- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20529
FORM 10-SB
TRIMFAST GROUP, INC.
(Name of Small Business Issuer)
NEVADA 88-0367136
------ ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
777 S. Harbour Island Blvd. Suite 260, Tampa, Florida 33602
(Address of principal executive offices)
(813) 275-0050
(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
Title of each class to Name of Each Exchange
be registered
None None
Securities to be registered under Section 12(g) of the Act:
Title of each class Name of each exchange on which
to be registered each class is to be registered,
Common Stock, $.001 Par Value None
----------------------------- ----
1
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ITEM 1. DESCRIPTION OF BUSINESS.................................................................. 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION................................17
ITEM 3. DESCRIPTION OF PROPERTY..................................................................18
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...........................18
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.............................19
ITEM 6. EXECUTIVE COMPENSATION...................................................................20
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...........................................20
ITEM 8. DESCRIPTION OF SECURITIES................................................................21
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.................................22
ITEM 2. LEGAL PROCEEDINGS........................................................................24
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS............................................24
ITEM 4. RECENT SALE OF UNREGISTERED SECURITIES...................................................24
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS................................................26
PART III.
PART F/S FINANCIAL STATEMENTS
INDEX TO EXHIBITS
DESCRIPTION OF EXHIBITS
</TABLE>
2
<PAGE>
References in this document to "us," "we," or "the Company" refer to TrimFast
Group, Inc., its predecessors and its subsidiaries.
ITEM 1. DESCRIPTION OF THE BUSINESS.
(a) Business Development.
We were incorporated in the State of Nevada on February 23, 1987 as Kendrex
Systems, Inc. On November 18, 1996, we reverse split our common stock. We issued
one (1) new share of our common stock in exchange for five (5) outstanding
shares of our common stock. On the same day, we entered into a reverse
acquisition with HLHK World Group, Inc. (hereinafter "World Group"), a Nevada
corporation, and subsequently changed our name to HLHK World Group, Inc. World
Group was in the business of telecommunications, an area in which we wished to
pursue the available opportunities. Pursuant to the terms of this acquisition,
we issued 6,000,000 of our post-split common shares to the shareholders of World
Group plus 250,000 of our post-split shares as finder's fees. As a result of
this transaction, World Group became our wholly owned subsidiary.
On August 12, 1998, we acquired TrimFast, Inc., a Florida Corporation,
(hereinafter "TrimFast Florida") in a common stock for common stock exchange. At
the time of this transaction, TrimFast Florida was engaged in the business of
formulating and distributing dietary and vitamin supplements. Pursuant to the
terms of this merger, we issued 13, 705,488 shares of our common stock to the
shareholders of TrimFast Florida. As a result of this acquisition, TrimFast
Florida became our wholly owned subsidiary. We entered into this transaction
because we felt that the nutrition and vitamin supplement field represented a
business opportunity for us. On September 4, 1998, we changed our name to
TrimFast Group, Inc. On December 20, 1998 we reverse split our common stock. We
issued one (1) new share of our common stock in exchange for ten (10)
outstanding shares of our common stock.
On September 4, 1998, we incorporated Body Life Sciences, Inc. (hereinafter
"Body Life"), a Florida corporation, as a wholly owned subsidiary of TrimFast
Florida. We formed this subsidiary in order to expand our business by offering
products under the Body Life tradename.
On March 18, 1999, we acquired IMMMU, Inc. (hereinafter "IMMMU"), a Delaware
corporation, and IMMCEL Pharmaceuticals, Inc. (hereinafter "IMMCEL"), a New York
corporation, both engaged in the business of developing nutritional supplements
manufactured by third parties. Pursuant to the terms of this acquisition, IMMMU
and IMMCEL became our wholly owned subsidiaries. We issued 235,000 shares of our
common stock, $50,000 in cash, an option agreement based upon performance
criteria and an employment agreement pursuant to the terms of the agreement. Leo
Ehrlich, the former president and principal shareholder of both IMMMU and
IMMCEL, is to receive a salary of $75,000 per year plus a bonus based on pre-tax
profits. The agreement is for a term of five years and may be renewed by the
parties in one-year increments.
On April 21, 1999, we formed a new division of our company, Nutrition Cafe, Inc.
doing business as NutritionCafe.com. This is an Internet website business
established to provide nutritional information, provide links to other
informative sites and to market and sell our products.
3
<PAGE>
On May 24, 1999, we acquired the assets of Ice Cold Water, Inc. (hereinafter
"Ice Water"), a Florida corporation incorporated on August 7, 1997, for
$120,000. At the time of this transaction, Ice Water was engaged in the business
of selling bottled water and leasing water coolers in Tampa, Florida and the
surrounding metropolitan areas. We entered into this transaction in order to
expand our product line to include water products, as we felt it would
complement our existing line of nutritional supplements.
(b) Principal Products and their Markets.
NUTRITIONAL PRODUCTS.
We are engaged in the nutraceutical business. We formulate, distribute and
market natural dietary supplements and health and fitness products through
wholesale and retail outlets. All manufacturing of our products is done by third
parties. We also distribute bottled water through our subsidiary Ice Water.
We sell approximately thirty-three (33) varieties of vitamins, nutritional
supplements, weight loss and muscle growth supplements and food supplements
under the brand line names TrimFast, Body Life Sciences and IMMMU. Our products
are formulated in vitamins/minerals combinations with varying potency levels.
They are offered in soft-gel, two-piece capsule, chewable, and liquid and powder
forms to accommodate various consumer preferences.
We offer the following products under the TrimFast line:
The TrimFast Dietary Supplement was introduced in January of 1999. It is an
all-natural herbal formula marketed weight loss supplement. It is sold by
distributors and in the following health food stores and weight loss centers:
Ansley's Natural Marketplace, Beehive Natural Foods of Miami, The Honey Tree,
Health Quest, Natural Nutrition, Physicians Weight Loss Clinics and Supplement
Warehouse. TrimFast was designed to assist in curbing appetite and increasing
metabolism to affect the fat burning process. In addition, TrimFast was designed
to increase energy and reduce water retention. However, there can be no
assurances that this product will have such effects uniformly upon all users
since the consuming population is diverse from the standpoint of various
metabolic rates. The TrimFast product has also been used in combination with St.
Johns Wort to provide the mental drive in implementing the positive effects of
St. Johns Wort - reducing stress and nervous tension and causing an alert mood.
This product is packaged in a one-month supply bottle.
Immune Blast, introduced in July of 1998, is an all-natural immune system
enhancer designed to aid in the prevention of colds and flu. The product is
marketed to the distributors: Abyss Distributors and Nutraline Distributors.
Max Impact is an entire product line targeted to convenience stores and gasoline
outlets. The products include all-natural packages, thirty count bottles and
daily supply packages of St. John's Wort, Trim Fast, Sudden Energy and Ginseng
Zing.
4
<PAGE>
Kicks, introduced in October of 1998, is an all natural chewable multi-vitamin
and mineral supplement developed and formulated exclusively for active children
and young athletes. This product is designed to compete with national brand
children's vitamins such as Flintstones.
The TrimFast Weight Loss Bar is a new product we introduced on June 14, 1999. We
designed this product to assist the user in a weight loss program by helping to
curb appetite, increase metabolism and increase energy levels; however, there
can be no assurance that any one or all of these effects will be produced in all
or any case. This product was designed to be implemented in conjunction with a
sensible nutritional diet program with exercise. The product was designed to
compete with several national companies including Slim Fast, Nestle's, MediFast
and Pounds Off nutrition. This product is offered in three flavors, chocolate
chocolate chip, chocolate peanut butter and passion fruit.
St. John's Wort: The only herb that has been scientifically studied and proven
to elevate mood and positive outlook, reduce stress and nervous tension which is
used to treat depression and mood related ailments.
Big Bad Rooster. A supplement designed to stimulate the male and female
reproductive, nervous and circulatory systems. The supplement contains an
alkaloid, yohimbine, which is believed by some to stimulate blood vessel
engorgement in the pelvic area, even though there is no scientific basis for
such conclusions.
Herbal Fen. A natural dietary supplement containing 5-Hydroxytryptophan that
helps increase brain levels of serotonin, a neurotransmitter which regulates key
functions related to moods.
Body Life, our wholly owned subsidiary, will market under its trade name Muscle
Recovery nutritional supplement. This product is a comprehensive remedy for
muscle aches, pains and soreness. It is to be taken immediately after injury or
exercise to boost the body's natural recuperative powers.
There can be no assurances that any of our products will produce the desired
results since the consuming population is diverse in their physical,
psychological and mental makeup and differs in their metabolic rates, genetic
composition and other factors and hence there is no scientific basis for
believing that any of the desired results will be produced.
5
<PAGE>
To date, we have not undergone any research and development of potential new
products or regarding any other areas of potential development. Although we plan
to devote 2% of our revenues to research and development within the next fiscal
year, such plans are totally dependent upon a number of factors, including:
sufficient revenue streams to support this expense, the retention of qualified
personnel participating in research and development. Currently we employ Steve
Kushner, the company nutritionist that has over 20 years of practical experience
and trained under Dr. Hazel Parcells. In addition, we must have the ability to
attract new qualified personnel to perform research and development and numerous
other factors which management may have not currently contemplated.
Competition.
Nutritional and dietary supplement products involve highly competitive markets.
We are in the process of developing our marketing strategies and product lines
and expect that both will involve an ever-changing and evolving process.
Although we will attempt to competitively price our products, provide superior
quality products, and achieve success through attentive and efficient customer
service and effective marketability strategies, we are limited by a number of
factors, including the developmental character of our company and the
unpredictability and uncertainty of our future revenues. In addition, we are
limited by the intensely competitive nature of the dietary food and vitamin
product industry in which more established companies may offer any combination
of the following: superior service, more competitive pricing, superior product
quality and availability, a variety of marketing strategies and distribution
networks and profitability achieved through sales volume and narrow profit
margins. There are many well-established competitors with substantially greater
financial revenues, as well as, significant new market entrants. Many of these
competitors have been in existence for substantially longer periods of time than
we have and may be better established in the market where we want to operate.
Further, they may have sufficient revenue streams to engage in extensive
advertising and promotional campaigns far in excess of our marketing
capabilities. In addition, many of the competitors in this field are privately
held, leading to unavailability of available data of the size of our
competition.
Accordingly, our competition is difficult to assess with any preciseness.
INTERNET ACTIVITIES: NUTRITION CAFE.
Nutrition Cafe, Inc., a wholly owned subsidiary of the Company, launched its
Internet site (www.nutritioncafe.com) in June of 1999. Through this Internet
site, we intend to offer nutritional products, including vitamins, minerals,
dietary supplements, sports nutrition products and homeopathic products for sale
to the public. These products are also offered at our retail store located in
Clearwater, Florida. Once the Internet site becomes fully operational, we will
attempt to market approximately 10,000 vitamins, herbs, dietary supplements and
homeopathic products to members at distributor wholesale prices. The Internet
site is planned to promote all of our products as well as, market and sell
vitamins and nutritional products from such other manufacturers as Met-rx,
Prolabs and Nature's Way.
In addition to offering a complete line of vitamins and supplements, the
NutritionCafe.com web page plans to offer visitors and members advice relating
to a variety of highlighted subject areas including nutrition, health, diet,
physical fitness and nutritional supplements. Daily columns on such topics as
health care, vitamins, homeopathic remedies, chiropractic care, fitness and
exercise may also be provided. Management believes that the subject areas, style
and special features will be arranged in a simple, easy-to-use fashion intended
to enhance product search and customer knowledge while encouraging membership
and repeat business.
6
<PAGE>
There can be no assurance that the Internet site will become fully operational
or will have the ability to effectively market our current products or those of
other manufacturers. In addition, there can be no assurance that our Internet
site will be able to market a projected 10,000 such products. The marketability
rate resulting from our Internet site is dependent upon revenues from our
Internet site and other sources, the relative success of promoting our Internet
site and competition from well-established Internet sites operated by strong
revenue based companies with long-life operational success.
Membership.
Anyone wishing to purchase products from the Nutrition Cafe will be required to
purchase a membership at the price of $9.95 per month. It is anticipated that
this fee will be automatically charged to the member's credit card or debited
from the member's checking account.
Payment.
Payment for orders placed on the NutritionCafe.com website may be made by check,
money order or credit card. Because of consumer concern on the issue of
utilizing their credit card for Internet purchases, we plan to utilize secure
server software. This software encrypts the entire customer personal information
including credit card number, name and address, so that it cannot be read during
Internet transmission.
Availability and Shipment.
Most of the products that are ordered from the Nutrition Cafe site would be
available for shipment within forty-eight (48) hours. Those products not in
stock can be ordered from various distributors or directly from the
manufacturer. Delivery time for these products can range from two (2) to four
(4) weeks. Orders are planned to be shipped via UPS ground transportation.
Express delivery options will be available at an additional cost. We warehouse
approximately 2,000 different products at our warehouse facility located in
Clearwater, Florida. Our goal is to continue developing our distribution
infrastructure to increase efficiency and support greater customer demand.
Marketing And Promotion.
Our marketing strategy is designed to strengthen the NutritionCafe.com brand
name, to increase customer traffic to the NutritionCafe.com website, to build
customer loyalty, to increase the membership base and to encourage repeat
business. We intend to utilize traditional advertising media to gain name
recognition in the general public including television, radio and print
advertising. We also intend to utilize banners, agreements with search engine
providers and hyperlinks. All products sold on our website are offered with a
100% money back guarantee, if the customer is dissatisfied for any reason with
the purchase.
7
<PAGE>
Competition.
The online commerce market, particularly over the Web, is new, rapidly evolving
and intensely competitive. Our current or potential competitors include Rexall
Sundown, Metabolife and Lifetrends International, each of which may be or are
currently offering their products on the Web. We also face competition from such
indirect sources as Yahoo and AOL that are involved in online commerce either
directly or in collaboration with other retailers, traditional retailers who
currently sell, or who may sell, products or services through the Internet. We
believe that the principal competitive edge in our market will be brand
recognition, price, selection, and a knowledgeable provider of health care
products, reliability and speed of performance. As the online commerce market
continues to grow, other companies may enter into business combinations or
alliances that strengthen their competitive positions. Our prospective customers
already have the opportunity to purchase various nutritional supplements from
various websites including Greentree.com, RX.com, Drugstore.com and Vitamin.com.
Retail Location.
On May 15, 1999, we opened a Nutrition Cafe retail store at our warehouse
facility in Clearwater. The retail establishment occupies approximately 1,300
square feet of space and caters primarily to local clientele. We expect to use
this store to test the viability of opening additional Nutrition Cafe retail
establishments.
Raw Materials, Suppliers and Manufacturing.
While we employ our own consultants to develop new product mixes, we do not
currently manufacture any of our products; instead, we rely on third-party
contract manufacturers. Currently, Innovative Labs, Phillips Pharmatech Labs,
Inc., Dolisos America, Inc. and Five Star Brands, Inc. manufacture most of the
products for TrimFast and Body Life Sciences. Innovative Labs manufactures all
products for IMMMU and IMMCEL Pharmaceuticals.
We procure raw materials from various suppliers, but we contract our finished
product production to one third party primarily. Since December 1998, we have
used a second production factory for some of our products; in the event that any
manufacturer ceases operations or cannot continue to manufacture any product for
us, we believe that there will be little difficulty in locating a manufacturer
to produce any of our products without delivery delays or significantly higher
costs.
The raw materials required for the manufacture of our products are readily
available from a number of different sources. As such, we do not believe there
will be any difficulties obtaining the required raw materials.
8
<PAGE>
BOTTLED WATER.
We recently acquired the assets of Ice Water, a bottled water distributor
located in the Tampa, Florida area. Ice Water delivers bottled water to a base
of customers in the Tampa, Florida area. Customers typically either own or rent
their water coolers from Ice Water. Rental customers typically sign a one-year
contract, providing Ice Water with a modest, but relatively stable stream of
revenue from both a monthly cooler rental charge and the sale of bottled water.
Water only customers generate revenues for us through the sale of bottled water
and ancillary services such as cooler repairs. We believe that direct delivery
water cooler companies enjoy several advantages over retailers of bottled water.
Management believes the strong industry growth has been and will continue to be
driven by: (i) concerns related to the quality of tap water sources, (ii)
consumer preferences for healthy products, (iii) taste preferences over tap
water and other refreshment beverages and (iv) favorable demographics.
Tap Water Concerns.
The aging of the tap water supply infrastructure and the high cost of adequately
maintaining or replacing existing water delivery systems have resulted in an
increase of tap water contamination incidences in recent years. Consequently,
there has been a decrease in consumers' confidence in the quality of tap water,
accompanied by an increase in consumption of bottled water. Management believes
that this trend will continue.
Healthy Products.
There is a movement toward a healthier lifestyle and the consumption of healthy
products, a theme that we attempt to promote in our varied line of products.
Within the "healthy products" segment, clear or natural colored products are
experiencing significant growth. Bottled water is perceived as a product with
strong health and fitness appeal.
Competition.
The bottled water industry is highly fragmented in North America. The bottled
water market is comprised of approximately 2,500 companies generating
approximately $4.0 billion in sales. Of these companies, the five largest
companies account for approximately 55% of the total market, with the remainder
comprised of hundreds of small regional companies. Management believes that the
industry will continue to consolidate as (i) operating leverage of the larger
companies makes the smaller companies uncompetitive, (ii) succession issues at
many smaller, family owned companies lead a number of independent companies to
exit the industry, and (iii) pressure to meet improving water quality standards
eliminates low quality producers.
We compete in the "alternative to tap water" market in two areas. First, we
compete directly with other home and office delivery bottled water companies in
our geographic markets. This segment is highly fragmented with the vast majority
of the companies being operated as small entrepreneurial and family-owned
businesses. We also compete indirectly with companies that distribute water
through retail stores and vending machines.
Management believes that the competitive advantage of water coolers over these
alternative distribution channels is primarily based on the convenience of home
or office delivery and, to a lesser extent, price. Similarly, we compete with
providers of on-premises water filtration systems, including systems distributed
through retail outlets, which we believe are aimed at less affluent consumers.
In certain markets, we market and provide on-premises water filtration systems.
9
<PAGE>
The "alternative to tap water" industry also includes a number of
well-established, well-capitalized companies. These include Nestle S.A., which
owns Perrier and the Perrier Group of America. Perrier Group of America operates
the Arrowhead, Poland Spring, Zephyrhills, Ozarka, Oasis and Great Bear brands.
Suntory owns Belmont Springs, Hinkley & Schmitt, Crystal, Kentwood, and Polar.
BSN Group owns the Evian and Dannon brands and also operates the Crystal Spring
(Toronto), Spring Valley, and Laurentian businesses. McKesson Corporation
operates the Sparkletts business. Ionics Incorporated operates the Aquacool
businesses. In addition, United States Filter Corp. and Culligan Water
Technologies, Inc. compete in the water filtration segment.
Business and Products.
We primarily market two types of water. These are spring water and premium
drinking water.
Spring Water.
Spring water is water that has been naturally filtered by its passage through
various geological layers, and is drawn from a protected underground reservoir
called an aquifer. It can then be either bottled at the source or transported in
stainless steel tankers to a more strategically located bottling facility.
Before bottling, spring water is passed through a micron filter that removes
sediment while retaining the natural mineral content of the water. The water is
then purified through an industry standard purification process known as
ozonation.
The Company draws its spring water from local sources. The spring water is
bottled at the source or transported to an independently owned bottling
facility. At the bottling facility, the spring water is filtered and ozonated.
Ozonation is a process whereby impurities not removed through ordinary
filtration are removed through the injection of oxygen. The process involves a
special form of oxygen, ozone, which is the strongest disinfectant and oxidizing
agent available for water treatment. The added oxygen quickly dissipates and
results in tasteless and odorless purification as compared to chlorination. This
process is designed to prevent bacteria and other contaminants from being
transferred from the spring or the tanker to the finished product.
Premium Drinking Water.
Premium Drinking Water is drawn from local municipal sources. It is passed
through a series of carbon and sand filters, processed by either reverse osmosis
or deionization, ozonated and then bottled. Premium drinking water has 99.9% of
all impurities removed from it, including its natural mineral content.
Premium drinking water, like spring water is obtained from an independent
bottler. Premium drinking water is accessed through local, publicly available
water supplies. It is further purified through reverse osmosis to remove
chlorine and other chemicals frequently found in tap water. The product then
goes through the ozonation process prior to bottling as premium drinking water.
10
<PAGE>
All water is obtained from sources in the Tampa area. We do not do any bottling;
rather, we rely upon independent bottlers to deliver our supply of water bottles
and coolers that, in turn, are delivered to our customers.
Water Coolers.
Rental customers typically sign a one-year contract, providing us with a stream
of relatively stable revenue from both a monthly cooler rental charge and the
sale of bottled water. While pricing varies depending on the water cooler
selected and the lease term selected by the customer, our current average
monthly rental charge for our coolers is approximately $8 -$10 per month.
We strip down, clean, and redeploy returned water coolers prior to all new
installations. Our average cost per water cooler is approximately $150, and we
estimates that the average life of a water cooler is ten (10) years. The typical
pay back period on a water cooler investment (assuming only rental revenue) is
approximately fifteen (15) months. In the event of termination of the rental
agreement, water coolers can be readily redeployed at a relatively low cost to
us. In addition, we charge a water cooler collection fee in certain markets when
a customer opts to discontinue purchasing water.
Delivery.
We believe that one of the most important success factors in the delivered
bottled water business is delivery route efficiency. Route efficiency is the
critical cost factor in the water cooler business, as the average cost of local
delivery per bottle is over four (4) times the cost of preparing one (1) bottle
for distribution. However, the marginal distribution cost of an additional
bottle on an existing route is relatively low.
Distribution Methods for our Dietary and Nutritional Supplements.
We utilize five different distribution channels for our health and fitness
products. These are wholesalers, distributors, food brokers, and direct sales to
retail outlets and the Internet. Currently, we distribute to twelve (12)
wholesalers and fifteen (15) distributors. We also have agreements with eleven
(11) food brokerage firms that sell products to nationwide retailers and
distributors.
Wholesalers buy products directly from us. These wholesalers in turn sell to
independent sales agents, who then sell to various retail establishments. The
distributors on the other hand buy the product directly from us and resell to
various retail outlets. Brokers are contracted to sell our products to retail
chains, distributors and wholesalers. Any retail accounts secured by the brokers
are directed to the distributors that currently supply the retailer with other
products.
Wholesalers and distributors are set up on terms of two percent (2%) fifteen-
(15) days net thirty (30) days as long as pre-approved credit has been
established. If credit has not been approved, we require one-half (1/2) of the
purchase order price upon ordering and the balance due on delivery.
11
<PAGE>
We also market through direct response television advertising. Inside sales
personnel who work directly for us will accept orders, arrange for production
and delivery of the products as required to service demand and co-ordinate
delivery of product to retailers and end customers.
Prospective retail locations include convenience stores, supermarkets, drug
stores, health clubs, gasoline outlets, restaurants and bars, and health
specialty outlets.
Once the purchase order has been verified, shipping instructions are delivered
to our distribution center where orders are fulfilled within forty-eight (48)
hours. Typically, product orders are generally shipped by UPS ground
transportation and customers receive their product within seven (7) days.
Express delivery services are also available. Express product orders are
generally shipped within twenty-four (24) hours. Special order products may take
up to a week to deliver but, in general, can be shipped within seventy-two (72)
hours. Unless alternate payment plans are provided, payment is due within thirty
(30) days of delivery.
License Agreement with WCW.
In June 1999 we developed our first private label product by entering into a
deal memorandum with the World Championship Wrestling Organization ("WCW") to
produce WCW Power Bar/Energy Extreme under the WCW brand name. The deal
memorandum is subject to execution of a definitive license agreement. The WCW
Power Bars will contain the likeness of a WCW wrestler and have been designed to
target an audience of millions of adults and children watching and attending
professional wrestling matches. Our WCW Power Bars are scheduled to be
introduced into the marketplace in August of 1999. We are in discussions with
other companies to produce private label products. Management believes that
private branding of nutritional supplements will provide increased future
revenues.
Dependence on a Few Customers.
As of December 31, 1998, we had approximately 79 customers, of whom one (1)
accounted for approximately sixty percent (60%) of our business and two (2)
accounted for an additional thirteen percent (13%) of our business. Although,
our marketing strategy contemplates increasing our customer base to 250 there
are no assurances that we will meet this goal.
12
<PAGE>
Intellectual Property.
We currently rely primarily on common law and proprietary protection. Our
business prospects will depend largely upon our ability to capitalize on
favorable consumer recognition of our trade names. We do not hold a trademark
registration for most of our products. We have been granted trademarks in the
state of Florida for TrimFast, Herbal Blast and Water with and Attitude.
TrimFast has also been registered with the U.S. Patent and Trademark Office. We
have applied for trademark protection for Kicks. These applications are
currently pending, have not been approved and may not ever be approved. Even, if
obtained, there can be no assurance that our trademarks will not violate the
proprietary rights of others or that our trademarks would be upheld and not
prevented from using our trademarks, if challenged, any of which could have an
adverse effect on us. It is possible that our competitors will adopt product or
service names similar to ours, thereby impeding our ability to build brand
identity and possibly leading to customer confusion. Our inability to protect
our trade names will have a material adverse effect on our business, results of
operations and financial condition.
We also rely on trade secrets and proprietary know-how, and employ various
methods, to protect our concepts. However, such methods may not afford complete
protection, and there can be no assurance that others will not independently
develop similar know-how or obtain access to our know-how and concepts. We do
not maintain confidentiality or non-competition agreements with all of our
executives, key personnel or suppliers. There can be no assurance that we will
be able to adequately protect our trade secrets. Third parties may assert
infringement claims against us or against third parties upon whom we rely and,
in the event of an unfavorable ruling on any claim, we may be unable to obtain a
license or similar agreement to use technology we rely upon to conduct our
business.
Unlike pharmaceutical products that rely on specific combinations of drugs and
chemicals, patents cannot protect herbal products. However, management believes
that simply knowing the ingredients to an herbal product does not mean that
other manufacturers can duplicate the product. Effective trademark, copyright
and trade secret protection may not be available in every country in which we
may offer or intend to offer or sell our products. Failure to adequately protect
our intellectual property rights could harm brand-name recognition, devalue our
proprietary content and adversely affect our ability to compete effectively in
the marketplace. Further, defending the intellectual property rights could
result in the expenditure of significant financial and managerial resources,
which could materially affect the operations of the business. While we believe
that our steps are adequate to secure our intellectual property rights, there
can be no assurance that a third party will not misappropriate any of our
proprietary information.
Government Approval.
The manufacturing, processing, formulating, packaging, labeling, distributing,
selling and advertising of our products are subject to regulation by one or more
federal agencies. The most active regulation has been administered by he Food
and Drug Administration (hereinafter the "FDA") which regulates our products
pursuant to the Federal Food, Drug and Cosmetic Act (hereinafter the "FDCA") and
regulations promulgated thereunder. In particular, the FDA regulates the safety,
manufacturing, labeling and distribution of dietary supplements, including
vitamins, minerals and herbs, food additives, food supplements, over-the-counter
drugs and prescription drugs, medical devices and cosmetics. In addition, the
Federal Trade Commission (hereinafter the "FTC") has overlapping jurisdiction
with the FDA to regulate the labeling, promotion and advertising of dietary
supplements, over the counter drugs, cosmetics and foods.
13
<PAGE>
Although the dietary supplement industry is subject to regulation by the FDA and
local authorities, dietary supplements, including vitamins, minerals, herbs and
other dietary ingredients, now have been statutorily affirmed as a "food."
Dietary supplement companies are authorized to make substantiated statements of
nutritional support and, subject to several possible limitations, to market
manufacture-substantiated-as-safe dietary supplement products without FDA
pre-clearance. Failure to comply with applicable FDA requirements can result in
sanctions being imposed on the Company or the manufacturers of our products,
including but not limited to fines, injunctions, product recalls, seizures and
criminal prosecution. .
Compliance with applicable FDA and any state or local statutes is critical.
Although we believe that we are in compliance with applicable statutes, there
can be no assurance that, should the FDA amend its guidelines or impose more
stringent interpretations of current laws or regulations, we would be able to
comply with these new guidelines. We are unable to predict the nature of such
future laws, regulations, interpretations or applications, nor can we predict
what effect additional governmental regulations or administrative orders, when
and if promulgated, would have on our business in the future. These regulations
could, however, require the reformation of certain products to meet new
standards, market withdrawal or discontinuation of certain products not able to
be reformulated, imposition of additional record keeping requirements, expanded
documentation regarding the properties of certain products, expanded or
different labeling and/or additional scientific substantiation.
The FDCA has been amended several times with respect to dietary supplements,
most recently by the Dietary Supplement Health and Education Act of 1994
(hereinafter "DSHEA"). DSHEA was enacted on October 15, 1994. It provides a new
statutory framework governing the composition and labeling of dietary
supplements. DSHEA provides a regulatory framework to ensure safe, quality
dietary supplements and the dissemination of accurate information about such
products. Under DSHEA, dietary supplements are generally excluded from the legal
definition of "food additive".
With respect to composition, DSHEA created a new class of "dietary supplements",
consisting of vitamins, minerals, herbs, amino acids and other dietary
substances for human use to supplement the diet, as well as concentrates,
metabolites, extracts or combinations of such dietary ingredients. Generally,
under DSHEA, dietary ingredients that were on the market before October 15, 1994
may be sold without FDA pre-approval and without notifying the FDA. On the other
hand, a new dietary ingredient (one not lawfully on the market before October
15, 1994) requires proof that it has been present in the food supply as an
article used for of food without being chemically altered, or evidence of a
history of use or other evidence of safety establishing that it is reasonably
expected to be safe. The FDA must be supplied with such evidence at least
seventy-five (75) days before the initial introduction into interstate commerce
use of a new dietary ingredient. There can be no assurance that the FDA will
accept the evidence of safety for any new dietary ingredients that we may decide
to use, and the FDA's refusal to accept such evidence could result in regulation
of such dietary ingredients as adulterated until such time as reasonable
expectation of safety for the ingredient can be established to the satisfaction
of the FDA.
14
<PAGE>
As for labeling, DSHEA permits "statements of nutritional support" for dietary
supplements without FDA pre-approval. Such statements may describe how
particular dietary ingredients affect the structure, function or general
well-being of the body, or the mechanism of action by which a dietary ingredient
may affect body structure, function or well-being (but may not state that a
dietary supplement will diagnose, mitigate, treat, cure or prevent a disease). A
company making a statement of nutritional support must possess substantiating
evidence for the statement, and, for such statements that are not about the
effects on the body as a result of a dietary supplement used as a tool for its
nutritive value and are not otherwise "health claims," disclose on the label
that the FDA has not reviewed that statement and that the product is not
intended for use for a disease, and notify the FDA of the statement within
thirty (30) days after its initial use. The manner for making the disclosure and
notifying the FDA are set forth in the regulations. However, there can be no
assurance that the FDA will not determine that a given statement of nutritional
support that we decide to make is a drug claim rather than an acceptable
nutritional support statement. Such a determination would require deletion of
the drug claim or our submission, and the FDA's approval of a new drug
application (hereinafter "NDA"), which would entail costly and time-consuming
clinical studies. In addition, DSHEA allows the dissemination of "third party
literature", publications such as reprints of scientific articles linking
particular dietary ingredients with health benefits. Third party literature is
exempted from FDA regulation as dietary supplement "labeling" and may be used in
connection with the sale of dietary supplements to consumers. Such a publication
may be so used if, among other things, it is not false or misleading, no
particular manufacturer or brand of dietary supplement is promoted and a
balanced view of available scientific information on the subject matter is
presented. There can be no assurance, however, that all pieces of third party
literature that may be disseminated in connection with our products will be
determined by the FDA to satisfy each of these requirements, and any such
failure could subject the product involved to regulation as a new drug or as a
"misbranded" product.
DSHEA permits substantiated, truthful and non-misleading statements of
nutritional support to be made in labeling, such as statements describing
general well being resulting from consumption of a dietary ingredient or the
role of a nutrient or dietary ingredient in affecting or maintaining structure
or function of the body. Any statement of nutritional support beyond traditional
claims must be accompanied by disclosure that the FDA has not evaluated such
statement and that the product is not intended to cure or prevent any disease.
We anticipate that the FDA will promulgate Good Manufacturing Practices
(hereinafter "GMPs") which are specific to dietary supplements and require at
least some of the quality control provisions contained in the GMPs for drugs.
Management anticipates that the FDA may promulgate GMP regulations authorized by
DSHEA, which are specific to dietary supplements. GMP regulation would require
supplements to be prepared, packaged and held in compliance with such rules, and
may require similar quality control provisions contained in the GMP regulations
for drugs. There can be no assurance that, if the FDA adopts GMP regulations
specific to dietary supplements, that either we or our manufacturers will be
able to comply with such GMP rules upon promulgation or without incurring
material expenses to do so.
15
<PAGE>
Our products and product related activities may also be subject to regulation by
other regulatory agencies, including but not limited to the FTC, the Consumer
Products Safety Commission, the United States Department of Agriculture, the
United States Postal Service, the United States Environmental Protection Agency
and the Occupational Safety and Health Administration. These activities are also
regulated by various agencies of the states and localities in which our products
are sold.
Advertising of dietary supplement products is subject to regulation by the FTC
under the Federal Trade Commission Act (hereinafter the "FTCA"). Section 5 of
the FTCA prohibits unfair methods of competition and unfair or deceptive trade
acts or practices in or affecting commerce. Section 12 of the FTCA provides that
the dissemination or the causing to be disseminated of any false advertising
pertaining to drugs or foods, which would include dietary supplements, is and
unfair or deceptive act or practice. Under the FTC's Substantiation Doctrine, an
advertiser is required to have a "reasonable basis" for all objective product
claims before the claims are made. Pursuant to this FTC requirement, we are
required to have adequate substantiation of all material advertising claims made
for its products. Failure to adequately substantiate claims may be considered
either deceptive or unfair practices.
In recent years the FTC has initiated numerous investigations of dietary
supplement and weight loss products and companies. The FTC has recently issued a
guidance document to assist supplement marketers of dietary supplement products
in understanding and complying with the substantiation requirement.
The FTC is authorized to use a variety of processes and remedies for
enforcement, both administratively and judicially including compulsory process,
cease and desist orders, and injunctions. FTC enforcement can result in orders
requiring, among other things, limits on advertising, corrective advertising,
consumer redress, divestiture of assets, rescission of contracts and such other
relief as may be deemed necessary. State and local authorities can also regulate
adverting and labeling for dietary supplements and conventional foods. There can
be no assurance that state and local authorities will not commence regulatory
action that could restrict the permissible scope of our product claims.
Employees.
We currently have fifteen (15) employees, of whom eleven (11) are employed
full-time and four (4) are employed part-time.
16
<PAGE>
Year 2000 Compliance.
Our systems are Year 2000 ("Y2K") compliant. The cost of such compliance on our
part was less than $5,000. The Y2K compliance issue is the result of computer
programs being written using two digits rather than four to define the
applicable year. Computer programs that have time sensitive software may
recognize a date using A00" as the year 1900 rather than 2000. This could result
in a systems failure or miscalculation causing disruption of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities. We have verified
that our two principal customers are Y2K compliant. We do not know if our other
suppliers or distributors are Y2K compliant, but believe there will be no
material adverse impact upon us if one of our individual distributors or
manufacturers is not Y2K compliant.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS/PLAN OF OPERATION
At the beginning of August of 1998, our assets were negligible, totaling $599.
Liabilities at that time totaled $680,917 with no revenues being generated and
no business plan in place. Accumulated losses totaled $1,122,218 with a
stockholders deficiency of $680,318. Due to the lack of revenues and no business
plan, our management sought out an acquisition candidate and, on August 12,
1998, acquired all of the issued and outstanding shares of common stock of
TrimFast Florida, a company engaged in the nutraceutical business.
TrimFast Florida was organized as a Florida corporation in April of 1997 and, in
its first year of operations generated revenues of $22,338. Start-up and
operating costs totaled $164,559 that resulted in a net loss of $151,846. These
operating expenses were funded by TrimFast Florida's president, Michael Muzio,
who, as of December 31, 1997, was owed a total of $150,200. Fiscal year 1998
represented the first full year of operations for TrimFast Florida. From the
beginning, management chose not to invest the capital required to lease or
acquire the machinery needed to manufacture their products. Instead, TrimFast
Florida relied upon contract manufacturers, freeing working capital for other
matters.
With the addition of our wholly owned subsidiary, TrimFast Florida, revenues in
1998 were $1,925,322. Cost of sales was $567,472 resulting in a gross profit of
$1,357,860. Operating expenses totaled $1,314,797 resulting in income from
operations of $43,063. We recorded $503,839 in bad debt expense. This sum was
partially due to the financial difficulties experienced by Cutting Edge, a
customer who accounted for approximately sixty percent (60%) of our revenues in
1998 and the bankruptcy of another customer. During 1998, a total of three (3)
customers accounted for approximately seventy-three (73%) of our sales.
Our cash balance as of December 31, 1998 was $105,641. We also had approximately
$358,000 in accounts receivable and $188,000 in inventory. Our total assets as
of December 31, 1998 were $731,438. Liabilities totaled $697,897 that was
comprised of approximately $626,000 in accounts payable and $72,000 in notes.
1998 represented a growing year for us. Relationships with distributors,
manufacturers and wholesalers had to be established. Manufacturing rates and
shipping costs all had to be analyzed and evaluated. With our acquisition of
TrimFast Florida in 1998, we opened new financing opportunities that would have
otherwise been foreclosed to us. We received a significant capital infusion
through the issuance of our common stock in private placements and borrowed
funds from private lenders.
17
<PAGE>
1999 saw our launch of the NutritionCafe website, the acquisition of IMMMU,
Inc., IMMCEL Pharmaceuticals, Inc., a significant expansion of our product line
and the purchase of the assets of Ice Cold Water Inc. Management believes direct
sales to consumers will significantly reduce reliance on several customers.
During the next twelve months of operation, management remains confident that
revenues from operation will be able to support its ongoing operations. Should
the Company determine additional financing is necessary, the additional
financing will be to expand current or proposed operations.
ITEM 3. DESCRIPTION OF PROPERTY
Our executive offices are located at 777 South Harbour Island Boulevard, Suite
260, Tampa, Florida 33602, where we lease approximately 1,350 square feet of
office space at a monthly rent of $2,300. We feel that this space is adequate
for our needs at this time. The current lease term expires on June 30, 2001.
Upon such expiration, we believe that we will be able to obtain renewal terms or
a lease for new space at terms favorable to the Company.
We have also signed a lease option agreement to acquire a 17,000 square foot
warehouse facility in Clearwater, Florida. The total purchase price for the
property is $1.2 million. The agreement required us to make a $100,000
non-refundable deposit to the seller of the property with the remaining balance
of $1.1 million due on or before June 30, 2000. Until such time as we pay the
full purchase price, we have agreed to pay a monthly lease rent of $8,000 per
month.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the ownership, as of June 1, 1999, of our common
stock by our officers, directors and principal shareholders who are known by us
to own, either beneficially or of record, more than 5% of said stock and by all
directors as a group.
NAME NO. OF SHARES % OWNED
- ---- ------------- -------
Michael Muzio 1,495,471* 32.9%
Gregg Vosler 120,000 02.6%
Christopher Hee 1,590 00.0003%
International Securities Corp. 300,000 06.6%
Mark Sansom 244,000 05.4%
All Officers and
Directors as a
Group (3 Individuals) 1,617,061 35.6%
18
<PAGE>
*Does not include 70,538 shares of common stock issued to Muzio in exchange for
the release of a debt in the amount of $126,644.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The directors and executive officers of the Company are as follows:
NAME AND ADDRESS AGE POSITIONS HELD
- ---------------- --- --------------
Michael Muzio 35 President/Treasurer/Director
4957 Bayshore Blvd.
Tampa Florida 33611
Gregg Vosler 52 Vice President/Secretary/Director
851 Lantana Avenue
Clearwater Beach Florida 34630
Christopher Hee 58 Director
3152 Fiesta Drive
Dunedin Florida 34689
The directors named above will serve until the next annual meeting of our
shareholders or until their successors shall have been elected and accepted
their positions. Directors are elected for one-year terms. Both Mr. Muzio and
Mr. Vosler are parties to an oral employment agreement with the Company that
pays each an annual salary of $150,000 and $50,000 respectively.
MICHAEL MUZIO: Since 1996, Mr. Muzio has served as president of the Company and
TrimFast Florida. Prior thereto, from 1991 until 1995 he served as chief
executive officer of Advanced Medical Diagnostics, Inc. Research and development
in health related products represent a significant portion of his prior work
experience. In 1994, Mr. Muzio filed for Bankruptcy Protection under Chapter 7
in the Southern District of Florida, Case Number 93-5409-8P7.
GREGG VOSLER: Mr. Vosler has served as vice president of the Company and
TrimFast Florida since November of 1997. Previously, from June 1996 to November
1997, he served as Director of Development for Physician's Weight Loss Center in
Akron, Ohio. In that capacity he was responsible for systems and franchise
development in the United States. From 1993 through June 1996, he served as an
independent consultant in the medical weight loss and health industry.
19
<PAGE>
CHRISTOPHER HEE: Mr. Hee has recently been appointed a director of the Company.
Dr. Hee received his M.D. degree at Sydney University, in Sydney, Australia. He
completed his residency at State General Hospital in Melaka, Malaysia. Dr. Hee
opened and operated four medical clinics in Tampin, Malaysia. After gaining
admission to practice medicine in the United States, Dr. Hee became the Chief
Medical Officer of the Tampa Military Processing Station for the United States
Department of Defense. Dr. Hee provides the Board with the medical background
and skills necessary for the Company to develop vitamins and supplements.
ITEM 6. EXECUTIVE COMPENSATION
Mr. Muzio, our president and treasurer, oversees the operations of the TrimFast
Florida subsidiary and in consideration thereof, receives annual compensation of
$150,000. Mr. Vosler, the Company's vice president and secretary, oversees sales
and in consideration thereof receives annual compensation of $50,000.
The terms and conditions of each officer's employment is reviewed annually by
our Board of Directors who may also award annual bonuses. There is no
compensation paid to our board members for serving on the Board of Directors.
However, board members are reimbursed for all costs and expenses incurred in
either attending Board meetings or, for any expenses incurred on our behalf.
The following table sets forth the compensation of the company's two (2)
officers for the last two (2) fiscal years:
ANNUAL COMPENSATION
NAME AND ANNUAL LONG TERM
PRINCIPAL POSITION COMPENSATION COMPENSATION
- ------------------ ------------ ------------
Michael Muzio 1998 $150,000.00 -0-
President & Treasurer 1997 $ -0- -0-
Gregg Vosler 1998 $ 50,000.00 -0-
Vice President & Secretary 1997 $ 31,000.00 -0-
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 12, 1999, we acquired all of the issued and outstanding shares of
common stock of TrimFast Florida, in exchange for the issuance of 13,705,488
with 75,060 remaining to be issued shares of our common stock. In conjunction
therewith, Michael Muzio acquired 1,186,624* shares of our common stock and
Gregg Vosler was issued 120,000* shares of our common stock. (*Reflects a 10:1
reverse split of our common stock occurring subsequent to the date of the
reverse acquisition.)
20
<PAGE>
On December 8, 1998, Mr. Muzio purchased all 508,313 post reverse-split shares
(5,083,134 pre-reverse split shares) of our outstanding common stock held
beneficially by our prior principal shareholder in a private transaction.
Effective December 31, 1998, our principal shareholder exchanged $126,664 of
loans due to him by us for 70,358(post-reverse split) shares of our common
stock. The number of shares received by Mr. Muzio was on a dollar for dollar
basis, based upon the outstanding debt obligation as of December 1, 1998 and the
stock valued at a pre-reverse split price of 0.18, with the debt due Mr. Muzio.
During 1988, we issued 65,000 shares of our common stock to Marsha Hardin in a
related party exchange for a loan payable by us in the amount of $40,000.
Mr. Muzio has entered into an oral employment agreement with us, which pays him
an annual compensation of $150,000. It is expected that we will renew this
agreement in the year 2000. Mr. Vosler has entered into an oral employment
agreement with us, which pays him an annual compensation of $50,000. It is
expected that we will renew this agreement in the year 2000.
We periodically advance funds to the principal stockholder and his affiliates as
well as borrow funds from the same parties. All of these amounts are interest
free without specific repayment terms.
ITEM 8. DESCRIPTION OF SECURITIES
We have authorized capital stock of one-hundred-million (100,000,000) shares of
common stock, $0.001 par value per share, 4,543,120 of, which were issued and
outstanding as of June 1, 1999. We have also authorized the issuance of twenty
million (20,000,000) shares of Class A Preferred Stock, $0.01 par value and
twenty-million (20,000,000) shares of Class B Preferred Stock, $0.01 par value
with such rights and preferences as determined by the Board of Directors. The
holders of common stock are entitled to one vote per share on all matters
submitted to a vote of the stockholders. Cumulative voting of shares of common
stock is prohibited. The holders of common stock are entitled to receive ratably
such dividends, if any, as may be declared from time to time by the Board of
Directors out of funds legally available therefor, subject to the payment of any
preferential dividends with respect to any preferred stock that may from time to
time be outstanding. In the event of the liquidation, dissolution or winding up
of the Company, the holders of common stock are entitled to share ratably in all
assets remaining after payment of liabilities, subject to prior distribution
rights of the holders of any outstanding preferred shares. The holders of common
stock have no preemptive rights except as prescribed by Nevada statutes, have no
conversion rights, subscription rights, and there are no redemptive or sinking
fund provisions applicable to the common stock. All of the outstanding shares of
common stock are fully paid and non-assessable, and all of the shares of common
stock when issued, will be fully paid and non-assessable. The vote of the
holders of a majority of the issued and outstanding shares of common stock
entitled to vote thereon is sufficient to authorize, affirm, ratify or consent
to such act or action, except as otherwise provided by law.
21
<PAGE>
Under Nevada law, stockholders may take certain actions without the holding of a
meeting by a written consent or consents signed by the holders of a majority of
the outstanding shares of the capital stock of the company entitled to vote
thereon. Prompt notice of the taking of any action without a meeting by less
than unanimous consent of the stockholders will be given to those stockholders
who do not consent in writing to the action. The purposes of this provision are
to facilitate action by stockholders and to reduce corporate expense associated
with annual special meetings of the shareholders. If shareholder action is taken
by written consent, we will be required to send each shareholder entitled to
vote on the applicable matter, but whose consent was not solicited, an
information statement containing information about the action taken.
Subject to the rights of the holders of any then outstanding preferred shares
(none are authorized as of the date of this prospectus) each holder of common
stock is entitled to receive such dividends as may be declared by the Board of
Directors out of funds legally available therefor. Upon liquidation or
dissolution of the Company, each holder of the common stock will be entitled to
share pro rata in any distribution of our assets after the payment of all debts
and other liabilities, subject to the rights of the holders of then outstanding
preferred stock, if any. Each holder of common stock is entitled to one vote per
share owned of record on the applicable record date on all matters presented to
a vote of the holders of the common stock, including the election of directors.
Holders of common stock have no cumulative voting rights and, therefore, the
holders of a majority of the shares voting for the election of a class of
directors can elect all the directors of such class and in such event the
holders of the remaining shares will not be able to elect any of such directors.
The holders of common stock have no preemptive rights to purchase or subscribe
for any stock or other securities and there are no conversion rights or
redemption or sinking fund provisions with respect to such stock. All
outstanding shares of common stock are, and the shares of common stock offered
hereby will be when issued, fully paid and non-assessable.
PART II.
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Market Information
------------------
Our common stock is currently traded on the National Association of Securities
Dealers Automated Quotation System Over the Counter Bulletin Board ("OTCBB")
under the symbol "TRIM." There is limited trading activity in our securities,
and there can be no assurance a regular trading market for our common stock will
be sustained.
22
<PAGE>
The following table sets forth, for the period indicated, the bid price range of
our common stock: Common Stock:
High Bid Low Bid
-------- -------
1997
- ----
Quarter Ended March 31, 1997 $ 9.00 $ 3.37
Quarter Ended June 30, 1997 5.50 1.55
Quarter Ended September 30, 1997 3.75 1.50
Quarter Ended December 31, 1997 2.62 .25
1998
- ----
Quarter Ended March 31, 1998 $ 12.50 $ 2.50
Quarter Ended June 30, 1998 5.31 3.10
Quarter Ended September 30, 1998 2.60 1.50
Quarter Ended December 31, 1998 5.30 1.20
1999
- ----
Quarter Ended March 31, 1999 $ 6.31 $ 2.75
Quarter Ended June 30, 1999 10.37 5.12
(Prices quoted reflect a prior 10:1 reverse stock split in 1998.)
Such market quotations reflect the high bid and low prices as reflected by the
OTC BB or by prices, without retail mark-up, markdown or commissions and may not
necessarily represent actual transactions. The following companies serve as
market makers for our securities: D.L. Cromwell, Wilson Davis and Knight
Securities.
(b) Holders
-------
As of June 1, 1999 there were approximately 159 holders of record of our common
stock.
(c) Dividends
---------
We have not paid any cash dividends since our inception, and the Board of
Directors does not contemplate doing so in the near future. Any decisions as to
future payment of dividends will depend on our earnings and financial position
and such other factors, as the Board of Directors deems relevant.
23
<PAGE>
ITEM 2. LEGAL PROCEEDINGS
Two lawsuits have been filed against us in connection with the sale of
Revivarant, a product containing the chemical GBL. In an action filed Jensen in
the District Court of the Fourth District of Idaho (Case No. CV PI 9900250D) and
in a separate action filed in the Circuit Court of the Tennessee for the
Thirteenth Judicial District at Memphis (Case No. 301672-5TD), the consumer of
the product alleges serious harm from the consumption of Revivarant. In each
case the consumer seeks compensatory and punitive damages totaling several
million dollars in compensatory damage. We have retained counsel to represent
their interests in these claims. We have not had a sufficient period of time to
investigate the merits of these claims. If these matters cannot be resolved,
management believes that any adverse rulings would not have a material adverse
impact on our operations, since we carry product liability insurance.
In 1999, we initiated a legal proceeding against a former major customer to
collect amounts receivable from such customer in an approximate amount of
$535,000 as of December 31, 1998. Such receivable related to products sold to
that customer during 1998, a portion of which were voluntarily recalled by us,
but never returned by the customer.
Prior to the acquisition of TrimFast Florida, we operated a telecommunications
company, HLHK Interactive Systems Pte Ltd. This entity conducted business in
Malaysia and Singapore. This entity filed for bankruptcy protection in Singapore
and pursuant to The Companies Act Cap 50 the affairs of HLHK Interactive were
wound up by High Court Order No. 84 of 1988.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The accounting firm of Schvaneveldt and Company previously audited our financial
statements. As a result of the stock exchange agreement entered into between us
and the Shareholders of TrimFast Florida on August 12, 1998, there was a change
in control of the Company and a relocation of our principal place of business
from Las Vegas, Nevada to Tampa, Florida. As a result of this move, the Board of
Directors felt that we would be better served by retaining an accounting firm
located in the State of Florida. As a result, we engaged the firm of Weinberg &
Co. to conduct our latest audit.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On November 18, 1996, we issued 6,250,000 shares of our common stock to then
existing shareholders of World Group pursuant to section 4(2) of the Securities
Act of 1933 in our acquisition of World Group.
On August 12, 1998, we issued 13,705,488 shares of our common stock to then
existing shareholders of TrimFast Florida pursuant to section 4(2) of the
Securities Act of 1933 in our acquisition of TrimFast Florida.
On March 18, 1999, we issued 235,000 shares of our common stock to the then
existing shareholders of IMMMU and IMMCEL pursuant to section 4(2) of the
Securities Act of 1933 is our acquisitions of IMMMU and IMMCEL.
24
<PAGE>
During 1999, and pursuant to various consulting agreements, we issued the
following common shares of our stock pursuant to section 4(2) of the Securities
Act of 1933:
NAME AMOUNT DATE OF ISSUANCE
- ---- ------ ----------------
Sansom, Mark 50,000 1/6
Lancaster Consultants, Inc. 225,000 1/6
Massa, Jr., Anthony 30,000 1/6
Sansom, Mark 30,000 1/18
Lancaster Consultants, Inc. 50,000 1/18
Sansom, Mark 20,000 2/19
Sansom, Mark 200,000 2/19
Millenium Health Products, Inc. 125,000 3/15
Midas Capital & Consulting 25,000 3/15
Sansom, Mark 125,000 4/26
NEXTDigital, Inc. 20,000 4/30
Millworth Investments, Inc. 150,000 5/19
First Nevisian Nominees Limited 37,500 6/1
First Nevisian Nominees Limited 10,000 6/1
IB Channel, Inc. 20,000 6/2
In June 1999, we issued a total of $1,000,000 in convertible debentures out of a
total offering of $3 million.
During 1996 pursuant to various agreements we issued the following shares of
common stock
NAME AMOUNT DATE OF ISSUANCE
- ---- ------ ----------------
Russo Securities 60,000* 12/13
*These shares were subsequently returned to the Company.
Harry Kay 60,000** 12/31
During 1997 pursuant to various agreements we issued the following shares of
common stock
NAME AMOUNT DATE OF ISSUANCE
- ---- ------ ----------------
Francis M. Fillerup 2,500** 3/27
E. Gregory George 2,500** 3/27
Velma Tronolone 2,500** 3/27
During 1998 pursuant to various agreements we issued the following shares of
common stock
25
<PAGE>
NAME AMOUNT DATE OF ISSUANCE
- ---- ------ ----------------
Ross, Norma 1,000** 1/6
Schneiderman, Robert 3,167** 1/6
Novak 3,000** 1/6
Graver, Thomas 1,250** 1/6
Tronolone, Velma 2,500** 1/6
Rubicon Technologies 15,000** 2/4
Kagel, David 5,000** 4/20
Schneiderman, Robert 14,833** 3/6
Klein, Jeffrey 5,000** 8/12
Shares to non-officers of TrimFast 75,440** 8/12
During 1998 we also offered for sale a total of $1,000,000 of our common stock
to investors pursuant to Rule 504 of Regulation D promulgated under the
Securities Act of 1933.
** Reflects 10:1 Reverse Split
In June 1999, we issued a total of $1,000,000 in convertible debentures out of a
total offering of $3 million.
The aforementioned issuances and sales were made in reliance upon the exemption
from the registration provisions of the 1933 Act afforded by Section 4(2)
thereof and/or Regulation D promulgated thereunder, as transactions by an issuer
not involving a public offering. The purchasers of the securities described
above acquired them for their own account and not with a view to any
distribution thereof to the public. Any shares which have been issued which have
not been issued pursuant to a valid exemption from registration bear legends
stating that the securities may not be offered, sold or transferred other than
pursuant to an effective Registration Statement under the 1933 Act, or an
exemption from such registration requirements. The Registrant will place stop
transfer instructions with its transfer agent with respect to all such
securities.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.7502 of the Nevada revised statutes provides for the indemnification
of directors and officers subject to certain limitations. Among other
provisions, the statute provides that to be entitled the indemnification under
the statutory provisions, if he acted in good faith and in a manner which 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 his conduct was unlawful.
Our By-laws provide for the indemnification of its directors and officers to the
maximum extent provided by law. It is the position of the Securities and
Exchange Commission and certain state securities administrators that any attempt
to limit the liability of persons controlling an issuer under the federal
securities laws or state securities laws is contrary to public policy and
therefore unenforceable.
26
<PAGE>
PART III.
ITEM 1. EXHIBITS
3. (i)(a) Articles of Incorporation Kendrex Systems, Inc.
(b) Amendment to the Articles of Incorporation for Kendrex Systems,
Inc.
(c) Certificate of amendment to the Articles of Incorporation for
HLHK World Group, Inc.
(d) Articles of Incorporation for HLHK World Group, Inc.
(e) Articles of Incorporation for TrimFast Inc.
(f) Articles of Incorporation for Body Life Sciences, Inc.
(g) Articles of Incorporation for Nutrition Cafe, Inc.
3.(ii) Bylaws of Kendrex Systems, Inc. ("TrimFast Group, Inc.")
4. Debenture Agreement
10.(a) Deal Memorandum with the Worldwide Championship Wrestling
(b) Lease Option Agreement for Clearwater property.
21. Subsidiaries of Registrant
23.(a) Consent of Weinberg & Company, P.A.
(b) Consent of Schvaneveldt and Company
27
<PAGE>
PART F/S
FINANCIAL STATEMENTS
Statements included in this Report that do not relate to present or historical
conditions are "forward-looking statements" within the meaning of the Safe
Harbor provisions of the Private Securities Litigation Reform Act of 1995 (the
"1995 Reform Act"). Additional oral or written forward-looking statements may be
made by the Company from time to time and such statements may be included in
documents other than this Report that are filed with the SEC. Such
forward-looking statements involve risks and uncertainties that could cause
results or outcomes to differ materially from those expressed in such
forward-looking statements. Forward-looking statements in this Report and
elsewhere may include, without limitation, statements relating to the Company's
plans, strategies, objectives, expectations, intentions and adequacy of
resources and are intended to be made pursuant to the Safe Harbor provisions of
the 1995 Reform Act Introduction.
28
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
REGISTRANT:
TRIMFAST GROUP, INC.
DATE:__________________________ BY:________________________
MICHAEL MUZIO, president
29
<PAGE>
HLHK World Group, Inc.
(A Development Stage Company)
Financial Statements
August 11, 1998
&
December 31, 1997
PAGE F-2 - INDEPENDENT AUDITORS' REPORT
PAGE F-3 - BALANCE SHEET AS OF AUGUST 11, 1998 & DECEMBER 31, 1997
PAGE F-4 - STATEMENT OF OPERATIONS FOR THE ACCUMULATED PERIOD OF
JULY 8, 1996 (INCEPTION) TO AUGUST 11, 1998 AND THE
PERIOD JANUARY 1, 1998 TO AUGUST 11, 1998 AND
THE YEAR ENDED DECEMBER 31, 1997
PAGE F-5-F-6 - STATEMENT OF STOCKHOLDERS' EQUITY
FROM JULY 8, 1996 (INCEPTION) TO AUGUST 11, 1998
PAGE F-7 - STATEMENTS OF CASH FLOWS FOR THE ACCUMULATED PERIOD OF
JULY 8, 1996 (INCEPTION) TO AUGUST 11, 1998 AND THE
PERIOD JANUARY 1, 1998 TO AUGUST 11, 1998 AND
THE YEAR ENDED DECEMBER 31, 1997
PAGES F-8-F-17 - NOTES TO FINANCIAL STATEMENTS
F-1
<PAGE>
/Letterhead/
Schvaneveldt & Company
Certified Public Accountant
275 East South Temple, Suite #300
Salt Lake City, Utah 84111
(801) 521-2392
Darrell T. Schvaneveldt, C.P.A.
Independent Auditors Report
---------------------------
Board of Directors
HLHK World Group, Inc.
(A Development Stage Company)
I have audited the accompanying balance sheets of HLHK World Group, Inc., as of
August 11, 1998 and December 31, 1997, and the related statements of operations,
stockholders equity, and cash flows for the accumulated period July 8,1996
(Inception) to August 11, 1998, the period January 1, 1998 to August 11, 1998
and the year ending December 31, 1997. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. 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 the significant estimates made by
management, as well as evaluating the overall financial statements presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the aforementioned financial statements present fairly, in all
material respects, the financial position of HLHK World Group, Inc., as of
August 11, 1998 and December 31, 1997, and the results of its operations and its
cash flows for the accumulated period July 8, 1996 (Inception) to August 11,
1998, the period January 1, 1998 to August 11, 1998 and the year ended December
31, 1997, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note #11 of the financial
statements, the Company has an accumulated deficit and a negative net worth at
August 11, 1998. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also discussed in Note #11. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/S/ Schvaneveldt & Company
Salt Lake City, Utah
June 22, 1999
F-2
<PAGE>
HLHK World Group, Inc.
(A Development Stage Company)
Balance Sheets
August 11, 1998 & December 31, 1997
<TABLE>
<CAPTION>
August December
11, 1998 31, 1997
-------- --------
<S> <C> <C>
Assets
Current Assets
- --------------
Cash in Banks $ 43 $ 28
Property & Equipment
- --------------------
Office Equipment - Net 556 756
--------------- ----------------
Total Assets $ 599 $ 784
=============== ================
Liabilities & Stockholders' Equity
Current Liabilities
- -------------------
Accounts Payable $ 106,921 $ 154,201
Accrued Interest Payable 12,673 7,792
Amounts Due - Related Parties 491,198 462,233
Notes Payable 70,125 70,000
--------------- ----------------
Total Current Liabilities 680,917 694,226
Stockholders' Equity
- --------------------
Common Stock, 100,000,000 Shares
Authorized at $0.001 Par Value,
8,177,499 Shares and 7,911,646
Shares Issued & Outstanding Respectively 8,177 7,912
Paid In Capital 433,723 388,902
Accumulated Deficit ( 1,122,218) ( 1,090,256)
--------------- ----------------
Total Stockholders' Equity ( 680,318) ( 693,442)
--------------- ----------------
Total Liabilities & Stockholders' Equity $ 599 $ 784
=============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements
F-3
<PAGE>
HLHK World Group, Inc.
(A Development Stage Company)
Statement of Operations
For the accumulated period of July 8, 1996
(Inception) to August 11, 1998 and the period
January 1, 1998 to August 11, 1998 and
the year ended December 31, 1997
<TABLE>
<CAPTION>
Accumulated 1998 1997
---------------- --------------- ----------------
<S> <C> <C> <C>
Revenues $ -0- $ -0- $ -0-
- --------
Expenses
- --------
Write Off Amounts Advanced to
Subsidiary 638,589 -0- 638,589
Administrative & General Expenses 451,667 31,962 374,911
---------------- --------------- ----------------
Total Expenses 1,090,256 31, 962 1,013,500
---------------- --------------- ----------------
Net Loss ($ 1,090,256) ($ 31,962) ($ 1,013,500)
================ =============== ================
Loss Per Share ($ 0.15) ($ .00) ($ 0.14)
Weighted Average Shares
Outstanding 7,290,828 8,177,499 7,478,323
</TABLE>
The accompanying notes are an integral part of these financial statements
F-4
<PAGE>
HLHK World Group, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
From July 8, 1996 (Inception) to August 11, 1998
<TABLE>
<CAPTION>
Common Stock Paid In Accumulated
Shares Amount Capital Deficit
------ ------ ------- -------
<S> <C> <C> <C> <C>
Shares Issued to Shareholders
Kendrex Systems, Inc.,
Retro-Actively Restated for
1 for 5 Split 770,000 770 ( 770)
Shares Issued to Acquire 100%
of Outstanding Shares of
HLHK World Group, Inc. 6,000,000 6,000 10,490
Shares Issued for Finder Fees 250,000 250
Shares Issued for Investment
Bankers Fees 600,000 600
Shares Issued for Directors Fees 100,000 100
Loss from Operations for Year
Ended December 31, 1996 ( 76,756)
--------------------------------------------------------------------
Balance, December 31, 1996 7,720,000 7,720 9,720 ( 76,756)
Shares Issued for Cash at $1.00
Per Share 10,000 10 9,990
Shares Issued for Interest Expense 31,646 32
Shares Issued in Satisfaction
of Debt 600,000 600 369,192
Shares Returned from Investment
Banker and Canceled ( 600,000) ( 600)
Shares Issued for Rubicon Guarantee 150,000 150
Loss from Operations for Year
Ended December 31, 1997 ( 1,013,500)
--------------------------------------------------------------------
Balance, December 31, 1997 7,911,646 7,912 388,902 ( 1,090,256)
</TABLE>
The accompanying notes are an integral part of these financial statements
F-5
<PAGE>
HLHK World Group, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
From July 8, 1996 (Inception) to August 11, 1998
<TABLE>
<CAPTION>
Common Stock Paid In Accumulated
Shares Amount Capital Deficit
------ ------ ------- -------
<S> <C> <C> <C> <C>
Shares Issued for Services at
$0.001 Per Share 67,500 67
Shares Issued in Satisfaction
of Accounts Payable 50,000 50 43,469
Shares Issued in Satisfaction of
Late Payment of Note Payable 148,353 148 1,352
Net Loss from Operation for
Period Ended August 11, 1998 ( 31,962)
--------------------------------------------------------------------
Balance, August 11, 1998 8,177,499 $ 8,177 $ 433,723 ($ 1,122,218)
====================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements
F-6
<PAGE>
HLHK World Group, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the accumulated period of July 8, 1996
(Inception) to August 11, 1998 and the Period
January 1, 1998 to August 11, 1998 and
the year ended December 31, 1997
<TABLE>
<CAPTION>
Accumulated 1998 1997
---------------- --------------- ----------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
- ------------------------------------
Net Loss ($ 1,090,256) ($ 31,962) ($ 1,013,500)
Adjustments to Reconcile Net Loss to
Net Cash Used by Operating Activities;
Depreciation 378 200 378
Write Off of Bad Debts from Subsidiary 638,589 -0- 638,589
Non Cash Expenses 782 1,567 782
Changes in Operating Assets & Liabilities;
Increase in Advance to Subsidiaries ( 252,557) -0- ( 251,810)
Increase in Accounts Payable 154,201 ( 3,761) 75,698
Increase in Accrued Interest 7,792 4,881 7,792
---------------- --------------- ----------------
Net Cash Used by Operating Activities ( 541,071) ( 29,075) ( 542,071)
Cash Flows from Investing Activities
- ------------------------------------
Purchase of Office Equipment ( 1,134) -0- ( 1,134)
---------------- --------------- ----------------
Net Cash Used by Investing Activities ( 1,134) -0- ( 1,134)
Cash Flows from Financing Activities
- ------------------------------------
Increase in Amounts Due from Related Parties 462,233 28,965 462,233
Increase in Notes Payable 70,000 125 70,000
Sale of Common Stock 10,000 -0- 10,000
---------------- --------------- ----------------
Net Cash Provided by Financing Activities 542,233 29,090 542,233
---------------- --------------- ----------------
Increase (Decrease) in Cash 28 15 ( 972)
Cash at Beginning of Period -0- 28 1,000
---------------- --------------- ----------------
Cash at End of Period $ 28 $ 43 $ 28
================ =============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements
F-7
<PAGE>
HLHK World Group, Inc.
(A Development Stage Company)
Notes to Financial Statements
NOTE #1 - Organization and Nature of Business
- ---------------------------------------------
HLHK World Group, Inc., (the Company), was organized on July 8, 1996, under the
laws of the state of Nevada.
The purpose for which the Corporation is formed and the nature of the objects
purposed to be transacted and carried on by it are any and all legal business.
The Company is considered to be a development stage company as defined in SFAS
No., 7.
NOTE #2 - Significant Accounting Policies
- -----------------------------------------
A. The Company uses the accrual method of accounting.
B. Revenues and directly related expenses are recognized in the period
when the goods are shipped to the customer.
C. The Company considers all short term, highly liquid investments that
are readily convertible, within three months, to known amounts as cash
equivalents. The Company currently has no cash equivalents.
D. Primary Earnings Per Share amounts are based on the weighted average
number of shares outstanding at the dates of the financial statements.
Fully Diluted Earnings Per Shares shall be shown on stock options and
other convertible issues that may be exercised within ten years of the
financial statement dates.
E. Inventories: Inventories are stated at the lower of cost, determined by
the FIFO method or market.
F. Depreciation: The cost of property and equipment is depreciated over
the estimated useful lives of the related assets. The cost of leasehold
improvements is depreciated (amortized. over the lesser of the length
of the related assets or the estimated lives of the assets.
Depreciation is computed on the straight line method for reporting
purposes and for tax purposes.
G. Estimates: The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
H. New Technical Pronouncements: In February 1997, SFAS No. 129,
"Disclosure of Information about Capital Structure" was issued
effective for periods ending after December 15, 1997. The Company has
adopted the disclosure provisions of SFAS No. 129 effective with the
fiscal year ended December 31, 1998.
In June 1997, SFAS No. 130, "Reporting Comprehensive Income" was issued
effective for fiscal years beginning after December 31, 1997, with
earlier application permitted. The Company has elected to adopt SFAS
No., 130 effective with the fiscal year ended December 31, 1998.
Adoption of SFAS No., 130 is not expected to have a material impact on
the Company's financial statements.
F-8
<PAGE>
HLHK World Group, Inc.
(A Development Stage Company)
Notes to Financial Statements
NOTE #2 - Significant Accounting Policies
- -----------------------------------------
In June 1997, SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" was issued for fiscal year
beginning after December 31, 1997, with earlier application permitted.
The Company has elected to adopt SFAS No. 131, effective with the
fiscal years ended December 31, 1998. Adoption of SFAS No. 131 is not
expected to have a material impact on the Company's financial
statements.
NOTE #3 - Reverse Takeover and Recapitalization
- -----------------------------------------------
Pursuant to a Plan and Agreement of Reorganization dated November 8, 1996, HLHK
World Group, Inc., a Nevada Corporation, (the legal acquiree) and Kendrex
Systems, Inc., a Nevada Corporation, (the legal acquirer) exchanged common stock
to give the shareholders of the legal acquiree control of the legal acquirer.
Shareholders of the legal acquiree surrendered 100% of the outstanding shares
(1,000 shares) in exchange for 6,000,000 shares of the legal acquirer. Each
share of the legal acquiree was exchanged for 6,000 shares of the legal
acquirer's previously unissued common stock. As part of the agreement the legal
acquirer issued 250,000 shares to persons as finders' fees.
Following the exchange the shareholders of the legal acquiree held 6,000,000
shares of the 7,020,000 issued shares of the legal acquirer (85.4%).
Kendrex Systems, Inc., the legal acquirer, filed a Certificate of Amendment with
the Secretary of State of the state of Nevada changing its name to HLHK World
Group, Inc.
The merger of a private operating Company, (HLHK World Group, Inc., a Nevada
Corporation) into a non-operating public shell corporation (Kendrex Systems,
Inc., a Nevada Corporation), with no assets or liabilities resulted in the
shareholders of the private company having actual operating control of the
combined company after the transaction, and the shareholders of the former
public shell continuing only as passive investors.
This transaction is considered to be a capital transaction in substance, rather
than a business combination. That is, the transaction is equivalent to the
issuance of stock by the private company for the net monetary assets of the
shell corporation, accompanied by a recapitalization. The accounting is
identical to that resulting from a reverse acquisition, except no goodwill or
other intangible is recorded.
APB No., 16, paragraph 70 states that, "Presumptive evidence of the acquiring
corporation in combinations effected by an exchange of stock is obtained by
identifying the former common stockholder interest of a combined company which
either retains or receives the larger portion of the voting rights of the
combined corporation. That corporation should be treated as the acquirer unless
other evidence clearly indicates that another corporation is the acquirer."
F-9
<PAGE>
HLHK World Group, Inc.
(A Development Stage Company)
Notes to Financial Statements
NOTE #3 - Reverse Takeover and Recapitalization
- -----------------------------------------------
Staff accounting Bulletin Topic 2A affirms the above principle and gives
guidelines that the post reverse-acquisition comparative historical financial
statements furnished for the legal acquirer should be those of the legal
acquiree.
In accordance with this guideline the outstanding shares of HLHK World Group,
Inc., have been retroactively restated on the Balance Sheet, and the Statement
of Stockholders' Equity to give effect to the 6,000 shares for 1 share exchange.
The retroactively restated shares have been used in the Computations for
Earnings (Losses) Per Share to preserve comparability of those figures.
NOTE #4 - Property and Equipment and Depreciation Expenses
- ----------------------------------------------------------
The Company capitalized the purchase of equipment for merger purchases in excess
of $500 per item. Capitalized amounts are depreciated over the useful life of
the assets as follows:
<TABLE>
<CAPTION>
Estimated
Property and Equipment Useful Life
- ---------------------- -----------
Furniture & Equipment 3 Years
Property and equipment at cost are as follows: 1998 1997
- ---------------------------------------------- ---- ----
<S> <C> <C>
Furniture & Equipment $ 1,134 $ 1,134
Less Accumulated Deprecation 578 378
--------------- ----------------
Net Book Value 556 756
=============== ================
Depreciation and Amortization Expenses $ 200 $ 378
=============== ================
</TABLE>
NOTE #5 - Notes Payable
- -----------------------
<TABLE>
<CAPTION>
The Company has short term note obligations as follows; 1998 1997
--------------- ----------------
<S> <C> <C>
The Company has three (3) notes with individual lenders, in the amounts of;
$20,000, $25,000 and $25,000, each note is currently due and payable and each
note requires interest
at 12% per annum. $ 70,125 $ 70,000
</TABLE>
F-10
<PAGE>
HLHK World Group, Inc.
(A Development Stage Company)
Notes to Financial Statements
NOTE #6 - Taxes
- ---------------
The Company accounts for income taxes in accordance with SFAS No., 109,
Accounting for Income Taxes, which requires an asset and liability approach to
financial accountings and reporting for income taxes. Deferred income tax assets
and liabilities are computed annually for differences between the financial
statement and tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. Income tax expenses are the tax
payable or refundable for the period plus or minus the change during the period
in deferred tax assets and liabilities.
The Company has net operating losses to carryforward for future tax purposes as
follows:
<TABLE>
<CAPTION>
Year of Loss Amount of Loss Expiration Date
--------------------------- -------------------- --------------------
<S> <C> <C>
December 31, 1996 $ 76,756 2016
December 31, 1997 1,013,500 2017
</TABLE>
Net deferred taxes in the accompanying balance sheets include the following
components as of December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
-------------------- --------------------
<S> <C> <C>
Deferred Tax Asset $ 336,901 $ 26,097
Net Operating Loss Carryforward
Valuation Allowance ( 336,901) ( 26,097)
-------------------- --------------------
Net Deferred Tax Asset $ -0- $ -0-
==================== ====================
Current Tax Expense $ -0- $ -0-
</TABLE>
Provisions of the Internal Revenue Code severally restrict the use of net
operating losses when there is a change in control of the Company.
The Company has established the valuation allowance at 100% of maximum tax
benefit because it is uncertain if the net loss carryforwards will result in tax
asset benefits.
NOTE #7 - Related Party Transactions
- ------------------------------------
During 1996, the Company's President advanced to the Company $369,792 for its
operations. In January 1997, the Board of Directors authorized the issuance of
600,000 shares of common stock, restricted, to the President as satisfaction in
full for the 1996 advance.
During 1998 and 1997, the Company's President advanced an additional $491,198 to
the Company. It is contemplated that these funds will be repaid by issuance of
additional shares of common stock in 1998.
F-11
<PAGE>
HLHK World Group, Inc.
(A Development Stage Company)
Notes to Financial Statements
NOTE #8 - Bad Debt
- ------------------
During 1996 and 1997, the Company transferred to its Asian Subsidiaries
$638,589. On October 31, 1997, the Board of Directors advised the Asian
Subsidiaries that it could no longer fund the operations in Asia. On May 28,
1998, the Company's legal counsel in Singapore advised the Company that the
Asian Subsidiaries had been put into liquidation.
The Company's President requested from the legal counsel in Asia an opinion
concerning the Company's exposure to Asian Creditors. On April 25, 1998, the
Company received the following, "No liability will attach to HLHK World Group,
Inc., by virtue of its shareholdings. Any liability would be limited to any
unpaid share capital. Assuming HLHK World Group, Inc., has no guaranteed any
liability of any sort for and on behalf of the Company (Asian Subsidiaries). I
am of the view that HLHK World Group, Inc., is in the clear."
The Company has no unpaid share capital and to date there has been no demands
from Asian Creditors.
NOTE #9 - Litigation
- --------------------
The Company currently is a defendant in the following litigation.
Rubicon Technologies and Telecommunications
This suit has been filed in the United States District Court Southern
District of New York. The Plaintiff alleges the Company owes $22,614
for telecommunications services and access fees. The Company issued
Rubicon 150,000 shares of stock as collateral for the payment of the
credit line. Rubicon contended that because the stock was restricted
and could not be traded it was inadequate consideration. The $22,614
has been included as an account payable by the Company.
In 1998, the Company settled with Rubicon for no additional
consideration.
Edward H. Grossman, C.P.A.,
Mr. Grossman has filed suit in the Supreme Court of the state of New
York, County of Suffolk, for services performed in the amount of
$22,000. The Company disputes the amount.
The Company has acquired accounts payable to Mr. Grossman in the amount
of $22,000.
F-12
<PAGE>
HLHK World Group, Inc.
(A Development Stage Company)
Notes to Financial Statements
NOTE #10 - Stockholders' Equity
- -------------------------------
Common Stock
The Company is authorized to issue 100,000 shares of common stock at
$0.001 par value, per share.
Common Stock Issued for Services and Other Non-Cash Transactions
In 1997, the Company issued 31,646 post reverse takeover shares as
incentive to a holder of a payable. No value assigned to the shares
issued.
Pursuant to the Plan and Agreement of Reorganization between Kendrex
Systems, Inc., and HLHK World Group, Inc., the Company issued 250,000
shares as finders' fees valued at $250.
In 1997, the Company issued 600,000 shares of its common stock in
satisfaction of $369,792 debt owed to an Officer for funds advanced in
1996.
Common shares of the Company's post reverse takeover stock, owned by
the shareholders of Kendrex Systems, Inc., are 770,000 shares.
In 1996, the Company issued 25,000 shares of its common stock to each
of its four directors for Directors Services.
Prior to August 11, 1998, the Company issued 67,500 shares of its
common stock to three individuals for services valued at $67. An
additional 148,353 shares valued at $1,500 to a note holder as fees to
forego collection on the note. The Company issued 50,000 shares in
satisfaction of an accounts payable for legal services of $43,518.
Deficit Accumulated in the Development Stage
The Company is considered to be a development stage company. Operations
have not produced significant revenues and expenditures for operating
expenses exceed revenues by $76,756 in 1996 and $990,886 in 1997,
August 11, 1998 expense exceeded revenues by $31,962. These amounts are
considered to be the deficit accumulated during the development stage.
NOTE #11 - Going Concern
- ------------------------
The accompanying financial statements of HLHK World Group, Inc., have been
prepared on a going-concern basis, which contemplates profitable operations and
the satisfaction of liabilities in the normal course of business. There are
uncertainties that raise substantial doubt about the ability of the Company to
continue as a going concern. As shown in the statements of operations, the
Company has not yet achieved profitable operations. As of December 31, 1997, the
Company has insufficient working capital. These items raise substantial doubt
about the ability of the Company to continue as a going concern.
F-13
<PAGE>
HLHK World Group, Inc.
(A Development Stage Company)
Notes to Financial Statements
NOTE #11 - Going Concern -Continued-
- ------------------------------------
The Company's continuation as a going concern is dependent upon its ability to
satisfactorily meet its debt obligations, secures new financing and generate
sufficient cash flows from operations. The financial statements do not include
any adjustments that might result from the outcome of these uncertainties.
F-14
<PAGE>
HLHK World Group, Inc.
Supplementary Information
For the Period August 11, 1998 and
the Year Ended December 31, 1997
F-15
<PAGE>
Accountant's Opinion on Supplementary Information
-------------------------------------------------
My audit of the basic financial statements presented in the preceding section of
this report was made primarily to form an opinion on such financial statements
taken as a whole. Supplementary information, contained in the following pages,
is not considered essential for the fair presentation of the financial position
of the Company, the results of its operations or the statements of cash flows in
conformity with generally accepted accounting principles. However, the following
data was subjected to the audit procedures applied in the examination of the
basic financial statements, and, in my opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Schvaneveldt & Company
June 22, 1999
F-16
<PAGE>
HLHK World Group, Inc.
Selling, General, and Administrative Expenses
For the Period January 1, 1998 to August 11, 1998
and the Year Ended December 31, 1997
<TABLE>
<CAPTION>
1998 1997
--------------- ----------------
Expenses
- --------
<S> <C> <C>
Advertising $ 100 $ 2,922
Auto Expenses 238 1,412
Bank Charges ( 129) 634
Commissions -0- 5,000
Consulting 42 150
Depreciation 200 378
Finders Fees -0- 250
Filing Fees 185 4,840
Interest Expense 6,380 7,824
Insurance -0- 588
Miscellaneous 658 5,381
Office Expenses 1,644 12,661
Contract Labor (Office) 7,875 28,346
Printing & Delivery 273 2,975
Postage & Delivery 252 7,854
Professional Fees 1,100 108,637
Legal Fees -0- 32,167
Storage -0- 49
Rent -0- 4,500
Repairs 100 246
Transfer Agent Fees 941 2,359
Telephone 9,987 46,203
Travel 2,116 99,390
Utilities -0- 145
--------------- ----------------
Total Expenses $ 31,962 $ 374,911
=============== ================
</TABLE>
(See Accountant's Opinion on Supplementary Information)
F-17
<PAGE>
TRIMFAST, INC.
--------------
FINANCIAL STATEMENTS
--------------------
AS OF DECEMBER 31, 1997
-----------------------
F-18
<PAGE>
TRIMFAST, INC.
CONTENTS
------------
PAGE F-20 - INDEPENDENT AUDITORS' REPORT
PAGE F-21 - BALANCE SHEET AS OF DECEMBER 31, 1997
PAGE F-22 - STATEMENT OF INCOME FOR THE YEAR ENDED
DECEMBER 31, 1997
PAGE F-23 - STATEMENT OF CHANGES IN STOCKHOLDERS'
DEFICIENCY FOR THE YEAR ENDED DECEMBER 31, 1997
PAGE F-24 - STATEMENT OF CASH FLOWS FOR THE YEAR ENDED
DECEMBER 31, 1997
PAGES F-25-F-34 - NOTES TO FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1997
F-19
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors of:
Trimfast, Inc.
We have audited the accompanying balance sheet of Trimfast, Inc. as of December
31, 1997 and the related statements of income, changes in stockholders'
deficiency and cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Trimfast, Inc. as of December
31, 1997 and the results of their operations and their cash flows for the year
then ended in conformity with generally accepted accounting principles.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
June 10, 1999
F-20
<PAGE>
TRIMFAST, INC.
BALANCE SHEET
DECEMBER 31, 1997
-----------------
ASSETS
------
CURRENT ASSETS
Cash $ 17,658
Accounts receivable - net 4,889
Inventory 23,699
---------
Total Current Assets 46,246
---------
PROPERTY AND EQUIPMENT - NET 5,481
OTHER ASSETS
Rent deposit 2,500
---------
Total Other Assets 2,500
---------
TOTAL ASSETS $ 54,227
- ------------ =========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 14,873
---------
Total Current Liabilities 14,873
---------
LONG-TERM LIABILITIES
Due to stockholder/officer 150,200
Due to related party 40,000
---------
Total Long-Term Liabilities 190,200
---------
Total Liabilities 205,073
---------
STOCKHOLDERS' DEFICIENCY
Preferred Stock, no par value;
2,000,000 shares authorized;
none issued and outstanding -
Common stock, no par value; 10,000,000
shares authorized; 3,000,000 shares issued
and outstanding 1,000
Accumulated deficit (151,846)
---------
Total Stockholders' Deficiency (150,846)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 54,227
- ---------------------------------------------- =========
See accompanying notes to financial statements.
F-21
<PAGE>
TRIMFAST, INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
NET SALES $ 22,338
COST OF SALES 9,625
----------
GROSS PROFIT 12,713
----------
OPERATING EXPENSES
Executive compensation 31,633
Bad debt expense 11,226
Depreciation expense 230
Professional fees 9,245
Selling, general and administrative expenses 92,565
Travel and entertainment 19,660
----------
Total Operating Expenses 164,559
----------
NET LOSS $(151,846)
==========
NET LOSS PER COMMON SHARE $(0.0111)
==========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 13,705,488
(as restated) ==========
See accompanying notes to financial statements.
F-22
<PAGE>
TRIMFAST, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK
ACCUMULATED
SHARES AMOUNT SHARES AMOUNT DEFICIT TOTAL
------ ------ ------ ------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1997 - $ - - $ - $ - $ -
Issuance of common stock - - 3,000,000 1,000 - 1,000
Net loss 1997 - - - - (151,846) (151,846)
------- -------- --------- -------- ----------- ----------
BALANCE, DECEMBER 31, 1997 - $ - 3,000,000 $ 1,000 $ (151,846) $(150,846)
======= ======== ========= ======== =========== =========
</TABLE>
See accompanying notes to financial statements.
F-23
<PAGE>
TRIMFAST, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(151,846)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 230
Bad debt expense 11,226
Changes in assets and liabilities (Increase) decrease in:
Accounts receivable (16,115)
Inventory (23,699)
Increase (decrease) in:
Accounts payable and accrued expenses 14,873
---------
Total adjustments (13,485)
---------
Net cash used in operating activities (165,331)
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (5,711)
Rent deposit (2,500)
---------
Net cash used in investing activities (8,211)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Due to stockholder/officer 150,200
Due to related party 40,000
Proceeds from issuance of common stock 1,000
---------
Net cash provided by financing activities 191,200
---------
INCREASE IN CASH AND CASH EQUIVALENTS 17,658
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR --
---------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 17,658
--------------------------------------- =========
See accompanying notes to financial statements.
F-24
<PAGE>
TRIMFAST, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997
-----------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
- ---- ---------------------------------------------------------------
(A) Description of Business
---------------------------
Trimfast, Inc. (the Company) is a Florida corporation that
develops, markets and sells dietary supplements. The Company was
incorporated on April 28, 1997.
(B) Use of Estimates
--------------------
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of
the financial statements and revenues and expenses during the reported
period. Actual results could differ from those estimates.
(C) Cash and Cash Equivalents
-----------------------------
For purposes of the cash flow statement, the Company considers all
highly liquid investments with original maturities of three months or
less at time of purchase to be cash equivalents.
(D) Inventories
---------------
Inventories consist principally of finished goods and raw materials and
are stated at lower of cost or market determined on the first-in,
first-out method.
(E) Property and Equipment
--------------------------
Property and equipment are stated at cost, less accumulated
depreciation. Expenditures from maintenance and repairs are charged to
expense as incurred. Depreciation is provided using the
double-declining balance method over the estimated useful life of the
assets from five to seven years.
(F) Revenue Recognition
-----------------------
The Company recognizes income from sale of products at the time of
delivery.
F-25
<PAGE>
TRIMFAST, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997
-----------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION - (CONT'D)
- ---- --------------------------------------------------------------------------
(G) Income taxes
----------------
The Company accounts for income taxes under the Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 109.
"Accounting for Income Taxes" ("Statement No.109"). Under Statement No.
109, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered
or settled. Under Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. The deferred tax asset of
approximately $51,600 resulting from the net operating loss in 1997 of
$151,846 has been fully offset by a valuation allowance at December 31,
1997.
(H) Earnings Per Share Data
---------------------------
Net loss per common share for the year ended December 31, 1997 is
required to be computed by dividing net income by the weighted average
common shares outstanding during the year as defined by Statement of
Financial Accounting Standards, No. 128, "Earnings per Share". However,
the weighted average shares have been retroactively restated to reflect
the quantity of shares of Trimfast Group, Inc. (f.k.a. HLHK World
Group, Inc.) issued to the Company's stockholders at the date of the
reorganization (See Note 8A)
NOTE 2 - ACCOUNTS RECEIVABLE
- ----------------------------
Accounts receivable were as follows at December 31, 1997:
Accounts receivable $ 4,889
========
NOTE 3 - PROPERTY AND EQUIPMENT
- -------------------------------
Property and equipment at December 31, 1997 consisted of the following:
F-26
<PAGE>
TRIMFAST, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997
-----------------------
NOTE 3 - PROPERTY AND EQUIPMENT -(CONT'D)
- -----------------------------------------
Furniture and fixtures 3,511
Equipment 2,200
---------
$ 5,711
---------
Less accumulated depreciation (230)
---------
$ 5,481
=========
Depreciation expense for the year ended December 31, 1997 was $230.
NOTE 4 - STOCKHOLDERS' EQUITY
- -----------------------------
The Company has authorized 10,000,000 shares of Common Stock, no par
value; and 2,000,000 shares of Preferred Stock, no par value. The
Preferred Stock shall have such rights and preferences as determined by
the Board of Directors.
NOTE 5 - CONCENTRATIONS
- -----------------------
The Company procures raw materials from various suppliers but contracts
the production of finished products to one primary third party
manufacturing company. Since December 31, 1998, the Company has
contracted with a second production facility for several of its
products and believes that many alternative third party production
facilities are available should the need arise.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
- --------------------------------------
(A) Year 2000 Issues
--------------------
The Company is aware of the issues associated with the programming code
in existing computer systems as the millennium (year 2000) approaches.
The "year 2000" problem is pervasive and complex as virtually every
computer operation will be affected in some way by the rollover of the
two-digit year to 00. The issue is whether computer systems will
properly recognize date-sensitive information when the year changes to
2000. Systems that do not properly recognize such information could
generate erroneous data or cause a system to fail.
The Company uses a standard off the shelf accounting software package
for all of its accounting requirements. Management has contacted the
software vendor and confirmed that the accounting
F-27
<PAGE>
TRIMFAST, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997
-----------------------
NOTE 6 - COMMITMENTS AND CONTINGENCIES - (CONT'D)
- -------------------------------------------------
(A) Year 2000 Issues -(CONT'D)
------------------------------
software is Year 2000 compliant. Management has contacted its primary
vendors has not identified any Year 2000 compliance issues with those
vendors. Costs of investigating Year 2000 compliance issues have not
been material to date. As a result, management believes that the effect
of investigating and resolving Year 2000 compliance issues will not
have a material effect on the Company's future financial position or
results of operations.
(B) Operating Agreements
------------------------
The Company enters into wholesaler and broker agreements whereby the
wholesalers and brokers are appointed the Company's sole and exclusive
wholesaler and broker within a specified geographic territory for
certain stipulated products. In general, under the agreements, the
wholesalers and brokers have the right to purchase, sell, promote,
advertise and deliver the stipulated products. Broker agreements allow
for broker commissions while wholesaler agreements allow for the
purchase of product by distributors at a discount. The agreements
generally may be terminated by either party with 60 days notice to the
other party.
NOTE 7 - RELATED PARTIES
- ------------------------
The Company periodically advances funds to the principal stockholder,
pays certain expenses of the principal stockholder, and borrows from
the principal stockholder. The net effect of transactions with the
principal stockholder are shown as due to stockholder/officer at
December 31, 1997. All amounts are non-interest bearing.
The Company received an advance of $40,000 from an individual in 1997.
The amount is recorded as due to related party at December 31, 1997.
The advance was exchanged for 65,000 shares of common stock of the
Company during 1998.
F-28
<PAGE>
TRIMFAST, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997
-----------------------
NOTE 8 - SUBSEQUENT EVENTS
(A) Acquisition and Recapitalization
Under a Stock Exchange Agreement (the "Agreement") consummated on
August 12, 1998, HLHK World Group, Inc., a non-reporting public shell,
acquired one hundred percent of the issued and outstanding common stock
of Trimfast, Inc. in exchange for 13,705,488 shares of the $0.001 par
value common stock of HLHK. Under the terms of the Agreement, shares
were exchanged at a ratio of three shares of HLHK common stock for each
share of Trimfast, Inc. common stock. As a result of the exchange, the
Company became a wholly-owned subsidiary of HLHK and the stockholders
of Trimfast, Inc. became stockholders of approximately sixty percent of
HLHK (Approximately 82% after repurchase agreement discussed below).
Generally Accepted Accounting Principles require that the Company whose
shareholders retain a majority interest in a combined business be
treated as the acquirer for accounting purposes. As a result, the
exchange was treated as an acquisition of HLHK by Trimfast, Inc., and a
recapitalization of Trimfast, Inc. The Company's consolidated financial
statements immediately following the acquisition are as follows: (1)
The Balance Sheet consists of Trimfast, Inc.'s net assets at historical
cost and HLHK's net assets at historical cost and (2) the Statement of
Operations includes Trimfast, Inc.'s operations for the period
presented and HLHK's operations from the date of acquisition. On
September 4, 1998 the Company filed an amendment to its articles of
incorporation to (i) change it's name from HLHK to Trimfast Group,
Inc., and to (ii) authorize 20,000,000 shares each of Class A and Class
B Preferred Stock,$0.01 par value. All subsequent references to the
Company refer to Trimfast Group, Inc. (the "Company").
On December 8, 1998, effective for stockholders of record on December
20, 1998, Trimfast Group, Inc.'s Board of Directors approved a
one-for-ten reverse split of its shares of issued and outstanding
common stock. On the same date, Trimfast Group, Inc.'s Chairman, CEO
and principal stockholder purchased all 508,313 post reverse-split
shares (5,083,134 pre-reverse-split shares) of Trimfast Group Inc.'s
outstanding common stock held beneficially by the prior principal
stockholder of HLHK.
F-29
<PAGE>
TRIMFAST, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997
-----------------------
NOTE 8 - SUBSEQUENT EVENTS - (CONT'D)
- -------------------------------------
(B) Acquisitions
----------------
On March 18, 1999 the Company acquired IMMMU, Inc. ("IMMMU") and IMMCEL
Pharmaceuticals, Inc. ("IMMCEL"), two companies related through common
stockholders, in a transaction accounted for as a purchase. Under terms
of the agreement, 235,000 shares of the Company's common stock, $50,000
in cash and an option agreement for shares of the Company's common
stock exercisable based on stipulated Company performance criteria were
exchanged for all of the issued and outstanding capital stock of IMMMU
and IMMCEL. IMMMU and IMMCEL are manufacturers of nutritional
supplements primarily marketed to pharmacies, supermarkets and discount
stores. In connection with the acquisitions, the Company entered into a
five year employment agreement, renewable in one year increments, with
a former stockholder of IMMMU and IMMCEL whereby the former stockholder
will be employed as the Chief Executive Officer of IMMMU and IMMCEL and
serve on the Board of Directors of the Company. The former stockholder
will receive an annual salary of $75,000 and a bonus based on
stipulated performance criteria. The employment agreement may be
terminated by the Company if IMMMU and IMMCEL have two consecutive
non-profitable fiscal quarters as defined in the agreement.
On May 24, 1999 the Company acquired certain assets of Ice Cold Water
Co., Inc. ("ICW") including certain receivables, inventory, property
and equipment, a customer list and the name "Ice Cold Water" and all
other intellectual property rights associated with the name. Under
terms of the agreement, the Company acquired the assets for $20,000 in
cash and a $100,000 promissory note at 8.5% per annum which is due in
four monthly installments of $25,000 plus accrued interest, commencing
June 10, 1999.
(C) Agreement with Investment Group
-----------------------------------
On March 18, 1999 the Company entered into an agreement (the
"Agreement") with a third party investment group (the "investment
group") whereby the investment group will purchase (i) common shares of
the Company in the open market having an aggregate value of no less
than $300,000, and (ii) 300,000 common shares from the Company at a
price of $4.00 per share according to a stipulated schedule based on
average market price of outstanding shares. The Agreement was
contingent upon the consumation of the acquisition of IMMMU and IMMCEL,
discussed above.
F-30
<PAGE>
TRIMFAST, INC
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997
-----------------------
NOTE 8 - SUBSEQUENT EVENTS - (CONT'D)
- -------------------------------------
(D) Formation of New Division
-----------------------------
On April 21, 1999 the Company formed a new division of Trimfast Group,
Inc. doing business as NutritionCafe.com. NutritionCafe.com is an
internet web site business established to (i) provide nutrition
information, (ii) provide portal links to other information sites and
(iii) market and sell at a discount the Company's products and products
of other nutrition product companies for which the Company acts as a
distributor.
(E) Lease and Purchase Option of Facility
-----------------------------------------
In connection with the formation of its new division,
NutritionCafe.com, on April 8, 1999 the Company entered into a
lease/purchase option agreement for a facility which will be used for
the operations of NutrionCafe.com. The lease calls for rental payment
of $8,000 per month and is effective for the period from May 15, 1999
through June 30, 2000. In addition, the Company paid $100,000 in cash
as non-refundable consideration for a purchase option on the premises.
The purchase price shall be for the sum of $1,200,000 with full credit
for the $100,000 option monies paid. The option must be exercised by
June 30, 2000.
(F) Issuance of Warrants
------------------------
In May 1999 the Company issued 40,000 warrants to purchase common stock
to two unrelated parties. The exercise prices and expirations dates for
exercise of the warrants are as follows:
<TABLE>
<CAPTION>
Quantity Exercise Price Expiration Date
-------- -------------- ---------------
<S> <C> <C> <C>
10,000 $4.00 May 12, 2000
10,000 $4.00 May 12, 2000
10,000 $7.00 May 13, 2000
10,000 $7.00 May 13, 2000
</TABLE>
(G) Private Placement
---------------------
In January 1999, the Company issued a private placement memorandum (the
"Private Placement") pursuant to Regulation D of the Securities Act of
1933, as amended. The Private Placement offered up to 232,500 shares of
common stock of the Company, on a best efforts basis, at a price of
$4.00 per share. At the termination
F-31
<PAGE>
TRIMFAST, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997
-----------------------
NOTE 8 - SUBSEQUENT EVENTS - (CONT'D)
- -------------------------------------
(G) Private Placement - (CONT'D)
--------------------------------
of the offering, the Company had raised approximately $807,000, net
of commissions and offering costs.
(H) Stock Issuances
-------------------
Effective December 1998, the principal shareholder of the Company
exchanged $126,644 of loans due to him and his wholly-owned affiliates
for 703,577 pre-reverse split shares of common stock of the Company
valued at a market price of $0.18 per share.
During 1998 the Company issued 10,000 pre-reverse split shares of
common stock in exchange for consulting services at a value of $1.00
per share.
During 1998 the Company issued 65,000 pre-reverse split shares of
common stock to an individual related party in exchange for a loan
payable of $40,000.
(I) Consulting Agreements
-------------------------
On October 9, 1998 the Company entered into a consulting agreement with
an individual whereby the Company will be provided with advice with
regard to corporate strategy and business development and such other
matters as agreed upon between the parties from time to time. As
consideration for the consulting services provided, the Company shall
issue 20,000 post reverse-split shares of common stock to the
consultant.
On December 14, 1998 the Company entered into a two year consulting
agreement with an individual whereby the Company will be provided with
advice with regard to corporate strategy and business development
including targeting of acquisitions. As consideration for the services
provided the Company shall issue 50,000 post reverse-split free trading
common shares and 250,000 post reverse- split common shares restricted
under Rule 144. In addition, the Company shall provide the consultant
with a $1,000 per month expense account.
On December 18, 1998 the Company entered into a two year consulting
agreement with a consulting organization whereby the Company will be
provided with advice with regard to corporate strategy and
F-32
<PAGE>
TRIMFAST, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997
-----------------------
NOTE 8 - SUBSEQUENT EVENTS - (CONT'D)
- -------------------------------------
(I) Consulting Agreements - (CONT'D)
------------------------------------
business development including targeting of acquisitions. As
consideration for the services provided the Company shall issue 100,000
post reverse-split free trading common shares and 350,000 post split
common shares restricted under Rule 144. In addition, the Company
should make monthly payments of $2,500 to the consulting organization.
All common stock under the above consulting agreements was issued in
1999.
(J) Litigation
--------------
In 1999 the Company initiated a legal proceeding against a former major
customer to collect amounts receivable from that customer aggregating
approximately $535,000 at December 31, 1998. Such receivable related to
products sold to that customer during 1998 that were voluntarily
recalled by the Company, but never returned by the customer. It is
management's assertion and the opinion of the Company's outside legal
counsel with regard to this matter that since the product was never
returned to the Company, and is believed to have been resold by the
customer, a successful outcome in favor of the Company is possible. As
a result, the Company wrote off $267,240 or fifty percent of the total
receivable that existed at December 31, 1998.
In early 1999, pursuant to a voluntary arrangement with the Food and
Drug Administration, the Company's product, Revivarant, was recalled
and removed from sale. Since the time of the recall, the Company has
been subject to six known lawsuits and claims relating to consumer use
of the product. As of the date of this report, only one lawsuit has
specified a dollar amount, that being, $400,000 of compensatory damages
and $350,000 of punitive damages. The Company is covered for product
liability up to $2,000,000 under the policy of its third party
manufacturer. All lawsuits and claims are being referred by management
to the insurance carrier. With regard to any punitive damage claims,
the Company intends vigorously oppose any factual basis for imposition
of punitive damages based upon research and efforts made prior to the
distribution of the Revivarant product to determine its safety. Since
the lawsuits and claims have been made fairly recently, the Company's
management and outside legal counsel are unable to
F-33
<PAGE>
TRIMFAST, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997
-----------------------
NOTE 8 - SUBSEQUENT EVENTS - (CONT'D)
- -------------------------------------
(J) Litigation - (CONT'D)
-------------------------
evaluate and determine the likely outcome of each cause of action,
however, management believes that the Company will be fully covered by
the liability insurance, and therefore the outcome of such cases will
not materially effect the company's consolidated financial position of
future results of operations.
The Company is subject to various lawsuits, investigations and claims
which, in the opinion of management, arise in the normal course of
conducting Company business. Several cases have been settled during
1999 and appropriate amounts have been accrued at December 31, 1998. In
the opinion of the Company's management after consultation with outside
legal counsel, the ultimate disposition of such remaining proceedings
will not have a materially adverse effect on the Company's consolidated
financial position or future results of operations.
F-34
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
-------------------------------------
CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------
AS OF DECEMBER 31, 1998
-----------------------
F-35
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
CONTENTS
-----------------
PAGE F-37 - INDEPENDENT AUDITORS' REPORT
PAGE F-38 - CONSOLIDATED BALANCE SHEET AS OF
DECEMBER 31, 1998
PAGE F-39 - CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR
ENDED DECEMBER 31, 1998
PAGE F-40 - CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY FOR THE YEAR ENDED
DECEMBER 31, 1998
PAGES F-41-F-42 - CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE
YEAR ENDED DECEMBER 31, 1998
PAGES F-43-F-56 - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS
OF DECEMBER 31, 1998
F-36
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors of:
Trimfast Group, Inc.
We have audited the accompanying consolidated balance sheet of Trimfast Group,
Inc. and Subsidiaries as of December 31, 1998 and the related consolidated
statements of income, changes in stockholders' equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Trimfast Group, Inc. and
Subsidiaries as of December 31, 1998 and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
June 10, 1999
F-37
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
-----------------
ASSETS
------
CURRENT ASSETS
Cash $ 105,641
Short-term investments 15,297
Accounts receivable 357,889
Due from employees 5,800
Inventory 188,737
Total Current Assets 673,364
---------
PROPERTY AND EQUIPMENT - NET 33,403
OTHER ASSETS
Due from affiliate 5,945
Rent deposit 10,619
Cash surrender value of life insurance 8,107
---------
Total Other Assets 24,671
---------
TOTAL ASSETS $ 731,438
- ------------ =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 625,767
Notes and loans payable 72,100
---------
Total Current Liabilities 697,867
---------
TOTAL LIABILITIES 697,867
---------
STOCKHOLDERS' EQUITY
Preferred Stock, Class A, $0.01 par value;
20,000,000 shares authorized;
none issued and outstanding -
Preferred Stock, Class B, $0.01 par value;
20,000,000 shares authorized;
none issued and outstanding -
Common stock, $0.001 par value; 100,000,000
shares authorized; 2,193,059 shares issued
and outstanding 2,192
Common stock to be issued (145,598 shares) 146
Additional paid-in capital 163,987
Accumulated deficit (109,220)
Less cost of treasury stock (5,500 shares) (23,534)
---------
Total Stockholders' Equity 33,571
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 731,438
- ------------------------------------------ =========
See accompanying notes to consolidated financial statements.
F-38
<PAGE>
TRIMFAST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
------------------------------------
NET SALES $1,925,332
COST OF SALES 567,472
----------
GROSS PROFIT 1,357,860
----------
OPERATING EXPENSES
Executive compensation 201,077
Salaries 20,696
Commissions 41,700
Depreciation expense 10,498
Professional fees 49,511
Bad debt expense 503,839
Selling, general and administrative expenses 423,289
Travel and entertainment 64,187
----------
Total Operating Expenses 1,314,797
----------
INCOME FROM OPERATIONS 43,063
----------
OTHER INCOME (EXPENSE)
Realized gain on sale of trading securities - net 1,905
Unrealized gain on trading securities - net 922
Interest expense (3,264)
----------
Total Other Income (Expense) (437)
----------
NET INCOME 42,626
NET INCOME PER COMMON SHARE $ 0.0247
=========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 1,723,134
=========
See accompanying notes to consolidated financial statements.
F-39
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1998
------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK AND
COMMON STOCK TO ADDITIONAL
BE ISSUED PAID-IN ACCUMULATED TREASURY
SHARES AMOUNT CAPITAL DEFICIT STOCK TOTAL
------ ------ ------- ------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1998 3,000,000 $ 1,000 $ - $ (151,846) $ - $ (150,846)
Issuance of common stock in exchange
for shares of Trimfast Holdings, Inc. 278,080 227,800 - - - 227,800
Effect of recapitalization 19,404,907 (206,117) 37,413 - (168,704)
Issuance of common stock in exchange
for stockholder loans 703,577 70 126,574 - - 126,644
Reverse one-for-ten stock split (21,047,908) ( 20,415) - - ( 20,415)
Repurchase of treasury stock at cost (23,534) ( 23,534)
Net income 1998 - - - 42,626 - 42,626
--------- --------- --------- ----------- ------------ -----------
BALANCE, DECEMBER 31, 1998 2,338,656 $ 2,338 $ 163,987 $ (109,220) $ (23,534) $ (33,571)
========== ========= ========== =========== ============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-40
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 42,626
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 10,498
Bad debt expense 503,839
Unrealized gain on short-term investments (922)
Changes in operating assets and liabilities
(Increase) decrease in:
Accounts receivable (856,839)
Inventory (165,038)
Increase (decrease) in:
Accounts payable and accrued expenses 496,181
---------
Total adjustments (12,281)
---------
Net cash provided by operating activities 30,345
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Short-term investments (14,375)
Due from employees (5,800)
Purchases of property and equipment (37,821)
Due from affiliate (5,945)
Rent deposit (8,119)
Purchase of treasury stock (23,534)
Cash surrender value of life insurance (8,107)
---------
Net cash used in investing activities (103,701)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Due to stockholder/officer (18,436)
Proceeds from borrowings 1,975
Proceeds from issuance of common stock 177,800
---------
Net cash provided by financing activities 161,339
---------
INCREASE IN CASH AND CASH EQUIVALENTS 87,983
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 17,658
---------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 105,641
--------------------------------------- =========
See accompanying notes to consolidated financial statements.
F-41
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONT'D)
FOR THE YEAR ENDED DECEMBER 31, 1998
------------------------------------
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
-----------------------------------------------------------------------
On August 12, 1998 one hundred percent of the issued and
outstanding common stock of Trimfast, Inc. was acquired by HLHK
World Group, Inc. in a transaction accounted for as a
recapitalization of Trimfast, Inc. HLHK subsequently changed its
name to Trimfast Group, Inc. (see Note 12)
Effective December 1998, the principal shareholder of the Company
exchanged $126,644 of loans due to him and his wholly-owned affiliates
for 703,577 pre-reverse split shares of common stock of the Company
valued at a market price of $0.18 per share.
During 1998 the Company issued 10,000 pre-reverse split shares of
common stock in exchange for consulting services at a value of $1.00
per share.
During 1998 the Company issued 65,000 pre-reverse split shares of
common stock to an individual related party in exchange for a loan
payable of $40,000.
See accompanying notes to consolidated financial statements.
F-42
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
-----------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
- ---- ---------------------------------------------------------------
(A) Description of Business
---------------------------
Trimfast Group, Inc. (the Company) formerly known as HLHK World
Group, Inc.(HLHK) is a Nevada corporation that through its
subsidiaries, develops, markets and sells dietary supplements. The
Company's subsidiaries Trimfast, Inc. and Body Life Sciences, Inc.
were incorporated in the State of Florida on April 28, 1997 and
September 4, 1998, respectively.
On August 12, 1998 one hundred percent of the issued and
outstanding common stock of Trimfast, Inc. was acquired by HLHK
World Group, Inc. in a transaction accounted for as a
recapitalization of Trimfast, Inc. HLHK subsequently changed its
name to Trimfast Group, Inc. (see Note 12)
(B) Principles of Consolidation
-------------------------------
The consolidated financial statements include the accounts of
Trimfast Group, Inc. and its subsidiaries Trimfast, Inc. and Body
Life Sciences, Inc. All significant intercompany balances and
transactions have been eliminated in consolidation.
(C) Use of Estimates
--------------------
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of
the financial statements and revenues and expenses during the reported
period. Actual results could differ from those estimates.
(D) Cash and Cash Equivalents
-----------------------------
For purposes of the cash flow statement, the Company considers all
highly liquid investments with original maturities of three months or
less at time of purchase to be cash equivalents.
F-43
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
-----------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION -(CONT'D)
- ---- -------------------------------------------------------------------------
(E) Short-Term Investments
--------------------------
The Company's policy is to invest in various equity or debt
instruments. The Company accounts for such investments in
accordance with Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities."
Management determines the appropriate classification of its investments
at the time of acquisition and reevaluates such determination at each
balance sheet date. Trading securities are carried at fair value, with
unrealized trading gains and losses included in earnings.
Available-for-sale securities are carried at fair value, with
unrealized gains and losses, net of tax, reported as a separate
component of stockholders' equity. Investments classified as
held-to-maturity are carried at amortized cost. In determining realized
gains and losses, the cost of the securities sold is based on the
specific identification method.
(F) Inventories
---------------
Inventories consist principally of finished goods and raw materials and
are stated at lower of cost or market determined on the first-in,
first-out method.
(G) Property and Equipment
--------------------------
Property and equipment are stated at cost, less accumulated
depreciation. Expenditures from maintenance and repairs are charged to
expense as incurred. Depreciation is provided using the
double-declining balance method over the estimated useful life of the
assets from five to seven years.
(H) Revenue Recognition
-----------------------
The Company recognizes income from sale of products at the time of
delivery.
(I) Income taxes
----------------
The Company accounts for income taxes under the Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 109. "Accounting for Income Taxes" ("Statement
F-44
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
-----------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION -(CONT'D)
- ---- -------------------------------------------------------------------------
(I) Income taxes - (CONT'D)
---------------------------
No.109"). Under Statement No. 109, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes
the enactment date.
(J) Earnings Per Share Data
---------------------------
Net income per common share for the year ended December 31, 1998 is
computed by dividing net income by the weighted average common shares
outstanding during the year as defined by Statement of Financial
Accounting Standards, No. 128, "Earnings per Share". For 1998, under
Generally Accepted Accounting Principles, the shares outstanding for
the period from January 1, 1998 through the acquisition date of August
12, 1998 (Note 12), are deemed to be that amount issued and to be
issued to the shareholders of Trimfast, Inc. on the acquisition date.
For the period from the acquisition date through December 31, 1998, the
shares used in the weighted average computation are the actual shares
outstanding for that period.
NOTE 2 - SHORT-TERM INVESTMENTS
- -------------------------------
The Company's short-term investments are comprised of equity
securities, all classified as trading securities, which are carried at
their fair value based upon the quoted market prices of those
investments at December 31, 1998. Accordingly, net realized and
unrealized gains and losses on trading securities are included in net
earnings.
The composition of short-term investments at December 31 is as follows:
F-45
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
-----------------------
NOTE 2 - SHORT-TERM INVESTMENTS -(CONT'D)
- -----------------------------------------
Fair
Cost Value
---- -----
Common stock $14,375 $15,297
------- -------
Short-term investments $14,375 $15,297
======= =======
Investment income for the year ended December 31, 1998 consisted of the
following:
Net realized gains on the
sale of trading securities $ 1,905
Net unrealized holding gains 922
-------
$ 2,827
=======
NOTE 3 - BAD DEBT EXPENSE
- -------------------------
During 1998 the Company wrote off accounts receivable of $202,112
from a customer who filed for bankruptcy and $267,240 from another
customer relating to a voluntary recall of a Company product. (See
Note 7(D))
NOTE 4 - PROPERTY AND EQUIPMENT
- -------------------------------
Property and equipment at December 31, 1998 consisted of the following:
Automobiles $33,475
Furniture and fixtures 7,900
Equipment 2,756
-------
$44,131
-------
Less accumulated depreciation (10,728)
-------
$33,403
=======
Depreciation expense for the year ended December 31, 1998 was $10,498.
F-46
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
-----------------------
NOTE 5 - INCOME TAXES
- ---------------------
There was no income tax expense for 1998 due to the usage of net
operating loss carryforwards.
The actual tax expense differs from the "expected" tax expense for the
year ended December 31, 1998 (computed by applying the U.S. Federal
Corporate tax rate of 34 percent to income before income taxes), as
follows:
Computed "expected" tax expense $ 14,493
State income tax, net of federal benefit 1,547
Meals and entertainment 10,911
Benefit of net operating loss carry forwards (26,951)
--------
Actual tax expense $ -
========
At December 31, 1998, the unused pre-acquisiton net operating loss
carryforwards available to offset the separate future net income of
Trimfast, Inc. and its subsidiary, Body Life Sciences, Inc., and
Trimfast Group, Inc., the holding company (f.k.a. HLHK World Group,
Inc.) were $94,105 and $1,105,240, respectively. The deferred tax
assets of $51,628 and $381,554, respectively, resulting from these net
operating loss carryforwards were fully offset by valuation allowances
at December 31, 1998. In assessing the realizability of the deferred
tax assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management
considers the historical taxable earnings patterns, reversal of
deferred tax liabilities, and projected future taxable income in making
this assessment.
The $94,105 net operating loss carryforward may be used to offset
future net income of Trimfast, Inc. and its subsidiary through the year
2012. Usage of the $1,105,240 net operating loss carryforward of
Trimfast Group, Inc., the holding company, is subject to a separate
return limitation year rule, which allows it to be applied only to
future net income of Trimfast Group, Inc., the holding company. There
was no post-acquisition net operating loss carryforward for the
consolidated group.
F-47
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
-----------------------
NOTE 5 - INCOME TAXES - (CONT'D)
- --------------------------------
The valuation allowance for the deferred tax asset resulting from the
net operating loss of Trimfast, Inc. as of January 1, 1998 was $51,627.
The net change in the pre-acquisition valuation allowance for Trimfast,
Inc. was an decrease of $19,633. The valuation allowance for the
deferred tax asset resulting from the net operating losses of Trimfast
Group, Inc., the holding company, as of January 1, 1998 was $381,554.
The net change in the pre-acquisition valuation allowance for Trimfast
Group, Inc., the holding company, was a decrease of $5,772.
NOTE 6 - NOTES AND LOANS PAYABLE
- ---- ---------------------------
The Company has three notes payable with individual lenders in the
amounts of $20,000, $25,125 and $25,000. The following schedule
reflects notes and loans payable to non-related parties at December 31,
1998:
Notes payable to individual
lenders in the amounts of $20,000,
$25,000 and $25,125, currently due,
interest at 12% per annum $ 70,125
Other loans payable, currently due 1,975
---------
$ 72,100
=========
Accrued interest of $15,923 on the notes and loans payable has been
included in accrued expenses at December 31, 1998. All principal and
accrued interest for $50,125 of the notes were exchanged for an
aggregate 40,000 shares of common stock in 1999.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
- ---- ---------------------------------
(A) Year 2000 Issues
--------------------
The Company is aware of the issues associated with the programming code
in existing computer systems as the millennium (year 2000) approaches.
The "year 2000" problem is pervasive and complex as virtually every
computer operation will be affected in some way by the rollover of the
two-digit year to 00. The issue is whether computer systems will
properly recognize date-sensitive information when the year changes to
2000. Systems that do not properly recognize such information could
generate erroneous data or cause a system to fail.
F-48
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
-----------------------
NOTE 7 - COMMITMENTS AND CONTINGENCIES - (CONT'D)
- -------------------------------------------------
(A) Year 2000 Issues - (CONT'D)
-------------------------------
The Company uses a standard off the shelf accounting software package
for all of its accounting requirements. Management has contacted the
software vendor and confirmed that the accounting software is Year 2000
compliant. Management has contacted its primary vendors has not
identified any Year 2000 compliance issues with those vendors. Costs of
investigating Year 2000 compliance issues have not been material to
date. As a result, management believes that the effect of investigating
and resolving Year 2000 compliance issues will not have a material
effect on the Company's future financial position or results of
operations.
(B) Lease Agreements
--------------------
The Company leases a corporate office facility in Tampa, office
equipment, and two automobiles under operating leases. The leases have
remaining terms varying from the years 1999 through 2002.
Future minimum lease payments for the operating leases are as follows
at December 31, 1998:
Years
Ending Amount
------ ------
1999 $ 39,393
2000 40,407
2001 26,708
2002 8,302
---------
$ 114,810
=========
Rent expense for 1998 aggregated $31,885.
(C) Consulting Agreements
-------------------------
On October 9, 1998 the Company entered into a consulting agreement with
an individual whereby the Company will be provided with advice with
regard to corporate strategy and business development and such other
matters as agreed upon between the parties from time to time. As
consideration for the consulting services provided, the Company shall
issue 20,000 post reverse-split shares of common stock to the
consultant (See Note 8(B)).
F-49
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
-----------------------
NOTE 7 - COMMITMENTS AND CONTINGENCIES - (CONT'D)
- -------------------------------------------------
(C) Consulting Agreements - (CONT'D)
------------------------------------
On December 14, 1998 the Company entered into a two year consulting
agreement with an individual whereby the Company will be provided with
advice with regard to corporate strategy and business development
including targeting of acquisitions. As consideration for the services
provided the Company shall issue 50,000 post reverse-split free trading
common shares and 250,000 post reverse- split common shares restricted
under Rule 144 (See Note 8(B)). In addition, the Company shall provide
the consultant with a $1,000 per month expense account.
On December 18, 1998 the Company entered into a two year consulting
agreement with a consulting organization whereby the Company will be
provided with advice with regard to corporate strategy and business
development including targeting of acquisitions. As consideration for
the services provided the Company shall issue 100,000 post
reverse-split free trading common shares and 350,000 post split common
shares restricted under Rule 144 (See Note 8B). In addition, the
Company should make monthly payments of $2,500 to the consulting
organization.
All common stock under the above consulting agreements was issued in
1999.
(D) Litigation
--------------
In 1999 the Company initiated a legal proceeding against a former major
customer to collect amounts receivable from that customer aggregating
approximately $535,000 at December 31, 1998. Such receivable related to
products sold to that customer during 1998 that were voluntarily
recalled by the Company, but never returned by the customer. It is
management's assertion and the opinion of the Company's outside legal
counsel with regard to this matter that since the product was never
returned to the Company, and is believed to have been resold by the
customer, a successful outcome in favor of the Company is possible. The
Company has written off $267,240 or fifty percent of the total
receivable.(See Note 3)
In early 1999, pursuant to a voluntary arrangement with the Food and
Drug Administration, the Company's product, Revivarant, was recalled
and removed from sale. Since the time of the recall, the Company has
been subject to six known lawsuits and claims relating
F-50
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
-----------------------
NOTE 7 - COMMITMENTS AND CONTINGENCIES - (CONT'D)
- -------------------------------------------------
(D) Litigation - (CONT'D)
-------------------------
to consumer use of the product. As of the date of this report, only one
lawsuit has specified a dollar amount, that being, $400,000 of
compensatory damages and $350,000 of punitive damages. The Company is
covered for product liability up to $2,000,000 under the policy of its
third party manufacturer. All lawsuits and claims are being referred by
management to the insurance carrier. With regard to any punitive damage
claims, the Company intends vigorously oppose any factual basis for
imposition of punitive damages based upon research and efforts made
prior to the distribution of the Revivarant product to determine its
safety. Since the lawsuits and claims have been made fairly recently,
the Company's management and outside legal counsel are unable to
evaluate and determine the likely outcome of each cause of action,
however, management believes that the Company will be fully covered by
the liability insurance, and therefore the outcome of such cases will
not materially effect the company's consolidated financial position of
future results of operations.
The Company is subject to various lawsuits, investigations and claims
which, in the opinion of management, arise in the normal course of
conducting Company business. Several cases have been settled during
1999 and appropriate amounts have been accrued at December 31, 1998. In
the opinion of the Company's management after consultation with outside
legal counsel, the ultimate disposition of such remaining proceedings
will not have a materially adverse effect on the Company's consolidated
financial position or future results of operations.
F-51
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
-----------------------
NOTE 8 - STOCKHOLDERS' EQUITY
- ---- ------------------------
(A) Authorized Shares
---------------------
The Company has authorized 100,000,000 shares of common stock, $0.001
par value; 20,000,000 share of Class A Preferred Stock,$0.01 par value;
and 20,000,000 shares of Class B Preferred Stock, $0.01 par value. The
preferred stock shall have such rights and preferences as determined by
the Board of Directors.
(B) Reverse Stock Split
-----------------------
On December 8, 1998, effective for stockholders of record on December
20, 1998, the Company's Board of Directors approved a one- for-ten
reverse split of its shares of issued and outstanding common stock.
(C) Repurchase of Outstanding Common Stock By Principal Stockholder
-------------------------------------------------------------------
On December 8, 1998 the Company's Chairman, CEO and principal
stockholder, purchased all 508,313 post reverse-split shares (5,083,134
pre-reverse-split shares) of the Company's outstanding common stock
held beneficially by the prior principal stockholder of HLHK (See Note
12).
NOTE 9 - CONCENTRATIONS
- -----------------------
(A) Supplier Concentration
--------------------------
The Company procures raw materials from various suppliers but contracts
the production of finished products to one primary third party
manufacturing company. Since December 31, 1998 the Company has
contracted with other production facilities for several of its products
and believes that many alternative third party production facilities
are available should the need arise.
(B) Customer Concentration
--------------------------
During 1998, approximately 60% of consolidated revenues was derived
from one customer and 13% was derived from two other customers.
(Note 3)
F-52
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
-----------------------
NOTE 10 - RELATED PARTIES
- -------------------------
The Company periodically advances funds to the principal stockholder
and affiliates of the principal stockholder, pays certain expenses of
the principal stockholder, and borrows from the principal stockholder.
The advances to affiliates are shown as due from affiliate. All net
amounts due to the principal stockholder were converted to common stock
in December 1998. (See supplemental disclosure of non-cash investing
and financing activities in cash flow statement.)
During 1998 the Company issued 65,000 shares of common stock to an
individual related party in exchange for a loan payable of $40,000.
NOTE 11 - OPERATING AGREEMENTS
- ------------------------------
The Company enters into wholesaler and broker agreements whereby the
wholesalers and brokers are appointed the Company's sole and exclusive
wholesaler and broker within a specified geographic territory for
certain stipulated products. In general, under the agreements, the
wholesalers and brokers have the right to purchase, sell, promote,
advertise and deliver the stipulated products. Broker agreements allow
for broker commissions while wholesaler agreements allow for the
purchase of product by distributors at a discount. The agreements
generally may be terminated by either party with 60 days notice to the
other party.
NOTE 12 - ACQUISITION AND RECAPITALIZATION
- ------------------------------------------
Under a Stock Exchange Agreement (the "Agreement") consumated on August
12, 1998, HLHK World Group, Inc., a non-reporting public shell,
acquired one hundred percent of the issued and outstanding common stock
of Trimfast, Inc. in exchange for 13,705,488 shares of the $0.001 par
value common stock of HLHK. Under the terms of the Agreement, shares
were exchanged at a ratio of three shares of HLHK common stock for each
share of Trimfast, Inc. common stock. As a result of the exchange, the
Company became a wholly-owned
subsidiary of HLHK and the stockholders of Trimfast, Inc. became
stockholders of approximately sixty percent of HLHK (Approximately 82%
after repurchase agreement discussed in Note 8(C)). Generally Accepted
Accounting Principles require that the Company whose shareholders
retain a majority interest in a combined business be treated as the
acquirer for accounting purposes. As a result, the exchange was treated
as an acquisition of HLHK by Trimfast, Inc.,
F-53
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
-----------------------
NOTE 12 - ACQUISITION AND RECAPITALIZATION - (CONT'D)
- -----------------------------------------------------
and a recapitalization of Trimfast, Inc. The Company's consolidated
financial statements immediately following the acquisition was as
follows: (1) The Balance Sheet consists of Trimfast, Inc.'s net assets
at historical cost and HLHK's net assets at historical cost and (2) the
Statement of Operations includes Trimfast, Inc.'s operations for the
period presented and HLHK's operations from the date of acquisition. On
September 4, 1998 the Company filed an amendment to its articles of
incorporation to (i) change its name from HLHK to Trimfast Group, Inc.
and (ii) authorize 20,000,000 shares each of Class A and Class B
Preferred Stock, $0.01 par value.
NOTE 13 - SUBSEQUENT EVENTS
- ---- ----------------------
(A) Acquisitions
----------------
On March 18, 1999 the Company acquired IMMMU, Inc. ("IMMMU") and IMMCEL
Pharmaceuticals, Inc. ("IMMCEL"), two companies related through common
stockholders, in a transaction accounted for as a purchase. Under terms
of the agreement, 235,000 shares of the Company's common stock, $50,000
in cash and an option agreement for shares of the Company's common
stock exercisable based on stipulated Company performance criteria were
exchanged for all of the issued and outstanding capital stock of IMMMU
and IMMCEL. IMMMU and IMMCEL are manufacturers of nutritional
supplements primarily marketed to pharmacies, supermarkets and discount
stores. In connection with the acquisitions, the Company entered into a
five year employment agreement, renewable in one year increments, with
a former stockholder of IMMMU and IMMCEL whereby the former stockholder
will be employed as the Chief Executive Officer of IMMMU and IMMCEL and
serve on the Board of Directors of the Company. The former stockholder
will receive an annual salary of $75,000 and a bonus based on
stipulated performance criteria. The employment agreement may be
terminated by the Company if IMMMU and IMMCEL have two consecutive
non-profitable fiscal quarters as defined in the agreement.
On May 24, 1999 the Company acquired certain assets of Ice Cold Water
Co., Inc. ("ICW") including certain receivables, inventory, property
and equipment, a customer list and the name "Ice Cold Water" and all
other intellectual property rights associated with the name. Under
terms of the agreement, the Company acquired the assets for $20,000 in
cash and a $100,000 promissory note at 8.5%
F-54
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
-----------------------
NOTE 13 - SUBSEQUENT EVENTS - (CONT'D)
- --------------------------------------
(A) Acquisitions - (CONT'D)
---------------------------
per annum which is due in four monthly installments of $25,000 plus
accrued interest, commencing June 10, 1999.
(B) Agreement with Investment Group
-----------------------------------
On March 18, 1999 the Company entered into an agreement (the
"Agreement") with a third party investment group (the "investment
group") whereby the investment group will purchase (i) common shares of
the Company in the open market having an aggregate value of no less
than $300,000, and (ii) 300,000 common shares from the Company at a
price of $4.00 per share according to a stipulated schedule based on
average market price of outstanding shares. The Agreement was
contingent upon the consumation of the acquisition of IMMMU and IMMCEL,
discussed above.
(C) Formation of New Division
-----------------------------
On April 21, 1999 the Company formed a new division of Trimfast Group,
Inc. doing business as NutritionCafe.com. NutritionCafe.com is an
internet web site business established to (i) provide nutrition
information, (ii) provide portal links to other information sites and
(iii) market and sell at a discount the Company's products and products
of other nutrition product companies for which the Company acts as a
distributor.
(D) Lease and Purchase Option of Facility
-----------------------------------------
In connection with the formation of its new division,
NutritionCafe.com, on April 8, 1999 the Company entered into a
lease/purchase option agreement for a facility which will be used for
the operations of NutrionCafe.com. The lease calls for rental payment
of $8,000 per month and is effective for the period from May 15, 1999
through June 30, 2000. In addition, the Company paid $100,000 in cash
as non-refundable consideration for a purchase option on the premises.
The purchase price shall be for the sum of $1,200,000 with full credit
for the $100,000 option monies paid. The option must be exercised by
June 30, 2000.
F-55
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
-----------------------
NOTE 13 - SUBSEQUENT EVENTS - (CONT'D)
- --------------------------------------
(E) Issuance of Warrants
------------------------
In May 1999 the Company issued 40,000 warrants to purchase common stock
to two unrelated parties. The exercise prices and expirations dates for
exercise of the warrants are as follows:
<TABLE>
<CAPTION>
Quantity Exercise Price Expiration Date
-------- -------------- ---------------
<S> <C> <C> <C>
10,000 $4.00 May 12, 2000
10,000 $4.00 May 12, 2000
10,000 $7.00 May 13, 2000
10,000 $7.00 May 13, 2000
</TABLE>
(F) Private Placement
---------------------
In January 1999, the Company issued a private placement memorandum (the
"Private Placement") pursuant to Regulation D of the Securities Act of
1933, as amended. The Private Placement offered up to 232,500 shares of
common stock of the Company, on a best efforts basis, at a price of
$4.00 per share. At the termination of the offering, the Company had
raised approximately $807,000, net of commissions and offering costs.
F-56
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3. (i)(a) Articles of Incorporation Kendrex Systems, Inc.
(b) Amendment to the Articles of Incorporation for Kendrex Systems,
Inc.
(c) Certificate of amendment to the Articles of Incorporation for
HLHK World Group, Inc.
(d) Articles of Incorporation for HLHK World Group, Inc.
(e) Articles of Incorporation for TrimFast Inc.
(f) Articles of Incorporation for Body Life Sciences, Inc.
(g) Articles of Incorporation for Nutrition Cafe, Inc.
(h) Certificate of Incorporation of Immmu Inc.
(i) Certificate of Incorporation Immcel Pharmaceuticals, Inc.
3.(ii) Bylaws of Kendrex Systems, Inc. ("TrimFast Group, Inc.")
4. Debenture Agreement
10.(a) Deal Memorandum with the Worldwide Championship Wrestling
(b) Lease Option Agreement for Clearwater property.
21. Subsidiaries of Registrant
23.(a) Consent of Weinberg & Company, P.A.
(b) Consent of Schvaneveldt and Company
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
ARTICLES OF INCORPORATION
OF
KENDREX SYSTEMS, INC.
FRANKIE SUE DEL PAPA SECRETARY OF STATE
/S/ Frankie Sue Del Papa
No. 121187
We, the undersigned natural persons acting as incorporators of the
corporation under the Nevada Business Corporations Act adopt the following
Articles of Incorporation for such corporation.
ARTICLE I
---------
Name. The name of the corporation (hereinafter called "Corporation") is
KENDREX SYSTEMS, INC.
ARTICLE II
----------
Period of Duration. The period of duration of the Corporation is
perpetual.
ARTICLE III
-----------
Purpose and Powers. The purpose for which this Corporation is organized
is to engage in the business of investing in investments of all forms and nature
and to engage in any and all other lawful business.
ARTICLE IV
----------
Capitalization. The Corporation shall have the authority to issue
100,000,000 shares of stock having a par value of one mil per share. All stock
of the Corporation shall be of the same class and shall have the same rights and
preferences. Fully paid stock of this Corporation shall not be liable for
further call or assessment. The
1
<PAGE>
authorized trading shares shall be issued at the discretion of the Directors.
ARTICLE V
---------
Commencement of Business. The Corporation shall not commence business
until at least One Thousand Dollars ($1,000) has been received by the
Corporation as consideration for the issuance of its shares.
ARTICLE VI
----------
Initial Registered Office and Initial Registered Agent. The address of
the initial registered office of the Corporation is 2050 Ellis Way, Elko, Nevada
89801 and the initial registered agent of the Corporation at such address is
Gateway Enterprises, Inc.
ARTICLE VII
-----------
Directors. The minimum number of Directors of this Corporation shall be
at least equal to the number of shareholders of the Corporation. At such time as
there are at least three shareholders of the Corporation the minimum number of
Directors of the Corporation shall be three and the maximum number of Directors
of the Corporation shall be nine. Directors need not be stockholders in the
Corporation but shall be elected by the stockholders of the Corporation. The
number of Directors constituting the initial Board of directors is one (1) and
the name and post office address of the persons who shall serve as Directors
until their successors are elected and qualified are:
W. Sterling Mason, Jr.
1549 South 1300 East
2
<PAGE>
Lake City, Utah 84105
ARTICLE VIII
------------
Incorporators. The name and post office address of each incorporator
is:
W. Sterling Mason, Jr.
1549 South 1300 East
Salt Lake City, Utah 84105
ARTICLE IX
----------
Preemptive Rights. There shall be no preemptive right to require
unissued and/or treasury shares of the stock of the corporation.
ARTICLE X
---------
Voting of Shares. Each outstanding share of common stock of the
Corporation shall be entitled to one vote on each matter submitted to a vote at
the meeting of the stockholders. Each stockholder shall be entitled to vote his
or its shares in person or by proxy, executed in writing by such stockholder, or
by his duly authorized attorney-in-fact. At each election of Directors, every
stockholder titled to vote in such election of Directors, every stockholder
titled to vote in such election shall have the right to vote in person or by
proxy the number of shares owned by him or it for as many persons as there are
directors to be elected and for whose election he or it has the right to vote,
but the shareholder shall have no right to accumulate his or its votes with
regard to such election.
ARTICLE XI
----------
Declaration Of Partial Liquidating Dividends. The Board of
3
<PAGE>
Directors shall have the authority to declare, in its discretion, any
dividends permitted by law including dividends in cash and property and shall,
in addition, have authority to declare partial liquidating dividends by the
Corporation without the consent or vote of the shareholders.
/s/ W. Sterling Mason, Jr.
------------------------
STATE OF UTAH )
: ss
COUNTY OF SALT LAKE )
On the 19th day of February, 1987, personally appeared before me W.
Sterling Mason, Jr., and duly acknowledged to me that he is the person who
signed the foregoing instrument as incorporator, and that he has read the
foregoing instrument and knows the contents thereof and that the same is true of
his own knowledge except as to chose matters upon which he operates on
information and belief and as to those matters believe them to be true.
/s/ Signature of Notary - unknown name
--------------------------------------
Residing in Salt Lake City, UT
My Commission Expires
7-26-87
4
<PAGE>
STATE OF NEVADA
DEPARTMENT OF
STATE
I hereby certify that this is a true and certified copy of the
documents as filed in this office.
DATED: Feb 23, 1987
/s/ Frankie Sue Del Papa
--------------------------
FRANKIE SUE DEL PAPA
Secretary of State
BY Marcy McCain
----------------------
5
AMENDMENT TO THE
ARTICLES OF INCORPORATION OF KENDREX SYSTEMS, INC.
Kendrex Systems, Inc., a corporation organized under the laws of the
State of Nevada, February 23, 1987, hereby adopts the following Articles of
Amendment to its Articles of Incorporation pursuant to the provisions of Nevada
Revised Statutes Sections 78.385 and 78.390.
I
The Articles of Incorporation shall be amended to read as follows:
Article I
NAME. The name of the corporation (hereinafter called the "Corporation")
HLHK World Group.Inc.
II
The date of the adoption of the foregoing amendments by the shareholders
was November 18, 1996. The number of shares outstanding in the Corporation and
entitled to vote on the amendment was 3,850,000. All stock in the Corporation is
entitled to one vote per share for each matter coming before the meeting of the
shareholders.
III
The number of shares that voted in favor of the above amendments was
2,600,000. The number of shares that voted against the above amendments was -0-.
IV
The shareholders also voted and approved a one for five reverse split of
the outstanding shares of the Corporation. The authorized shares will remain at
100,000,000, $.001 par value common voting shares. Following the reverse split
there were 770,000 shares outstanding. The
1
<PAGE>
shareholders also approved the issuance of 6,250,000 shares in connection with
an acquisition. There are currently 7,020,000 shares issued and outstanding in
the corporation.
DATED this 18 day of November, 1996.
Kendrex Systems, Inc.
By: /s/ Harry Kay
--------------------------
Harry Kay
President
By: /s/ Velma Tronolone
--------------------------
Velma Tronolone
Secretary
STATE OF NEVADA )
:ss
COUNTY OF CLARK )
On the 18th of November, 1996, personally appeared before me Harry Kay,
and Velma Tronolone and duly acknowledged to me that they are the persons who
signed the foregoing instrument as President and Secretary respectively and that
they have read the foregoing instrument and know the contents thereof and that
the same is true of their own knowledge except as to those matters upon which
they operate on information and belief and as to those matters believe them to
be true.
/s/ Diane Bray
------------------------
NOTARY PUBLIC
Residing in: Las Vegas, NV
My Commission Expires:
Jan 16, 1999
==========================================
NOTARY PUBLIC
STATE OF NEVADA
County of Clark
DIANE BRAY
My Appointment Expires Jan 16, 1999
==========================================
2
<PAGE>
CONSENT OF HLHK WORLD GROUP, INC., TO USE ITS NAME
According to the Plan and Agreement of Reorganization between Kendrex
Systems, Inc., a Nevada corporation, and HLHK World Group, Inc. a Nevada
corporation, dated November 18, 1996, whereby HLHK shall be acquired by Kendrex
System and both parties agree that Kendrex shall change its name to HLHK World
Group, Inc. and pursuant to Nevada Revised Statutes section 78.O39, HLHK World
Group, Inc. hereby gives consent and acknowledges the use of its name by Kendrex
Systems, Inc., effective November 18, 1996.
By: /s/ Harry Kay
----------------------------
Harry Kay
President
STATE OF NEVADA )
:ss
COUNTY OF CLARK )
On the 18th day of November, 1996. personally appeared before me Harry
Kay and duly acknowledged to me he is the person who signed the foregoing
instrument as President and that he has read the foregoing instrument and know
the contents thereof and that the same is true of their own knowledge except as
to those matters upon which they operate on information and belief and as to
those matters believe them to be true.
/s/ Diane Bray
------------------------
NOTARY PUBLIC
Residing in: Las Vegas, NV
My Commission Expires:
Jan 16, 1999
==========================================
NOTARY PUBLIC
STATE OF NEVADA
County of Clark
DIANE BRAY
My Appointment Expires Jan 16, 1999
==========================================
3
FILED
IN THE OFFICE OF THE
STATE OF NEVADA
SEP 04 1998
NO. C 1211 - 87
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
HLHK WORLD GROUP, INC.
HLHK World Group, Inc. a corporation organized under the laws of the
state of Nevada, February 23, 1987 hereby adopts the following Articles of
Amendment to its Articles of Incorporation pursuant to the provisions of Nevada
Revised Statutes 78.385 and 78.390.
I.
The Articles of Incorporation shall be amended to read as follows:
ARTICLE I
NAME: The name of the corporation hereinafter called the "Corporation"
shall be Trimfast Group, Inc.
ARTICLE II
CLASSES OF STOCK: The Company is hereby authorized to issue 20 million
shares of Class A Preferred Stock, $.01 par value and 20 million shares of Class
B Preferred Stock. $.01 par value with such rights and preferences as determined
by the Board of Directors. There shall be no change in the number of authorized
shares of common stock.
II.
The date of the adoption of the foregoing amendments by the
shareholders was August 21, 1998. The number of shares outstanding in the
Corporation and entitled to vote on the
1
<PAGE>
amendment was 21, 843,747. All stock in the corporation is entitled to
one vote per share for each matter coming before the meeting of the
shareholders.
III.
The number of shares that voted in favor to the above amendment was
18,707,807. The number of shares that voted against the above amendment was -0-.
HLHK WORLD GROUP, INC.
/s/ Michael Muzio
- ---------------------
By: Michael Muzio, President
/s/ Velma Tronolone
- ---------------------
By: Velma Tronolone, secretary
State of Florida
County of Palm Beach
Before me this 3rd day of September 1998 personally appeared Michael
Muzio, the president of HLHK World Group, Inc. who being duly sworn did
acknowledge that he executed the forgoing instrument.
/s/ Jeffrey G. Klein
- -----------------------
NOTARY PUBLIC
Jeffrey G. Klein
My Commission CC817371
Expires January 29, 2001
2
FILED
IN THE OFFICE OF THE
STATE OF NEVADA
ARTICLES OF INCORPORATION
OF
HLHK WORLD GROUP, INC.
KNOW ALL MEN BY THESE PRESENTS:
1, the undersigned, have this day voluntarily formed a corporation
under the laws of the State of Nevada, and I hereby state and certify:
FIRST: The name of said Corporation is:
HLHK WORLD GROUP, INC.
SECOND: The location of the registered office of the Corporation within
the State of Nevada is Suite 119, 1209 South Casino Center Boulevard, Las Vegas,
Nevada, 89104, and the Registered Agent in charge thereof is NATIONAL BUSINESS
CONSULTANTS, a Nevada corporation.
THIRD: The purpose for which said Corporation is formed and the nature
of the objects proposed to be transacted and carried on by it are any and all
legal business,
FOURTH: The amount of total authorized capital shall be divided Into
2,500,000 shares of common stock with a par value of one cent per share. The
Board of Directors shall have the authority to fix arid determine all classes of
stock and the designations, preferences and relative rights and qualifications,
limits and restrictions thereof, as authorized by law, All shares of stock shall
be issued fully paid at such time as the Board of Directors may designate in
exchange for cash, property or services, the stock of other corporations or
other values, rights or things. The judgment of the Board of Directors as to the
value thereof shall be conclusive.
1
<PAGE>
FIFTH: The members of the governing board shall be styled "Director"
and the first Board of Directors shall consist of one Director, except as
hereinafter provided. The name and address of the first Board of Directors and
the Incorporator signing these Articles shall be, and is, as follows:
Caroline Thomas
1209 South Casino Center Boulevard
Suite 119
Las Vegas, Nevada 89104
The number of Directors of this Corporation may, from time to time, be
increased or decreased, provided the number shall not be reduced to less than
three, except in cases where the shares of the Corporation are owned
beneficially and of record by either one or two stockholders, the number of
Directors may be one or two, but not less than the number of stockholders, nor
more than fifteen, regardless of the number of stockholders.
SIXTH: The capital stock after the amount of the subscription price is
paid in shall be and remain non-assessable. The private property of the
stockholders shall not be liable for the debts and liabilities of the
Corporation.
SEVENTH: The personal liability of a Director or Officer for the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty is hereby eliminated-, subject, however, to a Director being liable:
1. For acts or omissions or which involve intentional
misconduct, fraud or a knowing violation of law; or
2. For the payment of distributions in violation of N.R.S,
78.300.
The Corporation shall indemnify any of its Officers and Directors,
past, present and future, who were or are a party to any threatened, pending or
completed action, suit or
2
<PAGE>
proceeding, whether civil, criminal, administrative or investigative, against
any and all expenses, including but not limited to attorney fees, judgments,
fines and amounts paid in settlement which may be incurred, rendered or levied
in any action brought against any or all of them for or on account of any act or
omission alleged to have been committed while acting within the scope of their
duties as Officers or Directors of the Corporation. Any and all expenses
incurred by the Officers and Directors of the Corporation in defending a civil
or criminal action, suit or proceeding must be paid by the Corporation as they
are incurred and in advance of the final disposition of the action, suit or
proceeding upon receipt of an undertaking by or on behalf of the Director or
Officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that they are not entitled to be indemnified by the
Corporation.
To the extent permitted by law, the indemnification and advancement of
expenses authorized by this Article do not exclude any other rights to which a
person !Seeking indemnification or advancement of expenses may be entitled under
the articles of Incorporation or any by-law, agreement, vote of stockholders or
disinterested Directors or otherwise for either an action in their official
capacity or an action in another capacity while holding their office.
The Corporation may purchase and maintain Insurance or make any other
financial arrangements permitted by law 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 for any liability asserted against them and liability and expenses
incurred by them in their capacity as a Director, Office, employee or agent or
arising out of their status as such, whether or not the Corporation has the
authority to indemnify them against such
3
<PAGE>
liability and expenses. The decision of the Board of Directors as to the
propriety of the terms and conditions of any insurance or other financial
arrangement made pursuant to this Article and the choice of the person to
provide the insurance or other financial arrangement is conclusive and the
insurance or other financial arrangement is not void or voidable and does not
subject any Director approving it to personal liability for their action, even
if a Director approving the insurance or other financial arrangement is a
beneficiary of the insurance or other financial arrangement.
The provisions regarding Director's liability shall be effective as
of the date the Incorporator executes these Articles of Incorporation.
EIGHTH: The Corporation shall have perpetual existence,
IN WITNESS WHEREOF, the undersigned Incorporator has executed these
Articles of Incorporation on July 8, 1996.
/s/ CAROLINE THOMAS
-------------------
CAROLINE THOMAS
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
On July 8, 1996, before me, a Notary Public in and for Clark County,
Nevada, personally appeared Caroline Thomas, known to me to be the person
described in and who executed the above and foregoing instrument and who
acknowledged to me that she executed the same freely and voluntarily and for the
uses and purpose's therein mentioned.
/s/ MARY COYNE
----------------------
NOTARY PUBLIC
Mary Coyne
Notary Public
State of Nevada
Clark County
My Appointment Expires 1-25-97
4
<PAGE>
BYLAWS
OF
HLHK WORLD GROUP, INC.
ARTICLE I - OFFICES
The principal office of the Corporation shall be located at 3361
Westwind Rd, Las Vegas NV 89102 and it may be changed from time to time by the
Board of Directors. The Corporation may also maintain offices at such other
places within or without the United States as the Board of Directors may, from
time to time, determine.
ARTICLE II - MEETINGS OF STOCKHOLDERS
SECTION I - ANNUAL MEETINGS:
The annual meeting of the stockholders of the Corporation shall be held
within six (6) months after the close of the fiscal year of the Corporation, for
the purposes of electing directors, and transacting such other business as may
properly come before the meeting.
SECTION 2 - SPECIAL MEETINGS:
Special meetings of the stockholders may be called at any time by the
Board of Directors or by the President, and shall be called by the President or
the Secretary at the written request of the holders of twenty-five percent (25%)
of the shares then outstanding and entitled to vote thereat, or as otherwise
required by law.
SECTION 3 - PLACE OF MEETINGS:
All meetings of stockholders shall be held at the principal office of the
Corporation, or at such other places as shall be designated in the notices or
waivers of notice of such meetings.
SECTION 4 - NOTICE OF MEETINGS:
(a) Except as otherwise provided by statute, written notice of each meeting of
stockholders, whether annual or special, stating the time when and place where
it is to be held, shall be served either personally or by mail, not less than
ten or more than sixty (60) days before the meeting, upon each stockholder of
record entitled to vote at such meeting, and to any other stockholder to whom
the giving of notice may be required by law. Notice of a special meeting shall
also state the purpose or purposes for which the meeting is called, and shall
indicate that It is being issued by, or at the direction of, the person or
persons calling the meeting. If, at any meeting, action is proposed to be taken
that would, if taken, entitle stockholders to receive payment for their shares
pursuant to statute, the notice of such
BYLAWS - 1
<PAGE>
meeting shall include a statement of that purpose and to that effect. If mailed,
such notice shall be directed to each such stockholder at his address, as it
appears on the records of the stockholders of the Corporation, unless he shall
have previously filed with the Secretary of the Corporation a written request
that notices intended for him be mailed to some other address, in which case, it
shall be mailed to the address designated in such request.
(b) Notice of any meeting need not be given to any person who may become a
stockholder of record after the mailing of such notice and prior to the meeting,
or to any stockholder who attends such meeting, in person or by proxy, or
submits a signed waiver of notice either before or after such a meeting. Notice
of any adjourned meeting of stockholders need not be given, unless otherwise
required by statute.
SECTION 5 - QUORUM
(a) Except as otherwise provided herein, or by statute. or in the Certificate of
Incorporation (such certificate and any amendments thereof being hereinafter
collectively referred to as the "Certificate of Incorporation"), at all meetings
of stockholders of the Corporation, the presence at the commencement of such
meetings in person or by proxy of stockholders holding of record _______% of the
total number of shares of the Corporation then issued and outstanding and
entitled to vote, shall be necessary and sufficient to constitute a quorum for
the transaction of any business. The withdrawal of any stockholder after the
commencement of a meeting shall have no effect on the existence of a quorum,
after a quorum has been established at such meeting.
(b) Despite the absence of a quorum at any annual or special meeting of
stockholders, the stockholders, by a majority of the votes cast by the holders
of shares entitled to vote thereat, may adjourn the meeting. At any such
adjourned meeting at which a quorum is present, any business, may be transacted
at the meeting as originally called if a quorum had been present.
SECTION 6 - VOTING:
(a) Except as otherwise provided by statute or by the Certificate of
Incorporation, any corporate action, other than the election of directors, to be
taken by vote of the stockholders, shall be authorized by a majority of votes
cast at a meeting of stockholders by the holders of shares entitled to vote
thereat.
(b) Except as otherwise provided by statute or by the Certificate of
Incorporation, at each meeting of stockholders. each holder of record of stock
of the Corporation entitled to vote thereat. shall be entitled to one vote for
each share of stock registered in his name on the books of the Corporation.
(c) Each stockholder entitled to vote or to express consent or dissent without a
meeting, may do so by proxy: provided, however, that the instrument authorizing
such proxy to act shall have been
BYLAWS - 2
<PAGE>
executed In writing by the stockholder himself or by his attorney-in-fact
thereunto duly authorized in writing. No Proxy shall be valid after the
expiration of eleven (11) months from the date of its execution, unless the
person executing it shall have specified therein the length of time it is to
continue in force. Such instrument shall be exhibited to the Secretary at the
meeting and shall be filed with the minutes of the meeting.
(d) Any action, except election of directors, which may be taken by a vote of
stockholders at a meeting, may be taken without a meeting if authorized by a
written consent of shareholders holding at least a majority of the voting
power-. provided that if a greater proportion of voting power is required by
such action at such meeting, then such greater proportion of written consents
shall be required.
ARTICLE III - BOARD OF DIRECTORS
SECTION 1 - NUMBER, ELECTION AND TERM OF OFFICE:
(a) The number of the directors of the Corporation shall be not less than 1 nor
more than 9, unless and until otherwise determined by vote of a majority of
the entire Board of Directors. The number of Directors shall not be less than
three (3), unless all of the outstanding shares of stock are owned beneficially
and of record by less than three (3) stockholders, in which event the number of
directors shall not be less than the number of stockholders or the minimum
permitted by statute.
(b) Except as may otherwise be provided herein or in the Certificate of
Incorporation by way of cumulative voting rights the member's of the Board of
Directors of the Corporation, who need not be stockholders, shall be elected by
a majority of the votes cast at a meeting of stockholders, by the holders of
shares of stock present in person or by proxy, entitled to vote in the election.
(c) Each director shall hold office until the annual meeting of the stockholders
next succeeding his election, and until his successor is elected and qualified,
or until his prior death, resignation or removal.
SECTION 2 - DUTIES AND POWERS
The Board of Director's shall be responsible for the control and management of
the affairs, property and interests of the Corporation and may exercise all
powers of the Corporation, except as are in the Certificate of Incorporation or
by statute expressly conferred upon or reserved to the stockholders.
SECTION 3 - ANNUAL AND REGULAR MEETINGS; NOTICE:
(a) Regular annual meeting of the Board of Directors shall be held immediately
following the annual meeting of the stockholders, at the place of such annual
meeting of stockholders.
(b) The Board of Directors, from time to time, may provide by resolution for the
holding of other
BYLAWS - 3
<PAGE>
regular meetings of the Board of Directors, and may fix the time and place
thereof.
(c) Notice of any regular meeting of the Board of Directors shall not be
required to be given and, if given, need not specify the purpose of the meeting;
provided, however, that in case the Board of Directors shall fix or change the
time or place of any regular meeting. notice of such action shall be given to
each director who shall not have been present at the meeting at which such
change was made within the time limited, and in the manner set forth in
Paragraph (b) Section 4 of this Article III, with respect to special meetings,
unless such notice shall be waived in the manner set forth in Paragraph
(c) of such Section 4.
SECTION 4 - SPECIAL MEETING; NOTICE:
(a) Special meetings of the Board of Directors shall be held whenever called by
the President or by one of the directors. at such time and place as maybe
specified in the respective notices or waivers of notice thereof.
(b) Except as otherwise required by statute, notice of special meetings shall be
mailed directly to each director, addressed to him at his residence or usual
place of business, at least four (4) days before the day on which the meeting is
to be held, or shall be sent to him at such place by telegram, radio or cable,
or shall be delivered to him personally or given to him orally, not later than
the day before the day on which the meeting is to be held. A notice, or waiver
of notice except as required by Section 8 or this Article III, need not specify
the purpose of the meeting.
(c) Notice of any special meeting shall not be required to be given to any
director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to him or who submits a signed waiver of
notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.
SECTION 5 - CHAIRMAN:
At all meetings of the Board of Directors, the Chairman of the Board, if any and
if present, shall preside. If there shall be no Chairman, or he shall be absent,
then the Vice Chairman shall preside, and in his absence, a Chairman chosen by
the directors shall preside.
SECTION 6 - QUORUM AND ADJOURNMENTS:
(a) At all meetings of the Board of Directors, the presence of a majority of the
entire Board shall be necessary and sufficient to constitute a quorum for the
transaction of business, except as otherwise provided by law, by the Certificate
of Incorporation, or by these Bylaws.
(b) A majority of the directors, present at the time and place of any regular or
special meeting,
BYLAWS - 4
<PAGE>
although less than a quorum, may adjourn the same from time to time without
notice, until a quorum shall be present.
SECTION 7 - MANNER OF ACTING:
(a) At all meetings of the Board of Directors, each director present shall have
one vote, irrespective of the number of shares of stock, if any, which he may
hold.
(b) Except as otherwise provided by statute, by the Certificate of
Incorporation, or by these Bylaws, the action of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors.
(c) Unless otherwise required by amendment to the Articles of Incorporation or
statute, any action required or permitted to be taken at any meeting of the
Board of Directors or any Committee thereof may be taken without a meeting if a
written consent thereto is signed by all the members of the Board or
Committee. Such written consent shall be filed with the minutes of the
proceedings of the Board or Committee.
(d) Unless otherwise prohibited by Amendments to the Articles of Incorporation
or statute, members of the Board of Directors or of any Committee of the Board
of Directors may participate in a meeting of such Board or Committee by means
of a conference telephone network or a similar communications method by which
all persons participating in the meeting can hear each other. Such participation
is constituted presence of all of the participating persons at such meeting, and
each person participating in the meeting shall sign the minutes thereof. which
may be signed in counterparts.
SECTION 8 - VACANCIES:
Any vacancy in the Board of Directors, occurring by reason of an increase in the
number of directors, or by reason of the death, resignation, disqualification,
removal (unless vacancy created by the removal of a director by the stockholders
shall be filled by the stockholders at the meeting at which the removal was
effected) or inability to act of any director, or otherwise. shall be filled for
the unexpired portion of the term by a majority vote of the remaining directors,
though less than a quorum. at any regular meeting or special meeting of the
Board of Directors called for that purpose.
SECTION 9 - RESIGNATION:
Any director may resign at any time by giving written notice to the Board of
Directors, the President or the Secretary of the Corporation. Unless otherwise
specified in such written notice such resignation shall take effect upon receipt
thereof by the Board of Directors or such officer, and the acceptance of such
resignation shall not be necessary to make it effective.
BYLAWS - 5
<PAGE>
SECTION 10 - REMOVAL:
Any director may be removed with or without cause at any time by the affirmative
vote of stockholders holding of record in the aggregate at least a majority of
the outstanding shares of stock of the the Corporation at a special meeting of
the stockholders called for that purpose, and may be removed for cause by
action of the Board.
SECTION 11 - SALARY:
No stated salary shall be paid to directors, as such. for their services, but by
resolution of the Board of Directors a fixed sum and expenses of attendance, if
any, may be allowed for attendance at each regular or special meeting of the
Board; provided, however. that nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
SECTION 12 - CONTRACTS:
(a) No contract or other transaction between this Corporation and any other
corporation shall be impaired, affected or invalidated, nor shall any director
be liable in any way by reason of the fact that one or more of the directors of
this Corporation is or are interested in, or is a director or officer, or are
directors or officers of such other corporations, provided that such facts are
disclosed or made known to the Board of Directors, prior to their authorizing
such transaction.
(b) Any director, personally and individually. maybe a party to or may be
interested in any contract or transaction of this Corporation. and no directors
shall be liable in any way by reason of such interest, provided that the fact of
such interest be disclosed or made known to the Board of Directors prior to
their authorization of such contract or transaction, and provided that the Board
of Directors shall authorized, approve or ratify such contract or transaction by
the vote (not counting the vote of any such Director) of a majority of a quorum,
notwithstanding the presence of any such director at the meeting at which such
action is taken. Such director or directors may be counted in determining the
presence of a quorum at such meeting. This Section shall not be construed to
impair, invalidate or in any way affect any contract or other transaction which
would otherwise be valid under the law (common, statutory or otherwise)
applicable thereto.
SECTION 13 - COMMITTEES: The Board of Directors, by resolution adopted by a
majority of the entire Board, may from time to time designate from among its
members an executive committee and such other committees, and alternate members
thereof, as they may deem desirable, with such powers and authority (to the
extent permitted by law) as may be provided in such resolution. Each such
committee shall serve at the pleasure of the Board.
BYLAWS - 6
<PAGE>
ARTICLE IV -OFFICERS
SECTION 1 - NUMBER. QUALIFICATIONS, ELECTION AND TERM OF OFFICE:
(a) The officers of the Corporation shall consist of a President, a Secretary, a
Treasurer, or a President and Secretary-Treasurer. and such other officers,
including a Chairman of the Board of Directors, and one or more Vice Presidents,
as the Board of Directors may from time to time deem advisable. Any officer
other than the Chairman or Vice Chairman of the Board of Directors may be, but
is not required to be a director of the Corporation. Any two or more offices
may be held by the same person.
(b) The officers of the Corporation shall be elected by the Board of Directors
at the regular annual meeting of the Board following the annual meeting of
stockholders.
(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have been
elected and qualified or until his death, resignation or removal.
SECTION 2 - RESIGNATION:
Any officer may resign at any time by giving written notice of such resignation
to the Board of Directors, or to the President or the Secretary of the
Corporation. Unless otherwise specified in such written notice, such resignation
shall take effect upon receipt thereof by the Board of Directors or by such
officer, and the acceptance of such resignation shall not be necessary to make
it effective.
SECTION 3 - REMOVAL:
Any officer may be removed, either with or without cause, and a successor
elected by a majority vote of the Board of Directors at any time.
SECTION 4 - VACANCIES:
A vacancy in any office by reason of death, resignation, inability to act,
disqualification or any other cause, may at any time be filled for the unexpired
portion of the term by a majority vote of the Board of Directors.
SECTION 5 - DUTIES OF OFFICERS:
Officers of the Corporation shall, unless otherwise provided by the Board of
Directors, each have such powers and duties as generally pertain to their
respective offices as well as such powers and duties as may be set forth in
these Bylaws, or may from time to time be specifically conferred or imposed by
the Board of Directors. The President shall be the chief executive officer of
the Corporation.
BYLAWS - 7
<PAGE>
SECTION 6 - SURETIES AND BONDS:
In case the Board of Directors shall so require any officer, employee or agent
of the Corporation shall execute to the Corporation a bond in such sum, and with
such surety or sureties as the Board of Directors may direct, conditioned upon
the faithful performance of his duties to the Corporation, including
responsibility for negligence for the accounting for all property, funds or
securities of the Corporation which may come into his hands.
SECTION 7 - SHARES OF STOCK OF OTHER CORPORATIONS:
Whenever the Corporation is the holder of shares of stock of any other
corporation, any right or power of the Corporation as such stockholder
(including the attendance, acting and voting at stockholders' meetings and
execution of waivers, consents, proxies or other instruments) maybe exercised on
behalf of the Corporation by the President, any Vice President or such other
person as the Board of Directors may authorize.
ARTICLE V - SHARES OF STOCK
SECTION 1 - CERTIFICATE OF STOCK:
(a) The certificates representing shares of the Corporation's stock shall be in
such form as shall be adopted by the Board of Directors. and shall be numbered
and registered in the order issued. The certificates shall bear the following:
the Corporate Seal, the holder's name, the number of shares of stock and the
signatures of: (1) the Chairman of the Board, the President or a Vice President
and (2) the Secretary, Treasurer, any Assistant Secretary or Assistant
Treasurer.
(b) No certificate representing shares of stock shall be issued until the full
amount of consideration therefore has been paid, except as otherwise permitted
by law.
(c) To the extent permitted by law, the Board of Directors may authorize the
issuance of certificates for fractions of a share of stock which shall entitle
the holder to exercise voting rights, receive dividends and participate in
liquidating distributions, in proportion to the fractional holdings; or it may
authorize the payment in cash of the fair value of fractions of a share of stock
as of the time when those entitled to receive such fractions are determined; or
it may authorize the issuance, subject to such conditions as may be permitted by
law, of scrip in registered or bearer form over the signature of an officer or
agent of the Corporation, exchangeable as therein provided for full shares of
stock, but such scrip shall not entitle the holder to any rights of a
stockholder, except as therein provided.
SECTION 2 - LOST OR DESTROYED CERTIFICATES:
The holder of any certificate representing shares of stock of the Corporation
shall immediately notify the Corporation of any loss or destruction of the
certificate representing the same. The Corporation
BYLAWS - 8
<PAGE>
may issue a new certificate in the place of any certificate theretofore issued
by it, alleged to have been lost or destroyed. On production of such evidence of
loss or destruction as the Board of Directors in its discretion may require, the
Board of Directors may, in its discretion, require the owner of the lost or
destroyed certificate, or his legal representatives, to give the Corporation a
bond in such sum as the Board may direct, and with such surety or sureties as
may be satisfactory to the Board, to indemnify the Corporation against any
claims, loss, liability or damage it may suffer on account of the issuance of
the new certificate. A new certificate may be issued without requiring any such
evidence or bond when, in the judgment of the Board of Directors. it is proper
to do so.
SECTION 3 - TRANSFER OF SHARES:
(a) Transfer of shares of stock of the Corporation shall be made on the stock
ledger of the Corporation only by the holder of record thereof, in person or by
his duly authorized attorney, upon surrender for cancellation of the certificate
or certificates representing such shares of stock with an assignment or power of
transfer endorsed thereon or delivered therewith, duly executed, with such proof
of the authenticity of the signature and of authority to transfer and of payment
of taxes as the Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of record of any
share or shares of stock as the absolute owner thereof for all purposes and,
accordingly, shall not be bound to recognize any legal, equitable or other claim
to, or interest in, such share or shares of stock on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by law.
SECTION 4 - RECORD DATE:
In lieu of closing the stock ledger of the Corporation, the Board of Directors
may fix, in advance, a date not exceeding sixty (60) days, nor less than ten
(10) days, as the record date for the determination of stockholders entitled to
receive notice of, or to vote at, any meeting of stockholders, or to consent to
any proposal without a meeting, or for the purpose of determining stockholders
entitled to receive payment of any dividends or allotment of any rights, or for
the purpose of any other action. if no record date is fixed, the record date for
the determination of stockholders entitled to notice of, or to vote at, a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which the notice is given, or, if no notice is given, the
day preceding the day on which the meeting is held. The record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the resolution of the directors relating thereto is adopted.
When a determination of stockholders of record entitled to notice of, or to vote
at, any meeting of stockholders has been made, as provided for herein, such
determination shall apply to any adjournment thereof, unless the directors fix a
new record date for the adjourned meeting.
BYLAWS - 9
<PAGE>
ARTICLE VI - DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of any funds
available therefor, as often, in such amount, and at such time or times as the
Board of Directors may determine.
ARTICLE VII - FISCAL YEAR
The fiscal year of the Corporation shall be ________________, and may be changed
by the Board of Directors from time to time subject to applicable law.
ARTICLE VIII - CORPORATE SEAL
The corporate seal shall be in such form as shall be approved from time to time
by the Board of directors.
ARTICLE IX - INDEMNITY
(a) Any person made a party to any action, suit or proceeding, by reason of the
fact that he, his testator or interstate representative is or was a director,
officer or employee of the Corporation or of any corporation in which he served
as such at the request of the Corporation shall be indemnified by the
Corporation against the reasonable expenses, including attorneys' fees, actually
and necessarily incurred by him in connection with the defense of such action,
suit or proceedings, or in connection with any appeal therein, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding or in connection with any appeal therein that such officer director
or employee is liable for gross negligence or misconduct in the performance of
his duties.
(b) The foregoing right of indemnification shall not be deemed exclusive of any
other rights to which any officer or director or employee may be entitled apart
from the provisions of this section.
(c) The amount of indemnity to which any officer or any director may be entitled
shall be fixed by the Board of Directors, except that in any case in which there
is no disinterested majority of the Board available, the amount shall be fixed
by arbitration pursuant to the then existing rules of the American Arbitration
Association.
ARTICLE X - AMENDMENTS
SECTION 1. - BY STOCKHOLDERS:
All bylaws of the Corporation shall be subject to alteration or repeal, and new
bylaws may be made, by the affirmative vote of stockholder's holding of record
in the aggregate at least a majority of the
BYLAWS - 10
<PAGE>
outstanding shares of stock entitled to vote in the election of directors at any
annual or special meeting of stockholders, provided that the notice or waiver of
notice of such meeting shall have summarized or set forth in full therein, the
proposed amendment.
SECTION 2 - BY DIRECTORS:
The Board of Directors shall have power to make, adopt, alter, amend and repeal,
from time to time, bylaws of the Corporation, provided, however, that the
stockholders entitled to vote with respect thereto as in this Article X
above-provided may alter, amend or repeal bylaws made by the Board of Directors,
except that the Board of Directors shall have no power to change the quorum for
meetings of stockholders or of the Board of Directors or to change any
provisions of the bylaws with respect, to the removal of directors of the
filling of vacancies in the Board resulting from the removal by the
stockholders. In any bylaw regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shall be set forth
in the notice of the next meeting of stockholders for the election of Directors,
the bylaws so adopted, amended or repealed, together with a concise statement of
the changes made.
BYLAWS - 11
MINUTES OF THE FIRST MEETING OF
THE INCORPORATOR (BY ASSIGNMENT),
SUBSCRIBERS AND BOARD OF DIRECTORS OF
TRIMFAST, INC.
A meeting of the Assignee of the Sole Incorporator and the Subscribers
of TRIMFAST, INC. was held on June 1, 1998, at the offices of the Corporation,
777 S. Harbour Island Boulevard, Suit 260, Tampa, Florida 33602. Michael J.
Muzio called the meeting to order and stated the purpose thereof, the same being
the organization of the corporation.
On motion duly made and carried, Michael J. Muzio was elected Chairman
of the meeting, and Gregg P. Vosler was elected Secretary thereof.
The Secretary then called the roll and found that the following
subscribers to the capital stock were present in person:
Michael J. Muzio and Gregg P. Vosler
A written Waiver of Notice of the time and place of holding the
meeting, signed by Michael J. Muzio, as the assignee of all of the rights, title
and interests of the sole Incorporator, E.G. Mouakad, pursuant to an assignment
dated July 2, 1997 (See Exhibit A attached) and by Michael J. Muzio and Gregg P.
Vosler as the Subscribers of the capital stock of this corporation, was then
presented and read by the Secretary, and the same was ordered entered in the
minute book of the corporation immediately preceding the minutes of this
meeting.
The Secretary then presented and read to the meeting a copy of the
Articles of Incorporation and reported that on April 28, 1997, the original
thereof was duly submitted for filing in the office of the Secretary of State;
and the filing fees and taxes were paid; and on motion duly made and carried, it
was
RESOLVED, that such report be accepted as correct, and the
Secretary of the corporation is directed to file a copy of
the Articles of Incorporation and the Receipt therefore upon
the minutes of this meeting when the same shall be received
from the Secretary of State.
The articles are attached and incorporated within. The Secretary of the
meeting then presented a proposed set of Bylaws for the regulation and
management of the affairs of the Corporation, which Bylaws, after being read,
were adopted, section by section, and as a whole as the Bylaws of the
Corporation, and were made a part of the permanent records of the Corporation
and directed to be incorporated in the minutes of this meeting.
A motion was made, seconded and unanimously carried that the number of
Directors of the Corporation be fixed at two (2).
1
<PAGE>
Thereupon, the floor was declared open for nominations for the office
of Director. The following were duly nominated as the Directors to serve until
the next annual meeting of the stockholders of the Corporation, or until the
successor of such Director should be duly elected and qualified:
Michael J. Muzio
Gregg P. Vosler
Upon motion duly made, seconded, and unanimously adopted, it was
RESOLVED, that Michael J. Muzio and Gregg P. Vosler be, and
they hereby are, approved and confirmed as the Directors of
this Corporation, to hold office until the first annual
meeting of the stockholders, or until their successors are
duly elected and qualified.
Said Directors then immediately convened for the first Director's
meeting. The Chairman stated that the next order of business was the election of
officers of the Corporation. Upon motion duly made, seconded and unanimously
carried, the following resolution was adopted:
RESOLVED, that the persons whose names are set forth below be,
and they hereby are, elected to the offices set forth opposite
their names, to hold those offices until the next annual
meeting of the Board of Directors and until their respective
successors are elected and have qualified, or until their
earlier death, resignation or removal:
Michael J. Muzio President and Treasurer
Gregg P. Vosler Secretary
Mr. Muzio, having been elected the President, continued as Chairman of
the instant meeting. Mr. Vosler acted as the Secretary of the instant meeting.
The Chairman then stated that in his judgment it would be advisable to
authorize the Directors to issue the capital stock of this corporation up to the
amount authorized by the Articles of Incorporation for appropriate
consideration. After deliberation and discussion, upon motion duly made,
seconded, and unanimously adopted, it was
RESOLVED, that the Directors of this corporation be, and they
hereby are, authorized to issue, from time to time, shares of
the unsubscribed capital stock of this corporation at such
time and in such amounts as shall be determined by the Board
of Directors.
2
<PAGE>
The Secretary then presented to the meeting proposals from Michael J.
Muzio and Gregg P. Vosler to this corporation. Each such individual,
respectively, recounted the significant professional services that had been
provided to and on behalf of the Corporation by him for which no consideration
had been received, and the value of which is significantly greater than the
current fair market value of the number of shares proposed to the meeting as
full consideration for such services. Mr. Muzio proposed that the Corporation
issue to him 2,766,900 shares of common stock of the Corporation in full payment
for his services. Mr. Vosler proposed that the Corporation issue to him 233,100
shares of the common stock of the Corporation in full payment for his
services. The value of the services provided, respectively, equals or exceeds
the current fair market value of the common stock proposed to be issued, and
Mr. Muzio noted that the Corporation does not and will not have cash resources
which may be allocated to this purpose during its start-up phase.
Upon motion duly made and carried, the proposals were ordered filed
with the Secretary, and he was requested to spread the same at length upon the
minutes, such proposals being as follows:
PRICE PAID AND DESCRIPTION
NAME # OF SHARES OF CONSIDERATION
- ---- ----------- ----------------
Michael J. Muzio 2,766,900 Services rendered.
Gregg P. Vosler 233,100 Services rendered.
The Chairman then stated that it was advisable to issue immediately
certain shares of stock of the Corporation. Thereupon, after discussion, and
upon motion made, seconded and unanimously carried, the following resolutions
were adopted:
RESOLVED, That the proper officers of this Corporation be, and
they hereby are, authorized and directed, in the name and on
behalf of this Corporation and under its corporate seal or
otherwise, to issue to the above named individuals, the number
of shares listed opposite their names in exchange for the
consideration described immediately above.
RESOLVED, That after receipt of the consideration set forth
above, and upon the issuance of the aforesaid certificates,
the shares of common stock represented thereby shall be, and
as of that date and time they shall be declared to be, validly
issued, fully paid and non-assessable.
RESOLVED, That the proper officers of this Corporation be, and
they hereby are, authorized and directed, in the name and on
behalf of this Corporation and under its corporate seal or
otherwise, to
3
<PAGE>
take such action as they deem appropriate or necessary to
carry out the intent and accomplish the purposes of the
foregoing resolutions.
The following resolution was then duly made and carried:
RESOLVED, that the President is hereby directed to open an
account and deposit the funds of the above named corporation
with the bank he designates. All drafts, checks and notes of
the above named corporation, payable on said account are
hereby directed to be made in the name of the above named
corporation, signed by such persons as designated from time to
time by the President of the above named corporation.
Furthermore, it is
RESOLVED, that any and all resolutions required by the bank to
effect the foregoing arrangement are hereby authorized and
adopted as the actions of the Board of Directors of the above
named corporation and the same to be appended to these
minutes.
Upon motion duly made and carried, the principal office of the
corporation was fixed at 777 South Harbour Island Boulevard, Suite 260, Tampa,
Florida 33602. The Chairman then noted that the registered agent should be
changed from E.G. Mouakad (as designated at the time of incorporation) to
Michael J. Muzio at 777 South Harbour Island Boulevard, Suite 260, Tampa,
Florida 33602. It was therefore
RESOLVED, that the officers of the Corporation are hereby
authorized and directed to change the registered agent of the
Corporation to Michael J. Muzio at 777 South Harbour Island
Boulevard, Suite 260, Tampa, Florida 33602, and all necessary
papers should be filed with the Secretary of State in order to
effect the same.
The foregoing minutes were then read', and on motion duly made and
carried, were approved as and for the minutes of the meeting, There being no
further business to come before the meeting, the same was, on motion, duly
adjourned.
/s/ Gregg P. Vosler
-------------------
Gregg P. Vosler, Secretary
APPROVED:
/s/ Michael J. Muzio
- --------------------
Michael J. Muzio, Chairman
4
<PAGE>
WAIVER OF NOTICE OF FIRST MEETING OF THE INCORPORATOR,
SUBSCRIBERS AND BOARD OF DIRECTORS
of
TRIMFAST, INC.
We, the undersigned, being the assignees of all of the rights,
interests, and title of the sole Incorporator, E.G. Mouakad, and all of the
Subscribers of the capital stock of this corporation, hereby agree and consent
to the first meeting of the Incorporator, Subscribers and Board of Directors
held on June 1, 1998, at the offices of the Corporation located at 777, S.
Harbour Island Boulevard, Suite 260, Tampa, Florida 33602, and hereby waive all
notice of the meeting and any adjournment thereof.
/s/ Michael Muzio
-----------------
Michael J. Muzio
By Assignment of the Sole Incorporator
of the Corporation
/s/ Michael J. Muzio
---------------------
Michael J. Muzio
Subscriber
/s/ Gregg P. Vosler
-------------------
Gregg P. Vosler
Subscriber
EXHIBIT A
<PAGE>
ARTICLES OF INCORPORATION
OF
TrimFast, Inc.
The undersigned incorporator, for the purpose of forming a corporation under the
Florida Business Corporation Act, hereby adopt the following Articles of
Incorporation.
ARTICLE I NAME
The name of the corporation shall be:
TrimFast, Inc.
ARTICLE II PRINCIPAL OFFICE
The principal place of business and mailing address of this corporation shall
be:
3104 West Water Avenue, Tampa, Florida 33609
P.O. Box 1629, Tampa, Florida 33601
ARTICLE III SHARES
The number of shares of stock that this corporation is authorized to have
outstanding at any one time is:
10,000,000 shares, which shares shall be designated "Common". The corporation
also has authority to issue 2,000,000 shares, which shares shall be designated
"Preferred Shares". The Corporation's Board of Directors is authorized to
establish one or more series of such Preferred Shares and to determine the
preferences, limitations and relative rights of the Preferred Shares, subject to
limitations imposed by the Florida Business Corporation Act.
ARTICLE IV INITIAL REGISTERED AGENT AND STREET ADDRESS
The name and address of the initial registered agent is:
E.G. Mouakad
3104 West water Avenue, Tampa, Florida 33609
P.O. Box 1629, Tampa, Florida 33601
ARTICLE V INCORPORATOR
See Instructions for officers/directors
The name and street address of the incorporator to these Articles of
Incorporation is:
E.G. Mouakad
3104 West water Avenue, Tampa, Florida 33609
P.O. Box 1629, Tampa, Florida 33601
1
<PAGE>
ARTICLE VI
The corporation shall have the power to indemnify to the fullest extent
permitted by law any person who is made, or threatened to be made, a party to an
action, suit or proceeding, whether civil, criminal, administrative,
investigative or otherwise (including an action, suit or proceeding by or in the
right of the corporation) by reason of the fact that the person is or was a
director, officer, employee, or agent of the corporation, or a fiduciary within
the meaning of the Employee Retirement Income Security Act or 1974 with respect
to any employee the corporation as a director, officer, employee or agent, or is
a fiduciary of an employee benefit plan, of another corporation, partnership,
joint venture, trust or other enterprise, and their respective heirs,
administrators, personal representative, successors and assigns. Indemnification
specifically provided by the Florida Business Corporation Act shall not be
deemed exclusive of any other rights to which such director, officer, employee
or agent may be entitled under any bylaw, agreement, vote or shareholders or
disinterested directors or otherwise. The corporation, its officers, directors,
employees or agents shall be fully protected in taking any action or making any
payment under this Article or in refusing to do so upon the advice or counsel.
ARTLCLE VII
No director of the corporation shall be personally liable to the corporation or
its shareholders for monetary damages for conduct as a director, except that
this provision shall not apply to:
1. Any breach of the director's duty of loyalty to the corporation or
its shareholders;
2. Any acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
3. Any distribution from which the director derived an improper
personal benefit; or
4. Any act or omission occuring prior to the date on which these
Articles of Incorporation are filed with the Florida Department of
State.
The undersigned incorporator has executed these Articles of Incorporation this
15th day of April, 1997
/s/ E.G. Mouakad
--------------------------
E.G. Mouakad, Incorporator
2
<PAGE>
CERTIFICATE OF DESIGNATION OF
REGISTERED AGENT/REGISTERED OFFICE
PURSUANT TO THE PROVISIONS OF SECTION 607.0501, FLORIDA STATUTES, THE
UNDERSIGNED CORPORATION, ORGANIZED UNDER THE LAWS OF THE STATE OF FLORIDA.
SUBMITS THE FOLLOWING STATEMENT IN DESIGNATING THE REGISTERED OFFICE/REGISTERED
AGENT, IN THE STATE OF FLORIDA.
1. The name of the corporation is:
TrimFast, Inc.
2. The name and address of the registered agent and office is:
E.G. Mouakad
3104 West water Avenue, Tampa, Florida 33609
P.O. Box 1629, Tampa, Florida 33601
Tampa, Florida, 33609
(CITY/STATE/ZIP)
Having been named as registered agent and to accept service of process for the
above stated corporation at the place designated in this certificate, I hereby
accept the appointment as registered agent and agree to act in this capacity. I
further agree to comply with the provisions of all statutes relating to the
proper and complete performance of my duties, and I am familiar with and accept
the obligations of my position as registered agent.
/s/ E.G. Mouakad 4-15-97
- ---------------- ------------
SIGNATURE DATE
DIVISION OF CORPORATIONS, P.O. BOX 6327, TALLAHASSEE, FL 32314
3
<PAGE>
ORGANIZATIONAL WRITTEN ACTION OF THE FIRST BOARD
OF DIRECTORS OF TRIMFAST, INC.
The undersigned, being the sole member of the Board of Directors named
in the Articles of Incorporation of TRIMFAST, INC., a Florida corporation (the
"Corporation"), acting without meeting pursuant to the provisions of the
Florida General Corporation Act hereby consents to and adopts the following
actions, preambles, and resolutions:
1. Certificate of Incorporation. It is noted that the Corporation's
Articles of Incorporation were duly filed in the Office of the Secretary of
State of Florida. An acknowledged copy thereof, together with a letter from the
Secretary of State acknowledging receipt and filing of such Articles of
Incorporation in full payment of all charter fees and other money due to the
Secretary of State incident to the incorporation are to be filed in the minute
book.
2. Date of Activation. It is noted that pursuant to such filing with
the Secretary of State of Florida, the effective date of incorporation is April
28, 1997.
3. Bylaws. The proposed form of Bylaws for the regulation and
management of the affairs of the Corporation which have been read, section by
section, is hereby unanimously adopted and ordered to be made a part of the
permanent records to follow the Articles of Incorporation in the minute book.
4. Corporate Seal. The corporate seal, the impression of which is
affixed in the margin hereof, is approved and is designated as the official
corporate seal of the corporation.
1
<PAGE>
5. Stock Certificate. The form of stock certificate attached to these
minutes is adopted and approved.
6. Election of Officers. The following persons are hereby elected
to serve as the officers of the Corporation in the following capacities and to
assume the duties and responsibilities fixed by the Bylaws and to serve until
his successor is chosen and qualified:
MICHAEL J. MUZIO - President/Secretary/Treasurer
JOSEPH WITEK - Executive Vice President/Medical Director
CHARLES LECHER - Vice President of Marketing
7. Registered Office/Agent.
RESOLVED, that the Registered off ice of the Corporation, initially
designated in the Articles of Incorporation, shall be continued; and
FURTHER RESOLVED, that the Registered Agent of the corporation,
initially designated in the Articles of Incorporation, shall be continued.
8. Bank Accounts.
RESOLVED, that such bank or banks as the President shall select are
designated as a depository of this Corporation, and that funds so deposited may
be withdrawn upon the execution of a check, draft, note, or other documents of
the corporation, which documents may be drawn and executed by the officers of
the Corporation specified in such bank's resolution; and
FURTHER RESOLVED, that the form resolutions required by the bank or
banks to effect the foregoing arrangement are hereby adopted as the action of
the Board of Directors of the Corporation.
2
<PAGE>
9. Ratification of Acts. The acts of the incorporator, promoter, and
director from the date of incorporation to the present date be and the same
hereby are ratified and confirmed.
10. Section 1244.
RESOLVED, that all shares of stock hereunder, to the extent permitted
by law, are to be considered issued in accordance with Section 1244 of the
Internal Revenue Code of 1986, as amended (the "Code").
11. Investment Accounts. The President of the Corporation is authorized
to open an investment account or accounts with such appropriate firms as he may
select in order to invest, during the course of the year, any corporate funds
which the officers of the Corporation may determine proper.
12. Minute Book. The Corporation shall maintain, as part of its
corporate record, a corporate minute book which shall include a record of its
Articles of Incorporation and amendments thereto, its bylaws and amendments
thereto, minutes of all meetings or of written actions in lieu thereof of its
directors and shareholders, and its stock transfer ledger.
13. Organizational Expenses.
RESOLVED, the Treasurer be and hereby is authorized to pay all fees and
expenses incident to and necessary for the organization of this Corporation.
FURTHER RESOLVED, the Corporation elects to deduct its organizational
expenditures as permitted by law; and
FURTHER RESOLVED, that the President is hereby directed to
3
<PAGE>
instruct the Corporation's accountants to prepare and to file a statement in
accordance with Treasury Regulations 1.248-1(c) to permit ratable deductions of
such organizational expenses.
14. Insurance. The Corporation, through its President, shall purchase
general insurance, unemployment compensation, and liability insurance on behalf
of the Corporation.
15. Licenses and Permits.
RESOLVED, that the officers of the Corporation are directed to obtain
in the name of the Corporation such licenses and permits as may be required for
the conduct of the business of the Corporation by any Federal, state, county, or
municipal governmental ordinance or regulation and to do all things necessary or
convenient to qualify the Corporation to transact its business in compliance
with the laws and regulations of any appropriate Federal, state, county, or
municipal governmental authority.
The undersigned, being the sole member of the Board of Directors of
TRIMFAST, INC., does hereby ratify, approve, consent to, and confirm all of the
above preambles, resolutions, and actions.
DATED this _____ day of ________________________, 1997.
/s/ MICHAEL J. MUZIO
--------------------
MICHAEL J. MUZIO, Director
4
<PAGE>
BYLAWS OF
TRIMFAST, INC.
ARTICLE I
Offices
The principal office shall be in the City of Tampa, County of
Hillsborough, State of Florida.
The Corporation may also have offices at such other places both within
and without the State of Florida as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II
Shareholders
2.1 Annual Meeting. The annual meeting of the shareholders shall be
held within the three (3) month period beginning with the first day of the tenth
(1Oth) month of the fiscal year of the Corporation for the purpose of electing
directors and for the transaction of such other business as may come before the
meeting, the actual day thereof to be set forth in the Notice of Meeting or in
the Call and Waiver of Notice of Meeting. If the election of directors shall not
be held at any such annual meeting of the shareholders, or at any adjournment
thereof, the Board of Directors shall cause the election to be held at a special
meeting of the shareholders as soon thereafter as conveniently may be.
2.2 Special Meetings. Special meetings of the shareholders for any
purpose or purposes, unless otherwise prescribed by law or by the Articles of
Incorporation, may be called by the President or by the Board of Directors, and
shall be called by the President or Secretary at the request in writing of a
majority of the Board of Directors then in office, or at the request in writing
of shareholders owning ten percent (10%) or more of the entire capital stock of
the Corporation issued and outstanding and entitled to vote thereat. Such
request shall state the purpose or purposes of the proposed meeting. Business
transacted at any special meeting of the shareholders shall be limited to the
purposes stated in the notice thereof.
2.3 Place of Meeting. The Board of Directors may designate any place,
either within or without the State of Florida unless otherwise prescribed by law
or by the Articles of Incorporation, as the place of meeting for any annual
meeting or for any special meeting of the shareholders. A waiver of notice
signed by all shareholders entitled to vote at a meeting may designate any
place, either within or without the State of Florida unless otherwise prescribed
by law or by the Articles of Incorporation, as the place for the holding of such
meeting. If no
1
<PAGE>
designation is made, or if a special meeting be otherwise called, the place of
meeting shall be the principal office of the Corporation in the State of
Florida.
2.4 Notice of Meeting. Written or printed notice stating the place, day
and hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than sixty (60) days before the date of the meeting, either
personally or by mail, by or at the direction of the President or the Secretary,
or the officer or 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 postage thereon prepaid.
2.5 Waiver of Notice of Meeting. When shareholders who hold a majority
of the voting stock having the right and entitled to vote at any meeting, shall
be present at such meeting, however called or notified, and shall sign a written
consent thereto on the record of the meeting, the acts of such meeting shall be
as valid as if legally called and notified.
2.6 Voting Lists. The officer or agent in charge of the stock transfer
books for shares of the corporation shall make, at least ten (1O) days before
each meeting of shareholders, a complete list of the shareholders entitled to
vote at such meeting, or any adjournment thereof, arranged in alphabetical
order, with the address and the number of shares held by each, which list, for a
period of ten (10) days prior to such meeting, shall be kept on file at the
principal office of the Corporation and shall be subject to inspection by any
shareholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of my shareholder during the whole time of the meeting. The
original stock transfer book shall be prima facie evidence as to who are the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of the shareholders.
2.7 Quorum. Except as otherwise provided in these Bylaws, or as
required by the Articles of Incorporation, or by law, a majority of the
outstanding shares of the Corporation entitled to vote, represented in person or
by proxy, shall constitute a quorum at a meeting of shareholders. If less than a
majority of the outstanding shares are represented at a meeting, a majority of
the shares so represented may adjourn the meeting from time to time without
further notice. At 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. 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.
2.8 Voting of Shares. Each shareholder entitled to vote shall at every
meeting of the shareholders be entitled to one (1) vote in person, or by proxy,
signed by him, for each share of voting stock held by him. Such right to vote
shall be subject to the right of the Board of Directors to close the transfer
books or to fix a record date for voting shareholders as hereinafter provided,
and if such directors shall not have exercised such right, no share of stock
shall be
2
<PAGE>
voted on at any election for directors which shall have been transferred on the
books of the corporation within twenty (20) days next preceding such election.
2.9 Proxies. At all meetings of shareholders, a shareholder may vote by
proxy, executed in writing by the shareholder or by his duly authorized
attorney-in-fact; but no proxy shall be valid after eleven (11) months from its
date, unless the proxy provides for a longer period. Such proxies shall be filed
with the Secretary of the Corporation before or at the time of the meeting.
2.10 Voting Trusts. Any number of shareholders may create a voting
trust in the manner as provided for under Florida law.
2.11 Informal Action by Shareholders. Unless otherwise provided by law
or by the Articles of Incorporation, any action required to be taken at a
meeting of the shareholders, or any other action which may be taken at a meeting
of the shareholders, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof.
ARTICLE III
Board of Directors
3.1 General Powers. The business and affairs of the Corporation shall
be managed by its Board of Directors.
3.2 Number, Tenure and Qualifications. The number of directors of the
Corporation shall be not less than one (1) nor more than five (5), the number of
the same to be fixed by the shareholders at any annual or special meeting. Each
director shall hold office until the next annual meeting of shareholders and
until his successor has been qualified, unless sooner removed by the
shareholders at any general or special meeting. All directors shall be of full
age but need not to be shareholders.
3.3 Annual Meeting. After each annual meeting of shareholders, the
Board of Directors shall hold its annual meeting at the same place as and
immediately following such annual meeting of shareholders for the purpose of the
election of officers and the transaction of such other business as may come
before the meeting; and, if a majority of the directors be present at such place
and time, no prior notice of such meeting shall be required to be given to the
directors. The place and time of such meeting may also be fixed by written
consent of the directors.
3.4 Regular Meetings. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall be determined from
time to time by the Board of Directors. Such meetings may be held by telephone
conference.
3.5 Special Meetings. Special meetings of the Board of Directors may be
called by the Chairman of the Board, if there be one, or the President or any
director. The person or persons
3
<PAGE>
authorized to call special meetings of the Board of Directors may fix the place
for holding any special meetings of the Board of Directors called by them. Such
meetings may be held by telephone conference.
3.6 Notice. Notice of any special meeting shall be given at least two
(2) days prior thereto by written notice delivered personally or mailed to each
director at his business address, or by telegram. If mailed, such notice shall
be deemed to be delivered when deposited in United States mail so addressed with
postage thereon prepaid. If notice be given by telegram, such notice shall be
deemed to be delivered when the telegram is delivered to the telegraph company.
Any director may waive notice of any meeting, either before, at or after such
meeting. The attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting has not been lawfully called or convened.
3.7 Quorum. A majority of the directors shall constitute a quorum, but
a smaller number may adjourn from time to time, without further notice, until a
quorum is secured.
3.8 Manner of Acting. The act of the majority of the directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors.
3.9 Vacancies. Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the Board of Directors, unless otherwise provided by the
Articles of Incorporation, or by law. A director elected to fill a vacancy shall
be elected for the unexpired term of his predecessor in office. Any directorship
to be filled by reason of an increase in the number of directors shall be filled
by election at an annual meeting or a special meeting of the shareholders called
for that purpose.
3.10 Compensation. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors, or a stated salary as directors. No payment
shall preclude any director from serving the corporation in any other capacity
and receiving compensation therefor.
3.11 Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the secretary
of the meeting before the adjournment thereof, or shall forward such dissent by
registered or certified mail, return receipt requested, to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
3.12 Informal Action by Board. Any action required or permitted to be
taken by any provisions of law, of the Articles of Incorporation or of these
bylaws at any meeting of the Board
4
<PAGE>
of Directors or of any committee thereof may be taken without a meeting if a
written consent thereto is signed by all members of the Board or of such
committee, as the case may be.
3.13 Removal. Any director may be removed by the share-holders at any
general or special meeting of the shareholders whenever, in the judgment of the
shareholders, the best interests of the Corporation will be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person removed. This bylaw shall not be subject to change by the Board of
Directors.
ARTICLE IV
Officers
4.1 Number and Qualifications. The officers of the corporation shall be
a Chief Executive Officer, a President, a Secretary and a Treasurer, each of
whom shall be elected by the Board of Directors. The Board of Directors may also
elect a Chairman of the Board, one or more Vice Presidents, one or more
Assistant Secretaries and Assistant Treasurers and such other officers as the
Board of Directors shall deem appropriate. Two or more offices may be held by
the same person.
4.2 Election and Term of Office. The officers of the corporation shall
be elected annually by the Board of Directors at its first meeting after each
annual meeting of shareholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as conveniently may
be. Each officer shall hold office until his successor shall have been duly
elected and shall have qualified, or until his death, or until he shall resign
or shall have been removed in the manner hereinafter provided.
4.3 Removal. Any officer elected or appointed by the Board of Directors
may be removed by the Board of Directors whenever in its judgment the best
interests of the corporation will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
4.4 Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by the Board of Directors
for the unexpired portion of the term.
4.5 Duties of Officers. The Chairman of the Board of Directors of the
Corporation, or the Chief Executive Officer, if there shall not be a Chairman of
the Board, shall preside at all meetings of the Board of Directors and of the
shareholders which he shall attend. The Chief Executive Officer shall be the
chief executive officer of the Corporation. Subject to the foregoing, the
officers of the Corporation shall have such powers and duties as usually pertain
to their respective offices and such additional powers and duties specifically
conferred by law, by the Articles of Incorporation, by these bylaws, or as may
be assigned to them from time to time by the Board of Directors.
5
<PAGE>
4.6 Salaries. The salaries of the officers shall be fixed from time to
time by the Board of Directors and no officer shall be prevented from receiving
such salary by reason of the fact that he is also a director of the corporation.
4.7 Delegation of Duties. In the absence of, or disability of, any
officer of the Corporation or for any other reason deemed sufficient by the
Board of Directors, the Board may delegate his powers or duties to any other
officer or to any other director for the time being.
ARTICLE V
Executive and Other Committees
5.1 Creation of Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate an Executive Committee and
one or more other committees, each to consist of two (2) or more of the
directors of the Corporation.
5.2 Executive Committee. The Executive Committee, if there shall be
one, shall consult with and advise the officers of the Corporation in the
management of its business and shall have and may exercise to the extent
provided in the resolution of the Board of Directors creating such Executive
Committee such powers of the Board of Directors as can be lawfully delegated by
the Board.
5.3 Other Committees. Such other committees shall have such functions
and may exercise the powers of the Board of Directors as can be lawfully
delegated and to the extent provided in the resolution or resolutions creating
such committee or committees.
5.4 Meetings of Committees. Regular meetings of the Executive Committee
and other committees may be held without notice at such time and at such place
as shall from time to time be determined by the Executive Committee or such
other committees, and special meetings of the Executive Committee or such other
committees may be called by any member thereof upon two (2) days notice to each
of the other members of such committee, or on such shorter notice as may be
agreed to in writing by each of the other members of such committee, given
either personally or in the manner provided in Section 6 of Article III of these
bylaws (pertaining to notice for directors' meetings).
5.5 Vacancies on Committees. Vacancies on the Executive Committee or on
such other committees shall be filled by the Board of Directors then in office
at any regular or special meeting.
5.6 Quorum of Committees. At all meetings of the Executive Committee or
such other committees, a majority of the committee's members then in office
shall constitute a quorum for the transaction of business.
6
<PAGE>
5.7 Manner of Acting of Committees. The acts of a majority of the
members of the Executive Committee or such other committees, present at any
meeting at which there is a quorum, shall be the act of such committee.
5.8 Minutes of Committees. The Executive Committee, if there shall be
one, and such other committees shall keep regular minutes of their proceedings
and report the same to the Board of Directors when required.
5.9 Compensation. Members of the Executive Committee and such other
committees may be paid compensation in accordance with the provisions of Section
10 of Article III (pertaining to compensation of directors).
ARTICLE VI
Indemnification of Directors and Officers
(a) The corporation shall indemnify any director or officer who is made
a party to 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 another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and 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 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, of
itself, create a presumption that the person did not act in good faith and in a
manner which 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 reasonable cause to believe that his conduct was unlawful.
(b) The Corporation shall indemnify any director or officer who was or
is a party to or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor 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 another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the Corporation unless and only to
7
<PAGE>
the extent that the appropriate Florida court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the
appropriate Florida court shall deem proper.
(c) Any indemnification under Section is (a) and (b) of this Article VI
(unless ordered by a Court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director
or officer is proper under the circumstances because he has met the applicable
standard of conduct set forth in said Sections 6.1 and 6.2. Such determination
shall be made: (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) if such a quorum is not obtainable, or, even if obtainable and a quorum
of disinterested directors so directs, by independent legal counsel (compensated
by the Corporation) in a written opinion; or (3) by the shareholders.
(d) Expenses incurred in defending a civil or criminal action, suit or
proceeding shall be paid by the Corporation from time to time as incurred rather
than only after the final disposition of such action, suit or proceeding.
Payment of 3uch expenses shall be authorized by the Board of Directors in each
specific case only after receipt by the Corporation of an undertaking by or on
behalf of the director or officer to repay such amounts if it shall later
develop that he is not entitled to be indemnified by the Corporation.
(e) The indemnification provided by this Article VI shall not be deemed
exclusive of any other rights to which the Corporation's directors, officers,
employees or agents may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to actions in
their official capacities and as to actions in any other capacity while holding
such offices or positions, and shall continue as to a person who has ceased to
be a director or officer and shall inure to the benefit of the heirs, executors
and administrators of such a person.
(f) Upon authorization by the Board of Directors, the Corporation may
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 any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under the
provisions of this Article VI.
ARTICLE VII
Certificates of Stock
7.1 Certificates for Shares. Every holder of stock in the Corporation
shall be entitled to have a certificate, signed by the Chief Executive Officer,
the President or a Vice President and the Treasurer or an Assistant Treasurer,
or the Secretary or an Assistant Secretary, and sealed
8
<PAGE>
with the seal of the Corporation, exhibiting the holder's name and certifying
the number of shares owned by him in the Corporation. The certificates shall be
numbered and entered in the books of the Corporation as they are issued.
7.2 Transfer of Shares. Transfers of shares of the Corporation shall be
made upon its books by the holder of the shares in person or by his lawfully
constituted representative, upon surrender of the certificate of stock for
cancellation. The person in whose name shares stand on the books of the
Corporation shall be deemed by the Corporation to be the owner thereof for all
purposes and the corporation shall not be bound to recognize any equitable or
other claim to or interest in such share on the part of any other person whether
or not it shall have express or other notice thereof, save as expressly provided
by the laws of the State of Florida.
7.3 Facsimile Signature. Where a certificate is signed (1) by a
transfer agent or an assistant transfer agent or (2) by a transfer clerk acting
on behalf of the Corporation and a registrar, the signature of the Chairman of
the Board, Chief Executive Officer, President, Vice President, Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary may be a facsimile. In
case any officer or officers who have signed, or whose facsimile signature or
signatures have been used on any such certificate or certificates shall cease to
be such officer or officers of the Corporation, such certificate or certificates
may nevertheless be adopted by the Corporation and be issued and delivered as
though the person or persons who signed such certificate or certificates or
whose facsimile signature or signatures have been used thereon had not ceased to
be such officer or officers of the Corporation.
7.4 Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue of
a new certificate or certificates, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been lost or destroyed.
ARTICLE VIII
Record Date
The Board of Directors is authorized, from time to time, to fix in
advance a date, not more than sixty (60) days nor less than ten (10) days
before the date of any meeting of shareholders, or not more than sixty (60) days
prior to the date for the payment of any dividend or the date for the allotment
of rights, or the date when any change or conversion or exchange of stock shall
go into effect, or a date in connection with the obtaining of the consent of
shareholders for any purpose, as a record date for the determination of the
shareholders entitled
9
<PAGE>
to notice of and to vote at any such meeting and any adjournment thereof, or
entitled to receive payment of any such dividend, or to any such allotment, or
to exercise the rights in respect of any such change, conversion or exchange of
stock; or, to give such shareholders as shall be shareholders of record on the
date so fixed and shall be entitled to such notice of, and to vote at such
meeting and any adjournment thereof, or to receive payment of such dividend, or
to receive such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as aforesaid.
ARTICLE IX
Dividends
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares of capital stock in the
manner and upon the terms and conditions provided by the Articles of
Incorporation and by law. Dividends may be paid in cash, in property, or in
shares of stock, subject to the provisions of the Articles of Incorporation and
by law.
ARTICLE X
Fiscal Year
The fiscal year of the Corporation shall be the twelve-month period
selected by the Board of Directors as the taxable year of the Corporation for
federal income tax purposes.
ARTICLE XI
Seal
The corporate seal shall bear the words "TRIMFAST, INC.", which shall
be between two concentric circles and in the inside of the inner circle shall be
"Corporate Seal, 1998." An impression of said seal appears on the margin hereof.
ARTICLE XII
Stock in Other Corporations
Shares of stock in other corporations held by this Corporation shall be
voted by such officer or officers of this Corporation as the Board of Directors
shall from time to time designate for the purpose or by a proxy thereunto duly
authorized by said Board.
10
<PAGE>
ARTICLE XIII
Amendments
These Bylaws may be altered, amended or repealed and new bylaws may be
adopted by the Board of Directors; provided that any bylaw or amendment thereto
as adopted by the Board of Directors may be altered, amended or repealed by vote
of the shareholders entitled to vote thereon, or a new bylaw in lieu thereof may
be adopted by the shareholders. No bylaw which has been altered, amended or
adopted by such a vote of the shareholders may be altered, amended or repealed
by a vote of the directors until two (2) years shall have expired since such
action by vote of such shareholders.
11
ARTICLES OF INCORPORATION
OF
BODY LIFE SCIENCES, INC.
The undersigned incorporator hereby forms a corporation under Chapter
607 of the laws of the State of Florida.
ARTICLE I
---------
NAME
----
The name of the corporation shall be
BODY LIFE SCIENCES, INC.
The address of the principal office of this corporation shall be:
777 S. Harbour Island Blvd. Suite 260
Tampa, Florida 33602
ARTICLE II
----------
NATURE OF BUSINESS
------------------
This corporation may engage of transact any or all lawful activities or
business permitted under the laws of the United States, the State of Florida or
any other state, country, territory or nation.
ARTICLE III
-----------
CAPITAL STOCK
-------------
The maximum number of shares of stock that this corporation is
authorized to have outstanding at any one time is 10,000 shares of common stock,
$.01 par value per share.
1
<PAGE>
ARTICLE IV
----------
INITIAL BOARD OF DIRECTORS
--------------------------
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time as provided in
the by laws but shall never be less than one. The name of the initial director
of this corporation is:
MICHAEL MUZIO
ARTICLE V
---------
REGISTERED AGENT
----------------
The name and street address of the initial registered agent of the
corporation shall be:
Jeffrey G. Klein
23123 STATE ROAD SEVEN
Suite 350-B
BOCA RATON, FLORIDA 33428
ARTICLE VI
----------
TERM OF EXISTENCE
-----------------
This corporation is to exist perpetually.
2
<PAGE>
ARTICLE VII
-----------
INCORPORATOR
------------
The name and address of the incorporator to these Articles of
Incorporation is:
JEFFREY G. KLEIN, ESQUIRE
SUITE 350-B
23123 STATE ROAD SEVEN
BOCA RATON, FLORIDA 33428
ARTICLE VIII
------------
ELECTIONS
---------
The Corporation expressely elects not to be governed by the provisions
of Section 607.0901 and 607.0902 of the Florida Business Corporation Act.
IN WITNESS WHEREOF, I have made and subscribed these Articles of
Incorporation this 28th day of August, 1998.
/s/ Jeffrey G. Klein
---------------------------------
JEFFREY G. KLEIN, INCORPORATOR
3
<PAGE>
ACCEPTANCE OF REGISTERED AGENT DESIGNATED
-----------------------------------------
JEFFREY G. KLEIN, having a business office identical with the
registered office of the corporation named above, and having been designated as
the Registered Agent in the above Articles of Incorporation is familiar with and
accepts the obligation of the position of Registered agent under Section
607.0505 Florida Statutes.
/s/ Jeffrey G. Klein
----------------------------------
JEFFREY G. KLEIN, REGISTERED AGENT
4
ARTICLES OF INCORPORATION
OF
NUTRITION CAFE, INC.
The undersigned incorporator hereby forms a corporation under Chapter
607 of the laws of the State of Florida.
ARTICLE I
---------
NAME
----
The name of the corporation shall be
NUTRITION CAFE, INC.
The address of the principal office of this corporation shall be:
777 South Harbor Island Blvd.
Suite 260
Tampa, Florida 33620
ARTICLE II
----------
NATURE OF BUSINESS
------------------
This corporation may engage or transact any or all lawful activities or
business permitted under the laws of the United States, the State of Florida or
any other state, country, territory or nation.
ARTICLE III
-----------
CAPITAL STOCK
-------------
The maximum number of shares of stock that this corporation is
authorized to have outstanding at any one time is 10,000 shares of common stock,
$.01 par value per share.
1
<PAGE>
ARTICLE IV
----------
INITIAL BOARD OF DIRECTORS
--------------------------
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time as provided in
the bylaws but shall never be less than one. The name and address of the initial
director of this corporation is:
MICHAEL MUZIO
777 South Harbour Island Blvd.
Suite 260
Tampa, FL 33620
ARTICLE V
---------
REGISTERED AGENT
----------------
The name and street address of the initial registered agent of the
corporation shall be:
Jeffrey G. Klein
23123 STATE ROAD SEVEN
Suite 350-B
BOCA RATON, FLORIDA 33428
2
<PAGE>
ARTICLE VI
----------
TERM OF EXISTENCE
-----------------
This corporation is to exist perpetually.
ARTICLE VII
-----------
INCORPORATOR
------------
The name and address of the incorporator to these Articles of
Incorporator is:
JEFFREY G. KLEIN, ESQUIRE
SUITE 350-B
23123 STATE ROAD SEVEN
BOCA RATON, FLORIDA 33428
ARTICLE VIII
------------
ELECTIONS
---------
The Corporation expressly elects not to be governed by the provisions
of Section 607.0901 and 607.0902 of the Florida Business Corporation Act.
IN WITNESS WHEREOF, I have made and subscribed these Articles of
Incorporation this 14th day of April 1999.
/s/ Jeffrey G. Klein
---------------------------------
JEFFREY G. KLEIN, INCORPORATOR
3
<PAGE>
ACCEPTANCE OF REGISTERED AGENT DESIGNATED
-----------------------------------------
JEFFREY G. KLEIN, having a business office identical with the
registered office of the corporation named above, and having been designated as
the Registered Agent in the above Articles of Incorporation is familiar with and
accepts the obligation of the position of Registered agent under Section
607.0505 Florida Statutes.
/s/ Jeffrey G. Klein
----------------------------------
JEFFREY G. KLEIN, REGISTERED AGENT
4
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AN 0312711997
971200605 - 2733902
CERTIFICATE OF INCORPORATION
OF
IMMMU INC.
------------------------
FIRST. The name of this corporation shall be:
IMMMU INC.
SECOND. Its registered office in the State of Delaware is to be located
at 1013 Centre Road, in the City of Wilmington, County of New Castle and its
registered agent at such address is CORPORATION SERVICE COMPANY.
THIRD. The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which this corporation is
authorized to issue is:
One Thousand Five Hundred (1,500) shares without par value of which One Thousand
(1,000) shares are Common Stock and Five Hundred (500) shares are Preferred
Stock.
FIFTH. The name and address of the incorporator is as follows:
Dolores Cleaver
Corporation Service Company
1013 Centre Road
Wilmington, DE 19805
SIXTH. The Board of Directors shall have the power to adopt, amend or
repeal the by-laws.
<PAGE>
SEVENTH. No director shall be personally liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law, (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional Misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article Seventh
shall apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.
IN WITNESS WHEREOF, the undersigned, being the incorporator
hereinbefore named, has executed, signed and acknowledged this certificate of
incorporation this twenty-seventh day of March, A.D., 1997.
/s/ Delores Cleaver
-------------------
Dolores Cleaver
Incorporator
<PAGE>
BY-LAWS
OF
IMMMU, Inc.
-----------------------
ARTICLE I
OFFICES
1.1 Registered Office: The registered office shall be established and
maintained at and shall be the registered agent of the Corporation in charge
hereof.
1.2 Other Offices: The corporation may have other offices, either
within or without the State of Delaware, at such place or places as the Board of
Directors may from time to time appoint or the business of the corporation may
require, provided, however, that the corporation's books and records shall be
maintained at such place within the continental United States as the Board of
Directors shall from time to time designate.
ARTICLE 11
STOCKHOLDERS
2.1 Place of Stockholders' Meetings: All meetings of the stockholders
of the corporation shall be held at such place or places, within or outside the
State of Delaware as may be fixed by the Board of Directors from time to time or
as shall be specified in the respective notices thereof.
2.2 Date and Hour of Annual Meetings of Stockholders: An annual meeting
of stockholders shall be held each year within five months after the close of
the fiscal year of the Corporation.
2.3 Purpose of Annual Meetings: At each annual meeting, the
stockholders shall elect the members of the Board of Directors for the
succeeding year. At any such annual meeting any further proper business may be
transacted.
2.4 Special Meetings of Stockholders: Special meetings of the
stockholders or of any class or series thereof entitled to vote may be called by
the President or by the Chairman of the Board of Directors, or at the request in
writing by stockholders of record owning at least fifty (50%) percent of the
issued and outstanding voting shares of common stock of the corporation.
By -Laws - 1
<PAGE>
2.5 Notice of Meetings of Stockholders: Except as otherwise expressly
required or permitted by law, not less than ten days nor more than sixty days
before the date of every stockholders' meeting the Secretary shall give to each
stockholder of record entitled to vote at such meeting, written notice, served
personally by mail or by telegram, stating the place, date and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called. Such notice, if mailed shall be deemed to be given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address for notices to such stockholder as it appears on the
records of the corporation.
2.6 Quorum of Stockholders: (a) Unless otherwise provided by the
Certificate of Incorporation or by law, at any meeting of the stockholders, the
presence in person or by proxy of stockholders entitled to cast a majority of
the votes thereat shall constitute, a quorum. The withdrawal of any shareholder
after the commencement of a meeting shall have no effect on the existence of a
quorum, after a quorum has been established at such meeting.
(b) At any meeting of the stockholders at which a quorum shall
be present, a majority of voting stockholders, present in person or by proxy,
may adjourn the meeting from time to time without notice other than announcement
at the meeting. In the absence of a quorum, the officer presiding thereat shall
have power to adjourn the meeting from time to time until a quorum shall be
present. Notice of any adjourned meeting, other than announcement at the
meeting, shall not be required to be given except as provided in paragraph (d)
below and except where expressly required by law.
(c) At any adjourned session at which a quorum shall be
present, any business may be transacted which might have been transacted at the
meeting originally called but only those stockholders entitled to vote at the
meeting as originally noticed shall be entitled to vote at any adjournment or
adjournments thereof, unless a new record date is fixed by the Board
of directors.
(d) If an adjournment is for more than thirty 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 stockholder of record
entitled to vote at the meeting.
2.7 Chairman and Secretary of Meeting: The President, shall preside at
meetings of the stockholders. The Secretary shall act as secretary of the
meeting or if he is not present, then the presiding officer may appoint a person
to act as secretary of the meeting.
2.8 Voting by Stockholders: Except as may be otherwise provided by the
Certificate of Incorporation or these by-laws, at every meeting of the
stockholders each stockholder shall be entitled to one vote for each share of
voting stock standing in his name on the books of the corporation on the record
date for the meeting. Except as otherwise provided by these by-laws, all
elections and questions shall be decided by the vote of a majority in interest
of the stockholders present in person or represented by proxy and entitled to
vote at the meeting.
By - Laws - 2
<PAGE>
2.9 Proxies: Any stockholder entitled to vote at any meeting of
stockholders may vote either in person or by proxy. Every proxy shall be in
writing, subscribed by the stockholder or his duly authorized attorney-in-fact,
but need not be dated, sealed, witnessed or acknowledged.
2.10 Inspectors: The election of directors and any other vote by ballot
at any meeting of the stockholders shall be supervised by at least two
inspectors. Such inspectors may be appointed by the presiding officer before or
at the meeting; or if one or both inspectors so appointed shall refuse to serve
or shall not be present, such appointment shall be made by the officer presiding
at the meeting.
2.11 List of Stockholders: (a) At least ten days before every meeting
of stockholders, the Secretary shall prepare and make a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder.
(b) During ordinary business hours, for a period of at least
ten days prior to the meeting, such list shall be open to examination by any
stockholder for any purpose germane 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.
(c) The list shall also be produced and kept at the time and
place of the meeting during the whole time of the meeting, and it may be
inspected by any stockholder who is present.
(d) The stock ledger shall be the only evidence as to who are
the stockholders entitled to examine the stock ledger, the list required by this
Section 2.11 or the books of the corporation, or to vote in person or by proxy
at any meeting of stockholders.
2.12 Procedure at Stockholders' Meetings: Except as otherwise provided
by these by-laws or any resolutions adopted by the stockholders or Board of
Directors, the order of business and all other matters of procedure at every
meeting of stockholders shall be determined by the presiding officer.
2.13 Action By Consent Without Meeting: Unless otherwise provided by
the Certificate of Incorporation, any action required to be taken at any annual
or special meeting of stockholders, or any action which may be taken at any
annual or special meeting, 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 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. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
By - Laws - 3
<PAGE>
ARTICLE III
DIRECTORS
3.1 Powers of Directors: The property, business and affairs of the
corporation shall be managed by its Board of Directors which may exercise all
the powers of the corporation except such as are by the law of the State of
Delaware or the Certificate of Incorporation or these by-laws required to be
exercised or done by the stockholders.
3.2 Number, Method of Election, Terms of Office of Directors: The
number of directors which shall constitute the Board of Directors shall be )
unless and until otherwise determined by a vote of a majority of the entire
Board of Directors. Each Director shall hold office until the next annual
meeting of stockholders and until his successor is elected and qualified,
provided, however, that a director may resign at any time. Directors need not be
stockholders.
3.3 Vacancies on Board of Directors; Removal: (a) Any director may
resign his office at any time by delivering his resignation in writing to the
Chairman of the Board or to the President. It will take effect at the time
specified therein or, if no time is specified, it will be effective at the time
of its receipt by the corporation. The acceptance of a resignation shall not be
necessary to make it effective, unless expressly so provided in the resignation.
(b) Any vacancy in the authorized number of directors may be
filled by majority vote of the stockholders and any director so chosen shall
hold office until the next annual election of directors by the stockholders and
until his successor is duly elected and qualified or until his earlier
resignation or removal.
(c) Any director may be removed with or without cause at any
time by the majority vote of the stockholders given at a special meeting of the
stockholders called for that purpose.
3.4 Meetings of the Board of Directors: (a) The Board of Directors may
hold their meetings, both regular and special, either within or outside the
State of Delaware.
(b) Regular meetings of the Board of Directors may be held at
such time and place as shall from time to time be determined by resolution of
the Board of Directors. No notice of such regular meetings shall be required. If
the date designated for any regular meeting be a legal holiday, then the meeting
shall be held on the next day which is not a legal holiday.
(c) The first meeting of each newly elected Board of Directors
shall be held immediately following the annual meeting of the stockholders for
the election of officers and the transaction of such other business as may come
before it. If such meeting is held at the place of the stockholders' meeting, no
notice thereof shall be required.
By - Laws - 4
<PAGE>
(d) Special meetings of the Board of Directors shall be held
whenever called by direction of the Chairman of the Board or the President or at
the written request of any one director.
(e) The Secretary shall give notice to each director of any
special meeting of the Board of Directors by mailing the same at least three
days before the meeting or by telegraphing, telexing, or delivering the same not
later than the date before the meeting.
Unless required by law, such notice need not include a
statement of the business to be transacted at, or the purpose of, any such
meeting. Any and all business may be transacted at any meeting of the Board of
Directors. No notice of any adjourned meeting need be given. No notice to or
waiver by any director shall be required with respect to any meeting At which
the director is present.
3.5 Quorum and Action: Unless provided otherwise by law or by the
Certificate of Incorporation or these by-laws, a majority of the Directors shall
constitute a quorum for the transaction of business; but if there shall be less
than a quorum at any meeting of the Board, a majority of those present may
adjourn the meeting from time to time. The vote of a majority of the Directors
present at any meeting at which a quorum is present shall be necessary to
constitute the act of the Board of Directors.
3.6 Presiding Officer and Secretary of the Meeting: The President, or,
in his absence a member of the Board of Directors selected by the members
present, shall preside at meetings of the Board. The Secretary shall act as
secretary of the meeting, but in his absence the presiding officer may appoint a
secretary of the meeting.
3.7 Action by Consent Without Meeting: Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes or proceedings of the Board or committee.
3.8 Action by Telephonic Conference: Members of the Board of Directors,
or any committee designated by such board, may participate in a meeting of such
board or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such a meeting shall constitute presence in
person at such meeting.
3.9 Committees: The Board of Directors shall, by resolution or
resolutions passed by a majority of Directors designate one or more committees,
each of such committees to consist of one or more Directors of the Corporation,
for such purposes as the Board shall determine. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of such committee.
By - Laws - 5
<PAGE>
3.10 Compensation of Directors: Directors shall receive such reasonable
compensation for their service on the Board of Directors or any committees
thereof, whether in the form of salary or a fixed fee for attendance at
meetings, or both, with expenses, if any, as the Board of Directors may from
time to time determine. Nothing herein contained shall be construed to preclude
any Director from serving in any other capacity and receiving compensation
therefor.
ARTICLE IV
OFFICERS
4.1 Officers, Title, Elections, Terms: (a) The elected officers of the
corporation shall be a President, a Treasurer and a Secretary, and such other
officers as the Board of Directors shall deem advisable. The officers shall be
elected by the Board of Directors at its annual meeting following the annual
meeting of the stockholders, to serve at the pleasure of the Board or otherwise
as shall be specified by the Board at the time of such election and until their
successors are elected and qualified.
(b) The Board of Directors may elect or appoint at any time,
and from time to time, additional officers or agents with such duties as it may
deem necessary or desirable. Such additional officers shall serve at the
pleasure of the Board or otherwise as shall be specified by the Board at the
time of such election or appointment. Two or more offices may be held by the
same person.
(c) Any vacancy in any office may be filled for the unexpired
portion of the term by the Board of Directors.
(d) Any officer may resign his office at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein or, if no time has been specified, at the time of its receipt by the
corporation. The acceptance of a resignation shall not be necessary to make it
effective, unless expressly so provided in the resignation.
(e) The salaries of all officers of the corporation shall be
fixed by the Board of Directors.
4.2 Removal of Elected Officers: Any elected officer may be removed at
any time, either with or without cause, by resolution adopted at any regular or
special meeting of the Board of Directors by a majority of the Directors then in
office.
4.3 Duties: (a) President: The President shall be the principal
executive officer of the corporation and, subject to the control of the Board of
Directors, shall supervise and control all the business and affairs of the
corporation. He shall, when present, preside at all meetings of the stockholders
and of the Board of Directors. He shall see that all orders and resolutions of
the Board of Directors are carried into effect (unless any such order or
resolution shall provide otherwise), and in general shall perform all duties
incident to the office
By - Laws - 6
<PAGE>
of president and such other duties as may be prescribed by the Board of
Directors from time to time.
(b) Treasurer: The Treasurer shall (1) have charge and custody
of and be responsible for all funds and securities of the Corporation; (2)
receive and give receipts for moneys due and payable to the corporation from any
source whatsoever; (3) deposit all such moneys in the name of the corporation in
such banks, trust companies, or other depositories as shall be selected by
resolution of the Board of Directors; and (4) in general perform all duties
incident to the office of treasurer and such other duties as from time to time
may be assigned to him by the President or by the Board of Directors. He shall,
if required by the Board of Directors, 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.
(c) Secretary: The Secretary shall (1) keep the minutes of the
meetings of the stockholders, the Board of Directors, and all committees, if
any, of which a secretary shall not have been appointed, in one or more books
provided for that purpose; (2) see that all notices are duly given in accordance
with the provisions of these by-laws and as required by law; (3) 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; (4) keep a register of
the post office address of each stockholder which shall be furnished to the
Secretary by such stockholder; (5) have general charge of stock transfer books
of the Corporation; and (6) 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 President or by the Board of Directors.
ARTICLE V
CAPITAL STOCK
5.1 Stock Certificates: (a) Every holder of stock in the corporation
shall be entitled to have a certificate signed by, or in the name of, the
corporation by the President and by the Treasurer or the Secretary, certifying
the number of shares owned by him.
(b) If such certificate is countersigned by a transfer agent
other than the corporation or its employee, or by a registrar other than the
corporation or its employee, the signatures of the officers of the corporation
may be facsimiles, and, if permitted by law, any other signature may be a
facsimile.
(c) In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the corporation
with the same effect as if he were such officer at the date of issue.
By - Laws - 7
<PAGE>
(d) Certificates of stock shall be issued in such form not
inconsistent with the Certificate of Incorporation as shall be approved by the
Board of Directors, and shall be numbered and registered in the order in which
they were issued.
(e) All certificates surrendered to the corporation shall be
canceled with the date of cancellation, and shall be retained by the Secretary,
together with the powers of attorney to transfer and the assignments of the
shares represented by such certificates, for such period of time as shall be
prescribed from time to time by resolution of the Board of Directors.
5.2 Record Ownership. A record of the name and address of the holder of
such certificate, the number of shares represented thereby and the date of issue
thereof shall be made on the corporation's books. The corporation shall be
entitled to treat the holder of any share of stock as the holder in fact
thereof, and accordingly shall not be bound to recognize any equitable or other
claim to or interest in any share on the part of any other person, whether or
not it shall have express or other notice thereof, except as required by law.
5.3 Transfer of Record Ownership: Transfers of stock shall be made on
the books of the corporation only by direction of the person named in the
certificate or his attorney, lawfully constituted in writing, and only upon the
surrender of the certificate therefor and a written assignment of the shares
evidenced thereby. Whenever any transfer of stock shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer if, when the certificates are presented to the corporation for
transfer, both the transferor and the transferee request the corporation to do
so.
5.4 Lost, Stolen or Destroyed Certificates: Certificates representing
shares of the stock of the corporation shall be issued in place of any
certificate alleged to have been lost, stolen or destroyed in such manner and on
such terms and conditions as the Board of Directors from time to time may
authorize.
5.5 Transfer Agent; Registrar; Rules Respecting Certificates: The
corporation may maintain one or more transfer offices or agencies where stock of
the corporation shall be transferable. The corporation may also maintain one or
more registry offices where such stock shall be registered. The Board of
Directors may make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of stock certificates.
5.6 Fixing Record Date for Determination of Stockholders of Record: The
Board of Directors may fix, in advance, a date as the record date for the
purpose of determining stockholders entitled to notice of, or to vote at, any
meeting of the stockholders- or any adjournment thereof, or the stockholders
entitled to receive payment of any dividend or other distribution or the
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or to express consent to corporate
action in writing without a meeting, or in order to make a determination of the
stockholders for the purpose of any other lawful action. Such record date in any
case shall be not more than sixty days nor less than ten days before the date of
a meeting of the stockholders, nor more than sixty days prior to any other
action requiring such determination of the stockholders. A determination of
stockholders of record entitled to notice or to vote at a meeting of
stockholders shall apply to any adjournment
By - Laws - 8
<PAGE>
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
5.7 Dividends: Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the Board of Directors from time to time in
their discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board of Directors shall deem conducive to the interests of the corporation.
ARTICLE VI
SECURITIES HELD BY THE CORPORATION
6.1 Voting: Unless the Board of Directors shall otherwise order, the
President, the Secretary or the Treasurer shall have full power and authority,
on behalf of the corporation, to attend, act and vote at any meeting of the
stockholders of any corporation in which the corporation may hold stock, and at
such meeting to exercise any or all rights and powers incident to the ownership
of such stock, and to execute on behalf of the corporation a proxy or proxies
empowering another or others to act as aforesaid. The Board of Directors from
time to time may confer like powers upon any other person or persons.
6.2 General Authorization to Transfer Securities Held by the
Corporation
(a) Any of the following officers, to wit: the President and
the Treasurer shall be, and they hereby are, authorized and empowered to
transfer, convert, endorse, sell, assign, set over and deliver any and all
shares of stock, bonds, debentures, notes.. subscription warrants, stock
purchase warrants, evidence of indebtedness, or other securities now or
hereafter standing in the name of or owned by the corporation, and to make,
execute and deliver, under the seal of the corporation, any and all written
instruments of assignment and transfer necessary or proper to effectuate the
authority hereby conferred.
(b) Whenever there shall be annexed to any instrument of
assignment and transfer executed pursuant to and in accordance with the
foregoing paragraph (a), a certificate of the Secretary of the corporation in
office at the date of such certificate setting forth the provisions of this
Section 6.2 and stating that they are in full force and effect and setting forth
the names of persons who are then officers of the corporation, then all persons
to whom such instrument and annexed certificate shall thereafter come, shall be
entitled, without further inquiry or investigation and regardless of the date of
such certificate, to assume and to act in reliance upon the assumption that the
shares of stock or other securities named in such instrument were theretofore
duly and properly transferred, endorsed, sold, assigned, set over and delivered
by the corporation, and that with respect to such securities the authority of
these provisions of the by-laws and of such officers is still in full force and
effect.
By - Laws - 9
<PAGE>
ARTICLE VII
MISCELLANEOUS
7.1 Signatories: All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
7.2 Seal: The seal of the corporation shall be in such form and shall
have such content as the Board of Directors shall from time to time determine.
7.3 Notice and Waiver of Notice: Whenever any notice of the time, place
or purpose of any meeting of the stockholders, directors or a committee is
required to be given under the law of the State of Delaware, the Certificate of
Incorporation or these by-laws, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the holding
thereof, or actual attendance at the meeting in person or, in the case of any
stockholder, by his attorney-in-fact, shall be deemed equivalent to the giving
of such notice to such persons.
7.4 Indemnity: The corporation shall indemnify its directors, officers
and employees to the fullest extent allowed by law, provided, however, that it
shall be within the discretion of the Board of Directors whether to advance any
funds in advance of disposition of any action, suit or proceeding, and provided
further that nothing in this section 7.4 shall be deemed to obviate the
necessity of the Board of Directors to make any determination that
indemnification of the director, officer or employee is proper under the
circumstances because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of Section 145 of the Delaware General Corporation Law.
7.5 Fiscal Year: Except as from time to time otherwise determined by
the Board of Directors, the fiscal year of the corporation shall end on
By - Laws - 10
CERTIFICATE OF INCORPORATION
IMMCEL PHARMACEUTICALS, INC.
Under Section 402 of the Business Corporation Law.
The undersigned, for the purpose of forming a corporation pursuant to
Section 402 of the Business Corporation Law of the State of New York, does
hereby certify and set forth:
FIRST: The name of the corporation is IMMCEL PHARMACEUTICALS, INC.
SECOND: The purposes for which the corporation is formed are:
To engage in any lawful act or activity for which corporations may be
organized under the business corporation law, provided that the corporation is
not formed to engage in any act or activity which requires the act or approval
of any state official, department, board, agency or other body without such
approval or consent first being obtained.
To manufacture, buy, sell, distribute, job, to be a franchise dealer
licensee, import, export and otherwise deal in pharmaceuticals of every kind and
description, and other related and unrelated products at wholesale and at retail
and as principal and agent.
To carry on a general mercantile, industrial, investing and trading
business in all its branches; to devise, invent, manufacture, fabricate,
assemble, install, service, maintain, alter, buy, sell, import, export, license
as licensor or licensee, lease as lessor or lessee, distribute, job, enter into,
negotiate, execute, acquire, and assign contracts in respect of, acquire,
receive, grant, and assign licensing arrangements, options, franchises, and
other rights in respect of, and generally deal in and with, at wholesale and
retail, as principal, and as sales, business, special, or general agent,
representative, broker, factor, merchant, distributor, jobber, advisor, or in
any other lawful capacity, goods, wares, merchandise, commodities, and
unimproved, improved, finished, processed and other real, personal and mixed
property of any and all kinds, together with the components, resultants, and
by-products thereof.
To acquire by purchase, subscription, underwriting or otherwise, and to
own, hold for investment, or otherwise, and to use, sell, assign, transfer,
mortgage, pledge, exchange or otherwise dispose of real and personal property of
every sort and description and wheresoever situated, including shares of stock,
bonds, debentures, notes, scrip, securities, evidences of indebtedness,
contracts or obligations of any corporation or association, whether domestic or
foreign, or of any firm or individual or of the United States or any state,
territory or dependency of the United States or any foreign country, or any
municipality or local authority within or without the United States, and also to
issue in exchange therefor, stocks, bonds or other securities or evidences of
indebtedness of this corporation and, while the owner or holder of any such
property, to receive, collect and dispose of the interest, dividends and income
on or from such property and to possess and exercise in respect thereto all of
the rights, powers and privileges of ownership, including all voting powers
thereon.
1
<PAGE>
To construct, build, purchase, lease or otherwise acquire, equip, hold,
own, improve, develop, manage, maintain, control, operate, lease, mortgage,
create liens upon, sell, convey or otherwise dispose of and turn to account, any
and all plants, machinery, works, implements and things or property, real and
personal, of every kind and description, incidental to, connected with, or
suitable, necessary or convenient for any of the purposes enumerated herein,
including all or any part or parts of the properties, assets, business and
goodwill of any persons, firms, associations or corporations.
The powers, rights and privileges provided in this certificate are not
to be deemed to be in limitation of similar, other or additional powers, rights
and privileges granted or permitted to a corporation by the Business Corporation
Law, it being intended that this corporation shall have all rights, powers and
privileges granted or permitted to a corporation by such statute.
THIRD. The office of the corporation is to be located in the County of
Kings, State of New York.
FOURTH: The aggregate number of shares which the corporation shall have
the authority to issue is Two Hundred (200), all of which shall be without par
value.
FIFTH: The Secretary of State is designated as the agent of the
corporation upon whom process against it may be served. The post
2
<PAGE>
office address to which the Secretary of State shall mail a copy of any
process against the corporation served on him is:
1382 East 18th Street
Brooklyn, New York 11230
SIXTH: The personal liability of directors to the corporation or its
shareholders for damages for any breach of duty in such capacity is hereby
eliminated except that such personal liability shall not be eliminated if a
judgment or other final adjudication adverse to such director establishes that
his acts or omissions were in bad faith or involved intentional misconduct or a
knowing violation of law or that he personally gained in fact a financial profit
or other advantage to which he was not legally entitled or that his acts
violated Section 719 of the Business Corporation Law.
IN WITNESS WHEREOF, this certificate has been subscribed to this 13th
day of January, 1998 by the undersigned who affirms that the statements made
herein are true under the penalties of perjury.
/s/ GERALD WEINBERG
-------------------
GERALD WEINBERG
90 State Street
Albany, New York
3
<PAGE>
EMMCEL PHARMACEUTICALS, INC.
----------
BY-LAWS
----------
ARTICLE I
The Corporation
Section 1. Name. The legal name of this corporation (hereinafter called
the "Corporation") is
Section 2. Offices. The Corporation shall have its principal office in
the State of New York. The Corporation may also have offices at such other
places within and without the United States as the Board of Directors may from
time to time appoint or the business of the Corporation may require.
Section 3. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its organization and the words "Corporate
Seal, New York." One or more duplicate dies for impressing such seal may be kept
and used.
ARTICLE II
Meetings of Shareholders
Section 1. Place of Meetings. All meetings of the shareholders shall be
held at the principal office of the Corporation in the State of New York or at
such other place, within or without the State of New York, as is fixed in the
notice of the meeting.
Section 2. Annual Meeting. An annual meeting of the shareholders of the
Corporation for the election of directors and the transaction of such other
business as may properly come before the meeting shall be held on the first
Monday of _________ in each year if not a legal holiday, and if a legal holiday,
then on the next secular day following, at ten o'clock A.M., Eastern Standard
Time, or at such other time as is fixed in the notice of the meeting. If for any
reason any annual meeting shall not be held at the time herein specified, the
same may be held at any time
4
<PAGE>
thereafter upon notice, as herein provided, or the business thereof may be
transacted at any special meeting called for the purpose.
Section 3. Special Meetings. Special meetings of shareholders may be
called by the President whenever he deems it necessary or advisable. A special
meeting of the shareholders shall be called by the President whenever so
directed in writing by a majority of the entire Board of Directors or whenever
the holders of one-third (1/3) of the number of shares of the capital stock of
the Corporation entitled to vote at such meeting shall, in writing, request the
same.
Section 4. Notice of Meetings. Notice of the time and place of the
annual and of each special meeting of the shareholders shall be given to each of
the shareholders entitled to vote at such meeting by mailing the same in a
postage prepaid wrapper addressed to each such shareholder at his address as it
appears on the books of the Corporation, or by delivering the same personally to
any such shareholder in lieu of such mailing, at least ten (10) and not more
than fifty (50) days prior to each meeting. Meetings may be held without notice
if all of the shareholders entitled to vote thereat are present in person or by
proxy, or if notice thereof is waived by all such shareholders not present in
person or by proxy, before or after the meeting. Notice by mail shall be deemed
to be given when deposited, with postage thereon prepaid, in the United States
mail. If a meeting is adjourned to another time, not more than thirty (30 days
hence, or to another place, and if an announcement of the adjourned time or
place is made at the meeting, it shall not be necessary to give notice of the
adjourned meeting unless the Board of Directors, after adjournment fix a new
record date for the adjourned meeting. Notice of the annual and each special
meeting of the shareholders shall indicate that it is being issued by or at the
direction of the person or persons calling the meeting, and shall state the name
and capacity of each such person. Notice of each special meeting shall also
state the purpose or purposes for which it has been called. Neither the business
to be transacted at nor the purpose of the annual or any special meeting of the
shareholders need be specified in any written waiver of notice.
Section 5. Record Date for Shareholders. For the purpose of determining
the shareholders entitled to notice of or to vote at any meeting of shareholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividend or other distribution or the allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion,
or exchange of stock or for the
5
<PAGE>
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than fifty (50) days nor less than ten
(10) days before the date of such meeting, nor more than fifty (50) days prior
to any other action. If no record date is fixed, the record date for determining
shareholders entitled to notice of or to vote at a meeting of shareholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if no notice is given, the day on which the meeting is held-, the
record date for determining shareholders entitled to express consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is necessary, shall be the day on which the first written consent
is expressed-. and the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
shareholders of record entitled to notice of or to vote at any meeting of
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 6. Proxy Representation. Every shareholder may authorize
another person or persons to act for him by proxy in all matters in which a
shareholder is entitled to participate, whether by waiving notice of any
meeting, voting or participating at a meeting, or expressing consent or dissent
without a meeting. Every proxy must be signed by the shareholder or by his
attorney-in-fact. No proxy shall be voted or acted upon after eleven months
from its date unless such proxy provides for a longer period. Every proxy shall
be revocable at the pleasure of the shareholder executing it, except as
otherwise provided in Section 608 of the New York Business Corporation Law.
Section 7. Voting at Shareholders' Meetings. Each share of stock shall
entitle the holder thereof to one vote. In the election of directors, a
plurality of the votes cast shall elect. Any other action shall be authorized by
a majority of the votes cast except where the New York Business Corporation Law
prescribes a different percentage of votes or a different exercise of voting
power. In the election of directors, and for any other action, voting need not
be by ballot.
Section 8. Quorum and Adjournment. Except for a special election of
directors pursuant to Section 603 of the New York Business Corporation Law, the
presence, in person or by proxy, of the holders of a majority of the shares of
the stock of the Corporation outstanding and entitled to vote thereat shall be
requisite and shall constitute a quorum at any meeting of the shareholders. When
a quorum is once
6
<PAGE>
present to organize a meeting, it shall not be broken by the subsequent
withdrawal of any shareholders. If at any meeting of shareholders there shall be
less than a quorum so present, the shareholders present in person or by proxy
and entitled to vote thereat, may adjourn the meeting from time to time until a
quorum shall be present, but no business shall be transacted at any such
adjourned meeting except such as might have been lawfully transacted had the
meeting not adjourned.
Section 9. List of Shareholders. The officer who has charge of the
stock ledger of the Corporation shall prepare, make and certify, at least ten
(10) days before every meeting of shareholders, a complete list of the
shareholders, as of the record date fixed for such 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 or other municipality or
community where the meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole time thereof, and may
be inspected by any shareholder who is present. If the right to vote at any
meeting is challenged, the inspectors of election, if any, or the person
presiding thereat, shall require such list of shareholders to be produced as
evidence of the right of the persons challenged to vote at such meeting, and all
persons who appear from such list to be shareholders entitled to vote thereat
may vote at such meeting.
Section 10. Inspectors of Election. The Board of Directors, in advance
of any meeting, may, but need not, appoint one or more inspectors of election to
act at the meeting or any adjournment thereof. If an inspector or inspectors are
not appointed, the person presiding at the meeting may, and at the request of
any shareholder entitled to vote thereat shall, appoint one or more inspectors.
In case any person who may be appointed as an inspector fails to appear or act,
the vacancy may be filled by appointment made by the Board of Directors in
advance of the meeting or at the meeting by the person presiding thereat. Each
inspector, if any, before entering upon the discharge of his duties, shall take
and sign an oath faithfully to execute the duties of inspector at such meeting
with strict impartiality and according to the best of his ability. The
inspectors, if any, shall determine the number of shares of stock outstanding
and the voting power of each, the shares of stock represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall receive
7
<PAGE>
votes, ballots or consents, determine the result, and do such acts as are proper
to conduct the election or vote with fairness to all shareholders. On request of
the person presiding at the meeting or any shareholder entitled to vote thereat,
the inspector or inspectors, if any, shall make a report in writing of any
challenge, question or matter determined by him or them and execute a
certificate of any fact found by him or them. Any report or certificate made by
the inspector or inspectors shall be prima facie evidence of the facts stated
and of the vote as certified by them.
Section 11. Action of the Shareholders Without Meetings. Any action
which may be taken at any annual or special meeting of the shareholders may be
taken without a meeting on written consent, setting forth the action so taken,
signed by the holders of all outstanding shares entitled to vote thereon.
Written consent thus given by the holders of all outstanding shares entitled to
vote shall have the same effect as a unanimous vote of the shareholders.
ARTICLE III
Directors
Section 1. Number of Directors. The number of directors which shall
constitute the entire Board of Directors shall be at least three, except that
where all outstanding shares of the stock of the Corporation are owned
beneficially and of record by less than three shareholders, the number of
directors may be less than three but not less than the number of shareholders.
Subject to the foregoing limitation, such number may be fixed from time to time
by action of a majority of the entire Board of Directors or of the shareholders
at an annual or special meeting, or, if the number of directors is not so fixed,
the number shall be three or shall be equal to the number of shareholders
(determined as aforesaid), whichever is less. Until such time as the corporation
shall issue shares of its stock, the Board of Directors shall consist of two
persons. No decrease in the number of directors shall shorten the term of any
incumbent director.
Section 2. Election and Term. The initial Board of Directors shall be
elected by the incorporator and each initial director so elected shall hold
office until the first annual meeting of shareholders and until his successor
has been elected and qualified, Thereafter, each director who is elected at an
annual meeting of shareholders, and
8
<PAGE>
each director who is elected in the interim to fill a vacancy or a newly created
directorship, shall hold office until the next annual meeting of shareholders
aid until his successor has been elected and qualified.
Section 3. Filling Vacancies, Resignation and Removal. Any director
may tender his resignation at any time. Any director or the entire Board of
Directors may be removed, with or without cause, by vote of the shareholders. In
the interim between annual meetings of shareholders or special meetings of
shareholders called for the election of directors or for the removal of one or
more directors and for the filling of any vacancy in that connection, newly
created directorships and any vacancies in the Board of Directors, including
unfilled vacancies resulting from the resignation or removal of directors for
cause or without cause, may be filled by the vote of a majority of the remaining
directors then in office, although less than a quorum or by the sole remaining
director.
Section 4. Qualifications and Powers. Each director shall be at least
eighteen years of age. A director need not be a shareholder, a citizen of the
United States or a resident of the State of New York. The business of the
Corporation shall be managed by the Board of Directors, subject to the
provisions of the Certificate of Incorporation. In addition to the powers and
authorities by these By-Laws expressly conferred upon it, the Board may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by statute or by the Certificate of Incorporation or by these By-Laws
directed or required to be exercised or done exclusively by the shareholders.
Section 5. Regular and Special Meetings of the Board. The Board of
Directors may hold its meetings, whether regular or special, either within or
without the State of New York. The newly elected Board may meet at such place
and time as shall be fixed by the vote of the shareholders at the annual
meeting, for the purpose of organization or otherwise, and no notice of such
meeting shall be necessary to the newly elected directors in order legally to
constitute the meeting, provided a majority of the entire Board shall be
present-, or they may meet at such place and time as shall be fixed by the
consent in writing of all directors. Regular meetings of the Board may be held
with or without notice at such time and place as shall from time to time be
determined by resolution of the Board. Whenever the time or place of regular
meetings of the Board shall have been determined by resolution of the Board, no
regular
9
<PAGE>
meetings shall be held pursuant to any resolution of the Board altering or
modifying its previous resolution relating to the time or place of the holding
of regular meetings, without first giving at least three days written notice to
each director, either personally or by telegram, or at least five days written
notice to each director by mail, of the substance and effect of such new
resolution relating to the time and place at which regular meetings of the board
may thereafter be held without notice. Special meetings of the Board shall be
held whenever called by the President, Vice-President, the Secretary or any
director in writing. Notice of each special meeting of the Board shall be
delivered personally to each director or sent by telegram to his residence or
usual place of business at least three days before the meeting, or mailed to him
to his residence or usual place of business at least five days before the
meeting. Meetings of the Board, whether regular or special, may be held at any
time and place, and for any purpose, without notice, when all the directors are
present or when all directors not present shall, in writing, waive notice of and
consent to the holding of such meeting. All or any of the directors may waive
notice of any meeting and the presence of the director at any meeting of the
Board shall be deemed a waiver of notice thereof by him. A notice, or waiver of
notice, need not specify the purpose or purposes of any regular or special
meeting of the Board.
Section 6. Quorum and Action. A majority of the entire Board of
Directors shall constitute a quorum except that when the entire Board consists
of one director, then one director shall constitute a quorum, and except that
when a vacancy or vacancies prevents such majority, a majority of the directors
in office shall constitute a quorum, provided that such majority shall
constitute at lease one-third of the entire Board. A majority of the directors
present, whether or not they constitute a quorum, may adjourn a meeting to
another time and place. Except as herein otherwise provided, and except as
otherwise provided by the New York Business Corporation Law, the vote of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board.
Section 7. Telephonic Meetings. Any member or members of the Board of
Directors, or of any committee designated by the Board, may participate in a
meeting of the Board, or any such committee, as the case may be, by means of
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time, and
participation in a meeting by such means shall constitute presence in person at
such meeting.
10
<PAGE>
Section 8. Action Without a Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
Section 9. Compensation of Directors. By resolution of the Board of
Directors, the directors may be paid their expenses, if any, for attendance at
each regular or special meeting of the Board or of any committee designated by
the Board and may be paid a fixed sum for attendance at such meeting, or a
stated salary as director, or both. Nothing herein contained shall be construed
to preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor-, provided however that directors who are also
salaried officers shall not receive fees or salaries as directors.
ARTICLE IV
Committees
Section 1. In General. The Board of Directors may, by resolution or
resolutions passed by the affirmative vote therefore of a majority of the entire
Board, designate an Executive Committee and such other committees as the Board
may from time to time determine, each to consist of three or more directors, and
each of which, to the extent provided in the resolution or in the certificate of
incorporation or in the By-Laws, shall have all the powers of the Board, except
that no such Committee shall have power to fill vacancies in the Board, or to
change the membership of or to fill vacancies in any Committee, or to make,
amend, repeal or adopt By-Laws of the Corporation, or to submit to the
shareholders any action that needs shareholder approval under these By-Laws or
the New York Business Corporation Law, or to fix the compensation of the
directors for serving on the Board or any committee thereof, or to amend or
repeal any resolution of the Board which by its terms shall not be so amendable
or repealable. Each committee shall serve at the pleasure of the Board. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence of disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
11
<PAGE>
Section 2. Executive Committee. Except as otherwise limited by the
Board of Directors or by these By-Laws, the Executive Committee, if so
designated by the Board of Directors, shall have and may exercise, when the
Board is not in session, all the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall have power
to authorize the seal of the Corporation to be affixed to all papers which may
require it. The Board shall have the power at any time to change the membership
of the Executive Committee, to fill vacancies in it, or to dissolve it. The
Executive Committee may make rules for the conduct of its business and may
appoint such assistance as it shall from time to time deem necessary. A
majority of the members of the Executive Committee, if more than a single
member, shall constitute a quorum.
ARTICLE V
Officers
Section 1. Designation, Term and Vacancies. The officers of the
Corporation shall be a President, one or more Vice-Presidents, a Secretary, a
Treasurer, and such other officers as the Board of Directors may from time to
time deem necessary. Such officers may have and perform the powers and duties
usually pertaining to their respective offices, the powers and duties
respectively prescribed by law and by these By-Laws, and such additional powers
and duties as may from time to time be prescribed by the Board. The same person
may hold any two or more offices, except that the offices of President and
Secretary may not be held by the same person unless all the issued and
outstanding stock of the Corporation is owned by one person, in which instance
such person may hold all or any combination of offices.
The initial officers of the Corporation shall be appointed by the
initial Board of Directors, each to hold office until the meeting of the Board
of Directors following the first annual meeting of shareholders and until his
successor has been appointed and qualified. Thereafter, the officers of the
Corporation shall be appointed by the Board as soon as practicable after the
election of the Board at the annual meeting of shareholders, and each officer so
appointed shall hold office until the first meeting of the Board of Directors
following the next annual meeting of shareholders and until his successor has
been appointed and qualified. Any officer may be removed at any time, with or
without cause, by the affirmative vote therefor of a majority of the entire
Board of Directors. All other agents and employees of the Corporation shall hold
office during
12
<PAGE>
the pleasure of the Board of Directors. Vacancies occurring among the officers
of the Corporation shall be filled by the Board of Directors. The salaries of
all officers of the Corporation shall be fixed by the Board of Directors.
Section 2. President. The President shall preside at all meetings of
the shareholders and at all meetings of the Board of Directors at which he may
be present. Subject to the direction of the Board of Directors, he shall be the
chief executive officer of the Corporation, and shall have general charge of the
entire business of the Corporation. He may sign certificates of stock and sign
and seal bonds, debentures, contracts or other obligations authorized by the
Board, and may, without previous authority of the Board, make such contracts as
the ordinary conduct of the Corporation's business requires. He shall have the
usual powers and duties vested in the President of a corporation. He shall have
power to select and appoint all necessary officers and employees of the
Corporation, except those selected by the Board of Directors, and to remove all
such officers and employees except those selected by the Board of Directors, and
make new appointments to fill vacancies. He may delegate any of his powers to a
Vice-President of the Corporation.
Section 3. Vice-President. A Vice-President shall have such of the
President's powers and duties as the President may from time to time delegate to
him, and shall have such other powers and perform such other duties as may be
assigned to him by the Board of Directors. During the absence or incapacity of
the President, the Vice-President, or, if there be more than one, the
Vice-President having the greatest seniority in office, shall perform the duties
of the President, and when so acting shall have all the powers and be subject to
all the responsibilities of the office of President.
Section 4. Treasurer. The Treasurer shall have custody of such funds
and securities of the Corporation as may come to his hands or be committed to
his care by the Board of Directors. Whenever necessary or proper, he shall
endorse on behalf of the Corporation, for collection, checks, notes, or other
obligations, and shall deposit the same to the credit of the Corporation in such
bank or banks or depositories, approved by the Board of Directors as the Board
of Directors or President may designate. He may sign receipts or vouchers for
payments made to the Corporation, and the Board of Directors may require that
such receipts or vouchers shall also be signed by some other officer to be
designated by them. Whenever required by the Board of Directors, he shall render
a statement of his cash accounts and such other
13
<PAGE>
statements respecting the affairs of the Corporation as may be required. He
shall keep proper and accurate books of account. He shall perform all acts
incident to the office of Treasurer, subject to the control of the Board.
Section 5. Secretary. The Secretary shall have custody of the seal of
the Corporation and when required by the Board of Directors, or when any
instrument shall have been signed by the President duly authorized to sign the
same, or when necessary to attest any proceedings of the shareholders or
directors, shall affix it to any instrument requiring the same and shall attest
the same with his signature, provided that the seal may be affixed by the
President or Vice-President or other officer of the Corporation to any document
executed by either of them respectively on behalf of the Corporation which does
not require the attestation of the Secretary. He shall attend to the giving and
serving of notices of meetings. He shall have charge of such books and papers as
properly belong to his office or as may be committed to his care by the Board of
Directors. He shall perform such other duties as appertain to his office or as
may be required by the Board of Directors.
Section 6. Delegation. In case of the absence of any officer of the
Corporation, or for any other reason that the Board of Directors may deem
sufficient, the Board may temporarily delegate the powers or duties, or any of
them, of such officer to any other officer or to any director.
ARTICLE VI
Stock
Section 1. Certificates Representing Shares. All certificates
representing shares of the capital stock of the Corporation shall be in such
form not inconsistent with the Certificate of Incorporation, these By-Laws or
the laws of the State of New York and shall set forth thereon the statements
prescribed by Section 508, and where applicable, by Sections 505, 616, 620, 709
and 1002 of the Business Corporation Law. Such shares shall be approved by the
Board of Directors, and shall be signed by the President or a Vice-President and
by the Secretary or the Treasurer and shall bear the seal of the Corporation and
shall not be valid unless so signed and sealed. Certificates countersigned by a
duly appointed transfer agent and/or registered by a duly appointed registrar
shall be deemed to be so signed and sealed whether the signatures be manual or
facsimile signatures and whether the seal be a facsimile seal or any other
14
<PAGE>
form of seal. All certificates shall be consecutively numbered and the name of
the person owning the shares represented thereby, his residence, with the number
of such shares and the date of issue, shall be entered on the Corporation's
books. All certificates surrendered shall be canceled and no new certificates
issued until the former certificates for the same number of shares shall have
been surrendered and canceled, except as provided for herein.
In case any officer or officers who shall have signed or whose
facsimile signature or signatures shall have been affixed to any such
certificate or certificates, shall cease to be such officer or officers of the
Corporation before such certificate or certificates shall have been delivered by
the Corporation, such certificate or certificates may nevertheless be adopted by
the Corporation, and may be issued and delivered as though the person or persons
who signed such certificates, or whose facsimile signature or signatures shall
have been affixed thereto, had not ceased to be such officer or officers of the
Corporation.
Any restriction on the transfer or registration of transfer of any
shares of stock of any class or series shall be noted conspicuously on the
certificate representing such shares.
Section 2. Fractional Share Interests. The Corporation, may, but shall
not be required to, issue certificates for fractions of a share. If the
Corporation does not issue fractions of a share, it shall (1) arrange for the
disposition of fractional interests by those entitled thereto, (2) pay in cash
the fair value of fractions of a share as of the time when those entitled to
receive such fractions are determined, or (3) issue scrip or warrants in
registered or bearer form which shall entitle the holder to receive a
certificate for a full share upon the surrender of such scrip or warrants
aggregating a full share. A certificate for a fractional share shall, but scrip
or warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
distribution of the assets of the Corporation in the event of liquidation. The
Board of Directors may cause scrip or warrants to be issued subject to the
conditions that they shall become void if not exchanged for certificates
representing full shares before a specified date, or subject to the condition
that the shares for which scrip or warrants are exchangeable may be -sold by the
Corporation and the proceeds thereof distributed to the holders of scrip or
warrants, or subject to any other conditions which the Board of Directors may
impose.
Section 3. Addresses of Shareholders. Every shareholder shall furnish
the Corporation with an address to which notices of meetings and all other
notices may be
15
<PAGE>
served upon or mailed to him, and in default thereof notices may be addressed to
him at his last known post office address.
Section 4. Stolen, Lost or Destroyed Certificates. The Board of
Directors may in its sole discretion direct that a new certificate or
certificates of stock be issued in place of any certificate or certificates of
stock theretofore issued by the Corporation, alleged to have been stolen, lost
or destroyed, and the Board of Directors when authorizing the issuance of such
new certificate or certificates, may, in its discretion, and as a condition
precedent thereto, require the owner of such stolen, lost or destroyed
certificate or certificates or his legal representatives to give to the
Corporation and to such registrar or registrars and/or transfer agent or
transfer agents as may be authorized or required to countersign such new
certificate or certificates, a bond in such sum as the Corporation may direct
not exceeding double the value of the stock represented by the certificate
alleged to have been stolen, lost or destroyed, as indemnity against any claim
that may be made against them or any of them for or in respect of the shares of
stock represented by the certificate alleged to have been stolen, lost or
destroyed.
Section 5. Transfers of Shares. Upon compliance with all provisions
restricting the transferability of shares, if any, transfers of stock shall be
made only upon the books of the Corporation by the holder in person or by his
attorney thereunto authorized by power of attorney duly filed with the Secretary
of the Corporation or with a transfer agent or registrar, if any, upon the
surrender and cancellation of the certificate or certificates for such shares
properly endorsed and the payment of all taxes due thereon. The Board of
Directors may appoint one or more suitable banks and/or trust companies as
transfer agents and/or registrars of transfers, for facilitating transfers of
any class or series of stock of the Corporation by the holders thereof under
such regulations as the Board of Directors may from time to time prescribe. Upon
such appointment being made all certificates of stock of such class or series
thereafter issued shall be countersigned by one of such transfer agents and/or
one of such registrars of transfers, and shall not be valid unless so
countersigned.
ARTICLE VII
Dividends and Finance
Section 1. Dividends. The Board of Directors shall have power to fix
and determine and to vary, from time to time, the amount of the working capital
of the Corporation before declaring any dividends among its shareholders, and to
direct and
16
<PAGE>
determine the use and disposition of any net profits or surplus, and to
determine the date or dates for the declaration and payment of dividends and to
determine the amount of any dividend, and the amount of any reserves necessary
in their judgment before declaring any dividends among its shareholder, and to
determine the amount of the net profits of the Corporation from time to time
available for dividends.
Section 2. Fiscal Year. The fiscal year of the Corporation shall end on
the last day of ________ in each year and shall begin on the next succeeding
day, or shall be for such other period as the Board of Directors may from time
to time designate with the consent of the Department of Taxation and Finance,
where applicable.
ARTICLE VIII
Miscellaneous Provisions.
Section 1. Stock of Other Corporations. The Board of Directors shall
have the right to authorize any director, officer or other person on behalf of
the Corporation to attend, act and vote at meetings of the Shareholders of any
corporation in which the Corporation shall hold stock, and to exercise thereat
any and all rights and powers incident to the ownership of such stock, and to
execute waivers of notice of such meetings and calls therefor; and authority may
be given to exercise the same either on one or more designated occasions, or
generally on all occasions until revoked by the Board. In the event that the
Board shall fail to give such authority, such authority may be exercised by the
President in person or by proxy appointed by him on behalf of the Corporation.
Any stocks or securities owned by this Corporation may, if so
determined by the Board of Directors, be registered either in the name of this
Corporation or in the name of any nominee or nominees appointed for that purpose
by the Board of Directors.
Section 2. Books and Records. Subject to the New York Business
Corporation Law, the Corporation may keep its books and accounts outside the
State of New York.
Section 3. Notices. Whenever any notice is required by these By-Laws to
be given, personal notice is not meant unless expressly so stated, and any
notice so required shall be deemed to be sufficient if given by depositing the
same in a post
17
<PAGE>
office box in a sealed postpaid wrapper, addressed to the person entitled
thereto at his last known post office address, and such notice shall be deemed
to have been given on the day of such mailing.
Whenever any notice whatsoever is required to be given under the
provisions of any law, or under the provisions of the Certificate of
Incorporation or these By-Laws a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
Section 4. Amendments. Except as otherwise provided herein, these
By-Laws may be altered, amended or repealed and By-Laws may be made at any
annual meeting of the shareholders or at any special meeting thereof if notice
of the proposed alteration, amendment or repeal or By-Law or By-Laws to be made
be contained in the notice of such special meeting, by the holders of a majority
of the shares of stock of the Corporation outstanding and entitled to vote
thereat; or by a majority of the Board of Directors at any regular meeting of
the Board of Directors, or at any special meeting of the Board of Directors, if
notice of the proposed alteration, amendment or repeal, or By-Law or By-Laws to
be made, be contained in the Notice of such Special Meeting.
18
BY-LAWS
OF
KENDREX SYSTEMS, INC.
ARTICLE I. REGISTERED OFFICE.
-----------------
The registered office shall be at 2050 Ellis Way, Elko, Nevada 89801.
Gateway Enterprises, Inc. (hereinafter called the "Corporation") may also have
offices at such other places both within or without State of Nevada as the Board
of Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II. FISCAL YEAR.
-----------
The fiscal year of the Corporation shall end on the last day of
December, of each year unless another date shall be fixed by resolution of the
Board of Directors. After such date is fixed, it may be changed for future
fiscal years at any time by further resolution of the Board of Directors.
ARTICLE 111. MEETING OF SHAREHOLDERS.
-----------------------
1. Meetings.
--------
All meetings of the shareholders for the election of Directors shall
either be by waiver of notice and consent or shall be held at such place either
within or without State of Nevada as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting.
2. Annual Meetings.
---------------
Annual meetings of shareholders may be held by waiver of notice and
consent or shall be held on such date and time as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting; at
which meeting the shareholders shall elect, either in person or by proxy, by a
plurality vote a Board of Directors and transact such other business as may
properly be brought before the meeting.
3. Special meetings.
----------------
Special meetings of the shareholders, for any purpose or purposes, may
be held by waiver of notice and consent or may be called by the President and
shall be called by the President or Secretary at the request in writing of any
two (2) of the Board of Directors, or at the request in writing of shareholders
owning not less than ten (10%) percent of the entire common stock of the
Corporation issued and outstanding and entitled to vote.
-Page 1-
<PAGE>
4. Notice.
------
When required by law, written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for which the
meeting is called shall be given not less than ten (10) nor more than fifty (50)
days before the date of the meeting, to each shareholder entitled to vote at
such meeting.
5. Notice of Specific Purpose.
--------------------------
Business transacted at a special meeting shall not be limited to the
purpose stated in the notice so long as not more than forty (40%) percent of
the shareholders present do not object to the consideration of such business.
6. Quorum.
------
Except as otherwise provided by statute or by the Articles of
Incorporation, the holders of fifty (50%) percent of the shares issued and
outstanding and entitled to vote at such meeting, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
shareholders for the transaction of business. If, however, such quorum shall not
be present or represented at any meeting of the shareholders, the shareholders
entitled to vote at such meeting, 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. Such adjourned meeting at which a quorum shall be present or
represented shall constitute the meeting as originally notified. If the
adjournment is for more than sixty (60) 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.
7. Voting Percentage.
-----------------
When a quorum is present at any meeting, the vote of the holders of a
majority of the shares having the power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the statutes or of the Articles of
Incorporation or of these By-Laws, a different vote is required, in which case
such express provision shall govern and control the necessary vote for such
question.
8. Voting List.
-----------
The officer who has charge of the stock ledger of the Corporation shall
prepare and make, 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
-Page 2-
<PAGE>
shareholder for any purpose germane to the meeting, during the ordinary business
hours, for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any shareholder who is present.
9. Votes Per Share and Proxies.
---------------------------
Each shareholder shall be entitled to one vote in person or by proxy
for each share of common stock having voting power held by such shareholder, but
no proxy shall be voted on after three (3) months from its date, unless the
proxy provides for a longer period.
ARTICLE IV. DIRECTORS.
---------
1. Number.
------
The number of Directors which shall constitute the whole Board shall
consist of not less than three (3) nor more than nine (9) Directors. The
Directors shall be elected at the annual meeting of the shareholders, except as
provided in Paragraph 2 of this Article. Each Director elected shall hold office
until his successor is elected and qualified or until he is removed pursuant to
statute. Directors need not be shareholders.
2. Vacancies.
---------
Vacancies and newly created directorships resulting from any increase
in the authorized number of Directors may be filled by a majority of the
Directors then in office, though less than a quorum, or by a sole remaining
Director. The Director so chosen shall hold office until the next annual
election and until his successor is duly elected and shall qualify, unless
sooner displaced. If there are no Directors in office, then an election of
Directors shall be held in the manner provided by statute.
3. Powers.
------
The business of the Corporation shall be managed by its Board of
Directors which may exercise all such powers of the Corporation and do all such
lawful acts and things as are not by statute or by the Articles of Incorporation
directed or required to be exercised or done by the shareholders.
4. Place of Meetings.
-----------------
The Board of Directors of the Corporation may hold meetings, both
regular and special, either within or without the State of Nevada.
-Page 3-
<PAGE>
5. First Meeting.
-------------
The first meeting of each newly elected Board of Directors shall be
held at such time and place as shall be fixed by the vote of the shareholders at
the annual meeting and no notice of such meeting shall be necessary to the
newly elected Directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event of the failure of the shareholders to fix
the time or place of such first meeting of the newly elected Board of Directors,
or in the event such meeting is not held at the time and place so fixed by the
shareholders, the meeting may be held at such time an place as shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors, or as shall be specified in a written waiver signed by all
of the Directors.
6. Regular meetings.
----------------
Regular meetings of the Board of Directors may be held without notice
at such time and at such place as shall from time to time be determined by the
Board.
7. Special Meetings.
----------------
Special meetings of the Board may be called by the President on one
day's notice to each Director, either personally or by mail or by telegram;
special meetings shall be called by the President or Secretary in like manner
and on like notice on the written request by two (2) Directors.
8. Quorum.
------
At all meetings of the Board, a majority of the Directors shall
constitute a quorum for the transaction of business and the act of a majority of
the Directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors, except as may be otherwise specifically provided
by statute or by the Articles of Incorporation. If a quorum shall not be present
at any meeting of the Board of Directors, the Directors present at such meeting
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
9. Consent Meetings.
----------------
Any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting, if all members of the Board
or committee consent thereto in writing, and the writing or writings are filed
with the minutes of the Board.
10. General Authorization of Board's Authority to Issue
---------------------------------------------------
Stock.
-----
The Board of Directors may issue, from time to time and in its
discretion, any stock authorized by the Articles of Incorporation to be issued
by the Corporation.
-Page 4-
<PAGE>
ARTICLE V. NOTICES.
-------
Whenever, under the provisions of the statutes or of the Articles of
Incorporation or of these By-Laws, notice is required to be given to any
Director or shareholder, it shall not be construed to require personal notice
unless specifically stated. Rather such notice may be given in writing, by mail,
addressed to such Director or shareholder, at his address as it appears on the
records of the Corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to Directors may also be given by telegram.
Whenever any notice is required to be given under the provisions of the
statutes or of the Articles of Incorporation or of these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent to
such notice.
ARTICLE VI. OFFICERS.
--------
1. Officers.
--------
The Board of Directors, within twenty-one (21) days after the annual
election of the Directors in each year, shall elect a President, a
Vice-President, a Secretary and a Treasurer, who need not be members of the
Board and who need not be shareholders. The Board at that time or from time to
time may elect more than one Vice-Presidents, Assistant Secretaries and
Assistant Treasurers who may or may not be members of the Board. The same person
may hold any two or more offices excepting those of President and Secretary,
but no Officer shall execute, acknowledge or verify any instrument in more than
one capacity. The Board may also appoint such other Officers and agents as it
may deem necessary for the transaction of the business of the Corporation.
2. Terms.
-----
The term of office of all Officers shall be one year or until their
respective successors are chosen, but any Officer may be removed from office,
with or without cause, at any meeting of the Board of Directors by the
affirmative vote of a majority of the Directors then in office. The Board of
Directors shall have power to fill any vacancies in any offices occurring from
whatever reason.
3. Salaries.
--------
The salaries and other compensation of all Officers of the Corporation
shall be fixed by the Board of Directors.
-Page 5-
<PAGE>
4. President.
---------
The President shall be the chief executive officer of the Corporation
and shall have the responsibility for the general and active management of the
business of the Corporation, and shall see that all orders and resolutions of
the Board are carried into effect. He shall execute all authorized conveyances,
contracts, or other obligations in the name of the Corporation 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 preside at
all meetings of the shareholders and, if not a member of the Board of Directors,
shall nonetheless receive notice of all meetings of the Board of Directors and
shall be ex-officio a member of the Board of Directors and all standing
committees of the Board of Directors.
5. Vice-President(s).
-----------------
The Vice-Presidents in the order designated by the Board of Directors
or, lacking such a designation, by the President, shall in the absence or
disability of the President perform the duties and exercise the powers of the
President and shall perform such other duties as the Board of Directors shall
prescribe.
6. Secretary.
---------
The Secretary shall attend all meetings of the shareholders and record
all votes and the minutes of all proceedings in a book to be kept for that
purpose and shall perform like duties for the Board of Directors and the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the shareholders and shall perform such other duties as may
be prescribed by the Board of Directors of by the President, under whose
supervision he shall act. He may execute with the President all authorized
conveyances, contracts or other obligations in the name of the Corporation
except as otherwise directed by the Board of Directors. He shall keep in safe
custody the seal of the Corporation and, when authorized by the Board, affix the
same to any instrument requiring it and, when so affixed, it shall be attested
by his signature or by the signature of the Treasurer or an Assistant Secretary.
The Secretary shall keep a register of the address of each shareholder.
Said address shall be furnished to the Secretary by such shareholder and the
responsibility for keeping said address current shall be upon the shareholder.
The Secretary shall have general charge of the stock transfer books of the
Corporation.
7. Treasurer.
---------
The Treasurer shall have custody of and keep account of all money,
funds and property of the Corporation, unless otherwise determined by the Board
of Directors, and he shall render such accounts and present such statements to
the Directors and President as may be required of him. He shall deposit funds of
-Page 6-
<PAGE>
the Corporation which may come into his hands in such bank or banks as the Board
of Directors may designate. He shall keep his bank accounts in the name of the
Corporation and shall exhibit his books and accounts at all reasonable times to
any Director of the Corporation, upon application, at the office of the
Corporation during business hours. If required by the Board of Directors, he
shall give the Corporation a bond in such sum and with such surety or sureties
as shall be satisfactory to the Board for faithful performance of the duties of
his office and for the restoration to the Corporation in case of his death,
resignation or removal from office of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the Corporation.
S. Assistants.
----------
The Assistant Secretaries and the Assistant Treasurers, if any,
respectively, in the absence of the Secretary or the Treasurer, as the case may
be, shall perform the duties and exercise the powers of such Secretary or
Treasurer and shall perform such other duties as the Board of Directors shall
prescribe.
ARTICLE VII. CERTIFICATES.
------------
1. Lost Certificates.
-----------------
The Board of Directors may direct a new certificate or certificates to
be issued in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of shares to be
lost, stolen or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal representative, to advertise
the same in such manner as it shall require and/or to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
2. Surrender.
---------
Upon surrender to the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
3. Record Date.
-----------
-Page 7-
<PAGE>
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 to express consent to corporate action in writing without a meeting,
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, a record date, which shall
not be more than sixty (60) days 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 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. Absent Board of Directors action, the record date shall be ten (10)
days before the date of such meeting.
4. Voting.
------
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, 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 share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of the State of Nevada.
ARTICLE VIII. AMENDMENTS.
----------
These By-Laws may be altered, amended or repealed or new By-Laws may be
adopted by the shareholders or by the Board of Directors at any regular meeting
of the shareholders or of the Board of Directors or at any special meeting of
the shareholders or of the Board of Directors if notice of such alteration,
amendment, repeal or adoption of new By-Laws be contained in the notice of such
special meeting.
/s/ Beth A. Coonradt
- --------------------------------
Beth A. Coonradt
-Page 8-
FORM OF DEBENTURE
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO
REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
ISSUANCE DATE June, 1999
DUE DATE June, 2002
AMOUNT $1,000,000
NUMBER JUNE-1999-101
FOR VALUE RECEIVED, TRIMFAST GROUP, INC., a Nevada corporation (the
"Company"), hereby promises to pay to CALP II Limited Partnership or registered
assigns (the "Holder") on June 14, 2002, (the "Maturity Date"), the principal
amount of ONE MILLION DOLLARS ($1,000,000) U.S., and to pay interest on the
principal amount hereof, in such amounts, at such time$ and on such terms and
conditions as are specified herein.
Article 1. Interest
The Company shall pay interest on the unpaid principal amount of this
Debenture (the "Debenture") at the rate of seven percent (7.0%) per annum,
payable at the time of each conversion, with respect to the principal amount of
the Debenture being converted, until the principal amount hereof is paid in full
or has been converted Interest shall be computed on the basis of a 360 day year
of 12, 30 day months. Each payment shall be paid in cash or in freely trading
Common Stock of the Company, at the Company's option. If the interest is to be
paid in cash, the Company shall make such payment within five business days of
the of "Conversion Date" as that term is defined in Section 3.2(b). If the
interest
1
<PAGE>
is to be paid in Common Stock, said Common Stock shall be delivered to the
Holder, or per Holder's instructions, within 5 business days of the date of
conversion. The Debentures are subject to automatic conversion at the end of
three years from the date of issuance at which time all Debentures outstanding
will be automatically converted based upon the formula set forth in Section 3.2.
The closing shall be deemed to have occurred on the date the funds are received
by the Company or its Counsel (the "Closing Date").
Article 2. Method of Payment
This Debenture must be surrendered to the Company in order for the
Holder to receive payment of the principal amount hereof. The Company shall have
the option of paying the interest on this Debenture in United States dollars or
in common stock upon conversion pursuant to Article 1 hereof. The Company may
draw a check for the payment of interest to the order of the Holder of this
Debenture and mail it to the Holder's address as shown on the Register (as
defined in Section 7.2 below). Interest and principal payments shall be subject
to withholding under applicable United States Federal Internal Revenue Service
Regulations.
Article 3. Conversion
Section 3. 1. Conversion Privilege
(a) The Holder of this Debenture shall have the right, at its option,
to convert it into shares of common stock, par value $0.001 per share, of the
Company ("Common Stock") at any time which is before the close of business on
the Maturity Date, except as set forth in Section 3.1(c) below. The number of
shares of Common Stock issuable upon the conversion of this Debenture is
determined pursuant to Section 3.2 and rounding the result to the nearest whole
share.
(b) Less than all of the principal amount of this Debenture may be
converted into Common Stock if the portion converted is $5,000 or a whole
multiple of $5,000 and the provisions of this Article 3 that apply to the
conversion of all of the Debenture shall also apply to the conversion of a
portion of it. This Debenture may not be converted, whether in whole or in part,
except in accordance with Article 3.
(c) In the event all or any portion of this Debenture remains
outstanding on the third anniversary of the date hereof, the unconverted portion
of such Debenture will automatically be converted into shares of Common Stock on
such date in the manner set forth in Section 3.2.
Section 3.2. Conversion Procedure
2
<PAGE>
(a) Debentures. Upon the Company's receipt of a facsimile or original
of Holder's signed Notice of Conversion and the original Debenture to be
converted, the Company shall instruct its transfer agent to issue one or more
Certificates representing that number of shares of Common Stock into which the
Debenture, or portion thereof is convertible in accordance with the provisions
regarding conversion set forth in the conversion notice. The Company or its
counsel shall act as Registrar and shall maintain an appropriate ledger
containing the necessary information with respect to each Debenture.
(b) Conversion Date. The face amount of the Debentures, plus accrued
interest, may be converted anytime after the Closing Date. Such conversion shall
be effectuated by surrendering to the Company, or its attorney, this Debenture
to be converted together with a facsimile or original of the signed Notice of
Conversion which evidences Holder's intention to convert the Debenture
indicated. The date on which the Notice of Conversion is effective ("Conversion
Date") shall be deemed to be the date on which the Holder has delivered to the
Company a facsimile or original of the signed Notice of Conversion, as long as
the original Debentures to be converted are received by the Company or its
designated attorney within 5 business days thereafter. As long as the Debentures
to be converted are received by the Company or its designated attorney within 5
business days after it receives a facsimile or original of the signed Notice of
Conversion, the Company shall deliver to the Holder, or per the Holder's
instructions as may be required by the terms of the Subscription Agreement, the
shares of Common Stock, with restrictive legend or stop transfer instructions,
within seven (7) business days of receipt of the facsimile Conversion Notice.
(c) Issuance of Common Stock. Upon the conversion of any Debentures and
upon receipt by the Company or its attorney of a facsimile or original of
Holders signed conversion notice Company shall instruct Company's transfer agent
to issue Stock Certificates with restrictive legend or stop transfer
instructions, as may be required pursuant to the terms of the Subscription
Agreement entered into by the Company and Holder in the name of Holder (or its
nominee) and in such denominations to be specified at conversion representing
the number of shares of Common Stock issuable upon such conversion, as
applicable. Company warrants that no instructions, other than these
instructions, have been given or will be given to the transfer agent and that
the Common Stock shall otherwise be freely transferable on the books and records
of Company.
(d) Conversion Rate. Anytime after the Closing Date, Holder is entitled
to convert the face amount of this Debenture, plus accrued interest, into Common
Stock at the lesser of (a) 80% of the 5 day average closing bid price as
reported by Bloomberg LP for the 5 consecutive trading days prior to the
Conversion Date or (b) $8.50 (each) being reffered to as the "Conversion
Price"). No fractional shares or scrip representing fractions of shares will be
issued on coversion, but the number of shares issuable shall be rounded up or
down, as the case may be, to the nearest whole share.
3
<PAGE>
The Debentures are subject to a mandatory, 36 month conversion feature
at the end of which all Debentures outstanding will be automatically converted,
upon the terms set forth in this section ("Mandatory Conversion Date").
(e) Nothing contained in this Debenture shall be deemed to establish or
require the payment of interest to the Company at a rate in excess of the
maximum rate permitted by governing law. In the event that the rate of interest
required to be paid exceeds the maximum rate permitted by governing law, the
rate of interest required to be paid thereunder shall be automatically reduced
to the maximum rate permitted under the governing law and such excess shall be
returned with reasonable promptness by the Holder to the Company.
(f) It shall be the Company's responsibility to take all necessary
actions and to bear all such costs to issue the Certificate of Common Stock as
provided herein, including the responsibility and cost for delivery of an
opinion letter to the transfer agent, if so required. The person in whose name
the certificate of Common Stock is to be registered shall be treated as a
shareholder of record on and after the conversion date. Upon surrender of any
Debentures that are to be converted in part, the Company shall issue to the
Holder a new Debenture equal to the unconverted amount, if so requested in
writing by Holder.
(g) In the event the Common Stock is not delivered per the written
instructions of the Holder, within seven (7) business days after the Conversion
Date, then in such event the Company shall pay to Holder one percent (1%) in
cash, of the dollar value of the Debentures being converted per each day after
the seventh (7th) business day following the Conversion Date that the Common
Stock is not delivered.
The Company acknowledges that its failure to deliver the Common Stock
within seven (7) business days after the Conversion Date will cause the Holder
to suffer damages in an amount that will be difficult to ascertain. Accordingly,
the parties agree that it is appropriate to include in this Agreement a
provision for liquidated damages. The parties acknowledge and agree that the
liquidated damages provision set forth in this section represents the parties'
good faith effort to qualify such damages and, as such, agree that the form and
amount of such liquidated damages are reasonable and will not constitute a
penalty. The payment of liquidated damages shall not relieve the Company from
its obligations to deliver the Common Stock pursuant to the terms of this
Agreement.
To the extent that the failure of the Company to issue the Common Stock
pursuant to this Section 4 is due to the unavailability of authorized but
unissued shares of Common Stock, the provisions of this Section 4(g) shall not
apply but instead the provisions of Section 4(h) shall apply.
The Company shall make any payments incurred under this Section 4(g) in
immediately available funds within three (3) business days from the date of
4
<PAGE>
issuance of the applicable Common Stock. Nothing herein shall limit a Holder's
right to pursue actual damages or cancel the conversion for the Company's
failure to issue and deliver Common Stock to the Holder within seven (7)
business days after the Conversion Date.
(h) The Company shall at all times reserve and have available all
Common Stock necessary to meet conversion of the Debentures by all Holders of
the entire amount of Debentures then outstanding. If, at any time Holder submits
a Notice of Conversion and the Company does not have sufficient authorized but
unissued shares of Common Stock available to effect, in full, a conversion of
the Debentures (a "Conversion Default", the date of such default being referred
to herein as the "Conversion Default Date"), the Company shall issue to the
Holder all of the shares of Common Stock which are available, and the Notice of
Conversion as to any Debentures requested to be converted but not converted (the
"Unconverted Debentures"), upon Holder's sole option, may be deemed null and
void. The Company shall provide notice of such Conversion Default ("Notice of
Conversion Default") to all existing Holders of outstanding Debentures, by
facsimile, within three (3) business day of such default (with the original
delivered by overnight or two day courier), and the Holder shall give notice to
the Company by facsimile within five business days of receipt of the original
Notice of Conversion Default (with the original delivered by overnight or two
day courier) of its election to either nullify or confirm the Notice of
Conversion.
The Company agrees to pay to all Holders of outstanding Debentures
payments for a Conversion Default ("Conversion Default Payments") in the amount
of (N/365) x (.24) x the initial issuance price of the outstanding and/or
tendered but not converted Debentures held by each Holder where N = the number
of days from the Conversion Default Date to the date (the "Authorization Date")
that the Company authorizes a sufficient number of shares of Common Stock to
effect conversion of all remaining Debentures. The Company shall send notice
("Authorization Notice") to each Holder of outstanding Debentures that
additional shares of Common Stock have been authorized, the Authorization Date
and the amount of Holder's accrued Conversion Default Payments. The accrued
Conversion Default shall be paid in cash or shall be convertible into Common
Stock at the Conversion Rate, at the Holder's option, payable as follows: (i) in
the event Holder elects to take such payment in cash, cash payments shall be
made to such Holder of outstanding Debentures by the fifth day of the following
calendar month, or (ii) in the event Holder elects to take such payment in
stock, the Holder may convert such payment amount into Common Stock at the
conversion rate set forth in Section 3.2(d) at anytime after the 5th day of the
calendar month following the month in which the Authorization Notice was
received, until the expiration of the mandatory 24 month conversion period. The
Company acknowledges that its failure to maintain a sufficient number of
authorized but issued shares of Common Stock to effect in full a conversion of
the Debentures will cause the Holder to suffer damages in an amount that will be
5
<PAGE>
difficult to ascertain. Accordingly, the parties agree that it is appropriate to
include in this Debenture a provision for liquidated damages. The parties
acknowledge and agree that the liquidated damages provision set forth in this
section represents the parties' good faith effort to quantify such damages and,
as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. The payment of liquidated damages
shall not relieve the Company from its obligations to deliver the Common Stock
pursuant to the terms of this Debenture. Nothing herein shall limit the Holder's
right to pursue actual damages or cancel the conversion for the Company's
failure to maintain a sufficient number of authorized shares of Common Stock.
(i) The Company shall furnish to Holder such number of prospectuses and
other documents incidental to the registration of the shares of Common Stock
underlying the Debentures, including any amendment of or supplements thereto.
(j) The Holder is limited in the amount of this Debenture it may
convert and own. Other than the Mandatory Conversion provisions contained in
this Debenture which are not limited by the following, in no other event shall
the Holder be entitled to convert, any amount of Debentures in excess of that
amount upon conversion of which the sum of (1) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Debenture, and (2) the number of shares of Common
Stock issuable upon the conversion of the Debentures with respect to which the
determination of this provision is being made, would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock of the Company. (after taking into account the shares to
be issued to the Holder upon such conversion). For purposes of this provision to
the immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13 D-G thereunder, except as otherwise provided in
clause (1) of such provision. The Company must not permit conversion of any
Debentures which could result in more than 4.99% of the outstanding shares of
Common Stock (after taking into account the shares upon such conversion) being
issued to the Purchaser.
(k) Nothing contained in the Debenture shall be deemed to establish or
require the payment of interest to the Purchaser at a rate in excess of the
maximum rate permitted by governing law. In the event that the rate of interest
required to be paid under the Debenture exceeds the maximum rate permitted by
governing law, the rate of interest required to be paid thereunder shall be
automatically reduced to the maximum rate permitted under the governing and any
amounts collected in excess of the permissible amount shall be deemed a payment
of principal. To the extent that such excess amount exceeds the aggregate
6
<PAGE>
principal amount of the Debenture, such excess shall be returned with reasonable
promptness by the holder to the Company
(1) Redemption: The Company reserves the right, at its sole option, to
call a mandatory redemption of any percentage of the balance on the Debentures,
if the closing bid price of the Company's Common Stock as reported by Bloomberg,
LP is $6.00 or less, as follows. In the event the Company exercises such right
of redemption anytime following the Closing Date, it shall pay the Holder, in
U.S. currency the benefit of the bargain (intrinsic value), that is, the
principal amount of the Debenture being redeemed, plus accrued interest and the
profit the Holder would have received upon conversion of that portion of the
Debenture being redeemed and sale of the Common Stock. The date by which the
Debentures must be delivered to the Escrow Agent, shall not be later than 5
business days following the date the Company notifies the Holder by facsimile of
the redemption. The Company shall give the Holder at least twenty (20) business
days advance written notice of its intent to redeem.
(m) Investment Intent. The Holder of this Debenture by acceptance
hereof, agrees that this Debenture is being acquired for investment and that
such Holder will not offer, sell or otherwise dispose of this Debenture or the
shares of Common Stock issuable upon conversion thereof except under
circumstances which will not result in violation of the 1933 Act or any
applicable state Blue Sky law or similar laws relating to the sale of
securities.
(n) Adjustment In case any provision of this Debenture is held by a
court of competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
and the validity and enforceability of the remaining provisions of this
Debenture will not in any way be affected or impaired thereby.
Section 3.3. Fractional Shares. The Company shall not issue fractional
shares of Common Stock, or scrip representing fractions of such shares, upon the
conversion of this Debenture. Instead, the Company shall round up or down, as
the case may be, to the nearest whole share.
Section 3.4. Taxes on Conversion. The Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of shares
of Common Stock upon the conversion of this Debenture. However, the Holder shall
pay any such tax which is due because the shares are issued in a name other than
its name.
Section 3.5. Company to Reserve Stock. The Company shall reserve the
number of shares of Common Stock required pursuant to and upon the terms set
forth in Section 3(a) of the Subscription Agreement entered into by the Company
and Holder, to permit the conversion of this Debenture. All shares of Common
Stock which may be issued upon the conversion hereof shall upon issuance be
7
<PAGE>
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof.
Section 3.6. Restrictions on Transfer. This Debenture has not been
registered under the Securities Act of 1933, as amended, (the "Act") and is
being issued under Section 4(2) of the Act and Rule 506 of Regulation D
promulgated under the Act. This Debenture and the Common Stock issuable upon the
conversion thereof may only be offered or sold pursuant to registration under or
an exemption from the Act.
Section 3.7. Mergers, Etc. If the Company merges or consolidates with
another corporation or sells or transfers all or substantially all of its assets
to another person and the holders of the Common Stock are entitled to receive,
stock, securities or property in respect of or in exchange for Common Stock,
then as a condition of such merger, consolidation, sale or transfer, the Company
and any such successor, purchaser or transferee shall amend this Debenture to
provide that it may thereafter be converted on the terms and subject to the
conditions set forth above into the kind and amount of stock, securities or
property receivable upon such merger, consolidation, sale or transfer by a
holder of the number of shares of Common Stock into which this Debenture might
have been converted immediately before such merger, consolidation, sale or
transfer, subject to adjustments which shall be as nearly equivalent as may be
practicable to adjustments provided for in this Article 3.
Article 4. Mergers and Adjustments
Section 4.1 Mergers. The Company shall not consolidate or merge into,
or transfer all or substantially all of its assets to, any person, unless such
person assume in writing the obligations of the Company under this Debenture and
immediately after such transaction no Event of Default exists. Any reference
herein to the Company shall refer to such surviving or transferee corporation
and the obligations of the Company shall terminate upon such written assumption.
Section 4.2 Adjustments. The number of shares of Common Stock
purchasable upon the conversion of this Debenture shall be subject to
adjustments as follows:
(a) In case the Company shall (i) pay a dividend on Common Stock in
Common Stock or securities convertible into, exchangeable for or otherwise
entitling a holder thereof to receive Common Stock, (ii) declare a dividend
payable in cash on its Common Stock and at substantially the same time offer its
shareholders a right to purchase new Common Stock (or securities convertible
into, exchangeable for or other entitling a holder thereof to receive Common
Stock) from the proceeds of such dividend (all Common Stock so issued shall be
deemed to have been issued as a stock dividend), (iii) subdivide its outstanding
shares of Common Stock into a greater number of shares of Common Stock, (iv)
combine its outstanding shares of Common Stock into a smaller number of
8
<PAGE>
shares of Common Stock, or (v) issue by reclassification, reorganization or
recapitalization of its Common Stock any shares of Common Stock or other
securities of the Company, the number of shares of Common Stock issuable upon
conversion of this Debenture immediately prior thereto shall be adjusted so that
the Holder of this Debenture shall be entitled to receive after the happening of
any of the events described above that number and kind of shares as the Holder
would have received had this Debenture been converted immediately prior to the
happening of such event or any record date with respect thereto. Any adjustment
made pursuant to this subdivision shall become effective immediately after the
close of business on the record date in the case of a stock dividend and shall
become effective immediately after the close of business on the effective date
in the case of a stock split, subdivision, combination or reclassification.
(b) In case the Company shall distribute, without receiving
consideration therefor, to all holders of its Common Stock evidences of its
indebtedness or assets (excluding cash dividends other than as described in
Section 4.2(a)), or rights, options or warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of Common
Stock, then in such case, the number of shares of Common Stock thereafter
issuable upon conversion of this Debenture shall be determined by multiplying
the number of shares of Common Stock theretofore issuable upon conversion of
this Debenture, by a fraction, of which the numerator shall be the closing bid
price per share of Common Stock on the record date for such distribution, and of
which the denominator shall be the closing bid price of the Common Stock less
the then fair value (as determined by the Board of Directors of the Company,
whose determination shall be conclusive) of the portion of the assets or
evidences of indebtedness so distributed or of such subscription rights, options
or warrants, or of such convertible or exchangeable securities applicable to one
share of Common Stock. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
distribution.
(c) Any adjustment in the number of shares of Common Stock issuable
hereunder otherwise required to be made by this Section 4.2 will not have to be
adjusted if such adjustment would not require an increase or decrease in one
percent (1%) or more in the number of shares of Common Stock issuable upon
conversion of this Debenture. No adjustment in the number of shares of Common
Stock issuable upon conversion of this Debenture will be made for the issuance
of shares of capital stock to directors, employees or independent contractors
pursuant to the Company's or any of its subsidiaries' stock option, for the
purpose of the Company's Common Stock warrants issued, issuable or to be issued
for services rendered by others to the Company stock ownership or other benefit
plans or arrangements or trusts related thereto or for issuance of any shares of
Common Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Company and the investment of additional
optional amounts in shares of Common Stock under such plan.
9
<PAGE>
Article 5. Reports
The Company will mail to the Holder hereof at its address as shown on
the Register a copy of any annual, quarterly or current report that it files
with the Securities and Exchange Commission promptly after the filing thereof
and a copy of any annual, quarterly or other report or proxy statement that it
gives to its shareholders generally at the time such report or statement is sent
to shareholders.
Article 6. Defaults and Remedies
Section 6.1. Events of Default. An "Event of Default" occurs if (a) the
Company does not make the payment of the principal of this Debenture when the
same becomes due and payable at maturity, upon redemption or otherwise, (b)
the Company does not make a payment, other than a payment of principal, for a
period of 5 business days thereafter, (c) the Company fails to comply with any
of its other agreements in this Debenture and such failure continues for the
period and after the notice specified below, (d) the Company pursuant to or
within the meaning of any Bankruptcy Law (as hereinafter defined): (i) commences
a voluntary case; (ii) consents to the entry of an order for relief against it
in an involuntary case; (iii) consents to the appointment of a Custodian (as
hereinafter defined) of it or for all or substantially all of its property or
(iv) makes a general assignment for the benefit of its creditors or (v) a court
of competent jurisdiction enters an order or decree under any Bankruptcy Law
that: (A) is for relief against the Company in an involuntary case; (B) appoints
a Custodian of the Company or for all or substantially all of its property or
(C) orders the liquidation of the Company, and the order or decree remains
unstayed and in effect for 60 days, (e) the Company's Common Stock is no longer
listed on any recognized exchange including electronic over-the-counter bulletin
board. As used in this Section 6.1, the term "Bankruptcy LaW' means Title 11 of
the United States Code or any similar federal or state law for the relief of
debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law. A default under clause (c) above
is not an Event of Default until the holders of at least 25% of the aggregate
principal amount of the Debentures outstanding notify the Company of such
default and the Company does not cure it within five (5) business days after the
receipt of such notice, which must specify the default, demand that it be
remedied and state that it is a "Notice of Default".
Section 6.2. Acceleration. If an Event of Default occurs and is
continuing, the Holder hereof by notice to the Company, may declare the
remaining principal amount of this Debenture to be due and payable. Upon such
declaration, the remaining principal amount shall be due and payable
immediately.
Article 7. Registered Debentures
Section 7.1. Series. This Debenture is one of a numbered series of
Debentures which are identical except as to the principal amount and date of
10
<PAGE>
issuance thereof and as to any restriction on the transfer thereof in order to
comply with the Securities Act of 1933 and the regulations of the Securities and
Exchange Commission promulgated thereunder. Such Debentures are referred to
herein collectively as the "Debentures". The Debentures shall be issued in whole
multiples of $5,000.
Section 7.2. Record Ownership. The Company, or its attorney, shall
maintain a register of the holders of the Debentures (the "Register") showing
their names and addresses and the serial numbers and principal amounts of
Debentures issued to or transferred of record by them from time to time. The
Register may be maintained in electronic, magnetic or other computerized form.
The Company may treat the person named as the Holder of this Debenture in the
Register as the sole owner of this Debenture. The Holder of this Debenture is
the person exclusively entitled to receive payments of interest on this
Debenture, receive notifications with respect to this Debenture, convert it into
Common Stock and otherwise exercise all of the rights and powers as the absolute
owner hereof.
Section 7.3. Registration of Transfer. Transfers of this Debenture may
be registered on the books of the Company maintained for such purpose pursuant
to Section 7.2 above (i.e., the Register). Transfers shall be registered when
this Debenture is presented to the Company with a request to register the
transfer hereof and the Debenture is duly endorsed by the appropriate person,
reasonable assurances are given that the endorsements are genuine and effective,
and the Company has received evidence satisfactory to it that such transfer is
rightful and in compliance with all applicable laws, including tax laws and
state and federal securities laws. When this Debenture is presented for transfer
and duly transferred hereunder, it shall be canceled and a new Debenture showing
the name of the transferee as the record holder thereof shall be issued in lieu
hereof. When this Debenture is presented to the Company with a reasonable
request to exchange it for an equal principal amount of Debentures of other
denominations, the Company shall make such exchange and shall cancel this
Debenture and issue in lieu thereof Debentures having a total principal amount
equal to this Debenture in such denominations as agreed to by the Company and
Holder.
Section 7.4. Worn or Lost Debentures. If this Debenture becomes worn,
defaced or mutilated but is still substantially intact and recognizable, the
Company or its agent may issue a new Debenture in lieu hereof upon its
surrender. Where the Holder of this Debenture claims that the Debenture has been
lost, destroyed or wrongfully taken, the Company shall issue a -new Debenture in
place of the original Debenture if the Holder so requests by written notice to
the Company actually received by the Company before it is notified that the
Debenture has been acquired by a bona fide purchaser and the Holder has
delievered to the Company an indemnity bond in such amount and issued by such
surety as the Company deems satisfactory together with an affidavit of the
Holder setting forth the facts concerning such loss, destruction or wrongful
taking
11
<PAGE>
and such other information in such form with such proof or verification as the
Company may request.
Article 8. Notices
Any notice which is required or convenient under the terms of this
Debenture shall be duly given if it is in writing and delivered in person or
mailed by first class mail, postage prepaid and directed to the Holder of the
Debenture at its address as it appears on the Register or if to the Company to
its principal executive offices. The time when such notice is sent shall be the
time of the giving of the notice.
Article 9. Time
Where this Debenture authorizes or requires the payment of money or the
performance of a condition or obligation on a Saturday or Sunday or a public
holiday, or authorizes or requires the payment of money or the performance of a
condition or obligation within, before or after a period of time computed from a
certain date, and such period of time ends on a Saturday or a Sunday or a public
holiday, such payment may be made or condition or obligation performed on the
next succeeding business day, and if the period ends at a specified hour, such
payment may be made or condition performed, at or before the same hour of such
next succeeding business day, with the same force and effect as if made or
performed in accordance with the terms of this Debenture. A "business day" shall
mean a day on which the banks in New York are not required or allowed to be
closed.
Article 10. Waivers
The holders of a majority in principal amount of the Debentures may
waive a default or rescind the declaration of an Event of Default and its
consequences except for a default in the payment of principal or conversion into
Common Stock.
Article 1 1. Rules of Construction
In this Debenture, unless the context otherwise requires, words in the
singular number include the plural, and in the plural include the singular, and
words of the masculine gender include the feminine and the neuter, and when the
sense so indicates, words of the neuter gender may refer to any gender. The
numbers and titles of sections contained in the Debenture are inserted for
convenience of reference only, and they neither form a part of this Debenture
nor are they to be used in the construction or interpretation hereof. Wherever,
in this Debenture, a determination of the Company, is required or allowed, such
determination shall be made by a majority of the Board of Directors of the
Company and if it is made in good faith, it shall be conclusive and binding upon
the Company and the Holder of this Debenture.
12
<PAGE>
Article 12. Governing Law
The validity, terms, performance and enforcement of this Debenture
shall be governed and construed by the provisions hereof and in accordance with
the laws of the State of Florida applicable to agreements that are negotiated,
executed, delivered and performed solely in the State of Florida.
Article 13. Litigation
(a) Forum Selection and Consent to Jurisdiction. Any litigation based
thereon, or arising out of, under, or in connection with, this agreement or any
course of conduct, course of dealing, statements (whether oral or written) or,
actions of the Company or Holder shall be brought and maintained exclusively in
the federal courts of the state of Florida without reference to its conflicts of
laws rules or principles. The Company hereby expressly and irrevocably submits
to jurisdiction exclusively with the federal Courts of the State of Florida for
the purpose of any such litigation as set forth above and irrevocably agrees to
be bound by any final judgment rendered thereby in connection with such
litigation. The Company further irrevocably consents to the service of process
by registered mail, postage prepaid, or by personal service within or without
the State of Florida. The Company hereby expressly and irrevocably waives, to
the fullest extent permitted by law, any objection which it may have or
hereafter may have to the laying of venue of any such litigation brought in any
such court referred to above and any claim that any such litigation has been
brought in any inconvenient forum. To the extent that the Company has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution or otherwise) with respect to itself or its
property. The Company hereby irrevocably waives such immunity in respect of its
obligations under this agreement and the other loan documents.
(b) Waiver of Jury Trial. The Holder and the Company hereby knowingly,
voluntarily and intentionally waive any rights they may have to a trial by jury
in respect of any litigation based hereon, or arising out of, under, or in
connection with, this agreement, or any course of conduct, course of dealing,
statements (whether oral or written) or actions of the Holder or the Company.
The Company acknowledges and agrees that it has received full and sufficient
consideration for this provision and that this provision is a material
inducement for the Holder entering into this agreement.
(c) Submission To Jurisdiction. Any legal action or proceeding in
connection with this Agreement or the performance hereof shall be brought
exclusively in the federal courts located in the Florida and the parties hereby
irrevocably submit to the exclusive juridiction of such courts for the purpose
of any such action or proceeding.
[THE BALANCE OF THE PAGE INTENTIONALLY LEFT BLANK.]
13
<PAGE>
IN WITNESS WHEREOF, the Company has duly executed this Debenture as of
the date first written above.
TRIMFAST GROUP, INC.
By /s/ Michael Muzio
------------------------
Michael Muzio C.E.O.
14
L E I S U R E C O N C E P T S
------------------------------
I N C O R P O R A T E D
Deal Memo Overview LCI REP: Alyssa Altman
Date: May 25, 1999
------------
LICENSOR: World Championship Wrestling
----------------------------
LICENSEE: Trimfast Group, Inc.
-------------------
- --------------------------------------------------------------------------------
Product Category: Energy Bars (WCW Bars)
----------------------
Marketing Plan
Roll Out: Pre-Positioning of Energy Bars will be
accomplished by securing distribution of brokers,
wholesalers, distributors and retail chains. Once
initials purchases are filled and product is
delivered to retailers, retail advertising on
television and radio. The Energy Bar demographics
varies from children age 10 and up through the
entire adult WCW market. Formulations of the bars
are focused on natural energy from food sources,
with no herbal stimulants. Proteins are from milk,
soy and peanut. This base formulation created a
safe supplement for the general public.
Status In Industry: Trimfast Group, Inc. and its subsidiaries contract
manufacture 33 individual product in the
enutraceutical industry including vitamins,
minerals, herbals, health and fitness products and
health bars.
Other Licenses:
Comments:
Catalog enclosed: Yes__X__No____License application Enclosed
Yes__X__No___
LEISURE CONCEPTS INC.* o 1414 AVENUE OF THE AMERICAS o NEW YORK, NY 10019 o
(212) 980-0933
- --------------------------------------------------------------------------------
NEW YORK LONDON LOS ANGELES
<PAGE>
L E I S U R E C O N C E P T S
------------------------------
I N C O R P O R A T E D
World Championship Wrestling
Licensing Deal Memo
-------------------
DATE: JUN 02 1999
PROPERTY: World Championship Wrestling
LICENSOR: World Championship Wrestling, Inc.
LICENSEE NUMBER: D993287
LICENSEE ADDRESS: Trimfast Group, Inc.
777 South Harbour Island Blvd. #260
Tampa FL 33602
CONTACT: NAME: Michael J. Muzzio
Tel: 813-275-0050
FAX: 813-275-0051
LICENSED ELEMENTS: All logos, slogans and wrestlers under contract to
World Championship Wrestling for Merchandising
(list to be provided in writing by WCW and may be
amended by WCW from time to time)
AUTHORIZED ARTICLES: Nonexclusive license for Trimfast Energy Bars (WCW
Bars) in 3 flavors; Chocolate, chocolate chip;
Chocolate peanut butter; Passion fruit.
Licensee is limited to the foregoing Authorized Articles as currently
manufactured by Licensee with the ingredients set out in Exhibit A*. Licensee
has provided WCW with a complete list of its entire current product line.
Licensee shall from time to time provide WCW with an updated list of its current
product line. In the event WCW objects to any products being produced or sold by
Licensee. Licensee shall discontinue production and sale of such products within
sixty (60) days of notice by WCW or WCW may terminate this Licensee agreement
immediately without resource.
*[Exhibit A]
Ingredients: High fructose, corn syrup, chocolate coating (contains turbinato
sugar, fractionated vegetable oils, non-fat dry milk, cocoa, soy lecithin, and
salt), cocoa powder, chocolate chips, calcium, etc.
TERRITORY: U.S., its territories and possessions; US Military
Installations
LICENSEE PERIOD: DEC 31 2002
RENEWAL PERIOD: N/A
EXCLUSIVITY: Nonexclusive
LEISURE CONCEPTS INC.* o 1414 AVENUE OF THE AMERICAS o NEW YORK, NY 10019 o
(212) 980-0933
- --------------------------------------------------------------------------------
NEW YORK LONDON LOS ANGELES
<PAGE>
PAGE 2
WCW DEAL MEMO
LICENSE NO.: D983287
ADVANCE: $550.00 ($50,000 Payable upon signing this
proposal, $100,000 due on or before
12/31/98; $100,000 due on or before
06/30/00; $100,000 due on or before
12/31/00. $100,000 due on or before
06/30/01)
GUARANTEE: $550.00
ROYALTY RATE: 6% of Net Sales
"Net Sales" shall mean gross sales by Licensee or
any of its affiliated, associated or subsidiary
companies, without any deductors whatsoever
(including, without limitation, freight, taxes,
uncollectible accounts, manufacturing,
distribution, advertising, marketing or promotion
costs with the exception of trade quantity
discounts only) except for actual returns. Credit
against sales shall be allowed only for actural
returns and shall not be allowed on the basis of
an accrual or reserve system. Net Sales for each
Authorized Article shall be computed on no less
than Licensee's regular, full, "top-of-the-line"
gross wholesale invoice price calculated at source
in the Licensed Territory, based upon the usual
billing price for items sold in the normal course
of business ("Royalty Base Price").
MARKETING DATE: OCT 01 1999
SHIPPING DATE: NOV 01 1999
DISTRIBUTION PERIOD: Mass Markets Chain Stores Specialty Stores
SELL-OFF PERIOD: 90 Days
SAMPLES: 12 of each
PROTOTYPES RECEIVED: SEP 01 1999
SALES PROJECTIONS: YR 1 3M
YR 2 8M
WHOLESALE PRICE(S): $0.75
RETAIL PRICE(S): $1.49
INSURANCE: $1,000,000 Minimum Product Liability Insurance
Required
QUALITY & TESTING
STANDARDS: Licensed Articles shall be of the highest quality,
meet Licensor's standards and be of substantially
the same or better quality as the samples
previously submitted by Licensee.
<PAGE>
PAGE 3
WCW DEAL MEMO
LICENSE NO.: D983287
CREDIT TERMS: Licensee agrees to furnish any financial
information requested by WCW to confirm Licensee's
credit status.
OTHER TERMS &
CONDITIONS: (a) WCW may remove from this Agreement any article
listed within the definition of Authorized
Ariticles which is not to diligently used by
Licensee for a period of three (3) consecutive
months, by giving thirty (30) days' written notice
to Licensee.
(b) It is understood that no product may be sold
until final product and design approval is given
by the Licensor, and no products may be sold or
produced until the long-form License Agreement has
been fully executed by the parties. If Licensor
signs the Deal Memo, Licensee and Licensor shall
enter into a License Agreement containing the
terms and conditions set forth in this Deal Memo
as well as such other and conditions customarily
found in WCW's Merchandise License Agreement.
It is specifically understood and agreed that the names and likenesses of
actor/talent, voice-over artists, and/or other elements listed below are
included within the definition of "Licensed Elements" (i) only to the extent of
WCW's ownership or control thereof and (ii) only as depicted in and as part of
the property.
Licensee understands and acknowledges that nothing herein grants Licensee the
right to use sound bites, voices, music, or other audio effects from the
property. If Licensee wishes to use any such elements, Licensor shall use
commercially reasonable efforts to assist Licensee in procuring the necessary
rights, but any rights, clearance or related fees arising from the same shall be
at Licensee's sole expense.
Licensee acknowledges and agrees that by signing this Deal Memo, Licensee is
making an irrevocable offer to Licensor to license from Licensor rights to the
Property on the terms and conditions as set forth in the Deal Memo. If Licensor
elects to countersign this Deal Memo, the parties will enter into good faith
negotiations to execute the long-form License Agreement. If a long-form License
Agreement satisfactory to Licensor is not signed within ninety (90) days of the
Deal Memo date, Licensor shall have the right to terminate this Agreement and
Licensor shall refund to Licensee any amounts paid by Licensee under this Deal
Memo and neither party shall have any liability to the other.
If this memo reflects your understanding of the Agreement please sign in the
indicated space below and return it to us with your Advance Payment.
LICENSEE: Trimfast Group, Inc. WORLD CHAMPIONSHIP WRESTLING (WCW)
By: By:
------------------------------ -------------------------------
Title: Title:
--------------------------- ----------------------------
Date: Date:
----------------------------- -----------------------------
<PAGE>
PAGE 4
DEAL MEMO
LICENSE NO.: D983287
PRELIMINARY APPROVAL
--------------------
LEISURE CONCEPTS. INC. WORLD CHAMPIONSHIP WRESTLING
- ---------------------- ----------------------------
AL KAHN
------------------ ---------------
JOE GARRITY C. COLLINS
--------------- ------------------
LEGAL DEPT.
-----------------
SALES DEPT.
-----------------
LCI REP.
------------------
Other Comments:
- ---------------
CONTACT INFORMATION
-------------------
Licensing Contact: Michael J. Muzzio
Tel. No. 813-275-0050
Art Contact: Shane Lewis Design
Tel. No. 813-290-0167
Royalties Contact: Michael J. Muzzio
Tel. No. 813-275-0050
Legal Contact: Jeffrey G. Klein
Tel. No. 561-470-9010
LEASE/OPTION
THIS LEASE/OPTION, entered into this 8th day of April, 1999, between
FRED R. BECKER, III and ELAINE S. BECKER, his wife, whose mailing address is:
2520 North Field Lane, Clearwater, FL 33761, "Lessor", and TRIMFAST GROUP, INC.,
whose mailing address is: 777 S. Harbor Island Boulevard, Tampa, FL 33602,
"Lessee".
W I T N E S S E T H:
--------------------
In consideration of the sum of Ten ($10.00) Dollars and other good and
valuable considerations, the receipt of which is hereby acknowledged, the
parties agree to lease the hereinafter described premises, on the terms as
hereinafter provided:
1. Premises. Lessor does hereby lease to Lessee all of the real
property and improvements situate on the hereinafter described property located
in Pinellas County, Florida, to-wit:
West 360, MOL, of Lot 5, BLACKBURN SUBDIVISION, according to the
map or plat thereof, as recorded in Plat Book 24, page 62, public
records of Pinellas County, Florida.
2. Rental Period. The term of this lease shall commence on 1999, or
issuance of a Certificate of the earlier of May 15, 1999, or issuance of a
Certificate of Occupancy for the premises (the "Commencement Date"), and shall
continue until midnight on the 30th day of June, 2000.
3. Rental. The agreed rental for the term is payable in advance on a
monthly basis on the 1st day of each and every month during the term hereof as
follows:
(a) $8,000/per month, plus all applicable sales tax,
commencing on the lst day of June, 1999, and on the lst day of each
and ever month thereafter, payable monthly in advance and without
demand, in the City of Clearwater or at such other place an to such
other person or persons as Lessor may from time to time designate in
writing. Provided, nevertheless, in the event the Commencement Date
is earlier than May 15, 1999, Lessee shall pay prorated rents at the
above rate from the Commencement Date to June 1st and monthly
thereafter.
4. Late Payment Charge. In addition to Lessor's remedies under the
terms of this Lease, upon Lessee's failure to pay the
<PAGE>
rent or to make any other payments required to be made by Lessee hereunder
within fifteen (15) days after the date, Lessor reserves the right to charge a
late payment charge for handling the Fifty Dollars ($50.00) plus five percent
(5%) of the outstanding balance due for each month or portion thereof. In no
event shall the amount of such interest and late charge be in excess of usury
laws.
5. Use of Premises. The Premises are leased to Lessee for the use as: a
manufacturing facility, as approved by the attached Conditional Use #6-4-98,
dated 5/21/98 or such other legal purposes authorized by applicable zoning laws
or other regulations.
6. Ad Valorem Taxes and Assessments. Lessee covenants and agrees to pay
and discharge during the month of November, all real estate taxes and
assessments on the Premises, including improvements thereof, due and payable
during the term of this Lease and any renewals thereof. Taxes for each year
shall be paid in November for the initial year, Lessor will pay Lessor's prorata
share, based upon the November discount, and Lessee shall timely deliver the
balance to Lessor, made payable to the Tax Collector, for payment to the Tax
Collector prior to the end of November, 1999.
7. Personal Property Taxes and Expenses Relating to the Use of its
Property. Lessee shall pay and hold Lessor harmless from and on account of all
claims for occupational license, personal property taxes or other obligations
attributable to the operation of Lessee's business on the Premises.
8. Utilities. Lessee agrees to pay the cost of all utilities, including
water, electricity, gas, sewer and trash collection. If these charges are not
paid when due and Lessor is required to pay same, they will be added to the
subsequent month's rent and shall be collectible from Lessee in the same manner
as rent. Lessor shall not be liable for damage to Lessee in the same manner as
rent. Lessor shall not be liable for damages to Lessee's business and/or
inventory or for any other claim by Lessee resulting from an interruption in
utility services or other casualty.
-2-
<PAGE>
9. Observance of Laws and Ordinances. Lessee agrees to observe, comply
with and execute promptly at its expense during the term hereof, all laws,
rules, requirements, orders, directives, codes, ordinances and regulations of
governmental authorities and agencies and of insurance carriers which relate to
its use or occupancy of the demised Premises. In addition, Lessee agrees to
abide by all rules and regulations reasonably promulgated from time to time by
Lessor for the demised Premises.
10. Maintenance and Repairs. Lessee covenants throughout the term of
this Lease and any renewal terms, at Lessee's sole cost and expense, to take
good care of the demised Premises, including the Building and improvements now
or at any time erected thereon, the equipment, fixtures, HVAC, motors and
machinery thereof, and the sidewalks, curbs, roadways, parking areas and fences,
if any, and to keep the same in good order and condition, and shall promptly at
Lessee's own cost and expense make all necessary repairs and replacements,
interior and exterior, structural and non-structural. All such repairs made by
Lessee shall be generally at least equal in quality and class to the original
work. Lessee shall keep and maintain all portions of the demised Premises and
sidewalks adjoining the same in a clean and orderly condition, free of
accumulation of dirt and rubbish. Lessee shall maintain all existing
landscaping, keeping same neat and properly trimmed and fertilized.
In the event Lessee shall not exercise its option, or upon any other
termination of this lease, Lessee shall fully restore the premises to their
original condition, excluding only normal wear and tear.
11. Indemnity. Lessee covenants and agrees to indemnify and save Lessor
harmless from and against any and all claims for damages or injuries to goods,
wares, merchandise and profit and for any personal injury or loss or life in,
upon, or about the demised Premises, and Lessee covenants to provide
comprehensive liability insurance coverage insuring Lessor against any liability
whatsoever
-3-
<PAGE>
occasioned by accident on or about the demised Premises, in a company, form and
amount reasonably acceptable to Lessor.
12. Fire and Extended Coverage Insurance. Lessee shall carry windstorm,
hurricane, fire and extended coverage insurance (and flood insurance if required
by Lessor's mortgagee) insuring the Building for its full insurance value, in a
form and company reasonably acceptable to Lessor, naming the Lessor and its
mortgages as additional insurance.
13. Intent of Parties. It being the intention and purpose of the
respective parties hereto that this Lease shall be a "Net Lease" to Lessor, with
all cost or expense, tax or assessment, of whatever character or kind, general
and special, ordinary and extraordinary, foreseen and unforeseen and of every
kind and nature whatsoever that may be necessary in or about the operation of
said demised Premises being paid by Lessee, and Lessee's authorized use thereof
during the entire term of this Lease and all provisions of this Lease relating
to expenses are to be construed in light of such intention and purpose to
construe this Lease as a "Net Lease".
14. Mortgages and Encumbrances. Lessor represents to Lessee that as of
the date of this lease, no mortgages, liens or other encumbrances exist on the
subject property EXCEPT FOR that certain mortgage to AmSouth Bank, originally
dated 4/3/84, having an approximate balance of $338,000 and ballooning on
5/24/01. Lessee shall have no right to expose Lessor's interest to mechanic's,
materialman's, laborer's or other lies or encumbrances of any type or nature at
any time hereunder.
15. Default. Lessee shall have a ten (10) day grace period, following
written notice to Lessee, before Lessor can proceed to enforce Lessor remedies
in the event of a default. If any default is not corrected, Lessor may
immediately enter on the leased Premises and repossess the same as of its former
estate, and expel Lessee and those claiming under Lessee, and remove their
effects without being deemed guilty of any manner of trespass and without
prejudice to any remedies which might otherwise be used for arrears
-4-
<PAGE>
of rent or preceding breach of covenant. Such property may be moved and stored
in a public warehouse or elsewhere at the cost and for the account of Lessee and
Lessor shall have no liability therefore, absent willful negligence. Should
Lessor elect to reenter as herein provided or should it take possession pursuant
to legal proceedings or pursuant to any notice provided, for by law, it may
either terminate this Lease or it may from time to time, without terminating
this Lease, make such alterations and repairs as may be necessary in order to
relet the Premises, and relet said Premises or any part thereof for such term
and at such rental and terms as Lessor may deem advisable; upon each such
reletting all rentals received by Lessor from such reletting shall be applied
first, to the payment of any indebtedness other than rent due hereunder from
Lessee to Lessor; second, to the payment of any costs and expenses of such
reletting, including brokerage fees and attorney's fees and costs of such
alterations and repairs; third, to the payment of rent due and unpaid hereunder;
and the residue, if any, shall be held by the Lessor and applied in payment of
future rent as the same may become due and payable hereunder. If such rentals
received from such reletting during any month be less than that to be paid
during that month by Lessee hereunder, Lessee shall pay any such deficiency to
Lessor. No such re-entry or taking possession of said Premises by Lessor shall
be construed as an election on its part to terminate this Lease unless a written
notice of such intention be given to Lessee. Notwithstanding any such reletting
without termination, Lessor may at any time thereafter elect to terminate this
Lease for such previous breach. Should Lessor at any time terminate this Lease
for any breach, in addition to any other remedies it may have, it may recover
from Lessee all damages it may incur by reason of such breach, including the
cost of recovering the leased Premises, reasonable attorney's fees, and
including the worth at the time of such termination of the excess, if any, of
the amount of rent and charges equivalent to rent reserved in this Lease for the
remainder of the stated term
-5-
<PAGE>
over the then reasonable rental value of the leased Premises for the remainder
of the stated term. In case suit shall be brought for recovery of possession of
the leased Premises, for the recovery of rent or any other amount due under the
provisions of this Lease, or because of the breach of any other covenants herein
contained on the part of Lessee to be kept or performed, and a breach shall be
established, Lessee shall pay to Lessor all expenses Lessor incurred therefor,
including a reasonable attorney's fee for trial and appellate legal services.
The specified remedies to which the Lessor may resort under the terms of
this Lease are cumulative and are not intended to be exclusive of any other
remedies or means of redress to which the Lessor may be lawfully entitled in
case of any breach or threatened breach by the Lessee of any provision of this
Lease. The failure of the Lessor to insist in any one or more cases upon the
strict performance of any of the covenants of this Lease or to exercise any
option herein contained shall not be construed as a waiver or relinquishment for
the future of such covenant or option. A receipt by the Lessor of rent with
knowledge of the breach of any covenant hereof (other than the payment of rent)
shall not be deemed a waiver of such breach and no waiver by the Lessor of any
provisions in this Lease shall be deemed to have been made unless expressed in
writing and signed by the Lessor. In addition to the other remedies in this
Lease provided, the Lessor shall be entitled to the restraint by injunction of
the violation, or attempted or threatened violation of the covenants, conditions
or provisions of this Lease.
Anything above, or elsewhere set forth in this lease to the contract
notwithstanding in the event of a default hereunder by Lessee, Lessee shall
retain the option to purchase to properties leased hereby, until the earlier of
the closing date of July 15, 2000, or expiration of the appeal period as to any
Court order cancelling this lease or evicting the Lessee for default, but in
-6-
<PAGE>
such case, the option price shall be adjusted to include the cost and fees
incurred by Lessor in adjudicating a default hereunder.
16. Florida Law Governs. This instrument is governed by and interpreted
pursuant to the laws of the State of Florida.
17. Binding on Successors. This Contract shall bind Lessor, its
successors or assigns, and the heirs, assigns, administrators, legal
representatives, executors or successors as the case may be, of Lessee, but may
not be assigned without the prior written consent of Lessor, which shall not be
unreasonably withheld.
18. Time is of the Essence. It is understood and agreed by the parties
hereto that time is of the essence as to this Lease and this applies to all
terms and conditions contained herein.
19. Non-Waiver Provision. It is further agreed that the failure of
either party hereto in one or more instances to insist upon strict performance
or observance of one or more of the covenants or conditions hereof, or to
exercise any remedy, privilege or option herein conferred upon or reserved to
Lessor or Lessee shall not operate or be construed as a relinquishment or right
to enforce the same or to exercise such privilege, option or remedy and that the
same shall continue in full force and effect.
20. Attorneys' Fees, Collection and Appeal. In the event of any
default, Lessee agrees to pay the cost of collection and including attorneys'
fees through any appeal.
21. Memorandum of Lease. The parties agree that upon the request of a
party, the other party will enter into a Memorandum of Lease for recording
purposes describing the Premises, term, Lessee's options to purchase, Lessee's
exclusive rights and such other matters as Lessee may request or as shall be
appropriate.
22. Vandalism. Lessor shall not be liable for any damage to, removal
of, or loss of any property of Lessee occasioned by any theft, burglary,
robbery, larceny, vandalism or any attempted theft, burglary, robbery, larceny
of any kind. Lessee will repair at its own cost and expense any damage or loss
caused to the demised Premises as a result of any such theft or vandalism.
-7-
<PAGE>
23. Alterations and Additions. Lessee may make any and all alterations,
additions, changes, improvements or modifications to the interior, exterior or
structural parts of the Building as it desires in order to maintain, replace,
repair or update the appearance without the necessity of obtaining the prior
consent of Lessor, so long as Lessee complies with all applicable building codes
and regulations.
Upon termination of this Lease, Lessee shall be under no obligation to
remove any alterations, additions, changes or improvements so as to restore the
Building to its prior condition. Lessor shall cooperate in securing all
necessary building and other permits required under this paragraph, and Lessor
does hereby irrevocably appoint Lessee as its agent and/or attorney-in-fact, to
authorize Lessee to obtain any and all permits, or other approvals as they
relate to the property, during the term of this lease, and any party relying
upon this appointment or designation shall not have any liability therefore.
24. Lessee's Signs. Lessee shall have the right to install and maintain
appropriate exterior signs identifying its business operations at the Premises
including, but not limited to, an illuminated, free-standing sign, provided the
same complies with-all applicable codes.
25. Notices. Notices to Lessor provided herein shall be sufficient if
sent by registered or certified mail, postage prepaid, or by facsimile
transmission, addressed to:
AS TO LESSOR: FRED R. AND ELAINE S. BECKER
2520 North Field Lane
Clearwater, FL 33761
FAX #
------------------------
AS TO LESSEE: TRIMFAST GROUP, INC.
777 S. Harbour Island Boulevard
Tampa, FL 33602
FAX # 813-275-0051
------------------------
or such other respective addresses as the parties may designate in writing from
time to time.
-8-
<PAGE>
27. Radon Gas. Radon is a naturally occurring radioactive gas that,
when it has accumulated in a building in sufficient quantities, may present
health risks to person's who are exposed to it over time. Levels of radon that
exceed Federal and State guidelines have been found in buildings in Florida.
Additional information regarding radon and radon testing may be obtained from
your County Public Health Unit.
28. Option to Purchase. In consideration of the sum of $100,000 paid
by Lessee to Lessor upon execution of this lease, Lessor grants to Lessee an
exclusive option to purchase the demised premises during the term of this lease,
the last day to effect closing being June 30, 2000. TIME BEING OF THE ESSENCE.
The said $100,000 payment is fully earned in consideration of said option and
this lease agreement, and is non-refundable, except if Lessee closes hereunder,
the payment shall be credited as hereinafter set forth. The purchase price shall
be for the sum of One Million Two Hundred Thousand ($1,200,000.00) Dollars, with
full credit for the $100,000 option monies paid. To exercise this said Option to
Purchase, Lessee shall give Lessor thirty (30) days written notice of its intent
to exercise this option, at which time Lessor shall order, at Lessor's expense,
a title insurance commitment, which shall insure the Lessee's purchase in the
full amount of the purchase price, reflecting the title to be marketable, and
free of all liens, encumbrances, or exceptions, except for ad valorem taxes
[which are the obligation of Lessee] and matters set forth in the attached
Exhibit "A", which are permitted exceptions [the "Permitted Exceptions"], the
existing lease hereinafter identified, and mortgages or other charges which will
be paid at closing. Lessor shall in addition to paying for owner's title
insurance as aforesaid, in a company reasonably acceptable to Lessee, pay for
documentary stamps in the full amount of the transfer, all in the amount of the
said purchase price, and shall pay for any corrective documents or actions
needed to make the title marketable, and consistent with the requirements
hereunder, or to otherwise comply
-9-
<PAGE>
with Lessor obligations under this lease agreement. All costs of any mortgage
financing by Lessee shall be Lessee's sole cost and expense. As to any other
transactional costs or charges arising at the time of exercise, they shall be
handled as is then the custom as established by the most recently drafted
FAR/BAR form real estate contract, except that there shall be no corrective
requirements for the physical property, since Lessee is obligated to make all
maintenance, treatment, repairs, etc., and there will be no proration of taxes
since the same is a Lessee obligation hereunder. Each party represents to the
other that neither has dealt with a real estate broker or agent incident to the
lease agreement evidenced hereby, or the option extended hereunder, and to the
extent such representations are not accurate and commissioned liability should
arise hereunder, the party misrepresenting such statement shall fully indemnify
the other party for all costs, charges and commissions due, including attorneys'
fees incident to said indemnity or the enforcement thereof. Anything herein to
the contrary notwithstanding, if Lessee exercises its option on a timely basis
and Lessor either cannot, or will not, convey the property by Warranty Deed
generally in accordance with this agreement, then Lessor shall immediately remit
the full $100,000 option amount, plus interest at the legal rate and this
agreement shall be at an end.
29. Miscellaneous.
-------------
A. There is an existing month-to-month lease on the premises. Lessor
shall retain all rents paid thereunder. Should Lessee exercise its option,
Lessor shall assign its rights in the lease to Lessee.
B. Lessee, at its expense, may order an Ownership & Encumbance Report
upon execution hereof. If it show title to be as stated, Lessee may by written
notice cancel this lease on or before May 1, 1999 and Lessor shall remit the
option monies paid.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
the day and year first above written.
In the Presence of:
/s/ /S/ FRED R. BECKER, III (SEAL)
---------------------------- ----------------------------
FRED R. BECKER, III
/S/ ELAINE S. BECKER (SEAL)
- ------------------------------ ----------------------------
As to "Lessor" ELAINE S. BECKER
TRIMFAST GROUP, INC.
/s/ Kimberly E. Mann By: /s/ Michael J. Muzzio (SEAL)
---------------------------- -------------------------
Kimberly E. Mann Michael J. Muzzio
- -------------------------------
As to "Lessee"
-11-
SUBSIDIARIES OF REGISTRANT:
HLHK World Group, Inc., a Nevada corporation
TrimFast, Inc., a Florida corporation
Nutrition Cafe, Inc., a Florida corporation
Body Life Sciences, Inc., a Florida corporation
Immmu, Inc., a Delaware corporation
Immcel Pharmeceuticals, Inc., a New York corporation
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in the Form 10-SB of Trimfast Group, Inc. our
report for the year ended December 31, 1998 dated June 10, 1999 relating to the
consolidating financial statements of Trimfast Group, Inc. and Subsidiaries
which appear in such Form 10-SB.
/s/ WEINBERG & COMPANY, P.A.
----------------------------
Certified Public Accountants
Boca Raton, Florida
July 7, 1999
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in the Form 10-SB of Trimfast Group, Inc. our
report for the year ended December 31, 1997 dated June 10, 1999 relating to the
financial statements of Trimfast, Inc. which appear in such Form 10-SB.
/s/ WEINBERG & COMPANY, P.A.
----------------------------
Certified Public Accountants
Boca Raton, Florida
July 7, 1999
Schvaneveldt & Company
Certified Public Accountant
275 East South Temple, Suite #300
Salt Lake City, Utah 84111
(801) 521-2392
Darrell T. Schvaneveldt, C.P.A.
Consent of Darrell T. Schvaneveldt
Independent Auditor
I consent to the use, of our report dated June 22, 1999, on the financial
statements of HLHK World Group, Inc., dated August 11, 1999, included herein, in
their filing of the 10SB.
/s/ Schvaneveldt & Company
Salt Lake City, Utah
July 6, 1999
