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
Card-Smart Corp.
(Name of Small Business Issuer in its charter)
Nevada 52-2043569
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
38820 N. 25TH Avenue, Phoenix, AZ 85086
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(Address of principal executive offices) (zip code)
1-602-617-4456 (Phone) 1-480-905-8078 (FAX)
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Issuer's Telephone Number
Securities to be registered under section 12(b) of the Act:
Title of Each Class Name on each exchange on which
to be registered each class is to be registered
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Securities to be registered under section 12(g)of the Act:
Common Stock, $.001 par value per share, 25,000,000 shares authorized,
3,120,000 issued and outstanding as of March 20, 2000.
Copies of Communications sent to:
Georgios Polyhronopoulos, President
Card-Smart Corp.
38820 N 25th Avenue
Phoenix AZ 85027
Tel: (602) 617-4456 - Fax: (480) 905-8078
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FORWARD LOOKING STATEMENTS
CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS
Card-Smart Corp, a developmental stage company ("Card-Smart Corp)," or the
"Company" or the "Registrant") cautions readers that certain important factors
may affect the Company's actual results and could cause such results to differ
materially from any forward-looking statements that may be deemed to have been
made in this Document or that are otherwise made by or on behalf of the Company.
For this purpose, any statements contained in the Document that are not
statements of historical fact may be deemed to be forward-looking statements.
This Registration contains statements that constitute "forward-looking
statements." These forward-looking statements can be identified by the use of
predictive, future-tense or forward-looking terminology, such as "believes,"
"anticipates," "expects," "estimates," "plans," "may," "will," or similar terms.
These statements appear in a number of places in this Registration and include
statements regarding the intent, belief or current expectations of the Company,
its directors or its officers with respect to, among other things: (i) trends
affecting the Company's financial condition or results of operations for its
limited history; (ii) the Company's business and growth strategies; (iii) the
Internet and Internet commerce; and, (iv) the Company's financing plans.
Investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve significant risks and
uncertainties, and that actual results may differ materially from those
projected in the forward-looking statements as a result of various factors.
Factors that could adversely affect actual results and performance include,
among others, the Company's limited operating history, dependence on continued
growth in the use of the Internet, the Company's inexperience with the Internet,
potential fluctuations in quarterly operating results and expenses, security
risks of transmitting information over the Internet, government regulation,
technological change and competition.
The accompanying information contained in this Registration, including, without
limitation, the information set forth under the heading "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" identifies important additional factors that could
materially adversely affect actual results and performance. All of these factors
should be carefully considered and evaluated. All forward-looking statements
attributable to the Company are expressly qualified in their entirety by the
foregoing cautionary statement. Any forward- looking statements in this report
should be evaluated in light of these important risk factors. The Company is
also subject to other risks detailed herein or set forth from time to time in
the Company's filings with the Securities and Exchange Commission.
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
Part I ....................................................... 4
Item 1. Description of Business................................ 4
Item 2. Management's Discussion and Analysis or Plan of
Operation............................................. 22
Item 3. Description of Property............................... 23
Item 4. Security Ownership of Management and Others
and Certain Security Holders......................... 23
Item 5. Directors, Executives, Officers and Significant
Employees............................................. 25
Item 6. Remuneration of Directors and Executive
Officers.............................................. 30
Item 7. Certain Relationships and Related Transactions........ 30
Part II ...................................................... 31
Item 1. Market Price of and Dividends of the Registrant's
Common Equity and Other Stockholder Matters........... 31
Item 2. Legal Proceedings..................................... 32
Item 3. Recent Sales of Unregistered Securities............... 32
Item 4. Description of Securities............................. 34
Item 5. Indemnification of Directors and Officers............. 35
Part F/S ...................................................... 36
Item 1. Financial Statements.................................. 36
Item 2. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure................... 36
Part III ...................................................... 37
Item 1. Index to Exhibits..................................... 37
Item 2. Description of Exhibits............................... 37
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and the Financial Statements and
Notes related thereto appearing elsewhere in this Registration. Except where the
context otherwise requires, all references in this Registration to (a) the
"Registrant" or the "Company" or Card Smart" refer to Card-Smart Corp, a Nevada
corporation, (b) the "Web" refer to the World Wide Web and the "site" refers to
the Company's Web site.
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Part I
Item 1. Description of Business
A. Business Development, Organization and Acquisition Activities Card-Smart
Corp, is a developmental stage Company, who plans to market its products through
the Internet, hereinafter referred to as "Card-Smart Corp" or the " Company" or
the "Registrant", was organized by the filing of Articles of Incorporation with
the Secretary of State of the State of Nevada on May 01, 1998. The Company is a
development stage company with a principal business objective to sell and market
Smart Cards to hotels, resorts, cruise lines and casinos. The Company plans to
support these services through its WEB site presence (www.card-smart.com). The
Company plans to be a provider of consumer credit tracking and loyalty programs
for specialized market niches in the world resort and cruise markets through the
use of Smart Cards. The original Articles of the Company authorized the issuance
of twenty- five million (25,000,000) common shares. There are twenty-five
million (25,000,000) shares of Common Stock at par value of $0.001 per share and
no Preferred stock. The Registrant was incorporated on May 01, 1998, in the
state of Nevada under the name Card-Smart Corp In connection with its formation,
a total of two million (2,000,000) shares of its common stock were purchased by
the three founders of the Company, on May 10, 1998 for services. Between July 10
and July 20, 1998, the Company sold one million (1,000,000) shares of its common
stock in connection with a public offering at a price of $0.025 per share. On or
about July 20, 1998, the Company completed a public offering of shares of common
stock of the Company pursuant to Regulation "D," Rule 504 of the Securities Act
of 1933, as amended, whereby it sold one million (1,000,000) shares of the
Common Stock of the Company for twenty-five thousand ($25,000) dollars to
approximately twenty-five (25) unaffiliated shareholders of record. The Company
filed an original Form D with the Securities and Exchange Commission on or about
July 20, 1998. On January 11,2000 the company completed a subsequent Public
Offering that was offered without registration under the Securities Act of 1933,
as amended (The "Act"), in reliance upon the exemption from registration
afforded by sections 4(2) and 3 (b) of the Securities Act and Regulation "D"
promulgated thereunder. The Company sold to One (1) additional unaffiliated
shareholder, one hundred twenty thousand (120,000) shares of common stock at a
price of $.20 per share for a total amount raised of twenty four thousand
($24,000) dollars. As of March 20, 2000, the Company has three million one
hundred twenty thousand shares (3,120,000) shares of its $0.001 par value common
voting stock issued and outstanding which are held by approximately thirty (30)
shareholders, including the three founding shareholders, of record. The Company
is a newly formed development stage company, which plans to market Loyalty
Programs to hotels, resorts, cruise lines and casinos using Smart Cards (plastic
cards with embedded microprocessors) and support these services through its Web
site, i.e., www.card-smart.com.
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B. Business of Issuer
1) Principal Products, Services and Principal Markets.
The Company is developmental stage company, which plans to market Smart Cards to
hotels, resorts, cruise lines and casinos using Smart Cards (plastic cards with
embedded microprocessors) and support these services through its Web site, i.e.,
www.card-smart.com. Management of company believes that they can deliver a more
cost-effective turn-key program with the ability to share consumer information
and profiles between clients and build a comprehensive database for resale. The
Company hopes to provide solutions for the growing demand in application of
computers in the wallet or what have been termed Smart Cards, and the
implementation of loyalty programs based on the technology (See "Business of the
Company"). The Company plans to provide consumer credit tracking and loyalty
programs for specialized market niches focused toward the resort and cruise
markets through the use of Smart Cards. The Card-Smart Cards are designed to
eliminate growing transaction charges by creating an internal credit system for
each client while adding photo identification for security verification. The
Company plans to contract with Gemplus a major worldwide provider of Smart Card
solutions, for use of their technology platform. At this time, no contract has
been made between the Company and Gemplus. Gemplus has developed a flexible,
configurable technology engine which offers merchants a method to retain
customers as compared to traditional stand alone paper card alternatives. Any
potential revenue which the Company might generate would be derived from sales
by the Company to hotels, casinos, cruise lines and resorts, which generally
achieve full occupancy levels and consistent sold out turnover.
Management believes that placing this technology into foreign resorts would
enhance the Company's revenues as wholesaler volume discounts for hardware would
then be made available to these customers from the Company. The Company hopes to
also achieve revenues from maintenance contracts and supply of new cards.
Management believes their product has value for the following reasons:
1) Client resorts would be able to bypass numerous credit card transaction
fees by providing Global SmartCards with an adjustable credit value.
Card-Smart Card holder would pay for the credit value once at the beginning
of their vacation using Visa, MasterCard, Traveler's Cheques, etc. This
would mean one transaction fee to the client. Thereafter, there would be no
transaction fees involved in using the Card-Smart Cards. If the credit
limit runs out, the Card-Smart Card holders can add more credit to their
card via regular payment methods.
2) Card-Smart plans to have the digitized photograph of the Card-Smart Card
holder placed in a database accessible to resort cashiers to verify that
the particular person is a Card-Smart Card holder. The credit total and
transaction history would be tracked through this database. Additionally,
the Global Card would have the Card-Smart Card holder's picture printed on
the card itself.
3) Loyalty programs with reward points could be built into the card program as
an added value and customization for the client resort. At the end of the
vacation period, any remaining credit would be refunded to the Card-Smart
Card holder.
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(a) Limited Operating History
The Company was first incorporated in the State of Nevada on May 01, 1998.
Accordingly, the Company has a limited operating history upon which an
evaluation of the Company, its current business and its prospects can be based,
each of which must be considered in light of the risks, expenses and problems
frequently encountered by all companies in the early stages of development, and
particularly by such companies entering new and rapidly developing and mature
markets. The Company's prospects must be considered in light of the risks,
uncertainties, expenses and difficulties frequently encountered by companies in
their early stages of development, particularly companies who face competition
from other more established companies in this market. Such risks include,
without limitation, the lack of broad acceptance of the company's products, the
company's inability to build a customer base, inability for the Company to fully
develop and utilize its Internet Web site, the inability of the Company to
generate significant revenues from customers, the company's inability to
anticipate and adapt to a developing market, the failure of the company's
network infrastructure (including its server, hardware and software) to
efficiently handle its Internet traffic, changes in laws that adversely affect
the company's business, the ability of the Company to manage its operations,
including the amount and timing of capital expenditures and other costs relating
to the expansion of the company's operations, the introduction and development
of different or more extensive communities by direct and indirect competitors of
the Company, including those with greater financial, technical and marketing
resources, the inability of the Company to maintain and increase levels of
traffic on its Web site, the inability of the Company to attract, retain and
motivate qualified personnel and general economic conditions.
(b) Anticipated Losses for the Foreseeable Future
The Company has not achieved profitability to date, and the Company anticipates
that it will continue to incur net losses for the foreseeable future. The extent
of these losses will depend, in part, on the amount of growth in the Company's
revenues from sales of its products. As of February 07, 2000, the Company had an
accumulated deficit of Twenty Seven Thousand and Ten ($27,010) dollars. The
Company expects that its operating expenses will increase significantly during
the next several years, especially in the areas of sales and marketing, and
brand promotion. Thus, the Company will need to generate increased revenues to
achieve profitability. To the extent that increases in its operating expenses
precede or are not subsequently followed by commensurate increases in revenues,
or that the Company is unable to adjust operating expense levels accordingly,
the Company's business, results of operations and financial condition would be
materially and adversely affected. There can be no assurances that the Company
can achieve or sustain profitability or that the Company's operating losses will
not increase in the future.
(c) Dependence on Continued Growth and Viability of Smart Cards
The Company's future success is substantially dependent upon acceptance and
usage of Smart Cards. To generate product sales, the Company must identify a
customer base that has a need for their products. There are no assurances that
this can take place. The Internet may prove not to be a viable commercial
marketplace for their products. Additionally, due to the ability of their
customers to easily
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compare prices of similar products or services on competing Web sites, gross
margins for e-Commerce transactions may narrow in the future and, accordingly,
the Company's revenues from utilizing its Web site may be materially negatively
impacted.
Additionally, to the extent that the Internet continues to experience
significant growth in the number of users and the level of use, this can be no
assurance that its technical infrastructure will continue to be able to support
the demands placed upon it. The necessary technical infrastructure for
significant increases with the Internet, such as a reliable network backbone,
may not be timely and adequately developed. In addition, performance
improvements, such as high-speed modems, may not be introduced in a timely
fashion. Furthermore, security and authentication concerns with respect to
transmission over the Internet of confidential information, such as credit
information, may remain. Issues like these could lead to resistance against the
acceptance of the Internet as a viable commercial marketplace. Also, the
Internet could lose its viability due to delays in the development or adoption
of new standards and protocols required to handle increased levels of activity,
or due to increased governmental regulation. Changes in or insufficient
availability of telecommunications services could result in slower response
times and adversely affect usage of the Internet. Demand and market acceptance
for recently introduced services and products over the Internet are subject to a
high level of uncertainty, and this exist few proven services and products.
The Internet may not be commercially viable in the long term for a number of
reasons, including potentially inadequate development of the necessary network
infrastructure or delayed development of enabling technologies, performance
improvements and security measures. To the extent that the Internet continues to
experience significant growth in the number of users, their frequency of use or
their band width requirement, this can be no assurance that the infrastructure
for the Internet and other online services will be able to support the demands
placed upon them. In addition, the Internet or other online services could lose
their viability due to delays in the development or adoption of new standards
and protocols required to handle increased levels of Internet or other online
service activity, or due to increased governmental regulation. Changes in or
insufficient availability of telecommunications services to support the Internet
or other online services also could result in slower response times and
adversely affect usage of the Internet and other online services generally and
Global SmartCards,Inc. in particular. If use of the Internet and other online
services does not continue to grow or grows more slowly than expected, if the
infrastructure for the Internet and other online services does not effectively
support growth that may occur, or if the Internet and other online services do
not become a viable commercial marketplace, the Company's business, results of
operations and financial condition would be adversely affected.
(d) Risk Supply Failures
The Company plans to use the Gemplus (Gem Club Micro platform) to operate and
market its loyalty programs. Gem Club Micro is a microprocessor card with
advanced loyalty function that has been developed for loyalty card applications.
Gem Club Micro cards can be used in other type of application, including coupon
programs, store- valued cards, private electronic purses, metering (e.g.,
measuring
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consumption of gas or electricity), customer identification. Up to thirty (30)
counters can be created in a Gem Club Micro cards. The Company plans to purchase
and market these microprocessor cards. The Company is dependent upon the
manufacturer of these cards. If the manufacturer experiences problems in
producing these cards, this would hamper sales results for the Company. If the
manufacturer supplies microprocessor cards which malfunction, this could hurt
the image of the Company and future business. The Company does not have any
exclusive contract with any manufacturer of these microprocessors cards,
Therefore, if supplies become limited this are no assurances that the Company
will have product to market and sell.
(e) Risk of System Failures
The Company's ability to facilitate trade successfully and provide high quality
customer service via the Internet, depends on the efficient and uninterrupted
operation of its computer and communications through its designated Internet
Service Provider (ISP). These systems and operations are vulnerable to damage or
interruption from earthquakes, floods, fires, power loss, telecommunication
failures, break-ins, sabotage, intentional acts of vandalism and similar events.
The Company does not have fully redundant systems, a formal disaster recovery
plan or alternative providers of hosting services and does not carry business
interruption insurance to compensate it for losses that may occur. Despite any
precautions taken by, and planned to be taken by the Company, the occurrence of
a natural disaster or other unanticipated problems with its ISP could result in
interruptions in the services provided by the Company.
In addition, the failure by the ISP to provide the data communications capacity
required by the Company, as a result of human error, natural disasters other
operational disruption, could result in interruptions in the Company's service.
Any damage to or failure of the systems of the Company could result in
reductions in, or terminations of, the Global SmartCards service, which could
have a material adverse effect on the Company's business, results of operations
and financial condition. In the case of frequent or persistent system failures,
the Company's reputation and name brand could be materially adversely affected.
Although the Company has implemented certain network security measures, the
Company and its IPS are also vulnerable to computer viruses, physical or
electronic break-ins and similar disruptions, which could lead to interruptions,
delays, loss of data or the inability to complete customer auctions. In
addition, although the Company works to prevent unauthorized access to Company
data, it is impossible to eliminate this risk completely. The occurrence of any
and all of these events could have a material adverse effect on the Company's
business, results of operations and financial condition.
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(f) Competition
The Company expects to experience heavy competition in marketing its
services. The Company will experience competition from Corporations who are
developing their own marketing departments using similar off the shelf Smart
Card technologies. Management believes that they can deliver a more
cost-effective turn-key program with the ability to share consumer information
and profiles between clients and build a comprehensive database for resale.
However, there are no assurances that they will be successful in this endeavor.
Smart card manufacturers are now marketing to secondary adopters who requires
Smart Cards shift from being the new technological wonder to providing
legitimate solutions for the businesses. The Smart Card industry has yet to
prove fully the technology's case as a legitimate business tool. Although
manufacturers are still exploring other applications such as loyalty programs,
internet commerce and network security, the market has stalled as far as the
end-user is concerned with warning signs that the next few years will be lean,
and may include the failure of the immediate materialization of stored-value
card installations by bank card associations such as Visa and member banks,
delays in project roll-out, and extreme pricing competition.
The market for providing Smart Card services over the Internet is relatively
new, rapidly evolving and intensely competitive, and the Company expects
competition to intensify further in the future. Barriers to entry are relatively
low, and current and new competitors can launch new sites at a relatively low
cost using commercially- available software. The Company potentially competes
with a number of other companies marketing similar health care products over the
Internet. Competitive pressures created by any of the Company's competitors,
could have a material adverse effect on the Company's business, results of
operations and financial condition. The Company believes that the principal
competitive factors in its market are volume and selection of goods, population
of buyers and sellers, community cohesion and interaction, customer service,
reliability of delivery and payment by users, brand recognition, WEB site
convenience and accessibility, price, quality of search tools and system
reliability. Some of the Company's potential competitors have longer operating
histories, larger customer bases, greater brand recognition and significantly
greater financial, marketing, technical and other resources than the Company. In
addition, other online trading services may be acquired by, receive investments
from or enter into other commercial relationships with larger, well-established
and well-financed companies as use of the Internet and other online services
increases.
Therefore, certain of the Company's competitors with other revenue sources may
be able to devote greater resources to marketing and promotional campaigns,
adopt more aggressive pricing policies and devote substantially more resources
to Web site and systems development than the Company or may try to attract
traffic by offering services for free. Increased competition may result in
reduced operating margins, loss of market share and diminished value in the
Company's brands. There can be no assurance that the Company will be able to
compete successfully against current and future competitors. Further, as a
strategic response to changes in the competitive environment, the Company may,
from time to time, make certain pricing, service or marketing decisions or
acquisitions that could have a material adverse effect on its business, results
of operations and financial condition. New technologies and the expansion of
existing technologies may increase the competitive pressures on the Company by
enabling the Company's competitors to offer a lower-cost service.
Certain Web-based applications that direct Internet traffic to certain Web sites
may channel users to trading services that compete with the Company. Although
the Company plans to establish arrangements with online services and search
engine companies, this can be no assurance that these arrangements will be
renewed on commercially reasonable terms or that they will otherwise bring
traffic to the Card-Smart.com WEB site. In addition, companies that control
access to transactions through network access or Web browsers could promote the
Company's competitors or charge the Company substantial fees for inclusion. Any
and all of these events could have a material adverse effect on the Company's
business, results of operations and financial condition.
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(g) Potential Fluctuations in Operating Results; Quarterly Fluctuations
The Company's operating results may fluctuate significantly in the future as a
result of a variety of factors, many of which are outside the Company's control.
See "-Limited Operating History." As a strategic response to changes in the
competitive environment, the Company may from time to time make certain pricing
or marketing decisions with their Smart Card business that could have a material
short-term or long-term adverse effect on the Company's business, results of
operations and financial condition. In particular, in order to accelerate the
promotion of the Company's Web Site (www.gscards.com), the Company intends to
market it Web site through the major search engines. The Company believes that
it may experience seasonality in its business, with use of the Internet and
Card-Smart.com being somewhat lower during the summer vacation and year-end
holiday periods. Advertising impressions (and therefore revenues) may be
expected to decline accordingly in those periods. Additionally, seasonality may
affect significantly any potential advertising revenues during the first and
third calendar quarters, as advertisers historically spend less during these
periods. There can be no assurance that such patterns will not have a material
adverse effect on the Company's business, results of operations and financial
condition. In addition to selling its brands, it is the Company's strategy to
generate additional revenues through e- Commerce arrangements including for
other companies to advertise on the Company's Web site. There can be no
assurance that the Company will receive any material amount of revenue under
these agreements in the future. The foregoing factors, in some future quarters,
may lead the Company's operating results to fall below the expectations.
(h) Risk Of Capacity Constraints And Systems Failures
A key element of the Company's strategy is to support its Smart Card services
through its Web site. The Company's ability to attract customers and to achieve
market acceptance of its products depends significantly upon the performance of
the Company and its network infrastructure (including its server, hardware and
software). The Company plans to enter into a web site agreement with Smackdab
Corporation. Under this agreement, Smackdab will market the Company's web site
with the major search engines (e.g., Yahoo, Lycos, Infoseek, etc.) in order to
increase traffic to the Company's Web Site. Any system failure that causes
interruption or slower response time of the Company's products and services
could result in less traffic to the Company's Web site and, if sustained or
repeated, could reduce the attractiveness of the Company's products. An increase
in the volume of user traffic could strain the capacity of the Company's
technical infrastructure, which could lead to slower response time or system
failures, and could adversely affect operating results. There can be no
assurance that the Company and its technical infrastructure will be able to grow
accordingly, and the Company faces risks related to its ability to scale up to
its expected customer levels while maintaining superior performance. Any failure
of the Company's server and networking systems to handle current or higher
volumes of traffic would have a material adverse effect on the Company's
business, results of operations and financial condition. The Company is also
dependent upon third parties to provide product support. In the past, users have
occasionally experienced difficulties with Internet and online services due to
system failures, including failures unrelated to the Company's systems. Any
disruption in
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Internet access provided by third parties could have a material adverse effect
on the Company's business, results of operations and financial condition.
Furthermore, the Company is dependent on hardware suppliers for prompt delivery,
installation and service of equipment used to deliver the Company's products and
services. The Company's operations are dependent in part upon its ability to
protect its operating systems against damage from human error, fire, floods,
power loss, telecommunications failures, break-ins and similar events. The
Company does not presently have redundant, multiple-site capacity in the event
of any such occurrence. The Company's servers are also vulnerable to computer
viruses, break-ins and similar disruptions from unauthorized tampering with the
Company's computer systems. The occurrence of any of these events could result
in the interruption, which could have a material adverse effect on the Company's
business, results of operations and financial condition. In addition, the
Company's reputation could be materially and adversely affected.
(i) Risks Associated With New Services, Features and Functions
There can be no assurance that the Company would be able to expand its
operations in a cost-effective or timely manner or that any such efforts would
maintain or increase overall market acceptance. Furthermore, any Smart Card
business launched by the Company that is not favorably received by customers
could damage the Company's reputation and diminish the value of its brand name.
Expansion of the Company's operations in this manner would also require
significant additional expenses and development, operations, training the
Company's management, financial and operational resources. The lack of market
acceptance of the Company's products would result in the Company's inability to
generate satisfactory revenues and its inability to offset their costs could
have a material adverse effect on the Company's business, results of operations
and financial condition.
(j) Online Commerce Security Risks
A significant barrier to online Global SmartCard service support and
communications is the secure transmission of confidential information over
public networks. Card-Smart Corp plans to support its services via its Web site.
The Company will rely on encryption and authentication technology licensed from
third parties to provide the security and authentication technology to effect
secure transmission of confidential information, including confidential customer
information. There can be no assurance that advances in computer capabilities,
new discoveries in the field of cryptography, or other events or developments
will not result in a compromise or breach of the technology used by the Company
to protect customer transaction data from one its competitors.
If any such compromise of the Company's security were to occur, it could have a
material adverse effect on the Company's reputation and, Therefore, on its
business, results of operations and financial condition. Furthermore, a party
who is able to circumvent the Company's security measures could misappropriate
proprietary information or cause interruptions in the Company's operations. The
Company may be required to expend significant capital and other resources to
protect against such security breaches or to alleviate problems caused by such
breaches. Concerns over the security of transactions conducted on the Internet
and other online services and the privacy of users may also inhibit the growth
of the Internet and other online services generally, and the Web in particular,
especially as a means of conducting commercial transactions. To the extent that
activities of the
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Company involve with the storage and transmission of proprietary information,
security breaches could damage the Company's reputation and expose the Company
to a risk of loss or litigation and possible liability. There can be no
assurance that the Company's security measures will prevent security breaches or
that failure to prevent such security breaches will not have a material adverse
effect on the Company's business, results of operations and financial condition.
(k) Risks Associated with Acquisitions
If appropriate opportunities present themselves, the Company would acquire
businesses, technologies, services or product(s) that the Company believes are
strategic.
The Company currently has no understandings, commitments or agreements with
respect to any other material acquisition and no other material acquisition is
currently being pursued. There can be no assurance that the Company will be able
to identify, negotiate or finance future acquisitions successfully, or to
integrate such acquisitions with its current business. The process of
integrating an acquired business, technology, service or product(s) into the
Company may result in unforeseen operating difficulties and expenditures and may
absorb significant management attention that would otherwise be available for
ongoing development of the Company's business. Moreover, there can be no
assurance that the anticipated benefits of any acquisition will be realized.
Future acquisitions could result in potentially dilutive issuances of equity
securities, the incurrence of debt, contingent liabilities and/or amortization
expenses related to goodwill and other intangible assets, which could materially
adversely affect the Company's business, results of operations and financial
condition. Any future acquisitions of other businesses, technologies, services
or product(s) might require the Company to obtain additional equity or debt
financing, which might not be available on terms favorable to the Company, or at
all, and such financing, if available, might be dilutive.
(l) Risks Associated With International Operations
A component of the Company's strategy is to offer its products online to
international customers. Expansion into the international markets will require
management attention and resources. The Company has limited experience in
localizing its service, and the Company believes that many of its competitors
are also undertaking expansion into foreign markets. There can be no assurance
that the Company will be successful in expanding into international markets. In
addition to the uncertainty regarding the Company's ability to generate revenues
from foreign operations and expand its international presence, this are certain
risks inherent in doing business on an international basis, including, among
others, regulatory requirements, legal uncertainty regarding liability, tariffs,
and other trade barriers, difficulties in staffing and managing foreign
operations, longer payment cycles, different accounting practices, problems in
collecting accounts receivable, political instability, seasonal reductions in
business activity and potentially adverse tax consequences, any of which could
adversely affect the success of the Company's international operations.
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To the extent the Company expands its international operations and has
additional portions of its international revenues denominated in foreign
currencies, the Company could become subject to increased risks relating to
foreign currency exchange rate fluctuations. There can be no assurance that one
or more of the factors discussed above will not have a material adverse effect
on the Company's future international operations and, consequently, on the
Company's business, results of operations and financial condition.
2) Distribution Methods of the Products and Services
The Company will be significantly dependent on a number of third-party
relationships to supply product(s), to ship product(s), and increase traffic to
Card-Smart.com. Additionally, with regards to the Company's Internet Web site is
generally dependent on other Web site operators that provide links to Card-Smart
Corp. (www.card-smart.com). The Company does not have any agreements with any
Web site operators that provide links to its Web site at this time, and, if the
Company can establish such links the other Web site operators may terminate such
links at any time without notice to the Company. There can be no assurance that
third parties will regard their relationship with the Company as important to
their own respective businesses and operations. There can be no assurance that
the Company will ever develop a relationships with third parties that supply the
Company with links to their Web site. In particular, the elimination of a pre-
installed bookmark on a Web browser that directs traffic to the Company's Web
site could significantly reduce traffic on the Company's Web site, which would
have a material adverse effect on the Company's business, results of operations
and financial condition. Additionally, at this time, the Company has not entered
into any agreements with any suppliers to ship and provide products.
3) Status of Any Announced New Product or Service
The Company does not have any announced new product or service.
The Company needs to develop a customer base for its Loyalty Programs,
utilizing the SmartCard. The Company, however, has yet to announce
any new products and has not announced any other recent additions or
services.
4) Industry Background
There was initial interest in Smart Cards by early adopters ten (10) years ago,
when these cards were first introduced. The Smart Card industry has been
developing new and improved technologies. Due to the maturity of this industry,
business for Smart Cards has been slowing down. According to research conducted
by Frost & Sullivan, Worldwide Smart Card Application Markets and Worldwide
Smart Card IC Markets, the Smart Cards market has hit a "market canyon" in its
transition from embryonic to the developmental stage. Building an in- house
database of project, Frost & Sullivan calculated the Smart Card market to have
issued 912 million cards in 1998. Analyst Alyxia T. Do, for Frost & Sullivan
stated, "The Smart Card industry is now ending its dynamic growth phase that
resulted from installation by early adopters of the technology."
The support of Smart Cards services through the company's Web site is a somewhat
new and evolving concept, it is difficult to predict with any assurance whether
the Web will prove to be a viable commercial marketplace in the long term. The
Web has experienced, and is expected to continue to experience, significant
growth in the numbers of users and amount of traffic. To the extent that the Web
continues to experience increased numbers of users, frequency of use or
increased bandwidth requirements of users, this can be no assurance that the Web
infrastructure will continue to be able to support the demands placed on it by
this continued growth or that the performance or reliability of the Web will not
be adversely affected.
13
<PAGE>
Furthermore, the Web has experienced a variety of outages and other delays as a
result of damage to portions of its infrastructure, and could face such outages
and delays in the future,These outages and delays could adversely affect the
level of Web usage and also the level of traffic for Global SmartCards, Inc. In
addition, the Web could lose its viability due to delays in the development or
adoption of new development or adoption of new standards and protocols to handle
increased levels of activity or due to increased governmental regulation.
The Internet allows marketers to collect meaningful demographic information and
feedback from consumers, and to rapidly respond to this information with new
messages. This offers a significant new opportunity for businesses to increase
the effectiveness of their direct marketing campaigns. In traditional media, a
significant portion of all advertising budgets are spent on direct marketing
because of its effectiveness. However, the effectiveness of direct marketing
campaigns is dependent upon the quality of consumer data used to develop and
place complementary products, services or facilities are developed and the Web
becomes a viable commercial marketplace in the long term, the Company might be
required to incur substantial expenditures in order to adapt its products to
changing Web technologies, which could have a material adverse effect on the
Company's business, results of operations and financial condition.
14
<PAGE>
(a) E-Commerce and Direct Marketing.
The Internet has become a significant marketplace for buying and selling goods
and services. Industry estimates that the amount of goods or services purchased
in online consumer transactions will grow from approximately $2.6 billion in
1997 to approximately $37.5 billion in 2002. Improvements in security, interface
design and transaction- processing technologies have facilitated an increase in
online consumer transactions. Early adopters of such improvements include online
merchants offering broad product catalogs (such as books, music CDs and toys),
those seeking distribution efficiencies (such as PCs, flowers and groceries) and
those offering products and services with negotiable pricing (such as
automobiles and mortgages). The Company believes that online companies provide
businesses an opportunity to link Internet customers with like interests. The
Internet allows marketers to collect meaningful demographic information. The
Company's business strategy relies on providing support for the Company's
services via the Company's Web site. Any significant deterioration in general
economic conditions that adversely affected these companies could also have a
material adverse effect on the Company's business, results of operations and
financial condition.
5) Raw Materials and Suppliers
The Company is a not a manufacturer and is dependent in purchasing plastic cards
with embedded microprocessors from other suppliers. Therefore, the Company does
not use any raw materials.
6) Customers
The Company believes that establishing and maintaining brand identity through
Loyalty Programs to Hotels, Resorts, Cruise Line, and Casinos is a critical
aspect of its efforts to attract new customers In order to attract new
customers, the Company intends to make a commitment to the creation and
maintenance of brand loyalty among these groups. The Company plans to accomplish
this, although not exclusively, through advertising its Web site through the
various search engines, marketing its site to businesses/customers through
e-mail, online media, and other marketing and promotional efforts.
There can be no assurance that brand promotion activities will yield increased
revenues or that any such revenues would offset the expenses incurred by the
Company in building its brands. Further, there can be no assurance that any new
users attracted to Global SmartCards will conduct business with the Company on a
regular basis. If the Company fails to promote and maintain its brand or incurs
substantial expenses in an attempt to promote and maintain its brand or if the
Company's existing or future strategic relationships fail to promote the
Company's brand or increase brand awareness, the Company's business, results of
operations and financial condition would be materially adversely affected.
15
<PAGE>
7) Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements,
or Labor Contracts
The Company regards substantial elements of its future and underlying
infrastructure and technology as proprietary and attempts to protect them by
relying on trademark, service mark, copyright and trade secret laws and
restrictions on disclosure and transferring title and other methods. The Company
plans to enter into confidentiality agreements with its future employees, future
suppliers and future consultants and in connection with its license agreements
with third parties and generally seeks to control access to and distribution of
its technology, documentation and other proprietary information. Despite these
precautions, it may be possible for a third party to copy or otherwise obtain
and use the Company's proprietary information without authorization or to
develop similar technology independently. Legal standards relating to the
validity, enforceability and scope of protection of certain proprietary rights
in Internet-related businesses are uncertain and still evolving, and no
assurance can be given as to the future viability or value of any of the
Company's proprietary rights. There can be no assurance that the steps taken by
the Company will prevent misappropriation or infringement of its proprietary
information, which could have a material adverse effect on the Company's
business, results of operations and financial condition. Litigation may be
necessary in the future to enforce the Company's intellectual property rights,
to protect the Company's trade secrets or to determine the validity and scope of
the proprietary rights of others. Such litigation might result in substantial
costs and diversion of resources and management attention. Furthermore, there
can be no assurance that the Company's business activities will not infringe
upon the proprietary rights of others, or that other parties will not assert
infringement claims against the Company, including claims that by directly or
indirectly providing hyperlink text links to Web sites operated by third
parties. Moreover, from time to time, the Company may be subject to claims of
alleged infringement by the Company or service marks and other intellectual
property rights of third parties. Such claims and any resultant litigation,
should it occur, might subject the Company to significant liability for damages,
might result in invalidation of the Company's proprietary rights and, even if
not meritorious, could result in substantial costs and diversion of resources
and management attention and could have a material adverse effect on the
Company's business, results of operations and financial condition.
8) Regulation
The law relating to the liability of companies promoting their products and
services online is currently unsettled. It is possible that claims could be made
against online e-Commerce companies under both United States and foreign law for
defamation, libel, invasion of privacy, negligence, copyright or trademark
infringement, or other theories based on the nature and content of the materials
disseminated through their Web site. Several private lawsuits seeking to impose
such liability upon other online companies are currently pending.
16
<PAGE>
9) Effect of Existing or Probable Government Regulations
Government legislation has been proposed that imposes liability for or prohibits
the transmission over the Internet of certain types of information.
The imposition upon the Company and other online providers of potential
liability for information carried on or disseminated through their services
could require the Company to implement measures to reduce its exposure to such
liability, which may require the Company to expend substantial resources and/or
to discontinue certain service offerings. In addition, the increased attention
focused upon liability issues as a result of these lawsuits and legislative
proposals could impact the growth of Internet use.
The Company does not believe that such regulations, which were adopted prior to
the advent of the Internet, govern the operations of the Company's business nor
have any claims been filed by any state implying that the Company is subject to
such legislation. There can be no assurance, however, that State government will
not attempt to impose these regulations upon the Company in the future or that
such imposition will not have a material adverse effect on the Company's
business, results of operations and financial condition. Several States have
also proposed legislation that would limit the uses of personal user information
gathered online or require online services to establish privacy policies. The
Federal Trade Commission has also recently settled a proceeding with one online
service regarding the manner in which personal information is collected from
users and provided to third parties. Changes to existing laws or the passage of
new legislation, could create uncertainty in the marketplace that could reduce
demand for the services of the Company or increase the cost of doing business as
a result of litigation costs or increased service delivery costs, or could in
some other manner have a material adverse effect on the Company's business,
results of operations and financial condition. In addition, because the
Company's services are accessible worldwide, and the Company may facilitate
sales of goods to users worldwide, other jurisdictions may claim that the
Company is required to qualify to do business as foreign corporation in
particular state or foreign country. Due to the increasing popularity and use of
the Internet and other online services, it is possible that a number of laws and
regulations may be adopted with respect to the Internet or other online services
covering issues such as user privacy, freedom of expression, pricing, content
and quality of products and services, taxation, advertising, intellectual
property rights and information security. Although sections of the
Communications Decency Act of 1996 (the "CDA") that, among other things,
proposed to impose criminal penalties on anyone distributing "indecent" material
to minors over the Internet, were held to be unconstitutional by the U.S.
Supreme Court, there can be no assurance that similar laws will not be proposed
and adopted. Certain members of Congress have recently discussed proposing
legislation that would regulate the distribution of "indecent" material over the
Internet in a manner that they believe would withstand challenge on constitution
law.
17
<PAGE>
Any new legislation or regulation, or the application of laws or regulations
from jurisdictions whose laws do not currently apply to the Company's business,
for third-party activities and jurisdiction. The adoption of new laws or the
application of existing laws may decrease the growth in the use of the Internet,
which could in turn decrease the demand for the Company's services, increase the
Company's cost of doing business or otherwise have a material adverse effect on
the Company's business, results of operations and financial condition. The
Company does not believe that such regulations, which were adopted prior to the
advent of the Internet, govern the operations of the Company's business nor have
any claims been filed by any state implying that the Company is subject to such
legislation. There can be no assurance, however, that State government will not
attempt to impose these regulations upon the Company in the future or that such
imposition will not have a material adverse effect on the Company's business,
results of operations and financial condition.
10) Research and Development Activities
The Company, among other things, plans to develop and market its Web site,
enhance its brands, implement and execute its business and marketing strategy
successfully, continue to develop and upgrade its technology and
information-processing systems, meet the needs of a changing market, provide
superior customer service, respond to competitive developments and attract,
integrate, retain and motivate qualified personnel provided the company can
generate sales and profit.
The Company also needs to develop and identify SmartCard products that achieve
market acceptance by its end-users. There can be no assurance that Global
SmartCards will achieve market acceptance. Accordingly, no assurance can be
given that the Company's business model will be successful or that it can
sustain revenue growth or be profitable. The market for SmartCards has matured
and is finite. As is typical of any rapidly evolving market, demand and market
acceptance for products are subject to a high level of uncertainty and risk.
Moreover, because this market is rapidly evolving, it is difficult to predict
its future growth rate, if any, and its ultimate size.
If the market fails to develop, develops more slowly than expected or becomes
saturated with competitors, or if the Company's products do not achieve or
sustain market acceptance, the Company's business, results of operation may be
materially and adversely affected.
There can be no assurances the Company will be successful in accomplishing all
of these things, and the failure to do so could have a material adverse effect
on the company's business, results of operations and financial condition.
11) Impact of Environmental Laws
The Company is not aware of any federal, state or local environmental laws which
would effect is operations.
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<PAGE>
12) Employees
The Company currently has three (3) employees: one President, and one Secretary
and one Chief Financial Officer, all of which are Directors of the Company. The
Company has no intention at this time to add full employees.
(i) The Company's performance is substantially dependent on the
performance of its corporate President and CEO, Georgios
Polyhronopoulos. In particular, the Company's success depends on his
ability to define and develop markets and business for the Company.
(ii) The Company does not carry key person life insurance on any of its
personnel. The loss of the services of any of its executive officers
or other key employees could have a material adverse effect on the
business, results of operations and financial condition of the
Company. The Company's future success also depends on its ability to
retain and attract highly qualified technical and managerial
personnel.
(iii)There can be no assurance that the Company will be able to retain its
key managerial and technical personnel or that it will be able to
attract and retain additional highly qualified technical and
managerial personnel in the future. The inability to attract and
retain the technical and managerial personnel necessary to support the
growth of the Company's business, due to, among other things, a large
increase in the wages demanded by such personnel, could have a
material adverse effect upon the Company's business, results of
operations and financial condition.
13) Year 2000 Implications
The Company plans to market and sell Smart Cards which are plastic cards with an
embedded microprocessor. The Company has not completed any tests or assessment
of internal and external (third-party) IT systems and non-IT systems. At this
point, the Company is not currently aware of any Year 2000 problems relating to
its Smart Cards or the use of its Smart Cards with other computer equipment
operated by third parties that would have a material effect on the Company's
business, results of operations or financial condition, without taking into
account the Company's efforts to avoid such problems. Based on its assessment to
date, the Company does not anticipate that costs associated with remediating the
Company's non-compliant IT systems or non-IT systems will be material, although
there can be no assurance to such effect.
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<PAGE>
Such a failure could prevent the Company from operating its business, and have
an adverse affect on the company's business. The Company believes that the
primary business risks, in the event of such failure, would include, but not be
limited to, lost of potential revenues, increased operating costs, loss of
customers, or other business interruptions of a material nature, as well as
claims of mismanagement, misrepresentation, or breach of contract, any of which
could have a material adverse effect on the Company's business, results of
operations and financial condition.
14) The Industry & Potential Effect on the Company's Plan of Operations
The rapid adoption of the Internet as a means to gather information,
communicate, interact and be entertained, combined with the vast proliferation
of Web sites(estimated worldwide domains 15,719,462), has made the Internet an
important new mass medium. Industry estimates that the number of Web users
exceeded 68 million in 1997, and will grow to over 319 million by 2002. The
market for Internet products and services is characterized by rapid
technological developments, evolving industry standards and customer demands,
and frequent new product introductions and enhancements. These market
characteristics are exacerbated by the emerging nature of the market and the
fact that many companies are expected to introduce new Internet products and
services in the near future. The Company's future success will depend in part on
its ability to continually improve the performance, features and reliability of
its product(s) to both evolving demands of the marketplace and competitive
product and service offerings; and, there can be no assurance that the Company
will be successful in doing so. Accordingly, the Company's future success will
depend on its ability to adapt to rapidly changing technologies, to adapt to
evolving industry standards and to continually improve the performance, features
and reliability of its service in response to competitive service and product
offerings and evolving demands of the marketplace. The failure of the Company to
adapt to such changes would have a material adverse effect on the Company's
business, results of operations and financial condition. In addition, the
widespread adoption of the Internet, networking or telecommunications
technologies or other technological changes could require substantial
expenditures by the Company to modify or adapt its services or infrastructure,
which could have a material adverse effect on the Company's business, results of
operations and financial condition.
20
<PAGE>
15) Present Licensing Status
None-Not Applicable.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
All statements, trend analysis and other information contained in this
Registration relative to markets for the Company's products and trends in
revenues, gross margin and anticipated expense levels, as well as other
statements including words such as "believe," "anticipate," "expect,"
"estimate," "plan" and "intend" and other similar expressions, constitute
forward-looking statements. Those forward- looking statements are subject to
business and economic risks, and the Company's actual results of operations may
differ from those contained in the forward-looking statements. The following
discussion of the financial condition and results of operations of the Company
should also be read in conjunction with the Financial Statements and Notes
related thereto included elsewhere in this Registration.
21
<PAGE>
Item 2
Item 2. Management's Discussion and Analysis or Plan of Operation
A. Management's Plan of Operation
1) In its initial twenty two operating period ended May 01, 1998, the Company
incurred a net loss of $27,010 from developement stage operations. It has yet to
receive any revenues from operations.
An original stock offering was made in reliance upon an exemption from the
registration provisions of Section 5 of the Securities Act of 1993, as amended,
pursuant to Regulation D, Rule 504, of the Act. a total of two million
(2,000,000) shares of its common stock were purchased by the three founders of
the Company, on May 15, 1998 for cash. Between July 10 and July 15, 1998, the
Company sold One Million (1,000,000) shares of its common stock in connection
with a public offering at a price of $0.025 per share. On or about July 15,
1998, the Company completed a public offering of shares of common stock of the
Company pursuant to Regulation "D," Rule 504 of the Securities Act of 1933, as
amended, whereby it sold one million (1,000,000) shares of the Common Stock of
the Company for twenty-five thousand ($25,000) dollars to approximately
twenty-five (25) unaffiliated shareholders of record. The Company filed an
original Form D with the Securities and Exchange Commission on or about July 20,
1998. On January 11 2000, the company completed a subsequent Public Offering
that was offered without registration under the Securities Act of 1933, as
amended (The "Act"), in reliance upon the exemption from registration afforded
by sections 4(2) and 3 (b) of the Securities Act and Regulation "D" promulgated
thereunder. The Company sold to one (1) additional shareholders, one hundred
twenty thousand (120,000) shares of common stock at a price of $.20 per share
for a total amount raised of twenty four thousand ($24,000) dollars. As of march
20, 2000, the Company has three million one hundred twenty thousand (3,120,000)
shares of its $0.001 par value common voting stock issued and outstanding which
are held by approximately thirty (30) shareholders, including the three founding
shareholders, of record.
Management fully anticipates that the proceeds from the sale of all of the
Common Shares sold in the offering delineated above will be sufficient to
provide the Company's capital needs for the next twelve (12) months. If the
Company cannot generate sufficient revenues or raise money in the next 12
months, it is most likely the company will not be able to stay in business.
Card-Smart Corp is a developmental stage company. The Company does not
anticipate any revenues until it can identify and sell customers its products.
The Company currently anticipates that it has enough available funds to meet its
anticipated needs for working capital, capital expenditures and business
expansion for the next twelve (12) months. The Company expects that it will
continue to experience negative operating cash flow for the foreseeable future
as a result of significant spending on advertising and infrastructure. The
Company does not have significant cash or other material assets, nor does it
have an established source of revenues sufficient to cover its operating costs
and to allow it to continue as a going concern. It is, however, the intent of
the Company to seek to raise additional capital via a private placement offering
pursuant to Regulation "D" Rule 505 or 506 or a private placement once the
Company is trading on OTC-BB. If the Company needs to raise additional funds in
order to fund expansion, develop new or enhanced services or products, respond
to competitive pressures or acquire complementary products, businesses or
technologies, any additional funds raised through the issuance of equity or
convertible debt securities, the percentage ownership of the stockholders of the
Company will be reduced, stockholders may experience additional dilution and
such securities may have rights, preferences or privileges senior to those of
the Company's Common Stock. The Company does not currently have any contractual
restrictions on its ability to incur debt and, accordingly, the Company could
incur significant amounts of indebtedness to finance its operations. Any such
indebtedness could contain covenants which would restrict the Company's
operations. There can be no assurance that additional financing will be
available on terms favorable to the Company, or at all. If adequate funds are
not available or are not available on acceptable terms, the Company may not be
able to continue in business, or to a lessor extent not be able to take
advantage of acquisition opportunities, develop or enhance services or products
or respond to competitive pressures. The Company does not have significant cash
or other material assets, nor does it have an established source of revenues
sufficient to cover its operating costs and to allow it to continue as a going
concern. The Company does not have any preliminary agreements or understandings
between the Company and its stockholders/officers and directors with respect to
loans or financing to operate the Company.
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<PAGE>
2) No engineering, management or similar report has been prepared or provided
for external use by the Company in connection with the offer of its securities
to the public.
3) Management believes that the Company's future growth and success will
depend on its ability to find customers for its Smart Card products, and their
ability to develop a Web site to support their services. The Company expects to
continually evaluate its potential products to determine what additional
products or enhancements are required by the marketplace. The Company does not
plan to develop products internally, but find suppliers who would be willing to
sell, market or license their products through the Company. This can help avoid
the time and expense involved in developing actual products.
The Company has yet to incur any research and development costs May 01 1998
through March 20, 2000. The only research and development the Company plans to
incur in finding suitable products which offer the Company potential for
revenues and profits.
4) The Company currently does not expect to purchase or sell any of its
equipment, since it owns no equipment. Any computer equipment to be utilized is
equipment owed by the Officers of the Company.
B. Segment Data
As of March 20, 2000, no sales revenue has been generated by the Company.
Accordingly, no table showing percentage breakdown of revenue by business
segment or product line is included.
Item 3. Description of Property
A. Description of Property
The address of the principal office is: 38820 N. 25th Avenue, Phoenix, AZ 85027.
One of the Officers of the Company is providing office space and computer use at
no cost to the Company. Management believes that this is currently suitable for
the Company's needs for the next twelve (12) months.
Item 4. Security Ownership of Management and Certain Security Holders
A. Security Ownership of Management and Certain Beneficial Owners
The following table sets forth information as of the date of this Registration
Statement certain information with respect to the beneficial ownership of the
Common Stock of the Company concerning stock ownership by (i) each director,
(ii) each executive officer, (iii) the directors and officers of the Company as
a group, (iv) and each person known by the Company to own beneficially more than
five (5%) of the Common Stock. Unless otherwise indicated, the owners have sole
voting and investment power with respect to their respective shares.
23
<PAGE>
<TABLE>
<CAPTION>
Title Name & Address Amount of Percent
of of Beneficial shares of
Class Owner of Shares (1) Position held by Owner Class
- ------ --------------- -------- ------------- ------
<S> <C> <C> <C> <C>
Common Georgios Polyhronopoulos Chairman/ 1,500,000 48.00%
CEO
Common Larry Richardson Secretary 250,000 8.00%
Director
Common Stephen J. Antol Treasurer 250,000 8.00%
All Executive Officers and Directors as a
Group (3 persons), purchased shares 2,000,000 64.00%
<FN>
These 2,000,000 shares were purchased at par value ($0.001) by these
three individuals on May 15, 1998 for a total of two thousand
($2,000) dollars cash.
</TABLE>
(1) c/o Card-Smart Corp 38820 N. 25th Avenue, Phoenix, AZ 85086
B. Persons Sharing Ownership of Control of Shares
No person other than Georgios Polyhronopoulos, President/CEO owns or shares the
power to vote ten percent (10%) or more of the Company's securities.
C. Non-voting Securities and Principal Holders Thereof
The Company has not issued any non-voting securities.
D. Options, Warrants and Rights
This are no options, warrants or rights to purchase securities of the Company.
E. Parents of Issuer
Under the definition of parent, as including any person or business entity who
controls substantially all (more than 80%) of the issuers of common stock, the
Company has no parents.
F. Other
Not applicable
24
<PAGE>
Item 5. Directors, Executives, Officers and Significant Employees The names,
ages and positions of the Company's directors and executive officers are as
follows:
<TABLE>
<CAPTION>
Name Age Position
- -------- ------ ----------
<S> <C> <C>
Georgios Polyhronopoulos 42 President, CEO, &
Director
Larry L. Richardson 54 Secretary, Director &
Chief Technology
Officer
Stephen J. Antol 57 Chief Financial
Officer & Director
</TABLE>
B. Work Experience
Georgios Polyhronopous (George Poulos), President and CEO of Global SmartCards,
Inc., organized and formed the company.
George Poulos, President and CEO of the Company, since inception. He has 10
years experience in corporate development, and has managed multiple projects.
Mr. Poulos has been directly involved in taking several companies "Public" from
seed funding to IPO. He has worked as an Investment Banker and Broker. Mr.
Poulos closely follows Technological Developments and Trends, as they relate to
both the Telecommunications Industry and the Internet and World Wide Web. He is
a Professional Member of the National Association of Certified Valuation
Analysts.
1998-present, Director Enterprise Solutions, Telemax Communications, he is
responsible for developing a Corporate Finance team to seek out and attract
funding sources during Telemax's various stages of development. His position at
Telemax requires him to interface with licensees, negotiate lease management
arrangements, and deal with the providers of enterprise solutions, such as:
educational institutions; public utilities; community, city, state, and federal
offices; media relations and medical facilities.
1997-present, Co-founder/Corporate Secretary, Infobuild Networks, he provided
investors to "seed" the Company, he structured and prepared the Offering for the
Company. He initially negotiated the licensing of certain technologies, and
eventually the acquisition of said technologies. He recruited the Board of
Directors, and the Chief Technology Officer. And was responsible for developing
the World Wide Web presence for the Company at www.infobuild.com.
1989-1996, Managing Director, Capcom Equities Inc., he was responsible for
facilitating mergers and or acquisitions for private and public development
stage and Micro-cap companies provided strategic financing advice and the
development of public market strategies. Mr. Poulos performed many of the same
functions as his position as an Investment Banker.
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<PAGE>
1989-1996, Broker/Investment Banker, Osler Inc., Mr. Poulos spent seven years in
the Securities Industry in Vancouver, Canada, initially as a retail broker; he
progressed to assistant of the lead analyst, and eventually became part of the
Investment Banking team focusing on emerging technologies. His duties included
full due-diligence review of the Companies and their industries, and complete
evaluation and comparison of the business case.
Larry L. Richardson, Corporate Secretary, Chief Technology Officer and Director
for Card-Smart Corp
March, 1999 to Present, Larry L. Richardson has been the Chief Operating Officer
and Chief Technology Officer for Telemax Communications. He has over 30 years of
engineering, operations, and telecommunications operations management experience
and expertise. He currently provides the technical direction of the company and
oversees the company's RF engineers and business development activities.
September 1998 - February 1999, RF Engineering and Enterprise Network
Consultant, Mr. Richardson served as a captive consultant under contract to
Telecellular, Inc., a startup Enhanced Specialized Mobile Radio (ESMR) company,
with radio frequency license construction contracts in Puerto Rico. As such, he
provided the business, financial and technical recommendations to the company's
board of directors. His tasks included the identification of funding sources,
development of the business plan, identification of teledensity, defense of the
pro forma, and preparation of the network launch plan to rapidly realize return
on investment.
February 1997-August 1998, Project Development/International Project Leader,
Black & Veatch, Kansas City, MO. Black & Veatch is an engineer- constructor
company specializing in power plants and telecommunications infrastructure. As
an executive level engineer and International Project Leader Mr. Richardson was
responsible for wireless and wireline telecommunications business and project
development for Latin America, as well as oversight of the company's RF
engineering. He interfaced with equipment manufacturers and carriers in Latin
America (Ericsson, Motorola, NexTel, Qualcomm, NEC, Nortel, Lucent, Alcatel,
McCaw) to address the technical issues of their projects; prepared proposals in
Spanish and Brazilian Portuguese; identified the human and materiel resources
required to perform the work; and orchestrated the initial launch of project
implementation. During the proposal preparation phase, Mr. Richardson was
responsible for designing the initial promotional illustrations, addressing the
immediate and strategic commercial issues regarding contracting, liability,
currency, and other associated commercial risks, as well as the implementation
scheduling.
February 1995-February 1997, Team Leader, Telecommunications and Security
Engineering Team, Holmes & Narver Architects and Engineers, Albuquerque, NM.
Holmes & Narver is an architectural-engineering firm, which covers the entire
gamut of A/E work, and has operations worldwide. As a team leader, Mr.
Richardson managed, mentored and developed a team of engineers and specialists
who engineered LAN, MAN, WAN and security systems. In the capacity as a senior
engineer, he engineered a TDMA cellular telephone network for Puerto Rico using
a combination of MicroPath and AutoCad software tools as a proof-of-capabilities
to GTE; performed the conceptual design of a WAN manipulating multiple data
bases within Oracle for a client in Mexico, and performed the conceptual design
of SDH rings, optical fiber backbone, ATM switches, satellite teleports, and
technical control facilities for a client in the Republic of Panama. As the
company's Program Manager for Latin America, Mr. Richardson performed business
development for work in that geographical area, composed proposals in Spanish
and Brazilian Portuguese, and served as the corporate representative to the
Panamerican Federation of Consulting Engineers.
26
<PAGE>
December 1990-February 1995, Systems Engineer and Supervisor Telecommunications
Engineering Team Science Applications International Corp.: Communications.
Science Applications International Corporation (SAIC) is an Information
Technology and Telecommunications integration company. This assignment was a
continuation of the previous assignment under Martin Marietta. SAIC won the
re-compete contract during contract renewal negotiations. As SAIC's senior
engineer and engineer manager on the U.S. Department of Energy, Albuquerque
Operations Office contract, Mr. Richardson performed Value Added Engineering
(VAE) of fixed and mobile radio networks, microwave and satellite
communications, video communications, outside plant cable, emergency operations
centers and technical control functions for the department, Sandia National
Laboratories, Los Alamos National Laboratory, and its nationwide contractors. RF
engineering was performed by both traditional mathematics and physics, and
MicroPath. The associated civil works were designed using AutoCad. He prepared
technical analyses, reports, executive summaries, and briefings for the
department's executives. Subsequent to the design and engineering, Mr.
Richardson performed the project management and construction management
functions for the implementation and initial operations of the projects using
MSProject, Excel, and Word. He also served as the technical representative to
the DOE's nuclear Accident Response Group and Nuclear Emergency Search Team for
designing specialized telecommunications capabilities to support the recovery of
damaged nuclear weapons, cleanup of radioactive materials, and response to
nuclear terrorism. As a manager, he mentored technical personnel under his
supervision, developed them professionally, and provided the organizational and
financial input to the federal government's budget and long range plans.
Mr. Richardson was nominated by the U.S. Department of Energy to receive the
University of Florida's "Henry J. Phister" award for his outstanding
contribution to the field of telecommunications in the federal government for
the period 1985-1995.
November 1985-December 1990, Principal Engineer and Manager Engineering and
Design, Martin Marietta Information Systems. As an senior engineering contractor
to the U.S. Department of Energy's Albuquerque Operations Office, Mr. Richardson
performed Value Added Engineering (VAE) of fixed and mobile radio networks,
microwave and satellite communications, video communications, outside plant
cable, emergency operations centers and technical control functions for the
department, Sandia National Laboratories, Los Alamos National Laboratory, and
its nationwide contractors. RF engineering was performed by traditional
mathematics and physics. The associated civil works were designed using manual
drafting. He prepared technical analyses, reports, executive summaries, and
briefings for the department's executives. Subsequent to the design and
engineering, Mr. Richardson performed the project management and construction
management functions for the implementation and initial operations of the
projects using Lotus 1-2-3, and Word Perfect. He also served as the technical
representative to the DOE's nuclear Accident Response Group and Nuclear
Emergency Search Team for designing specialized telecommunications capabilities
to support the recovery of damaged nuclear weapons, cleanup of radioactive
materials, and response to nuclear terrorism. As a manager, he mentored
technical personnel under his supervision, developed them professionally, and
provided the organizational and financial input to the federal government's
budget and long range plans. Mr. Richardson was awarded Martin Marietta's
highest award for Technical Excellence.
27
<PAGE>
October 1983-November 1985, Telecommunications Specialist, U.S. Department of
Energy, As a federal government telecommunications engineering manager, Mr.
Richardson managed the RF, telephony, National Security Emergency Preparedness,
nuclear weapons Accident Response Group, and Radiological Assistance Program
communications programs. His duties included all of the technical and business
aspects of the programs including: financial planning, long range planning, as
well as preparation of scope and SOWs for bid to contractors. He also served as
the Communications Officer to the nuclear Accident Response Group (ARG) and the
ARG program manager to the Nuclear Emergency Search Team.
April 1983-October 1983, Electromagnetic Pulse (EMP) Engineer III, EG&G WASC,
Inc., Mr. Richardson designed EMP tests to instrument Department of Defense
aircraft, vehicles and operations vans to determine the damages caused by High
Altitude Electromagetic Pulse (HEMP). Using Maxwell pulsers, EMP waves
simulating nuclear blasts were imposed on test objects, the effects recorded,
and the remedial actions recommended. During his employment at EG&G, Mr.
Richardson designed a nuclear attack- survivable, RF-based, broadband data
network for Western Europe. The network employed every form of radio
communications and tied into the NATO countries' terrestrial fiber optic
backbone networks. The network was termed the European Distribution System
Logistics Command, Control, Communications and Information (EDS LogC3I) network.
The design was submitted for bid to the U.S. Air Force Logistics Command.
October 1982-April 1983, Telecommunications Specialist, Special Operations
Consultant and Department of the Army, Mr. Richardson developed conceptual
RF-based telecommunications systems for use by U.S. Special Operations Forces
elements (Army Special Forces, Navy SEALS, Air Force Special Operations Wings)
for clandestine warfare and counter- terrorism operations.
June 1962-September 1982, United States Army, Mr. Richardson is retired from the
U.S. Army.
Education: MA Degree, 1986, Webster University, Computer Resources Management
(IT Systems Analysis and Design); BS Degree, 1981, University of New York,
Liberal Studies (ADP and Communications Engineering); 1984- 1994, George
Washington University, Continuing Engineering Education. Certifications:
Engineer Class I, National Association of Radio and Telecommunications
Engineers, Certification No. E1-03422, with master endorsements in RF and Non-RF
technologies. Hekimian Laboratories REACT Technical Control Facilities, 1993
Professional Affiliations, Institute of Electrical and Electronics Engineers,
Decade Member, Member Number: 08563231 National Association of Radio and
Telecommunications Engineers, Member.
Stephen J. Antol, Chief Financial Officer, and Director of Card-Smart Corp.
Stephen James Antol, has over twenty-six years experience in the field of
Corporate Finance and Administration, and over four and half years' experience
with two major CPA firms in Phoenix, Arizona. His work background includes areas
of cash auditing, control and flow, budget administration, credit and collection
policies and procedures, management information systems, inventory control,
audits by outside agencies and CPA's. Mr Antol has also managed the
administration of profit sharing programs, benefits packages, corporate
insurance programs, human resources and corporate restructuring.
28
<PAGE>
1993- Present, he has been self-employed working as a financial consultant to
small business. This includes providing outside chief financial officer and
controller services to small businesses requiring technical expertise on a
limited or recurring basis. These include: corporate financial, tax and
administrative functions. As an independent consultant he provides services to
private and public corporations, partnerships and proprietorships. In September
1997, he accepted the Chief Financial Officer position with Telemax
Communications and handles all financial functions for the Company.
1990-1992, Chief Financial Officer and Corporate Controller, for Lou Regester
Furniture Co., Inc., a multiple-location retailer, Mr. Antol responsible for
entire accounting function, including LIFO inventory, budgets, cash flow
projections, financial statements, information systems and corporate income tax
return preparation. He directed administrative functions in areas of human
resources, payroll, group and liability insurance. Mr. Antol also was the with
outside CPAs and the Company's Bank. He directed installation and implementation
of new computer LAN system with related software for furniture retailers. In
conjuction with the new system Mr. Antol Designed and implemented new accounting
procedures, internal controls and paperwork flow. Mr Antol oversaw the
reconstruction of lost accounting information and developed plan for catch-up of
monthly accounting due to an old computer hardware failure.
1987-1989, Director of Finance, F.S. INC., d.b.a. Audio Express and Country
House Furniture, a four state multiple-location retailer and manufacturer. He
administered all financial functions, including statements, inventory, store
budgets, cash flow projections, payroll and taxes. Mr. Antol established store
audit checklist. Designed and implemented accounting system and controls for new
manufacturing affiliate. Mr Antol also developed new incentive compensation
program for sales personnel at the retail store locations.
1975- 1987, Corporate Treasurer, Giant Industries, Inc,a large independent
refiner, distributor and retailer of petroleum products. Mr. Antol headed entire
accounting function as controller, including financial statements, payroll,
human resources, taxes, budgets, cash flow projections, audits by outside
agencies and CPA's, and corporate income tax return preparation. Mr. Antol
implemented new management information system for monitoring profit centers
profitability and cost control he accelerated monthly closings and Improved the
credibility of financial information. Mr. Antol was responsible for conversion
from manual to a computerized accounting system in 1976-1977 and the
developement of all related paperwork and internal controls. Mr. Antol promoted
to Corporate Treasurer in late 1977. Developed treasury function, including:
cash flow analysis, investments, compliance to regulatory requirements,
corporate tax return preparation, issuance and receipt of letters of credit,
corporate insurance coverage, credit and collection procedures, and oversaw
audits by outside agencies. He maintained involvement with banking relations and
outside regulatory agencies, including the Department of Energy referencing
petroleum price controls and related reporting requirements. Mr Antol also
administered the Company's profit-sharing plan.
1973- 1975, Director of Finance, Freight Sales, Ltd., a five state multiple-
location retailer. Mr Antol directed the financial and administrative functions
of this $8 million dollar limited partnership. He developed and administered
accounting system and related internal controls, inventory and store audits,
operating budgets, administrative policies and procedures, and prepared income
tax return filings.
1971- 1973, Audit Supervisor, Laventhol, Kreckstein & Horwath, CPA's, he was
responsible for conducting and managing audits of partnerships and corporations.
He administered budgets, staffing requirements and on-job training, Prepared
related client income tax returns and maintained client relations.
1968-1971, Audit Senior, Touche Ross & Company, CPA's, he conducted audits of
clients in various industries, which included: electronic manufacturing,
distributors, construction, title company, service and real estate. He prepared
related income tax returns, reviewed and evaluated internal controls, accounting
systems, SEC and shareholder reports.
Education: Michigan State University, East Lansing, Michigan, Bachelor of Arts
Degree in Accounting-1968; Certified Public Accountant (CPA), Arizona 1970
(1970-1986), currently non-registered).
29
<PAGE>
Item 6. Remuneration of Directors and Executive Officers
(1) Compensation of Executive Officers
Only the President and CEO of Company has been compensated for the period from
February 16, 1999 to July 31, 1999 for services provided as an Officer.
Compensation is for this Officer is $12,000 per year, paid on a monthly basis.
"See Employment Agreements, Exhibits 10(a)."
(2) Compensation of Directors
This were no arrangements pursuant to which any director of the Company was
compensated for the period from February 16, 1999 to August 26, 1999 for any
service provided as a director. In addition, no such arrangement is contemplated
for the foreseeable future as the Company's only directors are its current
executive officers. "See Employment Agreements, Exhibits 10(a)." The By-laws of
the Company state: "Section 6.1. Compensation - The directors may be paid their
expenses of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like reimbursement and
compensation for attending committee meetings."
Item 7. Interest of Management and Others in Certain Transactions
None-Not applicable.
30
<PAGE>
Part II
Item 1. Market price of and Dividends on the Registrant's Common Equity and
Other Stockholder matters
A. Market Information
The common stock of the Company is currently not traded on the NASDAQ OTC
Bulletin Board or any other formal or national securities exchange. This is no
trading market for the Company's Common Stock at present and this has been no
trading market to date. At this time, management has not undertaken any
discussions, preliminary or otherwise, with any prospective market maker
concerning the participation of such market maker in the aftermarket for the
Company's securities, but the Company may initiate such discussions in the
future following receipt of an effective date for this Registration Statement.
(i) There is currently no Common Stock which is subject to outstanding options
or warrants to purchase, or securities convertible into, the Company's
common stock.
(ii) There is currently no common stock of the Company which could be sold under
Rule 144 under the Securities Act of 1933 as amended or that the registrant
has agreed to register for sale by security holders.
(iii)There is currently no common equity that is being or is proposed to be
publicly offered by the registrant, the offering of which could have a
material effect on the market price of the issuer's common equity.
B. Holders
As of March 20, 2000, the Company has approximately thrity (30) stockholders of
record. 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. 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.
C. Dividend Policy
The Company has not paid any dividends to date. In addition, it does not
anticipate paying dividends in the immediate foreseeable future. The Board of
Directors of the Company will review its dividend policy from time to time to
determine the desirability and feasibility of paying dividends after giving
consideration to the Company's earnings, financial condition, capital
requirements and such other factors as the Board may deem relevant.
31
<PAGE>
D. Reports to Shareholders
The Company intends to furnish its shareholders with annual reports containing
audited financial statements and such other periodic reports as the Company may
determine to be appropriate or as may be required by law. Upon the effectiveness
of this Registration Statement, the Company will be required to comply with
periodic reporting, proxy solicitation and certain other requirements by the
Securities Exchange Act of 1934.
E. Transfer Agent and Registrar
The Transfer Agent for the shares of common voting stock of the Company is
Halliday Stock Transfer, 2939 North 67th Place, Scottsdale, Arizona, Phone:
480-481-3940.
Item 2. Legal Proceedings
The Company is not currently involved in any legal proceedings nor does it have
knowledge of any threatened litigation.
Item 3. Recent sale of Unregistered Securities
A total of two million (2,000,000) shares of its common stock were purchased by
the three founders of the Company, on May 15, 1998 for cash. Between July 10 and
July 15, 1998, the Company sold One Million (1,000,000) shares of its common
stock in connection with a public offering at a price of $0.025 per share. On or
about July 15, 1998, the Company completed a public offering of shares of common
stock of the Company pursuant to Regulation "D," Rule 504 of the Securities Act
of 1933, as amended, whereby it sold one million (1,000,000) shares of the
Common Stock of the Company for twenty-five thousand ($25,000) dollars to
approximately twenty-five (25) unaffiliated shareholders of record. The Company
filed an original Form D with the Securities and Exchange Commission on or about
February 25, 1999. On January 11, 2000, the company completed a subsequent
Public Offering that was offered without registration under the Securities Act
of 1933, as amended (The "Act"), in reliance upon the exemption from
registration afforded by sections 4(2) and 3 (b) of the Securities Act and
Regulation "D" promulgated thereunder. The Company sold to one(1) additional
unaffiliated shareholders, one hundred twenty (120,000) shares of common stock
at a price of $.20 per share for a total amount raised of twenty four thousand
($24,000) dollars. As of March 20, 2000, the Company has three million one
hundred twenty shares (3,120,000) shares of its $0.001 par value common voting
stock issued and outstanding which are held by approximately thirty (30)
shareholders, including the three founding shareholders, of record.
32
<PAGE>
The Company Shareholder List as of March 20, 2000 is the following:
Shareholder Number of Shares
-------------------- ----------------
1. Thomas A. Todd Sr. 37,500
2. Lorrie L. Todd 42,500
3. Thomas A Todd Jr 40,000
4. Kristine D. Todd 40,000
5. Fran Muro 40,000
6. Joanne L. Richardson 40,000
7. J.R. Steward 40,000
8. Robert D. Morgan 40,000
9. Mardelle Steward 40,000
10. Carole Williams 40,000
11. William C. Todd 40,000
12. Robert Sletner 40,000
13. Joanne Sletner 40,000
14. Lucille Sletner 40,000
15. Terrance Moore 40,000
16. David Williams 40,000
17. Norma Moore 40,000
18. Enrique C. Parecki 40,000
19. Darius Williams 40,000
20. Kenneth Atkinson 40,000
21. Doug Walkup 40,000
22. Michael Fiscus 40,000
23. Mary Jane Fiscus 40,000
24. Jason Moran 40,000
25. Adam W. Steward 40,000
Restricted Common Stock:
- -----------------------
Founders Shares, purchased May 15, 1998:
26. Georgios Polyhronopoulos 1,500,000
27. Stephen J. Antol 250,000
28. Larry Richardson 250,000
Private Placement Stock sold on or before January 11, 2000:
29. Xen Stephanopoulos 120,000
33
<PAGE>
Item 4. Description of Securities
A. Common Stock
(1) Description of Rights and Liabilities of Common Stockholders
i. Dividend Rights - The holders of outstanding shares of common stock
are entitled to receive dividends out of assets legally available
Therefore at such times and in such amounts as the board of directors
of the Company may from time to time determine.
ii. Voting Rights - Each holder of the Company's common stock are entitled
to one vote for each share held of record on all matters submitted to
the vote of stockholders, including the election of directors. All
voting is noncumulative, which means that the holder of fifty percent
(50%) of the shares voting for the election of the directors can elect
all the directors. The board of directors may issue shares for
consideration of previously authorized but unissued common stock
without future stockholder action.
iii. Liquidation Rights - Upon liquidation, the holders of the common stock
are entitled to receive pro rata all of the assets of the Company
available for distribution to such holders.
iv. Preemptive Rights - Holders of common stock are not entitled to
preemptive rights.
v. Conversion Rights - No shares of common stock are currently subject to
outstanding options, warrants, or other convertible securities.
vi. Redemption rights - no redemption rights exist for shares of common
stock.
vii. Sinking Fund Provisions - No sinking fund provisions exist.
viii.Further Liability For Calls - No shares of common stock are subject
to Further call or assessment by the issuer. The Company has not
issued stock options as of the date of this Registration Statement.
(2) Potential Liabilities of Common Stockholders to State and Local Authorities
No material potential liabilities are anticipated to be imposed on stockholders
under state statues. Certain Nevada regulations, however, require regulation of
beneficial owners of more than 5% of the voting securities. Stockholders that
fall into this category, Therefore, may be subject to fines in circumstances
where non-compliance with these regulations are established.
B. Debt Securities
The Company is not registering any debt securities, nor are any outstanding.
C. Other Securities To Be Registered
The Company is not registering any security other than its common stock.
34
<PAGE>
Item 5. Indemnification of Directors and Officers
THE ARTICLES OF INCORPORATION AND BY-LAWS OF THE COMPANY PROVIDE FOR
INDEMNIFICATION OF EMPLOYEES AND OFFICERS IN CERTAIN CASES. INSOFAR AS
INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933 MAY BE
PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE COMPANY PURSUANT TO
THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN INFORMED THAT IN THE OPINION OF
THE SECURTIES AND EXCHANGE COMMISSION SUCH INDEMNIFICATION IS AGAINST PUBLIC
POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
Article 10 of the Articles of Incorporation states: "No Director or Officer of
this Corporation shall be personally liable to the Corporation or to any of its
stockholders for damages for breach of fiduciary duty as a director or officer
involving any act or commission of any such director or officer provided,
however, that the foregoing provision shall not eliminate or limit the liability
of a director or officer for acts of omissions which involve intentional
misconduct, fraud or a knowing violation of law, or the payment of dividends in
violation of Section 78.300 of the Nevada Revised Statutes. Any repeal or
modification of this Article by the Stockholders shall be prospective only, and
shall not adversely affect any limitation on the personal liability of a
director or officer of the Corporation for acts or omissions prior to such
repeal or modification."
Article 11 of the Company's By-laws state: " Every person who was or is a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he or a person of whom he is the legal representative is or was
a director or officer of the corporation or is or was serving at the request of
the corporation or for its benefit as a director or officer of another
corporation, or as its representative in a partnership, joint venture, trust or
other enterprise, shall be indemnified and held harmless to the fullest extent
legally permissible under the General Corporation Law of the State of Nevada
from time to time against all expenses, liability and loss (including moneys'
fees, judgments, fines and amounts paid or to be paid in settlement) reasonably
incurred or suffered by him in connection therewith. The expenses of officers
and directors incurred in defending a civil or criminal action, suit or
proceeding must be paid by the corporation as they are incurred and in advance
of the final disposition of the action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount if it
is ultimately determined by a court of competent jurisdiction that he is not
entitled to be indemnified by the corporation. Such right of indemnification
shall be a contract right which may be enforced in any manner desired by such
person. Such right of indemnification shall not be exclusive of any other right
which such directors, officers or representatives may have or hereafter acquire
and, without limiting the generality of such statement, they shall be entitled
to their respective rights of indemnification under any bylaw, agreement, vote
of stockholders, provision of law or otherwise, as well as their rights under
this Article.
The Board of Directors may cause the corporation to purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or arising out of
such status, whether or not the corporation would have the power to indemnify
such person.
The Board of Directors may from time to time adopt further Bylaws with respect
to indemnification and may amend these and such Bylaws to provide at all times
the fullest indemnification permitted by the General Corporation Law of the
State of Nevada."
35
<PAGE>
Part F/S
Item 1. Financial Statements
The following documents are filed as part of this report:
a) Card-Smart Corp
Report of Barry L. Friedman, CPA
FINANCIAL STATEMENTS
TABLE OF CONTENTS
PAGE #
INDEPENDENT AUDITORS REPORT 1
ASSETS 2
LIABILITIES AND STOCKHOLDERS' EQUITY 3
STATEMENT OF OPERATIONS 4
STATEMENT OF STOCKHOLDERS' EQUITY 5
STATEMENT OF CASH FLOWS 6
NOTES TO FINANCIAL STATEMENTS 7-8
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors February 7, 2000
Card-Smart Corp.
Minden, Nevada
I have audited the accompanying Balance Sheets of Card-Smart Corp., (A
Development Stage Company), as of January 11, 2000, December 31, 1999, and
December 31, 1998, and the related statements of operations, stockholders'
equity and cash flows for the period January 1, 2000, to January 11, 2000, the
year ended December 31, 1999 and the period May 1, 1998 (inception) to December
31, 1998. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit. I conducted my audit in accordance with generally
accepted auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis for
my opinion. In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Card-Smart Corp., (A
Development Stage Company), as of January 11, 2000, December 31, 1999, and
December 31, 1998, and the related statements of operations, stockholders'
equity and cash flows for the period January 1, 2000, to January 11, 2000, the
year ended December 31, 1999 and the period May 1, 1998 (inception) to December
31, 1998, in conformity with generally accepted accounting principles. The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. As discussed in Note #3 to the financial
statements, the Company has suffered recurring losses from operations and has no
established source of revenue. This raises substantial doubt about its ability
to continue as a going concern. Management's plan in regard to these matters is
described in Note #3. These financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/S/ Barry L. Friedman
- ---------------------------
Barry L. Friedman
Certified Public Accountant
1582 Tulita Drive
Las Vegas, NV 89123
(702) 361-8414
<PAGE>
<TABLE>
<CAPTION>
CARD-SMART CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
-------------
ASSETS
------
JANUARY DECEMBER DECEMBER
11, 2000 31, 1999 31, 1998
--------- --------- ---------
<S> <C> <C> <C>
CURRENT ASSETS
CASH $ 24,020 $ 0 $ 0
--------- --------- ---------
TOTAL CURRENT ASSETS $ 24,020 $ 0 $ 0
--------- --------- ---------
OTHER ASSETS
ORGANIZATION COSTS (NET) $ 0 $ 0 $ 0
--------- --------- ---------
TOTAL OTHER ASSETS $ 0 $ 0 $ 0
--------- --------- ---------
TOTAL ASSETS $ 24,020 $ 0 $ 0
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements
- 2 -
<PAGE>
<TABLE>
<CAPTION>
CARD-SMART CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
-------------
LIABILITIES AND STOCKHOLDERS' EQUITY
JANUARY DECEMBER DECEMBER
11, 2000 31, 1999 31, 1998
<S> <C> <C> <C>
--------- --------- ---------
CURRENT LIABILITIES
OFFICER'S ADVANCES (NOTE #6) $ 30 $ 0 $ 0
--------- --------- ---------
TOTAL CURRENT LIABILITIES $ 30 $ 0 $ 0
--------- --------- ---------
STOCKHOLDERS' EQUITY (NOTE #1)
COMMON STOCK, PAR VALUE $.001
AUTHORIZED 25,000,000 SHARES
ISSUED AND OUTSTANDING AT
DECEMBER 31, 1998
3,000,000 SHARES $ 3,000
DECEMBER 31, 1997
3,000,000 SHARES $ 3,000
JANUARY 31, 2000
3,120,000 SHARES $ 3,120
ADDITIONAL PAID IN CAPITAL 47,880 24,000 24,000
ACCUMULATED DEFICIT DURING
DEVELOPMENT STAGE -27,010 -27,000 -27,000
--------- --------- ---------
TOTAL STOCKHOLDERS' EQUITY $ 23,990 $ 0 $ 0
--------- --------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 24,020 $ 0 $ 0
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements
- 3 -
<PAGE>
<TABLE>
<CAPTION>
CARD-SMART CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
-----------------------
JAN. 1, YEAR MAY 1, MAY 1, 1998
2000 TO ENDED 1998 TO (INCEPTION)
JAN. 11, DEC. 31, DEC. 31, TO JAN. 11,
2000 1999 1998 2000
---------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
INCOME $ 0 $ 0 $ 0 $ 0
---------- ---------- ------------- ------------
EXPENSES
GENERAL, SELLING AND
ADMINISTRATIVE 10 0 27,000 27,010
---------- ---------- ------------- ------------
TOTAL EXPENSES $ 10 $ 0 $ 27,000 $ 27,010
---------- ---------- ------------- ------------
NET PROFIT/LOSS (-) $ -10 $ 0 $ -27,000 $ -27,010
---------- ---------- ------------- ------------
NET PROFIT/LOSS (-)
PER WEIGHTED SHARE
(NOTE #1) $ NIL $ NIL $ -.0987 $ -.0931
---------- ---------- ------------- ------------
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 3,010,909 3,000,000 2,735,931 2,899,703
---------- ---------- ------------- ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
- 4 -
<PAGE>
<TABLE>
<CAPTION>
Card-Smart Corp.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDER EQUITY
Additional Accumu-
Common Stock paid-in lated
Shares Amount Capital Deficit
---------- -------- -------- --------
<S> <C> <C> <C> <C>
May 15, 1998
Issued For Services 2,000,000 $ 2,000 $ 0
July 15, 1998
Stock Issued For Cash 1,000,000 +1,000 24,000
Net Loss May 1, 1998
(Inception) to
December 31, 1998 -27,000
---------- -------- -------- --------
Balance,
December 31, 1998 3,000,000 $ 3,000 $ 24,000 $-27,000
---------- -------- -------- --------
Net loss year ended
December 31, 1999 0
---------- -------- -------- --------
Balance,
December 31, 1999 3,000,000 $ 3,000 $ 24,000 $-27,000
January 11, 2000
Stock Issued For Cash 120,000 +120 +23,880
Net loss
January 1, 2000 to
January 11, 2000 -10
---------- -------- -------- --------
Balance,
January 11, 2000 3,120,000 $ 3,120 $ 47,880 $-27,010
---------- -------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements
- 5 -
<PAGE>
<TABLE>
<CAPTION>
CARD-SMART CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
JAN. 1, YEAR MAY 1, MAY 1, 1998
2000 TO ENDED 1998 TO (INCEPTION)
JAN. 11, DEC. 31, DEC. 31, TO JAN. 11,
2000 1999 1998 2000
--------- --------- ------------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
NET LOSS $ -10 $ 0 $ -27,000 $ -27,010
ADJUSTMENT TO
RECONCILE NET LOSS
TO NET CASH PROVIDED
BY OPERATING
ACTIVITIES
STOCK ISSUED FOR
SERVICES 0 0 +2,000 +2,000
CHANGES IN ASSETS AND
LIABILITIES
OFFICER'S ADVANCES +30 0 0 +30
--------- --------- ------------- -----------
NET CASH USED IN
OPERATING ACTIVITIES $ +20 $ 0 $ -25,000 $ -24,980
CASH FLOWS FROM
INVESTING ACTIVITIES 0 0 0 0
CASH FLOWS FROM
FINANCING ACTIVITIES
ISSUANCE OF COMMON
STOCK FOR CASH +24,000 0 +25,000 +49,000
--------- --------- ------------- -----------
NET INCREASE (DECREASE) $ +24,020 $ 0 $ 0 $ +24,020
CASH,
BEGINNING OF PERIOD 0 0 0 0
--------- --------- ------------- -----------
CASH, END OF PERIOD $ 24,020 $ 0 $ 0 $ 24,020
--------- --------- ------------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements
- 6 -
<PAGE>
Card-Smart Corp.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
January 11, 2000, December 31, 1999, and December 31, 1998
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized May 1, 1998, under the laws of the State of Nevada as
Card-Smart Corp. The Company currently has no operations and in accordance with
SFAS #7, is considered a development company.
On May 15, 1998, the company issued 2,000,000 shares of its $0.001 par value
common stock for services of $2,000.00.
On July 15, 1998, management completed a securities offering to obtain
additional funding in the amount of $25,000.00. The securities
offering was at $0.025 per share and the Company sold 1,000,000
shares of common stock. The proceeds of the offering were used for
general corporate purposes.
On January 11, 2000, management completed a securities offering to obtain
additional funding in the amount of $24,000.00. The securities offering was at
$0.20 per share and the Company sold 120,000 shares \ of common stock. The
proceeds of the offering were used for general corporate purposes.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
Accounting policies and procedures have not been determined except as follows:
1. The Company uses the accrual method of accounting.
2. Earnings per share is computed using the weighted average number of common
shares outstanding.
3. The Company has not yet adopted any policy regarding payment of dividends.
No dividends have been paid since inception.
- 7 -
<PAGE>
Card-Smart Corp.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (Continued)
January 11, 2000, December 31, 1999, and December 31, 1998
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek additional capital
through a merger with an existing operating company.
NOTE 4 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares of
common stock.
NOTE 5 - RELATED PARTY TRANSACTION
The Company neither owns nor leases any real or personal property. A director
provides office services without charge. Such costs are immaterial to the
financial statements and accordingly, have not been reflected therein. The
officer and directors of the Company are involved in other business activities
and may, in the future, become involved in other business opportunities. If a
specific business opportunity becomes available, such persons may face a
conflict in selecting between the Company and their other business interests.
The Company has not formulated a policy for the resolution of such conflicts.
NOTE 6 - OFFICER'S ADVANCES
While the Company is seeking additional capital through a merger with an
existing operating company, an officer of the Company has advanced funds on
behalf of the Company to pay for any costs incurred by it. These funds are
interest free.
- 8 -
<PAGE>
To Whom It May Concern: February 7, 2000
The firm of Barry L. Friedman, P.C., Certified Public Accountant consents to the
inclusion of their report of February 7, 2000, on the Financial Statements of
Card-Smart Corp., as of January 11, 2000, in any filings that are necessary now
or in the near future with the U.S. Securities and Exchange Commission.
Very truly yours,
/S/ Barry L. Friedman
- --------------------------
Barry L. Friedman
Certified Public Accountant
<PAGE>
Part III
Item 1. Index to Exhibits (Pursuant to Item 601 of Regulation SB)
Exhibit Number Name and/or Identification of Exhibit
1. Underwritten agreement
None. Not Applicable
2. Plan of Acquisition, Reorganization, Arrangement, Liquidation, or
Succession.
None. Not Applicable
b) Asset Purchase and Liability Assumption Agreement
None. Not Applicable
c) Interest Purchase Agreement
None. Not Applicable
d) Agreement for Bill of Sale and Assignment of Assets
None. Not Applicable
e) Exchange Stock Agreement
None. Not Applicable
3. Articles of Incorporation & By-Laws
3.1 Articles of Incorporation of the Company Filed May 01, 1998
3.2 By-Laws of the Company adopted May 10, 1998
4. Instruments Defining the Rights of Security Holders
Those included in exhibit 3, and sample of Stock Certificate
5. Opinion on Legality
None. Not Applicable
6. No Exhibit Required
Not Applicable
7. Opinion on Liquidation Preference
None. Not Applicable
8. Opinion on Tax Matters
None. Not Applicable
9. Voting Trust Agreement and Amendments
None. Not Applicable
10. Material Contracts
Employment Agreements with:
10.1 Georgios Polyhronopoulos
37
<PAGE>
11. Statement Re Computation of Per Share Earnings
None. Not Applicable. Computation of per share earnings can be clearly
determined from the Statement of Operation from the Company's financial
statements.
12. No Exhibit Required
13. Annual or Quarterly Reports - Form 10-Q
None. Not Applicable
14. Material Foreign Patents
None. Not Applicable
15. Letters on Unaudited Interim Financial Information
None. Not Applicable
16. Letter on Change in Certifying Accountant
None. Not Applicable
17. Letter of Director Resignation
None. Not Applicable
18. Letter on Change in Accounting Principles
None. Not Applicable
19. Reports Furnihed to Security Holders
None. Not Applicable
20. Other Documents or Statements to Security Holders
None. Not Applicable
21. Subsidiaries of Small Business Issuers
None. Not Applicable
38
<PAGE>
22. Published Report Regarding Matters Submitted to Vote of
None. Not Applicable
23. Consent of Experts and Counsel
Exhibit 23, Barry L. Friedman, CPA
24. Power of Attorney
None. Not Applicable
25. Statement of Eligibility of Trustee
None. Not Applicable
26. Invitations for Competitive Bids
None. Not Applicable
27. Financial Data Schedule
Exhibit 27
28. Information from Reports Furnished to State Insurance Regulatory
Authorities
None. Not Applicable
29. Additional Exhibits
None. Not Applicable
39
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, hereunto duly authorized.
Card-Smart Corp
--------------------
(Registrant)
Dated: March 20, 2000
By: s/s Georgios Polyhronopoulos
- ---------------------------------------------------------
Georgios Polyhronopoulos, Chairman of the Board, President
and Chief Executive Officer
By: s/s Larry L. Richardson
- ---------------------------------------------------------
Larry L. Richardson, Director, Corporate Secretary
40
<PAGE>
EXHIBIT 3.1
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
May 01, 1998
No. C-3690-99
s/s Dean Heller
Dean Heller, Secretary of State
Articles of Incorporation
for
Card-Smart Corp
Know all men by these presents:
That the undersigned, have this day voluntarily associated ourselves together
for the purpose of forming a corporation under pursuant to the provision of
Nevada Revised Statutes 78.010 to Nevada Revised Statutes 78.090 inclusive, as
amended, and certify that;
1. The name of the corporation is Card-Smart Corp
2. Offices for the transaction of any business of the corporation, and where
meetings of the board of Directors and Stockholders may be held, may be
established and maintained in any part of the State of Nevada, or in any
other state, territory, or possession of the United States.
3. The nature of the business is to engage in any lawful activity.
4. The capital stock shall consist of: 25,000,000 shares or common stock,
$0.001 par value.
5. The members of the governing board of the corporation shall be styled
directors, of which there shall be one or more, with the exact number to be
fixed by the by-laws of the corporation, provided the number so fixed by
the by-laws may be increased or decreased from time to time. Directors of
the corporation need not be stockholders. The FIRST BOARD OF DIRECTORS
shall consist of ONE director(s) and the names and addresses are, as
follows: (1) GEORGIOS POLYHRONOPOULOS, 38820 N. 25TH AVENUE, PHOENIX,AZ
85027
(2)
(3)
6. This corporation shall have perpetual existence.
7. This corporation shall have a President, Secretary, a treasurer, and a
resident agent, to be chosen by the Board of Directors. Any person may hold
two or more offices.
8. The Resident Agent of this corporation shall be:
RITE, INC., 1905 S. Eastern Ave., Las Vegas, NV 89104
9. The stock of this corporation, after the fixed consideration thereof has
been paid or performed, shall not be subject to assessment, and no
individual stockholder shall be liable for the debts and liabilities of the
Corporation. The Articles of Incorporation shall never be amended as to the
aforesaid provisions.
<PAGE>
10. No Director or Officer of this Corporation shall be personally liable to
the Corporation or to any of its stockholders for damages for breach of
fiduciary duty as a director or officer involving any act or commission of
any such director or officer provided, however, that the foregoing
provision shall not eliminate or limit the liability of a director or
officer for acts of omissions which involve intentional misconduct, fraud
or a knowing violation of law, or the payment of dividends in violation of
Section 78.300 of the Nevada Revised Statutes. Any repeal or modification
of this Article by the Stockholders shall be prospective only, and shall
not adversely affect any limitation on the personal liability of a director
or officer of the Corporation for acts or omissions prior to such repeal or
modification.
SIGNATURE OF INCORPORATOR: (Signature of incorporator must be notarized) FOR
Card-Smart Corp
I, the undersigned, being the incorporator for the purpose of forming a
corporation pursuant to the general corporation law of the State of Nevada, do
make and file these Articles of Incorporation, hereby declaring and certifying
that the facts within stated are true, and accordingly have hereunto set my hand
this 16th day of February, 1999
/S/ Dolores J. Passaretti
- ----------------------------
Dolores J. Passaretti
Signature
1905 S. Eastern Ave., Las Vegas, NV 89104
State of Nevada )
)SS
County of Clark )
On the 1st of May, 1998, personally known to me to be the person whose names are
subscribed to the within document and acknowledged to me that they executed the
same in their authorized capacity.
/S/ Noal D. Farmer
- -----------------------
Signature
Noal D. Farmer
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
No. C-3690-99
May 1, 1998
s/s Dean Heller
Dean Heller, Secretary of State
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT BY
RESIDENT AGENT
In the matter of: Card-Smart Corp
I, RITE, INC. 1905 S. Eastern Ave., Las Vegas, NV
89104, County of CLARK.
Do hereby accept the appointment as Resident Agent of
the above named Corporation in accordance with NRS 78.090.
Furthermore that the registered
office in Nevada is located at;
1905 S. Eastern Ave., Las
Vegas, NV 89104
In witness Whereof, I have hereunto set my hand this 1st day
of May, 1998
By /S/ Dolores J. Passaretti FOR RITE, INC.
- --------------------------------------------
Dolores J. Passaretti
Signature
NRS 78.090 Except for any period of vacancy described in NRS 78097, Every
Corporation shall have a Resident Agent, Who may be either a natural person or a
corporation, resident or located in this state, in charge of the registered
office. The resident agent may be any bank or banking corporation, or other
corporation located and doing business in this state. The certificate of
acceptance must be filed at the time of the initial filing of the corporate
papers.
<PAGE>
STATE OF NEVADA
Secretary of State
I hereby certify that this is a
true and complete copy of
the document as filed in this
Office.
MAY 01 '98
/S/ Dean Heller
- ------------------
Dean Heller
Secretary of State
By: /S/ Shaynee Davis
- --------------------------
<PAGE>
EXHIBIT 3.2
TABLE OF CONTENTS
BY-LAWS
ARTICLE ONE - OFFICES
1.1 Registered Office.
1.2 Other Offices.
ARTICLE TWO - MEETINGS OF STOCKHOLDERS
2.1 Place.
2.2 Annual Meetings.
2.3 Special Meetings.
2.4 Notices of Meetings.
2.5 Purpose of Meetings.
2.6 Quorum.
2.7 Voting.
2.8 Share Voting.
2.9 Proxy.
2.10 Written Consent in Lieu of Meeting.
ARTICLE THREE - DIRECTORS
3.1 Powers
3.2 Number of Directors.
3.3 Vacancies.
ARTICLE FOUR - MEETINGS OF THE BOARD OF DIRECTORS
4.1 Place.
4.2 First Meeting.
4.3 Regular Meetings.
4.4 Special Meetings.
4.5 Notice.
4.6 Waiver.
4.7 Quorum.
4.8 Adjournment.
ARTICLE FIVE - COMMIITTEES OF DIRECTORS
5.1 Power to Designate.
5.2 Regular Minutes.
5.3 Written Consent.
ARTICLE SIX -- COMPENSATION OF DIRECTORS
6.1 Compensation.
ARTICLE SEVEN - NOTICES
7.1 Notice.
7.2 Consent.
7.3 Waiver of Notice.
<PAGE>
ARTICLE EIGHT - OFFICERS
8.1 Appointment of Officers.
8.2 Time of Appointment.
8.3 Additional Officers.
8.4 Salaries.
8.5 Vacancies.
8.6 Chairman of the Board.
8.7 Vice-Chairman.
8.8 President
8.9 Vice President
8.10 Secretary.
8.11 Assistant Secretaries.
8.12 Treasurer.
8.13 Surety.
8.14 Assistant Treasurer.
ARTICLE NINE - CERTIFICATES OF STOCK
9.1 Share Certificates.
9.2 Transfer Agents.
9.3 Lost or Stolen Certificates.
9.4 Share Transfers.
9.5 Voting Shareholder.
9.6 Shareholders Record.
ARTICLE TEN - GENERAL PROVISIONS
10.1 Dividends.
10.2 Reserves.
10.3 Checks.
10.4 Fiscal Year.
10.5 Corporate Seal.
ARTICLE ELEVEN - INDEMNIFICATION
ARTICLE TWELVE - AMENDMENTS
12.1 By Shareholder.
12.2 By Board of Directors.
<PAGE>
BY-LAWS
OF
Card-Smart Corp
------------------------------------------------
A NEVADA CORPORATION
ARTICLE ONE
OFFICES
Section 1.1. Registered Office - The registered office of this corporation shall
Be in the County of Clark, State of Nevada.
Section 1.2. Other Offices - The corporation may also have offices at such other
places both within and without the State of Nevada as the Board of Directors may
from time to time determine or the business of the corporation may require.
ARTICLE TWO
MEETINGS OF STOCKHOLDERS
Section 2.1. - All annual meetings of the stockholders shall be held at the
registered office of the corporation or at such other place within or without
the State of Nevada as the directors shall determine. Special meetings of the
stockholders may be held at such time and place within or without the State of
Nevada as shall be stated in the notice of the meeting, or in a duly executed
waiver of notice thereof.
Section 2.2. Annual Meetings - Annual meetings of the stockholders, commencing
with the year 1998 , shall be held on the 17th day of February each year if not
a legal holiday and, if a legal holiday, then on the next secular day following,
or at such other time as may be set by the Board of Directors from time to time,
at which the stockholders shall elect by vote a Board of Directors and transact
such other business as may properly be brought before the meeting.
Section 2.3. Special Meetings - Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the Articles
of Incorporation, may be called by the President or the Secretary by resolution
of the Board of Directors or at the request in writing of stockholders owning a
majority in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose of the
proposed meeting.
Section 2.4. Notices of Meetings - Notices of meetings shall be in writing and
signed by the President or a Vice-President or the Secretary or an Assistant
Secretary or by such other person or persons as the directors shall designate.
Such notice shall state the purpose or purposes for which the meeting is called
and the time and the place, which may be within or without this State, where it
is to be held. A copy of such notice shall be either delivered personally to or
shall be mailed, postage prepaid, to each stockholder of record entitled to vote
at such meeting not less than ten nor more than sixty days before such meeting.
If mailed, it shall be directed to a stockholder at his address as it appears
upon the records of the corporation and upon such mailing of any such notice,
the service thereof shall be complete and the time of the notice shall being to
run from the date upon which such notice is deposited in the mail for
transmission to such stockholder. Personal delivery of any such notice to any
officer of a corporation or association or to any member of a partnership shall
constitute delivery of such notice to such corporation, association or
partnership. In the event of the transfer of stock after delivery of such notice
of and prior to the holding of the meeting it shall not be necessary to deliver
or mail notice of the meeting to the transferee.
<PAGE>
Section 2.5. Purpose of Meetings - Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 2.6. Quorum - The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Articles of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 2.7. Voting - When a quorum is present or represented at any meeting,
the vote of the holders of a majority of the stock having voting power present
in person or represented by proxy shall be sufficient to elect Directors or to
decide any questions brought before such meeting, unless the question is one
upon which by express provision of the statutes or of the Articles of
Incorporation, a different vote is required in which case such express provision
shall govern and control the decision of such question.
Section 2.8. Share Voting - Each stockholder of record of the corporation shall
be entitled at each meeting of stockholders to one vote for each share of stock
standing in his name on the books of the corporation. Upon the demand of any
stockholder, the vote for directors and the vote upon any question before the
meeting shall be by ballot.
Section 2.9. At any meeting of the stockholders any stockholder may be
represented and vote by a proxy or proxies appointed by an instrument in
writing. In the event that any such instrument in writing shall designate two or
more persons to act as proxies, a majority of such persons present at the
meeting, or, if only one shall be present. then that one shall have and may
exercise all of the powers conferred by such written instrument upon all of the
persons so designated unless the instrument shall otherwise provide. No proxy or
power of attorney to vote shall be used to vote at a meeting of the stockholders
unless it shall have been filed with the secretary of the meeting when required
by the inspectors of election. All questions regarding the qualification of
voters, the validity of proxies and the acceptance or rejection of votes shall
be decided by the inspectors of election who shall be appointed by the Board of
Directors, or if not so appointed, then by the presiding officer of the meeting.
Section 2.10. Written Consent in Lieu of Meeting - Any action which may be taken
by the vote of the stockholders at a meeting may be taken without a meeting if
authorized by the written consent of stockholders holding at least a majority of
the voting power, unless the provisions of the statutes or of the Articles of
Incorporation require a greater proportion of voting power to authorize such
action in which case such greater proportion of written consents shall be
required.
<PAGE>
ARTICLE THREE
DIRECTORS
Section 3.1. Powers - The business of the corporation shall be managed by its
Board of Directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done by
the stockholders.
Section 3.2. Number of Directors - The number of directors which shall
constitute the whole board shall be Two (2). The number of directors may from
time to time be increased or decreased to not less than one nor more than
fifteen by action of the Board of Directors. The directors shall be elected at
the annual meeting of the stockholders and except as provided in Section 2 of
this Article, each director elected shall hold office until his successor is
elected and qualified. Directors need not be stockholders.
Section 3.3. Vacancies- Vacancies in the Board of Directors including those
caused by an increase in the number of directors, may be filled by a majority of
the remaining directors, though less than a quorum, or by a sole remaining
director, and each director so elected shall hold office until his successor is
elected at an annual or a special meeting of the stockholders. The holders of a
two-thirds of the outstanding shares of stock entitled to vote may at any time
peremptorily terminate the term of office of all or any of the directors by vote
at a meeting called for such purpose or by a written statement filed with the
secretary or, in his absence, with any other officer . Such removal shall be
effective immediately, even if successors are not elected simultaneously and the
vacancies on the Board of Directors resulting therefrom shall be filled only by
the stockholders. A vacancy or vacancies in the Board of Directors shall be
deemed to exist in case of the death, resignation or removal of any directors,
or if the authorized number of directors be increased, or if the stockholders
fail at any annual or special meeting of stockholders at which any director or
directors are elected to elect the full authorized number of directors to be
voted for at that meeting.
The stockholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors. If the Board of Directors
accepts the resignation of a director tendered to take effect at a future time,
the Board or the stockholders shall have power to elect a successor to take
office when the resignation is to become effective. No reduction of the
authorized number of directors shall have the effect of removing any director
prior to the expiration of his term of office.
<PAGE>
ARTICLE FOUR
MEETINGS OF THE BOARD OF DIRECTORS
Section 4.1. ~ - Regular meetings of the Board of Directors shall be held at any
place within or without the State which has been designated from time to time by
resolution of the Board or by written consent of all members of the Board. In
the absence of such designation regular meetings shall be held at the registered
office of the corporation. Special meetings of the Board may be held either at a
place so designated or at the registered office.
Section 4.2. First Meeting - The first meeting of each newly elected Board of
Directors shall be held immediately following the adjournment of the meeting of
stockholders and at the place thereof. No notice of such meeting shall be
necessary to the directors in order legally to constitute the meeting, provided
a quorum be present. In the event such meeting is not so held, the meeting may
be held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors.
Section 4.3. Regular Meetings - Regular meetings of the Board of Directors may
be held without call or notice at such time and at such place as shall from time
to time be fixed and determined by the Board of Directors.
Section 4.4. Special Meetings - Special Meetings of the Board of Directors may
be called by the Chairman or the President or by any Vice-President or by any
two directors. Written notice of the time and place of special meetings shall be
delivered personally to each director, or sent to each director by mail or by
other form of written communication, charges prepaid, addressed to him at his
address as it is shown upon the records or is not readily ascertainable, at the
place in which the meetings of the directors are regularly held. In case such
notice is mailed or telegraphed, it shall be deposited in the United States mail
or delivered to the telegraph company at lease forty-eight (48) hours prior to
the time of the holding of the meeting. In case such notice is delivered as
above provided, it shall be so delivered at lease twenty-four (24) hours prior
to the time of the holding of the meeting. Such mailing, telegraphing or
delivery as above provided shall be due, legal and personal notice to such
director .
Section 4.5. ~ - Notice of the time and place of holding an adjourned meeting
need not be given to the absent directors if the time and place be fixed at the
meeting adjourned.
Section 4.6. Waiver - The transactions of any meeting of the Board .of
Directors, however called and noticed or wherever held, shall be as valid as
though had at a meeting duly held after regular call and notice, if a quorum be
present, and if. either before or after the meeting, each of the directors not
present signs a written waiver of notice, or a consent to holding such meeting,
or an approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.
Section 4.7. Quorum - A majority of the authorized number of directors shall be
necessary to constitute a quorum for the transaction of business, except to
adjourn as hereinafter provided. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Directors, unless a greater
number be required by law or by the Articles of Incorporation. Any action of a
majority, although not at a regularly called meeting. and the record thereof, if
assented to in writing by all of the other members of the Board shall be as
valid and effective in all respects as if passed by the Board in regular
meeting.
Section 4.8. Adjournment - A quorum of the directors may adjourn any directors
meeting to meet again at a stated day and hour; provided, however, that in the
absence of a quorum, a majority of the directors present at any directors
meeting. either regular or special, may adjourn from time to time until the time
fixed for the next regular meeting of the Board.
<PAGE>
ARTICLE FIVE
COMMITTIES OF DIRECTORS
Section 5.1. Power to Designate - The Board of Directors may, by resolution
adopted by a majority of the whole Board, designate one or more committees of
the Board of Directors, each committee to consist of one or more of the
directors of the corporation which, to the extent provided in the resolution,
shall have and may exercise the power of the Board of Directors in the
management of the business and affairs of the corporation and may have power to
authorize the seal of the corporation to be affixed to all papers which may
require it. Such committee or committees shall have such name or names as may be
determined from time to time by the Board of Directors. The members of any such
committee present at any meeting and not disqualified from voting may, whether
or not they constitute a quorum, unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any absent or disqualified
member . At meetings of such committees, a majority of the members or alternate
members shall constitute a quorum for the transaction of business, and the act
of a majority of the members or alternate members at any meeting at which there
is a quorum shall be the act of the committee.
Section 5.2. Regular Minutes - The committees shall keep regular minutes of
their proceedings and report the same to the Board of Directors.
Section 5.3. Written Consent - Any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board of Directors or of such committee, as the case may be, and such written
consent is filed with the minutes of proceedings of the Board or committee.
ARTICLE SIX
COMPENSATION OF DIRECTORS
Section 6.1. Compensation - The directors may be paid their expenses of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like reimbursement and
compensation for attending committee meetings.
<PAGE>
ARTICLE SEVEN
NOTICES
Section 7.1. Notice - Notices to directors and stockholders shall be in writing
and delivered personally or mailed to the directors or stockholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by telegram.
Section 7.2. Consent - Whenever all parties entitled to vote at any meeting,
whether of directors or stockholders, consent, either by a writing on the
records of the meeting or filed with the secretary, or by presence at such
meeting and oral consent entered on the minutes, or by taking part in the
deliberations at such meeting without objection. the doings of such meetings
shall be as valid as if had at a meeting regularly called and noticed, and at
such meeting any business may be transacted which is not excepted from the
written consent or to the consideration of which no objection for want of notice
is made at the time, and if any meeting be irregular for want of notice or of
such consent, provided a quorum was present at such meeting, the proceedings of
said meeting may be ratified and approved and rendered likewise valid and the
irregularity or defect therein waived by a writing signed by all parties having
the right to vote at such meeting; and such consent or approval of stockholders
may be by proxy or attorney, but all such proxies and powers of attorney must be
in writing.
Section 7.3. Waiver of Notice - Whenever any notice whatever is required to be
given under the provisions of the statutes, of the Articles of Incorporation or
of these Bylaws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE EIGHT
OFFICERS
Section 8.1. Appointment of Officers - The officers of the corporation shall be
chosen by the Board of Directors and shall be a President, a Secretary and a
Treasurer. Any person may hold two or more offices.
Section 8.2. Time of Appointment - The Board of Directors at its first meeting
after each annual meeting of stockholders shall choose a Chairman of the Board
who shall be a director, and shall choose a President, a Secretary and a
Treasurer. none of whom need be directors.
Section 8.3. Additional Officers - The Board of Directors may appoint a Vice
Chairman of the Board, Vice- Presidents and one or more Assistant Secretaries
and Assistant Treasurers and such other officers and agents as it shall deem
necessary who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors.
Section 8.4. Salaries - The salaries and compensation of all officers of the
corporation shall be fixed by the Board of Directors.
Section 8.5. Vacancies - The officers of the corporation shall hold office at
the pleasure of the Board of Directors. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors. Any
vacancy occurring in any office of the corporation by death, resignation,
removal or otherwise shall be filled by the Board of Directors.
<PAGE>
Section 8.6. Chairman of the Board - The Chairman of the Board shall preside at
meetings of the stockholders and the Board of Directors, and shall see that all
orders and resolutions of the Board of Directors are carried into effect.
Section 8.7. Vice-Chairman - The Vice-Chairman shall, in the absence or
disability of the Chairman of the Board, perform the duties and exercise the
powers of the Chairman of the Board and shall perform such other duties as the
Board of Directors may from time to time prescribe.
Section 8.8. President - The President shall be the chief executive officer of
the corporation and shall have active management of the business of the
corporation. He shall execute on behalf of the corporation all instruments
requiring such execution except to the extent the signing and execution thereof
shall be expressly designated by the Board of Directors to some other officer or
agent of the corporation.
Section 8.9. Vice-President - The Vice-President shall act under the direction
of the President and in the absence or disability of the President shall perform
the duties and exercise the powers of the President. They shall perform such
other duties and have such other powers as the President or the Board of
Directors may from time to time prescribe. The Board of Directors may designate
one or more Executive Vice Presidents or may otherwise specify the order of
seniority of the Vice-Presidents. The duties and powers of the President shall
descend to the Vice-Presidents in such specified order of seniority.
Section 8.10. Secretary- The Secretary shall act under the direction of the
President. Subject to the direction of the President he shall attend all
meetings of the Board of Directors and all meetings of the stockholders and
record the proceedings. He shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the President or the Board of
Directors.
Section 8.11. Assistant Secretaries - The Assistant Secretaries shall act under
the direction of the President. In order of their seniority, unless otherwise
determined by the President or the Board of Directors, they shall, in the
absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary. They shall perform such other duties and have such
other powers as the President or the Board of Directors may from time to time
prescribe.
Section 8.12. Treasurer - The Treasurer shall act under the direction of the
President. Subject to the direction of the President he shall have custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the corporation as may be ordered by
the President or the Board of Directors, taking proper vouchers for such
disbursements. and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
corporation.
<PAGE>
Section 8.13. ~ - If required by the Board of Directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 8.14. Assistant Treasurer- The Assistant Treasurer in the order of their
seniority, unless otherwise detem1ined by the President or the Board of
Directors, shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer. They shall perform such other
duties and have such other powers as the President or the Board of Directors may
from time to time prescribe.
ARTICLE NINE
CERTIFICATES OF STOCK
Section 9.1. Share Certificates - Every stockholder shall be entitled to have a
certificate signed by the President or a Vice-President and the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
corporation, certifying the number of shares owned by him in the corporation. If
the corporation shall be authorized to issue more than once class of stock or
more than one series of any class, the designations, preferences and relative,
participating, optional or other special rights of the various classes of stock
or series thereof and the qualifications, limitations or restrictions of such
rights, shall be set forth in full or summarized on the face or back of the
certificate which the corporation shall issue to represent such stock.
Section 9.2. Transfer Agents - If a certificate is signed (a) by a transfer
agent other than the corporation or its employees or (b) by a registrar other
than the corporation or its employees, the signatures of the officers of the
corporation may be facsimiles. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall cease to be such
officer before such certificate is issued, such certificate may be issued with
the same effect as though the person had not ceased to be such officer. The seal
of the corporation. or a facsimile thereof, may, but need not be, aff1Xcd to
certificates of stock.
Section 9.3. Lost or Stolen Certificates - The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost or
destroyed upon the making of an affidavit o that fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
Section 9.4. Share Transfers - Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation, if it is satisfied that all
provisions of the laws and regulations applicable to the corporation regarding
transfer and ownership of shares have been complied with, to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
<PAGE>
Section 9.5. Voting Shareholder- The Board of Directors may fix in advance a
date not exceeding sixty (60) days nor less than ten (10) days preceding the
date of any meeting of stockholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital stock shall go into effect, or a date in
connection with obtaining the consent of stockholders for any purpose, as a
record date for the determination of the stockholders entitled to notice of and
to vote at any such meeting, and any adjournment thereof, or entitled to receive
payment of any such dividend, or to give such consent, and in such case, such
stockholders, and only such stockholders as shall be stockholder of record on
the date so fixed, shall be entitled to notice of and to vote at such meeting,
or any adjournment thereof, or to receive payment of such dividend, or to
receive such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the corporation after any such record date fixed as aforesaid.
Section 9.6. Shareholders Record - The corporation shall be entitled to
recognize the person registered on its books as the owner of shares to be the
exclusive owner for all purposes including voting and dividends, and the
corporation shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as other wise provided by
the laws of Nevada.
ARTICLE TEN
GENERAL PROVISIONS
Section 10.1. Dividends - Dividends upon the capital stock of the corporation,
subject to the provisions of the Articles of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property or in shares of the capital
stock, subject to the provisions of the Articles of Incorporation.
Section 10.2. Reserves. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums as
the directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends or for
repairing or maintaining any property of the corporation or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 10.3. Checks - All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 10.4. Fiscal Year - The fiscal year of the corporation shall be fixed by
resolution of the Board of Directors.
Section 10.5. Corporate Seal - The corporation mayor may not have a corporate
seal, as may from time to time be determined by resolution of the Board of
Directors. If a corporate seal is adopted, it shall have inscribed thereon the
name of the Corporation and the words "Corporate Seals." and "Nevada... The seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
in any manner reproduced.
<PAGE>
ARTICLE ELEVEN
INDEMNIFICATION
Every person who was or is a party or is threatened to be made a party to or is
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or a person of
whom he is the legal representative is or was a director or officer of the
corporation or is or was serving at the request of the corporation or for its
benefit as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise, shall
be indemnified and held harmless to the fullest extent legally permissible under
the General Corporation Law of the State of Nevada from time to time against all
expenses, liability and loss (including moneys' fees. judgments, fines and
amounts paid or to be paid in settlement) reasonably incurred or suffered by him
in connection therewith. The expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. Such right of indemnification shall be a contract right which may
be enforced in any manner desired by such person. Such right of indemnification
shall not be exclusive of any other right which such directors, officers or
representatives may have or hereafter acquire and, without limiting the
generality of such statement, they shall be entitled to their respective rights
of indemnification under any bylaw, agreement, vote of stockholders, provision
of law or otherwise, as well as their rights under this Article.
The Board of Directors may cause the corporation to purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or arising out of
such status, whether or not the corporation would have the power to indemnify
such person.
The Board of Directors may from time to time adopt further Bylaws with respect
to indemnification and may amend these and such Bylaws to provide at all times
the fullest indemnification permitted by the General Corporation Law of the
State of Nevada.
<PAGE>
ARTICLE TWELVE
AMENDMENTS
Section 12.1. By Shareholder - The Bylaws may be amended by a majority vote of
all the stock issued and outstanding and entitled to vote at any annual or
special meeting of the stockholders, provided notice of intention to and shall
have been contained in the notice of the meeting.
Section 12.2. By Board of Directors - The Board of Directors by a majority vote
of the whole Board at any meeting may amend these Bylaws, including Bylaws
adopted by the stockholders, but the stockholders may from time to time specify
particular provisions of the Bylaws which shall not be amended by the Board of
Directors.
APPROVED AND ADOPTED this 1st day of May, 1998
/S/ Larry Richardson
- --------------------------
Larry Richardson
Secretary
<PAGE>
CERTIFICATE OF SECRETARY
I hereby certify that I am the Secretary of Card-Smart Corp, and that the
foregoing BYLAWS, consisting of 11 pages, constitute the code of Bylaws of
Card-Smart Corp, as duly adopted at a the First Meeting of the Board of
Directors of the corporation held May 1, 1998. IN WITNESS WHEREOF, I have
hereunto subscribed my name this 1st day of February, 1998.
/S/ Larry Richardson
- --------------------------
Larry Richardson
Secretary
<PAGE>
EXHIBIT 4.1
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA NUMBER [ ]
SHARES [ ]
CUSIP # 37939A 10 6
Card-Smart Corp
Total Authorized issue 25,000,000 Shares
PAR VALUE $0.001 EACH COMMON STOCK
This is to Certify that [ ] is the owner of [ ] Fully Paid and non-
assessable Shares of Common Stock, no par value of Global SmartCards, Inc.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized Attorney upon surrender of this Certificate properly
endorsed.
WITNESS, the seal of the Corporation and the signatures of its Duly authorized
officers.
Dated
Stock Transfer Agent:
Seal
[signature] [signature]
- ------------------------ ------------------------------
Larry L. Richardson, Secretary Georgios Polyhronopoulos,
President
1
<PAGE>
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants
in common UNIF GIFT MIN ACT - . . . . Custodian. . . . (Cust)
(Minor) under Uniform Gifts to Minors Act
____________
(State)
Additional abbreviations may also be used though
not in the above list.
For the value received _____________ hereby sell,
assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
[
]
Please print or typewrite name and address including postal zip code of assignee
Shares
- -----------------
represented by the within Certificate, and do hereby irrevocably constitute and
appointto transfer the sad Shares, on the books of the within names Corporation
with full power of substitution in the premises.
Dated
-----------------------
In presence of
2
<PAGE>
EXHIBIT 10(a)
EMPLOYMENT AGREEMENT BY AND BETWEEN THE COMPANY AND Georgios Polyhronopoulos
DATED May 16, 1998 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the
"Agreement"), effective as of the 1st day of May 1998, by and between Card-Smart
Corp, a Nevada corporation with its principal place of business located at 38820
N. 25th Avenue, Phoneix, AZ 85027 (hereinafter referred to as "Company" or
"Employer") and Georgios Polyhronopoulos (hereinafter referred to as the
"Employee"). The Company hereby employs the Employee and the Employee hereby
accepts employment on the terms and conditions hereinafter set forth.
1. Term.
Subject to the provisions for termination hereinafter provided, the initial term
of this Agreement shall commence on May 15, 1998 and terminate on May 15, 2000,
and shall continue hereafter on a year to year basis unless terminated by the
Company by delivery of written notice to the Employee not later than thirty (30)
days prior to the date for termination as indicated in said notice.
2. Compensation and Performance Review
The employee shall receive a salary of $12,000 per year, paid on a monthly
basis.
3. Duties.
Employee is engaged as the President, Chief Executive Officer, and Chief
Financial Officer of the Company. In such capacities, Employee shall exercise
detailed supervision over the operations of the Company subject, however, to
control by the Board of Directors. The Employee shall perform all duties
incident to the title of President, Chief Executive Officer, and Chief Financial
Officer and such other duties as from time to time may be assigned to him by the
Board of Directors.
1
<PAGE>
4. Best Efforts of Employee.
The Employee shall devote his best efforts to the business of the Company and to
all of the duties that may be required by the terms of this Agreement to the
reasonable satisfaction of the Company. The Employee shall at all times
faithfully, with diligence and to the best of his ability, experience and
talents, perform all the duties that may be required of and from his pursuant to
the express and implicit terms hereof to the reasonable satisfaction of the
Company. Such services shall be rendered at such other place or places as the
Company shall in good faith require or as the interest, needs, business or
opportunity of the Company shall require. The Employee agrees not to engage in
any employment or consulting work or any trade or business for his account or
for or on behalf of any other person, firm or corporation, which would conflict
with the operations of the Company's business, unless the Employee obtains prior
written consent from the Board of Directors of the Company.
5. Working Facilities.
The Employee shall be furnished with all such facilities and services suitable
to his position and adequate for the performance of his duties. In this case,
the Employee is utilizing their own facilities at no cost to the Company.
6. Expenses.
The Employee is authorized to incur reasonable expenses for promoting the
business of the Company, including his out-of-pocket expenses for entertainment,
travel and similar items. The Company shall reimburse the Employee for all such
expenses on the presentation by the Employee, from time to time, of an itemized
account of such expenditures in accordance with the guidelines set forth by the
Internal Revenue Service for travel and entertainment.
7. Vacation.
The Employee shall be entitled each year to a vacation of a reasonable amount
during which time his compensation, as described above, shall be paid in full,
that is, provided he is receiving compensation based on the incentive
performance program described above.
8. Disability.
(a) Should the Employee, by reason of illness or incapacity, be unable to
perform his job for a period of up to and including a maximum of
twelve (12) months, the compensation payable to his for and during
such period under this Agreement shall be unabated. The Board of
Directors shall have the right to determine the incapacity of the
Employee for the purposes of this provision, and any such
determination shall be evidenced by its written opinion delivered to
the Employee. Such written opinion shall specify with particularity
the reasons supporting such opinion and be manually signed by at least
a majority of the Board.
(b) The Employee's compensation hereafter shall be reduced to zero. The
Employee shall receive full compensation upon his return to employment
and regular discharge of his full duties hereunder. Should the
Employee be absent from his employment for whatever cause for a
continuous period of more than 365 calendar days, the Company may
terminate this Agreement and all obligations of the Company hereunder
shall cease upon such termination.
2
<PAGE>
9. Termination.
(a) The Company may terminate this Agreement with cause at any time under
immediate notice to the Employee thereof, and such notice having been
given, this Agreement shall terminate in accordance therewith. For the
purpose of this section, "cause" shall be defined as meaning such
conduct by the Employee which constitutes in fact and/or law a breach
of fiduciary duty or felonious conduct having the effect, in the
opinion of the Board of Directors, of materially adversely affecting
the Company and/or its reputation.
(b) The Company may terminate this Agreement without cause by giving 90
days written notice to the Employee, and such notice having been
given, this Agreement shall terminate in accordance therewith.
(c) The Employee may terminate this Agreement without cause by giving 90
days written notice to the Company, and such notice having been given,
this Agreement shall terminate in accordance therewith.
(d) In the event of termination herein, the Employee shall be entitled to
receive compensation based upon his prorated incentive compensation,
up and until the date of termination. After the date of termination,
the Employee shall not be entitled to receive additional compensation
of any kind or nature from the Employer and all benefit and incentive
programs then in place shall terminate.
10. Confidentiality.
The Employee shall not divulge to others any information he may obtain during
the course of his employment relating to the business of the Company without
first obtaining written permission of the Company.
11. Notices.
All notices, demands, elections, opinions or requests (however characterized or
described) required or authorized hereunder shall be deemed given sufficiently
if in writing and sent by registered or certified mail, return receipt requested
and postage prepaid, or by tested telex, telegram or cable to, in the case of
the Company: Card-Smart Corp, 38820 N. 25th Avenue, Phoenix, AZ 85027, and in
the case of the Employee: Georgios Polyhronopoulos, 38820 N. 25th Avenue,
Phoenix, AZ 85027
12. Assignment of Agreement.
No party may assign or otherwise transfer this Agreement or any of its rights or
obligations hereunder without the prior written consent to such assignment or
transfer by the other party hereto; and all the provisions of this Agreement
shall be binding upon the respective employees, delegates, successors, heirs
and assigns of the parties.
3
<PAGE>
13. Survival of Representations, Warranties and Covenants.
This Agreement and the representations, warranties, covenants and other
agreements (however characterized or described) by both parties hereto and
contained herein or made pursuant to the provisions hereof shall survive the
execution and delivery of this Agreement and any inspection or investigation
made at any time with respect to any thereof until any and all monies, payments,
obligations and liabilities which either party hereto shall have made, incurred
or become liable for pursuant to the terms of this Agreement shall have been
paid in full.
14. Further Instruments.
The parties shall execute and deliver any and all such other instruments and
shall take any and all such other actions as may be reasonably necessary to
carry the intent of this Agreement into full force and effect.
15. Severability.
If any provisions of this Agreement shall be held, declared or pronounced void,
violable, invalid, unenforceable or inoperative for any reason by any court of
competent jurisdiction, government authority or otherwise, such holding,
declaration or pronouncement shall not affect adversely any other provision of
this Agreement, which shall otherwise remain in full force and effect and be
enforced in accordance with its terms and the effect of such holding,
declaration or pronouncement shall be limited to the territory or jurisdiction
in which made.
16. Waiver.
All the rights and remedies of either party under this Agreement are cumulative
and not exclusive of any other rights and remedies provided by law. No delay or
failure on the part of either party in the exercise of any right or remedy
arising from a breach of this Agreement shall operate as a waiver of any
subsequent right or remedy arising from a subsequent breach of this Agreement.
The consent of any party where required hereunder to any act of occurrence shall
not be deemed to be a consent to any other act of occurrence.
17. General Provisions.
This Agreement shall be construed and enforced in accordance with, and governed
by, the laws of the State of Arizona. Except as otherwise expressly stated
herein, time is of the essence in performing hereunder.
This Agreement embodies the entire agreement and understanding between the
parties and supersedes all prior agreements and understanding relating to the
subject matter hereof, and this Agreement may not be modified or amended or any
term of provision hereof waived or discharged except in writing signed by the
party against whom such amendment, modification, waiver of discharge is sought
to be enforced. The headings of this Agreement are for convenience in reference
only and shall not limit or otherwise affect the meaning thereof.
The Agreement may be executed in any number of counterparts, each of which shall
be deemed an original but all of which taken together shall constitute one and
the same instrument.
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first above written.
THE COMPANY: THE EMPLOYEE:
Card-Smart Corp, Georgios Polyhronopoulos
/S/ Larry L. Richardson /S/ Georgios Polyhronopoulos
- --------------------------- -----------------------------
Witnessed:
Corporate Secretary
5
<PAGE>
BARRY L. FRIEDMAN, P.C.
Certified Public Accountant
1582 TULITA DRIVE OFFICE (702) 361-8414
LAS VEGAS, NEVADA 89123 FAX NO. (702) 896-0278
To Whom It May Concern: February 07, 2000
The firm of Barry L. Friedman, P.C., Certified Public Accountant consents to the
inclusion of their report of February 07, 2000, on the Financial Statements of
Card-Smart Corp, as of January 11, 2000, in any filings that are necessary now
or in the near future with the U.S. Securities and Exchange Commission.
Very truly yours,
/S/ Barry L. Friedman
- ----------------------------
Barry L. Friedman
Certified Public Accountant
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINACIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET, THE STATEMENT OF OPERATIONS, AND THE STATEMENT OF CASH FLOWS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SOUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-2001
<PERIOD-START> MAY-10-1998
<PERIOD-END> JAN-11-2000
<CASH> 24020
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 24020
<PP&E> 529
<DEPRECIATION> 0
<TOTAL-ASSETS> 24020
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 3120
<OTHER-SE> 40340
<TOTAL-LIABILITY-AND-EQUITY> 24020
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
