UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
under Section 12(b) or (g) of
The Securities Exchange Act of 1934
VILLA PASTA, INC.
(Name of Small Business Issuer in its charter)
Colorado 84-1313551
(State of incorporation) (I.R.S. Identification No.)
581 County Line Road, Suite B, Palmer Lake, Colorado 80133
(Address of principle executive offices) (Zip Code)
(719) 481-6815
(Issuer's telephone number)
Securities to be registered under Section 12 (b) of the Exchange Act:
None
Securities to be registered under Section 12 (g) of the Exchange Act:
Title of Class:
Common Stock, no par value
Copies of all communications, including all communications sent to the agent
for service, should be sent to:
David J. Babiarz, Esq.
Wendy H. Bird, Esq.
Overton, Babiarz & Associates, P.C.
7720 East Belleview Avenue, Suite 200
Englewood, Colorado 80111
(303) 779-5900
Page 1 of Pages 52
Exhibit Page is Located at Page 19.
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TABLE OF CONTENTS
PART I......................................................................1
ITEM 1. DESCRIPTION OF BUSINESS............................................1
ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OR PLAN OF OPERATION..........7
ITEM 3. DESCRIPTION OF PROPERTY............................................9
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT....10
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS......10
ITEM 6. EXECUTIVE COMPENSATION............................................11
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................11
ITEM 8. DESCRIPTION OF SECURITIES.........................................12
PART II....................................................................14
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS....14
ITEM 2. LEGAL PROCEEDINGS.................................................15
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.....................15
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES...........................15
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.........................15
PART F/S...................................................................18
FINANCIAL STATEMENTS......................................................18
PART III...................................................................19
ITEM 1. EXHIBIT INDEX.....................................................19
SIGNATURES.................................................................20
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PART I
Item 1. Description of Business
=================================
History and Organization.
- -------------------------
Villa Pasta, Inc. (the "Company") is a Colorado corporation organized on
April 6, 1999. The Company produces and distributes a line of gourmet dried
pasta and related food products through a variety of channels. The Company is a
successor to a Colorado limited liability company, Villa Pasta, Limited
Liability Company, which was originally organized in 1995. In 1999, the Company
was converted from a limited liability company to a corporation to facilitate
acquisition of additional working capital. The Company currently has
approximately 21 shareholders.
The Company operates from a single location in Palmer Lake, Colorado,
located approximately midway between Denver and Colorado Springs. This facility
serves as the Company's administrative headquarters, as well as its production
facility. Assets of the Company are currently limited, consisting primarily of
machinery and equipment utilized in connection with the production of its
products and various items of inventory. Distribution of the Company's products
is accomplished through third-party carriers. The Company's offices are located
at 581 County Line Road, Suite B, Palmer Lake, Colorado 80133, and its telephone
number is (719) 481-6815. The Company also maintains a toll-free number,
1-888-ME-PASTA.
Narrative Description of Business.
- ----------------------------------
The Company manufactures and distributes a line of gourmet pasta and
related products. Its primary source of revenue is through the sale of these
products for distribution by grocery retailers and gourmet food shops. The
Company maintains a site on the Worldwide Web ("Web") and utilizes direct mail
marketing to allow customers to order products directly from the Company. The
Company also markets to various non-profit organizations in an effort to
incorporate its products into various fund raisers held by these organizations.
The Company operates exclusively in one industry, the specialty food products
industry.
The Company produces all of its pasta and related products from scratch.
Raw materials include semolina and, depending upon the type of pasta desired,
lemon-pepper, jalapeno powder, tomato powder, spinach powder, black pepper, beet
powder and garlic powder. Employees of the Company mix various ingredients
together under carefully controlled conditions to achieve the desired type of
pasta. At any given time, the Company offers approximately 15 to 20 different
types of pasta, varying in flavor, size and shape.
Management believes that the Company is a relatively small producer
compared to other manufacturers and distributors of comparable products. As a
result, a substantial portion of the Company's production process is manual.
After the raw materials are mixed in the required proportion to achieve the
desired product, Company employees place the mixture in a pasta machine owned
and operated by the Company. This machine serves to mold the pasta into the
desired shape and size. The desired length is obtained by manually cutting the
pasta as it exits the machine.
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Following mixture and molding of the raw material ingredients, the pasta
must be dried for preservation and shipping. This is accomplished by manually
placing the pasta on drying racks and placing the racks in a drying room under
carefully controlled conditions. The drying room, measuring approximately 220
square feet, is heat controlled by electric heaters and kept at a constant
humidity by controlled introduction of water by employees of the Company. After
the pasta is dried for the required length of time, it is sorted, packaged and
boxed according to delivery requirements. The packaging of the products is also
done on a manual basis. The entire production cycle takes approximately 24 hours
from start to finish.
The Company's pasta is individually packaged in 12 ounce portions for sale
to consumers. Each package is clearly and attractively wrapped in cellophane to
reveal the size, shape and content of the pasta inside. A total of twelve
packages per box of the same pasta is then packaged for shipment to retailers.
At any given time, the Company maintains an inventory of packaging material, in
addition to the raw materials utilized in making the pasta.
In addition to its line of dried pasta, the Company produces and
distributes a limited line of seasoning mixes for use in conjunction with its
pasta. These mixes include dried spices which, when added to additional
ingredients by the purchaser, produce sauces to compliment the pasta. Each of
the recipes contained in these seasoning mixes was conceived by the Company's
president based on his experience in the food service industry. Management
believes these mixes are unique and constantly strives to supplement its
offerings.
As of the date of this Registration Statement, the Company produces as much
as 430 pounds of pasta per day, averaging five production days per week. A
substantial portion of this production is sold to grocery retailers and
specialty food shops in the Denver metropolitan area. Customers of the Company
which account for ten percent (10%) or more of its sales on an annual basis
include Krogers, which operates the King Soopers and City Market retail grocery
chains, as well as Safeway and Alfalfa's. The Company's primary emphasis at
present is on expanding this distribution through additional and different
channels. The Company recently began distributing its products through Dean and
DeLuca, a well-known retailer located on the eastern seaboard of the United
States. (See "Marketing and Distribution" for additional information regarding
marketing efforts by the Company).
In addition to distribution of its product through retailers as discussed
above, the Company has placed substantial emphasis on the design and creation of
gift baskets and boxes for holiday occasions. These gift items include an
assortment of Company products, including pastas, sauce mixes, recipe book and
pasta spoon. Gift items are sold primarily to employers for distribution to
employees and service organizations for distributions to their clients.
Management views gift items as an important aspect of the Company's business,
accounting for approximately thirty (30%) percent of its revenues during the
year ended December 31, 1998.
The Company acquires it raw materials from a variety of food brokers in the
Denver area. In the opinion of management, none of these raw materials are
subject to restrictions on supply and all are available from a variety of
sources. Most of the raw materials are derived from agricultural products and
have been available at constant prices for the past twelve months. While
management believes the Company will be afforded an adequate supply of these raw
materials in the future, there is no assurance that the prices will remain
stable in the future. The supply and price of these raw materials are dependent
on such factors as worldwide supply and demand, weather conditions and
government subsidies
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Marketing and Distribution.
- ---------------------------
The Company's products are distributed through a variety of channels. Its
primary means of distribution, common in the retail food industry, is through
food brokers to retail outlets such as grocery chains and specialty food stores.
Additional channels of distribution include direct mail of holiday gift baskets.
Management continually strives to supplement and expand its distribution within
the financial and personnel resources of the Company.
The Company has relationships with three food brokers who distribute the
product through retail outlets. These brokers represent a number of different
food products throughout the Colorado front range, and are engaged by the
Company as independent contractors on a commission basis. It is the brokers'
objective to place the Company's product in as many outlets as possible
consistent with the Company's business plan of attracting customers with more
discriminating tastes. These brokers also seek to display the products in a
prominent manner to attract point of purchase sales.
The Company products are delivered through a combination of customer-owned
transportation and common carriers. Products sold to Kroger chains, including
King Soopers and City Market, are transported by carriers owned or operated by
that entity. Such transportation is done at the customers' expense. Shipments to
other retail outlets are done via common carrier, primarily UPS. The shipments
are done at the Company's expense and accordingly, the Company continually
monitors shipping costs to obtain the lowest prices possible.
The Company also maintains a Website and advertises its products on the
Internet. The Company's Website is located at http:\\www.villapasta.com.
Visitors to the Company's Website are afforded information about the Company's
products and details on ordering merchandise. During the fiscal year ended
December 31, 1998, direct sales resulted in approximately one (1%) percent of
the Company's revenue for the year.
The Company also utilizes direct mail as a means of marketing. Management
uses various customer lists for advertising its gift offerings at holidays, as
well as direct offering throughout the year. Management anticipates this means
of distribution will decrease as a percentage of Company revenue as efforts to
increase distribution through retail outlets are enhanced.
Gift baskets and boxes sold by the Company are attractively packaged and
contain an assortment of the Company's products. The Company markets these gift
packages primarily to employer groups for distribution to employees and
customers. Gift packages have been a substantial source of revenue for the
Company since its inception.
The Company also markets its products to various non-profit groups for fund
raising efforts. In this context, the Company's products are sold at wholesale
prices for resale by the charitable organizations in fund-raising events. During
the year ended December 31, 1998, this segment of the Company's business
accounted for a minor portion of its revenues. However, management believes the
market to be an attractive source of revenue, and will continue to pursue it in
the future.
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The Company's target market is middle to upper-income families with a love
of pasta and who demand the convenience of prepackaged food products. The
Company's pasta can be cooked in approximately five minutes and provides a
healthy and satisfying meal. Seasoning packages can be combined with readily
available products to create a nutritional sauce in a matter of minutes. The
Company's marketing plan is designed to appeal to these consumers.
Competition.
- ------------
Competition in the specialty food products industry is intense. Competitors
of the Company include large, multi-national manufacturers and distributors, as
well as a myriad of local and regional producers and distributors. As a dietary
offering, the Company's products compete for consumer dollars with other forms
of pasta, along with a variety of other food products. Management believes the
Company is an insignificant participant in this industry.
Consumer choices among pasta products includes fresh, refrigerated pasta,
mass-produced dried pasta and specialty produced dried pasta such as that of the
Company. Distributors of fresh refrigerated pasta include Catalina, while
distributors of other specialty dried pastas include Al Dente, Pasta Mama and
Elenas. Distributors of mass-produced pasta are even more numerous. The Company
competes with a variety of distributors of dried pasta, both locally,
nationally, and internationally. Management believes the Company is at a
significant disadvantage vis a' vis these other entities from a financial and
personnel perspective.
The Company's business plan contemplates that the Company will seek to
distinguish itself through the quality and taste of its products, as well as the
service provided to its customers. Management continually strives to upgrade and
diversify its product offerings while maintaining the quality of its products.
The Company also hopes to develop a loyal following in its retail customers
through direct sales and gift basket distributions.
Pricing.
- --------
The Company's products are marketed as specialty, gourmet food items, on
the upper-end price scale for similar products. Management does not perceive the
price of the Company's products as a deterrent to consumers, and allows some
latitude for the Company to cover its costs and realize a reasonable profit. The
Company currently markets its pasta from $2.99 to $6.00 per package retail,
$25.80 per carton for wholesale distribution and $29.95 and $39.95 respectively,
for direct sales of gift boxes and gift baskets. Prices may change in the future
depending upon the price of raw materials, shipping and other factors affecting
the Company's cost.
Government Regulation.
- ----------------------
The Department of Agriculture regulates scale accuracies of the Company.
The Company is required to be accurate in its representations regarding weight
of the contents of its packages, that is, each package must actually contain
product which meets or exceeds the stated amount of product. The Company is also
required to accurately report the product ingredients and nutritional values on
its product labels. In addition to packaging regulations, the Company is
regulated by the Department of Health and environmental codes regarding
cleanliness standards in food preparation.
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Employees and Consultants.
- --------------------------
The Company currently employs nine individuals, including its president and
chief executive officer. Of those individuals, only the president is employed on
a full-time basis, and the remainder are part-time, depending on the needs of
the Company. The president is responsible for overseeing all of the Company's
operations as well as strategic planning, product development and marketing.
Other employees include a production manager, production assistant and shipping
and receiving personnel.
The Company employs additional part-time, seasonal help to assist in
packaging gift baskets during holiday time. Management does not perceive
retaining qualified help to be material to the Company's business. With the
exception of the Company's president, all of its employees are paid on an hourly
basis and none of the employees are subject to collective bargaining agreements
with the Company. The Company also retains independent consultants to assist
with administrative functions, such as bookkeeping, accounting and legal
services. Such individuals are retained at hourly rates customary in the
industry.
Facilities.
- -----------
The Company leases its administrative and production facilities from an
unrelated third party. This space, consisting of approximately 1600 square feet,
is characterized as warehouse and is located in a rural community south of
Denver. The space is divided between production, packaging, shipping and
receiving and administrative areas. Management deems these facilities to be
adequate for the Company's needs for the foreseeable future.
The space is rented on an annual basis at the rate of $525 per month, which
lease currently expires March 31, 2000. Management believes the lease can be
renewed on acceptable terms for the foreseeable future.
Risk Factors.
- -------------
In addition to the risks inherent in its business and described above,
management believes the Company is also subject to the following specific risks
with regard to its business and future operation:
Limited Capitalization and Working Capital.
-------------------------------------------
The Company has extremely limited capitalization and working capital.
Since inception, the Company has received approximately $48,750 in funding
from contributions from its original founders and the sale of securities to
investors in a private placement. At September 30, 1999, the Company had
working capital of approximately $55,262, consisting of $61,984 of current
assets and $6,722 of current liabilities. A portion of the working capital
will be spent on professional fees and expenses, including legal and
accounting fees to be incurred in connection with this Registration
Statement. Remaining funds must be used by the Company to pay operating
expenses. For the period ended September 30, 1999, the Company's operations
provided $8532 of cash. As a result, very limited funds remain for
additional marketing, promotion and additional operating expenses. There is
no assurance that existing capital will be sufficient to achieve the
Company's objectives.
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Competition.
------------
Competition in the specialty foods industry is intense. Many different
producers and distributors compete for the attention of consumers in this
industry. Success is often a function of the budget available for marketing
and advertising of a company's product. Due to the Company's limited
capitalization and personnel, management believes the company is at a
competitive disadvantage vis a' vis other participants in this industry.
Nonetheless, management believes the Company's product and service is
superior and will make the Company a viable competitor in this industry.
However, the Company lacks the financial resources to employ marketing and
advertising at a level consistent with other industry competitors.
Limited Personnel.
------------------
As of the date of this Registration Statement, the Company is totally
dependent on the efforts and expertise of Craig Van Scoten, its President
and Chief Executive Officer. In that capacity, he is responsible for
overseeing all of the Company's operations, including marketing, production
and distribution. Loss of his service would adversely affect the Company.
In addition, the Company does not maintain any key-man insurance on his
life. The ability of the Company to retain any additional employees is
dependent on the results of its future marketing and the availability of
additional working capital.
Penny Stock Regulation.
-----------------------
In the event the Company is successful in obtaining listing of its
Common Stock on the OTC Bulletin Board, investors should be aware of
limitations on marketing securities characterized as "penny stocks" under
existing securities statutes and regulations. Penny stocks are securities
not listed on an exchange or quoted in Nasdaq and selling for a price of
less than $5 per share. Broker-dealers engaging in transactions in penny
stocks are subject to special regulations, including a requirement to
evaluate the suitability of an investment in penny stocks and providing
specific information to potential investors. The Securities and Exchange
Commission and self-regulatory organizations such as the National
Association of Securities Dealers have shown a historical bias against
penny stocks. As a result, new and additional regulation may arise in the
future further affecting any trading market which may develop for the
Company's Common Stock.
Potentially Limited Trading Market.
-----------------------------------
In addition to rules regulating sales of penny stocks, trading in the
Company Common Stock may be limited by the "Blue Sky" statutes enacted by
individual states. Initial sale and distribution of the Company's Common
Stock was extremely limited, primarily restricted to residents of the State
of Colorado. Since the sale of the Common Stock was not qualified in any
additional states, trading in any after-market may be limited. While the
Company will seek to overcome this obstacle by obtaining listing in
Standard and Poors Corporation Records or another recognized securities
manual, there is no assurance that such efforts will be successful or that
a market will develop. Purchasers of the Common Stock may therefore have
difficulty selling their shares, should they desire to do so.
Lack of Dividends.
------------------
The Company has paid no dividends on its Common Stock since inception,
and it is not anticipated that any will be paid in the foreseeable future.
Any cash generated through operation in the future will be reinvested in
the Company to obtain additional personnel and increase marketing.
Investors should not expect dividends in the immediate future.
Control of the Company.
-----------------------
Officers and directors of the Company presently own an aggregate of
1,000,000 shares of Common Stock, representing 86.58% of all voting
securities outstanding. Due to the absence of cumulative voting by
shareholders, such individuals can elect the entire board of directors for
the foreseeable future. Shareholders will be unable to influence the
management or policies of the Company pending issuance of additional stock.
(See "DESCRIPTION OF SECURITIES).
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Preferred Stock Authorized.
-----------------------------
The Articles of Incorporation of the Company authorize the issuance of
up to 5,000,000 shares of preferred stock. While no shares of preferred
stock are currently outstanding, and the Company has no plans to issue any
in the foreseeable future, issuance of preferred stock could act to the
detriment of holders of Common Stock. Under the Company's Articles,
preferred stock can be issued with preferences on liquidation and dividends
or to prevent a takeover of the Company. The terms and conditions of any
preferred stock issued in the future could operate to the disadvantage of
holders of the Common Stock. (See "DESCRIPTION OF SECURITIES")
Item 2. Managements' Discussion and Analysis or Plan of Operation
=================================================================
Introduction.
- -------------
Villa Pasta, Inc. operates in the specialty food industry as a maker of
fine pasta and related products which are sold in supermarkets and specialty
stores in Colorado and other locations in the United States. The Company was
originally organized as a limited liability company under the laws of the State
of Colorado in July, 1995. In April, 1999, the Company was converted to a
corporation under the laws of the State of Colorado. This transaction was
treated as a reorganization for financial statement purposes, with the
then-existing members exchanging 100% of their membership interest for 900,000
shares of Common Stock. The financial statements included in this Registration
Statement for the years ended December 31, 1998 and 1997 reflect its operations
as a limited liability company. The financial statements for the nine month
period ended September 30, 1999 reflects its operation as a limited liability
company through March 31, 1999 and as a Colorado corporation since that date.
Certain statements contained in this Registration Statement may be "forward
looking" in nature. Such statements are identified by words such as
"anticipates," "expects," "believes" and "hopes." Investors are cautioned not to
put undue reliance on these forward looking statements, as they do not represent
statements of fact. These forward looking statements are subject to future
events affecting the Company and its operations, including the availability of
working capital, competition, consumer eating habits and the overall state of
the domestic and worldwide economy. Many of these factors are beyond the control
of the Company. Except as otherwise required by applicable securities laws, the
Company disclaims any obligation or intent to update these forward looking
statements.
Liquidity and Capital Resources.
- --------------------------------
September 30, 1999.
-------------------
At September 30, 1999, management believed the Company had sufficient
liquidity and capital to meet its needs for the next twelve months. At that
time, the Company had working capital of $55,262, consisting of current
assets of $61,984 and current liabilities of $6,722. Working capital at
September 30, 1999 represented an increase of $32,018 from fiscal year end
December 31, 1998. That increase resulted from a private placement
conducted by the Company during the second quarter of the current fiscal
year, discussed below.
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Capital requirements for the next twelve months include cash to pay
vendors, employees and other general and administrative expenses pending
collection of accounts receivable. Management believes the Company has
sufficient assets for that purpose for the foreseeable future. Most of the
Company's customers are large supermarket chains or established specialty
food stores, so collection of accounts receivable has not been an issue for
the Company to date. The Company's production operations are not highly
automated, so acquisition of additional property and equipment is not
expected to represent a material expenditure in the foreseeable future.
Finally, the Company leases its administrative and production facilities,
so substantial additional capital is not required for that purpose.
Liabilities of the Company at September 30, 1999 consisted of trade
accounts payable and other expenses accrued in the ordinary course of
business. The Company has no long-term debt, and it is not expected that
borrowing will be necessary in the foreseeable future. Historically, the
Company has relied on periodic advancements from the owner to finance
short-term capital requirements. However, with the private placement
discussed below, such borrowing should not be necessary for the foreseeable
future.
In the second quarter of the current fiscal year, the Company
conducted a private placement of its Common Stock pursuant to exemptions
from the registration requirements of Federal and state law. The Company
sold an aggregate of 155,000 shares of Common Stock at a price of $.25 per
share for aggregate proceeds of $38,750. Sales were made by an officer and
director of the Company and accordingly, no commissions were paid in
connection with that offering. A portion of those proceeds were used to
repay outstanding indebtedness to a related party and the balance was
available for operations.
For the nine month period ended September 30, 1999, and after taking
into account its net loss for the period, the Company's operations provided
approximately $8500 in cash. Cash provided by operations was supplemented
by cash produced from financing activities, specifically the private
placement. As a result, the Company's cash increased during the nine months
ended September 30, 1999. This compares to the nine months ended September
30, 1998, when the Company's cash decreased an aggregate of $17,199.
December 31, 1998.
------------------
At December 31, 1998, the Company had working capital of $23,244,
consisting of current assets of $36,516 and current liabilities of $13,272.
The Company also had additional liabilities of $11,452, representing
indebtedness to a related party. In the opinion of management, the
Company's financial condition at December 31, 1998 warranted additional
efforts to increase liquidity and available capital. As a result, the
private placement discussed above was conducted.
Operation of the Company for the year ended December 31, 1998 used
$13,241 of cash. The Company also spent $2,180 on capital expenditures and
approximately $5,000 on distributions to its owners. Partially offsetting
this adverse effect on cash flow was advances from members in the amount of
$3,576. However, the Company's cash decreased an aggregate of $16,838,
leaving the Company approximately $4,000 entering fiscal 1999. Proceeds
from the private placement were used to remedy this situation.
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Results of Operations.
- ----------------------
Nine Months Ended September 30, 1999.
-------------------------------------
During the nine months ended September 30, 1999, the Company realized
a net loss of $24,013 on revenues of $63,685. That represents an increase
in the net loss for the nine month period ended September 30, 1998, when
the Company realized a net loss of $3,187 on total revenues of $59,827.
However, the Company's gross margin increased from approximately 40% for
the nine months ended September 30, 1998 to 49% for the nine month period
ended September 30, 1999. This increase is attributable to increasing sales
of a greater mix of higher profit margin items. The single greatest factor
contributing to the increased loss for the 1999 period was the compensation
expense related to issuance of stock to an officer of the Company for
services rendered in connection with the reorganization to a corporation
and consulting in connection with the Company's business. The amount of the
expense was based on a value of $.25 per share, the price at which the
Company was offering stock to investors beginning in March 1999.
A substantial portion of the Company's sales are recorded in the
fourth fiscal quarter, commensurate with the holiday season. At this time
of the year, sales of the Company's gift baskets increase substantially
with sales to corporate and other special purchasers. However, management
is unable to predict with any degree of certainty whether sales during the
fourth quarter of 1999, when added to sales for the first three quarters,
will be sufficient to reach total sales reported for the last fiscal year.
General and administrative expenses increased slightly from the nine
months ended September 30, 1998 to the nine months ended September 30,
1999, from $27,104 to $30,421. A portion of those expenses are attributable
to legal and accounting fees incurred by the Company during 1999 in
connection with the private placement and preparation and filing of this
Registration Statement. Other general and administrative expenses remained
generally constant.
Year Ended December 31, 1998 Compared to December 31, 1997.
------------------------------------------------------------
For the year ended December 31, 1998, the Company reported a net loss
of $4,356 on sales of $115,559. This compares to a profit of $2,671 on
sales of $103,899 for the year ended December 31, 1997. The Company's gross
margin remained at 37% for both fiscal years. The difference in results of
operations for 1998 compared to 1997 is therefore attributable to the
increase in sales, and the increase in general and administrative expenses
from $36,955 for the year ended December 31, 1997 to $46,899 for the year
ended December 31, 1998. This increase is primarily attributable to higher
overhead due to location change of the facility and increased payroll
expenses.
Item 3. Description of Property
===============================
The Company owns no real property as of the date of this Registration
Statement. The Company leases its production facility and administrative offices
pursuant to an annual lease with the landlord. Management deems such arrangement
to be adequate for the Company's needs for the foreseeable future.
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Item 4. Security Ownership of Certain Beneficial Owners and Management
=======================================================================
As of the date of this Registration Statement, there were a total of
1,155,000 shares of Common Stock of the Company outstanding, the only class of
voting securities of the Company currently outstanding.
The following tabulates holdings of Common Stock of the Company by each
person who holds of record, or is known by management of the Company to own
beneficially, more than 5% of the voting securities outstanding and, in
addition, by all directors and officers of the Company individually and as a
group. The shareholders listed below have sole voting and investment power. All
ownership of securities is direct ownership unless otherwise indicated.
Number of Percent of
Name and Address Shares Voting Securities
- --------------------------------------------------------------------------------
Craig Van Scoten 900,000 77.92%
581 County Line Road, Suite B
Palmer Lake, CO 80133
Michael Wolf 100,000 8.66%
3430 East Geddes Drive
Littleton, CO 80122
All Officers and Directors
as a Group (2 persons) 1,000,000 86.58%
Each of the individuals listed in the foregoing table are officers and directors
of the Company.
Changes In Control.
- -------------------
The Company knows of no arrangements, including the pledge by any person of
securities of the Company, which may result in a change of control of the
Company in the future.
Item 5. Directors, Executive Officers, Promoters and Control Persons
======================================================================
The following individuals presently serve as officers and directors of the
Company:
Name Age Position
- --------------------------------------------------------------------------------
Craig Van Scoten 46 President, Treasurer and Director
Michael Wolf 46 Vice President, Secretary and Director
Mr. Van Scoten should be considered a "founder" and "parent" of the Company
(as such terms are defined by rule under the Securities Exchange Act of 1934, as
amended), inasmuch as he has taken initiative in founding and organizing the
business of the Company. Mr. Van Scoten served as the Manager of the predecessor
limited liability company since its inception in July of 1995.
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Messrs. Van Scoten and Wolf serve as directors of the Company until the
next annual meeting of shareholders and until their successors are elected and
qualify. Each individual serves as an officer at the will of the Board of
Directors. Each individual has served in his current capacity since the
Company's conversion from a limited liability company in April of 1999.
The following represents a summary of the business history of each of the
foregoing individuals for the last five years:
Craig Van Scoten:
-----------------
Since 1995, Mr. Van Scoten has acted as President, owner and operator
of Villa Pasta, Inc. and its predecessor Villa Pasta, Limited Liability
Company. From 1992 to 1994, Mr. Van Scoten served as a securities salesman
with Tamaron Securities, a retail securities broker-dealer located in
Englewood, Colorado. Mr. Van Scoten earned a Bachelor of Science in
business administration from Plymouth State College in Plymouth, New
Hampshire in 1976 and attended the Restaurant School of Philadelphia in
Philadelphia, Pennsylvania from 1976 to 1977.
Michael Wolf:
-------------
In April of 1999, Mr. Wolf joined Villa Pasta, Inc. as the Vice
President and Secretary of the corporation. He devotes only a minor portion
of his time to the affairs of the Company. In 1976, Mr. Wolf acted as a
founder and one of the original partners of Epicurean Catering, a private
Colorado corporation currently having revenues of approximately
$10,000,000. Mr. Wolf sold his share of the business to his partner in
1991, and since that time has served as vice president of finance and
administration for Epicurean Catering. In that capacity Mr. Wolf oversees
approximately 125 employees and the financial affairs of that entity in
conjunction with the president. Epicurean Catering's market is primarily
large-scale commercial special events. Mr. Wolf earned a Bachelor of
Science in business administration with a major in hotel/restaurant
management from the University of Denver in 1974.
No family relationships exist between either of the officers and directors
of the Company.
Item 6. Executive Compensation
==============================
Mr. Van Scoten currently receives an annual salary of $13,000 to act as
President of the Company. Mr. Van Scoten does not currently have an employment
contract and receives no benefits or bonuses from the Company. In 1999, Mr. Wolf
received 100,000 shares of stock in exchange for services rendered to the
Company valued in the amount of $25,000. The Company does not currently have a
stock option plan.
The Company's directors presently serve without compensation, but are
entitled to reimbursement for reasonable and necessary expenses incurred on
behalf of the Company.
Item 7. Certain Relationships and Related Transactions
======================================================
Initial Capitalization.
- ------------------------
On April 6, 1999 the Company issued 900,000 shares of Common Stock to Mr.
Van Scoten and 100,000 shares of Common Stock to Mr. Wolf in completion of its
initial capitalization. The shares issued to Mr. Van Scoten were issued in
exchange for his membership interest in the predecessor limited liability
company and were valued at $21,025. The shares issued to Mr. Wolf for services
rendered in connection with the organization of the Company and valued at
$25,000 for purposes of that transaction. Messrs. Van Scoten and Wolf were the
only members of the Board of Directors approving those transactions.
11
-13-
<PAGE>
During the two years ended December 31, 1998, and the nine month period
ended September 30, 1999, Mr. Van Scoten advanced funds to the Company for
working capital purposes. At December 31, 1998 and 1997, the amount outstanding
from Mr. Van Scoten was $11,452 and $2,060, respectively. An additional amount
of $5469 was advanced during the nine month period ended September 30, 1999. All
of these amounts were payable on demand. The entire balance of $16,921 was
repaid by the Company during the nine months ended September 30, 1999. The
Company is of the opinion that the foregoing transactions were no less favorable
than could have been obtained from an unaffiliated third party.
Item 8. Description of Securities
=================================
The Company's authorized capital consists of 50,000,000 shares of Common
Stock, no par value and 5,000,000 shares of Preferred Stock, no par value. The
following description of the Company's securities is qualified in its entirety
by reference to the Company's Articles of Incorporation ("Articles of
Incorporation"), a copy of which is filed as an Exhibit to this Registration
Statement.
Common Stock
- ------------
Each share of Common Stock is entitled to one vote at all meetings of
shareholders. All shares of Common Stock are equal to each other with respect to
liquidation rights and dividend rights. There are no preemptive rights to
purchase any additional shares of Common Stock. The Articles of Incorporation of
the Company prohibit cumulative voting in the election of directors. In the
event of liquidation, dissolution or winding up of the Company, holders of
shares of Common Stock will be entitled to receive on a pro rata basis all
assets of the Company remaining after satisfaction of all liabilities and all
liquidation preferences, if any, granted to holders of the Company's preferred
stock.
All of the Company's issued and outstanding Common Stock is fully paid and
non-assessable and is not subject to any future call.
Preferred Stock
- ---------------
The Articles of Incorporation vest the Board of Directors of the Company
with authority to divide the preferred stock into series and to fix and
determine the relative rights and preferences of the shares of any such series
so established to the full extent permitted by the laws of the State of Colorado
and the Articles of Incorporation in respect to, among other things, (i) the
number of shares to constitute such series and the distinctive designations
thereof; (ii) the rate and preference of dividends, if any, the time of payment
of dividends, whether dividends are cumulative and the date from which any
dividend shall accrue; (iii) whether preferred stock may be redeemed and, if so,
the redemption price and the terms and conditions of redemption; (iv) the
liquidation preferences payable on preferred stock in the event of involuntary
or voluntary liquidation; (v) sinking fund or other provisions, if any, for
redemption or purchase of preferred stock; (vi) the terms and conditions by
which preferred stock may be converted, if the preferred stock of any series are
issued with the privilege of conversion; and (vii) voting rights, if any. As of
the date of this Registration Statement, no preferred stock of the Company was
outstanding.
12
-14-
<PAGE>
Transfer Agent.
- ---------------
The Company currently acts as its own transfer agent and registrar for the
Common Stock. However, management anticipates the Company may retain the
services of a third-party transfer agent if the Company is successful in
obtaining quotation of its Common Stock on the Bulletin Board.
Dividends
- ----------
No dividend has been declared or paid by the Company on its shares of
Common Stock since inception and no dividends on shares of Common Stock are
contemplated in the foreseeable future. Any earnings of the Company will be
reinvested in the Company's business.
13
-15-
<PAGE>
PART II
Item 1. Market Price for Common Equity and Related Stockholder Matters.
=======================================================================
There is no trading market for the Company's Common Stock at present and
there has been no trading market to date. 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, but the Company may initiate such discussions in the
future following receipt of an effective date for this Registration Statement.
Market Price
- ------------
The Company's Common Stock is not quoted at the present time.
Shares Available for Future Sale
- --------------------------------
An aggregate of 1,000,000 shares of the Common Stock presently outstanding
are "restricted securities within the meaning of the 1933 Act and may hereafter
be sold in compliance with Rule 144 promulgated thereunder. Rule 144 provides,
among other things, and subject to certain limitations, that a person holding
restricted securities for a period of one year may sell, every three months,
those securities in brokerage transactions equal to 1% of the Company's
outstanding Common Stock or the average weekly trading volume during the four
weeks preceding the sale, whichever amount is greater. After two years, holders
of restricted stock who are not affiliates of the Company may apply to sell all
restricted stock free of restrictions. Possible sales of the Company's Common
Stock pursuant to Rule 144 may have a depressive effect on the price of the
Company's Common Stock. All of the restricted shares of Common Stock presently
outstanding were issued in April of 1999, and will be available for sale free of
restrictions by mid-2001.
Holders
- -------
There are 21 holders of the Company's Common Stock as of the date of this
Registration Statement.
Penny Stock Regulation
- ----------------------
Broker-dealer practices in connection with transactions in "Penny Stocks"
are regulated by certain penny stock 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.
14
-16-
<PAGE>
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 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.
Item 2. Legal Proceedings.
==========================
The Company knows of no legal proceeding to which it is a party or to which
any of its property is subject which are either pending, threatened or
contemplated, nor are there any unsatisfied judgments against the Company.
Item 3. Changes in and Disagreements With Accountants.
======================================================
The Company has retained its accountants, Cordovano and Harvey, P.C., 201
Steele Street, Suite 300, Denver, Colorado 80206 since its conversion to a
corporation and there are no disagreements with the findings of said
accountants.
Item 4. Recent Sales of Unregistered Securities.
================================================
On April 6, 1999, the Company completed its initial capitalization by
selling an aggregate of 1,000,000 shares to its directors, 900,000 shares to Mr.
Van Scoten and 100,000 shares to Mr. Wolf. This offering was conducted under
Section 4(2) of the Securities Act, as each individual was afforded access to
information typically contained in a registration statement under such Act, and
each was able to fend for himself in the transaction. Securities were sold for
an aggregate consideration of $52,325, consisting of $25,000 in services
provided by Mr. Wolf in connection with the Company's organization and $27,324
in membership interests owned by Mr. Van Scoten and converted to shares of
common stock upon the conversion from the predecessor limited liability company.
Also in April, 1999, the Company completed a private offering pursuant to
the provisions of Regulation D, Rule 504 of the Securities Act. The Company sold
an aggregate of 155,000 shares of Common Stock at an offering price of $.25 per
share for aggregate proceeds of $38,750. Those securities were sold to a group
of accredited investors consisting of friends, relatives and business associates
of the founders of the Company. The Company obtained agreements from the
subscribers in the offering confirming their status as accredited investors and
all sales were made by the Company through its officers and directors.
Item 5. Indemnification of Directors and Officers.
==================================================
Article IX of the Company's Articles of Incorporation contain provisions
providing for the Indemnification if directors and officers of the Company as
follows:
The Board of Directors of the Corporation shall have the power to:
15
-17-
<PAGE>
Section 1. Indemnify any director, officer, employee or agent of the
Corporation to the fullest extent permitted by the Colorado Business
Corporation Act as presently existing or as hereafter amended.
Section 2. Authorize payment of expenses (including attorney's fees)
incurred in defending a civil or criminal action, suit or proceeding
in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it is
ultimately determined that he is entitled to be indemnified by the
Corporation as authorized in this Article X [sic].
Section 3. Purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee or agent of the Corporation or
who is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under the provisions of
this Article X [sic].
The indemnification provided by this Article X [sic] shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
these Articles of Incorporation, and Bylaws, agreement, vote of shareholders or
disinterested directors or otherwise, and any procedure provided for by any of
the foregoing, both as to action in his official capacity and as to action in
another capacity while holding such office, shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
Section 7-109-103 of the Colorado Business Corporation Act (the "Act")
provides that a corporation organized under Colorado law shall be required to
indemnify a person who is or was a director of the corporation, is or was
serving at the corporation's request as a director, officer, partner, trustee,
employee or fiduciary or agent of another corporation or other entity or of any
employee benefit plant (a "Director") or officer of the corporation and who was
wholly successful, on the merits or otherwise, in defense of any threatened,
pending or complete action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal (a
"Proceeding"), in which he was a party, against reasonable expenses incurred by
him in connection with the Proceeding, unless such indemnity is limited by the
corporation's articles of incorporation.
16
-18-
<PAGE>
Section 7-109-102 of the Act provides, generally, that a corporation may
indemnify a person made a party to a proceeding because the person is or was a
Director against any obligation incurred with respect to a Proceeding to pay a
judgment, settlement, penalty, fine (including an excise tax assessed with
respect to an employee benefit plan) or reasonable expenses incurred in the
Proceeding if the person conducted himself or herself in good faith and the
person reasonably believed, in the case of conduct in an official capacity with
the Corporation, the person's conduct was in the corporation's best interests
and, in all other cases, his or her conduct was at least not opposed to the
corporation's best interests and, with respect to any criminal proceedings, the
person had no reasonable cause to believe that his or her conduct was unlawful.
A corporation may not indemnify a Director in connection with any Proceeding by
or in the right of the corporation in which the Director was adjudged liable to
the corporation or, in connection with any other Proceeding charging the
Director derived an improper personal benefit, whether or not involving actions
in an official capacity, in which Proceeding the Director was judged liable on
the basis that he or she derived an improper personal benefit. Any
indemnification permitted in connection with a Proceeding by or in the right of
the corporation is limited to reasonable expenses incurred in connection with
such Proceeding. Under Section 7-109-107 of the Act, unless otherwise provided
in the articles of incorporation, a corporation may indemnify an officer,
employee, fiduciary, or agent of the corporation to the same extent as a
Director and may indemnify an officer, employee, fiduciary, or agent who is not
a director to a greater extent, if not inconsistent with public policy and if
provided for by its bylaws, general or specific action of its board of directors
or shareholders, or contract.
Section 7-108-402 of the Act provides, generally, that the articles of
incorporation may contain a provision eliminating or limiting the personal
liability of a director to the corporation or its shareholders for monetary
damages for breach of fiduciary duty as a director; except that any such
provision may not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its shareholders,
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) acts specified in ss. 7-108-403, or (iv)
any transaction from which a director directly or indirectly derived an improper
personal benefit. Such provision may not eliminate or limit the liability of a
director for any act or omission occurring prior to the date on which such
provision becomes effective.
The Company's Articles of Incorporation limit director's liability to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director to the fullest extent permitted by Colorado law.
17
-19-
<PAGE>
PART F/S
Financial Statements.
The financial statements of the Company are attached to this
Registration Statement and filed as a part thereof.
VILLA PASTA, INC.
(FORMERLY VILLA PASTA, LLC)
FINANCIAL STATEMENTS
With
INDEPENDENT AUDITORS' REPORT
December 31, 1998
Prepared By:
Cordovano and Harvey, P.C.
Certified Public Accountants
Denver, Colorado
18
-20-
<PAGE>
PART III
Item 1. Exhibit Index
=====================
No. Description
- --------------------------------------------------------------------------------
(1) Not applicable
(2) Not applicable
(3) Charters and by-laws
(I) Articles of Incorporation, as filed
with the Colorado Secretary of State
on April 6, 1999.
(II) Bylaws
(4) Not applicable
(5) Not applicable
(6) Not applicable
(7) Not applicable
(8) Not applicable
(9) Not applicable
(10) Not applicable
(27) Financial Data Schedule
19
-21-
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Villa Pasta, Inc.
By:
/s/ Craig Van Scoten, President Date: December 10, 1999
------------------------------- -------------------
Craig Van Scoten, President
20
-22-
<PAGE>
Villa Pasta, Inc.
(Formerly Villa Pasta, LLC)
Index to Financial Statements
Independent auditors' report.....................................F-2
Balance sheets, December 31, 1998, and
September 30, 1999 (unaudited)..............................F-3
Statements of operations, for the years ended
December 31, 1998 and 1997, and for the nine months
ended September 30, 1999 and 1998 (unaudited)................F-4
Statement of shareholders' equity/members' capital, from
December 31, 1996 through September 30, 1999.................F-5
Statements of cash flows, for the years ended
December 31, 1998 and 1997, and for the nine months
ended September 30, 1999 and 1998 (unaudited)................F-6
Notes to financial statements....................................F-7
-23-
<PAGE>
To the Board of Directors and Shareholders
Villa Pasta, Inc. (formerly Villa Pasta, LLC), a Colorado corporation
Independent Auditors' Report
We have audited the accompanying balance sheet of Villa Pasta, Inc. (formerly
Villa Pasta, LLC), a Colorado corporation, as of December 31, 1998 and the
related statements of operations, shareholders' equity/members' capital and cash
flows for each of the years in the two-year period ended December 31,1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Villa Pasta, Inc. as of
December 31, 1998, and the results of its operations and its cash flows for each
of the years in the two year period ended December 31, 1998, in conformity with
generally accepted accounting principles.
Cordovano and Harvey, P.C.
Denver, Colorado
October 16, 1999
F-2
-24-
<PAGE>
<TABLE>
<CAPTION>
Villa Pasta, Inc.
(Formerly Villa Pasta, LLC)
Balance Sheets December 31, September 30,
1998 1999
(unaudited)
--------------------------
ASSETS
<S> <C> <C>
Current assets:
Cash........................................................................$ 4,010 $,34,371
Accounts receivable, trade.................................................. 19,070 14,392
Accounts receivable, related party (Note B)................................. - 5,563
Accounts receivable, other.................................................. - 525
Inventories, at lower of cost or market (Note C)............................ 13,436 7,133
--------- ----------
Total current assets 36,516 61,984
Property and equipment, less accumulated depreciation
of $12,164 and $15,896, respectively (Note D)............................... 9,197 5,465
--------- ----------
$45,713 $ 67,449
========= ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY/MEMBERS' CAPITAL
Current liabilities:
Accounts payable, trade.....................................................$ 4,658 3,423
Other current liabilities:
Accrued payroll taxes..................................................... 614 299
Other accrued expenses.................................................... 8,000 3,000
--------- ----------
Total current liabilities 13,272 6,722
Indebtedness to related parties (Note B)........................................ 11,452 -
--------- ----------
Total liabilities 24,724 6,722
--------- ----------
Shareholders' equity/members' capital (Note F):
Preferred stock, no par value;
5,000,000 authorized and -0- issued and outstanding...................... - -
Common stock, no par value; 50,000,000 shares
authorized and 1,155,000 shares issued and outstanding................... - 84,775
Members' capital........................................................... 20,989 -
Retained earnings (deficit)................................................. - (24,048)
--------- ----------
Total shareholders' equity/members' capital 20,989 60,727
--------- ----------
$45,713 $ 67,449
========= ==========
</TABLE>
F-3
-25-
<PAGE>
<TABLE>
<CAPTION>
Villa Pasta, Inc.
(Formerly Villa Pasta, LLC)
Statement of Operation
For the Years Ended For the Nine Months Ended
December 31, September 30,
1998 1997 1999 1998
(unaudited) (unaudited)
--------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales...............................................................$ 115,559 $ 103,899 $ 63,685 $ 59,827
Cost of sales........................................................... 72,480 64,250 32,277 35,909
------------ ---------- ------------- ------------
Gross profit 43,079 39,649 31,408 23,918
Other costs and expenses:
Selling, general and administrative expenses......................... 46,889 36,955 30,421 27,104
Stock based compensation............................................. - - 25,000 -
Provision for doubtful accounts...................................... 546 24 - -
------------ ---------- ----------- ------------
(47,435) (36,979) (55,421) (27,104)
------------ ---------- ----------- ------------
Income(loss) before income taxes (4,356) 2,671 (24,013) (3,187)
Income tax provision (Note E):
Current.............................................................. - - 4,275 -
Deferred............................................................. - - (4,275) -
------------ ---------- ----------- ------------
Net income (loss) $ (4,356) $ 2,671 $ (24,013) $ (3,187)
============ ========== =========== ============
Pro forma information (Note A):
Pro forma net income (loss).......................................... (4,356) 2,671 (24,013) (3,187)
Pro forma provision for income taxes................................. - (1,592) - -
------------ ---------- ----------- ------------
$ (4,356) $ 1,079 $ (24,013) $ (3,187)
============ ========== =========== ============
Basic pro forma earnings per share on common stock................... * * $ (0.02) *
============ ========== =========== ============
Pro forma weighted average number of shares outstanding.............. 900,000 900,000 1,070,000 900,000
============ ========== =========== ============
* Less than $.01 per share
</TABLE>
F-4
-26-
<PAGE>
<TABLE>
<CAPTION>
Villa Pasta, Inc.
(Formerly Villa Pasta, LLC)
Statement of Shareholder's Equity
Members' Preferred Stock Common Stock Retained
Capital Shares Amount Shares Amount Earnings Total
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1996..........................$ 27,668 - $ - - $ - $ - $ 27,668
Net income...................................... 2,670 - - - - - 2,670
-------- -------- ------- --------- ------- --------- ---------
Balance December 31, 1997.......................... 30,338 - - - - - 30,338
Distributions................................... (4,993) - - - - - (4,993)
Net loss........................................ (4,356) - - - - - (4,356)
-------- -------- ------- --------- ------- --------- ---------
Balance December 31, 1998.......................... 20,989 - - - - - 20,989
Net income prior to reorganization................. 36 - - - - - 36
-------- -------- ------- --------- ------- --------- ---------
21,025 21,025
Reorganization from a limited liability
company to a corporation (Note A)............ (21,025) - - 900,000 21,025 - -
Issuance of common stock
in exchange for services,
valued at $.25 per share..................... - - - 100,000 25,000 - 25,000
April 6, 1999, sale of
common stock at $.25 per share................ - - - 155,000 38,750 - 38,750
Deferred taxes relating to the reorganization... - - - - - (1,179) (1,179)
Net loss after reorganization................... - - - - - (22,869) (22,869)
-------- -------- ------- --------- ------- --------- ---------
Balance September 30, 1999 (unaudited).............$ - - $ - 1,155,000 $84,775 $(24,048) $60,727
======== ======== ======= ========= ======= ========= =========
</TABLE>
F-5
-27-
<PAGE>
<TABLE>
<CAPTION>
Villa Pasta, Inc.
(Formerly Villa Pasta, LLC)
Statement of Cash Flows
For the Years Ended For the Nine Months Ended
December 31, September 30,
1998 1997 1999 1998
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss......................................................$ (4,356) $ 2,671 $ (24,013) $ (3,187)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization............................... 3,593 2,571 3,732 2,894
Common stock exchanged for services (Note B)................ - - 25,000 -
(Increase) decrease in inventories.......................... 1,318 3,992 6,268 (637)
(Increase) decrease in accounts receivable and
other current assets........................................ (13,677) 92 4,059 (2,464)
Increase (decrease) in accounts payable and
accrued liabilities......................................... (119) 3,358 (6,514) (5,005)
------------ ------------ ------------- ------------
Net cash provided by
(used in) operating activities (13,241) 12,684 8,532 (8,399)
------------ ------------ ------------- ------------
Cash flows from investing activities:
Capital expenditures........................................ (2,180) (2,611) - (2,180)
------------ ------------ ------------- ------------
Net cash (used in)
investing activities (2,180) (2,611) - (2,180)
------------ ------------ ------------- ------------
Cash flows from financing activities:
Sale of common stock........................................ - - 38,750 -
Borrowings (repayments) from members (Note B)............... 3,576 (2,131) (16,921) (1,627)
Members' distributions...................................... (4,993) - - (4,993)
------------ ------------ ------------- ------------
Net cash provided by
(used in) financing activities (1,417) (2,131) 21,829 (6,620)
------------ ------------ ------------- ------------
Net change in cash............................................... (16,838) 7,942 30,361 (17,199)
Cash at beginning of period...................................... 20,848 12,906 4,010 20,848
------------ ------------ ------------- ------------
Cash at end of period $ 4,010 $ 20,848 $ 34,371 $ 3,649
============ ============ ============= ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest....................................................$ - $ - $ - $ -
============ ============ ============= ============
Income taxes................................................$ - $ - $ - $ -
============ ============ ============= ============
</TABLE>
F-6
-28-
<PAGE>
VILLA PASTA, INC.
(Formerly Villa Pasta, LLC)
Notes to Financial Statements
Note A: Organization and summary of significant accounting policies
===================================================================
Description of operations and recent reorganization
- ---------------------------------------------------
Villa Pasta, Inc. (the "Company") was incorporated in Colorado on April 6, 1999
to act as the successor to Villa Pasta, LLC (the "LLC"). Effective April 1,
1999, the LLC reorganized (the "Reorganization") and the existing members
exchanged 100 percent of their membership interests for 900,000 common shares of
the Company. This transaction was a reorganization of entities under common
control, and accordingly, it was accounted for at historical cost.
The Company is a maker of fine pastas that are sold in supermarkets and
specialty stores across the United States.
Financial instruments and cash equivalents
- ------------------------------------------
The Company's financial instruments consist of cash, accounts payable,
indebtedness to related parties, and accrued liabilities. The carrying value of
these financial instruments approximates fair value because of their short-term
nature. For financial accounting purposes and the statement of cash flows, cash
equivalents include all highly liquid debt instruments purchased with an
original maturity of three months or less.
Use of estimates
- ----------------
The preparation of the financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect certain reported amounts of assets and liabilities;
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. Accordingly, actual results could differ from those estimates.
Pro forma financial information
- --------------------------------
Pro forma provision for income taxes and pro forma net income. Prior to the
reorganization, Villa Pasta was organized as a limited liability company and
consequently, was not subject to income tax. A pro forma provision for income
taxes for the years ended December 31, 1998 and 1997 has been presented for
purposes of comparability as if the Company had been a taxable entity for all
periods presented.
Pro forma loss per share. The Company reports pro forma loss per share using a
dual presentation of basic and diluted pro forma loss per share. Basic pro forma
loss per share excludes the impact of common stock equivalents and preferred
stock dividends. Diluted pro forma loss per share uses the average market price
per share when applying the treasury stock method in determining common stock
equivalents.
Pro forma weighted average shares outstanding at December 31, 1998 and 1997, and
at September 30, 1998 and 1999. Pro forma weighted average shares outstanding
for December 31, 1998 and 1997, and for September 30, 1998 represent the
weighted average number of common shares issued in the Reorganization. Pro forma
weighted average shares outstanding for September 30, 1999 represents the
weighted average of, for the period prior to the Offering (see Note F), the
weighted average number of common shares issued in the Reorganization and, for
the period subsequent to the Offering, the total number of common shares
outstanding.
F-7
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<PAGE>
VILLA PASTA, INC.
(Formerly Villa Pasta, LLC)
Notes to Financial Statements
Note A: Organization and summary of significant accounting policies, continued
==============================================================================
Inventories
- -----------
Inventories are valued at the lower of cost or market as determined by the
average cost method.
Year end
- --------
The Company operates on a year ending on December 31.
Revenue recognition
- -------------------
Revenue from sales or services is recognized at the time the product is
delivered or at the time the service is performed.
Unaudited financial information
- -------------------------------
Certain financial information presented herein is unaudited. In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
which are necessary to provide a fair presentation of operating results for the
nine months ended September 30, 1999 and 1998 have been made. The results of
operations for the periods presented are not necessarily indicative of the
results to be expected in the future.
Stock-based compensation
- ------------------------
SFAS No. 123, "Accounting for Stock-Based Compensation" was issued in October
1995. This accounting standard permits the use of either a fair value based
method or the method defined in Accounting Principles Board Opinion 25,
"Accounting for Stock Issued to Employees" ("APB 25") to account for stock-based
compensation arrangements. Companies that elect to use the method provided in
APB 25 are required to disclose pro forma net income and earnings per share that
would have resulted from the use of the fair value based method. The Company has
elected to continue to follow the provisions of APB 25 for employees and SFAS
No. 123 for non-employees during the period ended September 30, 1999.
Recently issued accounting pronouncements
- -----------------------------------------
The Company has adopted the following new accounting pronouncements for the year
ended December 31, 1998. There was no effect on the financial statements
presented from the adoption of the new pronouncements. SFAS No. 130, "Reporting
Comprehensive Income," requires the reporting and display of total comprehensive
income and its components in a full set of general-purpose financial statements.
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," is based on the "managemen approach for reporting segments. The
management approach designates the internal organization that is used by
management for making operating decisions and assessing performance as the
source of the Company's reportable segments. SFAS No. 131 also requires
disclosure about the Company's products, the geographic areas in which it earns
revenue and holds long-lived assets, and its major customers. SFAS No. 132,
"Employers' Disclosures about Pensions and Other Post-retirement Benefits,"
which requires additional disclosures about pension and other post-retirement
benefit plans, but does not change the measurement or recognition of those
plans.
F-8
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<PAGE>
VILLA PASTA, INC.
(Formerly Villa Pasta, LLC)
Notes to Financial Statements
Note A: Organization and summary of significant accounting policies, concluded
===============================================================================
The Company has adopted the following new accounting pronouncements for the year
ended December 31, 1999. SFAS No. 133, "Accounting for Derivative Instruments
and Hedging activities," requires an entity to recognize all derivatives on a
balance sheet, measured at fair value. Statement of Positions ("SOP") 98-1
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal use." This SOP requires that entities capitalize certain internal-use
software costs once certain criteria are met. SOP 98-5, "Reporting on the Costs
of Start-Up Activities." SOP 98-5 provides, among other things, guidance on the
reporting of start-up costs and organization costs. It requires costs of
start-up activities and organization costs to be expensed as incurred. The
company will continue to review these new accounting pronouncements over time to
determine if any additional disclosures are necessary based on evolving
circumstances.
Note B: Related party transactions
====================================
Certain officers have provided non-interest bearing cash advances to the Company
for working capital purposes. During the nine months ended September 30, 1999
and 1998 and the years ended December 31, 1998 and 1997 working capital
transactions were as follows:
For the Year Ended For the Nine Months Ended
December 31, September 30,
1998 1997 1999 1998
(unaudited) (unaudited)
--------------------------------------------------
Cash advances..............$ 3,576 $ - $ - $ -
Repayment of advances......$ - $ 2,131 $16,921 $ 1,627
At December 31, 1998 $11,452 was owed to an officer of the Company. Of this
amount $5,816 was owed prior to December 31, 1997, $2,060 was owed at December
31, 1997, and $3,576 was advanced during the year ended December 31, 1998.
The Company had accounts receivable from an officer of the company for $5,563
arising from an advance to the officer which remained unpaid as of September 30,
1999 (unaudited).
The Company purchased consulting services totaling $25,000 in exchange for stock
from a director of the Company for the period from April 1, 1999 through
September 30, 1999 (unaudited).
Note C: Inventories
===================
At September 30, 1999 and December 31, 1998 inventories consisted of the
following:
December 31, September 30,
1998 1999
----------------------------------------
(unaudited)
Ingredients..................... $ 541 $ 634
Packaging....................... 4,118 4,102
Finished product................ 8,777 2,397
------------- --------------
============= ==============
$ 13,436 $ 7,133
============= ==============
F-9
-31-
<PAGE>
VILLA PASTA, INC.
(Formerly Villa Pasta, LLC)
Notes to Financial Statements
Note D: Property and equipment
==============================
Listed below are the major classes of property and equipment as of December 31,
1998 and September 30, 1999:
December 31, September 30,
1998 1999
-------------------------------------
(unaudited)
Office equipment $ 3,191 $ 3,191
Furniture and fixtures 612 612
Pasta making equipment 17,558 17,558
---------- ---------
21,361 21,361
Accumulated depreciation (12,164) (15,896)
---------- ---------
$ 9,197 $ 5,465
========== =========
Depreciation expense was $3,593, and $4,075 for the years ended December 31,
1998 and 1997, and $3,732 (unaudited), and $2,894 (unaudited) for the nine
months ended September 30, 1999 and 1998.
Note E: Income taxes
====================
The Company reports income taxes in accordance with SFAS No. 109, "Accounting
for Income Taxes", which requires the liability method in accounting for income
taxes. Deferred tax assets and liabilities arise from the difference between the
tax basis of an asset or liability and its reported amount on the financial
statements. Deferred tax amounts are determined by using the tax rates expected
to be in effect when the taxes will actually be paid or refunds received, as
provided under currently enacted law. Valuation allowances are established when
necessary to reduce the deferred tax assets to the amounts expected to be
realized. Income tax expense or benefit is the tax payable or refundable,
respectively, for the period plus or minus the change during the period in the
deferred tax assets and liabilities.
In connection with the reorganization from a limited liability company to a
corporation, the Company recorded deferred income taxes as of April 6, 1999 and
a one-time charge to earnings of $1,179.
The total income tax provision for the six months ended September 30, 1999 has
been allocated as follows:
Nine Months
Ended
September 30,
1999
----------------
(unaudited)
Arising from reorganization........ $ 1,179
Subsequent to reorganization....... (4,672)
Valuation Allowance................ 3,493
----------------
================
$ -
================
F-10
-32-
<PAGE>
VILLA PASTA, INC.
(Formerly Villa Pasta, LLC)
Notes to Financial Statements
Note E: Income taxes, concluded
===============================
A reconciliation of U.S. statutory federal income tax rate to the effective rate
follows for the six months subsequent to reorganization.
Six Months
Ended
September 30,
1999
------------------
(unaudited)
U.S. statutory federal rate......................... 15.00%
State income tax rate, net of federal benefit....... 3.76%
Property and Equipment.............................. -1.16%
Organizational Costs................................ 0.09%
Net operating loss for which no tax
benefit is currently available................... -17.69%
------------------
0.00%
==================
The deferred tax asset is comprised of net operating losses of $4,275 which are
offset by a valuation allowance of $3,493. At September 30, 1999 the net
deferred tax asset of $782 is offset by a deferred tax liability of $782 arising
from the reorganization.
The change in the valuation allowance for the period ended September 30, 1999
was $3,493. Net operating loss carryforwards at September 30, 1999 will begin
expire in 2019. The valuation allowance will be evaluated at the end of each
year, considering positive and negative evidence about whether the asset will be
realized. At that time, the allowance will either be increased or reduced;
reduction could result in the complete elimination of the allowance if positive
evidence indicates that the value of the deferred tax asset is no longer
impaired and the allowance is no longer required.
Should the Company undergo an ownership change, as defined in Section 382 of the
Internal Revenue Code, the Company's tax net operating loss carryforwards
generated prior to the ownership change will be subject to an annual limitation
which could reduce or defer the utilization of those losses.
Note F: Shareholders' equity/members' capital
=============================================
Preferred stock
- ---------------
The preferred stock may be issued in series as determined by the Board of
Directors. As required by law, each series must designate the number of shares
in the series and each share of a series must have identical rights of (1)
dividend, (2) redemption, (3) rights in liquidation, (4) sinking fund provisions
for the redemption of the shares, (5) terms of conversion and (6) voting rights.
F-11
-33-
<PAGE>
VILLA PASTA, INC.
(Formerly Villa Pasta, LLC)
Notes to Financial Statements
Note F: Shareholders' equity/members' capital, concluded
========================================================
Confidential private offering of common stock
- ---------------------------------------------
In April of 1999 the Company offered for sale 155,000 shares of its no par value
common stock for $.25 per share pursuant to the provisions of Regulation D, Rule
504 of the Securities Act of 1933, as amended (the "Act"). The Company sold all
155,000 shares for proceeds of $38,750. The shares were offered through officer
of the Company and there were no offering costs incurred.
Note G: The Year 2000 Issue
===========================
The Y2K issue is the result of computer programs being written using two digits
rather than four to define the applicable year. Any of the Company's computer
and telecommunications programs that have date sensitive software may recognize
a date using "00" as the year 1900 instead of 2000. This could result in system
failure or miscalculations causing disruptions or operations, including, among
other things an inability to process transactions, send invoices, or engage in
similar normal business activities. The Company's equipment, consisting of a
computer and related components, has been certified as Y2K compliant as of
December 31, 1998. The Company cannot determine the extent to which the Company
is vulnerable to third parties' failure to remediate their own Y2K problems. As
a result, there can be no guarantee that the systems of other companies on which
the Company's business relies will be timely converted, or that a failure to
convert by another company, or a conversion that is incompatible with the
Company's systems, would have a material adverse effect on the Company. In view
of the foregoing, there can be no assurance that the Y2K issue will not have a
material adverse effect on the Company's business.
Note H: Major Customers
=======================
For the year ended December 31, 1998 the Company earned 26% of its revenues from
two customers which act as distributors to the same retailer. For the year ended
December 31, 1997, the Company did not earn any revenues from either of these
two customers. At December 31, 1998 accounts receivable from these customers
totaled $3154 and $-0-, respectively.
F-12
-34-
<PAGE>
Exhibit 3(I) Articles of Incorporation, as filed with the Colorado Secretary of
State on April 6, 1999.
ARTICLES OF INCORPORATION
OF
VILLA PASTA, INC.
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Incorporator, being a
natural person of the age of eighteen years or more, and desiring to form a body
corporate under the laws of the State of Colorado, does hereby sign, verify and
deliver in duplicate to the Secretary of State of the State of Colorado these
Articles of Incorporation:
ARTICLE I. Name. The Name of the Corporation is VILLA PASTA, INC.
ARTICLE II. Duration. The Corporation shall have perpetual duration.
ARTICLE III. Principal Office. The principal office of the Corporation in
the State of Colorado shall be located at 75 Highway 105, P.O. Box
758, Palmer Lake, Colorado 80133, and thereafter at such location as
the Board of Directors may determine.
ARTICLE IV. Purposes. The nature of the business of the Corporation and the
objects and purposes and business thereof proposed to be transacted,
promoted or carried on are to engage in any lawful act or activity for
which corporations may be organized under the Colorado Business
Corporation Act.
ARTICLE V. Capital Structure.
Section 1. Authorized Capital. The total number of shares of all
classes which the Corporation shall have authority to issue is
55,000,000 of which 5,000,000 shall be Preferred Shares, no par
value per share, and 50,000,000 shall be Common Shares, no par
value per share, and the designations, preferences, limitations
and relative rights of the shares of each class are as follows:
Section 2. Preferred Shares. The Corporation, by resolution of its
Board of Directors, may divide and issue the Preferred Shares in
series. Preferred Shares of each series when issued shall be
designated to distinguish them from the shares of all other
series. The Board of Directors is hereby expressly vested with
authority to divide the class of Preferred Shares into series and
to fix and determine the relative rights and preferences of the
shares of any such series so established to the full extent
permitted by these Articles of Incorporation and the Colorado
Business Corporation Act in respect to the following:
A. The number of shares to constitute such series, and the
distinctive designations thereof;
B. The rate and preference of dividends, if any, the time
of payment of dividends, whether dividends are
cumulative and the date from which any dividend shall
accrue;
C. Whether shares may be redeemed and, if so, the
redemption price and the terms and conditions of
redemption;
-35-
<PAGE>
D. The amount payable upon shares in event of involuntary
liquidation;
E. The amount payable upon shares in event of voluntary
liquidation;
F. Sinking fund or other provisions, if any, for the
redemption or purchase of shares;
G. The terms and conditions on which shares may be
converted, if the shares of any series are issued with
the privilege of conversion;
H. Voting powers, if any; and
I. Any other relative rights and preferences of shares of
such series, including, without limitation, any
restriction on an increase in the number of shares of
any series theretofore authorized and any limitation or
restriction of rights or powers to which shares of any
future series shall be subject.
Section 3. Common Shares.
A. The rights of holders of Common Shares to receive
dividends or share in the distribution of assets in the
event of liquidation, dissolution or winding up of the
affairs of the Corporation shall be subject to the
preferences, limitations and relative rights of the
Preferred Shares fixed in the resolution or resolutions
which may be adopted from time to time by the Board of
Directors of the Corporation providing for the issuance
of one or more series of the Preferred Shares.
B. The holders of the Common Shares shall be entitled to
one vote for each Common Share held by them of record
at the time for determining the holders thereof
entitled to vote.
ARTICLE VI. Board of Directors. The business and affairs of the Corporation
shall be managed by the Board of Directors. The number of directors
constituting the Board of Directors shall be fixed in the manner
provided in the Bylaws of the Corporation, subject to the limitation
that the initial Board of Directors of the Corporation shall consist
of two persons. Those persons shall serve as directors of the
Corporation until the first annual meeting of shareholders or until
their successors shall have been elected and qualified. The names and
addresses of the initial Board of Directors are as follows:
-36-
<PAGE>
Craig L. Van Scoten Mike Wolf
75 Highway 105, P.O. Box 758 6022 So. Holly Street
Palmer Lake, Colorado 80133 Greenwood Village, Colorado 80111
In accordance with the Bylaws of the Corporation, the Board of
Directors may thereupon be divided into classes, each class to be as
nearly equal in number as possible, with the term of office of
directors of the first class to expire at the first annual meeting of
shareholders after their election, and the terms of the successive
classes expiring at successive annual meetings of shareholders
thereafter. At each annual meeting following such classification and
division of the members of the Board of Directors, a number of
directors equal to the number of directorships in the class whose term
expires at the time of such meeting shall be elected to hold office
for a term of years equal to the number of classes, and such term
shall expire at the annual meeting held during the final year of the
term.
ARTICLE VII. Voting by Shareholders.
Section 1. Cumulative Voting. Cumulative voting shall not be allowed
in the election of directors of the Corporation and every
shareholder entitled to vote at such election shall have the
right to vote the number of shares owned by him for as many
persons as there are directors to be elected, and for whose
election he has a right to vote.
Section 2. Denial of Preemptive Rights. No shareholder of the
Corporation shall by reasons of his holding shares of any class
or series have any preemptive or preferential rights to purchase
or subscribe to any shares of any class or series of the
Corporation now or hereafter to be authorized, or any notes,
debentures, bonds or other securities convertible into or
carrying options or warrants to purchase shares of any class or
series now or hereafter to be authorized, whether or not the
issuance of any such shares or notes, debentures, bonds or other
securities would adversely effect the dividend or voting rights
of such shareholder, other than such rights, if any, as the Board
of Directors, in its discretion from time to time, may grant, and
at such price as the Board of Directors, in its discretion, may
fix; and the Board of Directors, if otherwise authorized by the
provisions of these Articles of Incorporation may issue shares of
any class or series of the Corporation or any notes, debentures,
bonds or other securities convertible into or carrying options or
warrants to purchase shares of any class or series, without
offering any such shares of any class or series either in whole
or in part to the existing shareholders of any class or series.
Section 3. Majority Vote. When, with respect to any action to be taken
by the shareholders of the Corporation, the Colorado Business
Corporation Act requires the vote or concurrence of the holders
of greater than a majority of the outstanding shares, or of any
class or series entitled to vote thereon, any and every such
action shall be taken, notwithstanding the requirements of the
Colorado Business Corporation Act, by the affirmative vote or
concurrent of the holders of a majority of the outstanding
shares, or of any class or series entitled to vote thereon.
ARTICLE VIII. Right of Directors to Contract with Corporation.
Section 1. No contract or other transaction between the Corporation
and one or more of its directors or any other corporation, firm,
association or entity in which one or more of the directors of
the Corporation are directors or officers or are financially
interested, shall be either void or voidable solely because such
directors are present at the meeting of the Board of Directors or
a committee thereof which authorizes or approves such contract or
transaction or solely because their votes are counted for such
purpose if:
-37-
<PAGE>
A. The fact of such relationship or interest is disclosed
or known to the Board of Directors or committee which
authorizes, approves or ratifies the contract or
transaction by a vote or consent sufficient for that
purpose without counting the votes or consents of the
interested directors; or
B. The fact of such relationship or interest is disclosed
or known to the shareholders entitled to vote and they
authorize, approve or ratify such contract or
transaction by vote or written consent; or
C. The contract or transaction is fair and reasonable to
the Corporation.
Section 2. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of
Directors or a committee thereof which authorizes, approves or
ratifies such contract or transaction.
ARTICLE IX. Indemnification of Officers, Directors and Others. The Board of
Directors of the Corporation shall have the power to:
Section 1. Indemnify any director, officer, employee or agent of the
Corporation to the fullest extent permitted by the Colorado
Business Corporation Act as presently existing or as hereafter
amended.
Section 2. Authorize payment of expenses (including attorney's fees)
incurred in defending a civil or criminal action, suit or
proceeding in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf
of the director, officer, employee or agent to repay such amount
unless it is ultimately determined that he is entitled to be
indemnified by the Corporation as authorized in this Article X.
Section 3. Purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee or agent of the
Corporation or who is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and
incurred by him in any such capacity or arising out of his status
as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this
Article X.
The indemnification provided by this Article X shall not be
deemed exclusive of any other rights to which those indemnified
may be entitled under these Articles of Incorporation, and
Bylaws, agreement, vote of shareholders or disinterested
directors or otherwise, and any procedure provided for by any of
the foregoing, both as to action in his official capacity and as
to action in another capacity while holding such office, shall
continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
-38-
<PAGE>
ARTICLE X. Corporate Opportunity. The officers, directors and other members
of management of this Corporation shall be subject to the doctrine of
"corporate opportunities" only insofar as it applies to business
opportunities in which this Corporation has expressed an interest as
determined from time to time by this Corporation's Board of Directors
as evidenced by resolutions appearing in the Corporation's minutes.
Once such areas of interest are delineated, all such business
opportunities within such areas of interest which come to the
attention of the officers, directors, and other members of management
of this Corporation shall be disclosed promptly to this Corporation
and made available to it. The Board of Directors may reject any
business opportunity presented to it and thereafter any officers,
directors or other member of management may avail himself of such
opportunity. Until such time as this Corporation, through its Board of
Directors, has designated an area of interest, the officers, directors
and other members of management of this Corporation shall be free to
engage in such areas of interest on their own and this doctrine shall
not limit the right of any officer, director or other member of
management of this Corporation to continue a business existing prior
to the time that such area of interest is designated by the
Corporation. This provision shall be construed to release any employee
of this Corporation (other than an officer, director or member of
management) from any duties which he may have to this Corporation.
ARTICLE XI. Limitations on Director Liability. To the fullest extent
permitted by the Colorado Business Corporation Act as the same exists
or may hereafter be amended, a director of this Corporation shall not
be liable to the Corporation or its shareholders for monetary damages
for breach of fiduciary duty as a director, so long as such director
acted in good faith.
ARTICLE XII. Powers and Limitations. The powers and limitations of the
Corporation shall be those set forth by the Colorado Business
Corporation Act, under which this Corporation is formed.
ARTICLE XIII. Registered Office and Registered Agent. The registered office
of the Corporation is 7720 E. Belleview Avenue, Suite 200, Englewood,
Colorado 80111; the name of the registered agent of the Corporation at
such address is David J. Babiarz.
ARTICLE XIV. Incorporator. The name and address of the Incorporator is as
follows:
David J. Babiarz
7720 E. Belleview Avenue, Suite 200
Englewood, Colorado 80111
-39-
<PAGE>
ARTICLE XV. Rights to Amend, Alter, Change or Repeal. The Corporation
reserves the right to amend, alter, change or repeal any provision
contained in these Articles of Incorporation in the manner now or
hereinafter prescribed herein or by statute, and all rights conferred
upon shareholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 5th day of
April, 1999.
/s/ David J. Babiarz, Incorporator
-----------------------------------
David J. Babiarz, Incorporator
STATE OF COLORADO )
)ss.
COUNTY OF ARAPAHOE )
The undersigned, a Notary Public, hereby certifies that on this 5th day of
April, 1999, personally appeared David J. Babiarz, who, being by me first duly
sworn, declared that he is the person who signed the foregoing document as
Incorporator, and that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 5th day of
April, 1999.
Witness my hand and official seal.
My commission expires: 01/22/2002
/s/ Kay Wilkinson
-----------------
Kay Wilkinson
Notary Public
CONSENT OF REGISTERED AGENT
The undersigned, hereby certifies that on this 5th day of April, 1999, does
consent to act as Registered Agent for Villa Pasta, Inc.
/s/ David J. Babiarz, Registered Agent
---------------------------------------
David J. Babiarz, Registered Agent
-40-
Exhibit 3(II) Bylaws
BYLAWS
OF
VILLA PASTA, INC.
ARTICLE I
Office
The principal office of the Corporation in the State of Colorado shall be
located at 581 County Line Road #B, Palmer Lake, Colorado 80133 and thereafter
at such location as the Board of Directors may determine.
The Corporation may have such other offices, either within or without the
State of Colorado, as the Board of Directors may determine or as the affairs of
the Corporation may require from time to time.
The Corporation shall have and continuously maintain in the State of
Colorado a registered office and a registered agent whose office is identical
with such registered office as required by the Colorado Business Corporation
Act.
ARTICLE II
Shareholders' Meetings
Section 1. Annual Meetings.
A. Time and Place. The Annual Meeting of the Shareholders of the
Corporation, commencing with the year of incorporation, shall be as
determined by the Board of Directors on a date not less frequent than
once every 365 days. If said day is a legal holiday, the meeting shall
be held on the next succeeding day not a legal holiday.
B. Purpose of Annual Meeting. The business to be transacted at such
Annual Meeting shall be the election of Directors and such other
business as shall be properly brought before the meeting.
C. Alternate Election Date. If the election of Directors shall not be
held on the day designated for the Annual Meeting, or at the
designated date upon adjournment of such meeting, the Board of
Directors shall call a Special Meeting of the Shareholders as soon as
conveniently possible thereafter. At such meeting, the election of
Directors shall take place, and such election and any other business
transacted there at shall have the same force and effect as at an
Annual Meeting duly called and held.
-41-
<PAGE>
D. Notice. Written notice at the address last shown on the books of the
Corporation stating the place, day and hour of the meeting, and in the
case of a Special Meeting the purpose for which the meeting is called,
shall be delivered not less than 10 days nor more than 50 days before
the date of the meeting, either personally or by mail at the direction
of the President, Secretary or other officer or person calling the
meeting; except that if the authorized shares of the Corporation are
to be increased, at least 30 days notice shall be given.
Section 2. Special Meetings. Special Meetings of the Shareholders may be called
by the President, Board of Directors or by the holders of at least 10% of
the stock entitled to vote at such meeting.
Section 3. Waiver of Notice. A Shareholder may waive the notice of meeting by
attendance, either in person or by proxy, at the meeting, or by so stating
in writing either before or after such meeting. Attendance at a meeting for
the express purpose of objecting that the meeting was not lawfully called
or convened shall not, however, constitute a waiver of notice. Except where
otherwise required by law, notice need not be given of any adjourned
meeting of the Shareholders.
Section 4. Quorum. The holders of record of at least a majority of the shares of
the stock of the Corporation, issued and outstanding and entitled to vote,
present in person or by proxy, shall, except as otherwise provided by law
or by these Bylaws, constitute a quorum at all meetings of the
Stockholders; if there be no such quorum, the holders of a majority of such
shares so present or represented may adjourn the meeting from time to time
until a quorum shall have been obtained and, except as otherwise provided
by law, no notice of any such adjourned meeting need be given if the time
and place to which the meeting is adjourned are announced at the meeting so
adjourned.
Section 5. Closing of Transfer Books; Record Date. In order to determine the
Shareholders of record of the Corporation's stock who are entitled to
notice of meetings, to vote at a meeting or adjournment thereof, and to
receive payment of any dividend, or to make a determination of the
Shareholders of record for any other proper purpose, the Board of Directors
of the Corporation may order that the Stock Transfer Books be closed for a
period not to exceed 50 days. If the purpose of such closing is to
determine who is entitled to notice of a meeting and to vote at such
meeting, the Stock Transfer Books shall be closed for at least ten days
preceding such meeting.
A. Record Date. In lieu of closing the Stock Transfer Books, the Board of
Directors may fix a date as the record date for such determination of
Shareholders, such date in any case to be not more than 50 days prior
to the date of action which requires such determination, nor in the
case of a Shareholders' meeting, not less than ten days in advance of
such meeting.
B. Alternate Record Date. If the Stock Transfer Books are not closed and
no record date is fixed for such determination of the Shareholders of
record, the date on which notice of the meeting is mailed or on which
the resolution of the Board of Directors declaring a dividend is
adopted, as the case may be, shall be the record date for such
determination of Stockholders.
C. Adjournment. When a determination of Stockholders entitled to vote at
any meeting has been made, as provided in this Section, such
determination shall apply to any adjournment of such meeting.
Section 6. Presiding Officer. Meetings of the Stockholders shall be presided
over by the President.
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Section 7. Proxies. At all meetings of Stockholders, a Stockholder may vote by
proxy executed in writing by the Stockholder or the Stockholder's duly
authorized attorney-in-fact. Such proxies shall be filed with the Secretary
of the Corporation before or at the time of the meeting. No proxy shall be
valid after 11 months from the date of its execution, unless otherwise
provided in the proxy.
Section 8. Voting of Shares by Stockholders.
A. Neither treasury shares, nor shares of its own stock held by the
Corporation in a fiduciary capacity, nor shares held by another
corporation if a majority of the shares entitled to vote for the
election of directors of such other corporation is held by this
Corporation, shall be voted at any meeting or counted in determining
the total number of outstanding shares at any given time.
B. At each meeting of the Stockholders, except as otherwise provided by
law or by the Articles of Incorporation, every holder of record of
stock entitled to vote shall be entitled to one vote for each share of
stock standing in his name on the books of the Corporation. Elections
of directors shall be determined by a plurality of the votes cast, and
except as otherwise provided by law, the Articles of Incorporation, or
these Bylaws, all other actions shall be determined by a majority of
the votes cast at such meeting. Each proxy to vote shall be in writing
and signed by the Stockholder or by his duly authorized attorney and
shall not be voted or acted upon after eleven (11) months from the
date of its execution, unless such proxy expressly provides for a
longer period.
C. At all elections of directors, the voting shall be by ballot or in
such other manner as may be determined by the Stockholders present in
person or by proxy entitled to vote at such election. With respect to
any other matter presented to the Stockholders for their consideration
at a meeting, any Stockholder entitled to vote may, on any question,
demand a vote by ballot. The cumulative system of voting for the
election of directors or for any other purpose shall not be allowed.
D. A complete list of the Stockholders entitled to vote at each such
meeting, arranged in alphabetical order, with the address of each, and
the number of shares registered in the name of each Stockholder, shall
be prepared by the Secretary and shall be open to the examination of
any Stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior
to the meeting, either at a place within the city where the meeting is
to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to
be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be
inspected by any Stockholder who is present.
E. The Board of Directors in advance of any meeting of Stockholders may
appoint one or more inspectors of election to act at that meeting or
any adjournment thereof. If inspectors of election are not so
appointed, the Chairman of the meeting may, and on the request of any
Stockholder entitled to vote shall, appoint one or more inspectors of
election. Each inspector of election, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector of election at such meeting with
strict impartiality and according to the best of his ability. If
appointed, inspectors of election shall take charge of the polls and,
when the vote is completed, shall make a certificate of the result of
the vote taken and of such other facts as may be required by law.
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Section 9. Informal Action by Stockholders. Any action required to be taken at a
meeting of the Stockholders or any other action which may be taken at a
meeting of the Stockholders may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
Stockholders entitled to vote with respect to the subject matter thereof.
Such consent shall have the same force and effect as a unanimous vote of
the Stockholders and may be stated as such in any documents filed with the
Secretary of State of Colorado under the Colorado Business Corporation Act.
Section 10. Presumption of Assent. A Stockholder of the Corporation who is
present at a meeting of the Stockholders at which action on any corporate
matter is taken shall be presumed to have assented to the action taken
unless such Stockholder's dissent shall be entered in the Minutes of the
meeting or unless such Stockholder shall have filed 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 certified mail to the
Secretary of the Corporation immediately following the adjournment of the
meeting. Such right to dissent shall not apply to a Stockholder who voted
in favor of such action.
ARTICLE III
Directors
Section 1. Number. The property, affairs and business of the Corporation shall
be managed by a Board of Directors of not less than two (2) persons as
shall be fixed by the Board of Directors. Except as hereinafter provided,
Directors shall be elected at the Annual Meeting of the Stockholders and
each Director shall serve until the next annual meeting of shareholders or
his resignation or removal and until his successor shall be elected and
qualify.
Section 2. Increase in Numbers. The number of Directors may be increased or
decreased from time to time by a majority vote of the whole Board of
Directors, provided however, that no vote to decrease the number of
Directors shall have the effect of shortening the term of any incumbent
Director.
Section 3. Qualification. Directors need not be Stockholders of the Corporation.
Section 4. Quorum. A majority of the Directors in office shall be necessary to
constitute a quorum for the transaction of business. If at any meeting of
the Board of Directors there shall be less than a quorum present, a
majority of those present may adjourn the meeting without further notice,
from time to time, until a quorum shall have been obtained.
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Section 5. Vacancies. Any Director may resign at any time by giving written
notice to the President or to the Secretary of the Corporation. Such
resignation shall take effect at the time specified therein except such
resignations shall not be submitted effective retroactively. Unless
otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective. Any Director may be removed at any time
in the manner provided in the Colorado Business Corporation Act. Any
vacancy occurring in the Board of Directors may be filled by the
affirmative vote of the Stockholders, or by the remaining Directors, though
less than a quorum, or by a sole remaining Director. A Director elected to
fill a vacancy shall be elected for the unexpired term of such Director's
predecessor in office. Any vacancy may be filled by the affirmative vote of
Directors then in office or by an election at an Annual Meeting or at a
Special Meeting of Stockholders called for that purpose, and a Director so
chosen shall hold office until the next Annual meeting of Stockholders and
thereafter until such Director's successor shall have been elected and
qualified.
Section 6. Meetings. Regular meetings of the Board of Directors shall be held at
such times as are fixed from time to time by resolution of the Board.
Special Meetings may be held at any time upon call of the President, or a
majority of Directors serving as members of the Board of Directors. A
meeting of the Board of Directors shall be held without notice immediately
following the Annual Meeting of the Stockholders. Notice need not be given
of regular meetings of the Board of Directors held at any time without
notice if all the Directors are present, or if before the meeting those not
present waive such notice in writing. Notice of a meeting of the Board of
Directors need not state the purpose of nor the business to be transacted
at such meeting.
Section 7. 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 taken
unless such Director's dissent shall be entered in the Minutes of the
meeting or unless such Director shall have filed 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 certified mail to the
Secretary of the Corporation immediately following the adjournment of the
meeting. Such right to dissent shall not apply to a Director who voted in
favor of such action.
Section 8. Removal. At any meeting of Stockholders, any Director or Directors
may be removed from office, without assignment of any reason therefor, by a
requisite majority of the Stockholders. When any Director or Directors are
removed, new Directors may be elected at the same meeting of Stockholders
for the unexpired term of the Director or Directors to be removed. If the
Stockholders fail to elect persons to fill the unexpired term or terms of
the Director or Directors removed, such unexpired terms shall be considered
vacancies on the Board to be filled by the remaining Directors.
Section 9. Informal Action by Directors. Any action required to be taken at a
meeting of the Board of Directors or any other action which may be taken at
a meeting of the Board of Directors may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by
all of the Directors entitled to vote with respect to the subject matter
thereof. Such consent shall have the same force and effect as a unanimous
vote of the Directors and may be stated as such in any documents filed with
the Secretary of State of Colorado under the Colorado Business Corporation
Act.
Section 10. Compensation. Directors and members of any committee of the Board of
Directors shall be entitled to such reasonable compensation for their
services as Directors and members of any such committee as shall be fixed
from time to time by resolution of the Board of Directors, and shall also
be entitled to reimbursement for any reasonable expenses incurred in
attending such meetings. The compensation of Directors may be on such basis
as is determined in the resolution of the Board of Directors. Any Directors
receiving compensation under these provisions shall not be barred from
serving the Corporation in any other capacity and receiving reasonable
compensation for such other services.
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Section 11. Committees. The Board of Directors, by a resolution or resolutions
adopted by a majority of the members of the whole Board, may appoint an
executive committee, an audit committee and such other committees as it may
deem appropriate. Each such committee shall consist of at least two members
of the Board of Directors. Each committee shall have and may exercise such
powers as shall be conferred or authorized by the resolution appointing it
and as otherwise provided by Colorado law. A majority of any such committee
may determine its action and may fix the time and place of its meetings,
unless provided otherwise by the Board of Directors. The Board of Directors
shall have the power at any time to fill vacancies in, to change the size
of membership of and to discharge any such committee.
A. Committee to Keep Written Records. Each such committee shall keep a
written record of its acts and proceedings and shall submit such
record to the Board of Directors at each regular meeting thereof and
at such other times as requested by the Board of Directors.
B. Failure to Keep Written Records. Failure to submit such records, or
failure of the Board to approve any action indicated therein will not,
however, invalidate such action to the extent it has been carried out
by the Corporation prior to the time the record of such action was, or
should have been, submitted to the Board of Directors as herein
provided.
Section 12. Director Voting. At all meetings of the Board of Directors, each
Director present shall have one vote, irrespective of the number of shares
of stock, if any, which such Director may hold.
Section 13. Majority. The action of a majority of the Directors present at any
meeting at which a quorum is present shall be the act of the Board of
Directors with respect to regularly conducted business affairs. Any action
authorized, in writing, by all of the Directors entitled to vote thereon
and filed with the minutes of the Corporation shall be the act of the Board
of Directors with the same force and effect as if the same had been passed
by unanimous vote at a duly called meeting of the Board.
Section 14. Board and Committee Meeting by Telephone. Any one or more
(including, without limitation, all) members of the Board of Directors, or
any committee thereof, may participate in a meeting of the Board or such
committee by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each
other at the same time. Participation by such means shall constitute
presence in person at a meeting.
ARTICLE IV
Officers
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Section 1. Election and Term of Office. The Officers of the Corporation shall be
elected by the Board of Directors annually at the first meeting of the
Board held after each Annual Meeting of the Stockholders. If the election
of the Officers shall not be held at such meeting, such election shall be
held as soon thereafter as conveniently may occur. Each Officer shall hold
office until the first of the following to occur: until such Officer's
successor shall have been duly elected and shall have qualified; or until
such Officer's death; or until such Officer shall resign; or until such
Officer shall have been removed in the manner herein provided. The Officers
of the Corporation shall be a President, Secretary, Treasurer and one (1)
or more Vice-Presidents, Assistant Secretaries or Assistant Treasurers, at
the discretion of the Board of Directors. In addition, there may be a
Chairman of the Board of Directors and such subordinate Officers as the
Board of Directors may deem necessary.
Section 2. Removal. Any Officer or agent or employee of the Corporation 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 any Officer or agent shall not of
itself create contract rights.
Section 3. Vacancies. Any vacancy in an office from any cause may be filled for
the unexpired portion of the term by the Board of Directors.
Section 4. Chairman of the Board - Chief Executive Officer. The Chairman of the
Board shall be the chief executive officer of the Corporation and shall
preside at all meetings of the Board of Directors and of the Stockholders
at which he is present. He shall have general charge of the business and
affairs of the Corporation, may execute in the name of the Corporation
authorized corporate obligations or other instruments, shall perform such
other duties as may be prescribed by the Board of Directors from time to
time, and, in the absence or disability of the President, shall exercise
all of the powers and duties of the President. In the absence or disability
of the Chairman of the Board, the President shall exercise all the powers
and duties of the Chairman of the Board. In addition, the President shall
perform such duties as may be prescribed by the Board of Directors from
time to time or as may from time to time be prescribed by the Chairman of
the Board.
Section 5. President. The President shall be the chief operating officer of the
Corporation and, in the absence or disability of the Chairman of the Board,
he shall exercise all of the powers and duties of the Chairman of the
Board. He shall have general and active supervision of the operations of
the Corporation and shall, from time to time, make such reports of the
Chairman of the Board may require. He shall have the general powers and
duties of supervision usually vested in the office of the president of a
corporation and shall have such other powers and duties as may, from time
to time, be assigned to him by the Board of Directors or the Chairman of
the Board.
The President shall execute all deeds, conveyances, deeds of trust, bonds
and other contracts requiring a seal, under the seal of the Corporation,
except where required or permitted by law to be otherwise signed and
executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some Officer or agent of
the Corporation.
Section 6. Duties of Secretary. The Secretary shall:
A. Keep the minutes of the meeting of the Stockholders and of the Board
of Directors in books provided for that purpose.
B. Disseminate all notices in accordance with the provisions of these
Bylaws or as required by law.
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Section 7. Duties of Treasurer - Chief Financial Officer. The Treasurer - Chief
Financial Officer shall have the care and custody of the corporate funds
and securities, sign checks, drafts, notes and orders for the payment of
money, pay out and disburse the funds of the Corporation as may be ordered
by the Board, taking proper vouchers for such payments and disbursements,
deposit all monies and securities belonging to the Corporation and, in
general, perform such other duties as are customarily performed by the
Treasurer - Chief Financial Officer.
The Treasurer shall:
A. Have charge and custody of, and be responsible for, all funds and
securities of the Corporation.
B. Render a statement of the condition of the finances of the
Corporation from time to time and at the specific request of the
Board of Directors.
C. Receive and give receipts for monies due and payable to the
Corporation from any source whatsoever.
D. Perform all duties incident to the office of Treasurer, and such
other duties as from time to time may be assigned by the Board of
Directors or by the President. The Treasurer may be required to
give bond for the faithful performance of Treasurer's duties in
such sum and with such surety as may be determined by the Board
of Directors.
Section 8. Duties of Vice-President. The Vice-President(s), if appointed in the
discretion of the Board of Directors, shall perform such duties as are
incident to their offices, or are properly required of them by the Board of
Directors or are assigned to them by the Articles of Incorporation or these
Bylaws.
Section 9. Duties of Assistant Secretaries, Assistant Treasurers and Other
Subordinate Officers. Assistant Secretaries, Assistant Treasurers, and
other subordinate Officers appointed by the Board of Directors shall
exercise such powers and perform such duties as may be delegated to them by
the resolutions appointing them, or by subsequent resolutions adopted from
time to time.
Section 10. Duties of Officers May Be Delegated. In case of the absence or
disability of any officer of the Corporation, or for any other reason that
the Board may deem sufficient, the Board may delegate, for the time being,
the powers or duties, or any of them, of such officer to any other officer,
or to any director.
Section 11. Salaries. The salaries of all Officers of the Corporation shall be
fixed by the Board of Directors. No Officer shall be ineligible to receive
such salary by reason of the fact that he is also a Director of the
Corporation and receiving compensation therefor.
Section 12. Checks and Endorsements. All checks and drafts upon the funds to the
credit of the Corporation in any of its depositories shall be signed by
such of its Officers or agents as shall from time to time be determined by
resolution of the Board of Directors which may provide for the use of
signatures under specific conditions, and all notes, bills, receivables,
trade acceptances, drafts and other evidences of indebtedness payable to
the Corporation shall, for the purpose of deposit, discount, or collection
be endorsed by such Officers or agents of the Corporation or in such manner
as shall from time to time be determined by resolution of the Board of
Directors.
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ARTICLE V
Stock
Section 1. Certificates. The shares of stock shall be represented by
consecutively numbered certificates signed in the name of the Corporation
by its President and the Secretary and shall be sealed with the seal of the
Corporation, or with a facsimile thereof. The signatures of the
Corporation's Officers on such certificate may also be a facsimile engraved
or printed if the certificate is countersigned by the transfer agent, or
registered by a registrar. In the event any Officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased
to be such before the certificate is issued, it may be issued by the
Corporation with the same effect as if such Officer had not ceased to be an
officer at the date of its issue. Certificates of stock shall be in such
form consistent with law as shall be prescribed by the Board of Directors.
No certificate shall be issued until the shares represented thereby are
fully paid.
Section 2. Consideration for Shares. Shares shall be issued for such
consideration, expressed in dollars as shall be fixed from time to time by
the Board of Directors. Treasury shares shall be disposed of for such
consideration expressed in dollars as may be fixed from time to time by the
Board. Such consideration may consist in whole or in part of money, other
property, tangible or intangible, a promissory note or in labor or services
actually performed for the Corporation, or such other consideration as
shall be permitted under the Colorado Business Corporation Act.
Section 3. Lost, Destroyed or Stolen Certificates. No certificates for shares of
stock in the Corporation shall be issued in place of any certificate
alleged to have been lost, destroyed or stolen except on production of
evidence satisfactory to the Board of Directors of such loss, destruction
or theft; and if the Board of Directors so requires, upon the furnishing of
an indemnity bond in such amount and with such terms and such surety as the
Board of Directors may, in its discretion, require.
Section 4. Transfer of Shares.
A. Upon surrender to the Corporation of a certificate of stock duly
endorsed or accompanied by proper evidence of succession, assignment,
or authority to transfer, it shall be the duty of the Corporation to
issue a new certificate to the person entitled thereto, and cancel the
old certificate. Every such transfer of stock shall be entered on the
stock book of the Corporation which shall be kept either at the
offices of the Corporation's legal counsel, at the Corporation's
principal office or by its registered duly appointed agent.
B. The Corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof, and, accordingly, shall
not be bound to recognize any equitable or other claim to interest in
such share on the part of any other person whether or not it shall
have express or other notice thereof, except as may be required by the
laws of the State of Colorado.
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Section 5. Record Dates. The Board of Directors may fix in advance a date, not
less than ten (10) or more than fifty (50) days preceding the date of any
meeting of stockholders or the date for the payment of any dividend, or the
date for the distribution or allotment of rights, or the date when any
change, conversion or exchange of capital stock shall go into effect, as a
record date for the determination of Stockholders entitled to notice of,
and to vote at, any such meeting, or entitled to receive payment of any
such dividend, or to receive any distribution or allotment of such rights,
or to exercise the rights in respect of any such change, conversion or
exchange or capital stock, and in such case only such Stockholders as shall
be Stockholders of record on the date so fixed shall be entitled to such
notice of, and to vote at, such meeting, or to receive payment of such
dividend, or to receive such distribution or allotment of rights, or to
exercise any stock on the books of the Corporation after any such record
date fixed as aforesaid.
Section 6. Voting on Stock. All stock owned by the Corporation, other than stock
of the Corporation, shall be voted, in person or by proxy, by the Chairman
of the Board, the Vice Chairman of the Board, the President or any Vice
President of the Corporation on behalf of the Corporation upon resolution
and approval by the board.
ARTICLE VI
Contracts, Loans, Checks and Deposits
Section 1. Contracts. The Board of Directors may authorize any officer or agent
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.
Section 2. Loans. No loans shall be contracted on behalf of the Corporation and
no evidence of indebtedness shall be issued in its name unless authorized
by a resolution of the Board of Directors. Such authority may be general or
confined to specific instances.
Section 3. Checks, Drafts, etc. All checks, drafts, or other orders for the
payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or agent of the
Corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
Section 4. Deposits. The money of the Corporation shall be deposited in the name
of the Corporation in such banks, trust companies, or other depositories,
as the Board of Directors may designate and shall be subject to the order
of the Corporation signed by such officer or agent of the Corporation, and
in such manner as shall from time to time be determined by resolution of
the Board of Directors.
ARTICLE VII
Corporate Seal
The corporate seal of the Corporation shall consist of a circular imprint
bearing around the outside rim the name of the Corporation and the word
"Colorado" and in the center shall be inscribed the word "Seal".
ARTICLE VIII
Amendment of Bylaws
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Section 1. By Shareholders. All Bylaws of the Corporation shall be subject to
alteration or repeal and new Bylaws may be made by the requisite vote of
Stockholders, a quorum being present in person or by proxy, provided that
the notice or waiver of notice of such meeting shall have summarized or set
forth in full therein the proposed amendment.
Section 2. By Directors. The Board of Directors shall have power to make, adopt,
later, amend or repeal, from time to time, these Bylaws of the Corporation.
ARTICLE IX
Fiscal Year
The fiscal year end of the Corporation shall be as determined by the Board
of Directors.
ARTICLE X
Approval
The undersigned hereby certifies that the foregoing Bylaws constitute a
true and complete copy of the Bylaws of VILLA PASTA, INC. and the same have been
approved, ratified and accepted by the Board of Directors as the Bylaws of the
Corporation.
Dated: October 31, 1999 /s/ Craig Van Scoten, President
-------------------------------
Craig Van Scoten, President
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