UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the
Securities Exchange Act of 1934
Innovative Technology Systems, Inc.
(Name of Small Business Issuer in its charter)
Florida 65-0386286
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
131 Egret Drive, Jupiter, Florida 33458
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, (561) 575-3103
With Copy To:
David M. Bovi, Esq.
David M. Bovi, P.A.
319 Clematis Street, Suite 812
West Palm Beach, Florida 33401
(561) 655-0665
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Securities to be registered under Section 12(g) of the Act:
Common Stock, No Par Value
(Title of class)
(Title of class)
<PAGE>
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
Innovative Technology Systems, Inc. (the "Company"), was
incorporated under the laws of the State of Florida on November 13,
1992 and is in its early developmental and promotional stages. The
Company is a "shell" company conducting virtually no business
operation, other than its efforts to seek merger partners or
acquisition candidates. Since its inception, the Company has never
engaged in any substantive commercial business or other business
operations. The Company has no full time employees and owns no real
estate.
The Company is a corporate vehicle created to seek to effect
a merger, exchange of capital stock, asset acquisition or other
similar business combination (a "Business Combination") with an
operating or development stage business (the "Target Business")
which desires to employ the Company to become a reporting
corporation under the Securities Exchange Act of 1934 ("Exchange
Act"). On April 22, 1999, the Company elected to register the
Company's common stock, no par value (the "Common Stock") pursuant
to this Form 10-SB registration statement on a voluntary basis in
order to create a reporting "shell" company. The Company has a
shareholder base of approximately 300 shareholders and 6,100,000
shares of Common Stock outstanding, 5,375,000 of which are
"control" securities and therefore deemed to be restricted pursuant
to Rule 144 of the Securities Act of 1933, as amended (the
"Securities Act"). See "Description of Securities". Pursuant to
resolution of the Company's board of directors, no Business
Combination may occur prior to the Company obtaining the requisite
audited financial statements required pursuant to Form 8-K (or its
equivalent) promulgated under the Exchange Act.
Upon the effectiveness of this registration statement, the
Company intends to seek potential business opportunities and
effectuate a Business Combination with a Target Business with
significant growth potential which, in the opinion of management,
could provide a profit to the Company and its shareholders. The
Company intends to seek opportunities demonstrating the potential
of long term growth as opposed to short term earnings. The
Company's efforts in identifying a prospective Target Business are
expected to emphasize businesses primarily located in the United
States; however, the Company reserves the right to acquire a Target
Business located primarily elsewhere. While the Company may, under
certain circumstances, seek to effect Business Combinations with
more than one Target Business, as a result of its limited
resources, the Company will, in all likelihood, have the ability to
effect only a single Business Combination. The Company may effect
a Business Combination with a Target Business which may be
financially unstable or in its early stages of development or
growth. The Company will not restrict its search to any specific
business, industry or geographical location, and the Company may
participate in a business venture of virtually any kind or nature.
Present management of the Company may become involved in management
of the Target Business and/or may hire qualified but as yet
unidentified individuals to manage such Target Business. Presently,
the Company has no plan, proposal, agreement, understanding or
<PAGE> 2
arrangement to acquire or merge with any specific business or
company, and the Company has not identified any specific business
or company for investigation and evaluation.
The discussion of the proposed business under this caption and
throughout this registration statement is purposefully general and
is not meant to be restrictive of the Company's virtually unlimited
discretion to search for and enter into potential business
opportunities.
"SHELL" CORPORATION
Background.
Since the Company conducts virtually no business operations,
other than its efforts to effectuate a Business Combination, the
Company can be characterized as a "shell" corporation. As a shell
corporation, the Company faces special risks inherent in the
investigation, acquisition, or involvement in a new business
opportunity. Further, as a new or "start-up" company, the Company
faces all of the unforeseen costs, expenses, problems, and
difficulties related to such companies. The Company is dependent
upon its sole officer and director, John Bylsma, and his efforts to
effectuate a Business Combination. Accordingly, the Company's
shareholders will not have an opportunity to evaluate the specific
merits or risks of any one or more Business Combinations and will
have no control over the decision making relating to such. In the
event the Company loses the services of Mr. Bylsma, the Company
could be adversely affected.
Due to the limited capital available to the Company, the
consummation of a Business Combination will likely involve the
acquisition of, or merger or consolidation with, a company that
does not need substantial additional capital but which desires to
establish a public trading market for its shares, while avoiding
what it might deem to be the adverse consequences of undertaking a
public offering itself, such as the time delays and significant
expenses incurred to comply with the various federal and state
securities laws that regulate initial public offerings. A Target
Business might desire, among other reasons, to create a public
market for their shares in order to enhance liquidity for current
shareholders, facilitate raising capital through the public sale of
securities of which a prior existence of a public market for its
securities exists, and/or acquire additional assets through the
issuance of securities rather than for cash.
No trading market in the Company's securities presently
exists. In light of the restrictions concerning shell companies
contained in many state blue sky laws and regulations, it is not
likely that a trading market will be created in the Company's
securities until such time as a Business Combination occurs with a
Target Business. No assurances are given that subsequent to such a
Business Combination that a trading market in the Company's
securities will develop. The Company presently has 6,100,000 shares
of Common Stock outstanding, of which 5,375,000 of such shares are
deemed to be "restricted securities", as that term is defined under
Rule 144 promulgated under the Securities Act, in that such shares
were issued in private transactions not involving a public
offering. Presently, so long as all other conditions of Rule 144
are met, all 5,375,000 of such shares are eligible for sale under
Rule 144, as currently in effect. No assurances are made;
<PAGE> 3
however, that Rule 144 will be available at any time for any
shareholder's shares. The Company has not provided to any
shareholder registration rights to register under the Securities
Act any shareholder's shares for sale. See "Market for Common
Equity and Related Stockholder Matters".
The Company cannot estimate the time that it will take to
effectuate a Business Combination. It could be time consuming;
possibly in excess of many months or years. Additionally, no
assurance can be made that the Company will be able to effectuate
a Business Combination on terms favorable to the Company. The
Company might identify and effectuate a Business Combination with
a Target Business which proves to be unsuccessful for any number of
reasons, many of which are due to the fact that the Target Business
is not identified at this time. If this occurs, the Company and
its shareholders might not realize any type of profit.
Unspecified Industry and Target Business.
The Company will seek to acquire a Target Business without
limiting itself to a particular industry. Most likely, the Target
Business will be primarily located in the United States, although
the Company reserves the right to acquire a Target Business
primarily located outside the United States. In seeking a Target
Business, the Company will consider, without limitation, businesses
which (i) offer or provide services or develop, manufacture or
distribute goods in the United States or abroad, including, without
limitation, in the following areas: real estate, health care and
health products, educational services, environmental services,
consumer-related products and services (including amusement,
entertainment and/or recreational services), personal care
services, voice and data information processing and transmission
and related technology development or (ii) is engaged in wholesale
or retail distribution. To date, the Company has not selected any
particular industry or any Target Business in which to concentrate
its Business Combination efforts. Accordingly, the Company is only
able to make general disclosures concerning the risks and hazzards
of effectuating a Business Combination with a Target Business since
there is presently no current basis for the Company to evaluate the
possible merits or risks of the Target Business or the particular
industry in which the Company may ultimately operate. Any Target
Business that is selected will be required to have audited
financial statements prior to the commencement of a the Business
Combination. To the extent the Company effects a Business
Combination with a financially unstable company or an entity in its
early stage of development or growth (including entities without
established records of sales or earnings), the Company will become
subject to numerous risks inherent in the business and operations
of financially unstable and early stage or potential emerging
growth companies. In addition, to the extent that the Company
effects a Business Combination with a Target Business in an
industry characterized by a high level of risk, the Company will
become subject to the currently unascertainable risks of that
industry. An extremely high level of risk frequently characterizes
certain industries which experience rapid growth. Although
management will endeavor to evaluate the risks inherent in a
particular industry or Target Business, there can be no assurances
that the Company will properly ascertain or assess all significant
risk factors.
<PAGE> 4
Probable Lack of Business Diversification.
As a result of the limited resources of the Company, the
Company, in all likelihood, will have the ability to effect only a
single Business Combination. Accordingly, the prospects for the
Company's success will be entirely dependent upon the future
performance of a single business.
Unlike certain entities that have the resources to consummate
several Business Combinations or entities operating in multiple
industries or multiple segments of a single industry, it is highly
likely that the Company will not have the resources to diversify
its operations or benefit from the possible spreading of risks or
offsetting of losses. The Company's probable lack of
diversification could subject the Company to numerous economic,
competitive and regulatory developments, any or all of which may
have a material adverse impact upon the particular industry in
which the Company may operate subsequent to consummation of a
Business Combination. The prospects for the Company's success may
become dependent upon the development or market acceptance of a
single or limited number of products, processes or services.
Accordingly, notwithstanding the possibility of management
assistance to the Target Business by the Company, there can be no
assurance that the Target Business will prove to be commercially
viable.
Limited Ability to Evaluate Target Business' Management.
While the Company's ability to successfully effect a Business
Combination will be dependent upon certain key personnel, the
future role of such personnel in the Target Business cannot
presently be stated with any certainty. It is unlikely that any of
the Company's key personnel will remain associated in any
operational capacity with the Company following a Business
Combination. Moreover, there can be no assurances that such
personnel will have any experience or knowledge relating to the
operations of the particular Target Business. Furthermore, although
the Company intends to closely scrutinize the management of a
prospective Target Business in connection with evaluating the
desirability of effecting a Business Combination, there can be no
assurances that the Company's assessment of such management will
prove to be correct, especially since none of the Company's current
key personnel are professional business analysts. See "Directors,
Executive Officers, Promoters and Control Persons". Accordingly,
the Company will be dependant, in some significant respects, on the
ability of the management of the Target Business who are
unidentifiable as of the date hereof. In addition, there can be no
assurances that such future management will have the necessary
skills, qualifications or abilities to manage a public company. The
Company may also seek to recruit additional managers to supplement
the incumbent management of the Target Business. There can be no
assurances that the Company will have the ability to recruit such
additional managers, or that such additional managers will have the
requisite skill, knowledge or experience necessary or desirable to
enhance the incumbent management.
Opportunity for Shareholder Evaluation or Approval of Business
Combinations.
Non-affiliate shareholders of the Company will, in all
likelihood, neither receive nor otherwise have the opportunity to
evaluate any financial or other information which will be made
available to the Company in connection with selecting a potential
Business Combination until after the Company has entered into an
<PAGE> 5
agreement to effectuate a Business Combination. Such agreement to
effectuate a Business Combination, however, will be subject to
shareholder approval pursuant to applicable law. As a result,
non-affiliate shareholders of the Company will be almost entirely
dependent on the judgment and experience of management in
connection with the selection and ultimate consummation of a
Business Combination. In addition, under Florida law, the form of
Business Combination could impact upon the availability of
dissenters' rights (i.e., the right to receive fair payment with
respect to the Company's Common Stock) to shareholders disapproving
the proposed Business Combination. See "Description of Business -
Shell Corporation - Conflicts of Interest" and "Certain
Relationships and Related Transactions".
Selection of a Target Business and Structuring of a Business
Combination.
The Company's management anticipates that the selection of a
Target Business will be complex and risky because of competition
for such business opportunities among all segments of the financial
community. The nature of the Company's search for the acquisition
of a Target Business requires maximum flexibility inasmuch as the
Company will be required to consider various factors and
circumstances which may preclude meaningful direct comparison among
the various business enterprises, products or services
investigated. Investors should recognize that the possible lack of
diversification among the Company's acquisitions may not permit the
Company to offset potential losses from one venture against profits
from another. Management of the Company will have virtually
unrestricted flexibility in identifying and selecting a prospective
Target Business. In addition, in evaluating a prospective Target
Business, management will consider, among other factors, the
following factors which are not listed in any particular order:
- financial condition and results of operation of the Target
Business;
- growth potential and projected financial performance of
the Target Business and the industry in which it operates;
- experience and skill of management and availability of
additional personnel of the Target Business;
- capital requirements of the Target Business;
- the availability of a transaction exemption from
registration pursuant to the Securities Act for the
Business Combination;
- the location of the Target Business;
- competitive position of the Target Business;
- stage of development of the product, process or service
<PAGE> 6
of the Target Business;
- degree of current or potential market acceptance of the
product, process or service of the Target Business;
- possible proprietary features and possible other protection
of the product, process or service of the Target Business;
- regulatory environment of the industry in which the Target
Business operates;
- costs associated with effecting the Business Combination;
and
- equity interest in and possible management participation in
the Target Business.
The foregoing criteria are not intended to be exhaustive; any
evaluation relating to the merits of a particular Business
Combination will be based, to the extent relevant, on the above
factors as well as other considerations deemed relevant by
management of the Company in connection with effecting a Business
Combination consistent with the Company's business objective. In
many instances, it is anticipated that the historical operations of
a Target Business may not necessarily be indicative of the
potential for the future because of the possible need to shift
marketing approaches substantially, expand significantly, change
product emphasis, change or substantially augment management, or
make other changes. The Company will be dependent upon the owners
of a Target Business to identify any such problems which may exist
and to implement, or be primarily responsible for the
implementation of, required changes. Because the Company may
engage in a Business Combination with a newly organized firm or
with a firm which is entering a new phase of growth, the Company
will incur further risks, because in many instances, management of
the Target Business will not have proven its abilities or
effectiveness, the eventual market for the products or services of
the Target Business will likely not be established, and the Target
Business may not be profitable subsequent to a Business
Combination.
The Company's limited funds and the lack of full-time
management will likely make it impracticable to conduct a complete
and exhaustive investigation and analysis of a Target Business
before the Company commits its capital or other resources thereto.
Management decisions, therefore, will likely be made without
detailed feasibility studies, independent analysis, market surveys
and the like which, if the Company had more funds available to it,
would be desirable. The Company will be particularly dependent in
making decisions upon information provided by the promoter, owner,
sponsor, or others associated with the business opportunity seeking
the Company's participation. In connection with its evaluation of
a prospective Target Business, management anticipates that it will
conduct a due diligence review which will encompass, among other
things, meetings with incumbent management and inspection of
facilities, as well as review of financial or other information
which will be made available to the Company. The time and costs
required to select and evaluate a Target Business (including
<PAGE> 7
conducting a due diligence review) and to structure and consummate
the Business Combination (including negotiating relevant agreements
and preparing requisite documents for filing pursuant to applicable
securities laws and state "blue sky" and corporation laws) cannot
presently be ascertained with any degree of certainty. Mr. Bylsma,
the Company's sole director and officer, intends to devote only a
small portion of his time, approximately 25%, to the affairs of the
Company and, accordingly, consummation of a Business Combination
may require a greater period of time than if Mr. Bylsma devoted his
full time to the Company's affairs. However, Mr. Byslma will devote
such time as he deems reasonably necessary, up to 100%, to carry
out the business and affairs of the Company, including the
evaluation of potential Target Businesses and the negotiation of a
Business Combination and, as a result, the amount of time devoted
to the business and affairs of the Company may vary significantly
depending upon, among other things, whether the Company has
identified a Target Business or is engaged in active negotiation of
a Business Combination. Any costs incurred in connection with the
identification and evaluation of a prospective Target Business with
which a Business Combination is not ultimately consummated will
result in a loss to the Company and reduce the amount of capital
available to otherwise complete a Business Combination or for the
resulting entity to utilize. In the event the Company depletes its
present cash reserves, the Company might be forced to cease
operations and a Business Combination might not occur.
The Company anticipates that it will locate and make contact
with Target Businesses primarily through the reputation and efforts
of Mr. Bylsma, who will meet personally with existing management
and key personnel, visit and inspect material facilities, assets,
products and services belonging to such prospects, and undertake
such further reasonable investigation as he deems appropriate. Mr.
Bylsma has a network of contacts in the State of Florida, and will
most likely concentrate his search efforts for a Target Business in
this geographic area. Mr. Bylsma does not intend to actively
solicit or contact prospective Targets directly. Rather, he
believes that prospective Target Businesses will be referred to the
Company through his network of contacts; however, the Company will
not engage in any discussions with prospective Target Businesses
regarding the possibility of a Business Combination with the
Company until after the effective time of this registration
statement. The Company also expects that many prospective Target
Businesses will be brought to its attention from various other
non-affiliated sources, including securities broker-dealers,
investment bankers, venture capitalists, bankers, and other members
of the financial community. The Company has neither the present
intention, nor does the present potential exist for the Company, to
consummate a Business Combination with a Target Business in which
the Company's management, promoters, or their affiliates or
associates directly or indirectly have a pecuniary interest,
although no existing corporate policies of the Company would
prevent this from occurring. The Company will not advertise or
promote itself in any financial or trade publications, or any other
type of written publications or other type of media, to seek
potential Target Businesses. Although there are no current plans to
do so, the Company may engage the services of professional firms
that specialize in finding business acquisitions and pay a finder's
fee or other compensation. Since the Company has no current plans
to utilize any outside consultants or advisors to assist in a
Business Combination, no policies have been adopted regarding use
of such consultants or advisors, the criteria to be used in
selecting such consultants or advisors, the services to be
provided, the term of service, or regarding the total amount of
fees that may be paid. However, because of the limited resources
<PAGE> 8
of the Company, it is likely that any such fee the Company agrees
to pay would be paid in stock and not in cash. In no event will
the Company pay a finder's fee or commission to the officer and
director of the Company or any entity with which he is affiliated
for such service. Moreover, in no event shall the Company issue any
of its securities to any other officer, director or promoter of the
Company, if any, or any of their respective affiliates or
associates, in connection with activities designed to locate a
Target Business.
As a general rule, Federal and state tax laws and regulations
have a significant impact upon the structuring of business
combinations. The Company will evaluate the possible tax
consequences of any prospective Business Combination and will
endeavor to structure a Business Combination so as to achieve the
most favorable tax treatment to the Company, the Target Business
and their respective stockholders. There can be no assurance that
the Internal Revenue Service or relevant state tax authorities will
ultimately assent to the Company's tax treatment of a particular
consummated Business Combination. To the extent the Internal
Revenue Service or any relevant state tax authorities ultimately
prevail in recharacterizing the tax treatment of a Business
Combination, there may be adverse tax consequences to the Company,
the Target Business and their respective stockholders. Tax
considerations as well as other relevant factors will be evaluated
in determining the precise structure of a particular Business
Combination, which could be effected through various forms of a
merger, consolidation or stock or asset acquisition.
Although the Company has no commitments as of the date of this
registration statement to issue any shares of Common Stock,
preferred stock, options or warrants, other than as described in
this registration statement, the Company will, in all likelihood,
issue a substantial number of additional shares in connection with
the consummation of a Business Combination. To the extent that such
additional shares are issued, dilution to the interests of the
Company's stockholders will occur. Additionally, if a substantial
number of shares of Common Stock are issued in connection with the
consummation of a Business Combination, a change in control of the
Company is likely to occur which will likely affect, among other
things, the Company's ability to utilize net operating loss carry
forwards, if any. Any such change in control may also result in
the resignation or removal of the Company's present officer and
director. If there is a change in management, no assurance can be
given as to the experience or qualification of such persons, either
in the operation of the Company's activities or in the operation of
the business, assets or property being acquired. Management
considers it likely that in order to consummate a Business
Combination, a change in control will occur; therefore, management
anticipates offering a controlling interest in the Company to a
Target Business in order to effectuate a Business Combination.
Mr. Bylsma may actively negotiate for or otherwise consent to
the disposition of any portion of his Common Stock as a condition
to or in connection with a Business Combination. Therefore, it is
possible that the terms of any Business Combination will provide
for the sale of some shares of Common Stock held by Mr. Bylsma. It
is likely that no other shareholder of the Company will be afforded
the right to sell their shares of Common Stock in connection with
a Business Combination pursuant to the same terms that Mr. Bylsma
will be provided. The Company's director intends to approve of the
Business Combination pursuant to Section 607.0902(2)(d)(7) of the
Florida Business Corporation Act which will have the effect of
removing the transaction from the purview of the control-share
<PAGE> 10
acquisition statute promulgated under Section 607.0902 of the
Florida Business Corporation Act.
Section 607.0902 of the Florida Business Corporation Act
denies corporate control to an acquiror of control shares by
extinguishing the voting rights of shares of an "issuing public
corporation", as defined therein, acquired in a "control share
acquisition", as defined therein. Voting rights may be reinstated
to the extent provided in a shareholders' resolution approved by
(1) each class or series entitled to vote separately on the
proposal by a majority of all votes entitled to be cast by such
class or series and (2) each class or series entitled to vote
separately on the proposal by a majority of all votes entitled to
be cast by such class or series, excluding all "interested shares"
(ie., generally speaking, those shares that may be voted by or at
the direction of a person who made a control-share acquisition or
an officer or employee/director of the subject "issuing public
corporation"). The acquisition of shares is not directly affected,
only the voting rights attendant to control shares. Other shares of
the same corporation that are owned or acquired by the same person
are not affected. The stated purpose of the control share
acquisition statute is to protect Florida shareholders by affording
them an opportunity to decide whether a change in corporate control
is desirable. Shares of an "issuing public corporation" acquired
pursuant to an acquisition approved by the corporation's board of
directors are not deemed to be "control-share acquisitions", which,
effectively allows the board to approve the acquisition and avoid
a shareholder vote by taking the transaction out of the purview of
the "control-share acquisition" statute. Thus, non-
management/affiliate shareholders will not be afforded an
opportunity to approve or consent to an acquiror's purchase of Mr.
Bylsma's shares pursuant to a Business Combination. See
"Description of Business -Shell Corporation - Conflicts of
Interest".
There are currently no limitations relating to the Company's
ability to borrow funds to increase the amount of capital available
to the Company to effect a Business Combination or otherwise
finance the operations of the Target Business. However, the
Company's limited resources and lack of operating history could
make it difficult for the Company to borrow additional funds from
other sources. The amount and nature of any borrowings by the
Company will depend on numerous considerations, including the
Company's capital requirements, potential lenders' evaluation of
the Company's ability to meet debt service on borrowings and the
then prevailing conditions in the financial markets, as well as
general economic conditions. The Company does not have any
arrangements with any bank or financial institution to secure
additional financing and there can be no assurance that such
arrangements if required or otherwise sought, would be available on
terms commercially acceptable or otherwise in the best interests of
the Company. The inability of the Company to borrow funds required
to effect or facilitate a Business Combination, or to provide funds
for an additional infusion of capital into a Target Business, may
have a material adverse effect on the Company's financial condition
and future prospects, including the ability to effect a Business
Combination. To the extent that debt financing ultimately proves to
be available, any borrowings may subject the Company to various
risks traditionally associated with indebtedness, including the
risks of interest rate fluctuations and insufficiency of cash flow
to pay principal and interest. Furthermore, a Target Business may
have already incurred debt financing and, therefore, all the risks
inherent thereto.
If securities of the Company are issued as part of an
acquisition, such securities are required to be issued either in
reliance upon exemptions from registration under applicable federal
or state securities laws or registered for public distribution. The
Company intends to primarily target only those companies where an
exemption from registration would be available; however, since the
structure of the Business Combination has yet to be determined, no
assurances can be made that the Company will be able to rely on
such exemptions. Registration of securities typically requires
significant costs and time delays are typically encountered. In
addition, the issuance of additional securities and their potential
sale in any trading market which might develop in the Company's
Common Stock, of which there is presently no trading market and no
assurances can be given that one will develop, could depress the
price of the Company's Common Stock in any market which may develop
in the Company's Common Stock. Further, such issuance of additional
securities of the Company would result in a decrease in the
percentage ownership of the Company's present shareholders.
Due to the Company's small size and limited amount of capital,
considerable business constraints could be imposed on the Company
with respect to its ability to raise additional capital if and when
needed. Until such time as any enterprise, product or service which
the Company acquires generates revenues sufficient to cover
operating costs, it is conceivable that the Company could find
itself in a situation where it needs additional funds in order to
continue its operations. This need could arise at a time when the
Company is unable to borrow funds and when market acceptance for
the sale of additional shares of the Company's Common Stock does
not exist. See "Management's Discussion and Analysis or Plan of
Operation".
Conflicts of Interest.
None of the Company's affiliates, officers and directors are
required to commit their full time to the affairs of the Company
and, accordingly, such persons may have conflicts of interest in
allocating management time among various business activities. The
affiliates, officers and directors of the Company may engage in
other business activities similar and dissimilar to those engaged
in by the Company. To the extent that such persons engage in such
other activities, they will have possible conflicts of interest in
diverting opportunities to other companies, entities or persons
with which they are or may be associated or have an interest,
rather than diverting such opportunities to the Company.
Presently, Mr. Bylsma, the Company's sole officer and
director, is involved in overseeing and controlling his various
holdings and investments. See "Directors, Executive Officers,
Promoters and Control Persons". Also, Mr. Bylsma may in the future
become affiliated with additional other entities, which may engage
in business activities similar to those intended to be conducted by
the Company. Such potential conflicts of interest include, among
other things, time, effort and corporate opportunity involved in
their participation in other business transactions. As no policy
has been established for the resolution of such a conflict, the
Company could be adversely affected should Mr. Bylsma choose to
place his other business interests before those of the Company. No
assurance can be given that such potential conflicts of interest
will not cause the Company to lose potential opportunities.
<PAGE> 11
In the course of his other business activities, including
private investment activities, Mr. Bylsma, the Company's sole
officer and director, may become aware of investment and business
opportunities which may be appropriate for presentation to the
Company as well as the other entities with which they are
affiliated. Mr. Bylsma may have conflicts of interest in
determining to which entity a particular business opportunity
should be presented. In general, officers and directors of
corporations are required to present certain business opportunities
to such corporations. Accordingly, as a result of multiple business
affiliations, Mr. Bylsma may have similar legal obligations
relating to presenting certain business opportunities to multiple
entities. In addition, conflicts of interest may arise in
connection with evaluations of a particular business opportunity by
the board of directors with respect to the foregoing criteria.
There can be no assurances that any of the foregoing conflicts will
be resolved in favor of the Company. The Company may consider
Business Combinations with entities owned or controlled by persons
other than those persons described above. There can be no
assurances that any of the foregoing conflicts will be resolved in
favor of the Company.
Mr. Bylsma may actively negotiate for or otherwise consent to
the disposition of any portion of his Common Stock as a condition
to or in connection with a Business Combination. Therefore, it is
possible that the terms of any Business Combination will provide
for the sale of some shares of Common Stock held by Mr. Bylsma. In
the event this occurs, the Company's directors intend to approve of
the Business Combination pursuant to Section 607.0902(2)(d)(7) of
the Florida Business Corporation Act which will have the effect of
removing the transaction from the purview of the control-share
acquisition statute promulgated under Section 607.0902 of the
Florida Business Corporation Act. Thus, it is likely that no other
shareholder of the Company will be afforded the right to sell their
shares of Common Stock in connection with a Business Combination
pursuant to the same terms that Mr. Bylsma will be provided. Also,
such shareholders will not be afforded an opportunity to approve or
consent to Mr. Bylsma's stock purchase. See "Description of
Business - Shell Corporation - Selection of a Target Business and
Structuring of a Business Combination".
Investment Company Act and Other Regulation
The Company may participate in a Business Combination by
purchasing, trading or selling the securities of such Target
Business. The Company does not, however, intend to engage
primarily in such activities. Specifically, the Company intends to
conduct its activities so as to avoid being classified as an
"investment company" under the Investment Company Act of 1940 (the
"Investment Act"), and therefore to avoid application of the costly
and restrictive registration and other provisions of the Investment
Act, and the regulations promulgated thereunder.
The Company's plan of business may involve changes in its
capital structure, management, control and business, especially if
it consummates a Business Combination as discussed above. Each of
these areas is regulated by the Investment Act, in order to protect
purchasers of investment company securities. Since the Company
will not register as an investment company, stockholders will not
be afforded these protections.
Any securities which the Company might acquire in exchange
for its Common Stock will be "restricted securities" within the
<PAGE> 12
meaning of the Securities Act of 1933, as amended (the "Securities
Act"). If the Company elects to resell such securities, such sale
cannot proceed unless a registration statement has been declared
effective by the Securities and Exchange Commission or an exemption
from registration is available. Section 4(1) of the Securities
Act, which exempts sales of securities not involving a public
distribution by persons other than the issuer, would in all
likelihood be available to permit a private sale. Although the
Company's plan of operation does not contemplate the resale of an
acquired Target Business' securities, if such a sale were to be
necessary, the Company would be required to comply with the
provisions of the Securities Act to effect such resale.
An acquisition made by the Company may be in an industry
which is regulated or licensed by federal, state or local
authorities. Compliance with such regulations can be expected to
be a time consuming and expensive process.
Penny Stock Regulations - State Blue Sky restrictions -
Restrictions on Marketability.
The Securities and Exchange Commission (the "Commission") has
adopted regulations which generally define "penny stock" to be any
equity security that has a market price (as defined) less than
$5.00 per share or an exercise price of less than $5.00 per share,
subject to certain exceptions. The Company's securities may be
covered by the penny stock rules, which impose additional sales
practice requirements on broker-dealers who sell such securities to
persons other than established customers and accredited investors
(generally institutions with assets in excess of $5,000,000 or
individuals with net worth in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 jointly with their spouse). For
transactions covered by the rule, the broker-dealers must make a
special suitability determination for the purchase and receive the
purchaser's written agreement of the transaction prior to the sale.
Consequently, the rule may affect the ability of broker-dealers
sell the Company's securities and also may affect the ability of
shareholders of the Company to sell their shares of the Company in
the secondary market.
In addition, the Securities and Exchange Commission has
adopted a number of rules to regulate "penny stocks". Such rules
include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, and
15g-9 under the Securities Exchange Act of 1934, as amended.
Because the securities of the Company may constitute "penny stocks"
within the meaning of the rules, the rules would apply to the
Company and to its securities. The rules may further affect the
ability of the Company's shareholders to sell their shares in any
public market which might develop.
Shareholders should be aware that, according to Securities and
Exchange Commission Release No. 34-29093, the market for penny
stocks has suffered in recent years from patterns of fraud and
abuse. Such patterns include (i) control of the market for the
security by one or a few broker-dealers that are often related to
the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and
misleading press releases; (iii) "boiler room" practices involving
high-pressure sales tactics and unrealistic price projections by
inexperienced sales persons; (iv) excessive and undisclosed bid-ask
differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and
<PAGE> 13
broker-dealers after prices have been manipulated to a desired
level, along with the resulting inevitable collapse of those prices
and with consequent investor losses. The Company's management is
aware of the abuses that have occurred historically in the penny
stock market. Although the Company does not expect to be in a
position to dictate the behavior of the market or of broker-dealers
who participate in the market, management will strive within the
confines of practical limitations to prevent the described patterns
from being established with respect to the Company's securities.
The Company has 50,000,000 shares of authorized Common Stock
with 6,100,000 shares of Common Stock outstanding. See "Description
of Securities". No trading market in the Company's securities
presently exists. In light of the restrictions concerning shell
companies contained in many state blue sky laws and regulations, it
is not likely that a trading market will be created in the
Company's securities until such time as a Business Combination
occurs with a Target Business. No assurances are given that
subsequent to such a Business Combination that a trading market in
the Company's securities will develop. The Company presently has
6,100,000 shares of Common Stock outstanding, of which 5,375,000 of
such shares are deemed to be "restricted securities", as that term
is defined under Rule 144 promulgated under the Securities Act, in
that such shares were issued in private transactions not involving
a public offering. Presently, so long as all other conditions of
Rule 144 are met, all 5,375,000 of such shares are eligible for
sale under Rule 144, as currently in effect. No assurances are
made; however, that Rule 144 will be available at any time for any
shareholder's shares. The Company has not provided to any
shareholder registration rights to register under the Securities
Act any shareholder's shares for sale. See "Market for Common
Equity and Related Stockholder Matters".
COMPETITION
The Company expects to encounter intense competition from
other entities having a business objective similar to that of the
Company. Many of these entities are well-established and have
extensive experience in connection with identifying and effecting
business combinations directly or through affiliates. Many of these
competitors possess greater financial, marketing, technical,
personnel and other resources than the Company and there can be no
assurances that the Company will have the ability to compete
successfully. The Company's financial resources will be limited in
comparison to those of many of its competitors. This inherent
competitive limitation could compel the Company to select certain
less attractive Target Businesses for a Business Combination.
There can be no assurances that such Target Businesses will permit
the Company to meet its stated business objective. Management
believes, however, that the Company's status as a reporting public
entity could give the Company a competitive advantage over
privately held entities having a similar business objective to that
of the Company in acquiring a Target Business with significant
growth potential on favorable terms.
UNCERTAINTY OF COMPETITIVE ENVIRONMENT OF TARGET BUSINESS
In the event that the Company succeeds in effecting a
Business Combination, the Company will, in all likelihood, become
<PAGE> 14
subject to intense competition from competitors of the Target
Business. In particular, certain industries which experience rapid
growth frequently attract an increasingly larger number of
competitors, including competitors with increasingly greater
financial, marketing, technical and other resources than the
initial competitors in the industry. The degree of competition
characterizing the industry of any prospective Target Business
cannot presently be ascertained. There can be no assurances that,
subsequent to a Business Combination, the Company will have the
resources to compete effectively, especially to the extent that the
Target Business is in a high-growth industry.
FEDERAL SECURITIES LAWS COMPLIANCE
Under the Federal securities laws, companies reporting under
the Exchange Act must furnish stockholders certain information
about significant acquisitions, which information may require
audited financial statements for a Target Business with respect to
one or more fiscal years, depending upon the relative size of the
acquisition. Consequently, the Company's policy is to only effect
a Business Combination with a Target Business that has available
the requisite audited financial statements. See "Description of
Securities--Securities Exchange Act of 1934".
FACILITIES
The principal office of the Company is located at 131 Egret
Drive, Jupiter, Florida 33458. This property is jointly owned by
Mr. Bylsma, the Company's sole officer and director, and Mr.
Bylsma's wife. The Company believes these facilities are adequate
to serve its needs until such time as a Business Combination
occurs. The Company expects to be able to utilize these facilities,
free of charge, until such time as a Business Combination occurs.
See "Description of Property" and "Certain Relationships and
Related Transactions".
EMPLOYEES
As of the date of this Registration Statement, the Company is
in the development stage and currently has no full time employees.
Management of the Company serves the Company on a part time basis.
Management of the Company expects to use consultants, attorneys and
accountants as necessary, and does not anticipate a need to engage
any full-time employees so long as it is seeking and evaluating
Target Businesses. The need for employees and their availability
will be addressed in connection with the decision whether or not to
acquire or participate in a specific Business Combination.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
PLAN OF OPERATION
The Company is presently a development stage company
conducting virtually no business operation, other than its efforts
<PAGE> 15
to effect a Business Combination with a Target Business which the
Company considers to have significant growth potential. To date,
the Company has neither engaged in any operations nor generated any
revenue. It receives no cash flow. The Company will carry out its
plan of business as discussed above. See "Description of Business".
The Company cannot predict to what extent its liquidity and capital
resources will be diminished prior to the consummation of a
Business Combination or whether its capital will be further
depleted by the operating losses, if any, of the Target Business
which the Company effectuates a Business Combination with. The
continuation of the Company's business is dependant upon its
ability to obtain adequate financing arrangements, effectuate a
Business Combination and ultimately, engage in future profitable
operations.
Presently, the Company is not in a position to meet its cash
requirements for the remainder of its fiscal year or for the next
12 months. The Company does not generate any cash revenue or
receive any type of cash flow. From inception to the date of this
registration statement, Mr. Bylsma, the Company's sole officer and
director, has made loans to the Company on a need be basis in the
form of promissory notes in the approximate amount of $16,000. The
promissory notes bear simple interest at prime plus 2%. In 1996,
the balance due on the promissory notes was reduced by $5,000
pursuant to a sale of the Company's Common Stock. The Company's
operating costs, which includes professional fees and costs related
to a Business Combination, are likely to approximate $10,000 to
$20,000 during the next 12 months. It is likely that a Business
Combination might not occur during the next 12 months. In the
event the Company cannot meet its operating costs prior to the
effectuation of a Business Combination, the Company may cease
operations and a Business Combination may not occur.
Prior to the occurrence of a Business Combination, the Company
may be required to raise capital through the sale or issuance of
additional securities in order to ensure that the Company can meet
its operating costs prior to the effectuation of a Business
Combination. As of the date of this registration statement, no
commitments of any kind to provide additional funds have been made
by Mr. Bylsma, other present shareholders or any other third
person. There are no agreements or understandings of any kind with
respect to any loans from such persons on behalf of the Company.
Accordingly, there can be no assurance that any additional funds
will be available to the Company to allow it to cover its expenses.
In the event the Company can no longer borrow funds from Mr.
Bylsma, and the Company elects to raise additional capital prior to
the effectuation of a Business Combination, it expects to do so
through the private placement of restricted securities rather than
through a public offering. The Company does not currently
contemplate making a Regulation S offering.
ITEM 3. DESCRIPTION OF PROPERTY.
The principal office of the Company is located at 131 Egret
Drive, Jupiter, Florida 33458. This property is jointly owned by
Mr. Bylsma, the Company's sole officer and director, and Mr.
Bylsma's wife. The Company believes these facilities are adequate
to serve its needs until such time as a Business Combination
<PAGE> 16
occurs. The Company expects to be able to utilize these facilities,
free of charge, until such time as a Business Combination occurs.
See "Certain Relationships and Related Transactions".
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth, as of the date hereof, the
names, addresses, amount and nature of beneficial ownership and
percent of such ownership of each person known to the Company to be
the beneficial owner of more than five percent (5%) of Company's
Common Stock:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent of Class
of Beneficial Owner of Beneficial Owner
<S> <C> <C>
John & Barbara Bylsma 5,375,000 (D) 88.1%
131 Egret Drive
Jupiter, Florida 33458
</TABLE>
The following table sets forth, as of the date hereof, the
names, addresses, amount and nature of beneficial ownership and
percent of such ownership of the Company's Common Stock of each of
the officers and directors of the Company, and the officers and
directors of the Company as a group:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent of Class
of Beneficial Owner of Beneficial Owner
<S> <C> <C>
John Bylsma(1) 5,375,000 (D) 88.1%
131 Egret Drive
Jupiter, Florida 33458
All Officers and Directors
as a Group (1 person) 5,375,000 (D) 88.1%
______________________
</TABLE>
(1) All 5,375,000 of Mr. Bylsma's shares are held jointly by Mr.
Bylsma and his wife, Barbara.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
The current directors and executive officers of the Company
are as follows:
Name Age Position
John Bylsma 65 Director, President,
Secretary & Treasurer
<PAGE> 17
Mr. Bylsma has served as the sole director, president and
secretary of the Company since its inception in November 1992.
From 1992 to 1995, Mr. Bylsma served as Chairman of the Board of
Trustees and Executive Vice President of Service & Business Workers
of America Local 12 SEIU, AFL-CIO. Mr. Bylsma received his B.B.A.
in management and general business from Western Michigan University
in 1961, and his M.B.A. (equivalent) from the General Motors
Institute in 1962.
There are no agreements or understandings for the sole officer
or director to resign at the request of another person, and the
sole officer and director of the Company is not acting on behalf of
or will act at the discretion of any other person.
Presently, the only person who performs material operations on
behalf of the Company is Mr. Bylsma, the Company's sole officer and
director. Until such time as a Business Combination occurs, Mr.
Bylsma, does not expect any significant changes in the composition
of the Company's officers or board of directors.
OTHER BLANK CHECK ACTIVITIES
Mr. Bylsma has not, during the past five years, held a
management position in or promoted any other blank check company.
ITEM 6. EXECUTIVE COMPENSATION.
Executive Compensation.
As president and sole director of the Company, Mr. John Bylsma
receives no salary or other compensation in connection with his
employment as such. Mr. Bylsma has no employment agreement with the
Company. The Company has no other executive officers. Pursuant to
Instruction (5) to Item 402(a)(2) of Regulation S-B, no table or
column is provided in this Item 6 to this registration statement.
Compensation of Directors
No director receives any type of compensation from the Company
for serving as such.
Until the Company effectuates a Business Combination, it is
not anticipated that any officer or director will receive any
compensation from the Company other than reimbursement for
out-of-pocket expenses incurred on behalf of the Company. See
"Certain Relationships and Related Transactions". The Company has
no stock option, retirement, pension, or profit-sharing programs
for the benefit of directors, officers or other employees, but the
Board of Directors may recommend adoption of one or more such
programs in the future. No other arranagements are presently in
place regarding compensation to directors for their services as
directors or for committee participation or special assignments.
<PAGE> 18
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
No officer, director, promoter or affiliate of the Company has
or proposes to have any direct or indirect material interest in any
asset proposed to be acquired by the Company through security
holdings, contracts, options, or otherwise.
It is not currently anticipated that any other salary,
consulting fee, or finder's fee shall be paid to any of the
Company's directors or executive officers, or to any other
affiliate of the Company except as described in this registration
statement. See "Executive Compensation".
The officer and director of the Company may actively negotiate
for or otherwise consent to the disposition of any portion of his
Common Stock as a condition to or in connection with a Business
Combination. Therefore, it is possible that the terms of any
Business Combination will provide for the sale of some shares of
Common Stock held by Mr. Bylsma. Thus, it is likely that no other
shareholder of the Company will be afforded the right to sell their
shares of Common Stock in connection with a Business Combination
pursuant to the same terms that Mr. Byslma will be provided. Also,
such shareholders will not be afforded an opportunity to approve or
consent to Mr. Bylsma's stock purchase. See "Description of
Business - Shell Corporation - Selection of a Target Business and
Structuring of a Business Combination". It is more likely than not
that any sale of securities by the Company's current stockholders
to an acquisition candidate would be at a price substantially
higher than that originally paid by such stockholders. Any payment
to current stockholders in the context of an acquisition involving
the Company would be determined entirely by the largely
unforeseeable terms of a future agreement with an unidentified
business entity. See "Description of Business - Shell Corporation
- - Selection of a Target Business and Structuring of a Business
Combination".
From inception to the date of this registration statement, Mr.
Bylsma, the Company's sole officer and director, has made loans to
the Company on a need be basis in the form of promissory notes in
the approximate amount of $16,000. The promissory notes bear
simple interest at prime plus 2%. In 1996, the balance due on the
promissory notes was reduced by $5,000 pursuant to a sale of the
Company's Common Stock.
ITEM 8. LEGAL PROCEEDINGS.
As of the date hereof, the Company is not a party to any
material legal proceedings, nor is it aware of any threatened
litigation of a material nature.
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
MARKET INFORMATION
No public trading market presently exists for the Company's
Common Stock, and there are no present plans, proposals,
<PAGE> 19
arrangements or understandings with any person with regard to the
development of any trading market in any of the Company's
securities. No assurances are made, however, that a trading market
for the Company's Common Stock will ever develop. No shares of
Common Stock have been registered for resale under the blue sky
laws of any state. The holders of shares of Common Stock and
persons who may desire to purchase shares of Common Stock in any
trading market that might develop in the future, should be aware
that there may be significant state blue-sky law restrictions upon
the ability of shareholders to sell their shares and of purchasers
to purchase the shares of Common Stock. Some jurisdictions may not
allow the trading or resale of blind-pool or "blank-check"
securities under any circumstances. Accordingly, shareholders
should consider the secondary market for the Company's securities
to be a limited one.
No shares of Common Stock of the Company are presently subject
to outstanding options or warrants to purchase, or securities
convertible into, common equity of the Company. Approximately 300
shareholders hold the Company's Common Stock. The Company
presently has 6,100,000 shares of Common Stock outstanding, of
which 5,375,000 of such shares are "control" securities and are
therefore deemed to be "restricted securities", as that term is
defined under Rule 144 promulgated under the Securities Act, in
that such shares were issued in private transactions not involving
a public offering. Presently, so long as all other conditions of
Rule 144 are met, 5,375,000 of such shares are eligible for sale
under Rule 144, as currently in effect. No assurances are made;
however, that Rule 144 will be available at any time for any
shareholder's shares. The Company has not provided to any
shareholder registration rights to register under the Securities
Act any shareholder's shares for sale.
In general, under Rule 144, as currently in effect, subject to
the satisfaction of certain other conditions, a person, including
an affiliate of the Company (or persons whose shares are
aggregated), who has beneficially owned restricted shares of Common
Stock for at least one year is entitled to sell, within any
three-month period, a number of shares that does not exceed the
greater of 1% of the total number of outstanding shares of the same
class or, if the Common Stock is traded on a national securities
exchange or the NASDAQ system, the average weekly trading volume
during the four calendar weeks preceding the sale. A person who has
not been an affiliate of the Company for at least the three months
immediately preceding the sale and who has beneficially owned
restricted shares of Common Stock for at least two years is
entitled to sell such shares under Rule 144 without regard to any
of the limitations described above. No assurances are made;
however, that Rule 144 will be available at any time for any
shareholder's shares.
The Company has no present plans, proposals, arrangements,
understandings or intention of selling any amount of shares of
Common Stock in the public market subsequent to a Business
Combination. Nevertheless, in the event that substantial amounts
of Common Stock are sold in the public market subsequent to a
Business Combination, such sales may adversely affect the price for
the sale of the Company's equity securities in any trading market
which may develop. No prediction can be made as to the effect, if
any, that market sales of restricted shares of Common Stock or the
availability of such shares for sale will have on the market prices
prevailing from time to time.
<PAGE> 20
DIVIDENDS
The Company has not paid any dividends on its Common Stock
to date and does not presently intend to pay cash dividends prior
to the consummation of a Business Combination. The payment of cash
dividends in the future, if any, will be contingent upon the
Company's revenues and earnings, if any, capital requirements and
general financial condition subsequent to the consummation of a
Business Combination. The payment of any dividends subsequent to a
Business Combination will be within the discretion of the Company's
then board of directors. It is the present intention of the board
of directors to retain all earnings, if any, for use in the
Company's business operations and, accordingly, the board of
directors does not anticipate paying any cash dividends in the
foreseeable future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
As of the date of this registration statement, during the past
three years, no shares of the Company's Common Stock have been
issued in a transaction not registered under the Securities Act.
ITEM 11. DESCRIPTION OF SECURITIES.
GENERAL
The Company is authorized to issue 50,000,000 shares of Common
Stock. As of the date of this registration statement 6,100,000
shares of Common Stock are outstanding, held of record by
approximately 300 shareholders. No other type of securities are
authorized by the Company at this time.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each
share held of record on all matters to be voted on by shareholders.
There is no cumulative voting with respect to the election of
directors, with the result that the holders of more than 50% of the
shares voted for the election of directors can elect all of the
directors. By virtue of his ownership of more than 50% of the
outstanding Common Stock, Mr. Bylsma, the Company's sole affiliate
shareholder can elect all of the directors of the Company. Florida
law permits the holders of the minimum number of shares necessary
to take action at a meeting of shareholders (normally a majority of
the outstanding shares) to take action by written consent without
a meeting, provided notice is given within ten days to all other
shareholders. The holders of Common Stock are entitled to receive
dividends when, as and if declared by the board of directors out of
funds legally available therefor. In the event of liquidation,
dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets remaining
available for distribution to them after payment of liabilities and
after provision has been made for each class of stock, if any,
having preference over the Common Stock. Holders of shares of
Common Stock, as such, have no conversion, preemptive, redemption
provisions or other subscription rights. All of the outstanding
shares of Common Stock are fully paid and non-assessable.
<PAGE> 21
DIVIDENDS
The Company has not paid any dividends on its Common Stock
to date and does not presently intend to pay cash dividends prior
to the consummation of a Business Combination. The payment of cash
dividends in the future, if any, will be contingent upon the
Company's revenues and earnings, if any, capital requirements and
general financial condition subsequent to consummation of a
Business Combination. The payment of any dividends subsequent to a
Business Combination will be within the discretion of the Company's
then board of directors. It is the present intention of the board
of directors to retain all earnings, if any, for use in the
Company's business operations and, accordingly, the board does not
anticipate paying any cash dividends in the foreseeable future.
SECURITIES EXCHANGE ACT OF 1934
By virtue of filing this registration statement, the Company
is making an application with the Commission to register its Common
Stock under the provisions of Section 12(g) of the Exchange Act.
Such registration will require the Company to comply with periodic
reporting, proxy solicitations and certain other requirements of
the Exchange Act. If the Company seeks shareholder approval of a
Business Combination at such time as the Company's securities are
registered pursuant to Section 12(g) of the Exchange Act, the
Company's proxy solicitation materials required to be transmitted
to shareholders may be subject to prior review by the Securities
and Exchange Commission. Under the federal securities laws, public
companies must furnish certain information about significant
acquisitions, which information may require audited financial
statements of an acquired company with respect to one or more
fiscal years, depending upon the relative size of the acquisition.
Consequently, if a prospective Target Business did not have
available and was unable to reasonably obtain the requisite audited
financial statements, the Company could, in the event of
consummation of a Business Combination with such company, be
precluded from (i) any public financing of its own securities for
a period of as long as three years, as such financial statements
would be required to undertake registration of such securities for
sale to the public; and (ii) registration of its securities under
the Exchange Act. As a result these requirements, and in order to
remain in compliance with the Company's board of director's
resolution, Target Businesses will be required to possess the
requisite audited financial statements prior to the consummation of
a Business Combination. See "Description of Business- General" and
"Market For Common Equity and Related Stockholder Matters- Market
Information".
In the event the Company's obligation to file periodic reports
under the Exchange Act is suspended, the Company presently intends
to continue to file such periodic reports on a voluntary basis.
CERTAIN PROVISIONS OF THE COMPANY'S BYLAWS
The Company's bylaws provide, among other things, that (i)
officers and directors of the Company will be indemnified to the
fullest extent permitted under Florida law. See "Indemnification
<PAGE> 22
of Directors and Officers".
TRANSFER AGENT
The Company presently serves as its own transfer agent.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's bylaws contain the broadest form of
indemnification for its officers and directors and former officers
and directors permitted under Florida law. The Company's bylaws
generally provide that: The Company shall indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by, or in the right of the Company) by reason of the
fact that he is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as
a director, officer, employee or agent of any other corporation,
partnership, joint venture, trust or other enterprise against
expenses (including attorney's fees), judgments, fines, amounts
paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding, including any
appeal thereof, if he acted in good faith in a manner he reasonably
believed to be in, or not opposed to the best interests of the
Company, and with respect to any criminal action or proceeding, had
no reasonable cause to believe that his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contenders or its
equivalent shall not create, of itself, a presumption that the
person did not act in good faith or in a manner which he reasonably
believed to be in, or not opposed to, the best interests of the
Company or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
To the extent that a director, officer, employee or agent of
the Company has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to above, or in
any defense of any claim, issue or matter therein, he shall be
indemnified against expenses, including attorneys fees, actually
and reasonably incurred by him in connection therewith.
Any indemnification shall be made only if a determination is
made that indemnification of the director, officer, employee or
agent is proper in the circumstances because such person has met
the applicable standard of conduct set forth above. Such
determination shall be made either (1) by the Board of Directors by
a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) by the
shareholders who were not parties to such action, suit or
proceeding. If neither of the above determinations can occur
because the Board of Directors consists of a sole director or the
Company is owned by a sole shareholder, then the sole director or
sole shareholder shall be allowed to make such determination.
Expenses incurred in defending any action, suit or proceeding
may be paid in advance of the final disposition of such action,
suit or proceeding as authorized in the manner provided above upon
receipt of any undertaking by or on behalf of the director,
officer, employee or agent to repay such amount, unless it shall
<PAGE> 23
ultimately be determined that he is entitled to be indemnified by
the Company.
The indemnification provided shall be in addition to the
indemnification rights provided pursuant to Chapter 607 of the
Florida Statutes, and shall not be deemed exclusive of any other
rights to which any person seeking indemnification may be entitled
under any bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in such person's official
capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent of the Company and shall inure
to the benefit of the heirs, executors and administrators of such
a person.
ITEM 13. FINANCIAL STATEMENTS
<PAGE> 24
INNOVATIVE TECHNOLOGY SYSTEMS, INC.
(a development stage company)
FINANCIAL STATEMENTS
FOR YEARS ENDED DECEMBER 31, 1998, 1997, AND
FROM INCEPTION (NOVEMBER 13, 1992)
TO DECEMBER 31, 1998
AND REPORT OF
INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE> 25
INNOVATIVE TECHNOLOGY SYSTEMS, INC.
(a development stage company)
FOR YEARS ENDED DECEMBER 31, 1998, 1997, AND
FROM INCEPTION (NOVEMBER 13, 1992) TO DECEMBER 31, 1998
TABLE OF CONTENTS
Pages
Report of Independent Public Accountants 1
Financial Statements
Balance Sheet 2
Statements of Operations 3
Statements of Changes in Stockholders' Deficit 4
Statements of Cash Flows 5
Notes to Financial Statements 6
<PAGE> 26
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
Innovative Technology Systems, Inc.
We have audited the accompanying balance sheet of Innovative
Technology Systems, Inc., (a development stage company) as of
December 31, 1998 and the related statements of operations,
stockholders' deficit, and changes in cash flows for the year ended
December 31, 1998 and for the period November 13, 1992 (inception)
to December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based upon our
audit.
We conducted out audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present
fairly, in all material respects, the financial position of
Innovative Technology Systems, Inc., (a development stage company)
as of December 31, 1998 and 1997 and for the period November 13,
1992 (inception) to December 31, 1998, in conformity with generally
accepted accounting principles.
Innovative Technology Systems, Inc. is in the development stage and
to date has had no significant operations. The continuation of
Innovative Technology Systems, Inc.'s business is dependent upon
the ability to obtain adequate financing arrangements and
ultimately, future profitable operations.
Sweeney, Gates & Co.
West Palm Beach, Florida
April 22, 1999
<PAGE> F-1
INNOVATIVE TECHNOLOGY SYSTEMS, INC.
(a development stage company)
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
Current assets: $ -
==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities: $ -
----------
Long-term liabilities:
Loans payable - related party 8,710
----------
Stockholders' deficit
Common stock - no par value,
authorized 50,000,000 shares,
issued and outstanding 6,100,000 shares 65,100
Accumulated deficit during development
stage (73,810)
----------
Total stockholders' deficit (8,710)
----------
$ -
==========
The accompanying notes are an integral part
of these financial statements
Page 2
<PAGE> F-2
INNOVATIVE TECHNOLOGY SYSTEMS, INC.
(a development stage company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from
November 13,
1992
(inception)
through
Year ended December 31, December 31,
1998 1997 1998
<S> <C> <C> <C>
Revenues $ - $ - $ -
General and administrative
expenses 1,395 1,422 70,817
-------- -------- ---------
(1,395) (1,422) (70,817)
Other expense
Interest expense (838) (710) (2,993)
-------- -------- ---------
Net loss $ (2,233) $ (2,132) $ (73,810)
======== ======== =========
Net loss per share of common stock:
Basic $ (0.00) $ (0.00)
======== ========
Weighted average number of
common shares:
Basic 6,100,000 6,100,000
========= =========
</TABLE>
The accompanying notes are an integral part
of these financial statements
Page 3
<PAGE> F-3
INNOVATIVE TECHNOLOGY SYSTEMS, INC.
(a development stage company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Deficit
accumulated
during the
Common stock development
Shares Amount stage Totals
<S> <C> <C> <C> <C>
Balance at November 13, 1992
(inception) - $ - $ - $ -
Issue founders shares
($.01 per share) 5,725,000 57,250 (57,250) -
Common stock issued for cash
and services ($.01 per share) 275,000 2,850 (2,750) 100
Net loss - - (2,125) (2,125)
--------- -------- -------- -------
Balance, December 31, 1992 6,000,000 60,100 (62,125) (2,025)
Net loss - - (1,551) (1,551)
--------- -------- -------- -------
Balance, December 31, 1993 6,000,000 60,100 (63,676) (3,576)
Net loss - - (1,413) (1,413)
--------- -------- -------- -------
Balance, December 31, 1994 6,000,000 60,100 (65,089) (4,989)
Net loss - - (1,712) (1,712)
--------- -------- -------- -------
Balance, December 31, 1995 6,000,000 60,100 (66,801) (6,701)
Common stock issued for
cash only ($.05 per share) 100,000 5,000 - 5,000
Net loss (2,644) (2,644)
--------- -------- -------- -------
Balance, December 31, 1996 6,100,000 65,100 (69,445) (4,345)
Net loss - - (2,132) (2,132)
--------- -------- -------- -------
Balance, December 31, 1997 6,100,000 65,100 (71,577) (6,477)
Net loss - - (2,233) (2,233)
--------- -------- -------- -------
Balance, December 31, 1998 6,100,000 $ 65,100 $(73,810) $(8,710)
========= ======== ======== =======
</TABLE>
The accompanying notes are an integral part
of these financial statements
Page 4
<PAGE> F-4
INNOVATIVE TECHNOLOGY SYSTEMS, INC.
(a development stage company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period from
November 13,
1992
(inception)
through
Year ended December 31, December 31,
1998 1997 1998
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (2,233) $ (2,132) $ (73,810)
Non-cash issuance of debt for
expenses 2,233 2,132 8,710
Non-cash issuance of founder shares - - 57,250
Non-cash compensation - - 2,750
-------- -------- --------
- - (5,100)
Cash flows from financing activities:
Proceeds from issuance of
common stock - - 5,100
-------- -------- --------
Change in cash - - -
Cash at beginning of period - - -
-------- -------- --------
Cash at end of period $ - $ - $ -
======== ======== ========
Supplemental disclosures:
Cash payments during the
development stage:
Interest $ - $ - $ -
======== ======== ========
Income taxes $ - $ - $ -
======== ======== ========
Non-cash activity:
Issuance of debt for prepaid
expenses $ 2,233 $ 2,132 $ 13,710
======== ======== ========
Issuance of stock for services $ - $ - $ 2,750
======== ======== ========
</TABLE>
The accompanying notes are an integral part
of these financial statements
Page 5
<PAGE> F-5
INNOVATIVE TECHNOLOGY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization -Innovative Technology Systems, Inc. (the "Company")
was incorporated in the State of Florida on November 13, 1992.
Development stage activities - The Company has been in the
development stage since its inception. It has conducted no
business other than to organize as a corporation. It intends to
seek and acquire merger partners that have ongoing operations.
Basis for assigning amounts to equity issued for other than cash
- - Shares of common stock issued for other than cash have been
assigned amounts equivalent to the fair value of the service or
assets received in exchange.
Fair value of financial instruments - The fair value of the
Company's financial instruments, such as notes payable,
approximate their carrying value.
Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Earnings per share - The Company has adopted Financial Accounting
Standards No. 128, "Earnings per Share" ("FAS 128"), effective
October 1, 1997. FAS 128 requires presentation of earnings or
loss per share on basic and diluted earnings per share. The
Company does not have any potentially dilutive shares outstanding,
and therefore, only basic earnings per share is presented.
Earnings per share is computed by dividing net income by the
weighted average number of shares outstanding during the period.
2. CAPITALIZATION AND SALE OF STOCK
The Company has authorized the issuance 50,000,000 shares of
common stock, having no par value. At December 31, 1998 and 1997,
there were 6,100,000 fully paid and non-assessable shares
outstanding. The common stock has exclusive voting rights at all
meetings of the shareholders with each holder of record entitled
to one vote for each share held. No stockholder of the Company is
entitled to preemptive rights. Stockholders are entitled to
receive dividends if and when declared by the Board of Directors.
The Company's initial common stock was issued November 13, 1992 on
a gift transfer basis in blocks of 1,000 shares to a total of 300
individuals, primarily "accredited investors". At the same time,
the organizer of the Company received 5,425,000 shares and 275,000
shares were issued for $100 and exchange of services. In 1996,
100,000 shares were issued for $5,000.
Page 6
<PAGE> F-6
2. ORGANIZATION COSTS
In April 1998, the Accounting Standards Executive Committee
released Statement of Position 98-5, "Reporting on the Costs of
State-Up Activities" ("SOP 98-5"). SOP 98-5 requires that
start-up costs, including organizational costs, be expensed as
incurred. The Company has accepted early adoption of SOP 98-5 and
has expensed all start-up costs.
3. RELATED PARTY TRANSACTIONS
The Company has no resources and all expenses to maintain itself
as a corporation have been advanced by its President in the form
of loans payable. The loans are payable on the earlier of 10
years or the consummation of a merger or other reorganization.
The loans bear simple interest at prime plus 2%. At December 31,
1998 principle due was $10,717 and accrued interest of $2,993 was
also due for a total of $13,710. The balance due was reduced by
the $5,000 amount paid for stock. The net amount due the President
was, therefore, $8,710.
4. YEAR 2000 COMPUTER CONSIDERATIONS (UNAUDITED)
The Company has completed an inventory of computer systems and
other electronic equipment that may be affected by the year 2000
issue and that are necessary to conduct Company operations.
Because of the unprecedented nature of the year 2000 issue, its
effects and the success of related remediation efforts will not be
fully determinable until the year 2000 and thereafter. Management
cannot assure that the Company is or will be year 2000 ready, that
the Company's remediation efforts will be successful in whole or
in part, or that parties with whom the Company does business will
be year 2000 compliant.
Page 7
<PAGE> F-7
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not Applicable.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements for Innovative Technology Systems,
Inc.
1. Balance Sheets (Audited)
2. Statements of Operations (Audited)
3. Statements of Changes in Stockholders'
Deficit (Audited)
4. Statements of Cash Flows (Audited)
5. Notes to Financial Statements (Audited)
(b) Pursuant to Item 601 of Regulation S-B, the Company
includes the following exhibits:
Sequential
Exhibit No. Description of Exhibit Page No.
(3) Charter and Bylaws.
3.1 Articles of Incorporation.
3.2 Bylaws.
(4) Instruments defining the rights of security
holders.
4.1 Articles of Incorporation. *
4.2 Bylaws.*
(10) Material Contracts.
10.1 Specimen Sample of Demand Promissory Notes
made by the Company to John Bylsma.
(27) Financial Data Schedule.
27.1 Financial Data Schedule.
* Incorporated by reference to Exhibit (3) herein.
<PAGE> 27
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.
INNOVATIVE TECHNOLOGY
SYSTEMS, INC.
Date: April 30, 1999. By:/s/John Bylsma
John Bylsma, President
FAX AUDIT NO. H9200005414
ARTICLES OF INCORPORATION
OF
INNOVATIVE TECHNOLOGY SYSTEMS, INC.
The undersigned, for the purpose of forming a corporation
under the Florida General Corporation Act, hereby adopts the
following Articles of Incorporation.
ARTICLE I
The name of the corporation shall be INNOVATIVE TECHNOLOGY
SYSTEMS, INC.
ARTICLE II
The term of existence of the corporation is perpetually.
ARTICLE III
The corporation may transact any and al lawful business for
which corporations may be incorporated under the Florida General
Corporation act.
ARTICLE IV
The aggregate number of shares which the corporation has
authority to issue is 50,000,000 all of which shall be common
shares with no par value.
PREPARED BY: ROBERT C. HACKNEY, ESQ.
DESANTIS, COOK & GASKILL
11891 US HIGHWAY ONE
NORTH PALM BEACH, FL 33408
FL BAR NO. 229563 FAX AUDIT NO. H92000006414
<PAGE>
FAX AUDIT NO. H92000006414
ARTICLE V
The street address of the initial registered office of the
corporation is 11891 U.S. Highway One, North Palm Beach, Florida
33408, and the name of the initial registered agent at such
address is Robert C. Hackney. The street address of the
corporation is 11891 U.S. Highway One, North Palm Beach, Florida
33408.
ARTICLE VI
The Corporation shall have one director, initially. The
number of directors may be increased or decreased from time to
time, by bylaws adopted by the stockholders, but shall never be
less than one.
ARTICLE VII
The name and post office address of the member of the first
Board of Directors is:
John Bylsma 30 Chestnut Trail
Tequesta, Florida 33469
ARTICLE VIII
The name and address of the incorporator is:
Robert C. Hackney 11891 U.S. Highway One
North Palm Beach, Florida 33408
ARTICLE IX
The Corporation shall be deemed to commence its existence
FAX AUDIT NO. H92000006414
<PAGE>
FAX AUDIT NO. H92000006414
upon the date of filing these Articles of Incorporation
IN WITNESS WHEREOF, I have subscribed my name this 12th day
of November, 1992.
/s/Robert C. Hackney
Robert C. Hackney
STATE OF FLORIDA
COUNTY OF PALM BEACH
On this 12th day of November, 1992, before me, a Notary
Public, duly authorized in the State and County named above to
take acknowledgments, personably appeared Robert C. Hackney, to
me known to be the person whose name is subscribed to the within
instrument, and he acknowledged that he executed the same for the
purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official
seal.
/s/Diane F. Thomas
Notary Public - State of Florida
My Commission Expires: [SEAL]
ACCEPTANCE BY REGISTERED AGENT
Having been named to accept service of process for the above
named Corporation, at the office stated above, I hereby accept to
act in the capacity of Registered Agent and agree to comply with
the provisions relative to keeping said office open.
/s/Robert C. Hackney
Robert C. Hackney
Registered Agent
FAX AUDIT NO. H92000006414
BYLAWS
OF
INNOVATIVE TECHNOLOGY
SYSTEMS, INC.
<PAGE>
BYLAWS INDEX
Page Number
ARTICLE I Offices
Section 1. Principal Office......................................4
Section 2. Other Offices.........................................4
ARTICLE II Seal..................................................4
ARTICLE III Meetings of Shareholders..............................4
Section 1. Place of Meeting......................................4
Section 2. Annual Meeting........................................4
Section 3. Special Meetings......................................5
Section 4. Notice of Meetings....................................5
Section 5. Action by Consent in Writing..........................5
Section 6. Quorum................................................5
Section 7. Required Vote.........................................5
Section 8. Voting and Proxies....................................6
Section 9. Voting Lists..........................................6
Section 10. Record Date...........................................6
Section 11. Voting of Shares by
Certain Holders.......................................6
ARTICLE IV Board of Directors....................................7
Section 1. Powers................................................7
Section 2. Number................................................7
Section 3. Election and Term of Office...........................7
Section 4. Vacancies.............................................7
Section 5. Removal...............................................8
Section 6. Place of Meetings.....................................8
Section 7. Regular Meetings......................................8
Section 8. Special Meetings......................................8
Section 9. Quorum................................................8
Section 10. Compensation..........................................8
Section 11. Executive Committee...................................8
Section 12. Presence at Meetings..................................9
Section 13. Written Consent.......................................9
ARTICLE V Officers .............................................9
Section 1. Designation...........................................9
Section 2. Election..............................................9
Section 3. Subordinate Officers..................................9
Section 4. Removal and Resignation...............................9
Section 5. Vacancies............................................10
Section 6. Chairman of the Board................................10
Section 7. Chief Executive Officer..............................10
Section 8. President............................................10
Section 9. Vice Presidents......................................10
Section 10. Secretary............................................11
Section 11. Chief Financial Officer/Treasurer....................11
Section 12. Compensation.........................................12
ARTICLE VI Certificates of Stock................................12
Section 1. Description..........................................12
Section 2. Lost Certificates....................................12
Section 3. Preferences..........................................12
Section 4. Transfers of Stock...................................13
Section 5. Registered Shareholders..............................13
ARTICLE VII General Provisions...................................13
Section 1. Dividends............................................13
Section 2. Checks...............................................13
Section 3. Fiscal Year..........................................13
Section 4. Execution of Deeds, Contracts and Other Documents....13
ARTICLE VIII Amendment to Bylaws..................................14
ARTICLE IX Indemnification......................................14
Section 1. General..............................................14
Section 2. Expenses.............................................14
Section 3. Standard of Conduct..................................14
Section 4. Advance Expenses.....................................15
Section 5. Benefit..............................................15
Section 6. Insurance............................................15
Section 7. Affiliates...........................................15
Section 8. Survival.............................................15
ARTICLE X Severability.........................................16
<PAGE>
BYLAWS
OF
INNOVATIVE TECHNOLOGY SYSTEMS, INC.
ARTICLE I
Offices
SECTION 1. Principal Office. The principal office of the
Corporation shall be established and maintained as stated in the
initial registered address of the corporation in the Articles of
Incorporation, until such time as the Board of Directors determines
otherwise.
SECTION 2. Other Offices. The Corporation may have other
offices, either within or without the State of Florida, at such
place or places as the Board of Directors may determine from time
to time or the business of the Corporation may require.
ARTICLE II
Seal
The Corporation shall have a corporate seal which shall be in
circular form and have inscribed thereon the name of the
Corporation and the year of its incorporation and may use the same
by causing it or a facsimile thereof to be impressed or affixed or
in any other manner reproduced upon any paper or document.
ARTICLE III
Meetings of Shareholders
SECTION 1. Place of Meeting. All meetings of the shareholders
shall be held at such place within or without the State of Florida
as shall be designated from time to time by the Board of Directors
and stated in the notice of such meeting or in a duly executed
waiver of notice thereof.
SECTION 2. Annual Meetings. The annual meeting of the shareholders
of the Corporation shall be held on a date and at a time designated
by the Board of Directors. If the day fixed for the annual meeting
shall be a legal holiday in the State of Florida or the state or
jurisdiction where the meeting is to be held, such meeting shall be
held on the next succeeding business day. The purpose of the
annual meeting of shareholders shall be to elect directors and to
transact such other business as may come before the meeting. If
the election of directors shall not be held on the day designated
for the annual meeting of the shareholders, or at any adjournment
thereof, the Board of Directors shall cause such election to be
held at a special meeting of the shareholders as soon thereafter as
conveniently may be.
SECTION 3. Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, may be called by the
Board of Directors or the holders of not less than one-tenth (1/10)
of all the shares entitled to vote at the meeting, or the
President. Business transacted at a special meeting shall be
confined to the purposes stated in the notice of the meeting.
SECTION 4. Notice of Meetings. Whenever shareholders are
required or authorized to take any action at a meeting, a notice of
such meeting, stating the place, day and hour of the meeting and,
in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered, not less than ten (10)
nor more than sixty (60) days before the date set for such meeting,
either personally or by first-class mail, by or at the direction of
the Chief Executive Officer, President or Secretary, or the persons
calling the meeting, to each shareholder of record entitled to vote
at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, addressed to
the shareholder, at his address as it appears on the stock transfer
books of the Corporation, with first-class postage prepaid thereon.
Written waiver by a shareholder of notice of a shareholders'
meeting, signed by him whether before or after the time stated
thereon, shall be equivalent to the giving of such notice.
SECTION 5. Action by Consent in Writing. Any action required
or permitted to be taken at any annual or special meeting of the
shareholders of this Corporation may be taken without a meeting,
without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders
of all of the outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon
were present and voted.
SECTION 6. Quorum. The majority of the shares entitled to
vote there at, present or represented by proxy at any meeting,
shall constitute a quorum of the shareholders for the transaction
of business except as otherwise provided by statute or by the
Articles of Incorporation. If, however, such quorum shall not be
present or represented at any meeting of the shareholders, the
shareholders entitled to vote there at, present in person or
represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such
adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally notified. If the
adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting,
a notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting, subject to
the provisions of Section 4 hereof. The shareholders present at a
duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough shareholders
to leave less than a quorum.
SECTION 7. Required Vote. If a quorum is present at any
meeting, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on the subject
matter shall be the act of the shareholders, unless the question is
one for which, by express provision of the law or of the Articles
of Incorporation or these Bylaws, a different vote is required, in
which case such express provision shall govern and control the
decision of such question.
SECTION 8. Voting and Proxies. Except as otherwise provided in
the Articles of Incorporation or by the terms of any outstanding
series of Preferred Stock of the Corporation, each shareholder
shall be entitled at each meeting and upon each proposal presented
at such meeting to one vote in person or by proxy for each share of
voting stock recorded in his name on the books of the Corporation
on the record date fixed as below provided, or if no such record
date was fixed, on the day of the meeting. Every proxy must be
signed by the shareholder or his attorney in fact. No proxy shall
be valid after the expiration of eleven (11) 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. If a proxy expressly
provides, any proxy-holder may appoint in writing a substitute to
act in his place.
SECTION 9. Voting Lists. The Secretary shall have charge of the
stock ledger and shall prepare and make, or cause to be prepared
and made, at least ten (10) days before every meeting of
shareholders, a complete list of the shareholders entitled to vote
at the meeting, arranged in alphabetical order, and showing the
address of each shareholder and the number of shares registered in
the name of each shareholder. Such list shall be open to the
examination of any shareholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified ,
at the place where the meeting is to be held. The list also shall
be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any shareholder or
proxy who is present. The stock ledger shall be the only evidence
as to who are the shareholders entitled to examine the stock
ledger, the list required by this section or the books of the
Corporation, or to vote in person or by proxy at any meeting of
shareholders.
SECTION 10. Record Date. In order that the Corporation may
determine the shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof or entitled to
receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix in advance, but
shall not be required to, a record date which shall not be more
than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
A determination of shareholders of record entitled to notice of or
to vote at a meeting of the shareholders shall apply to any
adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
SECTION 11. Voting of Shares by Certain Holders. Shares
outstanding in the name of another corporation may be voted by such
officer, agent or proxy as the by-laws of such corporation may
prescribe, or, in the absence of such provision, as the Board of
Directors of such corporation may determine. Shares held by an
administrator, executor, guardian or conservator may be voted by
him, either in person or by proxy, without a transfer of such
shares into his name.
Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a receiver may be
voted by such receiver, and shares held by or under the control of
a receiver may be voted by such receiver without the transfer
thereof into his name if authority to do so be contained in an
appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the
name of the pledgee and thereafter the pledgee shall be entitled to
vote the shares so transferred.
Treasury shares of this corporation's stock owned by another
corporation, the majority of the voting stock of which is owned or
controlled by this corporation, and shares of this corporation's
stock held by a corporation in a fiduciary capacity, shall not be
voted, directly or indirectly, at any meeting, and shall not be
counted in determining the total number of outstanding shares at
any given time.
ARTICLE IV
Board of Directors
SECTION 1. Powers. The business of the Corporation shall be
managed and its corporate powers shall be exercised by its Board of
Directors, except as otherwise provided by statute or by the
Articles of Incorporation.
SECTION 2. Number. Until changed by resolution of the Directors
at any time and from time to time, the Board at any time, shall
consist of at least One (1) director but no more than Five (5)
directors.
SECTION 3. Election and Term of Office. Directors shall be
elected at the annual meeting of shareholders, except as provided
in Sections 4 and 5 of this Article. At each meeting of
shareholders for the election of directors at which a quorum is
present, the persons receiving the greatest number of votes, up to
the number of directors to be elected, shall be the directors.
Each director shall hold office until the next succeeding annual
meeting, or until his successor is elected and qualified, or until
his earlier resignation by written notice to the Secretary of the
Corporation, or until his removal from office.
SECTION 4. Vacancies. Any vacancy occurring in the Board of
Directors, including any vacancy created by reason of an increase
in the number of directors, may be filled by the affirmative vote
of a majority of the directors then in office, though less than a
quorum of the Board of Directors. A director elected to fill a
vacancy shall be elected until the next annual meeting of the
shareholders. If there are no directors in office, then any
officer or any shareholder or an executor, administrator, trustee
or guardian of a shareholder or other fiduciary entrusted with like
responsibility for the person or estate of a shareholder, may call
a special meeting of shareholders for the purpose of electing a new
Board of Directors.
SECTION 5. Removal. At a special meeting of the shareholders,
duly called expressly for that purpose as provided in these Bylaws,
any director or directors, by the affirmative vote of the holders
of a majority of all the shares of stock outstanding and entitled
to vote for the election of directors, may be removed from office,
either with or without cause, and the remaining directors, in the
manner provided in these Bylaws, shall fill any vacancy or
vacancies created by such a removal.
SECTION 6. Place of Meetings. Meetings of the Board of Directors
of the Corporation, regular or special, may be held either within
or without the State of Florida.
SECTION 7. Regular Meetings. The Board of Directors shall hold
a regular meeting each year immediately after the annual meeting of
the shareholders at the place where such meeting of the
shareholders was held for the purpose of election of officers and
for the consideration of any other business that may be properly
brought before the meeting. No notice of any kind to either old or
new members of the Board of Directors for such regular meeting
shall be necessary.
SECTION 8. Special Meetings. Special meetings of the Board of
Directors may be called by any one (1) director, the Chairman of
the Board or the President or Secretary on two (2) days' written
notice to each director, either personally or by mail or by
telegram. Notice of any special meeting of the Board of Directors
need not be given to any director who signs a waiver of notice
either before or after the meeting. Attendance by a director at a
special meeting shall constitute a waiver of notice of such special
meeting, except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because
such special meeting is not lawfully convened.
SECTION 9. Quorum. A majority of all the directors shall
constitute a quorum for the transaction of business. The
affirmative vote of the majority of directors present at a meeting
where a quorum is present shall be the act of the Board of
Directors. If a quorum shall not be present at any meeting of the
Board of Directors a majority of the directors present there at may
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 10. Compensation. The Board of Directors shall have
the authority to fix the compensation of directors, and the
directors may be paid their expenses, if any, for attendance at
each meeting of the Board of Directors. No such payment shall
preclude any director from servicing the corporation in any other
capacity and receiving compensation therefrom. Directors may set
their own compensation for service as officers as well as for
service as directors.
SECTION 11. Executive Committee. The Board, by resolution
passed by a majority of the whole Board, may designate from among
its members an executive committee and one or more other
committees, which committees, to the extent provided in such
resolution, shall have and exercise any or all of the authority of
the Board of Directors, except that no such committee shall have
the authority to approve or recommend to the shareholders actions
or proposals required by law to be approved by the shareholders,
designate candidates for the office of director, fill vacancies on
the Board of Directors or any committee thereof, amend the Bylaws,
authorize or approve the re-acquisition of shares unless pursuant
to a general formula or method specified by the Board of Directors,
or authorize or approve the issuance or sale of, or any contract to
issue or sell,, shares or designate the terms of a series of a
class of shares, unless pursuant to a general formula or method
specified by the Board of Directors, within specifications
authorized by law.
SECTION 12. Presence at Meetings. Members of the Board of
Directors or an executive committee shall be deemed present in
person at a meeting of such Board or committee if a conference
telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other is used.
SECTION 13. Written Consent. Any action of the Board of
Directors or of any committee thereof, which is required or
permitted to be taken at a regular or special meeting, may be taken
without a meeting if consent in writing, setting forth the action
so to be taken, signed by all of the members of the Board of
Directors or of the committee, as the case may be, is in the
minutes of the proceedings of the Board of Directors or committee.
ARTICLE V
Officers
SECTION 1. Designation. The Corporation shall have a Chief
Executive Officer, President, Secretary and a Chief Financial
Officer/Treasurer, each of whom shall be elected by the Board of
Directors. The Corporation also may have, at the discretion of the
Board of Directors, a Chairman of the Board and one or more Vice
Presidents (however titled). Assistant Secretaries and Assistant
Chief Financial Officers/Treasurers, and such other officers as may
be appointed in accordance with the provisions of Section 3 of this
Article. One person may hold two or more offices.
SECTION 2. Election. The officers of the Corporation, except
such officers as may be elected in accordance with the provisions
of Section 3 or Section 5 of this Article, shall be elected
annually by the Board of Directors, and each shall hold his office
until he shall resign or shall be removed or otherwise disqualified
to serve, or his successor shall be elected and qualified.
Officers shall be elected by the affirmative vote of the majority
of directors present at a meeting where a quorum is present.
SECTION 3. Subordinate Officers. The Board of Directors may
elect such other officers as the business of the Corporation may
require, each of whom shall hold office for such period, have such
authority and perform such duties as are provided in these Bylaws
or as the Board of Directors may determine from time to time.
SECTION 4. Removal and Resignation. Any officer may be removed,
either with or without cause, by the affirmative vote of the
majority of directors present at any meeting where a quorum is
present, or, except in the case of an officer chosen by the Board
of Directors, by any officer upon whom such power of removal may be
conferred by the Board of Directors. Such removal shall be without
prejudice to the contract rights, if any, of the persons so
removed. Election or appointment of an officer or agent shall not
of itself create contract rights. Any officer may resign at any
time by giving written notice to the Board of Directors, or to the
Chairman of the Board, if one shall have been elected, or the Chief
Executive Officer, President or Secretary of the Corporation. Any
such resignation shall take effect at the date of the receipt of
such notice or at any later time specified therein, and, unless
otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
SECTION 5. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be
filled by the Board of Directors for the unexpired portion of the
term.
SECTION 6. Chairman of the Board. The Chairman of the Board, if
there shall be such an officer, if present, shall preside at all
meetings of the Board of Directors and exercise and perform such
other powers and duties as may from time to time be assigned to him
by the Board of Directors or prescribed by these Bylaws.
SECTION 7. Chief Executive Officer. The Chief Executive Officer
shall be the Chairman, who shall have management powers of the
corporation. His duties shall include but not be limited to
administration of the corporation, presiding over shareholder
meetings, general supervision of the policies of the corporation as
well as general management. The Chairman shall execute contracts,
mortgages, loans, and bonds under the seal of the corporation. The
Chairman shall have such other duties and powers as determined by
the Board of Directors by resolution. He shall preside at all
meetings of the shareholders, and in the absence of the Chairman of
the Board, shall preside at all meetings of the Board of Directors.
He shall be ex-officio a member of all the standing committees, if
any, and shall have such other powers and duties as may be
prescribed by the Board of Directors or these Bylaws.
SECTION 8. President. The President, subject to the control of
the Chief Executive officer and the Board of Directors, shall have
general supervision, direction and control of the business and
affairs of the Corporation. He shall execute deeds, bonds,
mortgages and other instruments on behalf of the Corporation,
except where required or permitted by law to be signed and executed
otherwise and except where the signing and execution thereof shall
be expressly delegated by the Board of Directors to some other
officer or agent of the Corporation. He shall have such other
powers and duties as may be prescribed by the Chief Executive
Officer and/or the Board of Directors or these Bylaws.
SECTION 9. Vice Presidents. The Vice Presidents, if any, shall
have such powers and perform such duties as may be prescribed from
time to time for them respectively by the Chairman of the Board,
the Chief Executive Officer, the President, the Board of Directors
or these Bylaws. In the absence of the President or in the event
of his death, inability or refusal to act, the first elected Vice
President or a designated Vice President shall perform the duties
of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President.
SECTION 10. Secretary. The Secretary shall: (a) keep, or cause
to be kept, a book of minutes at the registered or principal
office, or such other place as the Board of Directors may order, of
all meetings of directors and shareholders, with the time and place
of holding, whether regular or special, and if special, how
authorized, the notice thereof given, the names of those present at
directors, meetings, the number of shares present or represented at
shareholders, meetings and the proceedings thereof; (b) give, or
cause to be given, notice of all the meetings of the shareholders
and of the Board of Directors required by these Bylaws or by law to
be given; (c) be custodian of the corporate records and of the seal
of the corporation and see that the seal of the corporation is
affixed to all documents the execution of which on behalf of the
corporation under its seal is duly authorized; (d) keep a register
of the post office address of each shareholder which shall be
furnished to the Secretary by such shareholder; (e) sign with the
President,, certificates for shares of the corporation, the
issuance of which shall have been authorized by resolution of the
Board of Directors; (f) have general charge of the stock transfer
books of the corporation; and (g) in general perform all duties
incident to the office of Secretary and such other duties as from
time to time may be assigned to him by the Chief Executive Officer,
the President or by the Board of Directors. The Assistant
Secretaries shall have the powers of the Secretary, as may be
assigned to them by the Board of Directors and perform such other
duties as may be prescribed by the Board of Directors or these
Bylaws.
SECTION 11. Chief Financial Officer. The Chief Financial
Officer/Treasurer, if any, shall keep and maintain, or cause to be
kept and maintained, adequate and correct accounts of the
properties and business transactions of the Corporation, including
accounts of its assets, liabilities, receipts, disbursements,
gains, losses, capital, surplus and shares. Any surplus, including
earned surplus, paid-in surplus and surplus arising from a
reduction of stated capital, shall be classified according to
source and shown in a separate account. The books of account shall
be open at all reasonable times to inspection by any director. The
Chief Financial Officer/Treasurer shall deposit all monies and
other valuables in the name and to the credit of the Corporation
with such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation, shall
render to the Chief Executive Officer, the President and any
director, whenever requested, an account of all his transactions as
Chief Financial Officer/Treasurer and of the financial condition of
the Corporation, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or
these Bylaws. As required by the Board of Directors, the Chief
Financial Officer/Treasurer shall give a bond for the faithful
discharge of his duties in such sum and with such surety or
sureties as the Board of Directors shall determine. The Assistant
Chief Financial Officers/Treasurers shall have the powers of the
Chief Financial Officer/Treasurer, as may be assigned to them by
the Board of Directors.
SECTION 12. Compensation. The compensation of the officers and
agents of the Corporation shall be fixed from time to time by the
Board of Directors, or by such officer or officers as said Board
shall direct, and no officer shall be prevented from receiving such
compensation by reason of the fact that he is or was a director of
the Corporation.
ARTICLE VI
Certificates of Stock
SECTION 1. Description. Every shareholder shall be entitled
to have for each kind, class or series of stock held a certificate
certifying the number of shares thereof held of record by him. All
certificates for shares shall be consecutively numbered by class or
otherwise identified. Certificates shall be signed by the
President or a Vice President and the Secretary or an Assistant
Secretary, and may be sealed with the seal of the Corporation. The
seal may be a facsimile, engraved or printed. Where such
certificate is signed by a transfer agent or a registrar other than
the Corporation itself, the signature of any of those officers
named herein may be by facsimile. In case any officer who signed,
or whose facsimile signature has been used on, any certificate
shall cease to be such officer for any reason before the
certificate has been delivered by the Corporation, such certificate
may nevertheless be adopted by the Corporation and issued and
delivered as though the person who signed it or whose facsimile
signature has been used thereon had not ceased to be such officer.
SECTION 2. Lost Certificates. The Corporation may issue a new
certificate of stock in the place of any certificate theretofore
issued by it, alleged to have been lost, stolen or destroyed. The
Corporation may require the owner of the lost, stolen or destroyed
certificate, or his legal representative, to give the Corporation
a bond sufficient to indemnify the Corporation against any claim
that may be made against it on account of the alleged loss, theft
or destruction of any such certificate or the issuance of such new
certificate.
SECTION 3. Preferences. If the Corporation shall be authorized
to issue more than one class of stock or more than one series of
any class, the distinguishing characteristics of each class or
series, including designations, the relative rights and preferences
or limitations as regards dividend rates, redemption rights,
conversion privileges, voting powers or restrictions or
qualifications of voting powers, or such other distinguishing
characteristics as shall be stated either in the Articles of
Incorporation or in the resolution or resolutions providing for the
issue of such stock adopted by the Board of Directors or a duly
constituted executive committee shall be set forth in full on the
face or back of the certificate which the Corporation shall issue
to represent such kind, class or series of stock, provided that, in
lieu of the foregoing requirements, said provisions may be either
(a) summarized on the f ace or back of the certificate, or (b)
incorporated by reference made on the face or back of the
certificate where such reference states that a copy of said
provisions, certified by an officer of the Corporation, will be
furnished by the Corporation or its transfer agent, without cost,
to and upon request of the certificate holder.
SECTION 4. Transfers of Stock. 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 this Corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the
transaction upon its books.
SECTION 5. Registered Shareholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered on
its books as the owner of shares to receive dividends, and to vote
as such owner, and to hold liable for calls, to the extent
permitted by law, a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other
claim to interest in such shares on the part of any other person,
regardless of whether it shall have express or other notice
thereof, except as otherwise provided by law.
ARTICLE VII
General Provisions
SECTION 1. Dividends. The Board of Directors, at any regular
or special meeting thereof, subject to any restrictions contained
in the Articles of Incorporation, may declare and pay dividends
upon the shares of its capital stock in cash, property or its own
shares, except when the Corporation is insolvent or when the
payment thereof would render the Corporation insolvent.
SECTION 2. Checks. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may designate
from time to time.
SECTION 3. Fiscal Year. The fiscal year of the Corporation
shall end on the 31st day of December.
SECTION 4. Execution of Deeds, Contracts and Other Documents.
Except as otherwise provided by the Articles of Incorporation and
the Board of Directors, all deeds and mortgages made by the
Corporation and all other written contracts and agreements to which
the Corporation shall be a party may be executed on behalf of the
Corporation by the Chairman of the Board, if one shall have been
elected, the Chief Executive Officer, the President or one or more
Vice Presidents, if any shall have been elected, and may be
attested to and the corporate seal affixed thereto by the Secretary
or Assistant Secretary. The Board of Directors may authorize the
execution of deeds, mortgages and all other written contracts and
agreements to which the Corporation may be a party by such other
officers, assistant officers or agents, as may be selected by the
said Chairman of the Board, Chief Executive Officer, or President
from time to time and with such limitations and restrictions as
said authorization may prescribe.
ARTICLE VIII
Amendment to-Bylaws
These Bylaws may be altered, amended, repealed or added to by
the vote of a majority of the Board of Directors present at any
regular meeting of the said Board, or at a special meeting of the
directors called for that purpose, provided a quorum of the
directors is present at such meeting, unless reserved to the
shareholders by the Articles of Incorporation. These Bylaws, and
any amendments thereto, and new Bylaws added by the directors, may
be amended, altered or repealed by the shareholders and the
shareholders may prescribe in any Bylaw made by them that such
Bylaw shall not be altered, amended or repealed by the Board of
Directors.
ARTICLE IX
Indemnification
SECTION 1. General. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by, or in the right of the Corporation) by reason of
the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of any other
corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorney's fees), judgments, fines,
amounts paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding, including any
appeal thereof, if he acted in good faith in a manner he reasonably
believed to be in, or not opposed to the best interests of the
Corporation, and with respect to any criminal action or proceeding,
had no reasonable cause to believe that his conduct was unlawful.
The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contenders or
its equivalent shall not create, of itself, a presumption that the
person did not act in good faith or in a manner which he reasonably
believed to be in, or not opposed to, the best interests of the
Corporation or, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
SECTION 2. Expenses. To the extent that a director, officer,
employee or agent of the Corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding
referred to in Section 1 above, or in any defense of any claim,
issue or matter therein, he shall be indemnified against expenses,
including attorneys fees, actually and reasonably incurred by him
in connection therewith.
SECTION 3. Standard of Conduct. Any indemnification shall be
made hereunder only if a determination is made that indemnification
of the director, officer, employee or agent is proper in the
circumstances because such person has met the applicable standard
of conduct set forth in Section 1 above. Such determination shall
be made either (1) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) by the shareholders who were not
parties to such action, suit or proceeding. If neither of the
above determinations can occur because the Board of Directors
consists of a sole director or the Corporation is owned by a sole
shareholder, then the sole director or sole shareholder shall be
allowed to make such determination.
SECTION 4. Advance Expenses. Expenses incurred in defending
any action, suit or proceeding may be paid in advance of the final
disposition of such action, suit or proceeding as authorized in the
manner provided in Section 3 above upon receipt of any undertaking
by or on behalf of the director, officer, employee or agent to
repay such amount, unless it shall ultimately be determined that he
is entitled to be indemnified by the Corporation as authorized in
this Article.
SECTION 5. Benefit. The indemnification provided by this
Article shall be in addition to the indemnification rights provided
pursuant to Chapter 607 of the Florida Statutes, and shall not be
deemed exclusive of any other rights to which any person seeking
indemnification may he entitled under any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to
action in such person's official capacity and as to action in
another capacity while holding such office, and shall continue as
to a person who has ceased to be a director, officer, employee or
agent of the Corporation and shall inure to the benefit of the
heirs, executors and administrators of such a person.
SECTION 6. Insurance. The Corporation shall be empowered to
purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the Corporation or is
or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against liability asserted
against him and incurred by him in any such capacity or arising out
of his status as such, whether or not the Corporation would have
the power to indemnify him against such liability under the
provisions of this Article.
SECTION 7. Affiliates. For the purposes of this Article,
references to "the Corporation" include all constituent
corporations absorbed in a consolidation or merger, as well as the
resulting or surviving corporation, so that any person who is or
was a director, officer, employee or agent of such a constituent
corporation or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
shall stand in the same position under the provisions of this
Article with respect to the resulting or surviving corporation as
he would if he had served the resulting or surviving corporation in
the same capacity.
SECTION 8. Survival. Upon the death of any person having a
right to indemnification under this Article, such right shall inure
to his heirs and legal representatives. In addition, such heirs
and legal representatives shall be entitled to indemnification,
under the terms of this Article, against all expenses (including
attorney's fees, judgments, fines and amounts paid in settlement)
imposed upon or reasonably incurred by them in connection with any
claim, action, suit or proceeding described in the foregoing
Section 1 on account of such deceased person.
ARTICLE X
Severability
The provisions of these Bylaws shall be separable each from
any and all other provisions of these Bylaws, and if any such
provision shall be adjudged to be invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision
hereof, or the powers granted to this Corporation by the Articles
of Incorporation or Bylaws.
Adopted this 22nd day of April, 1999.
By:/s/John Bylsma
John Bylsma, President
(CORPORATE SEAL)
PROMISSORY NOTE
West Palm Beach, Florida
Principal Amount:$_________ Date:_______________
Innovative Technology Systems, Inc., a Florida corporation
(the "Maker"), for value received, promises to pay to the order
of John W. Bylsma, an individual(the "Payee"), at the office of
the Payee, or such other place that Payee may designate to Maker
in writing from time to time the principal sum of ______________
Dollars ($________) payable with interest thereon from the date
hereof computed on the basis of the actual number of days elapsed
and a year of 360 days, at such rates as are hereinafter
provided; said principal and interest to be paid without offset
or deduction in lawful money of the United States of America
which shall at the time of payment be legal tender in payment of
all debts and dues, public and private, subject to the following
terms and conditions:
1. INTEREST RATE
The principal amount hereof together with accrued unpaid
interest shall bear interest, as adjusted at a rate calculated as
provided herein. From the date hereof until maturity interest
shall accrue at the rate of Prime + 2% per annum, adjusted
annually.
2. PAYMENTS AND MATURITY
The principal, in the amount of __________________ Dollars
($______), and interest at the applicable interest rate, is due
upon the earlier to occur of: (i) Ten (10) years from the date
hereof; or (ii) the consummation of a merger, or other
reorganization, of the Maker with another company as contemplated
by the Maker's plan of business.
3. RIGHT TO PREPAY
It is specifically agreed by Payee that Maker shall have the
absolute right to prepay in whole, or in part, without premium or
penalty, the indebtedness evidenced hereby, including all unpaid
accrued interest. Any such prepayment shall be first applied to
accrued interest with the remainder applied to the reduction of
the principal balance hereof.
4. NON-TRANSFERABLE
Neither legal nor beneficial interest in this Promissory
Note ("Note") or any rights hereunder shall be negotiated,
assigned, sold nor in any way transferred by action of the Payee
without the prior written consent of the Maker which shall not be
withheld if Payee satisfies the Maker that the proposed transfer
would not be in violation of federal or state securities or other
laws. However, nothing herein shall preclude this Note and any
rights hereunder from being bequeathed or descending in
accordance with the laws of descent and distribution or from
being pledged as security for a bona fide loan.
5. GENERAL PROVISIONS
(a) Late Charges. If the payment is not received by Payee
within five (5) days of its due date, Maker shall pay Payee a
late charge of five percent (5%) of the amount due and Payee
shall not be obligated to accept said payment not accompanied by
said additional amount.
(b) Attorney's Fees. Maker promises to pay (in addition
to the above principal and interest) all costs of collection,
including reasonable attorney's fees if this Note is collected by
or through an attorney at law.
(c) Waiver. Maker, for itself, its heirs, legal
representatives, successors and assigns, hereby expressly waives
presentment for payment, demand, notice of demand, notice of
dishonor, protest, notice of protest, diligence in collection,
and all other notices of demands whatsoever with respect to this
Note except as expressly provided for herein, and hereby consents
to any and all indulgences granted by Payee, or any substitution,
exchange or release of collateral permitted by Payee, all without
in any way modifying, altering, releasing, affecting or limiting
the validity of the indebtedness evidenced hereby or impairing
any of Payee's rights following a default hereunder. No failure
to accelerate the debt evidenced hereby by reason of default from
time to time shall be construed (i) as a novation of this Note or
as a reinstatement of the indebtedness evidenced hereby or as a
waiver of such right of acceleration or of the right of Payee
thereto to insist upon strict compliance with the terms of this
Note, or (ii) to prevent the exercise of such right of
acceleration or any other right granted hereunder or by the laws
of the United States or any State thereof. Maker hereby
expressly waives the benefit of any statute or rule of law or of
equity now provided, or which may hereafter be provided, which
would produce a result contradictory to or in conflict with the
foregoing sentence. No extension of the time for payment of this
Note, or any installment due hereunder, made by agreement with
any person now or hereafter liable for the payment of this Note,
shall operate to release, discharge, modify, change or affect the
original liability of Maker under this Note, either in whole or
in part, unless Payee agrees otherwise in writing. This Note may
not be changed orally, but only by agreement in writing signed by
the party against whom enforcement of any waiver, change,
modification or discharge is sought.
(d) Waiver and Requirement of Exemptions. Maker hereby
waives and renounces for itself, its heirs, legal
representatives, successors and assigns, all rights to the
benefits of any statute of limitations and any moratorium,
reinstatement, marshalling, forbearance, valuation, stay,
extension, redemption, appraisement, exemption or homestead now
provided, or which may hereafter be provided by the Constitution
or laws of the United States of America or of any state thereof
to and in all its property, real and personal, against the
enforcement and collection of the obligations evidenced by this
Note. Maker hereby transfers, conveys, and assigns to the Payee
a sufficient amount of such homestead or exemption as may be set
apart in bankruptcy, to pay this Note in full, with all costs of
collection, and does hereby direct any trustee in bankruptcy
having possession of such homestead or exemption to deliver to
Payee a sufficient amount of property or money set apart as
exempt to pay the indebtedness evidenced hereby, or any renewal
hereof, and does hereby irrevocably appoint the Payee the
attorney-in-fact for Maker to claim any and all homestead
exemptions allowed by law.
(e) Governing Law. This Note is intended to constitute a
contract and shall be construed, interpreted and enforced in
accordance with the laws of the State of Florida.
(f) Time of Essence. Time is of the essence of this Note.
(g) Inurement. This Note shall bind and inure to the
benefit of Maker and Payee and their respective heirs, executors,
successors, assigns and legal representatives, whether by
voluntary action or by operation of law.
(h) Captions. The captions of the paragraphs of this Note
are for convenience only and are not intend to be nor shall be
construed as being a part hereof and shall not limit, expand or
otherwise affect any of the terms hereof.
SIGNED, SEALED AND DELIVERED, by Maker the day and year
first set forth above.
MAKER
____________________________
John W. Bylsma, President
Innovative Technology Systems, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Balance
Sheet, Statements of Operations, Statements of Cash Flows and Notes thereto
incorporated in Item 13. of this Form 10-SB and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 7,810
0
0
<COMMON> 65,100
<OTHER-SE> (73,810)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> (1,395)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (838)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,233)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,233)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
