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U.S. 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 12 (g) of the Securities Exchange Act of 1934
HARMONY TRADING CORP.
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(Name of Small Business Issuer in Its Charter)
New York 13-3935933
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(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
8 Harmony Lane
Hartsdale, New York 10530
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(Address of Principal Executive Offices) (Zip Code)
(914) 686-8255
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(Registrant's Telephone Number, Including Area Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
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None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
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(Title of Class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
(a) Business Development.
Harmony Trading Corp., a New York corporation (the "Company"), was
formed on August 13, 1996 to engage in any lawful act or activity for which
corporations may be organized under the New York Business Corporation Law
("NYBCL"). The Company remained inactive until December 1998, when it
became a direct seller for Doncaster, a division of Tanner Companies.
Doncaster is a manufacturer of women's apparel and accessories. The
Company, through its independent contractors, is in the business of the
direct selling of Doncaster apparel and accessories.
(b) Business of the Issuer.
(1) Principal Products or Services and their Markets.
(i) The Company.
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The business of the Company is the direct selling of Doncaster women's
apparel and accessories (the "Doncaster Line"). Doncaster is a division of
Tanner Companies, which is based in Rutherfordton, North Carolina. Direct
selling is the sale of a consumer product or service in a face to face
manner away from a fixed retail location. Harmony, through it's two (2)
independent contractors, Falene Gottbetter and Roberta Winley, markets the
Doncaster line through fashion shows and private appointments.
Doncaster is the manufacturer of women's apparel and accessories.
Doncaster's clothing is comparable in quality and styling to DKNY, Donna
Karan, Dana Buchman and other high end contemporary clothing lines. The
style of clothing is classic and traditional, but modern and contemporary
and is made from wool, linen, silk and cotton. The size of the clothing
ranges from 2 to 18 and 2 to 14 petite, and is a fuller cut to assure true
sizing and proper fit.
The Doncaster Line consists of separate pieces to allow women
versatility in mixing matching items. The line includes pants, blazers,
sweaters, blouses, skirts, shorts, camisoles, and dresses. In addition,
Doncaster offers accessories including jewelry, belts and scarves. The
Doncaster Line is made up of four (4) seasonal collections Spring,
Spring/Summer, Fall and Fall/Winter. The collections are introduced on the
following schedule - Fall in July, Fall/Winter in September, Spring in
January, and Spring/Summer in May. Within each season's collection there
are various style/theme collections. For example, the Spring /Summer
collection consisted of Sloan Ranger, White Sand, Summer Essentials, Kauai
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Island and Specie Market Group. The Sloan Ranger group was inspired by
London's Sloane Ranger district and featured casual coordinates in khaki,
white, peach and lilac, in solids and prints. The White Sand group
consisted of very classic pieces such as a shirtwaist dress, tailored
jacket, man tailored shirt, in the colors of white, beige and navy. The
Fall 1999 collection consists of the following: Grey Matters, Country
Classics, Luxe, Fall Essentials, Haute View and Simply Silk. In addition
to slacks, sweaters, blouses, the Fall collection includes wool jackets and
a coat with a detachable fur collar.
Doncaster has been in business since 1931, and the Company has been a
direct seller of the Doncaster Line since December 1998.
(2) Distribution Methods of the Products or Services.
The Company relies on its mailing list, referrals and national
advertising by Doncaster in order to increase its customer base. The
Company currently has a mailing list of approximately 200 names to which it
send announcements of the four (4) trunk shows and preview shows during the
year.
The trunk show lasts for one (1) week and it is by appointment. The
shows are held at the offices of the Company which are at the home of the
Company's president, Paul Gottbetter. Customers make appointments to view
the current collection, try on different pieces and place orders. Each
client's appointment is for one (1) hour to one and one-half (1 1/2) hours.
The client can look at various colors and fabrics in a "look book" for the
current season's collection. If a client is unable to attend the truck
show, an appointment can be made to view the collection at Doncaster's New
York showroom.
The Company forwards a client's order with Doncaster by phone or fax.
The customer is not billed for the order until Doncaster ships the order to
the client. The order can be shipped directly or indirectly to the client
or to Doncaster's New York showroom. Doncaster employs a dressmaker who can
make alterations to the clothing. Clothing which has not been altered or
worn can be returned to Doncaster for a full refund within thirty (30) days
of receipt.
The Company also obtains clients from referrals by Doncaster in
response to its national advertising campaign in magazines such as Harper's
Bazaar, Town & Country and Vogue. Doncaster will give names and telephone
numbers of a consultant in a potential client's area in response to leads
or generated by Doncaster.
The Company runs fashions shows for various organization such as
women's groups, church group's and other women's organizations. For each
season, Doncaster provides a fashion show sets which a consultant can
obtain from Doncaster's district coordinator.
(3) Status of any publicly announced new product or service.
There have been no publicly announced new products or services by the
Company.
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(4) Competitive Business Conditions and the Company's Competitive Position
in the Industry and Methods of Competition.
(i) The Company.
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The women's apparel retail industry is highly competitive and
fragmented. The Company competes with large specialty retailers,
traditional and better department stores, national apparel chains, designer
boutiques, individual specialty apparel stores and other direct marketing
firms. The Company does not have to compete for its merchandise since it
only orders merchandise for individual clients. However, Doncaster only
manufacturers a fixed number of pieces of each item and the pieces are sold
on an "first-come, first-serve basis." Most of the Company's competitors
are larger and have greater financial resources than the Company.
(5) Sources and Availability of Raw Materials and the Names of Principal
Suppliers.
The Company, does not utilize any raw materials in its business. The
closest comparison to the utilization of raw materials is the reliance by
the Company on the availability of the Doncaster Line. The Company's
success is dependent in part upon initiating and maintaining strong
relationships with its clients and the quality and value of the Doncaster
Line.
(6) Dependence on one or a few major customers.
The Company is not dependent on one or a few major customers. The
Company currently has a mailing list of approximately 200 clients, and
management is constantly adding names to the mailing list. The loss of a
few clients would not impact the business of the Company because it
regularly adds new clients.
(7) Patents, trademarks, licenses, franchises, concessions, royalty
agreements or labor contracts, including duration.
The Company does not have any patents, trademarks or licenses nor does
it have any franchise, cessions, labor, contract or royalty agreements.
The Company, through Falene Gottbetter has a fashion consultant
agreement dated December 7, 1998 with the Tanner Companies Limited
Partnership (the "Agreement"). The Agreement may be terminated by either
party at any time upon thirty (30) days written notice.
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(8) Need for any Government Approval of Principal Products or Services.
(i) The Company.
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The Company does not need any Government approval of any principal
products or services. The Company has no employees, but it does have two
(2) independent contractors, who are paid on a percentage basis.
(9) Effect of Existing or Probable Governmental Regulations on the
Business.
The business of the Company is not subject to regulation at either the
federal and state levels.
(10) Estimate of the amount spent during each of the last two fiscal years
on research and development activities, and the extent to which the
cost of such activities are borne directly by customers.
Since the Company's inception in 1996, the Company has incurred no
research and development expense.
(11) Costs and effects of compliance with environmental laws (federal,
state and local).
The Company is not impacted directly by the costs and effects of
compliance with environmental laws.
(12) Number of total employees and number of full time employees.
As of May 1, 1999, the Company had no employees. The Company has two
independent contractors, Falene Gottbetter and Roberta Winley. Falene
Gottbetter is the wife of the Company's president, Paul B. Gottbetter.
ITEM 2. Plan of Operations.
The Company was formed on August 13, 1996, under the laws of the State of
New York to engage in any lawful act or activity for which corporations may be
organized under the business corporation law of the State of New York. The
Company's principal assets consist of the revenues it receives as commissions
from the sale of the Doncaster Line.
Development stage activities.
The following discussion relates to the results of our operations to date,
and our financial condition:
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For the next 12 months, the Company plans to devote the majority of its
efforts to (i) obtaining new customers for its products by continuing its
marketing efforts through direct mail and Doncaster national advertisements,
(ii) enhancing its sources for inventory, and (iii) pursuing and finding a
management team to continue the process of completing its marketing goals and to
market limited quantities of the Doncaster Line. The Company anticipates
seeking equity through a private placement offering to enable it to continue to
expand its operations. The Company anticipates that its results of operations
may fluctuate for the foreseeable future due to several factors, including
whether and when new products are successfully developed by Doncaster and
introduced by the Company, market acceptance of current or new products,
competitive pressures on pricing, changes in the mix of products sold.
Operating results would also be adversely affected by a downturn in the market
for Doncaster's current products. Because the Company is continuing to increase
its operating expenses for personnel and other general and administrative
expenses, the Company's operating results would be adversely affected if its
sales did not correspondingly increase. The Company's limited operating history
makes accurate prediction of future operating results difficult or impossible.
Although the Company has experienced growth in recent years, there can be no
assurance that, in the future, the Company will sustain revenue growth or remain
profitable on a quarterly or annual basis or that its growth will be consistent
with predictions made by securities analysts.
The Company has been a development stage enterprise since its inception,
August 13, 1996, to December 31, 1998 and for the three months ended March 31,
1999. During this period, management had devoted the majority of its efforts to
obtaining new customers for its products, enhancing its sources for inventory,
pursuing and finding a management team to continue the process of completing its
marketing goals, market limited quantities of the Doncaster Line, obtain
sufficient working capital through loans, and equity through private placement
offering. These activities were funded by the Company's management and
investments from stockholders.
Results of operations.
Results of Operations for the year ended December 31, 1998 as compared
to December 31, 1997.
For the year ended December 31, 1998, the Company generated net sales of
$-0- as compared to $4,000 for the year ended 1997, representing a decrease of
$4,000. The Company's cost of goods sold for the year ended December 31, 1998
was $-0- as compared to $-0- for the year ended December 31, 1997. The Company's
gross profit on sales was approximately $-0- for the year ended December 31,
1998 as compared to $4,000 for the year ended December 31, 1997. The decrease
in gross profit is the result of entering a period of reevaluation of the
Company's sources of supply and potential customers.
The Company's general and administrative costs aggregated approximately
$1,785 for the year ended December 31, 1998 as compared to $1,865 for the year
ended December 31, 1997 representing a decrease of $80. This decrease
represents decreased spending for office expenses.
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Results of Operations for the three months ended March 31, 1999 as compared
to the three months ended March 31, 1998.
For the three months ended March 31, 1999, the Company generated net sales
of $2,694 as compared to $-0- for the three months ended March 31, 1998
representing an increase of $4,000. The Company's cost of goods sold for the
three months ended March 31, 1999 was $-0- as compared to $-0- for the three
months ended March 31, 1998. The Company's gross profit on sales was $4,000 for
the three months ended March 31, 1999 as compared to $-0- for the three months
ended March 31, 1998. The increase in gross profit is the result of offering for
sale the Doncaster Line in the reorganization of the Company's business.
The Company's general and administrative costs aggregated approximately
$5,369 for the three months ended March 31, 1999 as compared to $500 for the
three months ended March 31, 1998 representing an increase of $4,869. This
increase represents office and computer expenses of $5,369.
Results of Operations for the period of inception (August 13, 1996) through
March 31, 1999.
For the period from the Company's inception, August 13, 1996, through March
31, 1999, a period of approximately 31 months, the Company generated net sales
of $6,694 (an average of $216 per month). The Company's cost of goods sold
on sales was approximately $-0- for the period from the Company's inception,
August 13, 1996, through March 31, 1999. The gross profit from sales for this
31 month period is $6,694. Management believes the gross profit of an average
of $216 for the period from inception, August 13, 1996, through March 31, 1999,
will improve and stabilize once the Company's marketing plans become fully
implemented.
The Company's general and administrative costs aggregated approximately
$5,369 for the period from inception, August 13, 1996, through March 31, 1999.
Of these initial startup costs, approximately $5,369 is attributed to telephone
and other office expenses.
The Company's Services
The Company is in the business of the direct selling of Doncaster women's
clothing (the "Doncaster Line"). The Company's independent contractors provide
fashion consulting for its clients to encourage more sales and provide a value
added service.
Liquidity and capital resources.
The Company increased liquidity by $667 from a cash balance at the
Company's inception of $-0- through the process of developing profits from sales
and loans to the Company by the principal shareholders.
The Company expended an aggregate of $2,325 for operating expenses and
reduced Company notes payable by $592 through March 31, 1999. Subsequent to the
date of the financial statements, the Company has sold, pursuant to the terms of
Rule 504 of Regulation D of the
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the Securities Act of 1933, as amended, an aggregate of 555,000 shares of common
stock at $0.05 per share for an aggregate of $27,750 less $6,685 in offering
expenses.
Known trends, events or uncertainties that could be reasonably likely to
have a material adverse effect on the businesses of Doncaster and the Company
and may thereby materially impact the Company's short-term or long-term
liquidity and/or net sales, revenues or income from continuing operations are:
1. Risk Factors Relating to the Company
A. Sensitivity To Economic Conditions and Consumer Confidence
The specialty retail industry is highly dependent upon the level
of consumer spending, particularly among affluent customers, and may
be adversely affected by an economic downturn, increases in consumer
debt levels, uncertainties regarding future economic prospects, or a
decline in consumer confidence. An economic downturn which effects the
clients of the Company, could have a material adverse effect on
Company's business and results of operations, and thereby effect the
Company.
B. Changing Consumer Preferences
The Company's success depends in substantial part upon
Doncaster's ability to anticipate and respond to changing consumer
preferences and fashion trends in a timely manner. Although Doncaster
attempts to stay abreast of emerging lifestyle and consumer
preferences affecting its merchandise, any failure by Doncaster to
identify and respond to such trends could have a material adverse
effect on the Company's business and results of operations.
C. Dependence on Designer Resources
Because the Company offers high end apparel, the Company's
success is dependent in part upon initiating and maintaining strong
relationships with designers and suppliers of fabric. The Company has
no guaranteed supply arrangements with Doncaster and orders are filled
on a "first-come first-serve" basis its principal merchandising
sources. Accordingly, there can be no assurance that such sources will
continue to meet Doncaster's quality, style and volume requirements.
The inability of Doncaster to obtain quality and fashionable
merchandise in a timely fashion could have a material adverse effect
on the Company's business and results of operations.
D. Competition
The specialty retail industry is highly competitive and
fragmented. The Company competes with large specialty retailers,
traditional and better department stores, national apparel chains,
designer boutiques, individual specialty apparel stores
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and direct marketing firms. The Company competes for customers
principally on the basis of quality, assortment and presentation of
merchandise, customer service, marketing programs and value. Most of
Doncaster's and the Company's competitors are larger and have greater
financial resources than the Company.
It should be noted that The Private Securities Litigation Reform
Act of 1995 provides a "safe harbor" for certain forward-looking
statements. The forward-looking statements contained in this Form 10-
SB are subject to certain risks and uncertainties. Actual results
could differ materially from current expectations. Among the factors
that could affect the Company's actual results and could cause results
to differ from those contained in the forward-looking statements
contained herein is the Company's ability to implement its business
strategy successfully, which will be dependent on business, financial,
and other factors beyond the Company's control, including, among
others, prevailing changes in consumer preferences, availability of
trained personnel and changes in regulations. There can be no
assurance that the Company will continue to be successful in
implementing its business strategy. Other factors could also cause
actual results to vary materially from the future results covered in
such forward-looking statements.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations for the Years Ending December 31, 1997 and 1998
and for the Three Months Ended March 31, 1998 and 1999 and the Period
from Inception (June 23, 1997) to March 31, 1999.
The following discussion relates to the results of our operations to date,
and our financial condition:
This prospectus contains forward looking statements relating to our
Company's future economic performance, plans and objectives of management for
future operations, projections of revenue mix and other financial items that are
based on the beliefs of, as well as assumptions made by and information
currently known to, our management. The words "expects, intends, believes,
anticipates, may, could, should" and similar expressions and variations thereof
are intended to identify forward-looking statements. The cautionary statements
set forth in this section are intended to emphasize that actual results may
differ materially from those contained in any forward looking statement.
Development stage activities.
The Company has been a development stage enterprise from its inception June
23, 1997 to March 31, 1999. The Company is in the process of developing a web
site on the World Wide Web for the purpose of selling health care products and
sharing its expertise by doing consulting.
During this period, management devoted the majority of its efforts to
initiating the process of the web site design and development, obtaining new
customers for sale of consulting
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services, developing sources of supply, developing and testing its marketing
strategy and finding a management team to begin the process of: completing its
marketing goals; furthering its research and development for its products;
completing the documentation for and selling initial shares through the
Company's private placement; and completing the documentation for the Company's
initial public offering. These activities were funded by the Company's
management and investments from stockholders. The Company has not yet generated
sufficient revenues during its limited operating history to fund its ongoing
operating expenses, repay outstanding indebtedness, or fund its web site and
product development activities. There can be no assurance that development of
the web site will be completed and fully tested in a timely manner and within
the budget constraints of management and that the Company's marketing research
will provide a profitable path to utilize the Company's marketing plans. Further
investments into web site development, marketing research as defined in the
Company's operating plan will significantly reduce the cost of development,
preparation, and processing of purchases and orders by enabling the Company to
effectively compete in the electronic market place.
During this developmental period, the Company has been financed through
officer's loans with a balance of $72,622 from Jack Rubenstein, The Company also
financed its activities through profit earned in the first quarter ending March
31, 1999 of $24,962. through the sale of shares of common stock aggregating
$236,750.
Results of Operations for the year ended December 31, 1998 as compared to
the period from inception, June 23, 1997, to December 31, 1997.
For the year ended December 31, 1998, the Company generated net sales of
$22,500 as compared to $-0- for the period from inception, June 23, 1997, to
December 31, 1997 representing an increase of $22,500. The Company's cost of
goods sold for the year ended December 31, 1998 was $-0- as compared to $-0- for
the period from inception, June 23, 1997, to December 31, 1997. The Company's
gross profit on sales was approximately $22,500 for the year ended December 31,
1998 as compared to $-0- for the period from inception, June 23, 1997, to
December 31, 1997. The increase in gross profit is the result of offering for
sale technology that was learned as a result of organizing the business.
The Company's general and administrative costs aggregated approximately
$66,277 for the year ended December 31, 1998 as compared to $32,003 for the
period from inception, June 23, 1997, to December 31, 1997 representing an
increase of $34,274. This increase represents increased spending for office
salaries of $20,000, telephone expense of $8,351, professional fees of $13,287
and office and computer expense of $24,639.
Results of Operations for the three months ended March 31, 1999 as compared
to the three months ended March 31, 1998.
For the three months ended March 31, 1999, the Company generated net sales
of $30,000 as compared to $-0- for the three months ended March 31, 1998
representing a increase of $30,000. The Company's cost of goods sold for the
three months ended March 31, 1999 was $-0- as compared to $-0- for the three
months ended March 31, 1998. The Company's gross profit on sales was
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$30,000 for the three months ended March 31, 1999 as compared to $-0- for the
three months ended March 31, 1998. The increase in gross profit is the result of
offering for sale technologies learned as a result of organizing the Company's
business.
The Company's general and administrative costs aggregated approximately
$3,988 for the three months ended March 31, 1999 as compared to $10,005 for the
three months ended March 31, 1998 representing a decrease of $6,017. This
decrease represents office and computer expenses of $3,988.
Results of Operations for the period of inception (June 23, 1997) to March
31, 1999.
For the period from the Company's inception, June 23, 1997, through March
31, 1999, a period of approximately 21 months, the Company generated net sales
of $52,500 (an average of $2,500 per month). The Company's cost of goods sold on
sales was approximately $-0- for the period from the Company's inception June
23, 1997, through March 31, 1999. The gross profit from sales for this 21 month
period is $52,500. Management believes the gross profit of an average of $2,500
for the period from inception, June 23, 1997, through March 31, 1999, will
improve and stabilize once the Company's web site facilities become realized at
the completion of the public offering and its marketing plans become fully
implemented.
The Company's general and administrative costs aggregated approximately
$102,268 for the period from inception, June 23, 1997, through March 31, 1999.
Of these initial startup costs, approximately $40,000 is attributed to wages
telephone of $11,605, professional fees of $13,287, rent of $13,125, and office
and computer expenses of $24,251.
Liquidity and Capital Resources.
The Company decreased liquidity by $30,379 from a cash balance of $-0- at
June 23, 1997 to $4,367 December 31, 1998 and $30,379 at March 31, 1999.
Working capital at December 31, 1998 and March 31, 1999 was negative at $69,005
and $44,043 respectively. For the year ended December 31, 1998 and for the three
months ended March 31, 1999, working capital was provided by the positive cash
flows from operations of $24,962 for the three months ended March 31, 1999. The
Company continued to be funded in part through officer loans aggregating $74,422
for the period from inception, June 23, 1997, to March 31, 1999. The Company
expended cash for the development of the business and absorbing losses
aggregating $82,004 for the period from inception, June 23, 1997, to December
31, 1998.
Management believes that it will be able to fund the Company through
the continuation of offering consulting services until the Company's web site is
developed and on-line and the process of a public offering is completed.
Year 2000 Readiness
The following disclosure is a Year 2000 ("Y2K") readiness disclosure
statement pursuant to the Year 2000 Readiness and Disclosure Act.
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The Company's Year 2000 program is designed to minimize the
possibility of serious Year 2000 interruption. Possible Year 2000 worst case
scenarios include the interruption of significant parts of the Company's
business as a result of internal business system failure or the failure of the
business systems of its suppliers, distributors or customers. The
potential effect to the operations of the present business are minimized
currently because the Company's reliance upon computer systems in the day to day
operations is minimal.
However, the Company decided to significantly upgrade its "business
systems" (all computer hardware and software used to run its businesses
including its operations management, administration and financial systems).
Specifications were developed for desired capabilities, including Year 2000
compliance. In 1998 the Company began assessing its Year 2000 exposure and
commenced implementation of a plan to achieve Year 2000 readiness. Based on its
review to date, the Company believes that its products and business software are
Year 2000 compliant.
The Company has also begun to survey major suppliers, distributors, and
customers to determine the status and schedule for their Year 2000
compliance. To date, no significant issues have been identified, and the
survey is expected to be completed in the third quarter of 1999. Where it
believes that a particular supplier's situation poses unacceptable risks,
the Company plans to identify an alternative source.
The costs of the readiness program for business systems, other
infrastructure areas, and suppliers are a combination of incremental
external spending and use of existing internal resources. In total, the Company
expects to spend less than $1,000 to achieve readiness, of which approximately
10% has been expended to date. This amount is based on the costs to upgrade the
existing business systems to Y2K compliant versions.
Milestones and implementation dates and the costs of the Company's
Year 2000 readiness program are subject to change based on new circumstances
that may arise or new information becoming available that may change the
underlying assumptions or requirements.
Recent Accounting Pronouncements
Accounting for Derivative Instruments and Hedging Activities
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133) was issued in June
1998. It is effective for all fiscal years beginning after June 15, 1999. The
new standard requires companies to record derivatives on the balance sheet as
assets or liabilities, measured at fair value. Gains or losses resulting from
changes in the values of those derivatives would be accounted for depending on
the use of the derivatives and whether they qualify for hedge accounting. The
key criterion for hedge accounting is that the hedging relationship must be
highly effective in achieving offsetting changes in fair value or cash flows.
The Company does not currently engage in derivative trading or hedging activity.
The Company will adopt SFAS 133 in the fiscal year ending December 31, 1999,
although no impact on operating results or financial position is expected.
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Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use
In March of 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use". SOP 98-1 requires computer
software costs associated with internal use software to be charged to operations
as incurred until certain capitalization criteria are met. SOP 98-1 is effective
beginning January 1, 1999. The Company is currently assessing the impact that
adoption of this statement will have on consolidated financial position and
results of operations.
Forward - Looking Information
The Annual Report on Form 10-SB contains forward-looking statements
concerning the Company's financial performance and business operations. The
Company wishes to caution readers of this Report on Form 10-SB that actual
results might differ materially from those projected in the forward-looking
statements contained herein.
Factors which might cause actual results to differ materially from those
projected in the forward-looking statements contained herein include the
following: the seasonality of the business, inability of the Company to
develop the end user market for quality control products; inability of the
Company to grow the sales to the extent anticipated; the interruption of
significant parts of the Company's business as a result of internal
business system failure or the failure of the business systems of its
suppliers or customers due to the inability of such systems to properly
handle credit card purchases after December 31, 1999; and the potential
insufficiency of Company resources, including human resources, plant and
equipment and management systems, to accommodate any future growth.
ITEM 3. Description of Property.
The Company maintains its offices at 8 Harmony Lane, Hartsdale, New York,
10530, in the home of its president, Paul B. Gottbetter. The Company does not
have any rental agreement with Mr. Gottbetter.
ITEM 4. Security Ownership of Certain Beneficial Owners and Management.
(a) Security Ownership of Certain Beneficial Owners.
The following information relates to those persons known to the Company to
be the beneficial owner of more than five percent (5%) of the common stock, par
value $.001 per share, the only class of voting securities of the Company
outstanding.
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<TABLE>
<CAPTION>
Name and Amount and
Title of Address of Nature of Percentage
Class Beneficial Owner Beneficial Ownership of Class*
- --------------------- ------------------------- ------------------------- -----------
<S> <C> <C> <C>
Common Stock, par Paul B. Gottbetter 867,500 shares 55.78%
value $.001 per share 8 Harmony Lane
Hartsdale, New York 10530 Direct
Common Stock, par Turbo International, Inc. 500,000 shares 32.15%
value $.001 per share 50 Shirley Street
Nassau, Bahamas Direct
Common Stock, par Adam S. Gottbetter 138,666.66 shares(1) 8.91%
value $.001 per share 1035 Park Avenue, Apt. 5B
New York, New York 10028 Direct
</TABLE>
* Based on 1,555,000 shares issued and outstanding.
(1) Adam S. Gottbetter owns 122,000 shares directly. Adam S. Gottbetter owns
an additional 16,666.66 shares indirectly by reason of his being a partner
in KGL which owns 50,000 shares of the Company's common stock.
(b) Security Ownership of Management.
The number of shares of common stock of the Issuer owned by the
Directors and Executive Officers of the Issuer is as follows:
<TABLE>
<CAPTION>
Name and Amount and
Title of Address of Nature of Percentage
Class Beneficial Owner Beneficial Ownership of Class*
- --------------------- ------------------------- ------------------------- -----------
<S> <C> <C> <C>
Common Stock, par Paul B. Gottbetter 867,500 shares 55.78%
value $.001 per share 8 Harmony Lane
Hartsdale, New York 10530 Direct
Common Stock, par Michael Conte 300 shares(1)
value $.001 per share 18 Burdge Drive
Middletown, New Jersey 07748
All officers and directors 867,800 shares
as a group (2 persons)
</TABLE>
- --------------------
(1) Less than 1%.
* Based on 1,555,000 shares issued and outstanding.
13
<PAGE>
ITEM 5. Directors, Executive Officers, Promoters and Control Persons.
(a) Directors and Executive Officers.
Directors of the Company serve for a term of one year or until their
successors are elected. Officers are appointed by, and serve at the
pleasure of, the Board. The Directors and Executive Officers of the
Company are as follows:
Paul B. Gottbetter, President, Treasurer and Director, age 67, has
been the President, Treasurer and sole director of the Company since
inception. At present, Mr. Gottbetter has nearly completed the second year
of a three year term as Director of the Company. Mr. Gottbetter serves as
President and Treasurer of the Company at the pleasure of the Board of
Directors. Since 1959, Mr. Gottbetter has been self-employed as both a
certified public accountant and an attorney in private practice. Mr.
Gottbetter's clientele largely consists of various sectors of the major
apparel industry ranging from manufacturers to wholesalers. Mr. Gottbetter
received his B.B.A. in accounting in 1953 form City College of New York and
his JD in 1955 from New York University Law School.
Michael C. Conte, Secretary and Director, age 40, has been Secretary
of the Company since April 6, 1999. Mr. Conte's term as a Director is from
April 6, 1999 until August 30, 2000. Mr. Conte serves as Secretary of the
Company at the pleasure of the Board of Directors. Mr. Conte has been
employed by Paul B. Gottbetter as a certified public accountant since June
1980. Mr. Conte received his B.S. in accounting in 1980 from New York
University. Mr. Conte tenure with Mr. Gottbetter has enabled him to deal
with various sectors of the major apparel industry.
(b) Significant Employees.
Although the Company does not have any employees, it does rely on the
services of two (2) independent contractors, Falene R. Gottbetter and
Roberta Winley. Mrs. Gottbetter and Ms. Winley are the people who run the
trunk shows, take clients to the Doncaster's show room and sell the
Doncaster Line for the Company.
Falene R. Gottbetter, Independent Contractor, age 56, has been an
independent contractor of the Company, and has been selling the Doncaster
Line since December 1998. During the period between June 1994 and December
1998, Mrs. Gottbetter was retired. Mrs. Gottbetter received her B.S. in
education in 1964 from Finch College and her MA in education in 1982 from
Long Island University.
Roberta Winley, Independent Contractor, age 56, has been an
independent contractor to the Company, and has been selling the Doncaster
Line since December 1998. Since January 1998, Ms. Winley has been the
principle of RSW Image, Inc., a fashion consultant. From 1994 to 1996, Ms.
Winley was employed as a sales manager by Nancy Crystal, and from 1996 to
1998, Ms. Winley was employed as a sales manager for Nira Nira.
14
<PAGE>
(c) Family relationships.
Paul B. Gottbetter and Falene R. Gottbetter are married to each other.
Adam S. Gottbetter is the son of Paul and Falene Gottbetter.
(d) Involvement in certain legal proceedings.
None of the directors, executive officers or control persons is or has
been subject to any of the following proceedings during the last five
years:
(1) A bankruptcy petition filed by or against the subject party;
(2) A conviction in a criminal proceeding or being a subject party in
a pending criminal proceeding;
(3) an order, judgment or decree permanently or temporarily enjoining
barring, suspending or otherwise limiting the party's involvement
in any type of business, securities or banking activities;
(4) being found by a court of competent jurisdiction (in a civil
action, the Commission or Securities and Exchange Commission or
the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law.
ITEM 6. Executive Compensation.
None of the officers or directors of the Company receives any salary or
other compensation. Ms. Winley has an oral agreement with Ms. Gottbetter
pursuant to which Ms. Winley receives ten percent (10%) of the commissions paid
to the Company from the sale of the Doncaster Line.
ITEM 7. Certain Relationships and Related Transactions.
(a) Transactions where Key Company Members have a direct or indirect
material interest.
None.
(b) Transactions with promoters.
None.
15
<PAGE>
ITEM 8. Description of Securities.
(a) Common Stock
The Company is authorized to issue up to 20,000,000 shares of common
stock, par value $.001 per share ("Common Stock"), of which 1,555,000
shares are outstanding on the date hereof. Holders of Common Stock are
entitled to one vote for each share held of record on each matter submitted
to a vote of stockholders. There is no cumulative voting for election of
directors.
Subject to the prior rights of any series of preferred stock which may
from time to time be outstanding, if any, holders of Common Stock are
entitled to receive ratably, dividends when, as, and if declared by the
Board of Directors out of funds legally available therefor, and upon the
liquidation, dissolution, or winding up of the Company, to share ratably in
all assets remaining after payment of liabilities and payment of accrued
dividends and liquidation preferences on the preferred stock, if any.
Holders of Common Stock have no preemptive rights and have no rights to
convert their Common Stock into any other securities. The outstanding
Common Stock is validly authorized and issued, fully paid, and
nonassessable.
(b) Preferred Stock
The Company is authorized to issue up to 5,000,000 shares of
"blank check" preferred stock, par value $.001 per share ("Preferred
Stock"), none of which are outstanding on the date hereof. The Board of
Directors of the Company has to date not established the rights and
preferences of the Company's Preferred Stock.
16
<PAGE>
PART II.
ITEM 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Shareholder Matters.
(a) Market information.
There is no public trading market on which the Company's Common Stock
is traded. The Company intends to engage a broker/dealer to file a Form 211
with the National Association of Securities Dealers ("NASD") in order to
allow the quote of the Company's Common Stock on the Bulletin Board. The
Company's Common Stock may trade on the Bulletin Board under the symbol
"HARM", if available.
There are no outstanding options or warrants to purchase, or
securities convertible into, common equity of the registrant;
Of 1,555,000 shares of Common Stock that are issued and outstanding
1,000,000 shares are eligible to be sold pursuant to the terms and
conditions of Rule 144 under the Securities Act.
Although not subject to Rule 144, one shareholder of the Company must
hold her shares pursuant to state law restrictions until the shares are
registered pursuant to an registration statement which is effective under
the securities laws of the state in which the shareholders resides or the
shares can be sold pursuant to an exemption from registration. The
shareholder is a resident of the State of New Jersey and purchased 5,000
shares in April 1999 in the Company's offering of its Common Stock pursuant
to Rule 504 of Regulation D.
The Company is currently not planning on making a public offering of
any shares of its Common Stock.
(b) Holders.
There are approximately forty (40) record holders of common equity.
(c) Dividends.
As of the date hereof, no cash dividends have been declared on the
Common Stock. Subject to the prior rights of any series of preferred stock
which may from time to time be outstanding, if any, holders of Common Stock
are entitled to receive ratably, dividends when, as, and if declared by the
Board of Directors out of funds legally available therefor. Under the
NYBCL, the Company may only pay dividends out of capital and surplus, or
out of certain enumerated retained earnings, as those terms are defined in
the NYBCL. The
17
<PAGE>
payment of dividends on its Common Stock is, therefore, subject to the
availability of capital and surplus or retained earnings as provided in the
NYBCL.
ITEM 2. Legal Proceedings.
None of the Company, its officers or its directors is party to any pending
legal proceeding, nor is its property the subject of any pending legal
proceeding that is not routine litigation that is incidental to its business.
ITEM 3. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.
None.
ITEM 4. Recent Sales of Unregistered Securities.
In August 1996, the Company issued 200 shares of its Common Stock to Paul
Gottbetter for a price of $5.00 per share. The shares of Common Stock were
issued pursuant to Section 4(2) of the Securities Act.
In January 1998, Paul Gottbetter gifted 25 shares of the Common Stock to
his son, Adam S. Gottbetter.
In April 1999, the Company authorized a forward stock split of its Common
Stock on a 5,000 to 1 basis and amended its certificate of incorporation to
increase its authorized capital and reflect the forward stock split.
In April 1999, Mr. Paul Gottbetter gifted 300 shares of Common Stock to
each of twenty-five (25) persons. The recipients of Mr. Gottbetter's gift were
friends, family members and certain longtime employees. In April 1999, Mr. Adam
Gottbetter gifted 300 shares of Common Stock to each of ten (10) persons. The
recipients of Adam Gottbetter's gifts were friend, family members and certain
longtime employees.
On April 6, 1999, the Company closed its offering of Common Stock pursuant
to Rule 504 of Regulation D promulgated under the Act. The Company sold
555,0000 shares of its Common Stock, at a price of $.05 per share, aggregating
$27,750.
ITEM 5. Indemnification of Directors and Officers.
The Company's Certificate of Incorporation contains provisions to (i)
eliminate the personal liability of its directors for monetary damages resulting
from breaches of their fiduciary duty (other than breaches of the duty of
loyalty, acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, violations under Section 719 of the
NYBCL or for any transaction from which the director derived an improper
personal benefit) and (ii) indemnify its directors and officers to the fullest
extent permitted by Section 721 of the NYBCL,
18
<PAGE>
including circumstances in which indemnification is otherwise discretionary. The
Company believes that these provisions are necessary to attract and retain
qualified persons as directors and officers. The SEC has taken the position that
the provision will have no effect on claims arising under the federal securities
laws.
Part F/S
Financial Statements.
The Company's audited Financial Statements for the years ended December 31,
1997 and 1998 and for the three month period ended March 31, 1999, appear on
pages F-1 to F-11 of this Form 10-SB. All such financial statements are herein
incorporated by reference thereto.
19
<PAGE>
WOLFPACK CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31,
January 4, 1999
1999 Unaudited
---------- ----------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $132,070 $ 72,819
Inventory 60,367 129,132
Prepaid expenses 57,091 57,091
-------- --------
Current assets 249,528 259,042
Capital assets-net 43,811 41,711
Other assets
Security deposits 5,500 5,500
-------- --------
Total other assets 5,500 5,500
-------- --------
Total assets $298,839 $306,253
======== ========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 15,600 $ 18,330
Investor loans 7,000
-------- --------
15,600 25,330
Stockholders' equity
Preferred stock - authorized 5,000,000 shares,
$.001 per share each. At January 4, 1998, there -0-
shares outstanding.
Common Stock authorized 20,000,000 shares,
$0.001 par value each. At January 4, 1998, there
are 2,000,000 and 2,000,000 shares outstanding 2,000 2,000
respectively.
Additional paid in capital 281,165 281,165
Retained earnings 74 (2,242)
-------- --------
Total stockholders' equity 283,239 280,923
-------- --------
Total liabilities and stockholders' equity $298,839 $306,253
======== ========
</TABLE>
See accompanying notes to proforma financial statements.
F-1
<PAGE>
WOLFPACK CORPORATION
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the period from
For the period inception, March 13, For the three months
from 1998, to ended March 31,
inception, March March 31, 1998 1999
16, 1998 to Unaudited Unaudited
January 4, 1999 --------------------- --------------------
<S> <C> <C> <C>
Revenue $ 672,619 $ -0- $ 139,185
Costs of goods sold 405,540 -0- 82,021
---------- ----------
Gross profit 267,079 -0- 57,164
Operations:
General and administrative 251,938 -0- 58,289
Depreciation and amortization 7,278 -0- 2,100
---------- ---------- ----------
Total expense 259,216 -0- 60,389
Income before corporate income taxes 7,863 (3,225)
-0-
Other income
Interest income 3,013 909
---------- ----------
Total other income and expenses 3,013 909
Net income $ 10,876 $ -0- $ (2,316)
========== ========== ==========
Net income (loss) per share-basic $ 0.01 $ 0.00 $ (0.00)
========== ========== ==========
Number of shares outstanding-basic 2,000,000 2,000,000 2,000,000
========== ========== ==========
</TABLE>
See accompanying notes to proforma financial statements.
F-2
<PAGE>
WOLFPACK CORPORATION
STATEMENT OF STOCKHOLDERS EQUITY
Unaudited
<TABLE>
<CAPTION>
Additional
Preferred Preferred Common Common paid in Retained
Date Stock Stock Stock Stock capital earnings Total
- ---- --------- --------- --------- ------ --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
12-31-1998 -0- $-0- -0- $ -0- $ -0- $ -0- $ -0-
Issuance of -0- $-0- 2,000,000 $2,000 $281,165 $ 74 $ 1,000
shares for --- ---- --------- ------ -------- ------- -------
acquisitions
01-04-1999 -0- $-0- 2,000,000 $2,000 $281,165 $ 74 $ 1,000
Unaudited
Net loss (2,316) (2,316)
--- ---- --------- ------ -------- ------- -------
03-31-1999 -0- $-0- 2,000,000 $2,000 $281,165 $(2,242) $(2,242)
=== ==== ========= ====== ======== ======= =======
</TABLE>
See accompanying notes to proforma financial statements.
F-3
<PAGE>
WOLFPACK CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the period from
For the period from inception, March 13, For the three months
inception, 1998, to ended
March 16, 1998 to March 31, 1998 March 31, 1999
January 4, 1999 Unaudited Unaudited
-------------------- --------------------- ---------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 10,876 $-0- $ (2,316)
Depreciation 7,278 -0- 2,100
Adjustments to reconcile net income (loss) to net cash
Inventory 60,754 (68,765)
Prepaid expenses (28,716)
Accounts payable 15,600 2,730
-------- --------
TOTAL CASH FLOWS FROM OPERATIONS 65,792 -0- (66,251)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital withdrawal (7,500)
Purchase of assets (35,139)
--------
TOTAL CASH FLOWS FROM INVESTING ACTIVITIES (42,635) -0-
CASH FLOWS FROM FINANCING ACTIVITIES
Loan from investors 7,000
--------
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 7,000
NET INCREASE (DECREASE) IN CASH 30,653 -0- (59,251)
CASH BALANCE BEGINNING OF PERIOD 101,417 -0- 132,070
-------- ---- --------
CASH BALANCE END OF PERIOD $132,070 $-0- $ 72,819
======== ==== ========
</TABLE>
See accompanying notes to proforma financial statments.
F-4
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 4, 1999
Note 1 - Organization of Company and Issuance of Common Stock
----------------------------------------------------
a. Creation of the Company
Wolfpack Corporation (the "Company") was formed under the laws of Delaware
on March 16, 1998 and is authorized to issue 20,000,000 shares of common stock,
$0.001 par value each and 5,000,000 shares of preferred stock, $0.001 par value
each.
b. Description of the Company
The Company was formed as a holding company for two subsidiary company's
acquired through the Company's subsidiary Wolfpack Subsidiary, Corp. has two (2)
subsidiaries Dina Porter, Inc. and AAM Investment Council, Inc. Dina Porter,
Inc. (Dina Porter) is a retail store which specializes in contemporary clothing,
jewelry and fine crafts. AAM Investment Council, Inc. (AAM) was formed in on
February 15, 1990 under the laws of Pennsylvania by Peter Coker and Susan
Coker. AAM is an investment adviser, that offers portfolio management designed
to achieve unique investment objectives.
c. Issuance of Shares of Common Stock
On January 4, 1999, the Company issued 1,000,000 shares of common stock each
to Susan Coker and Peter Coker in consideration for all of the issued and
outstanding shares of common stock of Wolfpack Subsidiary, Corp. and its
subsidiaries.
Note 2-Summary of Significant Accounting Policies
------------------------------------------
a. Basis of Financial Statement Presentation
The consolidated financial statements presented consist of the financial
statements of the Company as at January 4, 1999 and the related statements of
operations, stockholders' equity and cash flows for period from inception, March
16, 1998, to January 4, 1999 and the balance sheet of Wolfpack Subsidiary, Corp.
at January 4, 1999 and the related statements of operations, stockholders'
equity and cash flows for the period from inception, May 14, 1998, to January 4,
1999.
The unaudited consolidated financial statements presented consist of the
unaudited financial statements of the Company as at March 31, 1999 and the
related statements of operations, stockholders' equity and cash flows for the
three months ended March 31, 1999 and the unaudited balance sheet of Wolfpack
Subsidiary, Corp. at March 31, 1999 and the related unaudited
See accompanying notes to proforma financial statements.
F-5
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 4, 1999
statements of operations, stockholders' equity and cash flows for the three
months ended March 31, 1999.
b. Cash and cash equivalents
The Company treats temporary investments with a maturity of less than three
months as cash.
c. Revenue recognition
Revenue is recognized when products are shipped or services are rendered.
d. Selling and Marketing Costs
Selling and Marketing - Certain selling and marketing costs are expensed in
the period in which the cost pertains. Other selling and marketing costs are
expensed as incurred.
e. Property and Equipment
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed over the estimated useful lives using the straight line
methods over a period of five and seven years. Maintenance and repairs are
charged against income and betterment's are capitalized.
f. Earnings per share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, EARNINGS PER SHARE ("Statement No.
128"). Statement No. 128 applies to entities with publicly held common stock or
potential common stock and is effective for financial statements issued for
periods ending after December 15, 1997. Statement No. 128 replaces APB Opinion
15, Earnings per Share ("EPS"). Statement No. 128 requires dual presentation of
basic and diluted earnings per share by entities with complex capital
structures. Basic EPS includes no dilution and is computed by dividing net
income by the total number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution of securities that could share in the
earnings of the Company such as common stock which may be issuable upon exercise
of outstanding common stock options or the conversion of debt into common stock.
Pursuant to the requirements of the Securities and Exchange Commission, the
calculation of the shares used in computing basic and diluted EPS include the
shares of common stock issued pursuant to certain related party acquisition
agreements.
See accompanying notes to proforma financial statements.
F-6
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 4, 1999
Shares used in calculating basic and diluted net income per share were as
follows:
January 4, 1999
-------------------------
Total number common
shares issued 2,000,000
=========
g. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
h. Asset Impairment
The Company adopted the provisions of SFAS No. 121, Accounting for the
impairment of long lived assets and for long-lived assets to be disposed of
effective January 1, 1996. SFAS No. 121 requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the estimated undiscounted cash flows to be generated by those
assets are less than the assets' carrying amount. SFAS No. 121 also addresses
the accounting for long-lived assets that are expected to be disposed of. There
was no effect of such adoption on the Company's financial position or results of
operations.
i. Significant Concentration of Credit Risk
At January 4, 1999 and March 31, 1999, the Company has concentrated its
credit risk by maintaining deposits in several banks. The maximum loss that
could have resulted from this risk totaled $-0- which represents the excess of
the deposit liabilities reported by the banks over the amounts that would have
been covered by the federal insurance.
See accompanying notes to proforma financial statements.
F-7
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 4, 1999
j. Recent Accounting Standards
Accounting for Derivative Instruments and Hedging Activities
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133) was issued in June
1998. It is effective for all fiscal years beginning after June 15, 1999. The
new standard requires companies to record derivatives on the balance sheet as
assets or liabilities, measured at fair value. Gains or losses resulting from
changes in the values of those derivatives would be accounted for depending on
the use of the derivatives and whether they qualify for hedge accounting. The
key criterion for hedge accounting is that the hedging relationship must be
highly effective in achieving offsetting changes in fair value or cash flows.
The Company does not currently engage in derivative trading or hedging activity.
The Company will adopt SFAS 133 in the fiscal year ending December 31, 2000,
although no impact on operating results or financial position is expected.
Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use
In March of 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use". SOP 98-1 requires computer
software costs associated with internal use software to be charged to operations
as incurred until certain capitalization criteria are met. SOP 98-1 is effective
beginning January 1, 1999. The Company is currently assessing the impact that
adoption of this statement will have on consolidated financial position and
results of operations.
k. Unaudited financial information
In the opinion of Management, the accompanying unaudited financial
statements contain all adjustments (consisting only of normal recurring items)
necessary to present fairly the financial position of the Company as of
March 31, 1999 and the results of its operations and its cash flows for the
three months ended March 31, 1999. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the SEC's rules and regulations of the Securities and Exchange
Commission. The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full year.
See accompanying notes to proforma financial statements.
F-8
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 4, 1999
Note 3 - Transfer of Assets
The Company was formed as a holding company for the acquisition of certain
assets and operating entities through its subsidiary Wolfpack Subsidiary, Corp.
which has two subsidiaries Dina Porter, Inc. and AAM Investment Council, Inc.
The Company entered into an Agreement with Wolfpack Subsidiary, Corp.,
pursuant to which the Company exchanged all the issued and outstanding shares of
common stock of Wolfpack Subsidiary, Corp. and its subsidiaries for an
aggregate of 2,000,000 shares of common stock of the Company. The transaction
has been accounted for as a transfer and is accounted for at historical cost as
a pooling of interests with the recording of the net assets acquired at their
historical book value.
Note 4 - Related Party transactions
Certain relationships
Susan Coker and Peter Coker are officer's and directors of the Company,
Wolfpack Subsidiary, Corp., Dina Porter and AAM.
Peter Coker and Susan Coker are husband and wife.
Note 5 - Commitments and Contingencies
Lease Agreements
On June 26, 1995, the Susan H. Coker d/b/a/ Dina Porter entered into a
lease agreement for 4,251 square feet of retail space at The Cameron Village
Shopping Center at 446 Daniel Street, Raleigh, North Carolina with an unrelated
party for a period of 5 years beginning October 1, 1995 and ending September 30,
2000 for a rental of $4,530 per month. The lease requires a security deposit of
$4,530. The amount of rent to be paid over the life of the lease is as follows:
$54,355 per year October 1, 1995 through September 30, 1996
$56,194 per year October 1, 1996 through September 30, 1997.
$58,033 per year October 1, 1997 through September 30, 1998.
$59,872 per year October 1, 1998 through September 30, 1999
$61,711 per year October 1, 1999 through September 30, 2000
See accompanying notes to proforma financial statements.
F-9
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 4, 1999
The Company is also liable for additional rent equal to 6% of sales which is
computed and paid on an annual basis with a natural break-even point through
September 30, 1996, and thereafter computed and paid on a monthly basis.
In addition, the Company will pay its pro rata share of ad valorem property
taxes on the premises. This will be paid monthly in advance based on estimates
of costs for the year. The monthly amounts due for this space is $173.58 for
property taxes and $63.76 for insurance. These amounts will be adjusted once a
year to reflect the actual pro rata costs for the year.
The Company and AAM occupies office space on a month to month basis, rent
free at 17 Glenwood Avenue, Raleigh, North Carolina 27603.
Note 6 - Inventory
Inventory has been recorded at the lower of cost or market under the first-in
first-out method. At December 31 1998, inventory of goods available for sale was
$60,367.
Note 7 - Capital Assets
Capital Assets for the Company consisted of the following at December 31,
1998:
<TABLE>
<CAPTION>
Accumulated
Asset depreciation Balance
-------- ------------ -------
<S> <C> <C> <C>
Vehicles $35,139 $ 5,020 $30,119
Furniture and fixtures 16,444 $ 6,826 $ 9,618
Leasehold Improvements 7,358 3,284 $ 4,074
------- ------- -------
Total $58,941 $15,130 $43,811
======= ======= =======
</TABLE>
Note 8 - Income Taxes
------------
The Company provides for the tax effects of transactions reported in the
financial statements. The provision if any, consists of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities, if any represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. As of March 31, 1999, the Company had no
material current tax liability, deferred tax assets, or liabilities to impact on
the Company's financial position because the
See accompanying notes to proforma financial statements.
F-10
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 4, 1999
deferred tax asset related to the Company's net operating loss carryforward and
was fully offset by a valuation allowance.
At March 31, 1999, the Company has net operating loss carry forwards for
income tax purposes of $2,242. This carryforward is available to offset future
taxable income, if any, and expires in the year 2010. The Company's utilization
of this carryforward against future taxable income may become subject to an
annual limitation due to a cumulative change in ownership of the Company of more
than 50 percent.
The components of the net deferred tax asset as of March 31, 1998 are as
follows:
Deferred tax asset:
Net operating loss carry forward $ 762
Valuation allowance $ (762)
--------
Net deferred tax asset $ -0-
========
The Company recognized no income tax benefit for the loss generated in the
period from inception, March 16, 1998, to March 31, 1999. SFAS No. 109 requires
that a valuation allowance be provided if it is more likely than not that some
portion or all of a deferred tax asset will not be realized. The Company's
ability to realize benefit of its deferred tax asset will depend on the
generation of future taxable income. Because the Company has yet to recognize
significant revenue from the sale of its products, the Company believes that a
full valuation allowance should be provided.
Note 9 - Limited Offering
----------------
The Company offered for sale a 2,775,000 shares of common stock at a price
of $0.10 per share, pursuant to Rule 504 of Regulation D of the Securities Act,
as amended.
As if March 31, 1999, the Company sold an aggregate of 70,000 shares for an
aggregate of $7,000. Because the shares underlying the offering had not been
issued, the money advanced was treated as an investor loan pending the issuance
of the shares.
Subsequent to the date of the financial statements, the Company sold an
aggregate of 2,715,000 shares have been sold for an aggregate consideration of
$271,500. The Company incurred an aggregate of $19,300 in offering expenses.
In addition, the Company issued an aggregate of 50,000 shares of common
stock to Kaplan Gottbetter & Levenson in consideration for legal services valued
at $5,000.
See accompanying notes to proforma financial statements.
F-11
<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, thereunto duly authorized.
HARMONY TRADING CORP.
Date: June 28, 1999 By: /s/ Paul B. Gottbetter
-----------------------------------
Paul B. Gottbetter, President,
Treasurer and Director
Date: June 28, 1999 By: /s/ Michael C. Conte
-----------------------------------
Michael C. Conte, Secretary
<PAGE>
PART III
ITEM 1. Index to Exhibits.
Exhibit No. Description
----------- -----------
2.1 Fashion Consultant Agreement dated as of December
7, 1993 by and between Tanner Companies Limited
Partnership and Falene R. Gottbetter.
3.1 Certificate of Incorporation, as amended of
Registrant.
3.2 By-laws of Registrant
23 Consent of Independent Accountant
<PAGE>
EXHIBIT 21.1
FASHION CONSULTANT AGREEMENT
THIS AGREEMENT is made and entered into this _____ day of
__________________ 19___ by and between TANNER COMPANIES LIMITED PARTNERSHIP
(hereafter called the "Company"), a North Carolina corporation with as principal
place of business in Rutherfordton, North Carolina and ________________ (herein
called the "Fashion Consultant") of
- --------------------------------------------------------------------------------
Street City State Zip
The Company and the Fashion Consultant agree to the following:
SECTION 1. APPOINTMENT OF THE FASHION CONSULTANT. The Company hereby
appoints the Fashion Consultant as an authorized dealer in such of the Apparel
as the Company may designate from time to time (the line or lines of Apparel
which the Fashion Consultant is authorized to sell is hereafter called
"Designated Apparel") and the Fashion Consultant hereby accepts such
appointment. The appointment of the Fashion Consultant is made on the terms and
conditions set forth in this Agreement.
SECTION 2. PRICES AND TERMS. It is understood that the Fashion Consultant
may order the Designated Apparel from the Company according to the terms set
forth in the Sales Ka in effect at the time of shipment and that all orders
shall be subject to acceptance by the Company and availability of the Designated
Apparel.
2.1 The Fashion Consultant shall remit payment for each order in
accordance with the payment plan selected by the Fashion Consultant as provided
in the Fashion Consultant Manuel.
2.2 The company will provide a free Sales Kit for the Consultant's first
season. The Consultant will be charged for her kit in subsequent seasons as
outlined in the Fashion Consultant Manual. The Company will refund the price of
any Kit received within forty-five (45) days after shipment should the
Consultant decide not to continue.
SECTION 3. WARRANTY. The Company offers unconditional guarantee on every
item sold for quality of workmanship and fabric. When the item is returned
according to Doncaster's policy for returns or exchanges, a credit, exchange or
refund will be made to the Fashion Consultant.
SECTION 4. FASHION CONSULTANT'S OBLIGATION. The Fashion Consultant agrees
to actively promote and solicit the sale of the Designated Apparel and agrees
not to show competitive products when using a Doncaster sample set.
SECTION 5. RELATIONSHIP OF THE PARTIES. The services to be rendered by
the Fashion Consultant under this Agreement shall be rendered as an independent
business person. The Fashion consultant will not be treated as an employee for
Federal or State tax purposes. As an independent contractor, the Fashion
Consultant is responsible for filing all necessary Federal and State tax returns
as may be required by law.
SECTION 6. TERMINATION OF AGREEMENT. Either the Company or the Fashion
Consultant may terminate this Agreement at any time by giving 30 days written
notice.
SECTION 7. IMPOSSIBILITY OF THE COMPANY'S PERFORMANCE. The Company shall
not be liable for the delay or inability to manufacture, sell or deliver the
Designated Apparel due to shortages of materials, labor strikes, accidents,
fire, flood or other acts of God or acts of civil authorities, or from any other
cause beyond the Company's control. Further, the Company has limited supplies of
certain Apparel. Orders for such Apparel shall be filled on a "first-come,
first- served" basis, and the Company's sole obligation for its inability to
fill an order after its supply of any item of Apparel has been exhausted or for
any other reason shall be to refund the purchase price of such item.
SECTION 8. APPLICABLE LAW. This Agreement shall be governed by the laws
of the State of North Carolina.
FASHION CONSULTANT TANNER COMPANIES
by_______________________________ by_______________________________
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
HARMONY TRADING CORP.
Filed by: Paul Gottbetter, Esq.
570 Seventh Avenue Rm. 1802
New York, New York 10018
<PAGE>
CERTIFICATE OF INCORPORATION
HARMONY TRADING CORP.
Under Section 402 of the Business Corporation Law.
The undersigned, for the purpose of forming a corporation pursuant to
Section 402 of the Business Corporation Law of the State of New York, does
hereby certify and set forth:
FIRST: The name of the corporation is HARMONY TRADING CORP.
-----
SECOND: The purposes for which the corporation is formed are:
------
To engage in any lawful act or activity for which corporations may be
organized under the business corporation law, provided that the corporation is
not formed to engage in any act or activity which requires the act or approval
of any state official, department, board, agency or other body without such
approval or consent first being obtained.
To export from the United States of America and its territories and
possessions, and any and all foreign countries, as principal or agent,
merchandise of every kind and description including, but not limited to,
machinery, equipment, firearms and munitions, and to purchase, sell and deal in
and with such merchandise for exportation from the United States and from all
countries foreign thereto, and for exportation from any foreign country from any
other country foreign thereto, and to purchase and sell domestic merchandise in
domestic markets and foreign merchandise in foreign markets, and to do a general
foreign and domestic exporting business.
To carry on business in the various states, territories, districts and
insular possessions of the United States and in foreign countries as factors,
agents and commission merchants; to solicit, receive, pack, crate, ship, bill
and collect for all articles of merchandise offered by foreign manufacturers for
sale and disposal in domestic markets, and to investigate, buy, secure, pack,
crate, ship, bill and collect for all machinery, goods, wares, merchandise and
commodities of foreign manufacturers directly or indirectly desired by
corporations, individuals or firms located in the United States.
To carry on a general mercantile, industrial, investing and trading
business in all its branches; to devise, invent, manufacture, fabricate,
assemble, install, service, maintain, alter, buy, sell, import, export, license
as licensor or licensee, lease as lessor or lessee, distribute, job, enter into,
negotiate, execute, acquire, and assign contracts in respect of, acquire,
receive, grant, and assign licensing arrangements, options, franchises, and
other rights in respect of, and generally deal in and with, at wholesale and
retail, as principal, and as sales, business, special, or general agent,
representative, broker, factor, merchant, distributor, jobber, advisor, or in
any other lawful capacity, goods, wares,
<PAGE>
merchandise, commodities, and unimproved, improved, finished, processed and
other real, personal and mixed property of any and an kinds, with the
components, resultants, and by products thereof.
To acquire by purchase, subscription, underwriting or otherwise, and to
own, hold for investment, or otherwise, and to use, sell, assign, transfer,
mortgage, pledge, exchange or otherwise dispose of real and personal property of
every sort and description and wheresoever situated, including shares of stock,
bonds, debentures, notes, scrip, securities, evidences of indebtedness,
contracts or obligations of any corporation or association, whether domestic or
foreign, or of any firm or individual or of the United States or any state,
territory or dependency of the United States or any foreign country, or any
municipality or local authority within or without the United States, and also to
issue in exchange therefor, stocks, bonds or other securities or evidences of
indebtedness of this corporation and, while the owner or holder of any such
property, to receive, collect and dispose of the interest, dividends and income
on or from such property and to possess and exercise in respect thereto all of
the rights, powers and privileges of ownership, including all voting powers
thereon.
To construct, build, purchase, lease or otherwise acquire, equip, hold,
own, improve, develop, manage, maintain, control, operate, lease, mortgage,
create liens upon, sell, convey or otherwise dispose of and turn to account, any
and all plants, machinery, works, implements and things or property, real and
personal, of every kind and description, incidental to, connected with, or
suitable, necessary or convenient for any of the purposes enumerated herein,
including all or any part or parts of the properties, assets, business and
goodwill of any persons, firms, associations or corporations.
The powers, rights and privileges provided in this certificate are not to
be deemed to be in limitation of similar, other or additional powers, rights and
privileges granted or permitted to a corporation by the Business Corporation
Law, it being intended that this corporation shall have all rights, powers and
privileges granted or permitted to a corporation by such statute.
THIRD: The office of the corporation is to be located in the County of
-----
Westchester, State of New York.
FOURTH: The aggregate number of shares which the corporation shall have
------
the authority to issue is Two Hundred (200), all of which shall be without par
value.
FIFTH: The Secretary of State is designated as the agent of the
-----
corporation upon whom process against it may be served. The post office address
to which the Secretary of State shall mail a copy of any process against the
corporation served on him is:
<PAGE>
Paul Gottbetter, Esq.
570 Seventh Avenue Rm. 1802
New York, New York 10018
SIXTH: The personal liability of directors to the corporation or its
-----
shareholders for damages for any breach of duty in such capacity is hereby
eliminated except that such personal liability shall not be eliminated if a
judgment or other final adjudication adverse to such director establishes that
his acts or omissions were in bad faith or involved intentional misconduct or a
knowing violation of law or that he personally gained in fact a financial profit
or other advantage to which he was not legally entitled or that his acts
violated Section 719 of the Business Corporation Law.
IN WITNESS WHEREOF, this certificate has been subscribed to this 12th day
of August, 1996 by the undersigned who affirms that the statements made herein
are true under the penalties of perjury.
/s/ Gerald Weinberg
-------------------
GERALD WEINBERG
90 State Street
Albany, New York
<PAGE>
EXHIBIT 3.2
BY-LAWS
of
HARMONY TRADING CORP.
OFFICES
The principal office of the corporation shall be in the Town of Hartsdale,
County of Westchester, State of New York. The corporation may also have offices
at such other places within or without the State of New York as the board may
from time to time determine or the business of the corporation may require.
SHAREHOLDERS
PLACE OF MEETINGS.
Meetings of shareholders shall be held at the principal office of the
corporation or at such place within or without the State of New York as the
board shall authorize.
ANNUAL MEETING.
The annual meeting of the shareholders shall be held on the third Monday in
April at a time chosen by the board of directors, in each year if not a legal
holiday, and, if a legal holiday, then on the next business day following at the
same hour, when the shareholders shall elect a board and transact such other
business as may properly come before the meeting.
SPECIAL MEETINGS.
Special meetings of the shareholders may be called by the board or by the
president and shall be called by the president or the secretary at the request
in writing of a majority of the board or at the request in writing of
shareholders owning a majority in amount of the shares issued and outstanding.
Such request shall state the purpose or purposes of the proposed meeting.
Business transacted at a special meeting shall be confined to the pur poses
stated in the notice.
FIXING RECORD DATE.
For the purpose of determining the shareholders entitled to notice of or to vote
at any meeting of shareholders or any adjournment thereof, or to express consent
to or dissent from any proposal without a meeting, or for the purpose of
determining shareholders entitled to receive payment of any dividend or the
allotment of any rights, or for the purpose of any other action, the board shall
fix, in advance, a date as the record date for any such determination of
shareholders. Such date shall not be more than sixty or less
<PAGE>
than ten days before the date of such meeting, or more than sixty days prior to
any other action. If no record date is fixed it shall be determined in
accordance with the provisions of law.
NOTICE OF MEETINGS OF SHAREHOLDERS.
Written notice of each meeting of shareholders shall state the purpose or
purposes for which the meeting is called, the place, date and hour of the
meeting and unless it is the annual meeting, shall indicate that it is being
issued by or at the direction of the person or persons calling the meeting.
Notice shall be given either personally or by mail to each shareholder entitled
to vote at such meeting, neither less than ten nor more than sixty days before
the date of the meeting. If action is proposed to be taken that might entitle
shareholders to payment for their shares, the notice shall include a statement
of that purpose and to that effect. If mailed, the notice is given when
deposited in the United States mail, with postage thereon prepaid, directed to
the shareholder at his address as it appears on the record of shareholders, or,
if he shall have filed with the secretary a written request that notices to him
be mailed to some other address, then directed to him at such other address.
WAIVERS.
Notice of meeting need not be given to any shareholder who signs a waiver of
notice, in person or by proxy, whether before or after the meeting. The
attendance of any shareholder at a meeting, in person or by proxy, without
protesting prior to the conclusion of the meeting the lack of notice of such
meeting, shall constitute a waiver of notice by him.
QUORUM OF SHAREHOLDERS.
Unless the certificate of incorporation provides otherwise, the holders of a
majority of the shares entitled to vote thereat shall constitute a quorum at a
meeting of shareholders for the transaction of any business, provided that when
a specified item of business is required to be voted on by a class or classes,
the holders of a majority of the shares of such class or classes shall
constitute a quorum for the transaction of such specified item of business.
When a quorum is once present to organize a meeting, it is not broken by the
subsequent withdrawal of any shareholders.
The shareholders present may adjourn the meeting despite the absence of a
quorum.
PROXIES.
<PAGE>
A shareholder may execute a writing authorizing another person or persons to act
for him as proxy. Execution may be accomplished by the shareholder or the
shareholder=s authorized officer, director, employee or agent signing such
writing or causing his signature to be affixed to such writing by any reasonable
means including, but not limited to, by facsimile signature. A shareholder may
authorize another person or persons to act for the shareholder as proxy by
transmitting or authorizing the transmission of a telegram, cablegram or other
means of electronic transmission to the person who will be the holder of the
proxy or to a proxy solicitation firm, proxy support service organization or
like agent duly authorized by the person who will be the holder of the proxy to
receive such transmission, provided that any such telegram, cablegram or other
means of electronic transmission must either set forth or be submitted with
information from which it can be reasonably determined that the telegram,
cablegram or other electronic transmission was authorized by the shareholder. If
it is determined that such telegrams, cablegrams or other electronic
transmissions are valid, the inspectors or, if there are no inspectors, such
other persons making that determination shall specify the nature of the
information upon which they relied. Any copy, facsimile telecommunication or
other reliable reproduction of the writing or transmission created pursuant to
this section may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile telecommunication
or other reproduction shall be a complete reproduction of the entire original
writing or transmission. No proxy shall be valid after expiration of eleven
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the shareholder executing it, except as
otherwise provided by law.
QUALIFICATION OF VOTERS.
Every shareholder of record shall be entitled at every meeting of shareholders
to one vote for every share standing in his name on the record of shareholders,
unless otherwise provided in the certificate of incorporation.
VOTE OF SHAREHOLDERS.
Except as otherwise required by statute or by the certificate of incorporation:
directors shall be elected by a plurality of the votes cast at a meeting of
shareholders by the holders of shares entitled to vote in the election; and
all other corporate action shall be authorized by a majority of the votes cast.
WRITTEN CONSENT OF SHAREHOLDERS.
Any action that may be taken by vote may be taken without a meeting on written
consent, setting forth the action so taken, signed by the holders of all the
outstanding shares entitled to vote thereon or signed by such lesser number of
holders as may be provided
<PAGE>
for in the certificate of incorporation.
ADDITIONAL PROVISIONS WHERE SHARES ARE PUBLICLY HELD
The following additional provisions shall be applicable only if at the time of a
meeting of shareholders the corporation has a class of voting stock that is
listed on national securities exchange or authorized for quotation on an
interdealer quotation system of a registered national securities association.
The Board of Directors shall appoint one or more inspectors to act at the
meeting or any adjourned thereof and make a written report thereof. The Board of
Directors may designate one or more persons as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate has been appointed,
or if such persons are unable to act at any meeting of shareholders, the person
presiding at the meeting shall appoint one or more inspectors to act at the
meeting. Each inspector, before entering upon the discharge of his duties, shall
take an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors
shall determine the number of shares outstanding and the voting power of each,
the shares represented at the meeting, the existence of a quorum, the validity
and effect of proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents, determine the results,
and do such acts as are proper to conduct the election or vote with fairness to
all shareholders. On request of the person presiding at the meeting or any
shareholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, question or matter determined by them and execute a
certificate of any fact found by them. In determining the validity and counting
of proxies, ballots and consents, the inspectors shall be limited to an
examination of the proxies, any envelope submitted with those proxies and
consents, any information provided in accordance with Section 8 of ARTICLE II,
ballots and the regular books and records of the corporation, except that the
inspectors may consider other reliable information for the limited purpose of
reconciling proxies, ballots and consents submitted by or on behalf of banks,
brokers, their nominees or similar persons which represent more votes than the
holder of a proxy is authorized by the record owner to cast or more votes than
the shareholder holds of record. If the inspectors consider other reliable
information for the limited purpose permitted herein, the inspectors at the time
they make their certification shall specify the precise information considered
by them including the person or persons from whom they obtain the information,
when the information was obtained, the means by which the information was
obtained and the basis for the inspectors= belief that such information is
reliable.
The date and time (which need not be a particular time of day) of the opening
and the closing of the polls for each matter upon which the shareholders will
vote at a meeting shall be announced by the person presiding at the meeting at
the beginning of the meeting and, if no date and time is so announced, the polls
shall close at the end of the meeting, including any adjournment thereof. No
ballots, proxies or consents, nor any revocation
<PAGE>
thereof or changes thereto, shall be accepted by the inspectors after the
closing of polls unless the Supreme Court of the State of New York at a special
term held within the judicial district where the office of the corporation is
located, upon application by a shareholder, shall determine otherwise.
DIRECTORS
BOARD OF DIRECTORS.
Subject to any provision in the certificate of incorporation the business of the
corporation shall be managed by its board of directors, each of whom shall be at
least 18 years of age and need not be a shareholder.
NUMBER OF DIRECTORS.
The number of directors shall be fixed by the board of directors from time to
time. If not otherwise fixed under this paragraph, the number shall be one.
ELECTION AND TERM OF DIRECTORS.
At each annual meeting of shareholders, the shareholders shall elect directors
to hold office until the next annual meeting. Each director shall hold office
until the expiration of the term for which he is elected and until his successor
has been elected and qualified, or until his prior resignation or removal.
NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists, unless otherwise
provided in the certificate of incorporation. Vacancies occurring by reason of
the removal of directors without cause shall be filled by vote of the
shareholders unless otherwise provided in the certificate of incorporation. A
director elected to fill a vacancy caused by resignation, death or removal shall
be elected to hold office for the unexpired term of his predecessor.
REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the shareholders
or by action of the board. Directors may be removed without cause only by vote
of the shareholders.
RESIGNATION.
A director may resign at any time by giving written notice to the board, the
president or
<PAGE>
the secretary of the corporation. Unless otherwise specified in the notice, the
resignation shall take effect upon receipt thereof by the board or such officer,
and the acceptance of the resignation shall not be necessary to make it
effective.
QUORUM OF DIRECTORS.
Unless otherwise provided in the certificate of incorporation, a majority of the
entire board shall constitute a quorum for the transaction of business or of any
specified item of business.
ACTION OF THE BOARD.
Unless otherwise required by law, the vote of a majority of the directors
present at the time of the vote, if a quorum is present at such time, shall be
the act of the board. Each director present shall have one vote regardless of
the number of shares, if any, which he may hold.
PLACE AND TIME OF BOARD MEETINGS.
The board may hold its meetings at the office of the corporation or at such
other places, either within or without the State of New York, as it may from
time to time determine.
REGULAR ANNUAL MEETING.
A regular annual meeting of the board shall be held immediately following the
annual meeting of shareholders at the place of such annual meeting of
shareholders.
NOTICE OF MEETINGS OF THE BOARD, ADJOURNMENT.
Regular meetings of the board may be held without notice at such time and place
as it shall from time to time determine. Special meetings of the board shall be
held upon notice to the directors and may be called by the president upon three
days notice to each director either personally or by mail or by wire; special
meetings shall be called by the president or by the secretary in a like manner
on written request of two directors. Notice of a meeting need not be given to
any director who submits a waiver of notice whether before or after the meeting
or who attends the meeting without protesting prior thereto or at its
commencement, the lack of notice to him.
A majority of the directors present, whether or not a quorum is present, may
adjourn any meeting to another time and place. Notice of the adjournment shall
be given all directors who were absent at the time of the adjournment and,
unless such time and place are announced at the meeting, to the other directors.
<PAGE>
CHAIRMAN.
At all meetings of the board the president, or in his absence, a chairman chosen
by the board shall preside.
EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution adopted by a majority of the entire board, may
designate from among its members an executive committee and other committees,
each consisting of one or more directors. Each such committee shall serve at the
pleasure of the board.
COMPENSATION.
No compensation shall be paid to directors, as such, for their services, but by
resolution of the board a fixed sum and expenses for actual attendance, at each
regular or special meeting of the board may be authorized, Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
OFFICERS
OFFICES, ELECTION, TERM.
Unless otherwise provided for in the certificate of incorporation, the board may
elect or appoint a president, one or more vice-presidents, a secretary and a
treasurer, and such other officers as it may determine, who shall have such
duties, powers and functions as hereinafter provided.
All officers shall be elected or appointed to hold office until the meeting of
the board following the annual meeting of shareholders. Each officer shall hold
office for the term for which he is elected or appointed and until his successor
has been elected or appointed and qualified.
REMOVAL, RESIGNATION, SALARY, ETC,
Any officer elected or appointed by the board may be removed by the board with
or without cause. In the event of the death, resignation or removal of an
officer, the board in its discretion may elect or appoint a successor to fill
the unexpired term. Any two or more offices may be held by the same person, and
such person may hold all or any combination of offices. The salaries of all
officers shall be fixed by the board. The directors may require any officer to
give security for the faithful performance of his duties.
PRESIDENT.
<PAGE>
The president shall be the chief executive officer of the corporation; he shall
preside at all meetings of the shareholders and of the board; he shall have
oversight over the management of the business of the corporation and shall see
that all orders and resolutions of the board are carried into effect.
VICE-PRESIDENTS.
During the absence or disability of the president, the vice-president, or if
there is more than one, the executive vice-president, shall have all the powers
and functions of the president. Each vice-president shall perform such other
duties as the board shall prescribe.
SECRETARY.
The secretary shall:
- attend all meetings of the board and of the shareholders;
- record all votes and minutes of all proceedings in a book to be kept for
that purpose;
- give or cause to be given notice of all meetings of shareholders and of
special meetings of the board;
- keep in safe custody the seal of the corporation and affix it to any
instrument when authorized by the board;
- when required, prepare or cause to be prepared and available at each
meeting of shareholders a certified list in alphabetical order of the names
of shareholders entitled to vote thereat, indicating the number of shares
of each respective class held by each;
- keep all the documents and records of the corporation as required by law
or otherwise in a proper and safe manner.
- perform such other duties as may be prescribed by the board.
ASSISTANT SECRETARIES.
During the absence or disability of the secretary, the assistant secretary, or
if there is more than one, the one so designated by the secretary or by the
board, shall have all the powers and functions of the secretary.
TREASURER.
The treasurer shall:
- have the custody of the corporate funds and securities;
- keep full and accurate accounts of receipts and disbursements in the
corporate books;
- deposit all money and other valuables in the name and to the credit of
the corporation in such depositories as may be designated by the board;
<PAGE>
- disburse the funds of the corporation as may be ordered or authorized by
the board and preserve proper vouchers for such disbursements;
- render to the president and board at the regular meetings of the board,
or whenever they require it, an account of all his transactions as
treasurer and of the financial condition of the corporation;
- render a full financial report at the annual meeting of the shareholders
if so requested;
- be furnished by all corporate officers and agents at his request, with
such reports and statements as he may require as to all financial
transactions of the corporation;
- perform such other duties as are given to him by these by-laws or as from
time to time are assigned to him by the board or the president.
ASSISTANT TREASURER.
During the absence or disability of the treasurer, the assistant treasurer, or
if there is more than one, the one so designated by the secretary or by the
board, shall have all the powers and functions of the treasurer.
SURETIES AND BONDS.
In case the board shall so require, any officer or agent of the corporation
shall execute to the corporation a bond in such sum and with such surety or
sureties as the board may direct, conditioned upon the faithful performance of
his duties to the corporation and including responsibility for negligence and
for the accounting for all property, funds or securities of the corporation
which may come into his hands.
<PAGE>
CERTIFICATES FOR SHARES
CERTIFICATES.
The shares of the corporation shall be represented by certificates. They shall
be numbered and entered in the books of the corporation as they are issued. They
shall exhibit the holder's name and the number of shares and shall be signed by
the president or a vice-president and the treasurer or the secretary and shall
bear the corporate seal.
LOST OR DESTROYED CERTIFICATES.
The board 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 of that fact by
the person claiming the certificate to be lost or destroyed. When authorizing
such issue of a new certificate or certificates, the board 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 and with such surety or sureties 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.
TRANSFERS OF SHARES.
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 to issue a new certificate to the person entitled thereto, and
cancel the old certificate; every such transfer shall be entered on the transfer
book of the corporation which shall be kept at its principal office. No transfer
shall be made within ten days next preceding the annual meeting of shareholders.
The corporation shall be entitled to treat the holder of record of any share as
the holder in fact thereof and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such share on the part of any other
person whether or not it shall have express or other notice thereof, except as
expressly provided by the laws of New York.
CLOSING TRANSFER BOOKS.
The board shall have the power to close the share transfer books of the
corporation for a period of not more than ten days during the thirty day period
immediately preceding (1) any shareholders meeting, or (2) any date upon which
shareholders shall be called upon to or have a right to take action without a
meeting, or (3) any date fixed for the payment of a dividend or any other form
of distribution, and only those shareholders of record at the time the transfer
books are closed, shall be recognized as such for the purpose of (1) receiving
notice of or voting at such meeting, or (2) allowing them to take appropriate
action, or (3) entitling them to receive any dividend or other form of
distribution.
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DIVIDENDS
Subject to the provisions of the certificate of incorporation and to applicable
law, dividends on the outstanding shares of the corporation may be declared in
such amounts and at such time or times as the board may determine.
CORPORATE SEAL
The seal of the corporation shall be circular in form and bear the name of the
corporation, the year of its organization and the words "Corporate Seal, New
York." The seal may be used by causing it to be impressed directly on the
instrument or writing to be sealed, or upon adhesive substance affixed thereto.
The seal on the certificates for shares or on any corporate obligation for the
payment of money may be a facsimile, engraved or printed.
EXECUTION OF INSTRUMENTS
All corporate instruments and documents shall be signed or countersigned,
executed, verified or acknowledged by such officer or officers or other person
or persons as the board may from time to time designate.
FISCAL YEAR
The fiscal year shall be as determined by the accountant for the corporation
REFERENCES TO CERTIFICATE OF INCORPORATION
Reference to the certificate of incorporation in these by-laws shall include all
amendments thereto or changes thereof unless specifically excepted.
BY-LAW CHANGES AMENDMENT, REPEAL, ADOPTION, ELECTION OF DIRECTORS.
Except as otherwise provided in the certificate of incorporation, the by-laws
may be amended, repealed or adopted by vote of the holders of the shares at the
time entitled to vote in the election of any directors. By-laws may also be
amended, repealed or adopted by the board but any by-law adopted by the board
may be amended by the shareholders entitled to vote thereon as hereinabove
provided.
No amendment of the bylaws pertaining to the election of directors or the
procedures for the calling and conduct of a meeting of shareholders shall affect
the election of directors or the procedure for the calling or conduct in respect
of any meeting of shareholders unless adequate notice thereof is given to the
shareholders in a manner reasonably calculated to provide shareholders with
sufficient time to respond thereto prior to such meeting.
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EXHIBIT 23
THOMAS P. MONAHAN
CERTIFIED PUBLIC ACCOUNTANT
208 LEXINGTON AVENUE
PATERSON, NEW JERSEY 07502
(201) 790-8775
Fax (201) 790-8845
To The Board of Directors and Shareholders
of Wolfpack Corporation
I have audited the accompanying consolidated balance sheet of Wolfpack
Corporation as of January 4, 1999 and the related consolidated statements of
operations, cash flows and shareholders' equity for period from inception, March
16, 1998, to January 4, 1999. 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 I 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 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 Wolfpack as of January 4,
1999 and the results of its operations, shareholders equity and cash flows for
period from inception, March 16, 1998, to January 4, 1999 in conformity with
generally accepted accounting principles.
Thomas Monahan
--------------------------
Thomas P. Monahan, CPA
June 10, 1999
Paterson, New Jersey
