution. Unless the Articles of Incorporation or Bylaws state
otherwise, the Board of Directors may appoint natural persons who are not
Directors to serve on such committees authorize herein. Each such committee
shall serve at the pleasure of the Board and, unless otherwise, stated by law,
the Certificate of Incorporation of the Corporation or these Bylaws, shall be
governed by the rules and regulations state herein regarding the Board of
Directors.
ARTICLE IV - OFFICERS
Section 1 - Number, Qualifications, Election and Term of Office: (Section
78.130)
(a) The Corporation's officers shall have such titles and duties as shall be
stated in these Bylaws or in a resolution of the Board of Directors which is not
inconsistent with these Bylaws. The officers of the Corporation shall consist
of a President, Secretary and Treasurer, and also may have one or more Vice
Presidents, assistant secretaries and assistant treasurers and such other
officers as the Board of Directors may from time to time deem advisable. Any
officer may hold two or more offices in the Corporation.
(b) The officers of the Corporation shall be elected by the Board of Directors
at the regular annual meetings of the Board following the annual meeting of
shareholders.
(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have been
duly elected and qualified, subject to earlier termination by his or her death,
resignation or removal.
Section 2 - Resignation:
Any officer may resign at any time by giving written notice of such resignation
to the Corporation.
Section 3 - Removal:
Any officer elected by the Board of Directors may be removed, either with or
without cause, and a successor elected by the Board at any time, and any officer
or assistant officer, if appointed by another officer, may likewise be removed
by such officer.
Section 4 - Vacancies:
A vacancy, however caused, occurring in the Board and any newly created
Directorships resulting from an increase in the authorized number of Directors
may be filled by the Board of Directors.
Section 5 - Bonds:
<PAGE>
The Corporation may require any or all of its officers or Agents to post a bond,
or otherwise, to the Corporation for the faithful performance of their positions
or duties.
Section 6 - Compensation:
The compensation of the officers of the Corporation shall be fixed from time to
time by the Board of Directors.
ARTICLE V - SHARES OF STOCK
Section 1 - Certificate of Stock: (Section 78.235)
(a) The shares of the Corporation shall be represented by certificates or shall
be uncertified shares.
(b) Certified shares of the Corporation shall be signed, (either manually or
facsimile), by officers or agents designated by the Corporation for such
purposes, and shall certify the number of shares owned by him in the
Corporation. Whenever any certificate is countersigned or otherwise
authenticated by a transfer agent or transfer clerk, and a registrar, then a
facsimile of the signatures of the officers or agents, the transfer agent or
transfer clerk or the registrar of the Corporation may be printed or
lithographed upon the certificate in lieu of the actual signatures. If the
Corporation uses facsimile signatures of its officers and agents on its stock
certificates, it cannot act as registrar of its stock, but its transfer agent
and registrar may be identical if the institution acting in those dual
capacities countersigns or otherwise authenticates any stock certificates in
both capacities. If any officer who has signed or whose facsimile signature has
been placed upon such certificate, shall have ceased to be such officer before
such certificates is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of its issue.
(c) If the Corporation issues uncertificated shares as provided for in these
Bylaws, within a reasonable time after the issuance or transfer of such
uncertificated shares, and at least annually thereafter, the Corporation shall
send the shareholder a written statement certifying the number of shares owned
by such shareholder in the Corporation.
(d) Except as otherwise provided by law, the rights and obligations of the
holders of uncertified shares and the rights and obligations of the holders of
certificates representing shares of the same class and series shall be
identical.
Section 2 - Lost or Destroyed Certificates: (Section 104.8405)
The Board of Directors may direct a new certificate to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed if the owner:
(a) so requests before the Corporation has notice that the shares have been
acquired by a bona fide purchaser,
(b) files with the Corporation a sufficient indemnity bond; and
(c) satisfies such other requirements, including evidence of such loss,
theft or destruction, as may be imposed by the Corporation.
<PAGE>
Section 3 - Transfers of Shares: (Section 104.8401, 104.8406 & 104.8416)
(a) Transfers or registration of transfer of shares of the Corporation shall be
made on the stock transfer books of the Corporation by the registered holder
thereof, or by his attorney duly authorized by a written power of attorney; and
in the case of shares represented by certificates, only after the surrender to
the Corporation of the certificates representing such shares with such shares
properly endorsed, with such evidence of the authenticity of such endorsement,
transfer, authorization and other matters as the Corporation may reasonably
require, and the payment of all stock transfer taxes due thereon.
(b) The Corporation shall be entitled to treat the holder of record of any
shares or shares as the absolute owner thereof for all purposes, and,
accordingly, shall not be bound to recognize any legal, equitable or other claim
to, or interest in, such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by law.
Section 4 - Record Date: (Section 78.215 & 78.350)
(a) The Board of Directors may fix, in advance, which shall not be more than
sixty days before the meeting or action requiring a determination of
shareholders, as the record date for the determination of shareholders entitled
to receive notice of, or to vote at, any meeting of shareholders, entitled to
receive payment of any dividends, or allotment of any rights, or for the purpose
of any other action. If no record date is fixed, the record date for
shareholders entitled to notice of meeting shall be at the close of business on
the day preceding the day on which notice is given, or, if no notice is given,
the day on which the meeting is held, or if notice is waived, at the close of
business on the day before the day on which the meeting is held.
(b) The Board of Directors may fix a record date, which shall not precede the
date upon which the resolution fixing the record date is adopted for
shareholders entitled to receive payment of any dividend or other distribution
or allotment of any rights of shareholders entitled to exercise any right sin
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action.
(c) A determination of shareholders entitled to notice of or to vote at a
shareholders' meeting is effective for any adjournment of the meeting unless the
Board of Directors fixes a new record date for the adjournment meeting.
Section 5 - Fractions of Shares/Scrip: (Section 78.205)
The Board of Directors may authorize the issuance of certificates or payment of
money for fractions of a share, either represented by a certificate or
uncertificated, which shall entitle the holder to exercise voting rights,
receive dividends and participate in any assets of the Corporation in the event
of liquidation, in proportion to the fractional holdings; or it may authorize
the payment in case of the fair value of fractions of a share as of the time
when those entitled to receive such fractions are determined; or it may
authorize the issuance, subject to such conditions as may be permitted by law,
of scrip in registered or bearer form over the manual or facsimile signature of
<PAGE>
an officer or agent of the Corporation or its agents for that purpose,
exchangeable as therein provided for full shares, but such scrip shall not
entitle the holder to any rights of shareholder, except as therein provided.
The scrip may contain any provisions or conditions that the Corporation deems
advisable. If a scrip ceases to be exchangeable for full share certificates,
the shares that would otherwise have been issuable as provided on the scrip are
deemed to be treasury shares unless the scrip contains other provisions for
their disposition.
ARTICLE VI - DIVIDENDS (Section 78.215 & 78.288)
(a) Dividends may be declared and paid out of any funds available therefor, as
often, in such amounts, and at such time as the Board of Directors may determine
and shares may be issued pro rata and without consideration to the Corporation's
shareholders or to the shareholders of one or more classes or series.
(b) Shares of one class or series may not be issued as a share dividend to
shareholders of another class or series unless:
(i) so authorized by the Articles of Incorporation;
(ii) a majority of the shareholders of the class or series to be issued
approve the issue; or
(iii) there are no outstanding shares of the class or series of shares that
are authorized to be issued.
ARTICLE VII - FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and shall be subject to
change by the Board of Directors from time to time, subject to applicable law.
ARTICLE VIII - CORPORATE SEAL (Section 78.065)
The corporate seal, if any, shall be in such form as shall be prescribed and
altered, from time to time, by the Board of Directors. The use of a seal or
stamp by the Corporation on corporate documents is not necessary and the lack
thereof shall not in any way affect the legality of a corporate document.
ARTICLE IX - AMENDMENTS
Section 1 - By Shareholders:
All Bylaws of the Corporation shall be subject to alteration or repeal, and new
Bylaws may be made, by a majority vote of the shareholders at the time entitled
to vote in the election of Directors even though these Bylaws may also be
altered, amended or repealed by the Board of Directors.
Section 2 - By Directors: (Section 78.120)
The Board of Directors shall have power to make, adopt, alter, amend and repeal,
from time to time, Bylaws of the Corporation.
ARTICLE X - WAIVER OF NOTICE: (Section 78.375)
Whenever any notice is required to be given by law, the Articles of
Incorporation or these Bylaws, a written waiver signed by the person or persons
entitled to such notice, whether before or after the meeting by any person,
shall constitute a waiver of notice of such meeting.
<PAGE>
ARTICLE XI - INTERESTED Directors: (Section 78.140)
No contract or transaction shall be voided or avoidable if such contract or
transaction is between the Corporation and one or more of its Directors or
Officers, or between the Corporation and any other corporation, partnership,
association, or other organization in which one or more of its Directors or
Officers, are directors or officers, of have a financial interest, when such
director or Officer is present at or participates in the meeting of the Board,
or the committee of the shareholders which authorizes the contract or
transaction or his, her or their votes are counted for such purpose, if:
(a) the material facts as to his, her or their relationship or interest and
as to the contract or transaction are disclosed or are known to the Board of
Directors or the committee and are noted in the minutes of such meeting, and the
Board or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested Directors, even the
disinterested Directors be less than a quorum; or
(b) the material facts as to his, her or their relationship or
relationships or interest or interests and as to the contract or transaction are
disclosed or are known to the shareholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
shareholders; or
(c) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified, by the Board of Directors, a
committee of the shareholders; or
(d) the fact of the common directorship, office or financial interest is
not disclosed or known to the Director or Officer at the time the transaction is
brought before the Board of Directors of the Corporation for such action.
Such interested Directors may be counted when determining the presence of a
quorum at the Board of Directors' or committee meeting authorizing the contract
or transaction.
ARTICLE XII - ANNUAL LIST OF OFFICERS, DIRECTORS AND REGISTERED AGENT:
(Section 78.150 & 78.165)
The Corporation shall, within sixty days after the filing of its Articles of
Incorporation with the Secretary of State, and annually thereafter on or before
the last day of the month in which the anniversary date of incorporation occurs
each year, file with the Secretary of State a list of its President, Secretary
and Treasurer and all of its Directors, along with the post office box or street
address, either residence or business, and a designation or its resident agent
in the state of Nevada. Such list shall be certified by an officer of the
Corporation.
*Unless otherwise stated herein all references to "Sections" in these Bylaws
refer to those sections contained in Title 78 of the Nevada Private Corporations
Law.
Signed for Identification,
A Nevada Corporation
<PAGE>
BY: /s/
___________________________________________
Its: Chairperson of the Board of Directors
Exhibit 6. Material Contracts
EMPLOYMENT AGREEMENT
This agreement is made and entered into this 29 day of October, 1998, by
and between CARV Industries, Inc. (hereinafter 'CARV and/or Employer") a
corporation organized and existing under the laws of the State of Colorado, with
its principal place of business located at 2077 Las Palmas Drive, Carlsbad,
California and Frank Drechsler (hereinafter "Employee") an individual residing
in the State of California, residing at 17620 Oak St., Fountain Valley, CA
92708, both of whom enter into this agreement under the terms and conditions
contained herein.
SECTION ONE-EMPLOYMENT
A. Employer hereby employs, engages, and hires Employee and Employee
hereby accepts and agrees to such hiring, engagement, and employment, subject to
the general supervision and pursuant to the orders, advice, and direction of
Employer.
B. Employee shall perform such duties as are customarily performed by
one holding a position in other, same, or similar businesses or enterprises as
that engaged in by Employer, and shall also additionally render such other and
unrelated services and duties as may be assigned to Employee from time to time
by Employer.
SECTION TWO-BEST EFFORTS OF EMPLOYEE
Employee will at all times faithfully, industriously, and to the best of
Employee's ability, experience, and talents, perform all of the duties that may
be required of and from Employee pursuant to the express and implicit terms of
this agreement, to the reasonable satisfaction of Employer.
SECTION THREE-TERM OF EMPLOYMENT
This employment agreement is for a term of one (1) year under the law of the
State of California; Employer may terminate this Agreement for cause. Employee
may terminate this agreement at any time, for any reason with or without cause.
Termination of this agreement shall be complete upon the terminating party
tendering to the other party written notice of his intent to terminate this
agreement.
SECTION FOUR-COMPENSATION OF EMPLOYEE
A. Employer shall pay Employee, and Employee shall accept from
Employer, in full payment for Employee's services under this agreement,
<PAGE>
compensation at the rate of Five Thousand Dollars ($5000.00) per month, payable
twice a month on the 1st and 15th days of each month while this agreement shall
be in force.
B. Employer shall reimburse Employee for all necessary expenses
incurred by Employee while traveling pursuant to Employer's directions.
C. Employee may, in the sole and absolute discretion of the Employer, from
time to time receive increases or bonuses in his pay.
D. In addition to the compensation Employee receives hereunder,
Employee is eligible for participation in the fringe benefit programs
established by Employer on fulfillment of the eligibility requirements for each
program. Employer may, without notice, modify or discontinue any fringe benefit
program, which it maintains.
E. Employee is entitled to a paid vacation of two (2) weeks per year.
F. Within ten (90) days of signing this Agreement Employee shall
receive twenty five thousand ($25,000) Dollars signing bonus.
SECTION FIVE -OTHER EMPLOYMENT
Employee shall devote all of Employee's time, attention, knowledge, and
skills solely to the business and interest of Employer, and Employer shall be
entitled to all of the benefits, profits, or other issues arising from or
incident to all work, services, and advice of Employee, and Employee shall not,
during the term of this agreement, be interested directly or indirectly, in any
manner, as partner, officer, director, shareholder, advisor, Employee, or in any
other capacity in any other business similar to Employer's business or any
allied trade; provided, however, that nothing contained in this section shall be
deemed to prevent or to limit the right of Employee to invest any of Employee's
money in the capital stock or other securities of any corporation whose stock or
securities are publicly owned or are regularly traded on any public exchange,
nor shall anything contained in this section be deemed to prevent Employee from
investing or limit Employee 5 right to invest Employee's money in real estate.
SECTION SIX-RECOMMENDATIONS FOR IMPROVING OPERATIONS
Employee shall make available to Employer all information of which Employee
shall have any knowledge and shall make all suggestions and recommendations that
will be of mutual benefit to Employer and Employee.
SECTION SEVEN-TRADE SECRETS/PROPERTY RIGHTS
A. Employee shall not at any time or in any manner, either directly or
indirectly, divulge, disclose or communicate to any person, firm, corporation,
or other entity in any manner whatsoever any information concerning any matters
affecting or relating to the business of Employer, including without limitation,
<PAGE>
any of its customers, the prices it obtains or has obtained from the sale of, or
at which it sells or has sold, its products, or any other information concerning
the business of Employer, its manner of operation, its plans, processes, or
other data ("Confidential Information") without regard to whether all of the
above-stated matters will be deemed confidential, material, or important by
others, Employer and Employee specifically and expressly stipulating that as
between them, such matters are important, material, and confidential and gravely
affect the effective and successful conduct of the business of Employer, and
Employer's good will, and that any breach of the terms of this section shall be
a material breach of this agreement.
B. During the course of his employment with Employer, Employee may be
producing software code and other items related to computers and/or their
peripherals. All inventions, designs, developments, formulas, patterns, devices,
compilations of information, records and specifications, computer programs,
hardware, software code and/or marketing programs (and any portions thereof)
produced and/or conceived by the Employee while employed with Employer and/or
that were conceived from the use of equipment, facilities, or other resources of
the Employer or which the Employer possessed at the time of the execution of
this agreement (all of the foregoing shall be collectively referred to as
"Intellectual Property"), shall remain the sole and exclusive property of the
Employer. Intellectual Property shall also include any inventions, designs,
developments, formulas, patterns, devices, compilations of information, records
and specifications, computer programs, hardware, software code and/or marketing
programs produced by Employee after the termination of the Employee-Employer
relationship to the extent such items relate in any fashion to an idea, concept
or program, which was originally conceived or produced while Employee was
employed with Employer. The Employee shall promptly disclose and fully inform to
the Employer the details of all such Intellectual Property as soon as the same
becomes known to Employee. For purposes of this agreement the terms "conceived"
and "produced" shall be given the broadest possible interpretation and shall
include any thought process during which an idea is created regardless of
whether the idea as originally conceived or produced requires alteration to
become practical or useful.
C. Employee agrees that he has no past, present or future claim or right to
ownership of any of the Intellectual Property, any current or future proceeds
from the sale of any Intellectual Property or profits derived from the
Intellectual Property by the Employer or Employee, and/or any Intellectual
Property currently belonging to the Employer or Intellectual Property which is
conceived of or produced by the Employee and which becomes property of the
Employer pursuant to the terms hereof. To the extent that the Employee may in
the future attempt to claim any ownership interest in or legal right to the
Intellectual Property or any portion thereof, any current or future proceeds
from the sale of the Intellectual Property or the use thereof, and/or any
Intellectual Property currently belonging to the Employer or Intellectual
Property which becomes property of the Employer hereunder, Employee hereby
<PAGE>
expressly waives such claims regardless of whether such claims are now known or
of an unknown origin and nature.
SECTION EIGHT-TRADE SECRETS AFTER TERMINATION OF EMPLOYMENT
All of the terms of Section Seven of this agreement shall remain in full
force and effect for the period of thirty (30) years after the termination of
Employee's employment for any reason, and during such time period.
SECTION NINE-COVENANTS OF EMPLOYEE/NON COMPETITION AGREEMENT)
A. Employee shall not, directly or indirectly at any time during her
employment with Employer and for a period of two (2) years after termination of
the Employee-Employer relationship:
1. Solicit or attempt to solicit any employee, agent or contractor of
Employer to leave the employment of Employer; or
2. Assist or attempt to assist any person, firm or corporation in any
way to solicit any employee, agent or contractor of Employer to leave the
employment of Employer.
B. At such time as the employment relationship between Employee and
Employer has terminated, Employee shall:
1. Promptly return to Employer, or at Employer's option, destroy all
Confidential Information and any documents related to the Intellectual Property,
including all copies of documents, notes or materials made by Employee or at her
direction; and
2. Certify in writing to Employer that she has so complied; and
3. Not use Confidential Information or Intellectual Property or
transact business in a manner in any way based upon or utilizing Confidential
Information or Intellectual Property.
C. Commencing on the effective date of this Agreement and continuing
for a period of two (2) years after termination of Employee's employment with
Employer, Employee, either individually or in partnership or jointly or in
conjunction with any person or persons, firm, association, syndicate, company or
Employer, as principal, agent, shareholder, or in any other manner whatsoever
shall not solicit, divert or take away, or attempt to solicit, divert or take
away, any customers of Employer, or call upon communicate, advise or consult
with, write or respond to, or inform any customer, client or account of
Employer, for the purpose of soliciting, selling or recommending conflicting
products and service (whether or not such customer, client or account was a
customer, client or account previously contacted by Employee while employed by
Employer), in any area in which Employer (or its agents or representatives)
<PAGE>
sells its products and services not to exceed two hundred miles (200) from the
outer limits of Orange and San Diego Counties in any direction. This covenant
not to compete shall be effective regardless of the reason why Employee was
terminated even if such termination was arbitrary, capricious or wrongful.
D. In the event that any or all of the restrictive covenants shall be
determined by a court of competent jurisdiction to be unenforceable by reason of
their geographic or temporal restrictions being too great, or by reason that the
range of activities covered are too great, or for any other reason, they should
be interpreted to extend over the maximum geographic area, period of time, range
of activities or other restrictions as to which they may be enforceable.
E. The provisions of this section Nine shall survive the termination of
this Agreement by thirty (30) years.
SECTION TEN-MISCELLANEOUS
A. This agreement contains the complete agreement concerning the
employment arrangement between the parties and shall, as of the effective date
hereof, supersede all other agreements between the parties. Neither party has
made any representation with respect to the subject matter of this agreement not
specifically included in this agreement nor has either party relied on any such
representation in entering into this agreement.
B. This agreement may only be modified by writing signed by both
parties.
C. The invalidity of any portion of this agreement will not and shall not be
deemed to affect the validity of any other provision. In the event that any
provision of this agreement is held to be invalid, the parties agree that the
remaining provisions shall be deemed to be in full force and effect as if they
had been executed by both parties subsequent to the expungement of the invalid
provision.
D. This agreement shall be interpreted in accordance with California
law.
E. The failure of either party to this agreement to insist upon the
performance of any of the terms and conditions of this agreement, or the waiver
of any breach of any of the terms and conditions of this agreement, shall not be
construed as thereafter waiving any such terms and conditions, but the same
shall continue and remain in full force and effect as if no such forbearance or
waiver had occurred.
F. The titles to the paragraphs of this agreement are solely for the
convenience of the parties and shall not be used to explain, modify, simplify,
or aid in the interpretation of the provisions of this agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
<PAGE>
as set forth below in multiple originals, one of which is retained by each party
hereto.
/s/Randall Lanham Date: 10-29-98
Carv Ind., Inc.
/s/Frank Drechsler Date: 10-29-98
Exhibit 10. Consents
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form 10-SB of our
report dated January 18, 2000 relating to the financial statements of
PacificTradingPost.com, Inc. as of June 30, 1999.
/s/ Nguyen & Co.
--------------
Chartered Accountants
March 7, 2000
Exhibit 16. Change of Accountants
BOARD OF DIRECTOR'S MEETING MINUTES
-----------------------------------
November 8, 1998
The following resolution was adopted by the written consent of the Board of
Directors of CARV Industries; Inc. Present at the meeting was Frank Drechsler,
Eben Woodall and Randall Lanham. Said resolution is in full force and effect
and has not been rescinded.
Change of Auditor
Frank Drechsler notified the board, that the last Auditor Merle Finical no
longer handled S.E.C. Corporate audits. The board ratified the retention of Ma
Nguyen Charter Accounts to handle current and future audits required by the
S.E.C.
/s/ Randall J. Lanham
- ------------------------
Randall J. Lanham
Chairman
Dated: November 8, 1998
Exhibit 99 (i)
<PAGE>
NAME OF offeree MEMORANDUM
NO.
PROSPECTUS PROSPECTUS
NATURAL BORN CARVERS, INC.
COMMON STOCK: 1,000,000 SHARES
OFFERING PRICE: $01.00 PER SHARE
Minimum Purchase: 5,000 Shares for $5,000
THESE SECURITIES ARE BEING OFFERED EXCLUSIVELY TO PERSONS WHO ARE NOT
CITIZENS OR RESIDENTS OF THE UNITED STATES OF AMERICA IN RELIANCE ON EXEMPTIVE
PROVISIONS OF THE LAWS OF THE VARIOUS SECURITIES LAWS OF COUNTRIES WHICH THE
SECURITIES ARE BEING OFFERED. THESE SECURITIES ARE EXEMPT FROM REGISTRATION
UNDER THE SECURITIES LAWS OF THE UNITED STATES PURSUANT TO REGULATION D3 RULE
504 OF THE SECURITIES ACT OF 1933, AS AMENDED, AND ARE FREELY TRADEABLE IN THOSE
STATES ACCEPTING SUCH EXEMPTION. THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS, AND
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO PROCEEDS TO
SUBSCRIBERS COMPANY
<S> <C> <C>
PER MINIMUM $ 5,000 $ 4,500
Total $1,000,000 $ 900,000
</TABLE>
Participating broker-dealers will be provided a commission of 10% This offering
is also being sold by the Company through its employees who are not paid any
commissions on the proceeds. The Proceeds to the Company are before deducting
estimated expenses of approximately $15,OOO for legal, accounting, promotion,
printing and other expenses incurred in this Offering, including finders' fees,
if anywhere appropriate.
ISSUER
NATURAL BORN CARVERS, INC.
7084 Mirarnar Road, 4th Floor
San Diego,CA 92021
(6l9 566-6971
<PAGE>
JANUARY 02,1998
NATURAL BORN CARVERS, INC.
1,000,000 SHARES COMMON STOCK
This Offering is being made, and shares of common stock for $1.00 per share will
be sold, pursuant to an exemption from registration pursuant to Rule 504 of
Regulation D of the Securities Act of 1933, as amended. This Memorandum is being
provided for the purpose of acquainting potential investors with the structure
and general business of the Company and highlighting the risks involved in
investing in the Company. Any further information about the Company required by
a recipient of this Memorandum shall be made available to such individual upon
receipt by the Company at its office located at 1610 Second Street, Encinitas,
California 92024, (619) 634-4808, of written request for such information.
Additionally, any potential investor may visit the Company in person.
This Memorandum does not constitute an offer or solicitation in a state or any
other jurisdiction in which such an offer or solicitation is not authorized. In
addition, this Memorandum constitutes an offer only if a name has been inserted
in the 'name of offeree" space on the cover page. In such event, this Memorandum
is an offer only to the person named.
THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE BY REASON OF SPECIFIC
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS RELATING TO LIMITED
OFFERINGS AND/OR TRANSACTIONS NOT INVOLVING A PUBLIC OFFERING.
THE SHARES OFFERED HEREBY ARE SUBJECT TO TRANSFER RESTRICTIONS AND INVOLVE A
HIGH DEGREE OF RISK. THE SHARES SHOULD NOT BE PURCHASED BY ANY INVESTOR THAT
CANNOT AFFORD THE LOSS OF HIS OR HER ENTIRE INVESTMENT. SEE "INVESTMENT
CONSIDERATIONS" FOR CERTAIN FACTORS WHICH MUST BE CAREFULLY CONSIDERED BY
PROSPECTIVE INVESTORS BEFORE PURCHASING SHARES.
This Confidential Memorandum (the "Memorandum") is being provided to a limited
number of prospective investors solely for the purpose of assisting such parties
in determining whether they wish further to consider a possible investment in
the Common Shares of Natural Borne Carvers, Inc. ("NBC" or the "Company")3 a
California corporation.
This Memorandum has been prepared by the Company and from trade and industry
sources deemed reliable by the Company. The Company makes no representation or
warranty as to the accuracy or completeness of this information. Moreover, this
Memorandum is intended only to provide certain general information regarding the
Company, its business, and the possible terms of an investment in the Shares,
and does not purport to provide complete disclosure or analysis of all matters
which may be relevant to an investment decision in the Shares, including risk
factors or similar investment considerations. The Company shall not have any
liability for any representations (express or implied) contained in, or for any
omissions from, this Memorandum or any other written or oral communications
transmitted to the recipient in the course of its evaluation of this investment.
Only those particular representations and warranties made to the investor in a
definitive purchase agreement, as and when executed, and subject to such
limitations as may be described therein, shall have any legal effect. It is
understood that each prospective investor will make his or her own independent
investigation into this investment and will be relying upon the same in making
any such investment. In that regard, representatives of the Company will be
<PAGE>
available to discuss with prospective investors, upon request, the information
contained in this Memorandum and prospective investors will be given the
opportunity to visit the facilities of the Company and to discuss its affairs
with appropriate personnel of the Company.
By accepting this Memorandum, the recipient agrees: (1) to keep confidential the
information contained herein or made available in connection with any further
investigations of the Company; (2) without limiting the generality of the
foregoing, the recipient will not reproduce or redistribute this Memorandum, in
whole or in part; (3) without limiting the generality of the foregoing, if the
recipient does not wish to pursue this investment, it will return this
Memorandum to the Company as soon as practicable, together with any other
material relating to the Company or its related entities which the recipient may
have received from the Company; (4) it will not contact, directly or indirectly,
any customer, supplier, or other third party relating to the Company or their
respective businesses, without the prior written consent of the Company; and (5)
any proposed actions by the recipient which are inconsistent in any manner with
the foregoing agreement will require the prior written consent of the Company.
This Memorandum shall not be deemed an indication of the state of affairs of the
Company or the business and technology described herein, nor an indication that
there has been no change in such matters since the date hereof. The information
contained in this Memorandum is for background purposes only and is subject to
change, amendment, or supplement in the course of a prospective investor's
investigation into a possible investment in the Company.
All communication and inquiries relative to this Memorandum or to a possible
transaction should be directed solely to the Company.
For Information, Please Contact.
NATURAL BORN CARVERS, INC.
7084 Miramar Road, 4th Floor
San Diego, California 92021
(619)566-6971
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Offering Summary 4
Risk Factors 5
The Company 7
Use of Proceeds 7
Dilution 8
The Business 8
Management 10
Principal Shareholders 11
Legal Matters 11
Description of Securities 11
Terms of the Offering 12
Plan of Distribution 12
Financial Statements 13
</TABLE>
<PAGE>
OFFERING SUMMARY
The following is a summary of the pertinent facts of this Offering. The lull
Offering Memorandum should be read in its entirety, as this summary does not
constitute a complete recitation of facts necessary to make an investment
decision. This Offering involves a high degree of risk and dilution.
THE COMPANY
Natural Born Carvers, Inc.(NBC) is a California corporation formed on January 2,
1996. The principal business of the Company is the design, manufacture and sale
of sports clothing (principally for surfing and in-line skating) and outdoor
sports equipment, principally tents featuring a unique foldout design. The
Company is in its development stage and hopes to establish retail distribution
for its products. Initial marketing efforts have produced some encouraging
results, including clothing sales in Asia and sales of the Company's outdoor
equipment through alternative distribution channels such as direct marketers,
promotional companies, etc.
BUSINESS OPERATIONS
Although the Company has growing markets in Japan, it is still seeking to
penetrate markets in the United States and thus the Company is still in the
development stages. The Company also has an agreement to sell its flow-out play
tents to the Girl Scouts of America and is working on agreements with several
additional customers in direct marketing, wholesale distribution, and premium
sales. NBC intends to use the proceeds of this offering to further its business
plan. Its principle short-term objectives include: penetrating retail and
specialty markets in the United States as well as continuing to grow
international opportunities. Substantial additional capital will be necessary to
complete the Company's business plan.
SECURITIES OFFERED
This Offering consists of 1,000,000 shares of common stock. The Offering price
is $1.00 per share for a total of $1,000,000. A minimum purchase of $5,000 is
required.
PLAN OF DISTRIBUTION
Participating Broker-Dealers will receive a sales commission of 10%. This
Offering will also be made by officers of the Issuer, who will receive no
commission. The Company may also pay finders' fees to third parties where
appropriate.
USE OF PROCEEDS
Proceeds of this Offering will be used for the advertising production and other
working capital needed for NBC to establish itself in specialty clothing and
outdoor sports markets.
ILLIQUIDITY
The shares purchased under this Offering have not been registered with the
Securities and Exchange Commission; rather, these shares will be issued pursuant
to an exemption from registration. Thus, anyone wishing to sell shares purchased
under this Offering must either register the shares or sell them under an
exemption from registration. At present, the Company's shares are traded
over-the-counter on the NASD Electronic Bulletin Board. There can be no
<PAGE>
assurance, however, that a substantial market will develop for the Company's
common stock, nor that the shares offered hereby will trade at a value equal or
greater than the purchase price of this Offering. Purchasers should therefore be
prepared to hold their shares for a lengthy period of time.
RISK FACTORS AND DILUTION
This Offering involves a high degree of risk (See risk Factors') and dilution
(See "Dilution').
COMPETITION
The Company's businesses are highly competitive. Many of its competitors are
well established and have greater financial and personnel resources than the
Company. (See "Business".)
RISK FACTORS
This Offering entails an extremely high degree of risk and entails a potential
for loss of all of one's investment. Therefore, prospective investors should
carefully consider the following. The ownership of shares involves certain risk
factors, including without limitation, lack of liquidity, and economic and
market risks.
AN INVESTMENT IN THESE SHARES IS A HIGH-RISK INVESTMENT. THE PURCHASE OF THESE
SECURITIES IS SUITABLE ONLY FOR INVESTORS OF SUFFICIENT FINANCIAL MEANS WHO HAVE
NO NEED FOR LIQUIDITY TO THE EXTENT OF THEIR INVESTMENT IN THE COMPANY AND WHO
ARE ABLE TO SUSTAIN A COMPLETE LOSS OF THEIR INVESTMENT. NATURAL BORN CARVERS
HAS A LIMITED OPERATING HISTORY AND THERE IS NO ASSURANCE THAT IT CAN MEET ALL
OF THE GOALS AND OBJECTIVES OF MANAGEMENT. IN ADDITION TO THE FACTORS SET FORTH
ELSEWHERE HEREIN, PROSPECTIVE INVESTORS ARE ADVISED TO CAREFULLY CONSIDER THE
FOLLOWING MATTERS AND SHOULD CONSULT THEIR OWN LEGAL, TAX AND FINANCIAL ADVISORS
WITH RESPECT THERETO. THE RISK FACTORS SET FORTH HEREIN AND THROUGHOUT THIS
MEMORANDUM ARE NOT INTENDED TO BE, AND ARE NOT, AN EXHAUSTIVE LIST OF ALL THE
POSSIBLE GENERAL OR SPECIFIC RISKS.
LACK OF OPERATIONS AND PROFITABILITY. The Company commenced operations in
January of 1996 and has a limited history of operations in the industries in
which it participates. There have been no profits on operations to date.
NEED FOR ADDITIONAL FINANCING. The Company will require additional financing in
order to establish profitable, ongoing operations. The net proceeds from this
offering are expected to be expended by the Company in the next 12-16 months.
The Company plans to seek additional funds through equity financing, which will
result in further dilution to the then existing shareholders, or through bank or
other borrowing. There is no assurance that such financing will be available or,
if available, that it can be obtained on terms favorable to the Company.
Consequently, should the Company be unable to secure needed additional
financing, it is possible that some or all of the proceeds of this Offering
could be expended without significant benefit to the Company.
DEPENDENCE ON MANAGEMENT. NBC is largely dependent upon the efforts and
abilities of management. However, Management has not yet been successful in
operating NBC at a profit, and has no experience in operating clothing and
outdoor products companies on a long-term basis. There is no assurance that
management will be able to manage the Company's transition from start-up to a
profitable company.
COMPETITION. The business in which the Company is engaged is highly competitive.
<PAGE>
Many of the competitors are more financially secure, better able to incur
research, production, and marketing expenses, and able to produce products that
could be superior as to price and performance. There can be no assurance that
the Company's prospects will not be adversely affected by existing and future
competition.
RESTRICTION ON TRANSFER. Investors should be fully aware of the long-term nature
of their investment in the Company. Each investor will be required to represent
that they are purchasing the shares for their own account for investment
purposes and not with a view to resale or distribution. The shares will not be
registered under the Securities Act of 1933 nor, with certain exceptions, under
state securities laws by reason of specific exemptions under the provisions of
such acts, which depend, in part, upon the investment intent of such investor.
The shares are not readily transferable and no transfer of shares may be made
unless the transferor delivers to the Company an opinion of Counsel satisfactory
to the Company that the transfer does not violate federal and/or state
securities laws, including, but not limited to, SEC rules.
NO ESCROW ACCOUNT. There is no escrow account or minimum amount of securities
that must be sold for the Company to accept investors' subscriptions for the
shares offered hereby. Therefore, the Company may use the proceeds of this
Offering as they are received. There can be no assurance that any specific
amount of capital will be raised by this Offering. If a substantial amount of
this offering is not sold, the Company's ability to conduct its business in
accordance with plans described in this Memorandum may be impaired. Therefore,
initial investors will bear a greater risk than later investors will. Failure to
sell the maximum amount of securities may materially impair the Company's
ability to carry out its business plan.
DETERMINATION OF OFFERING PRICE. The price at which the shares are being offered
was not determined by arms-length negotiation and does not necessarily reflect
the prior operations, net worth, or value of the Company or any other customary
investment criteria, including the current public trading price of its common
stock.
ILLIQUIDITY. The shares purchased under this Offering have not been registered
pursuant to the Securities Act of 1933; rather these shares will be issued under
an exemption from registration. No regulatory authority has reviewed or passed
upon the contents of this disclosure document or passed upon the sufficiency,
fairness or adequacy of any terms or conditions contained herein. Thus a
prospective investor must make his own independent evaluation of the adequacy of
the disclosures and fairness of the terms and conditions of the offering.
LACK OF MARKET FOR SHARES. There is presently a limited public market for the
Company's common shares. The Shares are traded over-the-counter on the NASD
Electronic Bulletin Board. There can be no assurance that significant market
will ever develop or, if developed, that it will be maintained. Furthermore,
there can be no assurance that the securities offered can be resold at the
offering price.
No DIVIDENDS. The Company has never paid cash dividends on its common stock and
does not intend to pay cash dividends in the foreseeable future. It currently
intends to retain substantially all future earnings, if any, for use in its
business.
DILUTION. Investors purchasing under this Offering would be subject to
<PAGE>
significant dilution in the resulting book value of their shares from the
Offering price of $1.00 per share when the Company offers additional shares for
the purposes of obtaining additional capital or assets.
SPECULATIVE INVESTMENT. This is a speculative investment. Many of the factors
which may affect the Company and its affairs are subject to change or are not
within the control of the Company. The extent to which such factors could
restrict the activities or adversely affect the Company is not currently
ascertainable. These factors include, without limitation. Interest rates and the
availability of debt and equity financing, economic supply and demand for
recreational clothing and outdoor sports equipment, financial controls and other
governmental imposed restrictions, changes in tax laws and other legislation and
judicial decisions, acts of God or other calamities.
CONTROL BY MANAGEMENT AND DISCRETION IN THE USE OF PROCEEDS. Substantially all
of the net proceeds of this offering will be used for the purposes discussed in
the Use of Proceeds section, as well as for general working capital purposes to
be expended in the sole discretion of the Board of Directors.
MANUFACTURING. Manufacturing will be provided by outside vendors. The Company is
currently negotiating agreements with primary vendors. There can be no
assurance, however, that the Company will be able to meet financial requirements
of manufacturing agreements; nor can there be any assurance that the Company
will be able to continue to contract with adequate outside sources of supply on
a long-term basis.
OPERATIONS. The Company cannot project with certainty the outcome of its
operations. There are no assurances that the Company will operate profitably.
ECONOMIC RISKS. Local, national and international economic conditions may have a
substantial adverse affect on the efforts of the Company. The Company cannot
guarantee against the possible eventuality of any of these potential adverse
conditions.
SHARES ELIGIBLE FOR FUTURE SALE. Most of the Company's shares of common stock
currently outstanding are restricted shares securities as that term is defined
by the Securities Act of 1933. These shares may become eligible for public sale
pursuant to Rule 144, and these sales may tend to depress the price of the
Company's stock that trades on the NASD Electronic Bulletin Board.
MARKET ACCEPTANCE. The Company's ability to successfully market its various
products and services will depend upon their acceptance by the public. There can
be no assurance that the Company's products and services will receive commercial
acceptance in volumes to assure profitability.
DIRECTOR'S AND OFFICER'S LIABILITY IS LIMITED. The Company's Bylaws provide that
directors and officers of the Company will not be held liable to the Company or
its stock holder's for monetary damages upon breach of a director's or officers
fiduciary duty.
LIMITED INTELLECTUAL PROPERTY PROTECTION. The Company's limited financial
resource have restricted the filing of Trademark applications. The Company
currently has no Trademark protection for its clothing products in Japan, it
biggest market, and it has only limited protection in the United States. A
response to due back to the Patent and Trademark Office regarding the rejection
of the NBC trademark. The Company currently owns certain intellectual property
rights related to its foldout tents.
<PAGE>
THE COMPANY
Natural Born Carvers, Inc., (NBC) is a California corporation formed on January
2, 1996. The principal business of the Company is the design, manufacture, and
sale of sports clothing (principally for surfing and in-line skating) and
outdoor sports equipment, principally tents featuring a unique foldout design.
The Company is in its development stage and hopes to establish retail
distribution for its products. Initial marketing efforts have produced some
encouraging results, including clothing sales in Japan and sales of the
Company's outdoor equipment through alternative distribution channels such as
direct marketers, promotional companies, etc. The principal place of business
and offices of the company are located at 1016 Second Street, Encinitas, CA
92024.
NBC manufactures and markets products positioned to address emerging sports
markets including surfing, in-line skating, beach, and camping. The current
clothing product line consists of two seasonal segments. The spring/summer
product line includes board shorts, walk shorts, short-sleeve button-up shirts,
short-sleeve T-shirts, and baseball caps. The fall/winter line includes corduroy
trousers, denim trousers, long sleeve button-up shirts, corduroy jackets, polar
fleece jackets, and polar fleece beenies.
The Company's outdoor sports product line includes a proprietary (patented)
fold-out, self-contained line of tent products with applications including
children's toys, camping, beach, military and emergency relief, specialty
advertising, etc. These "Springbok" tents are simple, convenient, and
inexpensive. They fill several niche markets that have not been adequately
addressed by other companies.
NBC's markets are growing out of the "Generation X" craze, which has spawned
mm-industries such as wakeboarding and extreme sports. Company research reveals
a growth market through the year 2000. However, the Company is only beginning to
enter a very competitive market. Management recognizes that it will take some
period of time to establish a viable identity and to establish its credibility
with potential customers.
NBC is developing an aggressive promotional and sales plan to establish its
customer base. Components of the plan include endorsement of top athletes,
participation in and sponsorship of special events, and the recruitment of local
clubs associated with niche sports activities. The Company will need to promote
its product lines widely and frequently as finances allow. Tactics include the
use of print media (industry magazines and newspaper), promotional videos,
product fashion shows, dealer incentive programs, etc.
"Carving" is synonymous with the act of surfing, snowboarding, and
skateboarding. The Company and its products are focused on these lifestyle
sports. The surfware and streetware industry is a multimillion dollar product
category. NBC's unique designs are expected to compete favorably in this market.
The Company's tent products are unique and serve these same (and additional)
niche markets.
USE OF PROCEEDS
If fully subscribed, the gross proceeds of this Offering will be $1,000,000.
Assuming Offering expenses of $100,000 the net proceeds of the Offering
<PAGE>
(including commissions payable to broker-dealers) will be $875,000. An
additional $25,000 of expenses is allocated from the proceeds for legal and
accounting, promotion, printing, and other expenses.
The proceeds of this Offering will enable the Company to establish adequate
advertising and marketing, expand current facilities and increase inventory
levels. There can be no assurance, however, that the allocated funds will be
sufficient to accomplish these objectives. To the extent that less than the
maximum amount of the Offering is raised, all categories of usage will be
proportionally reduced. The net funds will be expended approximately as follows:
<TABLE>
<CAPTION>
<S> <C>
Advertising & Marketing $ 100,000
Capital Expenditures 50,000
Inventory 75,000
Working Capital * 650,000
Costs of the Offering ** 125,000
----------
$1.000.000
----------
</TABLE>
* These funds will be used for ongoing operations and general corporate
purposes of the Company.
** Costs of the Offering include commissions to broker-dealers and other
costs associated with legal, accounting, promotion, printing expenses, and
finders' fees, if applicable
There is no escrow account or minimum amount of securities that must be sold
for the Company to accept investor' subscriptions for the shares offered hereby.
Therefore, the Company may use the proceeds of this Offering, as they are
received. There can be no assurance that any specific amount of capital will be
raised by this Offering. If a substantial amount of this offering is not sold,
the Company's ability to conduct its business in accordance with plans described
in this Memorandum any be impaired. Therefore, initial investors will bear a
grater risk than later investors. Failure to sell the maximum amount of
securities may materially impair the Company's ability to carry out its business
plan. Proceeds received for the sale of shares will be utilized by the Company
as they are received. No refund of any of the monies from the sale of shares
pursuant to the Offering will be made.
DILUTION
Assuming all of this Offering had been sold as of_June 30, 1998 and all shares
offered hereunder had been sold on that date (1,000,000 at $1.00 per share), the
following dilution would have occurred. The following table illustrates the pro
forma per share dilution to new stockholders, assuming they purchased their
shares on June 30, 1997:
The Offering
The Offering price per share is $ 1.00. The following table sets forth, at June
30, 1997, the difference between the existing stockholders and the purchasers of
the maximum number of shares in this Offering with respect to the number of
shares purchased from the Company:
<TABLE>
<CAPTION>
<S> <C> <C>
Common Stock Only Shares Purchased
Number Percent
Present stockholders 2,291,000 70.00
Purchasers of Offering 1,000,000 30.00
--------- ---------
3,291,000 100.00
</TABLE>
<PAGE>
THE BUSINESS
THE MARKET
In the United States the wholesale sales of clothing to specialty shops exceeded
$1.35 billion dollars. Participation in the sports and activities most
associated with the Company image are most concentrated in coastal and mountain
regions of the United States. Sales are expected to be strongest in these high
profile areas. In addition, areas of non-participation still show a strong
willingness to be associated with the products associated with the Company. The
Company's tent product lines are focused at a variety of niche markets
including: toys, camping, beach, emergency services, and specialty advertising.
The product line represents a unique approach to outdoor camping and recreation.
The patented tents are self-contained, compact, and inexpensive. As such, the
product line lends itself to various distribution and sales strategies.
During NBC's first year of operation operations have been limited export of its
clothing line to the Japanese market. The main objectives for the near-term
future is to capture some of "Southern California lifestyle" clothing market in
the USA and create demand for our products. There are approximately 3,600 surf
related stores across the U.S. at this time.
CUSTOMER PROFILE
The Company's customer target for clothing includes the demographic ranging from
ages 16 to 35. The product lines are designed to satisfy an unfilled need to
bridge the gap between this younger demographic and the professional that has
grown older in age but not in style preference. There isn't much difference in
the way these two demographics compete except where they shop. The customer
targets for tent products is more diversified and less age-specific.
With the ever growing lifestyle sports and the women's arena growing more
rapidly than the men, NBC expects to add a ladies product line. This could help
with product and name recognition as well as increasing the speed of market
penetration.
COMPETITION
The Company has many competitors to its clothing line. The Company competes with
other small to medium sized specialty clothing labels; many have considerable
resources and mature distribution. These companies include: Freshjive, 26 Red,
Alien Workshop, Eziekel, Volcom and Katin. The larger more well established
labels include, Quiksilver, Billabong, Rusty and Gotcha. These companies compete
in several different product categories within various markets. The Company does
not envision significant direct competition for its tent products. However,
traditional distribution channels (i.e. retail) for new products is generally
difficult to obtain. The Company is pursuing several different distribution
channels for its outdoor product line.
BUSINESS MODEL - MARKETING AND SALES STRATEGIES
The principal challenge faced by the Company is the highly competitive nature of
its target markets. The number and variety of competitor represents a
significant barrier to market access and acceptance. Consequently, the Company
plans to cross over into non-traditional distribution channels by going into
mainstream mass markets retailer while staying close to the home specialized new
era sports shops. Within the next five years management hopes this vision will
transform NBC into an international leader in each of its niche markets.
NBC is located in an historic location of the "Southern California lifestyle",
Encinitas, California. There is an office and showroom located near the beaches
where some of these sports are continually evolving. This helps in the research
and development of our new lines of clothing and equipment.
The Company hopes to develop a channel of distribution that enables it to serve
both specialty retailers and mass markets retailers. To support these channels,
the Company has developed a product mix that allows retailers "one stop
shopping" for soft and hard goods.
As a transition strategy, the Company expects to also use direct sales tactics
targeted at the demographics that we wish to reach. One of the ways we will
direct these sales is by way of our "grass roots" program Another way is to use
advertising campaigns in the top industry magazines. We will also use the US
Post Office direct mail to our targeted markets. With the use of directs sales
NBC will create a demand that will flow directly into sale with large retail
chains within the United States.
The prime market for NBC's product are areas where specialty sports are played.
NBC has chosen to enter in the surfing industry first due to its wide popularity
that reaches all corners of the globe. However, that is very broad market to
start with, so NBC's initially will target its market domestically in California
and branch out anywhere the industries we support are enjoyed throughout the
world. We chose to start with Southern California because it serves as the focal
point in the surfing industry. If something is going to happen, chances are that
it will happen in California first.
NBC promotional plans endorsement of top athletes, staging of special events in
selected niche markets and the recruitment of affiliated clubs. Methods to be
employed include print media advertising (industry magazines and newspapers),
promotional videos, product fashion shows, and dealer incentive plans to support
distribution channels.
The fundamental sales strategy of the Company for it's clothing lines is to sell
directly to the customer, by-passing wholesale distribution. This "consumer
direct" distribution will provide lower prices and high margins.
At present, the Company has a number of projects to support its proprietary
outdoor sports products. These include a contract with the Girl Scouts of
America, which calls for the Company to provide 500 sample play tents with the
logo "I Love the Girl Scouts". As part of the promotional strategy, NBC will
have a full page advertisement in the soon-to-be-released Girl Scout catalog,
which will be sent directly to 3.4 million girls. The Girl Scouts will provide
40 sales representatives traveling the country with samples.
The Company is also negotiating with several other key sales channels, including
school distribution, direct marketers, premium/sales promotion suppliers, and
major retailers.
<PAGE>
NBC's advertising and promotion strategy is grounded in an extensive campaign,
which is to be funded, in part, from the proceeds of this Offering. The Company
expects to leverage its association with schools, organizations and professional
sports.
Buying, Supply and Stocking: Purchasing will be done at fabric marts and through
established material distributors. Our standard production cycle is
approximately 90 days. Buying will be planned accordingly. Planning has been
based on the timing of specific items sales in quantity. This mold allows us to
focus production and buying at teach periods "best sellers." This provides focus
both in selling and advertising efforts. Inventory controls will include
physical security as well as managed levels targeted at planned sales. By using
small production runs targeted at low cost fabrics, margins will remain high.
The Company's plan is contingent upon adequate financing. The Company has
developed a strategy that it believes will enable it to become successful in its
targeted markets. However, the success of its business plan is dependent upon
the Company becoming adequately financed.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF NATURAL BORN CARVERS, INC.
The biographies of the Directors and Officers are set forth below. All Directors
hold office until the next annual shareholders meeting or until their death,
resignation, retirement or until their successors have been elected and
qualified. Vacancies in the existing Board are filled by a majority vote of the
remaining Directors.
Troy J. Flowers, 30, is Chairman of the Board and a Director of NBC. Mr. Flowers
joined the Company in 1997. He is also employed in the corporate finance
department of La Jolla Capital, Inc. in San Diego, California. He has extensive
experience in corporate finance and investment banking and holds Stockbroker and
Principal licenses. Previously, he was chief financial officer of Love Insurance
Agency, Inc. and a vice president of Electronic Service Corporation of America.
Randall J. Lanham, 33, is President, Chief Executive Officer, and a Director of
NBC. He joined the Company in 1997. Mr. Lanham has broad experience developing
and directing domestic and international operations of sporting goods companies.
Prior to joining NBC, he was president and chief executive officer of Springbok,
Inc. whose assets were purchased by NBC. He has also served in executive
capacities for AG Sport, Inc., a sports licensing company; and with Activate
Corporation, a manufacturer of sporting goods. Mr. Lanham is an attorney and is
licensed by the State Bar of California and Virginia. He graduated with a J.D.
from Whittier Collect School of Law.
Douglas Silva, 29, is a Vice President and a Director of NBC. He also is the
founder of the Company. Mr. Silva is a professional surfer. At the age of
fourteen he won his first amateur U.S. Champion title. He also has placed second
in the amateur World Championships and attained a first place ranking in the
NSSA National Scholastic Surfing Association. After turning professional, Mr.
Silva signed sponsorship contracts with Quicksilver clothing, Oakley
sunglasses, and Airwalk Shoe Company, among others. His primary responsibilities
included major international promotional tours, surfing competitions, seminars,
public relations, and research and development of products for his sponsors.
<PAGE>
Arthur J. Lewis, 36, is Vice President of Marketing for NBC. His most recent
professional associations have been as a partner in Professional Management
Services, a Los Angeles-based financial management and marketing firm for
athletes, entertainers and other professionals; and district director of the Los
Angeles Area Council of the Boy Scouts of America. He is particularly skilled in
marketing and promotion within the sports industry. He holds a Bachelor of Arts
Degree from the University of Southern California.
Paul E. Lanham, 67, is Vice President of Outdoor Products for NBC. He has
extensive experience in the professional sports industry, especially as a
coaching professional (for over 20 years) in the National Football
League and NCAA colleges. His associates include positions for the Cleveland
Browns, Washington Redskins, Arizona Wranglers, Los Angeles Rams, St. Louis
Cardinals, the University of Arkansas, and Colorado State University. His
contacts and associations are expected to be of considerable value to NBC. Mr.
Lanham holds a Master's Degree from the University of Delaware and a Bachelor of
Arts degree from Glenville State College.
EXECUTIVE COMPENSATION
None of the Company's executive officers and directors as of the date of this
Memorandum receive annual salaries over $60,000. It is anticipated that such
compensation will exceed $60,000 for certain executive officers and directors
following the completion of this Offering. However, no specific amount of
compensation has been agreed to as of the date of this Offering.
PRINCIPAL SHAREHOLDERS
As of the date of this Private Placement Memorandum, the Issuer has a total
of 50,000,000 par value $.0Ol Common Shares authorized and there are, as of June
30, 1997, 2,291,000 Common Shares outstanding. The officers and directors, as a
group, own collectively 28.4% of the outstanding shares. The table below
indicates the outstanding shares held by officers and directors of the Company.
<TABLE>
<CAPTION>
Name and Position Shares Percent
<S> <C> <C>
Troy Flowers, Chairman of the Board and Director 250,000 10.9%
Randall Lamham, President, CEO, and Director 50,000 2.2%
Douglas Silva, Vice President and Director 250,000 10.9%
Paul Lanham, Vice President 100,000 4.4%
All Executive Officers and Directors as a Group, 4 persons 650,000 28.4%
</TABLE>
LEGAL MATTERS
The Company is not involved in any litigation that would have a material adverse
effect on the Company; and the officers and directors are aware of no threatened
or pending litigation which would have a material, adverse effect on the
Company. (Also see, Notes to Consolidated Financial Statements)
<PAGE>
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company has authorized 50,000,000 Shares of Common Stock, par value $0.00l
per Share, with 2,291,000 Common Shares outstanding as of June 30, 1997. The
holders of Common Stock (1) have equal ratable rights to dividends from funds
legally available thereof, when as and if declared by the Board of Directors of
the Company; (2) are entitled to share ratably in all of the assets of the
Company available for distribution to holders of Common Stock upon liquidation,
dissolution or winding up of the affairs of the Company; (3) do not have
preemptive, subscription or conversion rights and there are no redemption or
sinking fund provisions applicable thereto; and (4) are entitled to one
cumulative vote per share on all matters which shareholders may vote on at all
meetings of shareholders. All shares of Common Stock now outstanding are fully
paid for and non-assessable.
The Common Stock offered hereby have all the rights and privileges of the Common
Stock. All Shares of the Common Stock which are the subject of this Offering,
when issued, will be fully paid for and non-assessable.
DIVIDEND POLICY
The payment by the Company of dividends, if any, in the future rests within the
discretion of the Board of Directors and will depend, among other things, upon
the Company's earnings, its capital requirements and its financial condition as
well as other relevant factors. The Company has not paid or declared any
dividends, and in light of its present financial status, and due to its
contemplated financial requirements, does not contemplate or anticipate paying
any dividends on its Common Stock in the foreseeable future.
TRANSFER AGENT
Corporate Stock Transfer
TERMS OF THE OFFERING
This Offering is speculative and entails a high degree of risk. These securities
are being offered and sold on reliance on the exemption from registration
pursuant to Rule 504 of Regulation D of the Securities Act of 1933 and pursuant
to similar exemptions under various State Securities Acts. The Company recently
commenced operations in active clothing wear and outdoor sporting goods and has
little or no history of operations or profits in this industry. Accordingly,
there can be no assurance as to profitability and there is no current market for
the Shares offered hereby. Investors hereunder will suffer dilution.
The Securities being offered hereby have not been registered under the
Securities Act of 1933, as amended, (the "Act"), in reliance upon an exemption
from such registration, which depends on the full compliance with certain terms
and conditions.
An investment in the shares involves a high degree of risk to investors. The
Offering price has been arbitrarily determined by the Company and bears no
relationship to assets, earnings, book value, or any other criteria of value,
including its public trading price. (See "Risk Factors.) No one is authorized to
give any information or to make any representations other than those contained
in this Memorandum in connection with the Offering described herein and, if
given or made, such information or representations must not be relied upon. This
Memorandum does not constitute an offer to sell any of the stock offered herein
to any person in any state or country in which is unlawful to make such an offer
or solicitation.
<PAGE>
This Memorandum does not constitute an offer or solicitation to any person
residing in a jurisdiction in which such offer or solicitation is not authorized
or in which the person making the offer or solicitation is not qualified to do
so. No person has been authorized to give any information or to make any
representations concerning the corporation other than those contained in this
Memorandum. Any other such representations must not be relied upon as having
been authorized by the corporation. Neither the delivery of this Memorandum nor
any sale made hereunder shall under any circumstances create an implication that
there have been no changes in the affairs of the corporation since the date
hereof. This Memorandum supersedes and replaces any and all information
delivered or made available or on behalf of the corporation to the recipients of
this Memorandum prior to the date hereof.
All other documents relating to this Offering will be made available to a
prospective investor and/or his advisors by the corporation upon request. No
Offering literature or advertising in any form should be relied upon in
connection with the Offering except for this Offering Memorandum and the
statements contained in it. No dealer, salesman or other person has been
authorized to give any information or to make any representation not contained
in this Memorandum and supplemental literature referred to herein, and if given
or made, such information or representation must not be relied upon as having
been authorized by the corporation.
The distribution of this Private Placement Memorandum and offering of the stock
in certain jurisdictions may be restricted by law. Persons obtaining possession
of this Memorandum are required by the Company and the selling agent to inform
themselves about and to observe such restrictions. This Memorandum does not
constitute an offer to sell or a solicitation of an offer to buy the stock in
any jurisdiction or to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction.
PLAN OF DISTRIBUTION
NASD Broker-Dealers may participate in selling this Offering. If so, they will
receive commissions of 10% up to a maximum of $100,000 for this Offering. Sales
will be made pursuant to Rule 504 of Regulation D of the Securities Act of 1933,
as amended. It is intended that the Offering will be sold in several states in
accordance with their applicable laws. Sales will also be made by officers of
the Company who will receive no commissions. The Company may pay finders' fees
of up to 15% if appropriate.
The Offering will be for a maximum period of 180 days. The Company may at its
sole discretion however, either close the Offering before all the shares have
been sold or extend the Offering period for a further 180 day period.
Investors should consult their own counsel and accountants as to tax and related
matters concerning their investment. Neither the Issuer nor any person or
corporation participating in the Offering or sale of the shares or in subsequent
communications will be providing any legal or tax advice for the Investors. The
obligations and representations of the parties to this transaction will be set
forth only in the documents to be entered into. This Memorandum has been
prepared solely for the information of the persons interested in the proposed
private placement of these shares and may not be reproduced or used for any
other purpose. The information contained herein is considered to be a fair
summary of relevant information pertinent to this investment and of the material
items referred to therein.
<PAGE>
This Offering is speculative and entails a high degree of risk (See risk
Factors"). The shares are restricted as to transferability, except in compliance
with SEC Rule 144, and sections 4(1) and 4(2) of the Securities Act of 1933 as
amended. Investors should be prepared to hold these shares for a lengthy period.
The Company will make available at a reasonable time prior to the consummation
of the transactions contemplated herein, to each purchaser of shares the
opportunity to ask questions of; and receive answers from, the officers of the
Company concerning the terms and conditions of this Offering, and to obtain any
additional information necessary to verily the accuracy of the information set
forth herein.
FINANCIAL STATEMENTS
Attached to this Memorandum is a copy of the Company's audited balance sheet and
notes thereto at June 30, 1997.
MERLE S. FINKEL
CERTIFIED PUBLIC ACCOUNTANT
210 Grant Street
Suite I
Pittsburgh, PA 15219
(412) 393-0805 (310) 473-4700
ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders of Natural Born Carvers, Inc.
I have audited the accompanying balance sheet of Natural Born Carvers, Inc.
(formerly Eyre Trading Group, Ltd.) (a development stage company) as of June 30,
1997. This financial statement is the responsibility of the company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also included
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statement referred to above presents fairly, in all
material respects, the financial position of Natural Born Carvers, Inc.
(formerly Eyre Trading Group, Ltd.) (a development stage company) for the dates
listed above, in conformity with generally accepted accounting principles.
M.S. FINKEL
Pittsburgh, Pennsylvania
August 11, 1997
<PAGE>
<TABLE>
<CAPTION>
Natural Born Carvers, Inc.
(formerly Eyre Trading Group, Ltd.)
(a development stage company)
BALANCE SHEET
JUNE 30, 1997
ASSETS
<S> <C>
Current assets:
Cash $ 4,228
Inventory 9,829
Total current assets 14,057
Property and equipment:
Land note 5) 6,100,000
Furniture and equipment 15,267
Total property and equipment 6,115,267
Total assets $6,129,324
----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,548
Long-term liabilities:
Long term debt 624,485
----------
Total liabilities 627,033
Stockholders' equity:
Preferred stock, Series B
1,500,000 shares authorized at $5.00 par value;
1,100,000 shares issues and outstanding at 6130/97 5,500,000
Common stock
50,000,000 shares authorized at $001 par value;
2,291,000 shares issued and outstanding at 6/30/97 2,291
----------
Total stockholders' equity 5,502,291
----------
$6,129,324
----------
</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE>
Natural Born Carvers, Inc.
(formerly Eyre Trading Group, Ltd.)
(a development stage company)
NOTES TO BALANCE SHEET
JUNE 30, 1997
NOTE 1 ORGANIZATION AND ACQUISITIONS:
Natural Born Carvers, Inc. (the "Company" or "Natural") was Incorporated on
March 22, 1996 under the laws of the State of Colorado under the name Eyre
Trading Group, Ltd. As a Colorado corporation.
The Company is currently a development stage enterprise which Intends on
engaging In two major business lines as follows:
1.the marketing and sales of sportswear and,
2.the development of a raw land parcel in Northern Tucson, Arizona.
Initial sales and development of the sportswear line is targeted to the
western region of the United States and the land development is located in
the western region of the United States.
The Company had a major change In stockholders when on May 8, 1997, the
Company acquired the assets of Natural Born Carvers, inc. In exchange for
common stock of Eyre Trading Group, Ltd. which was formed on January 2,
1996 as a California corporation. The acquisition Agreement provided for
the issuance of 851,000 shares of common stock of the Company In exchange
for all the assets of Natural Born Carvers, Inc.
The assets of the acquired company, Natural Born Carvers, Inc. were valued
at less than $20,000 as of the acquisition date.
On May 8, 1997, the Board of Directors approved a name change which was
filed with the Secretary of State. The name change became effective May 8,
1997 and the Company name became Natural Born Carvers, Inc.
On May 8, 1997 the Company amended its Articles of Incorporation to provide
for authorization of 1,500,000 shares of 5% Convertible Class B Preferred
Stock, $5.00 par value.
Also on May 8,1997 the Board of Directors approved the issuance of
1,100,000 shares of Preferred Shares Class B for the right to purchase a
parcel of land consisting of 102 acres located in Pima County, 12 miles
north of Tucson, Arizona. Said land is under a purchase option agreement by
Greenland Corporation and Greenland and the Company have entered into an
assignment of Greenland's option agreement. The seller's of the land to
Greenland under said Option Agreement have consented to the transfer of the
option from Greenland to the Company. (See Note 5 - Land Option.)
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(a) Principles of Reporting Acquired Companies:
The financial statements Include the accounts of the Company and the
acquired assets of Natural Born Carvers, Inc., a California
corporation based on the value of the acquired assets as of the date
of acquisition.
<PAGE>
(b) Use of Estimates:
In preparing financial statements in accordance with generally
accepted accounting principles, management makes certain estimates and
assumptions, where applicable, that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements, as well as
amounts of revenues and expenses during the reporting period. While
actual results could differ from those estimates, management does not
expect such variances, if any, to have a material effect on the
financial statements.
(c) Inventories:
Inventories are stated at the lower of cost (first-In, first-out
method) or market. The Inventory consists of the following:
Finished goods
(d) Property and equipment:
$9,829
Property and equipment is recorded at cost. Depreciation of property
and equipment will be provided on a straight line basis as follows:
Office furniture and equipment 5 years
Maintenance and repairs are expensed as incurred while renewals and
betterment's are capitalized.
(e) Income taxes:
The Company follows Statement of Financial Standards No.109 ("SFAS
109"), "Accounting for Income Taxes," which requires the Company to
recognize deferred tax assets and liabilities for future tax
consequences attributable to differences between the liabilities and
their respective tax basis. In addition, SFAS 109 requires recognition
of future tax benefits such as net operating loss carry forwards, to
the extent that realization of such benefits is more likely than not.
Accordingly, the Company has established a policy of 100% valuation
allowance against any deferred tax assets resulting principally from
net operating loss carry forwards until it is more likely than no that
the Company will realize taxable income. At June 30, 1997 the Company
has no operating history and consequently no not operating loss carry
forwards.
(f) Fiscal year:
The Company operates on a June 30 fiscal year end.
(g) Cash and cash equivalents:
The Company considers all highly liquid Investments with all original
maturity of three months or less to be cash equivalents.
<PAGE>
(h) Calculations of Per Common Share earnings (Losses):
Income (loss) per share will be computed on the basis of the weighted
average number of common shares outstanding during each period
presented.
NOTE 3 GOING CONCERN:
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. Although the Company
is in its development stage, its ability to continue as a going
concern is dependent upon the ability of management to obtain
sufficient financing, and ultimately achieving profitability.
NOTE 4 DIVIDEND POLICY:
The Company does not anticipate paying dividends until the Company
becomes profitable.
NOTE 5 OPTION AGREEMENT -102 ACRES OF LAND:
On December 28, 1995 Greenland Corporation ("Greenland"), non-related
entity, entered into a land purchase option agreement to acquire
approximately 102 acres of land situated in Pima County, Arizona,
approximately 12 miles from Tucson, Arizona.
The Agreement, among other things, provided that Greenland issued
common stock for the Option Agreement and additional stock for the
acquisition of the land under the Option Agreement.
Effective May, 1997 in an Assignment of the Option Agreement, signed
on June 24, 1997, the Seller of the Land, the Company and Greenland
all consented to Greenland's assignment of the Option Agreement to the
Company. The assignment provided for the Company to issue 1,100,000
shares of its Class B Preferred Stock to Greenland and Greenland to
issue its common stock to the Seller of the Land in accordance with
the original Option Agreement.
The Company has relied upon a supplied appraisal report by Ruth J.
Oaks, C.C.R.A. and C.R.E.A. (Certified General Real Estate Appraiser)
dated December 23, 1995 and updated on July 12, 1996. Said appraisal
valued the land at $8,250,000 and also Indicated a "FAST SALE" value
of $5,600,000. The Company has selected to value the land option at
about 10% higher than the Fast Sale valuation of $6,100,000. This
value is slightly over $2,000,000 less than the value of $8,250,000
for purposes of conservatism.
The land acquisition option also provided for the assumption of a
first deed of trust In the face amount of $435,000 plus accrued
interest, plus assumption of all unpaid property taxes. (See Note 6 -
Long Term Liabilities.)
<PAGE>
NOTE 6 LONG TERM LIABILITIES:
As of June 30, 1997 the Company had executed the necessary escrow
documents to allow the Company to purchase the parcel of land of
approximately 102 acres located outside Tucson, Arizona, and the
Company has issued the preferred stock In order to reflect the
acquisition of the land.
Accordingly, the purchase of the land required the assumption of an
existing note and deed of trust in the face amount of $435,000. This
notes bears interest at the rate of 17% and is all due and payable
December31, 1997. Interest has remained unpaid and totals $189,485.
The total amount of the first deed of trust, based on the closing date
of the property, May 14, 1997, effective as of June 30, 1997, is
$624,485.
The title policy to the land was issued by Mission Valley Escrow, 2565
Camino del Rio South, San Diego, CA 92108.
NOTE 7 COMMITMENTS AND CONTINGENCIES:
(a) Lease commitments:
The Company leases an office and operating facility located at
101 Second Street, Encinitas, California 92024.
(b) Litigation:
The Company's management and legal counsel Indicate, to the best
of their knowledge and belief, there is no litigation In process
or pending.
<PAGE>
Exhibit 99 (ii) NAME OF OFFEREE
MEMORANDUM
NO.
CONFIDENTIAL PRIVATE PLACEMENT
CARV.COM
INCORPORATED
January 21, 1999
Common Stock: 80,000 Shares
Offering Price: $12.50 Per Share
Minimum Purchase: 400 Shares for $5,000.00
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
<S> <C> <C>
Price to Proceeds to
Subscribers Company
Per minimum $ 5,000 $ 3,600
Total $1,000,000 $ 800,000
</TABLE>
I Participating broker-dealers will be provided a commission of 10%. This
offering is also being sold by the Company through its employees who are not
paid any commissions on the proceeds. The Proceeds to the Company are before
deducting estimated expenses of approximately $150,000 for legal, accounting,
promotion, printing and other expenses incurred in this Offering, including
finders' fees, if anywhere appropriate.
Issuer.
CARV.com, Incorporated
17301 Beach Blvd., Suite 2
Huntington Beach, California 92647
(888) SK8-SURF (838) 758-7873
<PAGE>
CARV.COM, INC.
80,000 SHARES COMMON STOCK
This Offering is being made and shares of common stock for $12.50 per share,
will be sold, pursuant to an exemption from registration pursuant to Rule 504 of
Regulation D of the Securities Act of 1933, as amended. This Memorandum is being
provided for the purpose of acquainting potential investors with the structure
and general business of CARV.com Inc. (hereinafter "CARV" and/or the "Company")
the Company and highlighting the risks involved in investing in the Company. Any
further information about the Company required by a recipient of this Memorandum
shall be made available to such individual upon receipt by the Company at its
office located at 17301 Beach Blvd., Suite 2, Huntington Beach, California
92647(888) 758-7873, of written request for such information. Additionally, any
potential investor may visit the Company in person.
This Memorandum does not constitute an offer or solicitation in a state or any
other jurisdiction in which such an offer or solicitation is not authorized. In
addition, this Memorandum constitutes an offer only if a name has been inserted
in the "name of offeree" space on the cover page. In such event, this Memorandum
is an offer only to the person named.
THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE BY REASON OF SPECIFIC
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS RELATING TO LIMITED
OFFERINGS AND/OR TRANSACTIONS NOT INVOLVING A PUBLIC OFFERING.
THE SHARES OFFERED HEREBY ARE SUBJECT TO TRANSFER RESTRICTIONS AND INVOLVE A
HIGH DEGREE OF RISK. THE SHARES SHOULD NOT BE PURCHASED BY ANY INVESTOR THAT
CANNOT AFFORD THE LOSS OF HIS OR HER ENTIRE INVESTMENT. SEE "INVESTMENT
CONSIDERATIONS" FOR CERTAIN FACTORS WHICH MUST BE CAREFULLY CONSIDERED BY
PROSPECTIVE INVESTORS BEFORE PURCHASING SHARES.
This Confidential Memorandum (the "Memorandum") is being provided to a limited
number of prospective investors solely for the purpose of assisting such parties
in determining whether they wish further to consider a possible investment in
the Common Shares of CARV, a Colorado corporation.
This Memorandum has been prepared by the Company and from trade and industry
sources deemed reliable by the Company. The Company makes no representation or
warranty as to the accuracy or completeness of this information. Moreover, this
Memorandum is intended only to provide certain general information regarding the
Company, its business, and the possible terms of an investment in the Shares,
and does not purport to provide complete disclosure or analysis of all matters
which may be relevant to an investment decision in the Shares, including risk
factors or similar investment considerations. The company shall not have any
liability for any representations (express or implied) contained in, or for any
omissions from, this Memorandum or any other written or oral communications
transmitted to the recipient in the course of its evaluation of this investment.
Only those particular representations and warranties made to the investor iii a
definitive purchase agreement, as and when executed, and subject to such
limitations as may be described therein, shall have any legal effect. It is
understood that each prospective investor will make his or her own independent
investigation into this investment and will be relying upon the same in making
any such investment. In that regard, representatives of the Company will be
available to discuss with prospective investors, upon request, the information
contained in this Memorandum and prospective investors will be given the
opportunity to visit the facilities of the Company and to discuss its affairs
with appropriate personnel of the Company.
<PAGE>
By accepting this Memorandum, the recipient agrees: (1) to keep confidential the
information contained herein or made available in connection with any further
investigations of the Company; (2) without limiting the generality of the
foregoing, the recipient will not reproduce or redistribute this Memorandum in,
in whole or in part; (3) without limiting the generality of the foregoing, if
the recipient does not wish to pursue this investment, it will return this
Memorandum to the Company as soon as practicable, together with any other
material relating to the Company or its related entities which the recipient may
have received from the Company; (4) it will not contact, directly or indirectly,
any customer, supplier, or other third party relating to the Company or their
respective businesses, without the prior written consent of the Company; and (5)
any proposed actions by the recipient which are inconsistent in any manner with
the foregoing agreement will require the prior written consent of the Company.
This Memorandum shall not be deemed an indication of the state of affairs of the
Company or the business and technology described herein, nor an indication that
there has been no change in such matters since the date hereof. The information
contained in this Memorandum is for background purposes only and is subject to
change, amendment, or supplement in the course of a prospective investor's
investigation into a possible investment in the Company.
All communication and inquiries relative to this Memorandum or to a possible
transaction should be directed solely to the Company.
For information, Please Contact
CARV.com, Incorporated
17301 Beach Blvd., Suite 2
Huntington Beach, California 92647
(888) 5K8-SURF - (888) 758-7873
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Offering Summary 5
Risk Factors 7
The Company 9
Use of Proceeds 10
Dilution 11
The Business 11
Management 13
Principal Shareholders 14
Legal Matters 14
Description of Securities 14
Terms of the Offering 15
Plan of Distribution 16
Financial Statements 16
</TABLE>
OFFERING SUMMARY
The following is a summary of the pertinent facts of this Offering. The full
Offering Memorandum should be read in its entirety, as this summary does not
constitute a complete recitation of facts necessary to make an investment
decision. This Offering involves a high degree of risk and dilution.
The Company
CARV.com, Inc., (CARV) is a Colorado corporation formed on January 2, 1996.
The principal business of the Company is the design, manufacture, and sale of
sports clothing (principally for surfing, bodyboarding, and skating) and outdoor
sports equipment. The Company is in its development stage and is in the process
of expanding its retail distribution for its products. Initial marketing efforts
have produced some encouraging results, including clothing sales in Asia and
sales of the Company's outdoor equipment through alternative distribution
channels such as direct marketers, promotional companies, etc.
Business Operations
The Company has a strong philosophical belief of growing through mergers
and acquisitions. In the last year the Company has acquired or initiated
acquisitions with the following five (5) companies:; I) Clockwork - a skateboard
manufacturer; 2) X Sports - an internet retail outlet; 3) Outcast - a bodyboard
<PAGE>
and wet suit manufacturer; 4) Pure Juice - a California causal lifestyle foot
wear and 5) Springbok - a self-erecting structure company. The Company also has
an agreement to sell its pop-up play tents to the Girl Scouts of America and is
working on agreements with several additional customers in direct marketing,
wholesale distribution, and premium sales. CARV intends to use the proceeds of
this offering to further its business plan. Its principle short-term objectives
include:
penetrating retail and specialty markets in the United States as well as
continuing to grow international opportunities. Substantial additional capital
will be necessary to complete the Company's business plan.
Securities Offered
This Offering consists of 80,000 shares of common stock. The Offering price
is $12.50 per share for total of $1,000,000. A minimum purchase of $4,000 is
required.
Plan of Distribution
Participating Broker-Dealers will receive a sales commission of 10%. This
Offering will also be made by officers of the Issuer, who will receive no
commission. The Company may also pay finders' fees to third parties where
appropriate.
Use of Proceeds
Proceeds of this Offering will be used to help expand the Company's
Internet capabilities, to fund manufacturing of product and sales. In addition,
funds will be used to seek out and complete new acquisitions of the Company.
Also, the funds shall be used to support and fund those acquisitions once they
become wholly owned subsidiaries. Including but not limited to advertising,
production, and other working capital needed for the companies to establish
themselves in the specialty sports markets.
Illiquidity
The shares purchased under this Offering have not been registered with the
Securities and Exchange Commission; rather, these shares will be issued pursuant
to an exemption from registration. Thus, anyone wishing to sell shares purchased
under this Offering must either register the shares or sell them under an
exemption from registration. At present, the Company's shares are traded
over-the-counter on the NASD Electronic Bulletin Board. There can be no
assurance, however, that a
substantial market wilt develop for the Company's common stock, nor that the
shares offered hereby will trade at a value equal or greater than the purchase
price of this Offering. Purchasers should therefore be prepared to hold their
shares for a lengthy period of time.
Risk Factors and Dilution
This Offering involves a high degree of risk (See "Risk Factors') and
dilution (See "Dilution?').
<PAGE>
Competition
The Company's industries are highly competitive. Many of its competitors
are welt established and have greater financial and personnel resources than the
Company. (See "Business")
RISK FACTORS
This Offering entails an extremely high degree of risk and entails a
potential for toss of all of one's investment. Therefore, prospective investors
should carefully consider the following:
The ownership of shares involves certain risk factors, including without
limitation, lack of liquidity, various conflicts of interest, and economic and
market risks.
AN INVESTMENT IN THESE SHARES IS A HIGH-RISK INVESTMENT. THE PURCHASE OF
THESE SECURITIES IS SUITABLE ONLY FOR INVESTORS OF SUFFICIENT FINANCIAL MEANS
WHO HAVE NO NEED FOR LIQUIDITY TO THE EXTENT OF THEIR INVESTMENT IN THE COMPANY
AND WHO ARE ABLE TO SUSTAIN A COMPLETE LOSS OF THEIR INVESTMENT. CARV HAS A
LIMITED OPERATING HISTORY AND THERE IS NO ASSURANCE THAT IT CAN MEET ALL OF THE
GOALS AND OBJECTIVES OF MANAGEMENT IN ADDITION TO THE FACTORS SET FORTH
ELSEWHERE HEREIN, PROSPECTIVE INVESTORS ARE ADVISED TO CAREFULLY CONSIDER THE
FOLLOWING MATTERS AND SHOULD CONSULT THEIR OWN LEGAL, TAX AND FINANCIAL ADVISORS
WITH RESPECT THERETO THE RISK FACTORS SET FORTH HEREIN AND THROUGHOUT THIS
MEMORANDUM ARE NOT INTENDED TO BE, AND ARE NOT, AN EXHAUSTIVE LIST OF ALL THE
POSSIBLE GENERAL OR SPECIFIC RISKS.
Lack of Operations and Profitability
The Company commenced operations approximately two and one-half years ago
and has little or no history of operations or profits in the industries in which
it participates.
Need for Additional Financing
The Company will require additional financing in order to establish
profitable, ongoing operations; there is no assurance that such financing will
be available or, if available, that it can be obtained on terms favorable to the
Company. Consequently, should the Company be unable to secure needed additional
financing, it is possible that some or all of the proceeds of this Offering
could be expended without significant benefit to the Company.
Dependence on Management
CARV is largely dependent upon the efforts and abilities of management.
However, Management has not yet been successful in operating CARV at a profit,
and has no experience in operating a profitable sports company, nor sports
companies on a long-term basis. There is no assurance that management will be
able to manage CARV's transition from start-up to a profitable company.
Competition
The Company is subject to competition from a number of other companies that
provide the same or similar services. Some of these competitors have been in the
business longer than CARV and may have large executive and operating staffs.
There can be no assurance that the Company's prospects will not be adversely
affected by competition from these companies.
<PAGE>
Restriction on Transfer
Investors should be fully aware of the long-term nature of their investment
in the Company. Each investor will be required to represent that they are
purchasing the shares for their own account for investment purposes and not with
a view to resale or distribution. The shares (including the underlying shares of
common stock) will not be registered under the Securities Act of 1933 nor, with
certain exceptions, under state securities laws by reason of specific exemptions
under the provisions of such acts, which depend in part, upon the investment
intent of such Investor. The shares are not readily transferable and no transfer
of shares may be made unless the Company consents to such transfer and if
requested by the Company, the transferor delivers to the Company an opinion of
Counsel satisfactory to the Company that the transfer does not violate federal,
including but not limited to SEC and FCC rules, or state securities laws.
Offering
There is no minimum amount of securities that must be sold for the Company
to accept investors' subscriptions for the shares offered hereby. If less than
the maximum of 125,000 shares offered by this Memorandum are sold, the Company's
ability to conduct its business in accordance with plans described in this
Memorandum may be impaired. Therefore, initial investors wilt bear a greater
risk than later investors will. Failure to sell the maximum amount of securities
may materially impair the Company's ability to carry out its business plan.
Determination of Offering Price
The price at which the shares are being offered was not determined by
arms-length negotiation and does not necessarily reflect the prior operations,
net worth, or value of the Company or any other customary investment criteria,
including the current public trading price of its common stock.
Possible volatility in trading price of Common Stock
The Company's Common Stock is traded over-the-counter on the NASD
Electronic Bulletin Board under the symbol "CARV" In the past, the trading price
of the Company's Common Stock has experienced substantial volatility. There can
be no assurance that such volatility in the trading price of the Company's
Common Stock will not continue in the future, nor can there be any assurance
that the Company may in the future satisfy the requirements to be listed on the
NASDAQ Small Cap Market System or any other nationally recognized exchange.
Illiquidity
The shares purchased under this offering are "restricted securities" as
defined by Rule 144 of the Securities Act of 1933 and will be restricted as to
transferability. At present, the Company's shares are not widely traded and
there can be no assurance that a substantial market will develop for the
Company's common stock. Purchasers should therefore be prepared to hold their
shares for a lengthy period of time.
<PAGE>
Dilution
Investors purchasing under this Offering would be subject to significant
dilution in the resulting book value of their shares from the Offering price of
$0.35 per share when the Company offers additional shares of Common and/or
Preferred Stock for the purposes of additional capital or assets. The Company is
currently authorized to issue 50,000,000 shares of Common Stock and a series of
classes of its Preferred Stock (5,000,000 shares total).
Regulation D Debenture
In February 1998, the Company raised approximately $1,000,000 principal
amount, through the sale of convertible debentures pursuant to Regulation D,
504.
Speculative Investment
This is a speculative investment. Many of the factors which may affect the
Company and its affairs are subject to change or are not within the control of
the Company, and the extent to which such factors could restrict the activities
or adversely affect the Company is not currently ascertainable. Those factors
include, without limitation: the trends in the sports and fashion world, the
weather and its volatile nature, i.e. El Nino, interest rates and the
availability of debt and equity financing, unexpected advances by the
competition, economic supply and demand for sports related products, financial
controls and other governmental imposed restrictions, changes in tax laws and
other legislation and judicial decisions, acts of God or other calamities.
Commitment to the Subsidiaries
The CARV has acquired from various private parties several subsidiaries. As
part of each acquisition CARV has supported each company financially and
operationally. While CARV has hired and retained key personnel necessary to
further its efforts in development and improvement of each subsidiary and will
continue to do so on an ass needed basis. However, there can be no assurance,
how ever, that any of the subsidiaries will continue as a viable company or as a
part of CARV. Operations
The Company cannot project with certainty the outcome of its operations.
There are no assurances that the Company will operate profitably.
Economic Risks
Local, national and international economic conditions may have a
substantial adverse affect on the efforts of the Company. The Company cannot
guarantee against the possible eventuality of any of these potential adverse
conditions.
<PAGE>
THE COMPANY
CARV is a Colorado corporation formed on January 2, 1996. The principal
business of the Company is the design, manufacture, and sale of sports clothing
(principally for surfing and in-line skating) and outdoor sports equipment,
principally tents featuring a unique foldout design. The Company is in its
development stage and is in the process of expanding its retail distribution for
its products. Initial marketing efforts have produced some encouraging results,
including clothing sales in Japan and sales of the Company's outdoor equipment
through alternative distribution channels such as direct marketers, promotional
companies, etc. The principal place of business and offices of the company are
located at 17301 Beach Blvd., Suite 2, Huntington Beach, California 92647.
CARV's markets are growing out of the "Generation X" craze, which has
spawned mm-industries such as wakeboarding, bodyboarding and numerous extreme
sports. Company research reveals a growth market through the year 2000. However,
the Company is only beginning to enter a very competitive market Management
recognizes that it will take some period of time to establish a viable identity
and to establish its credibility with potential customers.
"Carving is synonymous with the act of surfing, snowboarding, and
skateboarding The Company and its products are focused on these lifestyle
sports. The surfwear and streetwear industry is a multimillion-dollar product
category. CARV's unique designs are expected to compete favorably in this
market. The Company's Lent products are unique and serve these same (and
additional) niche markets.
CARV is developing an aggressive promotional and sales plan to establish
its customer base. Components of the plan include endorsement of top athletes,
participation in and sponsorship of special events, and the recruitment of local
clubs associated with niche sports activities. The Company will need to promote
its product lines widely and frequently as finances allow. Tactics include the
use of print media (industry magazines and newspaper), promotional videos,
product fashion shows, dealer incentive programs, etc.
CARV, its subsidiaries and initiated acquisitions manufacture and market
products positioned to address emerging sports markets including surfing,
in-line skating, beach, skate-boarding and camping. The subsidiaries and
proposed subsidiaries are as follows:
Natural Born Carvers Wear- The current clothing product line consists of two
seasonal segments. The spring/summer product line includes board shorts, walk
shorts, short-sleeve button-up shirts, short-sleeve T-shirts, and baseball caps.
The fall/winter line includes corduroy trousers, denim trousers, long sleeve
button-up shirts, corduroy jackets, polar fleece jackets, and polar fleece
beenies.
Pure Juice - founded in 1971 as a sandal companies it currently offers a full
line of athletic footwear. CARV acquired Pure Juice and its parent company
Gellis, Inc. earlier this year. Sales for Pure Juice were approximately 2.5
million last year and gives synergy to CARV's apparel line. Footwear crosses all
extreme sports markets; surfers, bodyboarders, skateboarders, and snowboarders
all wear the same brand and style shoes.
<PAGE>
Outcast - a wetsuit designer, manufacturer and distributor catering to the
boadyboard industry. Founded by world-renowned bodyboarders Paul Roach, JJ
Ayala, Jordon Hedrick, and Fred Booth In conventional "Surf" industry thinking a
company would not specifically market to the bodyboarders, it would taint" their
reputation. However, in today's market bodyboarders outnumber surfers over 5 to
1.
XSports - a direct sale outlet that utilizes the World Wide Web and catalogs to
reach extreme sports customers. X Sports' web site, www.skatesurfsnow.com, is
designed to attract the "x generation" and sell them product via the Internet. X
Sports not only offers CARV's and its subsidiaries' products but the
competitions, as well. Such companies include Gotcha, Reef Brazil, DC shoes and
others.
Springbok, Inc. - its outdoor sports product line includes a proprietary
(patented) pop-up, self-contained line of tent and net products with
applications including children's toys, camping, beach, goals, golf driving
nets, military and emergency relief, specialty advertising, etc. These
"Springbok" tents are simple, convenient, and inexpensive. They fill several
niche markets that have not been adequately addressed by other companies.
Clockwork - a skateboard manufacturer based in Hunting Beach California,
Clockwork was founded by Brian Patch, a world famous skateboarder and medallist
at the "Extreme Games" in San Diego, California. The skateboard industry is one
of the strongest in the extreme sports market, and Clockwork would allow CARV to
enter a market that up until now it has had very little opportunity to gain
exposure in.
USE OF PROCEEDS
If fully subscribed, the gross proceeds of this Offering will be $1,000,000.
Assuming Offering expenses of $150,000 the net proceeds of the Offering
(including commissions payable to broker-dealers) will be $850,000. An
additional $50,000 of expenses is allocated from the proceeds for finders' fees
that may be payable to third parties
The proceeds of this Offering will be utilized for marketing, distribution,
production and normal operating expenses and to expand its marketing efforts in
order to achieve positive cash flow at the earliest possible date. There can be
no assurance, however, that the allocated funds will be sufficient to accomplish
these objectives. To the extent that less than the maximum Offering is raised,
all categories of usage will be proportionally reduced. The net funds will be
expended approximately as follows:
<TABLE>
<CAPTION>
<S> <C>
Funding $1,000,000
Working Capital $ 800,000
Costs of the Offering $ 200,000
----------
TOTALS $1,000,000
</TABLE>
1. The Company will use these funds to support the growth through mergers and
acquisitions In addition, the funds will be utilized for product
development and costs of goods.
2. These funds will be used for ongoing operations and general corporate
purposes of the Company.
3 Costs of the Offering include commissions to broker-dealers and other costs
associated with legal, accounting, promotion, printing expenses, and
finders' fees, if applicable.
There is no escrow account or minimum amount of securities that must be sold for
the Company to accept investor' subscriptions for the shares offered hereby.
Therefore, the Company may use the proceeds of this Offering, as they are
received. There can be 110 assurance that any specific amount of capital will be
<PAGE>
raised by this Offering. If a substantial amount of this offering is not sold,
the Company's ability to conduct its business in accordance with plans described
in this Memorandum any be impaired. therefor', initial investors will bear a
grater risk than later investors. Failure to sell the maximum amount of
securities may materially impair the Company's ability to carry out its business
plan. Proceeds received for the sale of shares will be utilized by the Company
as they are received. No refund of any of the monies from the sale of shares
pursuant to the Offering will be made.
DILUTION
Assuming this entire Offering had been sold as of December 30, 1999, and all
shares offered hereunder had been sold on that date (80,000 at $12.50 per
share), the following dilution would have occurred. The following table
illustrates the pro forma per share dilution to new stockholders, assuming they
purchased their shares on December 31, 1998. The table sets forth, at December
30, 1998, the difference between the existing stockholders and the purchasers of
shares in this Offering (offering price of shares. $12.50) with respect to the
number of shares purchased from the Company, the total consideration paid, and
the average price per share, these figures are based on the Company's estimated
net worth and are an approximation:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Common Stock Only Shares Purchased Total Consideration
Average price
(Maximum) Number Percent Amount Percent per share
Present stockholders. 390,000 70 $ 3,000,000
$ 7.69
New Stockholders: 80,000 30 $ 1000000
------------------ ---------------- --------------------
$ 12.50
------------------
100.0 33.0 162.0
</TABLE>
THE BUSINESS
The Market
In the United States the Internet is the fastest growing medium. There were
over three billion dollars (3,000,000,000) spent in total Internet sales in
1998. The wholesale sales of clothing to specialty shops exceeded $1.35 billion
dollars. Participation in the sports and activities most associated with the
Company image are most concentrated in coastal and mountain regions of the
United States. Sales are expected to be strongest in these high profile areas.
In addition, areas of non-participation still show a strong willingness to be
associated with the products associated with the Company. CARV's subsidiaries
and initiated acquisitions have attempted to penetrate as many segments of the
extreme sports market as possible. In this effort to diversify CARV is not
relying on one division to determine the success or failure of the entire
Company. In addition, with separate divisions CARV, will remain focused on its
particular market and not forced by economic or saturation factors to try and
penetrate a different market. For example, Outcast may remain within the
bodyboard industry and not forced to attempt to try and penetrate the surf
industry and vise versa with Natural Born Carvers Wear. in addition, the
Company's tent product lines are focused at a variety of niche markets
including: toys, camping, beach, emergency services, and specialty advertising.
<PAGE>
The product line represents a unique approach to outdoor camping and recreation.
The patented tents are self-contained, compact, and inexpensive. As such, the
product line lends itself to various distribution and sales strategies.
CARV has also penetrated the Internet market with X Sports and is utilizing the
World Wide Web to sell its products and products of its computers to any
customer with access to a computer. X Spouts will be distributing direct mail
catalogs to specifically targeted customers. This has been a proven method of
sales and marketing.
During CARV's first year and half of operations CARV and its subsidiaries
have sold product mostly in the US but, in many countries through out the world.
The main objectives for the near-term future is to capture some of "Southern
California lifestyle" clothing market in the USA and create demand for our
products. There are approximately 3,600 surf related stores across the U.S. at
this time.
Customer Profile
The Company's customer target for clothing includes the demographic ranging
from ages 16 to 35. The product lines are designed to satisfy an unfilled need
to bridge the gap between this younger demographic and the professional that has
grown older in age but not in style preference. There isn't much difference in
the way these two demographics compete except where they shop. The customer
targets for tent products are more diversified and less age-specific.
With the ever growing lifestyle sports and the women's arena growing more
rapidly than the men, CARV expects to add a ladies product line. This could help
with product and name recognition as well as increasing the speed of market
penetration.
Competition
The Company has many competitors to its clothing line. The Company competes
with other small to medium sized specialty clothing labels; many have
considerable resources and mature distribution. These companies include.
Freshjive, 26 Red, Alien Workshop, Eziekel, Volcom and Katin. The larger more
well established labels include, Quiksilver, Billabong, Rusty and Gotcha. These
companies compete in several different product categories within various
markets. The Company does not envision significant direct competition for its
tent products. However, traditional distribution channels (i.e. retail) for new
products are generally difficult to obtain. The Company is pursuing several
different distribution channels for its outdoor product line.
Business Model - Marketing and Sales Strategies
The principal challenge faced by the Company is the highly competitive
nature of its target markets. The number and variety of competitor represents a
significant barrier to market access and acceptance. Consequently, the Company
plans to cross over into non-traditional distribution channels by going into
mainstream mass markets retailer while staying close to the home specialized new
era sports shops. Within the next five years management hopes this vision will
transform CARV into an international leader in each of its niche markets.
<PAGE>
CARV is located in an historic location of the "Southern California
lifestyle", California. There is an office and showroom located near the beaches
where some of these sports are continually evolving . This helps in the research
and development of our new lines of clothing and equipment.
The Company hopes to develop a channel of distribution that enables it to
serve both specialty retailers and mass markets retailers. To support these
channels, the Company has developed a product mix that allows retailers "one
stop shopping" for soft and hard goods.
As a transition strategy, the Company expects to also use direct sales
tactics targeted at the demographics that we wish to reach. One of the ways we
will direct these sales is by way of our "grass roots program another way is to
use advertising campaigns in the top industry magazines. We will also use the US
Post Office direct mail to our targeted markets. With the use of directs sales
CARV will create a demand that will flow directly into sale with large retail
chains within the United States.
The prime market for CARV's product are areas where specialty sports are
played. CARV has chosen to enter in the surfing industry first due to its wide
popularity that reaches all corners of the globe. However, that is very broad
market to start with, so CARV's initially will target its market domestically in
California and branch out anywhere the industries we support are enjoyed
throughout the world. We chose to start with Southern California because it
serves as the focal point in the surfing industry. If something is going to
happen, chances are that it will happen in California first.
CARV promotional plans endorsement of top athletes, staging of special
events in selected niche markets and the recruitment of affiliated clubs.
Methods to be employed include print media advertising (industry magazines and
newspapers), promotional videos, product fashion shows, and dealer incentive
plans to support distribution channels.
The fundamental sales strategy of the Company for its clothing lines is to
sell directly to the customer, by-passing wholesale distribution. This "consumer
direct" distribution will provide lower prices and high margins.
At present, the Company has a number of projects to support its proprietary
outdoor sports products. These include a contract with the Girl Scouts of
America, which calls for the Company to provide 500 play tents with the logo '~I
Love the Girl Scouts". As part of the promotional strategy, CARV will have a
full-page advertisement in the soon-to-be-released Girl Scout catalog, which
will be sent directly to 2 million girls. The Girl Scouts will provide 40 sales
representatives traveling the country with samples.
The Company is also negotiating with several other key sales channels,
including school distribution, direct marketers, premium/sales promotion
suppliers, and major retailers.
CARV's advertising and promotion strategy is grounded in an extensive
campaign, which is to be funded, in part, from the proceeds of this Offering.
The Company expects to leverage its association with schools, organizations and
professional sports.
<PAGE>
Buying Supply and Stocking. X Sports buys directly from the manufacturer
the product sold on the website. The purchasing of product depends on the
division of CARV doing the buying. For instance, Pure Juice purchases a majority
of their product in the Far East, China and Indonesia. Whereas, Outcast
purchases the majority of their product in Mexico. In addition, for Natural Born
Carvers Wear purchasing will be done at fabric marts and through established
material distributors. Our standard production cycle is approximately 90 days.
Buying will be planned for each division accordingly. Planning has been based on
the timing of specific item sales and quantity. This mold allows us to focus
production and buying at teach periods "best sellers." This provides focus both
in selling and advertising efforts. Inventory controls will include physical
security as well as managed levels targeted at planned sales. By maintaining
production runs to these targeted sales costs will remain low, margins will
remain high.
The Company's plan is contingent upon adequate financing. The Company has
developed a strategy that it believes will enable it to become successful in its
targeted markets. However, the success of its business plan is dependent upon
the Company becoming adequately financed.
MANAGEMENT
Directors and Executive Officers of CARV
The biographies of the Directors and Officers are set forth below. All
Directors hold office until the next annual shareholders meeting or until their
death, resignation, and retirement or until their successors have been elected
and qualified. Vacancies in the existing Board are filled by a majority vote of
the remaining Directors.
Randall J. Lanham, 33, is Chairman of CARV. lie joined the Company in 1997. Mr.
Lanham has broad experience developing and directing domestic and international
operations of sporting goods companies. Prior to joining CARV, he was president
and chief executive officer of Springbok, Inc. whose assets were purchased by
CARV. He has also served in executive capacities for AG Sport, Inc., a sports
licensing company; and with Activate Corporation, a manufacturer of sporting
goods. Mr. Lanham is an attorney and is licensed by the State Bar of California
and Virginia. He graduated with a Juris Doctor from Whittier College School of
Law.
Frank Drechsler, 30, is President and CEO of CARV. Mr. Drechsler comes from
CARV's Internet division, X Sports, www. Skatesurfsnow .com Mr. Drechsler has
demonstrated a strong ability to develop this e-commerce division of CARV, which
shall play a major role in the future of the company.
Eben Woodall, 28, Secretary and Director of CARV. Mr. Woodall was a former Sales
Director for the skateboard division of Bravo Corporation. His marketing
capabilities, intense focus on the market and his experience is the industry has
proven to be an extremely valuable asset in the Company.
Douglas Silva, 29, is a Vice President and a Director of CARV. He also is the
founder of the Company. Mr. Silva is a professional surfer. At the age of
fourteen he won his first amateur U.S. Champion title. He also has placed second
in the amateur World Championships and attained a first place ranking in the
NSSA National Scholastic Surfing Association. After turning professional, Mr.
Silva signed sponsorship contracts with Quicksilver clothing, Oakley sunglasses,
and Airwalk Shoe Company, among others. His primary responsibilities included
major international promotional tours, surfing competitions, seminars, public
relations, and research and development of products for his sponsors.
<PAGE>
Paul E. Lanham, 67, is Vice President of Outdoor Products for CARV. He has
extensive experience in the professional sports industry, especially as a
coaching professional (for over 20 years) in the National Football League and
NCAA colleges. His associates include positions for the Cleveland Browns,
Washington Redskins, Arizona Wranglers, Los Angeles Rams, St. Louis Cardinals,
the University of Arkansas, and Colorado State University. His contacts and
associations are expected to be of considerable value to CARV. Mr. Lanham holds
a Master's Degree from the University of Delaware and a Bachelor of Arts degree
from Glenville State College.
Executive Compensation
None of the Company's executive officers and directors as of the date of this
Memorandum receives annual salaries over $50,000. It is anticipated that such
compensation may exceed $72,000 for certain executive officers and directors
following the completion of this Offering. However, no specific amount of
compensation has been agreed to as of the date of this Offering.
PRINCIPAL SHAREHOLDERS
As of the date of this Private Placement Memorandum, the Issuer has a total
of 50,000,000, par value $O.OOl per share. Common Shares authorized and there
are, as of January 21, 1999, 450,000 Common Shares outstanding. The officers and
directors, as a group, own collectively 6.6% of the outstanding shares. The
table below indicates the outstanding shares held by officers and directors of
the Company.
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Position
Shares Percent
Randall Lanham, Chairman 4,000 2.2%
Douglas Silva, Vice President and Director 4,000 2.2%
Paul Lanham, Vice President 4,000 2.2%
------ --------
All Executive Officers and Directors as a Group, 12,000 6.6%
4 persons
</TABLE>
LEGAL MATTERS
The Company's officers and directors are aware of no threatened or pending
litigation, which would have a material, adverse effect on the Company. (Also
see, Notes to Consolidated Financial Statements)
DESCRIPTION OF SECURITIES
Common Stock
The Company has. authorized 50,000,000 Shares of Common Stock, par value $0.001
per Share, with approximately 400,000 Common Shares outstanding as of January ~,
1999. The holders of Common Stock (I) have equal ratable rights to dividends
from funds legally available thereof, when as and if declared by the Board of
Directors of the Company; (2) are entitled to share ratably iii all of the
<PAGE>
assets of the Company available for distribution to holders of Common Stock upon
liquidation, dissolution or winding up of the affairs of the Company; (3) do not
have preemptive, subscription or conversion rights and there are no redemption
or sinking fund provisions applicable thereto; and (4) are entitled to one
cumulative vote per share on all matters which shareholders may vote on at all
meetings of shareholders. All shares of Common Stock now outstanding are fully
paid for and non-assessable.
The Common Stock offered hereby have all the rights and privileges of the Common
Stock. All Shares of the Common Stock which are the subject of this Offering,
when issued, will be fully paid for and non-assessable.
Dividend Policy
The payment by the Company of dividends, if any, in the future rests within the
discretion of the Board of Directors and will depend, among other things, upon
the Company's earnings, its capital requirements and its financial condition as
well as other relevant factors. The Company has not paid or declared any
dividends, and in light of its present financial status, and due to its
contemplated financial requirements, does not contemplate or anticipate paying
any dividends on its Common Stock in the foreseeable future.
Transfer Agent
The Transfer Agent is Corporate Stock Transfer, Inc. located at Republic Plaza,
370-1 7th Street, Suite 2350 Denver, Colorado
TERMS OF THE OFFERING
This Offering is speculative and entails a high degree of risk. These
securities are being offered and sold on reliance on the exemption from
registration pursuant to Rule 504 of Regulation D of the Securities Act of 1933
and pursuant to similar exemptions under various State Securities Acts. The
Company recently commenced operations in the Internet business and has little or
no history of operations or profits in this industry. Accordingly, there can be
no assurance as to profitability and there is no current market for the
Convertible Preferred Shares. Investors hereunder will suffer dilution.
The Securities being offered hereby have not been registered under the
Securities Act of 1933, as amended, (the "Act"), in reliance upon an exemption
from such registration, which depends on the full compliance with certain terms
and conditions.
An investment in the shares involves a high degree of risk to investors.
The Offering price has been arbitrarily determined by the Company and bears no
relationship to assets, earnings, book value, or any other criteria of value,
including its public trading price. (See "Risk Factors.") No one is authorized
to give any information or to make any representations other than those
contained in this Memorandum in connection with the Offering described herein
and, if given or made, such information or representations must not be relied
upon. This Memorandum does not constitute an offer to sell any of the stock
offered herein to any person in any state or country in which is unlawful to
make such an offer or solicitation.
<PAGE>
This Memorandum does not constitute an offer or solicitation to any person
residing in a jurisdiction in which such offer or solicitation is not authorized
or in which the person making the offer or solicitation is not qualified to do
so. No person has been authorized to give any information or to make any
representations concerning the corporation other than those contained in this
Memorandum. Any other such representations must not be relied upon as having
been authorized by the corporation. Neither the delivery of this Memorandum nor
any sale made hereunder shall under any circumstances create an implication that
there have been no changes in the affairs of the corporation since the date
hereof. This Memorandum supersedes and replaces any and all information
delivered or made available or on behalf of the corporation to the recipients of
this Memorandum prior to the date hereof.
All other documents relating to this Offering will be made available to a
prospective investor and/or his advisors by the corporation upon request. No
Offering literature or advertising in any form should be relied upon in
connection with the Offering except for this Offering Memorandum and the
statements contained in it. No dealer, salesman or other person has been
authorized to give any information or to make any representation not contained
in this Memorandum and supplemental literature referred to herein, and if given
or made, such information or representation must not be relied upon as having
been authorized by the corporation.
The distribution of this Private Placement Memorandum and offering of the
stock in certain jurisdictions may be restricted by law. Persons obtaining
possession of this Memorandum are required by the Company and the selling agent
to inform themselves about and to observe such restrictions. This Memorandum
does not constitute an offer to sell or a solicitation of an offer to buy the
stock in any jurisdiction or to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction.
PLAN OF DISTRIBUTION
NASD Broker-Dealers may participate in selling this Offering. If so, they
will receive commissions of 10% up to a maximum of $100,000 for this Offering.
Sales will be made pursuant to Rule 504 of Regulation D of the Securities Act of
1933, as amended. It is intended that the Offering will be sold in several
states in accordance with their applicable laws. Sales will also be made by
officers of the Company who will receive no commissions. The Company may pay
finders' fees of up to 10% if appropriate.
The Offering will be for a period of 180 days. The Company may at its sole
discretion however, either close the Offering before all the shares have been
sold or extend the Offering period for a further 180 day period.
Investors should consult their own counsel and accountants as to tax and
related matters concerning their investment. Neither the Issuer nor any person
or corporation participating in the Offering or sale of the shares or in
subsequent communications will be providing any legal or tax advice for the
Investors. The obligations and representations of the parties to this
transaction will be set forth only in the documents to be entered into. This
Memorandum has been prepared solely for the information of the persons
interested in the proposed private placement of these shares and may not be
reproduced or used for any other purpose. The information contained herein is
considered to be a fair summary of relevant information pertinent to this
investment and of the material items referred to therein.
<PAGE>
This Offering is speculative and entails a high degree of risk (See "Risk
Factors'). The shares are restricted as to transferability, except in compliance
with SEC Rule 144. Investors should be prepared to hold these shares for a
lengthy period.
The Company will make available at a reasonable time prior to the consummation
of the transactions contemplated herein, to each purchaser of shares the
opportunity to ask questions of, and receive answers from, the officers of the
Company concerning the terms and conditions of this Offering, and to obtain any
additional information necessary to verify the accuracy of the information set
forth herein.
FINANCIAL STATEMENTS
Attached to this Memorandum is a copy of the Company's audited balance sheet and
notes thereto at June 30, 1997.
MERLE S. FINKEL
CERTIFIED PUBLIC ACCOUNTANT
210 Grant Street
Suite I
Pittsburgh, PA 15219
(412) 393-0805 (310) 473-4700
ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders of Natural Born Carvers, Inc.
I have audited the accompanying balance sheet of Natural Born Carvers, Inc.
(formerly Eyre Trading Group, Ltd.) (a development stage company) as of June 30,
1997. This financial statement is the responsibility of the company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also included
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statement referred to above presents fairly, in all
material respects, the financial position of Natural Born Carvers, Inc.
(formerly Eyre Trading Group, Ltd.) (a development stage company) for the dates
listed above, in conformity with generally accepted accounting principles.
M.S. FINKEL
Pittsburgh, Pennsylvania
August 11, 1997
<PAGE>
Natural Born Carvers, Inc.
(formerly Eyre Trading Group, Ltd.)
(a development stage company)
BALANCE SHEET
JUNE 30, 1997
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets:
Cash $ 4,228
Inventory 9,829
Total current assets 14,057
Property and equipment:
Land note 5) 6,100,000
Furniture and equipment 15,267
Total property and equipment 6,115,267
Total assets $6,129,324
----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,548
Long-term liabilities:
Long term debt 624,485
----------
Total liabilities 627,033
Stockholders' equity:
Preferred stock, Series B
1,500,000 shares authorized at $5.00 par value;
1,100,000 shares issues and outstanding at 6130/97 5,500,000
Common stock
50,000,000 shares authorized at $001 par value;
2,291,000 shares issued and outstanding at 6/30/97 2,291
----------
Total stockholders' equity 5,502,291
----------
6,129,324
----------
</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE>
Natural Born Carvers, Inc.
(formerly Eyre Trading Group, Ltd.)
(a development stage company)
NOTES TO BALANCE SHEET
JUNE 30, 1997
NOTE 1 ORGANIZATION AND ACQUISITIONS:
Natural Born Carvers, Inc. (the "Company" or "Natural") was Incorporated on
March 22, 1996 under the laws of the State of Colorado under the name Eyre
Trading Group, Ltd. As a Colorado corporation.
The Company is currently a development stage enterprise which Intends on
engaging In two major business lines as follows:
1. the marketing and sales of sportswear and,
2. the development of a raw land parcel in Northern Tucson, Arizona.
Initial sales and development of the sportswear line is targeted to the
western region of the United States and the land development is located in
the western region of the United States.
The Company had a major change In stockholders when on May 8, 1997, the
Company acquired the assets of Natural Born Carvers, inc. In exchange for
common stock of Eyre Trading Group, Ltd. which was formed on January 2,
1996 as a California corporation. The acquisition Agreement provided for
the issuance of 851,000 shares of common stock of the Company In exchange
for all the assets of Natural Born Carvers, Inc.
The assets of the acquired company, Natural Born Carvers, Inc. were valued
at less than $20,000 as of the acquisition date.
On May 8, 1997, the Board of Directors approved a name change which was
filed with the Secretary of State. The name change became effective May 8,
1997 and the Company name became Natural Born Carvers, Inc.
On May 8, 1997 the Company amended its Articles of Incorporation to provide
for authorization of 1,500,000 shares of 5% Convertible Class B Preferred
Stock, $5.00 par value.
Also on May 8,1997 the Board of Directors approved the issuance of
1,100,000 shares of Preferred Shares Class B for the right to purchase a
parcel of land consisting of 102 acres located in Pima County, 12 miles
north of Tucson, Arizona. Said land is under a purchase option agreement by
Greenland Corporation and Greenland and the Company have entered into an
assignment of Greenland's option agreement. The seller's of the land to
Greenland under said Option Agreement have consented to the transfer of the
option from Greenland to the Company. (See Note 5 - Land Option.)
<PAGE>
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(a) Principles of Reporting Acquired Companies:
The financial statements Include the accounts of the Company and the
acquired assets of Natural Born Carvers, Inc., a California
corporation based on the value of the acquired assets as of the date
of acquisition.
(b) Use of Estimates:
In preparing financial statements in accordance with generally
accepted accounting principles, management makes certain estimates and
assumptions, where applicable, that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements, as well as
amounts of revenues and expenses during the reporting period. While
actual results could differ from those estimates, management does not
expect such variances, if any, to have a material effect on the
financial statements.
(c) Inventories:
Inventories are stated at the lower of cost (first-In, first-out
method) or market. The Inventory consists of the following:
Finished goods
(d) Property and equipment:
$9,829
Property and equipment is recorded at cost. Depreciation of property
and equipment will be provided on a straight line basis as follows:
Office furniture and equipment 5 years
Maintenance and repairs are expensed as incurred while renewals and
betterment's are capitalized.
(e) Income taxes:
The Company follows Statement of Financial Standards No.109 ("SFAS
109"), "Accounting for Income Taxes," which requires the Company to
recognize deferred tax assets and liabilities for future tax
consequences attributable to differences between the liabilities and
their respective tax basis. In addition, SFAS 109 requires recognition
of future tax benefits such as net operating loss carry forwards, to
the extent that realization of such benefits is more likely than not.
Accordingly, the Company has established a policy of 100% valuation
allowance against any deferred tax assets resulting principally from
net operating loss carry forwards until it is more likely than no that
the Company will realize taxable income. At June 30, 1997 the Company
has no operating history and consequently no not operating loss carry
forwards.
(f) Fiscal year:
The Company operates on a June 30 fiscal year end.
<PAGE>
(g) Cash and cash equivalents:
The Company considers all highly liquid Investments with all original
maturity of three months or less to be cash equivalents.
(h) Calculations of Per Common Share earnings (Losses):
Income (loss) per share will be computed on the basis of the weighted
average number of common shares outstanding during each period
presented.
NOTE 3 GOING CONCERN:
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. Although the Company
is in its development stage, its ability to continue as a going
concern is dependent upon the ability of management to obtain
sufficient financing, and ultimately achieving profitability.
NOTE 4 DIVIDEND POLICY:
The Company does not anticipate paying dividends until the Company
becomes profitable.
NOTE 5 OPTION AGREEMENT -102 ACRES OF LAND:
On December 28, 1995 Greenland Corporation ("Greenland"), non-related
entity, entered into a land purchase option agreement to acquire
approximately 102 acres of land situated in Pima County, Arizona,
approximately 12 miles from Tucson, Arizona.
The Agreement, among other things, provided that Greenland issued
common stock for the Option Agreement and additional stock for the
acquisition of the land under the Option Agreement.
Effective May, 1997 in an Assignment of the Option Agreement, signed
on June 24, 1997, the Seller of the Land, the Company and Greenland
all consented to Greenland's assignment of the Option Agreement to the
Company. The assignment provided for the Company to issue 1,100,000
shares of its Class B Preferred Stock to Greenland and Greenland to
issue its common stock to the Seller of the Land in accordance with
the original Option Agreement.
The Company has relied upon a supplied appraisal report by Ruth J.
Oaks, C.C.R.A. and C.R.E.A. (Certified General Real Estate Appraiser)
dated December 23, 1995 and updated on July 12, 1996. Said appraisal
valued the land at $8,250,000 and also Indicated a "FAST SALE" value
of $5,600,000. The Company has selected to value the land option at
about 10% higher than the Fast Sale valuation of $6,100,000. This
value is slightly over $2,000,000 less than the value of $8,250,000
for purposes of conservatism.
The land acquisition option also provided for the assumption of a
first deed of trust In the face amount of $435,000 plus accrued
interest, plus assumption of all unpaid property taxes. (See Note 6 -
Long Term Liabilities.)
<PAGE>
NOTE 6 LONG TERM LIABILITIES:
As of June 30, 1997 the Company had executed the necessary escrow
documents to allow the Company to purchase the parcel of land of
approximately 102 acres located outside Tucson, Arizona, and the
Company has issued the preferred stock In order to reflect the
acquisition of the land.
Accordingly, the purchase of the land required the assumption of an
existing note and deed of trust in the face amount of $435,000. This
notes bears interest at the rate of 17% and is all due and payable
December31, 1997. Interest has remained unpaid and totals $189,485.
The total amount of the first deed of trust, based on the closing date
of the property, May 14, 1997, effective as of June 30, 1997, is
$624,485.
The title policy to the land was issued by Mission Valley Escrow, 2565
Camino del Rio South, San Diego, CA 92108.
NOTE 7 COMMITMENTS AND CONTINGENCIES:
(a) Lease commitments:
The Company leases an office and operating facility located at
101 Second Street, Encinitas, California 92024.
(b) Litigation:
The Company's management and legal counsel Indicate, to the best
of their knowledge and belief, there is no litigation In process
or pending.
SUBSCRIPTION AGREEMENT
Board of Directors
CARV.com, Inc.
17301 Beach Blvd., Suite 2
Huntington Beach, CA 92647
Gentlemen:
The undersigned subscriber (the "Purchaser") hereby agrees to purchase from
CARV.com, Inc. (the 'Company" or "CARV") and the Company agrees to sell to the
Purchaser, upon the terms and conditions set forth herein, an aggregate of
shares (the "Shares") of CARV common stock par value $001, on the date here of
for the purchase price in the gross aggregate amount of or $12.50
per share.
The undersigned understands that the Shares will not be registered or qualified
under any Federal or state securities laws in reliance upon exemptions
therefrom. The undersigned acknowledges and agrees that in order to ensure the
offer and sale of Shares are exempt from registration or qualification, the,
Company will rely on the representations and warranties, which the undersigned
<PAGE>
has made in accompanying documents. Accordingly, the, undersigned makes the
following representations and warranties for the purposes of inducing the
Company to permit the undersigned to acquire the Shares for which the
undersigned hereby subscribes.
The undersigned has received and reviewed carefully materials provided by the
Company relating to the Shares and has had a reasonable opportunity to ask
questions of and receive answers from the Company and its officers and all such
questions have been answered to the full satisfaction of the undersigned. No
oral representations or oral information or oral information furnished to the
undersigned or relied upon by the undersigned, in connection with the
undersigned's purchase of the Shares, were in any way inconsistent with the
written material provided by the Company.
The undersigned is an "accredited investor" within the meaning of SEC Regulation
D, as presently in effect. The undersigned has the knowledge and experience in
financial and business matters so as to en-able the undersigned to evaluate the
merits and risks of the investment represented by the Shares. The undersigned
recognizes that an investment in the Shares involves special risks, including
(without limitation) those set forth in the Risk Factors described in writing by
the Company.
The undersigned has adequate means of providing for the undersigned's current
needs and possible personal contingencies, and the undersigned has no need for
liquidity of the undersigned's investment in the Shares and can bear the
economic risk of losing the undersigned's entire investment herein. Each and
every representation set forth herein, and in the Investor Suitability
Questionnaire form, which have been executed by the undersigned, are true and
correct; and the undersigned does not have an overall commitment to non-readily
marketable investments which is disproportionate to the undersigned's net worth
and the investment subscribed for herein will not cause such overall commitment
to become excessive.
The undersigned is acquiring the Shares that the undersigned has specified
solely for the undersigned's own account or is exempt from such requirements.
The undersigned is acquiring such Shares without a view to, and not for resale
in connection with, a distribution of the Common Stock within the meaning of the
Securities Act of 1933, as amended ("1933 Act"). The undersigned hereby
covenants and agrees that the undersigned shall not sell any of the Shares in
violation of the 1933 Act.
The undersigned understands that the Company is a public company; however it is
not currently required to file reports with the Securities and Exchange
Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended ("1934 Act"). The undersigned further understands that the Company is
not registering any of the Shares under the 1933 Act.
The undersigned understands that the Shares are not being registered under the
1933 Act or qualified under any state securities laws. The undersigned agrees
not to transfer any of such securities unless such transfer has been registered
under the 1933 Act and qualified under applicable state securities laws or
unless, in the opinion of counsel, such a transaction is exempt from
registration under the 1933 Act and qualification under any applicable state
securities laws.
The undersigned acknowledges and agrees that instruments representing the Shares
are being sold under Rule 504 and shall have a legend in substantially the form
as follows, and agrees to comply in all respects with the transfer requirements
set forth in such section. The undersigned understands that the Common Stock
will not be freely transferable pursuant to Rule 144 under the Act.
<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED UNLESS
(A)COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B) THE COMPANY HAS BEEN FURNISHED WITH AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT NO REGISTRATION IS LEGALLY
REQUIRED FOR SUCH TRANSFER.
The address set forth herein is the undersigned's true and correct residence,
and the undersigned has no present intention of becoming a resident of any other
state or jurisdiction.
The undersigned acknowledges and is aware that the Company has limited financial
reserves and that the Shares represent a speculative investment, which involves
a high degree of risk of loss by the undersigned of the undersigned's entire
investment in the Company.
It has NEVER been guaranteed or warranted to the undersigned by the Company, its
officers or directors or by any other person, expressly or by implication, that
the undersigned will receive any approximate or exact amount of return or other
type of consideration, profit or loss as a result of any investment in the
Shares; or that the past performance or experience on the part of the Company,
any director, officer or any affiliate, will in any way indicate or predict the
results of the ownership of Shares or of the overall success of the Company.
The undersigned understands that the Company is soliciting only a select number
of investors with respect to the sale of the Shares. The undersigned has not and
will not, except at the express request of the Company, permit any person, other
than the undersigned's spouse, attorney, accountant and purchaser
representative, to review any documents which have been presented in connection
with the sale of Shares.
If the undersigned is more than one person, the obligations of the undersigned
shall be joint and several, and the representations and warranties herein
contained shall be deemed to be made by and be binding upon such person, and
ownership of the Shares subscribed for by the undersigned shall be as set forth
on the signature page hereto.
If there should be any adverse change in the representations and information set
forth herein prior to the Company's acceptance or rejection of this
subscription, the undersigned will immediately notify the Company of such
change.
The undersigned realizes that this Subscription Agreement form does not
constitute an offer by Company to sell Shares. The undersigned understands that
the Company reserves the right to reject subscriptions in whole or in part.
<PAGE>
At the request of the Company, the undersigned will promptly execute such other
instruments or documents as may be reasonably required in connection with the
purchase of the Shares. The undersigned hereby agrees that the representations
and warranties set forth in this Subscription Agreement shall survive the
acceptance hereof by the Company, shall be binding upon the heirs, executors,
administrators, successors, and assigns to the undersigned, but this
subscription is not voluntarily transferable or assignable by the undersigned.
This Subscription Agreement shall be governed by and construed in accordance
with the laws of the State of California, regardless of principles of conflicts
of law.
This subscription is subject to final acceptance by the Company, to be evidenced
by the signature of an officer of the Company as set forth on the Subscription
Agreement Signature Page.
