U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB AMENDED
General Form For Registration of Securities
of Small Business Issuers Under Section 12(b)
or 12(g) of the Securities Act of 1934
CLARION INTERNET, INC.
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(Name of Small Business Issuer in its Charter)
Nevada, U.S.A. 33-0860027
(State or other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
44489 Town Center Way, Suite D487, Palm Desert, California 92260
(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number (760) 342-8040
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered: Each Class is to be Registered:
Securities to be registered under Section 12(g) of the Act:
Common Stock
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(Title of Class)
<PAGE>
FORWARD LOOKING STATEMENTS
CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS
Clarion Internet, Inc., a new e-Commerce company ("Clarion" or the
"Company" or the "Registrant") cautions readers that certain important factors
may affect the Company's actual results and could cause such results to differ
materially from any forward-looking statements that may be deemed to have
been made in this Document or that are otherwise made by or on behalf of the
Company. For this purpose, any statements contained in the Document that are
not statements of historical fact may be deemed to be forward-looking
statements. This Registration contains statements that constitute "forward-
looking statements." These forward-looking statements can be identified by
the use of predictive, future-tense or forward-looking terminology, such as
"believes," "anticipates," "expects," "estimates," "plans," "may," "will," or
similar terms. These statements appear in a number of places in this
Registration and include statements regarding the intent, belief or current
expectations of the Company, its directors or its officers with respect to,
among other things: (i) trends affecting the Company's financial condition or
results of operations for its limited history; (ii) the Company's business
and growth strategies; (iii) the Internet and Internet commerce; and, (iv)
the Company's financing plans. Investors are cautioned that any such forward-
looking statements are not guarantees of future performance and involve
significant risks and uncertainties, and that actual results may differ
materially from those projected in the forward-looking statements as a result
of various factors. Factors that could adversely affect actual results and
performance include, among others, the Company's limited operating history,
dependence on continued growth in the use of the Internet, the Company's
inexperience with the Internet, potential fluctuations in quarterly operating
results and expenses, security risks of transmitting information over the
Internet, government regulation, technological change and competition.
The accompanying information contained in this Registration, including,
without limitation, the information set forth under the heading "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business" identifies important additional factors
that could materially adversely affect actual results and performance. All
of these factors should be carefully considered and evaluated. All forward-
looking statements attributable to the Company are expressly qualified in
their entirety by the foregoing cautionary statement. Any forward-looking
statements in this report should be evaluated in light of these important
risk factors. The Company is also subject to other risks detailed herein or
set forth from time to time in the Company's filings with the Securities and
Exchange Commission.
<PAGE>
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Part I
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Item 1. Description of Business
Item 2. Management's Discussion and Analysis or Plan of Operation
Item 3. Description of Property
Item 4. Security Ownership of Certain Beneficial Owners and Management
Item 5. Directors, Executive Officers, Promoters and Control Persons
Item 6. Executive Compensation
Item 7. Certain Relationships and Related Transactions
Item 8. Description of Securities
Part II
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Item 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters
Item 2. Legal Proceedings
Item 3. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
Item 4. Recent Sales of Unregistered Securities
Item 5. Indemnification of Directors and Officers
Part F/S
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Item 1. Financial Statements
Part III
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Index to Exhibits
Signatures
Exhibits
Except where the context otherwise requires, all references in this
Registration to (a) the "Registrant" or the "Company" or "Clarion" refer
to Clarion Internet, Inc., a Nevada corporation, (b) the "Web" refer to
the World Wide Web and (c) the "site" refer to the Company's website at
"www.DesertYellowPages.com".
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
(a) Business Development and Organizational Activities. Clarion
Internet, Inc. ("Clarion" or the "Company"), was incorporated in the State of
Nevada on January 9, 1999. The Company is in its development stage,
organizing and preparing to offer an easily-accessible, high exposure Internet
presence to small and growing businesses through its electronic Internet
directory website located at "www.DesertYellowPages.com". Accordingly, the
Company has a limited operating history upon which an evaluation of the
Company, its current business and its prospects can be based, each of which
must be assessed in light of the risks, expenses and problems frequently
encountered by all companies in the early stages of development, and
particularly by such companies entering new and rapidly developing markets
like the Internet.
Such risks include, without limitation, the lack of broad acceptance of
the company's products and services on the Internet, the possibility that the
Internet will fail to achieve broad acceptance, the inability of the Company
to generate significant e-Commerce-based revenues from Internet customers, the
Company's inability to anticipate and adapt to a developing market, the
failure of the Company's network infrastructure (including its server,
hardware and software) to efficiently handle its Internet traffic, changes in
laws that adversely affect the Company's business, the ability of the Company
to manage its operations, including the amount and timing of capital
expenditures and other costs relating to the expansion of the Company's
operations, the introduction and development of different or more extensive
Internet directories by direct and indirect competitors of the Company,
including those with greater financial, technical and marketing resources, the
inability of the Company to maintain and increase levels of traffic on its
website, the inability of the Company to attract, retain and motivate
qualified personnel and general economic conditions.
(b) Business of Issuer.
Industry Background
Global commerce and the online exchange of information is new and
evolving, and it is difficult to predict with any assurance whether the Web
will prove to be a viable commercial marketplace in the long term. The Web
has experienced, and is expected to continue to experience, significant growth
in the numbers of users and amount of traffic. To the extent that the Web
continues to experience increased numbers of users, frequency of use or
increased bandwidth requirements of users, there can be no assurance that the
Web infrastructure will continue to be able to support the demands placed on
it by this continued growth or that the performance or reliability of the Web
will not be adversely affected.
Industry estimates indicate, according to a Myers Group study, that
spending on Internet advertising in the United States will grow from $2
billion in 1999 to $32 billion in 2005. According to a report by Forrester
Research, money spent worldwide for Internet advertising will reach $33
billion. The Internet has become a compelling advertising vehicle that
provides advertisers with targeting tools not available from traditional
advertising media. Research by Jupiter Communications predicts that by 2003,
the amount of money spent on online advertising will exceed that spent in some
traditional media. The interactive nature of the Internet and the development
of "click-through" advertising banners and other feedback tools enable
advertisers to measure impression levels, establish a dialogue with users
and receive "real-time" direct feedback from their target markets.
Such feedback provides advertisers with an effective means to measure
the attractiveness of their offerings among targeted audiences and make
modifications to their advertising campaigns on short notice. Community sites
are generally able to provide advertisers significantly more information
regarding consumers than other websites because they collect detailed
demographic data and facilitate the development of user-created affinity
groups. The ability to target advertisements to broad audiences, specific
regional populations, affinity groups or individuals makes community website
advertising a highly versatile and effective tool for delivering customized
and cost-effective messages. One indicator of the Internet's popularity as
an advertising medium is the growing number and diversity of Internet
advertisers.
Most early Internet advertisers were technology and Internet-related
companies. Today, a growing number of Internet advertisers consist of
traditional, consumer product and service companies. The diverse audience of
users accessing community sites has made such sites especially attractive to
consumer product and service companies advertising on the Internet. The
Company believes that this trend should continue, and that a wide variety of
companies outside the technology and Internet industries, such as financial
services, consumer goods, automotive and pharmaceutical companies, are or
will be increasingly using the Internet, and Internet directory sites in
particular, to advertise.
The Internet allows marketers to collect meaningful demographic
information and feedback from consumers, and to rapidly respond to this
information with new messages. This offers a significant new opportunity for
businesses to increase the effectiveness of their direct marketing campaigns.
In traditional media, a significant portion of all advertising budgets is
spent on direct marketing because of its effectiveness. However, the
effectiveness of direct marketing campaigns is dependent upon the quality of
consumer data used to develop and place complementary products or services.
If and as facilities are developed and the Web becomes a viable commercial
marketplace in the long term, the Company might be required to incur
substantial expenditures in order to adapt its services to changing Web
technologies, which could have a material adverse effect on the Company's
business, results of operations and financial condition.
DesertYellowPages.com
The Company's business is in developing a single point of contact, one-
stop operation for the creation of an Internet presence. The Company will
target, in particular, those existing, not-on-line "legacy" companies, i.e.,
companies having older equipment or no web presence. Such businesses are
often aware of the Internet but do not have an understanding of how to apply
and use the Internet as a business tool. Clarion Internet is in the
development stage of offering a desert Internet directory of Coachella Valley
businesses. The Company's website, which is under development and not yet
functional, will provide listings of local businesses in an electronic
Internet "yellow pages"-type directory, allowing them to showcase their
products and services, provide contact information and, if desired, links to
additional web pages, designed and/or hosted by Clarion for an additional fee.
This means that business owners will be able to come to a single source,
Clarion, to receive all the help necessary to advertise and provide exposure
for their business, and, if desired, to build and maintain a company website.
Clarion will contract with a client company to prepare that company's
business information for presentation in an electronic format, design a
website and various web pages, determine and create appropriate search
response requests and information delivery mechanisms, create site visitor
information analysis algorithms, provide data storage and retrieval, as
necessary, create links to existing portals and "bannering" based upon the
client's desire to pay for commercial advertising, update the client's
information on a real-time basis, and provide liaison or direct service
through affiliated Internet Service Providers. Such services will be
performed by, or under the supervision of, Mr. Matt Blansett, the Company's
president, who is an expert and instructor of Internet website design. The
use of independent contractors may or may not be necessary depending upon the
breadth, scope and detail of the websites required by the Company's clients,
as well as volume of the Company's business. Furthermore, as the Company is
not an Internet Service Provider ("ISP"), it is presently in discussions with
GTE, Internet Technology Institute and Starhost as potential ISP and web
hosting service providers.
Initially, most of the Company's new business will derive from direct
sales, from referrals and from print advertising in local publications such as
the Desert Sun, Palm Springs Magazine and the White Pages. The Company's
marketing strategy will include door-to-door sales and introductions, whereby
a representative of Clarion will go directly to the prospective client's
business. As many of the Company's target business clients do not presently
have any web presence, the ease of acquiring such a web presence by listing
with Clarion's "Desert Yellow Pages" should generate interest from business
owners who wish to advertise on the Internet.
The Company's expansion strategy will also include attending business
functions, often sponsored by local organizations such as the Desert Chamber
of Commerce, the Greater Palm Springs Convention and Visitors Bureau, the
Rotary, the Riverside Economic Development Department and other such
associations, where many of the local business owners gather to discuss
business and to solicit sales and referrals.
Although the Internet industry is extremely competitive, there are few
local Internet-related service providers in the Coachella Valley, where the
Company is located, and still fewer providers geared towards small and
expanding businesses. There are currently only three local Internet Service
Providers in the Company's general vicinity and approximately one dozen web
design firms. Clarion Internet is in the process of developing a "Desert
Yellow Pages" to be available on the Internet. This listing service will be
presented in a electronic Internet "yellow pages"-type directory allowing
businesses to list their services and products and contact information, as
well as links to other hosted web pages for their particular business. No
such service is currently provided in the Company's locale, and as such, the
Company's potential for expansion is great.
Government Regulation.
Although the law relating to the liability of online companies is
currently unsettled, the Company does not presently anticipate the need for
any governmental approval for its products or services. It is possible that
claims could be made against online e-Commerce companies under both United
States and foreign law for defamation, libel, invasion of privacy, negligence,
copyright or trademark infringement, or other theories based on the nature and
content of the materials disseminated through their website. If government
regulation becomes a factor and approval of the Company's products and/or
services becomes necessary at some point in the future, the Company will seek
such approval at the appropriate time.
Employees.
As of July 27, 1999, the Company has two part-time employees, one
President and one Secretary. The Company is also presently in discussions
with potential employees for commission-based sales positions, with marketing
companies to assist with the design and production of Company brochures and
sales material, with Internet providers to optimize web technology and with
individuals to assist in website design. As projects are undertaken, the
Company intends to hire independent contractors to staff projects, as and if
necessary.
(i) The Company's performance is substantially dependent on the
performance of its President, Matthew Blansett, and its corporate Secretary,
Shirley Bethurum. In particular, the Company's success depends on their
ability to develop, design and market the Company's website.
(ii) The Company does not carry key person life insurance on any of its
personnel. The loss of the services of any of its executive officers or other
key employees could have a material adverse effect on the business, results of
operations and financial condition of the Company. The Company's future
success also depends on its ability to retain and attract highly qualified
technical and managerial personnel, if and when the need for such personnel
arises.
(iii) There can be no assurance that the Company will be able to retain
its key managerial and technical personnel or that it will be able to attract
and retain additional highly qualified technical and managerial personnel in
the future. The inability to attract and retain the technical and managerial
personnel necessary to support the growth of the Company's business, due to,
among other things, a large increase in the wages demanded by such personnel,
could have a material adverse effect upon the Company's business, results of
operations and financial condition.
(c) Risk Factors.
Anticipated Losses for the Foreseeable Future.
The Company has not achieved profitability to date, and the Company
anticipates that it will continue to incur net losses for the foreseeable
future. The extent of these losses will depend, in part, on the amount of
growth in the Company's revenues from sales of its products and services, and
the possibility of advertising revenues on its website. The Company expects
that its operating expenses will increase significantly during the next
several years, especially in the areas of sales and marketing, and brand
promotion. Thus, the Company will need to generate increased revenues to
achieve profitability. To the extent that increases in the Company's
operating expenses are not accompanied by commensurate increases in revenues,
or the Company is unable to adjust its operating expense levels accordingly,
the Company may not be able to achieve or sustain profitability. Furthermore,
there can be no assurances that the Company's operating losses will not
increase in the future or that it can ever achieve or sustain profitability.
Dependence on Continued Growth and Viability of the Internet.
The Company's future success is substantially dependent upon continued
growth in the use of the Internet. To generate product sales, advertising
sales and e-Commerce service fees for Clarion, the Internet's recent and rapid
growth must continue, and e-Commerce on the Internet must become widespread.
None of these can be assured. The Internet may prove not to be a viable
commercial marketplace. Additionally, due to the ability of consumers to
easily compare prices of similar products or services on competing websites,
gross margins for e-Commerce transactions may narrow in the future and,
accordingly, the Company's revenues from e-Commerce arrangements may decline.
If use of the Internet does not continue to grow, the Company's business,
results of operations and financial condition would be materially and
adversely affected. Additionally, to the extent that the Internet continues
to experience significant growth in the number of users and the level of use,
there can be no assurance that its technical infrastructure will continue to
be able to support the demands placed upon it. The necessary technical
infrastructure for significant increases in e-Commerce, such as a reliable
network backbone to minimize the occurrence and/or risk of Internet
disruptions, may not be timely and adequately developed. In addition,
performance improvements, such as high-speed modems, may not be introduced in
a timely fashion. Furthermore, security and authentication concerns with
respect to transmission over the Internet of confidential information, such as
credit card numbers, may remain. Issues like these could lead to resistance
against the acceptance of the Internet as a viable commercial marketplace.
Also, the Internet could lose its viability due to delays in the development
or adoption of new standards and protocols required to handle increased levels
of activity, or due to increased governmental regulation. Changes in or
insufficient availability of telecommunications services could result in
slower response times and adversely affect usage of the Internet. Demand and
market acceptance for recently introduced services and products over the
Internet are subject to a high level of uncertainty, and there exist few
proven services and products.
The Internet may not be commercially viable in the long term for a number
of reasons, including potentially inadequate development of the necessary
network infrastructure or delayed development of enabling technologies,
performance improvements and security measures. To the extent that the
Internet continues to experience significant growth in the number of users,
their frequency of use or their bandwidth requirement, there can be no
assurance that the infrastructure for the Internet and other online
services will be able to support the demands placed upon them. In addition,
the Internet or other online services could lose their viability due to
delays in the development or adoption of new standards and protocols required
to handle increased levels of Internet or other online service activity, or
due to increased governmental regulation. Changes in or insufficient
availability of telecommunications services to support the Internet or other
online services also could result in slower response times and adversely
affect usage of the Internet and other online services generally and
DesertYellowPages.com in particular. If use of the Internet and other online
services does not continue to grow or grows more slowly than expected, if the
infrastructure for the Internet and other online services does not effectively
support growth that may occur, or if the Internet and other online services do
not become a viable commercial marketplace, the Company's business, results of
operations and financial condition could be adversely affected.
Dependence on Third-Party Relationships.
The Company will be significantly dependent on a number of third-party
relationships to increase traffic to DesertYellowPages.com. Although the
Company's website does not require links from other websites in order to be
functional and/or generate a profit. However, as such links could potentially
increase traffic to the Company's website, the Company may seek to establish
relationships with other website operators to provide links to the Company's
DesertYellowPages.com.
The Company does not presently have any agreements in place with any
website operators that provide links to DesertYellowPages.com, and, even if
the Company can establish such relationships, the other website operators may
terminate the links at any time without notice to the Company. There can be
no assurance that third parties will regard their relationship with the
Company as important to their own respective businesses and operations.
There can be no assurance that the Company will ever develop such
relationships with third parties to supply the Company with links to their
website. In particular, the elimination of a pre-installed bookmark on a Web
browser that directs traffic to the Company's website could significantly
reduce traffic on the Company's website, which would have a material adverse
effect on the Company's business, results of operations and financial
condition.
Risk of System Failures.
The Company's ability to facilitate trade successfully through its
website and to provide high quality customer service, depends upon the
efficient and uninterrupted operation of its computer and communications
through its designated Internet Service Provider (ISP). These systems and
operations are vulnerable to damage or interruption from earthquakes, floods,
fires, power loss, telecommunication failures, break-ins, sabotage,
intentional acts of vandalism and similar events. The Company does not have
fully redundant systems or a formal disaster recovery plan and does not carry
business interruption insurance to compensate it for losses that may occur.
The Company has identified alternative providers of hosting services in the
event that its ISP's services malfunction. Despite any precautions taken by,
and planned to be taken by the Company, the occurrence of a natural disaster
or other unanticipated problems with its ISP could result in interruptions in
the services provided by the Company.
In addition, the failure by the ISP to provide the data communications
capacity required by the Company, as a result of human error, natural
disasters or other operational disruption, could result in interruptions in
the Company's service. Any damage to or failure of the systems of the Company
could result in reductions in, or terminations of, the Company's service,
which could detrimentally affect the Company's business, results of operations
and financial condition. In the case of frequent or persistent system
failures, the Company's reputation and name brand could also be adversely
affected. Although the Company has implemented certain network security
measures, the Company and its ISP are also vulnerable to computer viruses,
physical or electronic break-ins and similar disruptions, which could lead to
interruptions, delays, loss of data or the inability to complete customer
postings and transactions. In addition, although the Company works to
prevent unauthorized access to Company data, it is impossible to eliminate
this risk completely. The occurrence of any or all of these events could
have a long-term negative impact on the Company's business, results of
operations and financial condition.
Competition.
The market for Internet business directories is relatively new, rapidly
evolving and intensely competitive, and the Company expects competition to
intensify further in the future. Barriers to entry are relatively low, and
current and new competitors can launch new sites at a relatively low cost
using commercially-available software. The Company potentially competes with
a number of other companies marketing similar business directories over the
Internet. Competitive pressures created by any of the Company's competitors,
could damage the Company's business, results of operations and financial
condition. The Company believes that the principal competitive factors in its
market are volume and selection of business listings, population of Internet
users, community cohesion and interaction, customer service, reliability of
delivery and payment by users, brand recognition, website convenience and
accessibility, price, quality of search tools and system reliability. Some of
the Company's potential competitors have longer operating histories, larger
customer bases, greater brand recognition and significantly greater financial,
marketing, technical and other resources than the Company. In addition, other
online directory listing services may be acquired by, receive investments from
or enter into other commercial relationships with larger, well-established and
well-financed companies as use of the Internet and other online services
increases.
Therefore, certain of the Company's competitors with other revenue
sources may be able to devote greater resources to marketing and promotional
campaigns, adopt more aggressive pricing policies and devote substantially
more resources to website and systems development than the Company or may
try to attract traffic by offering services for free. Increased competition
may result in reduced operating margins, loss of market share and diminished
value in the Company's brand recognition. There can be no assurance that the
Company will be able to compete successfully against current and future
competitors. Further, as a strategic response to changes in the competitive
environment, the Company may, from time to time, make certain pricing, service
or marketing decisions or acquisitions that could have a material adverse
effect on its business, results of operations and financial condition. New
technologies and the expansion of existing technologies may increase the
competitive pressures on the Company by enabling the Company's competitors to
offer a lower-cost service. Certain Web-based applications that direct
Internet traffic to certain websites may channel users to directory services
that compete with the Company. Although the Company plans to establish
arrangements with online services and search engine companies, there can be
no assurance that these arrangements will ever be established or renewed on
commercially reasonable terms or that they will otherwise bring traffic to the
Company's website. In addition, companies that control access to transactions
through network access or Web browsers could promote the Company's competitors
or charge the Company substantial fees for inclusion. Any and all of these
events could have a material adverse effect on the Company's business, results
of operations and financial condition.
Potential Fluctuations in Operating Results; Quarterly Fluctuations.
The Company's operating results may fluctuate significantly in the future
as a result of a variety of factors, many of which are outside of the
Company's control, including but not limited to system and operational
vulnerability to damage or interruption due to earthquakes, floods, fires,
power loss, telecommunication failures, break-ins, sabotage, intentional acts
of vandalism and similar events, as well as changes in the competitive
environment. As a strategic response to changes in the competitive
environment, the Company may from time to time make certain pricing (e.g.,
increase/reduction in rates for DesertYellowPages.com listings and/or
services), marketing decisions (e.g., increase/reduction in advertising) or
acquisitions (e.g., acquisition of competitors) that could have a material
short-term or long-term adverse effect on the Company's business, results of
operations and financial condition. In particular, in order to accelerate the
promotion of Clarion, the Company intends to market its website, which may
have a negative impact on the Company's operating results for that period,
especially if the marketing efforts do not yield positive results. The
Company believes that it may experience seasonality in its business, with use
of the Internet and Clarion's services being somewhat lower during the summer
vacation and year-end holiday periods. Advertising impressions (and therefore
revenues) may be expected to decline accordingly in those periods.
Additionally, seasonality may significantly affect any potential advertising
revenues during the first and third calendar quarters, as advertisers
historically spend less during these periods.
There can be no assurance that such patterns will not have a material
adverse effect on the Company's business, results of operations and financial
condition. In addition to selling its brands, it is the Company's strategy
to generate additional revenues through e-Commerce arrangements including
allowing other companies to advertise on the Company's website. However,
there can be no assurance that the Company will receive any meaningful
revenues under these agreements in the future. The foregoing factors, in some
future quarters, may lead the Company's operating results to fall below
expectations.
Risk Of Capacity Constraints And Systems Failures.
A key element of the Company's strategy is to generate a volume of user
traffic to its website. The Company's ability to attract customers and to
achieve market acceptance of its DesertYellowPages.com product depends
significantly upon the performance of the Company and its network
infrastructure (including its server, hardware and software). Any system
failure that causes interruption or slower response time of the Company's
products and services could result in less traffic to the Company's website
and, if sustained or repeated, could reduce the attractiveness of the
Company's products. An increase in the volume of user traffic could strain
the capacity of the Company's technical infrastructure, which could lead to
slower response time or system failures, and could adversely affect the
ability of potential users to access the Company's website, thereby reducing
the Company's advertising revenues. In addition, as the number of Web pages
on and users of DesertYellowPages.com increases, there can be no assurance
that the Company and its technical infrastructure will be able to grow
accordingly, and the Company faces risks related to its ability to scale up to
its anticipated customer levels while maintaining superior performance. Any
failure of the Company's server and networking systems to handle current or
higher volumes of traffic would have a negative impact on the Company's
business, results of operations and financial condition. The Company is also
dependent upon third parties to provide potential users with Web browsers and
Internet and online services necessary for access to its site. In the past,
Internet users have occasionally experienced difficulties with Internet and
online services due to system failures, including failures unrelated to the
Company's systems. Any disruption in Internet access provided by third
parties could have a material adverse effect on the Company's business,
results of operations and financial condition. The Company's operations are
dependent in part upon its ability to protect its operating systems against
damage from human error, fire, floods, power loss, telecommunications
failures, break-ins and similar events. The Company does not presently have
redundant, multiple-site capacity in the event of any such occurrence. The
Company's servers are also vulnerable to computer viruses, break-ins and
similar disruptions from unauthorized tampering with the Company's computer
systems. The occurrence of any of these events could result in interruption,
which could have a detrimental effect on the Company's business, results of
operations and financial condition. In addition, the Company's reputation
could be materially and adversely affected.
Risks Associated With New Services, Features and Functions.
There can be no assurance that the Company will be able to expand its
operations in a cost-effective or timely manner or that any such efforts
would maintain or increase overall market acceptance. Furthermore, any new
product or service launched by the Company that is not favorably received by
consumers could damage the Company's reputation and diminish the value of its
brand name. Expansion of the Company's operations in this manner would also
require significant additional financial and operational resources. The lack
of market acceptance of the Company's products and services could result in
the Company's inability to generate satisfactory revenues and its inability to
offset their costs could have a material adverse effect on the Company's
business, results of operations and financial condition.
Online Commerce Security Risks.
A significant barrier to online commerce and communications is the secure
transmission of confidential information over public networks. The Company
will rely on encryption and authentication technology licensed from third
parties to provide the security and authentication technology to effect secure
transmission of confidential information, including, if necessary, customer
credit card numbers. There can be no assurance that advances in computer
capabilities, new discoveries in the field of cryptography, or other events or
developments will not result in a compromise or breach of the technology used
by the Company to protect customer transaction data.
If any such compromise of the Company's security were to occur, it could
have damage the Company's reputation and, consequently, its business, results
of operations and financial condition. Furthermore, a party who is able to
circumvent the Company's security measures could misappropriate proprietary
information or cause interruptions in the Company's operations. The Company
may be required to expend significant capital and other resources to protect
against such security breaches or to alleviate problems caused by such
breaches. Concerns over the security of transactions conducted on the
Internet and other online services and the privacy of users may also inhibit
the growth of the Internet and other online services generally, especially as
a means of conducting commercial transactions. To the extent that activities
of the Company involve the storage and transmission of proprietary
information, such as credit card numbers, security breaches could damage the
Company's reputation and expose the Company to a risk of loss or litigation
and possible liability. There can be no assurance that the Company's security
measures will prevent security breaches or that failure to prevent such
security breaches will not have a material adverse effect on the Company's
business, results of operations and financial condition.
Effect of Existing or Probable Government Regulations.
Government legislation has been proposed that imposes liability for or
prohibits the transmission over the Internet of certain types of information.
The imposition upon the Company and other online providers of potential
liability for information carried on or disseminated through their services
could require the Company to implement measures to reduce its exposure to such
liability, which may require the Company to expend substantial resources
and/or to discontinue certain service offerings. In addition, the increased
attention focused upon liability issues as a result of these lawsuits and
legislative proposals could impact the growth of Internet use.
The Company does not believe that existing regulations, most of which
were adopted prior to the advent of the Internet, govern the operations of the
Company's business nor have any claims been filed by any state implying that
the Company is subject to such legislation. There can be no assurance,
however, that State government will not attempt to impose these regulations
upon the Company in the future or that such imposition will not have a
material adverse effect on the Company's business, results of operations and
financial condition. Several States have also proposed legislation that would
limit the uses of personal user information gathered online or require online
services to establish privacy policies. The Federal Trade Commission has also
recently settled a proceeding with one online service regarding the manner in
which personal information is collected from users and provided to third
parties. Changes to existing laws or the passage of new legislation, could
create uncertainty in the marketplace that could reduce demand for the
services of the Company or increase the cost of doing business as a result of
litigation costs or increased service delivery costs, or could in some other
manner have a detrimental effect on the Company's business, results of
operations and financial condition. In addition, because the Company's
services are accessible worldwide, and the Company may facilitate sales of
goods to users worldwide, other jurisdictions may claim that the Company is
required to qualify to do business as a foreign corporation in particular
states or foreign countries.
Due to the increasing popularity and use of the Internet and other online
services, it is possible that a number of laws and regulations may be adopted
with respect to the Internet or other online services covering issues such as
user privacy, freedom of expression, pricing, content and quality of products
and services, taxation, advertising, intellectual property rights and
information security. The adoption of new laws or the application of existing
laws may decrease the growth in the use of the Internet, which could in turn
decrease the demand for the Company's services, increase the Company's cost of
doing business or otherwise have a material adverse effect on the Company's
business, results of operations and financial condition.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
(a) Plan of Operation.
Management plans to solicit customers from the greater Coachella Valley
area of the Inland Basin/Palm Springs regions of California, a region
currently under-serviced for purposes of Internet and electronic commerce
applications. This will be accomplished through print media advertisement and
by word-of-mouth through existing contacts of the two employed personnel.
There are currently only three local Internet Service Providers in the
Company's general vicinity (the Coachella Valley) and approximately one dozen
web design firms. Clarion Internet's "Desert Yellow Pages" listing service
will be presented in an electronic Internet "yellow pages"-type directory
allowing businesses to list their services and products and contact
information, as well as links to other hosted web pages for their particular
business. No such service is currently provided in the Company's locale, and
as such, the Company's potential for expansion is great.
Based upon the low monthly overhead associated with current operations,
the Company believes that it has sufficient cash on hand to meet its
anticipated needs for working capital, capital expenditures and business
expansion for the next six months of operations, before any revenues are
obtained. Should the business expand, and if the needs of the clientele
require further equipment support, the Company will need to raise additional
capital. Shirley Bethurum, the Secretary and a director of the Company, has
committed to interest-free (if converted into common stock of the Company)
advances of the Company's operating costs, until such time as the Company can
generate sufficient revenues and/or an alternate source of funding is secured.
This agreement calls for a line of credit of $50,000, starting in December,
1999, and limited to a maximum draw of $4,000 per month. Sums borrowed under
this agreement are convertible by Ms. Bethurum into Common Stock of the
Company, at the Company's most recent private placement share issuance price,
potentially allowing for recognition of the added risk associated with stock
that is restricted against transfer in the public marketplace for a period of
one year, as Ms. Bethurum's stock would be, should she elect to convert (A
copy of the Funding Agreement is included as Exhibit 10.2).
The Company's auditor has issued an opinion regarding the Company's
ability to continue as a going concern. The auditor's opinion notes that the
Company has not established revenues sufficient to cover its operating costs
and allow it to continue as a going concern. The Company's management
believes that the Company will be able to establish revenues sufficient for it
to continue as a going concern, and, as a contingency, the Company has secured
a commitment from its Secretary and Director, Ms. Shirley Bethurum, to advance
sufficient funds, in the interim, so as to enable the Company's operations
during such period. Notwithstanding the foregoing, there is substantial doubt
regarding the Company's ability to continue as a going concern, and as such,
the Company is substantially dependent upon its ability to generate sufficient
revenues to cover its operating costs.
If the Company needs to raise additional funds in order to fund
expansion, develop new or enhanced services or products, respond to
competitive pressures or acquire complementary products, businesses or
technologies, any additional funds raised through the issuance of equity or
convertible debt securities, the percentage ownership of the stockholders of
the Company will be reduced, stockholders may experience additional dilution
and such securities may have rights, preferences or privileges senior to those
of the Company's Common Stock. The Company does not currently have any
contractual restrictions on its ability to incur debt and, accordingly, the
Company could incur significant amounts of indebtedness to finance its
operations. Any such indebtedness could contain covenants which would
restrict the Company's operations. There can be no assurance that additional
financing will be available on terms favorable to the Company, or at all. If
adequate funds are not available or are not available on acceptable terms, the
Company may not be able to continue in business, or to a lesser extent, not be
able to take advantage of acquisition opportunities, develop or enhance
services or products or respond to competitive pressures.
The Company intends to hire additional employees as and only if the
volume of business increases. The Company currently does not expect to
purchase or sell any of its equipment, since it owns no equipment. The
computer equipment to be utilized is equipment owned by the Officers of the
Company, and such equipment is anticipated to be sufficient for the first
twelve months of operation.
As of the date of this filing, no sales revenue has been generated by the
Company. Accordingly, no table showing percentage breakdown of revenue by
business segment or product line is included.
Year 2000 Disclosure.
The Year 2000 issue is the potential for system and processing failures
of date-related data and the result of computer-controlled systems using two
digits rather than four to define the applicable year. For example,
computer programs that have time-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000. This could result in
system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transaction
The Company may be affected by Year 2000 issues related to non-compliant
information technology ("IT") systems or non-IT systems operated by the
Company or by third parties.
Based on a recent and ongoing assessment, the Company has determined that
it will require only off-the-shelf software utilizing a Microsoft Windows
platform for all of its computer requirements. The Company plans to design
its own website, utilizing software from Microsoft. This is the only system
the Company has assessed for Year 2000 compliance. The Company has not
completed its assessment of internal and external (third-party) IT systems and
non-IT systems. At this point, the Company is not currently aware of any Year
2000 problems relating to systems operated by the Company or by third parties
that would materially affect the Company's business, results of operations or
financial condition. Based on its assessment to date, the Company does not
anticipate that costs associated with remediating the Company's non-compliant
IT systems or non-IT systems will be material, although there can be no
assurance to such effect. Such a failure could prevent the Company from
operating its business, prevent users from accessing the Company's website, or
change the behavior of advertising customers or persons accessing the
Company's website.
In an effort to evaluate and reduce its exposure in this area, the
Company intends to make an inquiry of vendors and other business partners
about their progress in identifying and addressing problems that their
computer systems may face in correctly processing date information related to
the Year 2000. In particular, the Company will seek to obtain statements from
a substantial majority of its vendors that they are Year 2000 compliant or are
unaffected by "date sensitive" information. The Company estimates that this
process, including analysis of responses and follow-up queries will be
completed on or before October 31, 1999.
The Company believes that the primary business risks in the event of
such failure, utilizing the worst-case scenario, would include, but not be
limited to, loss of potential revenues, increased operating costs, loss of
customers or persons accessing the Company's website, or other business
interruptions of a material nature, as well as claims of mismanagement,
misrepresentation, or breach of contract, any of which could have a material
adverse effect on the Company's business, results of operations and financial
condition. In anticipation of such risks, the Company has formulated a
contingency plan which includes the identification of an alternate Internet
Service Provider to provide uninterrupted service to the Company's website in
the event of a Year 2000 malfunction on the part of the Company's present
Internet Service Provider. To avoid any potential claims of mismanagement,
misrepresentation and/or breach of contract, the Company's management will
keep accurate and complete records of all of its accounts, commitments and
dealings with third-party contractors, customers and service providers.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company presently maintains its principal place of business at 44489
Town Center Way, Suite D487, Palm Desert, California 92260, a space provided
to the Company, free of charge, by its Secretary, Shirley Bethurum.
Additionally, the Company sub-lets space located at 44915 Golf Center Parkway,
Suite 2, Indio, California 92001. The rent for this space is $300 per month,
on a month-to-month basis.
Management believes that this space is suitable for the Company's needs
for the next twenty-four months.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) Security ownership of certain beneficial owners. The table below
identifies any individual (including any "group") who is known to the Company
to be the beneficial owner of more than five percent of any class of the small
business issuer's voting securities:
<TABLE>
<S> <C> <C> <C>
Title of Name and address Amount and nature Percentage
class of beneficial of beneficial of class
Owner ownership
Common Matthew Blansett 200,000 13.33%
30540 San Eljoy
Cathedral City, CA 92234
Common Shirley Bethurum 200,000 13.33%
P.O. Box 3456
Galveston, TX 77551
Common Alice Neville 120,000 8.0%
315 John Henry Drive
Henderson, Nevada 89014
Common Mark Neville 120,000 8.0%
315 John Henry Drive
Henderson, Nevada 89014
Common Susan McCabe 120,000 8.0%
1475 Terminal Way, Suite E
Reno, Nevada 89502
Common Jessica Santoro 120,000 8.0%
6871 Soldela Drive
Las Vegas, Nevada 89115
Common Nancy Jones 120,000 8.0%
1475 Terminal Way, Suite E
Reno, Nevada 89502
</TABLE>
(b) Security ownership of management. The table below sets forth the
ownership by all directors and nominees, each of the named executive officers
of the Company, and all directors and executive officers of the registrant as
a group.
<TABLE>
<S> <C> <C> <C>
Title of Name and address Amount and nature Percentage
class of beneficial of beneficial of class
Owner ownership
Common Matthew Blansett 200,000 13.33%
30540 San Eljoy
Cathedral City, CA 92234
Common Shirley Bethurum 200,000 13.33%
P.O. Box 3456
Galveston, TX 77551
Common All Officers and
Directors as a Group
(two persons) 400,000 26.66%
</TABLE>
There are no agreements between or among any of the shareholders which
would restrict the issuance of shares in a manner that would cause any change
of control of the Company. There are no voting trusts, pooling arrangements
or similar agreements in place between or among any of the shareholders, nor
do the shareholders anticipate the implementation of such an agreement in the
near term.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
(a) Directors and Executive Officers:
Matthew Blansett, 35, has been President and a Director of the Company
since its inception. Mr. Blansett has been teaching in the Desert Sands
Unified School District since 1994. Mr. Blansett has taught language and
technology-related courses, and has been involved with the school district's
Language Assessment Team, its Technology Committee and its Technology Pilot
Project. Mr. Blansett received his Bachelors of Arts in Education and
Psychology from Central State University, Edmond, Oklahoma, in 1989. He has
also completed the required course work for his Masters in Education, in
Instructional Technology, from the California State University, at San
Bernardino.
Mr. Blansett has extensive education and experience in Internet service,
web design and computer technology. He is currently employed full time as the
"Technology Mentor for the Year 2000" of the Desert Sands Unified School
District. His responsibilities include setup of each classroom within the
district with Internet access, web page design for each teacher, Internet
usage instruction for staff and students and classes on design and creation of
web pages. Mr. Blansett presently devotes 20-40 hours per week, depending
upon the needs of the Company, to furthering the business of the Company.
Shirley Bethurum, 71, has been Secretary and a Director of the Company
since its inception. Ms. Bethurum has been a principal of several start-up
companies. Her experience and skills include office management, manufacturing
design and equipment purchase, purchase and supply management, direct sales
and advertising implementation, warehouse management and fulfillment, new
product introduction and start-up and financial management. Since 1978, Ms.
Bethurum has been the general manager of Bethurum Research and Development, a
pharmaceutical and laboratory company which develops, manufactures, markets
and sells several environmentally-safe and FDA-registered products including
Easy-Ivy(TM), Itch be Gone(TM), Beach-Aid(TM), Inter-Fear-On-Magic(TM) and
Bushwhacker(TM).
Ms. Bethurum's responsibilities with Clarion will include business
organization, marketing, servicing and processing orders using telephone sales
and "800" telephone numbers, orders and processing via facsimile and business
commerce on the Internet. In addition, Ms. Bethurum will seek strategic
partners for the Company to team with in the rapidly-changing Internet market
place.
During the past five years, none of the officers or directors of the
Company has been subject to a bankruptcy petition, criminal conviction, or any
order, judgment or decree, not subsequently reversed, suspended or vacated of
any court of competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any type of
business, securities or banking activities, or found to be guilty of any
securities laws infractions.
(b) There are no significant employees who are not described as
executives above, and there are no family relationships among directors,
executive officers or any nominees to these positions.
ITEM 6. EXECUTIVE COMPENSATION.
<TABLE>
SUMMARY COMPENSATION TABLE
Annual compensation Long term compensation
Awards Payouts
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Name and Year Salary($) Bonus($) Other Restricted Securities LTIP All
Principal annual stock awards underlying payouts other
position compensation options/SARs ($) compen-
(Medical) (#) sation
($)
-----------------------------------------------------------------------------------------------------
Matthew 1999 12,000(1) 0 0 0 0 0 0
Blansett
(President &
Director)
Shirley 1999 0 0 0 0 0 0 0
Bethurum
(Secretary &
Director)
The existing directors of the Company currently serve on a non-compensated
basis.
(1) Mr. Blansett has agreed to defer his salary, allowing it to
accrue until the Company is able to generate sufficient cash flow funds to
pay Mr. Blansett's salary.
</TABLE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Matthew Blansett (President) and Shirley Bethurum (Secretary) are
currently the owner-operators of the business, and each of them owns 200,000
shares or 13.33% of the issued and outstanding stock. The salary for Mr.
Blansett, $1,000 per month (deferred) was not established by arms-length
negotiations and may not be equivalent to salaries of persons in similar
positions in competitive companies.
During the preceding year, the company conducted an offering under Rule
504, raising a total of $25,000 in cash. This offer was conducted by the
officers of the company and no compensation was paid to either of them for the
funds raised. Expenses of the offering were legal and accounting, and were
satisfied from the proceeds of the offering in the amount of $4,000. Neither
the law firm nor the accounting firm have any equity interest in the company.
ITEM 8. DESCRIPTION OF SECURITIES.
There is only one class of stock, common, each share having equal and
identical rights to every other share for purposes of dividends, liquidation
preferences, voting rights and any other attributes of a company's common
stock. No voting trusts or any other arrangement for preferential voting
exist among any of the shareholders, and there are no restrictions in the
bylaws or articles of incorporation precluding issuance of further common
stock or requiring any liquidation preferences, voting rights or dividend
priorities with respect to this class of stock. As of May 31, 1999, there
were 1,500,000 shares issued and outstanding.
Each share of Common Stock entitles the holder thereof to one vote,
either in person or by proxy, at a meeting of shareholders. The holders are
not entitled to vote their shares cumulatively. Accordingly, the holders of
more than 50% of the issued and outstanding shares of Common Stock can elect
all of the directors of the Company.
All shares of common Stock are entitled to participate ratably in
dividends when and as declared by the Company's Board of Directors out of the
funds legally available therefor. Any such dividends may be paid in cash,
property or additional shares of Common Stock. The Company has not paid any
dividends since its inception and presently anticipates that no dividends will
be declared in the foreseeable future. Any future dividends will be subject
to the discretion of the Company's Board of Directors and will depend upon,
among other things, future earnings, the operating and financial condition of
the Company, its capital requirements, general business conditions and other
pertinent facts. Therefore, there can be no assurance that any dividends on
the Common Stock will be paid in the future.
Holders of Common Stock have no preemptive rights or other subscription
rights, conversion rights, redemption or sinking fund provisions. In the
event of the dissolution, whether voluntary or involuntary, of the Company,
each share of Common Stock is entitled to share ratably in any assets
available for distribution to holders of the equity securities of the Company
after satisfaction of all liabilities.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND OTHER SHAREHOLDER MATTERS.
A. Market Information
The Common Stock of the Company is currently not traded on any formal or
national securities exchange. There is no trading market for the Company's
Common Stock at present and there has been no trading market to date. At this
time, management has not undertaken any discussions, preliminary or otherwise,
with any prospective market maker concerning the participation of such market
maker in the aftermarket for the Company's securities. However, the Company
may initiate such discussions in the future following receipt of an effective
date for this Registration Statement, at which time the Company expects its
securities to trade on the NASDAQ Over-The-Counter Bulletin Board ("OTC BB").
(i) There is currently no Common Stock which is subject to outstanding
options or warrants to purchase, or securities convertible into, the Company's
Common Stock.
(ii) There is currently no common stock of the Company which could be
sold under Rule 144 under the Securities Act of 1933 as amended or that the
registrant has agreed to register for sale by security holders.
(iii) There is currently no common equity that is being or is proposed to
be publicly offered by the registrant, the offering of which could have a
material effect on the market price of the issuer's common equity.
B. Holders
As of the date of this filing, the Company has approximately 24
shareholders of record. Seven shareholders bought common stock of the Company
in a Rule 504 offering made in the State of New York under its exemption
statutes, with an opening Form D being filed with the Securities and Exchange
Commission on March 29, 1999. A closing Form D notice was then timely filed
on April 5, 1999, closing the offering before the NASD's April 7, 1999
deadline. The shares resulting from the 504 offering were issued without
restrictions as to resale. As of the date of this filing, twelve shareholders
have unrestricted stock (1,000,000 shares), and twelve shareholders have
restricted stock (500,000 shares) that would be subject to Rule 144 exemptions
at some point in the future. None of these restricted shares are eligible for
trading prior to January 12, 2000.
Applicability of Low-Priced Stock Risk Disclosure Requirements.
The securities of the Company will be considered low-priced or
"designated" securities under rules promulgated under the Exchange Act. Penny
Stock Regulation Broker-dealer practices in connection with transactions in
"Penny Stocks" are regulated by certain rules adopted by the Securities and
Exchange Commission. Penny stocks generally are equity securities with a
price of less than $5.00 (other than securities registered on certain national
securities exchanges or quoted on the NASDAQ system). The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document that
provides information about penny stocks and the risk associated with the penny
stock market. The broker-dealer must also provide the customer with current
bid and offer quotations for the penny stock, the compensation of the broker-
dealer and its salesperson in the transaction, and monthly account statements
showing the market value of each penny stock held in the customer's account.
In addition, the penny stock rules generally require that prior to a
transaction in a penny stock, the broker-dealer must make a written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules. When the Registration Statement becomes effective and the
Company's securities become registered, the stock will likely have a trading
price of less than $5.00 per share and will not be traded on any national
exchanges. Therefore, the Company's stock will become subject to the penny
stock rules and investors may find it more difficult to sell their securities,
should they desire to do so.
C. Dividend Policy
The Company has not paid any dividends to date. In addition, it does not
anticipate paying dividends in the immediate foreseeable future. The Board
of Directors of the Company will review its dividend policy from time to time
to determine the desirability and feasibility of paying dividends after
giving consideration to the Company's earnings, financial condition, capital
requirements and such other factors as the board may deem relevant.
D. Reports to Shareholders
The Company intends to furnish its shareholders with annual reports
containing audited financial statements and such other periodic reports as
the Company may determine to be appropriate or as may be required by law.
Upon the effectiveness of this Registration Statement, the Company will be
required to comply with periodic reporting, proxy solicitation and certain
other requirements by the Securities Exchange Act of 1934.
E. Transfer Agent and Registrar
The Transfer Agent for the shares of common voting stock of the Company
is Alexis Stock Transfer, Inc., 42450 Bob Hope Drive, Suite 225, Rancho
Mirage, California 92270.
ITEM 2. LEGAL PROCEEDINGS.
To the best knowledge of the officers and directors of the Company,
neither the Company nor any of its officers or directors is a party to any
material legal proceeding or litigation and such persons know of no other
material legal proceeding or litigation contemplated or threatened. There are
no judgments against the Company or its officers or directors. None of the
officers or directors has been convicted of a felony or misdemeanor relating
to securities or performance in corporate office.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
On April 5, 1999, the Company completed a public offering of shares of
Common Stock in the State of New York pursuant to Regulation D, Rule 504 of
the Securities Act of 1933, as amended. The Offering resulted in 1,000,000
new shares of the Company's Common Stock being issued to seven unaffiliated
shareholders of record, for a total of $25,000 cash. The shares were sold by
the officers and directors of the Company who did not receive any commissions
from such sales. The total costs of the Offering were $4,000, comprised of
legal fees, transfer agent's fees and printing and engraving costs. The net
offering proceeds to the Company, after deducting the total expenses, were
$21,000. The Company filed an original Form D with the Securities and
Exchange Commission on or about March 29, 1999.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article V of the Articles of Incorporation provides that no director of
the Company shall have personal liability to the corporation or to its
shareholders for damages for any breach of duty in such capacity, provided,
however, that the provisions shall not eliminate or limit:
(a) acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law, or
(b) the payment of dividends in violation of NRS 78.300.
PART F/S FINANCIAL.
<PAGE>
CLARION INTERNET, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
(Unaudited)
June 30, 1999
<PAGE>
CLARION INTERNET, INC.
Balance Sheet
June 30, 1999
ASSETS
<TABLE>
<S> <C>
June 30
1999
--------
CURRENT ASSETS:
Cash $ 18,931
--------
TOTAL CURRENT ASSETS $ 18,931
--------
OTHER ASSETS: $ 0
--------
Deferred tax asset $ 600
TOTAL OTHER ASSETS $ 600
--------
TOTAL ASSETS $ 19,531
========
</TABLE>
Unaudited - Management Purposes Only
<PAGE>
CLARION INTERNET, INC.
Balance Sheet
June 30, 1999
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C>
1999
-------
CURRENT LIABILITIES:
Accounts Payable $ 0
Salaries Payable $ 1,000
TOTAL CURRENT LIABILITIES $ 1,000
-------
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value
Authorized 100,000,000 shares
Issued and Outstanding
1,500,000 shares $ 150
Additional Paid-In Capital $24,900
Deficit Accumulated during
Development Stage $(6,519)
Total Stockholders' Equity $18,531
-------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $19,531
=======
</TABLE>
Unaudited - Management Purposes Only
<PAGE>
CLARION INTERNET, INC.
Statement of Operations
For month ended June 30, 1999
<TABLE>
<S> <C> <C>
Inception to
6/30/1999 6/30/1999
REVENUE:
Revenue from operations $ 0 $ 0
--------- --------
Total Revenue $ 0 $ 0
--------- --------
EXPENSES:
Accounting Fees $ 1,500 $ 1,500
Legal Fees 2,500
Transfer Fees 1,500
Rent 300 300
Salaries Expense 1,000 1,000
Telephone 319 319
--------- --------
Total Expenses $ 3,119 $ 7,119
--------- --------
Deferred Tax Asset $ 600
Net Income (Loss) $ (3,119) $ (6,519)
========= =========
</TABLE>
Unaudited - Management Purposes Only
<PAGE>
CLARION INTERNET, INC.
Statements of Cash Flows
June 30, 1999
<TABLE>
<S> <C> <C>
For Period of
May 31, 1999 to Inception to
June 30, 1999 June 30, 1999
--------------- ---------------
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Loss $ (3,119) $ (6,519)
Adjustments to reconcile
Net loss to net cash
Provided by operating
Activities.
Common stock issued for
Services $ 0
--------------- ---------------
Changes in assets and
Liabilities:
Increase in current
Assets $ (600)
Increase in current
liabilities $ 1,000 1,000
--------------- ---------------
Net cash used in
Operating activities $ 0
Cash Flows from
Investing Activities $ 0
Cash Flows from
Financing Activities
Issuance of common
Stock for cash $ 0 $ 25,050
--------------- ---------------
Net increase (decrease)
in cash $ 0
Cash,
Beginning of period $ 21,050 $ 0
--------------- ---------------
Cash,
End of period $ 18,931 $ 18,931
=============== ===============
</TABLE>
Unaudited - Management Purposes Only
<PAGE>
CLARION INTERNET, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
From
Inception (January 8, 1999)
To
May 31, 1999
<PAGE>
TABLE OF CONTENTS
INDEPENDENT AUDITORS' REPORT 1
ASSETS 2
LIABILITIES AND STOCKHOLDERS' EQUITY 3
STATEMENT OF OPERATIONS 4
STATEMENT OF STOCKHOLDERS' EQUITY 5
STATEMENT OF CASH FLOWS 6
NOTES TO FINANCIAL STATEMENTS 7 - 10
<PAGE>
DEMIAN & COMPANY
Certified Public Accountants
60 Walnut Avenue Suite 100 Office (732) 382-5888
Clark, New Jersey 07066 Fax No (732) 815-7810
INDEPENDENT AUDITORS' REPORT
Board of Directors June 15, 1999
Clarion Internet Inc.
44489 Town Center Way
#D487
Palm Desert, CA 92260
We have audited the accompanying Balance Sheet of Clarion Internet Inc. (A
Development Stage Company), as of May 31, 1999, and the related statements of
operations, stockholders' equity and cash flows for the partial period of
January 8, 1999 (Corporate inception) through May 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Clarion Internet Inc. (A
Development Stage Company) as of May 31, 1999 and the results of its
operations and cash flows for the partial period May 31, 1999, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note #5 to the financial
statements, the Company has no established source of revenue. This raises
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note #5.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
/s/ Peter Demian
Peter Demian, CPA
Demian & Company
Certified Public Accountants
<PAGE>
CLARION INTERNET, INC.
(A Development Stage Company)
BALANCE SHEET
ASSETS
<TABLE>
<S> <C>
May 31,
1999
--------
CURRENT ASSETS:
Cash $ 21,050
--------
TOTAL CURRENT ASSETS $ 21,050
--------
OTHER ASSETS: $ 0
--------
Deferred tax asset $ 600
TOTAL OTHER ASSETS $ 600
--------
TOTAL ASSETS $ 21,650
========
</TABLE>
See accompanying notes to financial statements & audit report
<PAGE>
CLARION INTERNET, INC.
(A Development Stage Company)
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C>
1999
-------
CURRENT LIABILITIES:
Accounts Payable $ 0
TOTAL CURRENT LIABILITIES $ 0
-------
STOCKHOLDERS' EQUITY (Note 1)
Common stock, $.0001 par value
Authorized 100,000,000 shares
Issued and Outstanding
1,500,000 shares $ 150
Additional Paid-In Capital $24,900
Deficit Accumulated during
Development Stage $(3,400)
Total Stockholders' Equity $21,650
-------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $21,650
=======
</TABLE>
See accompanying notes to financial statements & audit report
<PAGE>
CLARION INTERNET, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<S> <C>
From inception to
May 31, 1999
------------
INCOME: $ 0
------------
EXPENSES:
Legal Fees $ 2,500
Transfer Fees $ 1,500
------------
Total Expenses $ 4,000
------------
Deferred Tax Asset $ 600
Net Profit/Loss (-) $(3,400)
============
Net Profit/Loss (-)
Per weighted
Share (Note 1) $ (.003)
Weighted average
Number of common
shares outstanding 1,500,000
============
</TABLE>
See accompanying notes to financial statements & audit report
<PAGE>
CLARION INTERNET, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C> <C> <C>
Additional Accumu-
Common Stock paid-in lated
Shares Amount Capital Deficit
------- ------ ---------- --------
Inception date of
January 8, 1999 500,000 $ 50
Common stock
issued in Limited offering
for $ 0.025 per share 1,000,000 $100 $ 24,900 $ (4,000)
Net loss Period ended
May 31, 1999 $ (4,000)
------------------------------------------------
Balance, May 31, 1999 1,500,000 $150 $ 24,900 $ (4,000)
</TABLE>
See accompanying notes to financial statements & audit report
<PAGE>
CLARION INTERNET, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<S> <C>
For Period of
January 8, 1999
To May 31, 1999
_______________
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Loss $ (3,400)
Adjustments to reconcile
Net loss to net cash
Provided by operating
Activities.
Common stock issued for
Services $ 0
_______________
Changes in assets and
Liabilities:
Increase in current Assets $ (600)
Increase in current
liabilities $ 0
_______________
Net cash used in
Operating activities $ 0
Cash Flows from
Investing Activities $ 0
Cash Flows from
Financing Activities
Issuance of common
Stock for cash $ 25,050
_______________
Net increase (decrease)
in cash $ 25,050
Cash,
Beginning of period $ 0
_______________
Cash,
End of period $ 21,050
===============
</TABLE>
See accompanying notes to financial statements & audit report
<PAGE>
CLARION INTERNET, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
May 31, 1999
NOTE 1- HISTORY AND ORGANIZATION OF THE COMPANY
On January 8, 1999, Clarion Internet Inc.( the "Company") was
incorporated under the laws of the State of Nevada. The Company currently has
no operations and, in accordance with SFAS #7, is considered a development
stage company. The Company is presently developing an Internet web template
to list local Coachella business services in an electronic Internet "yellow
pages"-type directory allowing business owners to list their products and
services, contact information and, if the business owner wishes, links to
additional, hosted web pages about their particular business.
The Company is presently interviewing potential employees for sales
positions, marketing companies to assist with design and production of sales
material and Internet providers and individuals to facilitate web technology
and design.
The Company has already contacted several businesses and received
commitments for listing on the Company's Internet "Desert Yellow Pages". The
Company has also applied for and received registration of the domain name
"DesertYellowPages.com" and has initiated the design and development of its
Internet website.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The Company records income and expenses using the accrual method of
accounting.
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 and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash Equivalents
For the purpose of the statements of cash flows, all highly liquid
investments with a maturity of three months or less are considered to be cash
equivalents. There are no cash equivalents as of May 31, 1999.
Income Taxes
Income taxes are provided for using the liability method of accounting
in accordance with Statement of Financial Accounting Standards No. 109, (SFAS
# 109), "Accounting for Income Taxes". A deferred tax asset or liability is
recorded for all temporary difference between financial and tax reporting.
Deferred tax expense (benefit) results from the net change during the year of
deferred tax assets and liabilities.
Organization Costs
Costs incurred to organize the Company will be expensed as incurred.
Loss Per Share
Net loss per share is provided in accordance with Statement of Financial
Accounting Standards No 128 (SFAS # 128), "Earning Per Share". Basis loss per
share is computed by dividing losses available to common stockholders' by the
weighted average number of common shares outstanding during the period.
Diluted loss per share reflects per share amounts that would have resulted if
dilutive common stock equivalents had been converted to common stock. As of
May 31, 1999, the Company had no dilutive common stock equivalents such as
stock options.
Year End
The Company has selected December 31, as its year end.
Year 2000 Disclosure
The year 2000 issue is the result of computer programs being written
using two digits rather that four digits to define the applicable year.
Computer programs that have time sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a
system failure or miscalculations causing disruption of normal business
activities.
Based on a recent and ongoing assessment, the Company has determined
that it will require only off-the-shelf software utilizing a Microsoft Windows
platform for all of its computer requirements. The Company presently believes
that with modifications to existing off-the shelf software or conversions to
new software, the year 2000 issue will not pose a significant operational
problem and will not materially affect future financial results.
The Company currently anticipates purchasing new off-the-shelf year 2000
compatible software within the near future, which is prior to any anticipated
impact on its operating systems. The total cost of this new software is not
anticipated to be a material expense to the Company at this time. However,
there can be no guarantee that these new off-the-shelf software products will
be adequately modified, which could have a material adverse effect on the
Company's results of operations.
NOTE 3-INCOME TAXES
There is no provision for income taxes for the period ended May 31, 1999,
due to the net loss and no state income tax in the state of the Company's
domicile and operations, Nevada. The Company's total deferred tax asset as of
May 31, 1999 is as follows:
Net operating loss carry forward $ 4,000
Federal Income Tax 15%
---------
Net deferred tax asset $ 600
=========
The federal net operating loss carry forward will expire in various
amounts from 2016 to 2017. Income projected by management will "more-likely-
than-not" exceed the net operating loss and thus the entire amount is expected
to be realizable.
There is no State tax asset as Nevada has no Corporate state income tax.
This carry forward may be limited upon the consummation of a business
combination under IRS Section 381.
NOTE 4- SHAREHOLDERS' EQUITY
Common Stock
As of January 8, 1999, Clarion Internet, Inc. authorized 100,000,000
shares of common stock with a $0.0001 par value. 500,000 of these shares were
issued to the company's officers.
On March 29, 1999, Clarion Internet, Inc. had a limited offering of
1,000,000 shares for $.025 per share and raised $ 25,000.
Total shares issued and outstanding are 1,500,000 as of report date.
Preferred Stock
CLARION INTERNET, INC. has no preferred stock.
NOTE 5- GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The Company has not established revenues
sufficient to cover its operating costs and allow it to continue as a going
concern. Until that time, Shirley Bethurum, the Secretary and a director of
the Company, has committed to interest-free (if converted into common stock of
the Company) advances of the Company's operating costs, until such time as the
Company can generate sufficient revenues to allow it to continue as a going
concern and/or an alternate source of funding is secured. Ms. Bethurum has
entered into a line-of-credit agreement with the Company, calling for advances
totaling $50,000, at a maximum drawable rate of $4,000 per month. If the
Company's funding commitments are not met, then outside or third-party
investors will be solicited. If no suitable lenders or investors are
identified, the Company could become bankrupt.
NOTE 6- RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property from
its officers or directors. An officer has provided minimal office space and
services without charge. Such costs are immaterial to the financial
statements and accordingly are not reflected herein. In addition, the
Company's Secretary, Ms. Shirley Bethurum, has entered into a line-of-credit
agreement with the Company, calling for advances totaling $50,000, at a
maximum drawable rate of $4,000 per month. The officers and directors are
involved in other business activities and most likely will become involved in
other business activities in the future. If a specific business opportunity
becomes available, such persons may face a conflict of interest. A Company
policy for handling such a conflict has not yet been formulated.
NOTE 7- WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional
shares of common stock.
<PAGE>
PART III
FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS
Interim Statement for June 30, 1999 (unaudited)
Audited Financial Statement for May 31, 1999
(b) EXHIBITS
3.1 Articles of Incorporation, dated January 9, 1999
3.2 Bylaws, adopted on January 12, 1999
10.1 Employee / Contractor Agreement for Matthew Blansett
10.2 Line-of-Credit Funding Agreement
27 Financial Data Schedule
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant has caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
CLARION INTERNET, INC.
Date: September 21, 1999 By: /s/ Matthew Blansett
Matthew Blansett
President, Chairman
Date: September 21, 1999 By: /s/ Shirley Bethurum
Shirley Bethurum
Secretary, Director
<PAGE>
Exhibit 3.1 Articles of Incorporation
ARTICLES OF INCORPORATION
OF
CLARION INTERNET
I. The name of this corporation is CLARION INTERNET.
II. The Resident Agent of this corporation for the transaction of
business, until changed according to law, shall be the following:
Nevada Business Services
675 Fairview Dr. #246
Carson City, NV 89701
III. This corporation may engage in any lawful activity or activities
in Nevada and throughout the world.
IV. The total authorized capital stock of this corporation is -- One
Hundred Million -- shares, each share having $0.0001 par value. All of the
voting power of the capital stock of this corporation shall be subject to
assessment and no holder of any share or shares shall have preemptive rights
to subscribe to any or all issues of shares of other securities of this
corporation.
V. The directors, officers and stockholders of this corporation are
indemnified from any personal liability for damages including costs of
developing records, investigator fees and attorney fees, if any, for breach of
fiduciary duty or civil suit as a director or officer, but does no eliminate
or limit the liability for: (a) acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law or (b) the payment of
dividends in violation of NRS 78.300.
VI. The members of the governing board of this corporation shall be
styled directors, and they shall be one in number until changed either by (1)
an amendment to the Articles of Incorporation of this corporation, or (2) the
adoption of By-Laws, and from time to time amendments thereunto increasing or
decreasing the number of directors, but in no case shall the number of
directors be smaller than one or the number of stockholders, whichever shall
be the least. The name and address of the person who is appointed to act as
the first director of this corporation is as follows:
Shirley Bethurum
675 Fairview Dr. #246
Carson City, NV 89701
VII. This corporation is to have perpetual existence.
VIII. The name and address of the first incorporator of this
corporation is as follows:
Mary Ann Dickens
675 Fairview Dr. #246
Carson City, NV 89701
The powers of the incorporator are to terminate upon filing of these
Articles of Incorporation.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation of Clarion Internet on this 8th day of January,
1999.
/s/ Mary Ann Dickens
Incorporator
STATE OF NEVADA )
) ss
CARSON CITY )
On this 8th day of January, 1999, before me, James W. Hume, a Notary
Public in and for said County and State, personally appeared Mary Ann Dickens,
known to me to be the person whose name is subscribed to the foregoing
instrument, and who duly acknowledged to me that she executed the same for the
purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal in the County and State, the day and year in this Certificate
first above written.
[SEAL] /s/ James Hume
NOTARY PUBLIC
<PAGE>
Exhibit 3.2 Bylaws of the Company
BYLAWS
OF
"CLARION INTERNET"
(the "Corporation")
Article I.
Office
The Board of Directors shall designate and the Corporation shall maintain
a principal office. The location of the principal office may be changed by the
Board of Directors. The Corporation also may have offices in such other places
as the Board may from time to time designate. The location of the initial
principal office of the Corporation shall be designated by resolution.
Article II.
Shareholders Meetings
1. Annual Meetings
The annual meeting of the shareholders of the Corporation shall be held
at such place within or outside the State of Nevada as shall be set forth in
compliance with these Bylaws. The meeting shall be held between the 8th and
15th of January of each year. If such day is a legal holiday, the meeting may
be on the next business day. This meeting shall be for the election of
Directors and for the transaction of such other business as may properly come
before it.
2. Special Meetings
Special meetings of shareholders, other than those regulated by statute,
may be called by the President upon written request of the holders of 50% or
more of the outstanding shares entitled to vote at such special meeting.
Written notice of such meeting stating the place, the date and hour of the
meeting, the purpose or purposes for which it is called, and the name of the
person by whom or at whose direction the meeting is called shall be given.
3. Notice of Shareholders Meetings
The Secretary shall give written notice stating the place, day, and hour
of the meeting, and in the case of a special meeting, the purpose or purposes
for which the meeting is called, which shall be delivered not less than ten or
more than fifty days before the date of the meeting, either personally or by
mail to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the shareholder at his address as it appears
on the books of the Corporation, with postage thereon prepaid. Attendance at
the meeting shall constitute a waiver of notice thereof.
4. Place of Meeting
The Board of Directors may designate any place, either within or without
the State of Nevada, as the place of meeting for any annual meeting or for any
special meeting called by the Board of Directors. A waiver of notice signed by
all shareholders entitled to vote at a meeting may designate any place, either
within or without the State of Nevada, as the place for the holding of such
meeting. If no designation is made, or if a special meeting is otherwise
called, the place of meeting shall be the principal office of the Corporation.
5. Record Date
The Board of Directors may fix a date not less than ten nor more than
sixty days prior to any meeting as the record date for the purpose of
determining shareholders entitled to notice of and to vote at such meetings of
the shareholders. The transfer books may be closed by the Board of Directors
for a stated period not to exceed fifty days for the purpose of determining
shareholders entitled to receive payment of any dividend, or in order to make
a determination of shareholders for any other purpose.
6. Quorum
A majority of the outstanding shares of the Corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. If less than a majority of the outstanding shares are
represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At a meeting resumed
after any such adjournment at which a quorum shall be present or represented,
any business may be transacted, which might have been transacted at the
meeting as originally noticed.
7. Voting
A holder of an outstanding share, entitled to vote at a meeting, may vote
at such meeting in person or by proxy. Except as may otherwise be provided in
the currently filed Articles of incorporation, every shareholder shall be
entitled to one vote for each share standing in his name on the record of
shareholders. Except as herein or in the currently filed Articles of
Incorporation otherwise provided, all corporate action shall be determined by
a majority of the vote's cast at a meeting of shareholders by the holders of
shares entitled to vote thereon.
8. Proxies
At all meetings of shareholders, a shareholder may vote in person or by
proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid
after six months from the date of its execution.
9. Informal Action by Shareholders
Any action required to be taken at a meeting of the shareholders, may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by a majority of the shareholders entitled to vote with
respect to the subject matter thereof.
Article III.
Board Of Directors
1. General Powers
The business and affairs of the Corporation shall be managed by its Board
of Directors. The Board of Directors may adopt such rules and regulations for
he conduct of their meetings and the management of the Corporation as they
appropriate under the circumstances. The Board shall have authority to
authorize changes in the Corporation's capital structure.
2. Number, Tenure and Qualification
The number of Directors of the Corporation shall be a number between one
and five, as the Directors may by resolution determine from time to time. Each
of the Directors shall hold office until the next annual meeting of
shareholders and until his successor shall have been elected and qualified.
3. Regular Meetings
A regular meeting of the Board of Directors shall be held without other
notice than by this Bylaw, immediately after and, at the same place as the
annual meeting of shareholders. The Board of Directors may provide, by
resolution, the time and place for the holding of additional regular meetings
without other notice than this resolution.
4. Special Meetings
Special meetings of the Board of Directors may be called by order of the
Chairman of the Board or the President. The Secretary shall give notice of the
time, place and purpose or purposes of each special meeting by mailing the
same at least two days before the meeting or by telephone, telegraphing or
telecopying the same at least one day before the meeting to each Director.
Meeting of the Board of Directors may be held by telephone conference call.
5. Quorum
A majority of the members of the Board of Directors shall constitute a
quorum for the transaction of business, but less than a quorum may adjourn any
meeting from time to time until a quorum shall be present, whereupon the
meeting may be held, as adjourned, without further notice. At any meeting at
which every Director shall be present, even though without any formal notice,
any business may be transacted.
6. Manner of Acting
At all meetings of the Board of Directors, each Director shall have one
vote. The act of a majority of Directors present at a meeting shall be the act
of the full Board of Directors, provided that a quorum is present.
7. Vacancies
A vacancy in the Board of Directors shall be deemed to exist in the case
of death, resignation, or removal of any Director, or if the authorized number
of Directors is increased, or if the shareholders fail, at any meeting of the
shareholders, at which any Director is to be elected, to elect the full
authorized number of Director to be elected at that meeting.
8. Removals
Directors may be removed, at any time, by a vote of the shareholders
holding a majority of the shares outstanding and entitled to vote. Such
vacancy shall be filled by the Directors then in office, though less than a
quorum, to hold office until the next annual meeting or until his successor is
duly elected and qualified, except that any directorship to be filled by
election by the shareholders at the meeting at which the Director is removed.
No reduction of the authorized number of Directors shall have the effect of
removing any Director prior to the expiration of his term of office.
9. Resignation
A Director may resign at any time by delivering written notification
thereof to the President or Secretary of the Corporation. A resignation shall
become effective upon its acceptance by the Board of Directors; provided,
however, that if the Board of Directors has not acted thereon within ten days
from the date of its delivery, the resignation shall be deemed accepted.
10. Presumption of Assent
A Director of the Corporation who is present at a meeting of the Board of
Directors at which action on any corporate matter is taken shall be presumed
to have assented to the action(s) taken unless his dissent shall be placed in
the minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
Secretary of the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a Director who voted in favor of such
action.
11. Compensation
By resolution of the Board of Directors, the Directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors or a
stated salary as Director. No such payment shall preclude any Director from
serving the Corporation in any other capacity and receiving compensation
therefor.
12. Emergency Power
When, due to a national disaster or death, a majority of the Directors
are incapacitated or otherwise unable to attend the meetings and function as
Directors, the remaining members of the Board of Directors shall have all the
powers necessary to function as a complete Board, and for the purpose of doing
business and filling vacancies shall constitute a quorum, until such time as
all Directors can attend or vacancies can be filled pursuant to these Bylaws.
13. Chairman
The Board of Directors may elect from its own number a Chairman of the
Board, who shall preside at all meetings of the Board of Directors, and shall
perform such other duties as may be prescribed from time to time by the Board
of Directors. The Chairman may by appointment fill any vacancies on the Board
of Directors.
Article IV.
Officers
1. Number
The Officers of the Corporation shall be a President, one or more Vice
Presidents, and a Secretary Treasurer, each of whom shall be elected by a
majority of the Board of Directors. Such other Officers and assistant Officers
as may be deemed necessary may be elected or appointed by the Board of
Directors. In its discretion, the Board of Directors may leave unfilled for
any such period as it may determine any office except those of President and
Secretary. Any two or more offices may be held by the same person. Officers
may or may not be Directors or shareholders of the Corporation.
2. Election and Term of Office
The Officers of the Corporation to be elected by the Board of Directors
shall be elected annually by the Board of Directors at the first meeting of
the Board of Directors held after each annual meeting of the shareholders. If
the election of Officers shall not be held at such meeting, such election
shall be held as soon thereafter as convenient. Each Officer shall hold office
until his successor shall have been duly elected and shall have qualified or
until his death or until he shall resign or shall have been removed in the
manner hereinafter provided.
3. Resignations
Any Officer may resign at any time by delivering a written resignation
either to the President or to the Secretary. Unless otherwise specified
therein, such resignation shall take effect upon delivery.
4. Removal
Any Officer or agent may be removed by the Board of Directors whenever in
its judgment the best interests of the Corporation will be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an Officer or agent shall not of
itself create contract rights. Any such removal shall require a majority vote
of the Board of Directors, exclusive of the Officer in question if he is also
a Director.
5. Vacancies
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, or if a new office shall be created, may be
filled by the Board of Directors for the un-expired portion of the term.
6. President
The President shall be the chief executive and administrative Officer of
the Corporation. He shall preside at all meetings of the stockholders and, in
the absence of the Chairman of the Board, at meetings of the Board of
Directors. He shall exercise such duties as customarily pertain to the office
of President and shall have general and active supervision over the property,
business, and affairs of the Corporation and over its several Officers,
agents, or employees other than those appointed by the Board of Directors. He
may sign, execute and deliver in the name of the Corporation powers of
attorney, contracts, bonds and other obligations, and shall perform such other
duties as may be prescribed from time to time by the Board of Directors or by
the Bylaws.
7. Vice President
The Vice President shall have such powers and perform such duties as may
be assigned to him by the Board of Directors or the President. In the absence
or disability of the President, the Vice President designated by the Board or
the President shall perform the duties and exercise the powers of the
President. A Vice President may sign and execute contracts and other
obligations pertaining to the regular course of his duties.
8. Secretary
The Secretary shall keep the minutes of all meetings of the stockholders
and of the Board of Directors and, to the extent ordered by the Board of
Directors or the President, the minutes of meetings of all committees. He
shall cause notice to be given of meetings of stockholders, of the Board of
Directors, and of any committee appointed by the Board. He shall have custody
of the corporate seal and general charge of the records, documents and papers
of the Corporation not pertaining to the performance of the duties vested in
other Officers, which shall at all reasonable times be open to the examination
of any Directors. He may sign or execute contracts with the President or a
Vice President thereunto authorized in the name of the Corporation and affix
the seal of the Corporation thereto. He shall perform such other duties as may
be prescribed from time to time by the Board of Directors or by the Bylaws.
9. Treasurer
The Treasurer shall have general custody of the collection and
disbursement of funds of the Corporation. He shall endorse on behalf of the
Corporation for collection checks, notes and other obligations, and shall
deposit the same to the credit accounts to any Director of the Corporation
upon application at the office of the Corporation during business hours; and,
whenever required by the Board of Directors or the President, shall render a
statement of his accounts. He shall perform such other duties as may be
prescribed from time to time by the Board of Directors or by the Bylaws.
10. Other Officers
Other Officers shall perform such duties and shall have such powers as
may be assigned to them by the Board of Directors.
11. Salaries
The salaries or other compensation of the Officers of the Corporation
shall be fixed from time to time by the Board of Directors, except that the
Board of Directors may delegate to any person or group of persons the power to
fix the salaries or other compensation of any subordinate Officers or agents.
No Officer shall be prevented from receiving any such salary or compensation
by reason of the fact that he is also a Director of the Corporation.
12. Surety Bonds
In case the Board of Directors shall so require, any Officer or agent of
the Corporation shall execute to the Corporation a bond in such sums and with
such surety or sureties as the Board of Directors may direct, conditioned upon
the faithful performance of his duties to the Corporation, including
responsibility for negligence and for the accounting for all property, moneys
or securities of the Corporation, which may come into his hands.
Article V.
Contracts, Loans, Checks And Deposits
1. Contracts
The Board of Directors may authorize any Officer or Officers, agent or
agents, to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Corporation and such authority may be general
or confined to specific instances.
2. Loans
No loan or advance shall be contracted on behalf of the Corporation, no
negotiable paper or other evidence of its obligation under any loan or advance
shall be issued in its name, and no property of the Corporation shall be
mortgaged, pledged, hypothecated or transferred as security for the payment of
any loan, advance, indebtedness or liability of the Corporation unless and
except as authorized by the Board of Directors. Any such authorization may be
general or confined to specific instances.
3. Deposits
All funds of the Corporation not otherwise employed shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies or other depositories as the Board of Directors may select, or as
may be selected by an Officer or agent of the Corporation authorized to do so
by the Board of Directors.
4. Checks and Drafts
All notes, drafts, acceptances, checks, endorsements and evidence of
indebtedness of the Corporation shall be signed by such Officer or Officers or
such agent or agents of the Corporation and in such manner as the Board of
Directors from time to time may determine. Endorsements for deposits to the
credit of the Corporation in any of its duly authorized depositories shall be
made in such manner as the Board of Directors may from time to time determine.
5. Bonds and Debentures
Every bond or debenture issued by the Corporation shall be in the form of
an appropriate legal writing, which shall be signed by the President or Vice
President and by the Treasurer or by the Secretary, and sealed with the seal
of the Corporation. The seal may be facsimile, engraved or printed. Where such
bond or debenture is authenticated with the manual signature of an authorized
Officer of the Corporation or other trustee designated by the indenture of
trust or other agreement under which such security is issued, the signature of
any of the Corporation's Officers named thereon may be facsimile. In case any
Officer who signed, or whose facsimile signature has been used on any such
bond or debenture, shall cease to be an Officer of the Corporation for any
reason before the same has been delivered by the Corporation, such bond or
debenture may nevertheless be adopted by the Corporation and issued and
delivered as though the person who signed it or whose facsimile signature has
been used thereon had not ceased to be such Officer.
Article VI
Capital Stock
1. Certificate of Share
The shares of the Corporation shall be represented by certificates
prepared by the Board of Directors and signed by the President. The signatures
of such Officers upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent or registered by a registrar other than the
Corporation itself or one of its employees. All certificates for shares shall
be consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
Corporation. All certificates surrendered to the Corporation for transfer
shall be canceled except that in case of a lost, destroyed or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the Corporation as the Board of Directors may prescribe.
2. Transfer of Shares
Transfer of shares of the Corporation shall be made only on the stock
transfer books of the Corporation by the holder of record thereof or by his
legal representative, who shall furnish proper evidence of authority to
transfer, or by his attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary of the Corporation, and on surrender for
cancellation of the certificate for such shares. The corporation authorizes
the transfer of shares without medallion guarantee, such transfers will be
guaranteed by the Corporation. The person in whose name shares stand on the
books of the Corporation shall be deemed by the Corporation to be the owner
thereof for all purposes.
3. Transfer Agent and Registrar
The Board of Directors of shall have the power to appoint one or more
transfer agents and registrars for the transfer and registration of
certificates of stock of any class, and may require that stock certificates
shall be countersigned and registered by one or more of such transfer agents
and registrars.
4. Lost or Destroyed Certificates
The Corporation may issue a new certificate to replace any certificate
theretofore issued by it alleged to have been lost or destroyed. The Board of
Directors may require the owner of such a certificate or his legal
representative to give the Corporation a bond in such sum and with such
sureties as the Board of Directors may direct to indemnify the Corporation as
transfer agents and registrars, if any, against claims that may be made on
account of the issuance of such new certificates. A new certificate may be
issued without requiring any bond.
5. Consideration for Shares
The capital stock of the Corporation shall be issued for such
consideration as shall be fixed from time to time by the Board of Directors.
In the absence of fraud, the determination of the Board of Directors as to the
value of any property or services received in full or partial payment of
shares shall be conclusive.
6. Registered Shareholders
The Corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder thereof, in fact, and shall not be
bound to recognize any equitable or other claim to or on behalf of this
Corporation to any and all of the rights and powers incident to the ownership
of such stock at any such meeting, and shall have power and authority to
execute and deliver proxies and consents on behalf of this Corporation in
connection with the exercise by this Corporation of the rights and powers
incident to the ownership of such stock. The Board of Directors, from time to
time, may confer like powers upon any other person or persons.
Article VII.
Indemnification
No Officer or Director shall be personally liable for any obligations of
the Corporation or for any duties or obligations arising out of any acts or
conduct of said Officer or Director performed for or on behalf of the
Corporation. The Corporation shall and does hereby indemnify and hold harmless
each person and his heirs and administrators who shall serve at any time
hereafter as a Director or Officer of the Corporation from and against any and
all claims, judgments and liabilities to which such persons shall become
subject by reason of his having heretofore or hereafter been a Director or
Officer of the Corporation, or by reason of any action alleged to have
heretofore or hereafter taken or omitted to have been taken by him as such
Director or Officer, and shall reimburse each such person for all legal and
other expenses reasonably incurred by him in connection with any such claim or
liability, including power to defend such persons from all suits or claims as
provided for under the provisions of the Nevada Revised Statutes; provided,
however, that no such persons shall be indemnified against, or be reimbursed
for, any expense incurred in connection with any claim or liability arising
out of his own negligence or willful misconduct. The rights accruing to any
person under the foregoing provisions of this section shall not exclude any
other right to which he may lawfully be entitled, nor shall anything herein
contained restrict the right of the Corporation to indemnify or reimburse such
person in any proper case, even though not specifically herein provided for.
The Corporation, its Directors, Officers, employees and agents shall be fully
protected in taking any action or making any payment, or in refusing so to do
in reliance upon the advice of counsel.
Article VIII.
Notice
Whenever any notice is required to be given to any shareholder or
Director of the Corporation under the provisions of the Articles of
Incorporation, or under the provisions of the Nevada Statutes, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Attendance at any meeting shall constitute a waiver
of notice of such meetings, except where attendance is for the express purpose
of objecting to the holding of that meeting.
Article IX.
Amendments
These Bylaws may be altered, amended, repealed, or new Bylaws adopted by
a majority of the entire Board of Directors at any regular or special meeting.
Any Bylaw adopted by the Board may be repealed or changed by the action of the
shareholders.
Article X.
Fiscal Year
The fiscal year of the Corporation shall be fixed and may be varied by
resolution of the Board of Directors.
Article XI.
Dividends
The Board of Directors may at any regular or special meeting, as they
deem advisable, declare dividends payable out of the surplus of the
Corporation.
Article XII.
Corporate Seal
The seal of the Corporation shall be in the form of a circle and shall
bear the name of the Corporation and the year of incorporation.
January 12, 1999
/s/ Shirley Bethurum
Shirley Bethurum, Secretary
<PAGE>
Exhibit 10.1 Employee / Contractor Agreement for Matthew Blansett
Employee / Contractor Agreement
Agreed this first day of June, 1999 between Clarion Internet, Inc. and
Matthew Blansett. Matthew Blansett agrees to provide valuable services to and
for Clarion Internet on a regular and monthly basis for a period of one year
or until termination by mutual consent by both parties. Clarion Internet
agrees to pay Matthew Blansett a base monthly fee equal to $1,000.00. Said
fee shall accrue until Clarion Internet has sufficient cash flow funds to pay
Matthew Blansett.
So stated and agreed to this first day of June, 1999
/s/ /s/
Clarion Internet Matthew Blansett
<PAGE>
Exhibit 10.2 Line-of-Credit Funding Agreement
FUNDING AGREEMENT
This agreement is entered into between Clarion Internet, Inc. (the
"Company") and Shirley Bethurum ("Investor") with respect to funds to be
provided to the Company by Investor.
The Company is currently a development stage company and as such may
require additional funding and capital in the course of its growth to continue
its operations and expansion.
Investor, an officer and director of the Company, agrees to provide
funds to the Company under the following terms acceptable to the Company:
Maximum Funding Available $50,000
Maximum Amount per Advance $4,000 per month
First Date Available December 1, 1999
Interest Rate None, so long as the loan is
converted into company common stock,
at the choice of the Company or
Investor, otherwise at 10% simple.
Repayment Proportional, one year from first
drawdown
Convertibility Rights:
The Company may elect to repay the amounts advanced by issuance of
common stock according to the following terms and conditions:
1) Upon 15 days' notice to Investor demanding conversion, and if
Investor does not so elect, the Company may, at its option, elect to repay
the amounts advanced plus interest, at 10% simple.
2) Investor may, at her option, elect to convert the amounts advanced
into common stock of the Company at the then-most-recent private placement
price for sales of common stock (currently $0.025 per share). As of the date
of this agreement, that reference would be to the "504" offering conducted
March 29, 1999.
Accepted and agreed this 30th day of July, 1999
CLARION INTERNET, INC.
/s/ Matthew Blansett /s/ Shirley Bethurum
Matthew Blansett, Shirley Bethurum,
President and Director Secretary and Director
INVESTOR
/s/ Shirley Bethurum
Shirley Bethurum
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAY-31-1999
<CASH> 21050
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<CURRENT-ASSETS> 21050
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0
0
<COMMON> 150
<OTHER-SE> 24900
<TOTAL-LIABILITY-AND-EQUITY> 21650
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<TOTAL-REVENUES> 0
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<OTHER-EXPENSES> 4000
<LOSS-PROVISION> 600
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3400)
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