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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - SB
GENERAL FORM FOR REGISTRATION OF SEURITIES OF
SMALL BUSINESS ISSUERS Under Section 12(b) or
(g) of the Securities Exchange Act of 1934
Global SmartCards, Inc.
(Name of Small Business Issuer in its charter)
Nevada 86-0951473
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
38820 N. 25TH Avenue, Phoenix, AZ 85027
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(Address of principal executive offices) (zip code)
1-702-837-8811 (Phone) 1-702-837-8810 (FAX)
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Issuer's Telephone Number
Securities to be registered under section 12(b) of the Act:
Title of Each Class Name on each exchange on which
to be registered each class is to be registered
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- --------------------------- --------------------------------
Securities to be registered under section 12(g)of the Act:
Common Stock, $.001 par value per share, 25,000,000 shares authorized,
4,000,000 issued and outstanding as of August 26, 1999.
Copies of Communications sent to:
Brain G. Dvorak, Esq.
Dvorak & Associates
500 N. Rainbow, Suite 300
Las Vegas, NV 89107
Tel: (702) 794-4992 - Fax: (702) 794-4532
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FORWARD LOOKING STATEMENTS
CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS
Global SmartCards, Inc., a developmental stage company ("Global
SmartCards, Inc," or the "Company" or the "Registrant") cautions
readers that certain important factors may affect the Company's actual
results and could cause such results to differ materially from any
forward-looking statements that may be deemed to have been made in
this Document or that are otherwise made by or on behalf of the
Company. For this purpose, any statements contained in the Document
that are not statements of historical fact may be deemed to be
forward-looking statements. This Registration contains statements
that constitute "forward-looking statements." These forward-looking
statements can be identified by the use of predictive, future-tense or
forward-looking terminology, such as "believes," "anticipates,"
"expects," "estimates," "plans," "may," "will," or similar terms.
These statements appear in a number of places in this Registration and
include statements regarding the intent, belief or current
expectations of the Company, its directors or its officers with
respect to, among other things: (i) trends affecting the Company's
financial condition or results of operations for its limited history;
(ii) the Company's business and growth strategies; (iii) the Internet
and Internet commerce; and, (iv) the Company's financing plans.
Investors are cautioned that any such forward-looking statements are
not guarantees of future performance and involve significant risks and
uncertainties, and that actual results may differ materially from
those projected in the forward-looking statements as a result of
various factors. Factors that could adversely affect actual
results and performance include, among others, the Company's limited
operating history, dependence on continued growth in the use of the
Internet, the Company's inexperience with the Internet, potential
fluctuations in quarterly operating results and expenses, security
risks of transmitting information over the Internet, government
regulation, technological change and competition.
The accompanying information contained in this Registration,
including, without limitation, the information set forth under the
heading "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business"
identifies important additional factors that could materially
adversely affect actual results and performance. All of these factors
should be carefully considered and evaluated. All forward-looking
statements attributable to the Company are expressly qualified in
their entirety by the foregoing cautionary statement. Any forward-
looking statements in this report should be evaluated in light of
these important risk factors. The Company is also subject to other
risks detailed herein or set forth from time to time in the Company's
filings with the Securities and Exchange Commission.
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
Part I ....................................................... 4
Item 1. Description of Business................................ 4
Item 2. Management's Discussion and Analysis or Plan of
Operation...................................................... 22
Item 3. Description of Property............................... 23
Item 4. Security Ownership of Management and Others
and Certain Security Holders......................... 23
Item 5. Directors, Executives, Officers and Significant
Employees............................................. 25
Item 6. Remuneration of Directors and Executive
Officers.............................................. 30
Item 7. Certain Relationships and Related Transactions........ 30
Part II ...................................................... 31
Item 1. Market Price of and Dividends of the Registrant's
Common Equity and Other Stockholder Matters........... 31
Item 2. Legal Proceedings..................................... 32
Item 3. Recent Sales of Unregistered Securities............... 32
Item 4. Description of Securities............................. 34
Item 5. Indemnification of Directors and Officers............. 35
Part F/S ...................................................... 36
Item 1. Financial Statements.................................. 36
Item 2. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure................... 36
Part III ...................................................... 37
Item 1. Index to Exhibits..................................... 37
Item 2. Description of Exhibits............................... 37
The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information and the
Financial Statements and Notes related thereto appearing elsewhere in
this Registration. Except where the context otherwise requires, all
references in this Registration to (a) the "Registrant" or the
"Company" or "Global SmartCards.com" refer to Global SmartCards, Inc.,
a Nevada corporation, (b) the "Web" refer to the World Wide Web and
the "site" refers to the Company's Web site.
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Part I
Item 1. Description of Business
A. Business Development, Organization and Acquisition Activities
Global SmartCards, Inc., is a developmental stage Company, who plans
to market its products through the Internet, hereinafter referred to
as "Global SmartCards, Inc." or the "Company" or the "Registrant",
was organized by the filing of Articles of Incorporation with the
Secretary of State of the State of Nevada on February 16, 1999. The
Company is a development stage company with a principal business
objective to sell and market Smart Cards to hotels, resorts, cruise
lines and casinos. The Company plans to support these services through
its WEB site presence (www.gscards.com). The Company plans to be a
provider of consumer credit tracking and loyalty programs for
specialized market niches in the world resort and cruise markets
through the use of Smart Cards. The original Articles of the Company
authorized the issuance of twenty- five million (25,000,000) common
shares. There are twenty-five million (25,000,000) shares of Common
Stock at par value of $0.001 per share and no Preferred stock. The
Registrant was incorporated on February 16, 1999, in the state of
Nevada under the name Global SmartCards, Inc. In connection with its
formation, a total of two million (2,000,000) shares of its common stock
were purchased by the three founders of the Company, on February 18, 1999
for cash. Between February 23 and February 28, 1999, the Company sold one
million (1,000,000) shares of its common stock in connection with a public
offering at a price of $0.025 per share. On or about February 28, 1999, the
Company completed a public offering of shares of common stock of the Company
pursuant to Regulation "D," Rule 504 of the Securities Act of 1933, as amended,
whereby it sold one million (1,000,000) shares of the Common Stock of the
Company for twenty-five thousand ($25,000) dollars to approximately twenty-five
(25) unaffiliated shareholders of record. The Company filed an original Form D
with the Securities and Exchange Commission on or about February 25, 1999. On
August 26 1999, the company completed a subsequent Public Offering that was
offered without registration under the Securities Act of 1933, as amended
(The "Act"), in reliance upon the exemption from registration afforded by
sections 4(2) and 3 (b) of the Securities Act and Regulation "D" promulgated
thereunder. The Company sold to six (6) additional unaffiliated shareholders,
one million (1,000,000) shares of common stock at a price of $.05 per share for
a total amount raised of fifty thousand ($50,000) dollars. As of August 26,
1999, the Company has four million shares (4,000,000) shares of its $0.001 par
value common voting stock issued and outstanding which are held by
approximately thirty-four (34) shareholders, including the three founding
shareholders, of record. The Company is a newly formed development stage
company, which plans to market Loyalty Programs to hotels, resorts, cruise
lines and casinos using Smart Cards (plastic cards with embedded
microprocessors) and support these services through its Web site, i.e.,
www.gscards.com.
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B. Business of Issuer
1) Principal Products, Services and Principal Markets.
The Company is developmental stage company, which plans to market
Smart Cards to hotels, resorts, cruise lines and casinos using Smart
Cards (plastic cards with embedded microprocessors) and support these
services through its Web site, i.e., www.gscards.com. Management of
company believes that they can deliver a more cost-effective turn-key
program with the ability to share consumer information and profiles
between clients and build a comprehensive database for resale. The
Company hopes to provide solutions for the growing demand in
application of computers in the wallet or what have been termed Smart
Cards, and the implementation of loyalty programs based on the
technology (See "Business of the Company"). The Company plans to
provide consumer credit tracking and loyalty programs for specialized
market niches focused toward the resort and cruise markets through the
use of Smart Cards. The Global Smart Cards are designed to
eliminate growing transaction charges by creating an internal credit
system for each client while adding photo identification for security
verification. The Company plans to contract with Gemplus a major
worldwide provider of Smart Card solutions, for use of their technology
platform. At this time, no contract has been made between the Company
and Gemplus. Gemplus has developed a flexible, configurable technology
engine which offers merchants a method to retain customers as compared
to traditional stand alone paper card alternatives. Any potential
revenue which the Company might generate would be derived from
sales by the Company to hotels, casinos, cruise lines and resorts,
which generally achieve full occupancy levels and consistent sold out
turnover.
Management believes that placing this technology into foreign resorts
would enhance the Company's revenues as wholesaler volume discounts for
hardware would then be made available to these customers from the
Company. The Company hopes to also achieve revenues from maintenance
contracts and supply of new cards.
Management believes their product has value for the following reasons:
1) Client resorts would be able to bypass numerous credit card
transaction fees by providing Global SmartCards with an adjustable
credit value. Global Card holder would pay for the credit value once
at the beginning of their vacation using Visa, MasterCard, Traveler's
Cheques, etc. This would mean one transaction fee to the client.
Thereafter, there would be no transaction fees involved in using the
Global Smart Cards. If the credit limit runs out, the Global Card holders
can add more credit to their card via regular payment methods.
2) Global plans to have the photograph of the Global Card holder
placed in a database accessible to resort cashiers to verify that the
particular person is a GlobalCard holder. The credit total and
transaction history would be tracked through this database.
Additionally, the Global Card would have the Global Card
holder's picture printed on the card itself.
3) Loyalty programs with reward points could be built into the card
program as an added value and customization for the client resort. At
the end of the vacation period, any remaining credit would be refunded
to the Global Card holder.
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(a) Limited Operating History
The Company was first incorporated in the State of Nevada on February
16, 1999. Accordingly, the Company has a limited operating history
upon which an evaluation of the Company, its current business and its
prospects can be based, each of which must be considered in light of
the risks, expenses and problems frequently encountered by all
companies in the early stages of development, and particularly by such
companies entering new and rapidly developing and mature markets. The
Company's prospects must be considered in light of the risks,
uncertainties, expenses and difficulties frequently encountered by
companies in their early stages of development, particularly companies
who face competition from other more established companies in this
market. Such risks include, without limitation, the lack of broad
acceptance of the company's products, the company's inability to build
a customer base, inability for the Company to fully develop and utilize
its Internet Web site, the possibility that the Internet will fail to
achieve broad acceptance, the inability of the Company to generate
significant revenues from customers, the company's inability to
anticipate and adapt to a developing market, the failure of the
company's network infrastructure (including its server, hardware and
software) to efficiently handle its Internet traffic, changes in laws
that adversely affect the company's business, the ability of the
Company to manage its operations, including the amount and timing of
capital expenditures and other costs relating to the expansion of the
company's operations, the introduction and development of different or
more extensive communities by direct and indirect competitors of the
Company, including those with greater financial, technical and
marketing resources, the inability of the Company to maintain and
increase levels of traffic on its Web site, the inability of the
Company to attract, retain and motivate qualified personnel and general
economic conditions.
(b) Anticipated Losses for the Foreseeable Future
The Company has not achieved profitability to date, and the Company
anticipates that it will continue to incur net losses for the
foreseeable future. The extent of these losses will depend, in part,
on the amount of growth in the Company's revenues from sales of its
products. As of August 26, 1999, the Company had an accumulated
deficit of Thirty-two Thousand Six Hundred Sixty ($32,660) dollars.
The Company expects that its operating expenses will increase
significantly during the next several years, especially in the areas of
sales and marketing, and brand promotion. Thus, the Company will need
to generate increased revenues to achieve profitability. To the extent
that increases in its operating expenses precede or are not
subsequently followed by commensurate increases in revenues, or that
the Company is unable to adjust operating expense levels accordingly,
the Company's business, results of operations and financial condition
would be materially and adversely affected. There can be no assurances
that the Company can achieve or sustain profitability or that the
Company's operating losses will not increase in the future.
(c) Dependence on Continued Growth and Viability of Smart Cards
The Company's future success is substantially dependent upon
acceptance and usage of Smart Cards. To generate product sales, the
Company must identify a customer base that had a need for their
products. This are no assurances that this can take place. The
Internet may prove not to be a viable commercial marketplace for their
products. Additionally, due to the ability of their customers to easily
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compare prices of similar products or services on competing Web sites,
gross margins for e-Commerce transactions may narrow in the future and,
accordingly, the Company's revenues from utilizing its Web site may be
materially negatively impacted. If use of the Internet does not
continue to grow, the Company's business, results of operations and
financial condition would be materially and adversely affected.
Additionally, to the extent that the Internet continues to experience
significant growth in the number of users and the level of use, this
can be no assurance that its technical infrastructure will continue to
be able to support the demands placed upon it. The necessary technical
infrastructure for significant increases with the Internet, such as a
reliable network backbone, may not be timely and adequately developed.
In addition, performance improvements, such as high-speed modems, may
not be introduced in a timely fashion. Furthermore, security and
authentication concerns with respect to transmission over the Internet
of confidential information, such as credit information, may remain.
Issues like these could lead to resistance against the acceptance of
the Internet as a viable commercial marketplace. Also, the Internet
could lose its viability due to delays in the development or adoption
of new standards and protocols required to handle increased levels of
activity, or due to increased governmental regulation. Changes in or
insufficient availability of telecommunications services could result
in slower response times and adversely affect usage of the Internet.
Demand and market acceptance for recently introduced services and
products over the Internet are subject to a high level of uncertainty,
and this exist few proven services and products.
The Internet may not be commercially viable in the long term for a
number of reasons, including potentially inadequate development of the
necessary network infrastructure or delayed development of enabling
technologies, performance improvements and security measures. To the
extent that the Internet continues to experience significant growth in
the number of users, their frequency of use or their band width
requirement, this can be no assurance that the infrastructure for the
Internet and other online services will be able to support the demands
placed upon them. In addition, the Internet or other online services
could lose their viability due to delays in the development or
adoption of new standards and protocols required to handle increased
levels of Internet or other online service activity, or due to
increased governmental regulation. Changes in or insufficient
availability of telecommunications services to support the Internet or
other online services also could result in slower response times and
adversely affect usage of the Internet and other online services
generally and Global SmartCards,Inc. in particular. If use of the
Internet and other online services does not continue to grow or grows
more slowly than expected, if the infrastructure for the Internet and
other online services does not effectively support growth that may
occur, or if the Internet and other online services do not become a
viable commercial marketplace, the Company's business, results of
operations and financial condition would be adversely affected.
(d) Risk Supply Failures
The Company plans to use the Gemplus (Gem Club Micro platform) to
operate and market its loyalty programs. Gem Club Micro is a
microprocessor card with advanced loyalty function that has been
developed for loyalty card applications. Gem Club Micro cards can be
used in other type of application, including coupon programs, store-
valued cards, private electronic purses, metering (e.g., measuring
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consumption of gas or electricity), customer identification. Up to
thirty (30) counters can be created in a Gem Club Micro cards. The
Company plans to purchase and market these microprocessor cards. The
Company is dependent upon the manufacturer of these cards. If the
manufacturer experiences problems in producing these cards, this would
hamper sales results for the Company. If the manufacturer supplies
microprocessor cards which malfunction, this could hurt the image of
the Company and future business. The Company does not have any
exclusive contract with any manufacturer of these microprocessors
cards, Therefore, if supplies become limited this are no
assurances that the Company will have product to market and sell.
(e) Risk of System Failures
The Company's ability to facilitate trade successfully and provide
high quality customer service via the Internet, depends on the
efficient and uninterrupted operation of its computer and
communications through its designated Internet Service Provider (ISP).
These systems and operations are vulnerable to damage or interruption
from earthquakes, floods, fires, power loss, telecommunication
failures, break-ins, sabotage, intentional acts of vandalism and
similar events. The Company does not have fully redundant systems, a
formal disaster recovery plan or alternative providers of hosting
services and does not carry business interruption insurance to
compensate it for losses that may occur. Despite any precautions taken
by, and planned to be taken by the Company, the occurrence of a natural
disaster or other unanticipated problems with its ISP could result in
interruptions in the services provided by the Company.
In addition, the failure by the ISP to provide the data communications
capacity required by the Company, as a result of human error, natural
disasters other operational disruption, could result in interruptions
in the Company's service. Any damage to or failure of the systems of
the Company could result in reductions in, or terminations of, the
Global SmartCards service, which could have a material adverse effect
on the Company's business, results of operations and financial
condition. In the case of frequent or frequent or persistent system
failures, the Company's reputation and name brand could be materially
adversely affected. Although the Company has implemented certain
network security measures, the Company and its IPS are also vulnerable
to computer viruses, physical or electronic break-ins and similar
disruptions, which could lead to interruptions, delays, loss of data or
the inability to complete customer auctions. In addition, although the
Company works to prevent unauthorized access to Company data, it is
impossible to eliminate this risk completely. The occurrence of any and
all of these events could have a material adverse effect on the
Company's business, results of operations and financial condition.
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(f) Competition
The Company expects to experience heavy competition in marketing
its services. The Company will experience competition from
Corporations who are developing their own marketing departments using
similar off the shelf Smart Card technologies. Management believes
that they can deliver a more cost-effective turn-key program with the
ability to share consumer information and profiles between clients and
build a comprehensive database for resale. However, there are no
assurances that they will be successful in this endeavor.
Smart card manufacturers are now marketing to secondary adopters whose
requires Smart Cards shift from being the new technological wonder to
providing legitimate solutions for the businesses. The Smart Card
industry has yet to prove fully the technology's case as a legitimate
business tool. Although manufacturers are still exploring other
applications such as loyalty programs, internet commerce and network
security, the market has stalled as far as the end-user is concerned
with warning signs that the next few years will be lean, and may
include the failure of the immediate materialization of stored-value
card installations by bank card associations such as Visa and member
banks, delays in project roll-out, and extreme pricing competition.
The market for providing Smart Card services over the Internet is
relatively new, rapidly evolving and intensely competitive, and the
Company expects competition to intensify further in the future.
Barriers to entry are relatively low, and current and new competitors
can launch new sites at a relatively low cost using commercially-
available software. The Company potentially competes with a number of
other companies marketing similar health care products over the
Internet. Competitive pressures created by any of the Company's
competitors, could have a material adverse effect on the Company's
business, results of operations and financial condition.
The Company believes that the principal competitive factors in its
market are volume and selection of goods, population of buyers and
sellers, community cohesion and interaction, customer service,
reliability of delivery and payment by users, brand recognition, WEB
site convenience and accessibility, price, quality of search tools and
system reliability. Some of the Company's potential competitors have
longer operating histories, larger customer bases, greater brand
recognition and significantly greater financial, marketing, technical
and other resources than the Company. In addition, other online
trading services may be acquired by, receive investments from or enter
into other commercial relationships with larger, well-established and
well-financed companies as use of the Internet and other online
services increases.
Therefore, certain of the Company's competitors with other revenue
sources may be able to devote greater resources to marketing and
promotional campaigns, adopt more aggressive pricing policies and
devote substantially more resources to Web site and systems development
than the Company or may try to attract traffic by offering services for
free. Increased competition may result in reduced operating margins,
loss of market share and diminished value in the Company's brands.
This can be no assurance that the Company will be able to compete
successfully against current and future competitors. Further, as a
strategic response to changes in the competitive environment, the
Company may, from time to time, make certain pricing, service or
marketing decisions or acquisitions that could have a material adverse
effect on its business, results of operations and financial condition.
New technologies and the expansion of existing technologies may
increase the competitive pressures on the Company by enabling the
Company's competitors to offer a lower-cost service.
Certain Web-based applications that direct Internet traffic to certain
Web sites may channel users to trading services that compete with the
Company. Although the Company plans to establish arrangements with
online services and search engine companies, this can be no assurance
that these arrangements will be renewed on commercially reasonable
terms or that they will otherwise bring traffic to the Global
SmartCards.com WEB site. In addition, companies that control access to
transactions through network access or Web browsers could promote the
Company's competitors or charge the Company substantial fees for
inclusion. Any and all of these events could have a material adverse
effect on the Company's business, results of operations and financial
condition.
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(g) Potential Fluctuations in Operating Results; Quarterly Fluctuations
The Company's operating results may fluctuate significantly in the
future as a result of a variety of factors, many of which are outside
the Company's control. See "Limited Operating History." As a
strategic response to changes in the competitive environment, the
Company may from time to time make certain pricing or marketing
decisions with their Smart Card business that could have a material
short-term or long-term adverse effect on the Company's business,
results of operations and financial condition. In particular, in order
to accelerate the promotion of the Company's Web Site
(www.gscards.com), the Company intends to market it Web site
through the major search engines. The Company believes that it may
experience seasonality in its business, with use of the Internet and
Global SmartCards.com being somewhat lower during the summer vacation
and year-end holiday periods. Advertising impressions (and therefore
revenues) may be expected to decline accordingly in those periods.
Additionally, seasonality may affect significantly any potential
advertising revenues during the first and third calendar quarters, as
advertisers historically spend less during these periods.
This can be no assurance that such patterns will not have a material
adverse effect on the Company's business, results of operations and
financial condition. In addition to selling its brands, it is the
Company's strategy is to generate additional revenues through e-
Commerce arrangements including for other companies to advertise on the
Company's Web site. This can be no assurance that the Company will
receive any material amount of revenue under these agreements in the
future. The foregoing factors, in some future quarters, may lead the
Company's operating results to fall below the expectations.
(h) Risk Of Capacity Constraints And Systems Failures
A key element of the Company's strategy is to support its Smart Card
services through its Web site. The Company's ability to attract
customers and to achieve market acceptance of its products depends
significantly upon the performance of the Company and its network
infrastructure (including its server, hardware and software). The
Company plans to enter into a web site agreement with Smackdab
Corporation. Under this agreement, Smackdab will market the Company's
web site with the major search engines (e.g., Yahoo, Lycos, Infoseek,
etc.) in order to increase traffic to the Company's Web Site. Any
system failure that causes interruption or slower response time of the
Company's products and services could result in less traffic to the
Company's Web site and, if sustained or repeated, could reduce the
attractiveness of the Company's products. An increase in the volume of
user traffic could strain the capacity of the Company's technical
infrastructure, which could lead to slower response time or system
failures, and could adversely affect operating results. This can be
no assurance that the Company and its technical infrastructure will be
able to grow accordingly, and the Company faces risks related to its
ability to scale up to its expected customer levels while maintaining
superior performance. Any failure of the Company's server and networking
systems to handle current or higher volumes of traffic would have a material
adverse effect on the Company's business, results of operations and financial
condition. The Company is also dependent upon third parties to provide
product support. In the past, users have occasionally experienced
difficulties with Internet and online services due to system failures,
including failures unrelated to the Company's systems. Any disruption in
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Internet access provided by third parties could have a material
adverse effect on the Company's business, results of operations and
financial condition. Furthermore, the Company is dependent on hardware
suppliers for prompt delivery, installation and service of equipment
used to deliver the Company's products and services. The Company's
operations are dependent in part upon its ability to protect its
operating systems against damage from human error, fire, floods, power
loss, telecommunications failures, break-ins and similar events. The
Company does not presently have redundant, multiple-site capacity in
the event of any such occurrence. The Company's servers are also
vulnerable to computer viruses, break-ins and similar disruptions from
unauthorized tampering with the Company's computer systems. The
occurrence of any of these events could result in the interruption,
which could have a material adverse effect on the Company's business,
results of operations and financial condition. In addition, the
Company's reputation could be materially and adversely affected.
(i) Risks Associated With New Services, Features and Functions
This can be no assurance that the Company would be able to expand its
operations in a cost-effective or timely manner or that any such
efforts would maintain or increase overall market acceptance.
Furthermore, any Smart Card business launched by the Company that is
not favorably received by customers could damage the Company's
reputation and diminish the value of its brand name. Expansion of the
Company's operations in this manner would also require significant
additional expenses and development, operations train the Company's
management, financial and operational resources. The lack of market
acceptance of the Company's products would result in the Company's
inability to generate satisfactory revenues and its inability to offset
their costs could have a material adverse effect on the Company's
business, results of operations and financial condition.
(j) Online Commerce Security Risks
A significant barrier to online Global SmartCard service support and
communications is the secure transmission of confidential information
over public networks. Global SmartCards, Inc. plans to support its
services via its Web site. The Company will rely on encryption and
authentication technology licensed from third parties to provide the
security and authentication technology to effect secure transmission of
confidential information, including confidential customer information.
This can be no assurance that advances in computer capabilities, new
discoveries in the field of cryptography, or other events or developments
will not result in a compromise or breach of the technology used by the
Company to protect customer transaction data from one its competitors.
If any such compromise of the Company's security were to occur, it could
have a material adverse effect on the Company's reputation and, therefore,
on its business, results of operations and financial condition. Furthermore,
a party who is able to circumvent the Company's security measures could
misappropriate proprietary information or cause interruptions in the
Company's operations. The Company may be required to expend significant
capital and other resources to protect against such security breaches or to
alleviate problems caused by such breaches. Concerns over the security of
transactions conducted on the Internet and other online services and the
privacy of users may also inhibit the growth of the Internet and other online
services generally, and the Web in particular, especially as a means of
conducting commercial transactions. To the extent that activities of the
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Company involve with the storage and transmission of proprietary
information, security breaches could damage the Company's reputation
and expose the Company to a risk of loss or litigation and possible
liability. This can be no assurance that the Company's security
measures will prevent security breaches or that failure to prevent
such security breaches will not have a material adverse effect on the
Company's business, results of operations and financial condition.
(k) Risks Associated with Acquisitions
If appropriate opportunities present themselves, the Company would
acquire businesses, technologies, services or product(s) that the
Company believes are strategic.
The Company currently has no understandings, commitments or agreements
with respect to any other material acquisition and no other material
acquisition is currently being pursued. This can be no assurance that
the Company will be able to identify, negotiate or finance future
acquisitions successfully, or to integrate such acquisitions with its
current business. The process of integrating an acquired business,
technology, service or product(s) into the Company may result in
unforeseen operating difficulties and expenditures and may absorb
significant management attention that would otherwise be available for
ongoing development of the Company's business. Moreover, this can be
no assurance that the anticipated benefits of any acquisition will be
realized. Future acquisitions could result in potentially dilutive
issuances of equity securities, the incurrence of debt, contingent
liabilities and/or amortization expenses related to goodwill and other
intangible assets, which could materially adversely affect the
Company's business, results of operations and financial condition. Any
future acquisitions of other businesses, technologies, services or
product(s) might require the Company to obtain additional equity or
debt financing, which might not be available on terms favorable to the
Company, or at all, and such financing, if available, might be
dilutive.
(l) Risks Associated With International Operations
A component of the Company's strategy is to offer its products online
to international customers. Expansion into the international markets
will require management attention and resources. The Company has
limited experience in localizing its service, and the Company believes
that many of its competitors are also undertaking expansion into
foreign markets. There can be no assurance that the Company will be
successful in expanding into international markets. In addition to the
uncertainty regarding the Company's ability to generate revenues from
foreign operations and expand its international presence, this are
certain risks inherent in doing business on an international basis,
including, among others, regulatory requirements, legal uncertainty
regarding liability, tariffs, and other trade barriers, difficulties in
staffing and managing foreign operations, longer payment cycles,
different accounting practices, problems in collecting accounts
receivable, political instability, seasonal reductions in business
activity and potentially adverse tax consequences, any of which could
adversely affect the success of the Company's international operations.
12
<PAGE>
To the extent the Company expands its international operations and has
additional portions of its international revenues denominated in
foreign currencies, the Company could become subject to increased risks
relating to foreign currency exchange rate fluctuations. There can be
no assurance that one or more of the factors discussed above will not
have a material adverse effect on the Company's future international
operations and, consequently, on the Company's business, results of
operations and financial condition.
2) Distribution Methods of the Products and Services
The Company will be significantly dependent on a number of third-party
relationships to supply product(s), to ship product(s), and increase
traffic to Global SmartCards.com. Additionally, with regards to the
Company's Internet Web site is generally dependent on other Web site
operators that provide links to Global SmartCards (www.gscards.com).
The Company does not have any agreements with any Web site operators
that provide links to its Web site at this time, and, if the Company
can established such links the other Web site operators may terminate
such links at any time without notice to the Company. This can be no
assurance that third parties will regard their relationship with the
Company as important to their own respective businesses and operations.
There can be no assurance that the Company will ever develop a relationships
with third parties that supply the Company with links to their Web site.
In particular, the elimination of a pre-installed bookmark on a Web browser
that directs traffic to the Company's Web site could significantly reduce
traffic on the Company's Web site, which would have a material adverse
effect on the Company's business, results of operations and financial
condition. Additionally, at this time, the Company has not entered into
any agreements with any suppliers to ship and provide products.
3) Status of Any Announced New Product or Service
The Company does not have any announced new product or service.
The Company needs to develop a customer base for its Loyalty Programs,
utilizing the SmartCard. The Company, however, has yet to announce
any new products and has not announced any other recent additions or
services.
4) Industry Background
There was initial interest in Smart Cards by early adopters ten (10)
years ago, when these cards were first introduced. The Smart Card
industry has been developing new and improved technologies. Due to
the maturity of this industry, business for Smart Cards has been
slowing down. According to research conducted by Frost & Sullivan,
Worldwide Smart Card Application Markets and Worldwide Smart Card IC
Markets, the Smart Cards market has hit a "market canyon" in its
transition from embryonic to the developmental stage. Building an in-
house database of project, Frost & Sullivan calculated the Smart Card
market to have issued 912 million cards in 1998. Analyst Alyxia T. Do,
for Frost & Sullivan stated, "The Smart Card industry is now ending its
dynamic growth phase that resulted from installation by early adopters
of the technology."
The support of Smart Cards services through the company's Web site is
a somewhat new and evolving concept, it is difficult to predict with
any assurance whether the Web will prove to be a viable commercial
marketplace in the long term. The Web has experienced, and is
expected to continue to experience, significant growth in the numbers
of users and amount of traffic. To the extent that the Web continues to
experience increased numbers of users, frequency of use or increased
bandwidth requirements of users, this can be no assurance that the Web
infrastructure will continue to be able to support the demands placed
on it by this continued growth or that the performance or reliability
of the Web will not be adversely affected.
13
<PAGE>
Furthermore, the Web has experienced a variety of outages and other
delays as a result of damage to portions of its infrastructure, and
could face such outages and delays in the future, including outages
and delays resulting from the inability of certain computers or
software to distinguish dates in the 21st century from dates in the
20th century. These outages and delays could adversely affect the
level of Web usage and also the level of traffic for Global SmartCards,
Inc. In addition, the Web could lose its viability due to delays in
the development or adoption of new development or adoption of new
standards and protocols to handle increased levels of activity or due
to increased governmental regulation.
The Internet allows marketers to collect meaningful demographic
information and feedback from consumers, and to rapidly respond to
this information with new messages. This offers a significant new
opportunity for businesses to increase the effectiveness of their
direct marketing campaigns. In traditional media, a significant portion
of all advertising budgets are spent on direct marketing because of its
effectiveness. However, the effectiveness of direct marketing
campaigns is dependent upon the quality of consumer data used to
develop and place complementary products, services or facilities are
developed and the Web becomes a viable commercial marketplace in the
long term, the Company might be required to incur substantial
expenditures in order to adapt its products to changing Web
technologies, which could have a material adverse effect on the
Company's business, results of operations and financial condition.
14
<PAGE>
(a) E-Commerce and Direct Marketing.
The Internet has become a significant marketplace for buying and
selling goods and services. Industry estimates that the amount of goods
or services purchased in online consumer transactions will grow from
approximately $2.6 billion in 1997 to approximately $37.5 billion in
2002. Improvements in security, interface design and transaction-
processing technologies have facilitated an increase in online
consumer transactions. Early adopters of such improvements include
online merchants offering broad product catalogs (such as books, music
CDs and toys), those seeking distribution efficiencies (such as PCs,
flowers and groceries) and those offering products and services with
negotiable pricing (such as automobiles and mortgages). The Company
believes that online companies provide businesses an opportunity to
link Internet customers with like interests. The Internet allows
marketers to collect meaningful demographic information.
The Company's business strategy relies on providing support for the
Company's services via the Company's Web site. Any significant
deterioration in general economic conditions that adversely affected
these companies could also have a material adverse effect on the
Company's business, results of operations and financial condition.
5) Raw Materials and Suppliers
The Company is a not a manufacturer and is dependent in purchasing
plastic cards with embedded microprocessors from other suppliers.
Therefore, the Company does not use any raw materials.
6) Customers
The Company believes that establishing and maintaining brand identity
through Loyalty Programs to Hotels, Resorts, Cruise Line, and Casinos
is a critical aspect of its efforts to attract new customers In order
to attract new customers, the Company intends to make a commitment to
the creation and maintenance of brand loyalty among these groups. The
Company plans to accomplish this, although not exclusively, through
advertising its Web site through the various search engines, marketing
its site to businesses/customers through e-mail, online media, and
other marketing and promotional efforts.
There can be no assurance that brand promotion activities will yield
increased revenues or that any such revenues would offset the expenses
incurred by the Company in building its brands. Further, this can be
no assurance that any new users attracted to Global SmartCards will
conduct business with the Company on a regular basis. If the Company
fails to promote and maintain its brand or incurs substantial expenses
in an attempt to promote and maintain its brand or if the Company's
existing or future strategic relationships fail to promote the
Company's brand or increase brand awareness, the Company's business,
results of operations and financial condition would be materially
adversely affected.
15
<PAGE>
7) Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements, or Labor Contracts
The Company regards substantial elements of its future and underlying
infrastructure and technology as proprietary and attempts to protect
them by relying on trademark, service mark, copyright and trade secret
laws and restrictions on disclosure and transferring title and other
methods. The Company plans to enter into confidentiality agreements
with its future employees, future suppliers and future consultants and
in connection with its license agreements with third parties and
generally seeks to control access to and distribution of its technology,
documentation and other proprietary information. Despite
these precautions, it may be possible for a third party to copy or
otherwise obtain and use the Company's proprietary information without
authorization or to develop similar technology independently.
Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related
businesses are uncertain and still evolving, and no assurance can be
given as to the future viability or value of any of the Company's
proprietary rights. This can be no assurance that the steps taken by
the Company will prevent misappropriation or infringement of its
proprietary information, which could have a material adverse effect on
the Company's business, results of operations and financial condition.
Litigation may be necessary in the future to enforce the Company's
intellectual property rights, to protect the Company's trade secrets
or to determine the validity and scope of the proprietary rights of
others. Such litigation might result in substantial costs and
diversion of resources and management attention. Furthermore, this
can be no assurance that the Company's business activities will not
infringe upon the proprietary rights of others, or that other parties
will not assert infringement claims against the Company, including
claims that by directly or indirectly providing hyperlink text links
to Web sites operated by third parties. Moreover, from time to time,
the Company may be subject to claims of alleged infringement by the
Company or service marks and other intellectual property rights of
third parties. Such claims and any resultant litigation, should it
occur, might subject the Company to significant liability for damages,
might result in invalidation of the Company's proprietary rights and,
even if not meritorious, could result in substantial costs and
diversion of resources and management attention and could have a
material adverse effect on the Company's business, results of
operations and financial condition.
8) Regulation
The law relating to the liability of companies promoting their
products and services online is currently unsettled. It is possible
that claims could be made against online e-Commerce companies under
both United States and foreign law for defamation, libel, invasion of
privacy, negligence, copyright or trademark infringement, or other
theories based on the nature and content of the materials disseminated
through their Web site. Several private lawsuits seeking to impose
such liability upon other online companies are currently pending.
16
<PAGE>
9) Effect of Existing or Probable Government Regulations
Government legislation has been proposed that imposes liability for or
prohibits the transmission over the Internet of certain types of
information.
The imposition upon the Company and other online providers of
potential liability for information carried on or disseminated through
their services could require the Company to implement measures to
reduce its exposure to such liability, which may require the Company
to expend substantial resources and/or to discontinue certain service
offerings. In addition, the increased attention focused upon liability
issues as a result of these lawsuits and legislative proposals could
impact the growth of Internet use.
The Company does not believe that such regulations, which were adopted
prior to the advent of the Internet, govern the operations of the
Company's business nor have any claims been filed by any state
implying that the Company is subject to such legislation. This can be
no assurance, however, that State government will not attempt to
impose these regulations upon the Company in the future or that such
imposition will not have a material adverse effect on the Company's
business, results of operations and financial condition. Several
States have also proposed legislation that would limit the uses of
personal user information gathered online or require online services
to establish privacy policies. The Federal Trade Commission has also
recently settled a proceeding with one online service regarding the
manner in which personal information is collected from users and
provided to third parties. Changes to existing laws or the passage of
new legislation, could create uncertainty in the marketplace that
could reduce demand for the services of the Company or increase the
cost of doing business as a result of litigation costs or increased
service delivery costs, or could in some other manner have a material
adverse effect on the Company's business, results of operations and
financial condition. In addition, because the Company's services are
accessible worldwide, and the Company may facilitate sales of goods to
users worldwide, other jurisdictions may claim that the Company is
required to qualify to do business as foreign corporation in
particular state or foreign country. Due to the increasing popularity
and use of the Internet and other online services, it is possible that
a number of laws and regulations may be adopted with respect to the
Internet or other online services covering issues such as user
privacy, freedom of expression, pricing, content and quality of
products and services, taxation, advertising, intellectual property
rights and information security. Although sections of the
Communications Decency Act of 1996 (the "CDA") that, among other
things, proposed to impose criminal penalties on anyone distributing
"indecent" material to minors over the Internet, were held
to be unconstitutional by the U.S. Supreme Court, this can be no
assurance that similar laws will not be proposed and adopted.
Certain members of Congress have recently discussed proposing
legislation that would regulate the distribution of "indecent"
material over the Internet in a manner that they believe would
withstand challenge on constitution law.
17
<PAGE>
Any new legislation or regulation, or the application of laws or
regulations from jurisdictions whose laws do not currently apply to
the Company's business, for third-party activities and jurisdiction.
The adoption of new laws or the application of existing laws may
decrease the growth in the use of the Internet, which could in turn
decrease the demand for the Company's services, increase the Company's
cost of doing business or otherwise have a material adverse effect on
the Company's business, results of operations and financial condition.
The Company does not believe that such regulations, which were adopted
prior to the advent of the Internet, govern the operations of the
Company's business nor have any claims been filed by any state
implying that the Company is subject to such legislation. This can be
no assurance, however, that State government will not attempt to
impose these regulations upon the Company in the future or that such
imposition will not have a material adverse effect on the Company's
business, results of operations and financial condition.
10) Research and Development Activities
The Company, among other things, plans to develop and market its Web
site, enhance its brands, implement and execute its business and
marketing strategy successfully, continue to develop and upgrade its
technology and information-processing systems, meet the needs of a
changing market, provide superior customer service, respond to
competitive developments and attract, integrate, retain and motivate
qualified personnel provided the company can generate sales and
profit.
The Company also needs to develop and identify SmartCard products that
achieve market acceptance by its end-users. This can be no assurance
that Global SmartCards will achieve market acceptance. Accordingly,
no assurance can be given that the Company's business model will be
successful or that it can sustain revenue growth or be profitable.
The market for SmartCards has matured and is finite. As is typical of
any rapidly evolving market, demand and market acceptance for products
are subject to a high level of uncertainty and risk. Moreover,
because this market is rapidly evolving, it is difficult to predict its
future growth rate, if any, and its ultimate size.
If the market fails to develop, develops more slowly than expected or
becomes saturated with competitors, or if the Company's products do
not achieve or sustain market acceptance, the Company's business,
results of operation may be materially and adversely affected.
There can be no assurances the Company will be successful in
accomplishing all of these things, and the failure to do so could have
a material adverse effect on the company's business, results of
operations and financial condition.
11) Impact of Environmental Laws
The Company is not aware of any federal, state or local environmental
laws which would effect is operations.
18
<PAGE>
12) Employees
The Company currently has three (3) employees: one President, and one
Secretary and one Chief Financial Officer, all of which are Directors
of the Company. The Company has no intention at this time to add full
employees.
(i)The Company's performance is substantially dependent on the
performance of its corporate President and CEO, Georgios
Polyhronopoulos. In particular, the Company's success depends on his
ability to define and develop markets and business for the Company.
(ii) The Company does not carry key person life insurance on any of
its personnel. The loss of the services of any of its executive
officers or other key employees could have a material adverse effect on
the business, results of operations and financial condition of the
Company. The Company's future success also depends on its ability to
retain and attract highly qualified technical and managerial personnel.
(iii) There can be no assurance that the Company will be able to retain
its key managerial and technical personnel or that it will be able to
attract and retain additional highly qualified technical and
managerial personnel in the future. The inability to attract and
retain the technical and managerial personnel necessary to support the
growth of the Company's business, due to, among other things, a large
increase in the wages demanded by such personnel, could have a material
adverse effect upon the Company's business, results of operations and
financial condition.
13) Year 2000 Implications
The Year 2000 issue is the potential for system and processing
failures of date-related data and the result of computer-controlled
systems using two digits rather than four to define the applicable
year. For example, computer programs that have time-sensitive software
may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary
inability to process transaction The Company may be affected by Year
2000 issues related to non-compliant information technology ("IT")
systems or non-IT systems operated by the Company or by third parties.
The Company plans to market and sell Smart Cards which are plastic
cards with an embedded microprocessor. The Company has not completed
any tests or assessment of internal and external (third-party) IT
systems and non-IT systems. At this point, the Company is not currently
aware of any Year 2000 problems relating to its Smart Cards or the use
of its Smart Cards with other computer equipment operated by third
parties that would have a material effect on the Company's business,
results of operations or financial condition, without taking into
account the Company's efforts to avoid such problems. Based on its
assessment to date, the Company does not anticipate that costs
associated with remediating the Company's non-compliant IT systems or
non-IT systems will be material, although there can be no assurance to
such effect.
19
<PAGE>
Such a failure could prevent the Company from operating its business,
and have an adverse affect on the company's business. The Company
believes that the primary business risks, in the event of
such failure, would include, but not be limited to, lost of potential
revenues, increased operating costs, loss of customers, or other
business interruptions of a material nature, as well as claims of
mismanagement, misrepresentation, or breach of contract, any of which
could have a material adverse effect on the Company's business,
results of operations and financial condition.
14) The Industry & Potential Effect on the Company's Plan of Operations
The rapid adoption of the Internet as a means to gather information,
communicate, interact and be entertained, combined with the vast
proliferation of Web sites, has made the Internet an important new
mass medium. Industry estimates that the number of Web users exceeded
68 million in 1997, and will grow to over 319 million by 2002.
The market for Internet products and services is characterized by
rapid technological developments, evolving industry standards and
customer demands, and frequent new product introductions and
enhancements. These market characteristics are exacerbated by the
emerging nature of the market and the fact that many companies are
expected to introduce new Internet products and services in the near
future. The Company's future success will depend in part on its ability
to continually improve the performance, features and reliability of its
product(s) to both evolving demands of the marketplace and competitive
product and service offerings; and, there can be no assurance that the
Company will be successful in doing so. Accordingly, the Company's
future success will depend on its ability to adapt to rapidly changing
technologies, to adapt to evolving industry standards and to
continually improve the performance, features and reliability of its
service in response to competitive service and product offerings and
evolving demands of the marketplace. The failure of the Company to
adapt to such changes would have a material adverse effect on the
Company's business, results of operations and financial condition. In
addition, the widespread adoption of the Internet, networking or
telecommunications technologies or other technological changes could
require substantial expenditures by the Company to modify or adapt its
services or infrastructure, which could have a material adverse effect
on the Company's business, results of operations and financial
condition.
20
<PAGE>
15) Present Licensing Status
None. Not Applicable.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
All statements, trend analysis and other information contained in this
Registration relative to markets for the Company's products and trends
in revenues, gross margin and anticipated expense levels, as well as
other statements including words such as "believe," "anticipate,"
"expect," "estimate," "plan" and "intend" and other similar
expressions, constitute forward-looking statements. Those forward-
looking statements are subject to business and economic risks, and the
Company's actual results of operations may differ from those contained
in the forward-looking statements. The following discussion of the
financial condition and results of operations of the Company should
also be read in conjunction with the Financial Statements and Notes
related thereto included elsewhere in this Registration.
21
<PAGE>
Item 2
Item 2. Management's Discussion and Analysis or Plan of Operation
A. Management's Plan of Operation
1) In its initial six operating period ended August 26, 1999, the
Company incurred a net loss of $32,660 from operations. It has yet to
receive any revenues from operations.
An original stock offering was made in reliance upon an exemption from the
registration provisions of Section 5 of the Securities Act of 1993, as amended,
pursuant to Regulation D, Rule 504, of the Act. a total of two million
(2,000,000) shares of its common stock were purchased by the three founders of
the Company, on February 18, 1999 for cash. Between February 23 and February
28, 1999, the Company sold One Million (1,000,000) shares of its common stock
in connection with a public offering at a price of $0.025 per share. On or
about February 28, 1999, the Company completed a public offering of shares of
common stock of the Company pursuant to Regulation "D," Rule 504 of the
Securities Act of 1933, as amended, whereby it sold one million (1,000,000)
shares of the Common Stock of the Company for twenty-five thousand ($25,000)
dollars to approximately twenty-five (25) unaffiliated shareholders of record.
The Company filed an original Form D with the Securities and Exchange
Commission on or about February 25, 1999. On August 26 1999, the company
completed a subsequent Public Offering that was offered without registration
under the Securities Act of 1933, as amended (The "Act"), in reliance upon the
exemption from registration afforded by sections 4(2) and 3 (b) of the
Securities Act and Regulation "D" promulgated thereunder. The Company sold
to six (6) additional shareholders, one million (1,000,000) shares of common
stock at a price of $.05 per share for a total amount raised of fifty
thousand ($50,000) dollars. As of August 26, 1999, the Company has four
million shares (4,000,000) shares of its $0.001 par value common voting stock
issued and outstanding which are held by approximately thirty-four (34)
shareholders, including the three founding shareholders, of record.
Management fully anticipates that the proceeds from the sale of all of the
Common Shares sold in the offering delineated above will be sufficient to
provide the Company's capital needs for the next twelve (12) months. If the
Company cannot generate sufficient revenues or raise money in the next 12
months, it is most likely the company will not be able to stay in business.
Global SmartCards, Inc. is a developmental stage company. The Company does
not anticipate any revenues until it can identify and sell customers its
products.
The Company currently anticipates that it has enough available funds to meet
its anticipated needs for working capital, capital expenditures and business
expansion for the next twelve (12) months. The Company expects that it will
continue to experience negative operating cash flow for the foreseeable future
as a result of significant spending on advertising and infrastructure. The
Company does not have significant cash or other material assets, nor does it
have an established source of revenues sufficient to cover its operating costs
and to allow it to continue as a going concern. It is, however, the intent of
the Company to seek to raise additional capital via a private placement
offering pursuant to Regulation "D" Rule 505 or 506 or a private placement
once the Company is trading on OTC-BB. If the Company needs to raise
additional funds in order to fund expansion, develop new or enhanced services
or products, respond to competitive pressures or acquire complementary
products, businesses or technologies, any additional funds raised through the
issuance of equity or convertible debt securities, the percentage ownership of
the stockholders of the Company will be reduced, stockholders may experience
additional dilution and such securities may have rights, preferences or
privileges senior to those of the Company's Common Stock. The Company does
not currently have any contractual restrictions on its ability to incur debt
and, accordingly, the Company could incur significant amounts of indebtedness
to finance its operations. Any such indebtedness could contain covenants
which would restrict the Company's operations. There can be no assurance
that additional financing will be available on terms favorable to the Company,
or at all. If adequate funds are not available or are not available on
acceptable terms, the Company may not be able to continue in business, or to
a lessor extent not be able to take advantage of acquisition opportunities,
develop or enhance services or products or respond to competitive pressures.
The company does not have significant cash or other material assets, nor does
it have an established source of revenues sufficient to cover its operating
costs and to allow it to continue as a going concern. The Company does not
have any preliminary agreements or understandings between the company and its
stockholders/officers and directors with respect to loans or financing to
operate the company.
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<PAGE>
2) No engineering, management or similar report has been prepared or
provided for external use by the Company in connection with the offer
of its securities to the public.
3) Management believes that the Company's future growth and success
will depend on its ability to find customers for its Smart Card
products, and their ability to develop a Web site to support their
services. The Company expects to continually evaluate its potential
products to determine what additional products or enhancements are
required by the marketplace. The Company does not plan to develop
products internally, but find suppliers who would be willing to sell,
market or license their products through the Company. This can help
avoid the time and expense involved in developing actual products.
The Company has yet to incur any research and development costs
February 16 through August 26, 1999. The only research and development
the Company plans to incur in finding suitable products which offer
the Company potential for revenues and profits.
4) The Company currently does not expect to purchase or sell any of
its equipment, since it owns no equipment. Any computer equipment to
be utilized is equipment owed by the Officers of the Company.
B. Segment Data
As of August 26, 1999, no sales revenue has been generated by the Company.
Accordingly, no table showing percentage breakdown of revenue by business
segment or product line is included.
Item 3. Description of Property
A. Description of Property
The address of the principal office is: 38820 N. 25th Avenue,
Phoenix, AZ 85027. One of the Officers of the Company is providing
office space and computer use at no cost to the Company. Management
believes that this is currently suitable for the Company's needs for
the next twelve (12) months.
Item 4. Security Ownership of Management and Certain Security Holders
A. Security Ownership of Management and Certain Beneficial Owners
The following table sets forth information as of the date of this
Registration Statement certain information with respect to the
beneficial ownership of the Common Stock of the Company concerning
stock ownership by (i) each director, (ii) each executive officer,
(iii) the directors and officers of the Company as a group, (iv) and
each person known by the Company to own beneficially more than five
(5%) of the Common Stock. Unless otherwise indicated, the owners have
sole voting and investment power with respect to their respective
shares.
23
<PAGE>
<TABLE>
<CAPTION>
Title Name & Address Amount of Percent
of of Beneficial shares of
Class Owner of Shares (1) Position held by Owner Class
- ------ --------------- -------- ------------- ------
<S> <C> <C> <C> <C>
Common Georgios Polyhronopoulos Chairman/ 1,500,000 37.50%
CEO
Common Larry Richardson Secretary 250,000 6.25%
Director
Common Stephen J. Antol Treasurer 250,000 6.25%
All Executive Officers and Directors as a
Group (3 persons), purchased shares 2,000,000 50.00%
<F1>
These 2,000,000 shares were purchased at par value ($0.001) by these
three individuals on February 18, 1999 for a total of two thousand
($2,000) dollars cash.
</F1>
</TABLE>
(1) c/o Global SmartCards, Inc. 38820 N. 25th Avenue, Phoenix, AZ
85027
B. Persons Sharing Ownership of Control of Shares
No person other than Georgios Polyhronopoulos, President/CEO owns or
shares the power to vote ten percent (10%) or more of the Company's
securities.
C. Non-voting Securities and Principal Holders Thereof
The Company has not issued any non-voting securities.
D. Options, Warrants and Rights
This are no options, warrants or rights to purchase securities of the
Company.
E. Parents of Issuer
Under the definition of parent, as including any person or business
entity who controls substantially all (more than 80%) of the issuers
of common stock, the Company has no parents.
F. Other
None. Not applicable
24
<PAGE>
Item 5. Directors, Executives, Officers and Significant Employees
The names, ages and positions of the Company's directors and executive
officers are as follows:
<TABLE>
<CAPTION>
Name Age Position
- -------- ------ ----------
<S> <C> <C>
Georgios Polyhronopoulos 41 President, CEO, &
Director
Larry L. Richardson 53 Secretary, Director &
Chief Technology
Officer
Stephen J. Antol 56 Chief Financial
Officer & Director
</TABLE>
B. Work Experience
Georgios Polyhronopous (George Poulos), President and CEO of Global
SmartCards, Inc., organized and formed the company.
George Poulos, President and CEO of the Company, since inception. He
has 10 years experience in corporate development, and has managed
multiple projects. Mr. Poulos has been directly involved in taking
several companies "Public" from seed funding to IPO. He has worked as
an Investment Banker and Broker. Mr. Poulos closely follows
Technological developments and Trends, as they relate to both the
Telecommunications Industry and the Internet and World Wide Web. He
is a Professional Member of the National Association of Certified
Valuation Analysts.
1998-present, Director Enterprise Solutions, Telemax Communications, he
is responsible for developing a Corporate Finance team to seek out
and attract funding sources during Telemax's various stages of
development. His position at Telemax requires him to interface with
licensees, negotiate lease management arrangements, and deal with the
providers of enterprise solutions, such as: educational institutions;
public utilities; community, city, state, and federal offices; media
relations and medical facilities.
1997-present, Co-founder/Corporate Secretary, Infobuild Networks, he
provided investors to "seed" the Company, he structured and prepared
the Offering for the Company. He initially negotiated the licensing of
certain technologies, and eventually the acquisition of said
technologies. He recruited the Board of Directors, and the Chief
Technology Officer. And was responsible for developing the World Wide
Web presence for the Company at www.infobuild.com.
1989-1996, Managing Director, Capcom Equities Inc., he was responsible
for facilitating mergers and or acquisitions for private and public
development stage and Micro-cap companies provided strategic financing
advice and the development of public market strategies. Mr. Poulos
performed many of the same functions as his position as an Investment
Banker.
25
<PAGE>
1989-1996, Broker/Investment Banker, Osler Inc., Mr. Poulos spent
seven years in the Securities Industry in Vancouver, Canada, initially
as a retail broker; he progressed to assistant of the lead analyst,
and eventually became part of the Investment Banking team focusing on
emerging technologies. His duties included full due-diligence review
of the Companies and their industries, and complete evaluation and
comparison of the business case.
Larry L. Richardson, Corporate Secretary, Chief Technology Officer and
Director for Global SmartCards, Inc.
March, 1999 to Present, Larry L. Richardson has been the Chief Operating
Officer and Chief Technology Officer for Telemax Communications. He has
over 30 years of engineering, operations, and telecommunications
operations management experience and expertise. He currently provides
the technical direction of the company and oversees the company's RF
engineers and business development activities.
September 1998 to February 1999, RF Engineering and Enterprise Network
Consultant, Mr. Richardson served as a captive consultant under contract
to Telecellular, Inc., a startup Enhanced Specialized Mobile Radio (ESMR)
company, with radio frequency license construction contracts in Puerto
Rico. As such, he provided the business, financial and technical
recommendations to the company's board of directors. His tasks included
the identification of funding sources, development of the business plan,
identification of teledensity, defense of the pro forma, and preparation
of the network launch plan to rapidly realize return on investment.
February 1997-August 1998, Project Development/International Project
Leader, Black & Veatch, Kansas City, MO. Black & Veatch is an engineer-
constructor company specializing in power plants and telecommunications
infrastructure. As an executive level engineer and International Project
Leader Mr. Richardson was responsible for wireless and wireline
telecommunications business and project development for Latin America, as
well as oversight of the company's RF engineering. He interfaced with
equipment manufacturers and carriers in Latin America (Ericsson,
Motorola, NexTel, Qualcomm, NEC, Nortel, Lucent, Alcatel, McCaw) to
address the technical issues of their projects; prepared proposals in
Spanish and Brazilian Portuguese; identified the human and materiel
resources required to perform the work; and orchestrated the initial
launch of project implementation. During the proposal preparation phase,
Mr. Richardson was responsible for designing the initial promotional
illustrations, addressing the immediate and strategic commercial issues
regarding contracting, liability, currency, and other associated
commercial risks, as well as the implementation scheduling.
February 1995-February 1997, Team Leader, Telecommunications and Security
Engineering Team, Holmes & Narver Architects and Engineers, Albuquerque,
NM. Holmes & Narver is an architectural-engineering firm, which covers
the entire gamut of A/E work, and has operations worldwide. As a team
leader, Mr. Richardson managed, mentored and developed a team of
engineers and specialists who engineered LAN, MAN, WAN and security
systems. In the capacity as a senior engineer, he engineered a TDMA
cellular telephone network for Puerto Rico using a combination of
MicroPath and AutoCad software tools as a proof-of-capabilities to GTE;
performed the conceptual design of a WAN manipulating multiple data bases
within Oracle for a client in Mexico, and performed the conceptual design
of SDH rings, optical fiber backbone, ATM switches, satellite teleports,
and technical control facilities for a client in the Republic of Panama.
As the company's Program Manager for Latin America, Mr. Richardson
performed business development for work in that geographical area,
composed proposals in Spanish and Brazilian Portuguese, and served as the
corporate representative to the Panamerican Federation of Consulting
Engineers.
26
<PAGE>
December 1990-February 1995, Systems Engineer and Supervisor
Telecommunications Engineering Team Science Applications International
Corp.: Communications. Science Applications International Corporation
(SAIC) is an Information Technology and Telecommunications integration
company. This assignment was a continuation of the previous assignment
under Martin Marietta. SAIC won the re-compete contract during contract
renewal negotiations. As SAIC's senior engineer and engineer manager on
the U.S. Department of Energy, Albuquerque Operations Office contract,
Mr. Richardson performed Value Added Engineering (VAE) of fixed and
mobile radio networks, microwave and satellite communications, video
communications, outside plant cable, emergency operations centers and
technical control functions for the department, Sandia National
Laboratories, Los Alamos National Laboratory, and its nationwide
contractors. RF engineering was performed by both traditional mathematics
and physics, and MicroPath. The associated civil works were designed
using AutoCad. He prepared technical analyses, reports, executive
summaries, and briefings for the department's executives. Subsequent to
the design and engineering, Mr. Richardson performed the project
management and construction management functions for the implementation
and initial operations of the projects using MSProject, Excel, and Word.
He also served as the technical representative to the DOE's nuclear
Accident Response Group and Nuclear Emergency Search Team for designing
specialized telecommunications capabilities to support the recovery of
damaged nuclear weapons, cleanup of radioactive materials, and response
to nuclear terrorism. As a manager, he mentored technical personnel
under his supervision, developed them professionally, and provided the
organizational and financial input to the federal government's budget and
long range plans.
Mr. Richardson was nominated by the U.S. Department of Energy to receive
the University of Florida's "Henry J. Phister" award for his outstanding
contribution to the field of telecommunications in the federal government
for the period 1985-1995.
November 1985-December 1990, Principal Engineer and Manager Engineering
and Design, Martin Marietta Information Systems. As an senior engineering
contractor to the U.S. Department of Energy's Albuquerque Operations Office,
Mr. Richardson performed Value Added Engineering (VAE) of fixed and mobile
radio networks, microwave and satellite communications, video
communications, outside plant cable, emergency operations centers and
technical control functions for the department, Sandia National
Laboratories, Los Alamos National Laboratory, and its nationwide
contractors. RF engineering was performed by traditional mathematics and
physics. The associated civil works were designed using manual
drafting. He prepared technical analyses, reports, executive summaries,
and briefings for the department's executives. Subsequent to the design
and engineering, Mr. Richardson performed the project management and
construction management functions for the implementation and initial
operations of the projects using Lotus 1-2-3, and Word Perfect. He also
served as the technical representative to the DOE's nuclear Accident
Response Group and Nuclear Emergency Search Team for designing
specialized telecommunications capabilities to support the recovery of
damaged nuclear weapons, cleanup of radioactive materials, and response
to nuclear terrorism. As a manager, he mentored technical personnel
under his supervision, developed them professionally, and provided the
organizational and financial input to the federal government's budget and
long range plans. Mr. Richardson was awarded Martin Marietta's highest
award for Technical Excellence.
27
<PAGE>
October 1983-November 1985, Telecommunications Specialist, U.S.
Department of Energy, As a federal government telecommunications
engineering manager, Mr. Richardson managed the RF, telephony, National
Security Emergency Preparedness, nuclear weapons Accident Response Group,
and Radiological Assistance Program communications programs. His duties
included all of the technical and business aspects of the programs
including: financial planning, long range planning, as well as
preparation of scope and SOWs for bid to contractors. He also served as
the Communications Officer to the nuclear Accident Response Group (ARG)
and the ARG program manager to the Nuclear Emergency Search Team.
April 1983-October 1983, Electromagnetic Pulse (EMP) Engineer III, EG&G
WASC, Inc., Mr. Richardson designed EMP tests to instrument Department of
Defense aircraft, vehicles and operations vans to determine the damages
caused by High Altitude Electromagetic Pulse (HEMP). Using Maxwell
pulsers, EMP waves simulating nuclear blasts were imposed on test
objects, the effects recorded, and the remedial actions recommended.
During his employment at EG&G, Mr. Richardson designed a nuclear attack-
survivable, RF-based, broadband data network for Western Europe. The
network employed every form of radio communications and tied into the
NATO countries' terrestrial fiber optic backbone networks. The network
was termed the European Distribution System Logistics Command, Control,
Communications and Information (EDS LogC3I) network. The design was
submitted for bid to the U.S. Air Force Logistics Command.
October 1982-April 1983, Telecommunications Specialist, Special
Operations Consultant and Department of the Army, Mr. Richardson
developed conceptual RF-based telecommunications systems for use by U.S.
Special Operations Forces elements (Army Special Forces, Navy SEALS, Air
Force Special Operations Wings) for clandestine warfare and counter-
terrorism operations.
June 1962-September 1982, United States Army, Mr. Richardson is retired
from the U.S. Army.
Education: MA Degree, 1986, Webster University, Computer Resources
Management (IT Systems Analysis and Design); BS Degree, 1981, University
of New York, Liberal Studies (ADP and Communications Engineering); 1984-
1994, George Washington University, Continuing Engineering Education.
Certifications: Engineer Class I, National Association of Radio and
Telecommunications Engineers, Certification No. E1-03422, with master
endorsements in RF and Non-RF technologies. Hekimian Laboratories REACT
Technical Control Facilities, 1993.
Professional Affiliations, Institute of Electrical and Electronics
Engineers, Decade Member, Member Number: 08563231 National Association of
Radio and Telecommunications Engineers, Member.
Stephen J. Antol, Chief Financial Officer, and Director of Global
SmartCards, Inc.
Stephen James Antol, has over twenty-six years experience in the field of
Corporate Finance and Administration, and over four and half years'
experience with two major CPA firms in Phoenix, Arizona. His work
background includes areas of cash auditing, control and flow, budget
administration, credit and collection policies and procedures, management
information systems, inventory control, audits by outside agencies and
CPA's. He has also worked in the administration of profit sharing programs,
benefits packages, corporate insurance programs, human resources and
corporate restructuring.
28
<PAGE>
1993- Present, he has been self-employed working as a financial consultant
to small business. This includes providing outside chief financial officer
and controller services to small businesses requiring technical expertise on
a limited or recurring basis. This includes: corporate financial, tax and
administrative functions. As an independent consultant he provides services
to private and public corporations, partnerships and proprietorships. In
September 1997, he accepted the Chief Financial Officer position with Telemax
Communications and handles all financial functions for the Company.
1990-1992, Chief Financial Officer and Corporate Controller, for Lou Regester
Furniture Co., Inc., a Multiple-location retailer, he was responsible for
entire accounting function, including LIFO inventory, budgets, cash flow
projections, financial statements, information systems and corporate income tax
return preparation. Directed administrative functions in areas of human
resources, payroll, group and liability insurance. Liaison with outside CPAs
and bank relationships. He directed installation and implementation
of new computer LAN system with related software for furniture retailers.
Designed and implemented new accounting procedures, internal controls and
paperwork flow. Reconstructed lost accounting information and developed plan
for catch-up of monthly accounting due to old computer failure.
1987-1989, Director of Finance, F.S. INC., d.b.a. Audio Express and Country
House Furniture, a four state multiple-location retailer and manufacturer.
He administered all financial functions, including statements, inventory,
store budgets, cash flow projections, payroll and taxes. He established
store audit checklist. Designed and implemented accounting system and
controls for new manufacturing affiliate. And, developed new incentive
compensation program for sales personnel.
1975- 1987, Corporate Treasurer, Giant Industries, Inc., large independent
refiner, distributor and retailer of petroleum products. He headed entire
accounting function as controller, including financial statements, payroll,
human resources, taxes, budgets, cash flow projections, audits by outside
agencies and CPA's, and corporate income tax return preparation. He
implemented new management information system for monitoring profit centers
profitability. Accelerated monthly closings. Improved credibility of
financial information. Responsible for conversion from manual too
computerized accounting system in 1976-1977. He was promoted to Corporate
Treasurer in late 1977. Developed treasury function, including: cash flow
analysis, investments, compliance to regulatory requirements, corporate tax
return preparation, issuance and receipt of letters of credit, corporate
insurance coverage, credit and collection procedures, and directed audits
by outside agencies. He maintained involvement with banking relations and
outside regulatory agencies, including the Department of Energy referencing
petroleum price controls and related reporting requirements. And,
administered the Company's profit-sharing plan.
1973- 1975, Director of Finance, Freight Sales, Ltd., a five state multiple-
location retailer. He directed the financial and administrative functions
of this $8 million dollar limited partnership. He developed and administered
accounting system and related internal controls, inventory and store audits,
operating budgets, administrative policies and procedures, and prepared
income tax return filings.
1971- 1973, Audit Supervisor, Laventhol, Kreckstein & Horwath, CPA's, he was
responsible for conducting and managing audits of partnerships and
corporations. Administered budgets, staffing requirements and on-job
training. Prepared related client income tax returns and he maintained client
relations.
1968-1971, Audit Senior, Touche Ross & Company, CPA's, he conducted audits of
clients in various industries, this includes: electronic manufacturing,
distributors, construction, title company, service and real estate. He
prepared related income tax returns, reviewed and evaluated internal controls,
accounting systems, SEC and shareholder reports.
Education: Michigan State University, East Lansing, Michigan, Bachelor of Arts
Degree in Accounting--1968; Certified Public Accountant (CPA), Arizona 1970
(1970-1986), currently non-registered.
29
<PAGE>
Item 6. Remuneration of Directors and Executive Officers
(1) Compensation of Executive Officers
Only the President and CEO of Company has been compensated for the
period from February 16, 1999 to July 31, 1999 for services provided
as an Officer. Compensation is for this Officer is $12,000 per year,
paid on a monthly basis. "See Employment Agreements, Exhibits 10(a)."
(2) Compensation of Directors
This were no arrangements pursuant to which any director of the
Company was compensated for the period from February 16, 1999 to August
26, 1999 for any service provided as a director. In addition, no such
arrangement is contemplated for the foreseeable future as the
Company's only directors are its current executive officers. "See
Employment Agreements, Exhibits 10(a)." The By-laws of the Company
state: "Section 6.1. Compensation - The directors may be paid their expenses
of attendance at each meeting of the Board of Directors and may be
paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other
capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like reimbursement and compensation
for attending committee meetings."
Item 7. Interest of Management and Others in Certain Transactions
None. Not applicable.
30
<PAGE>
Part II
Item 1. Market price of and Dividends on the Registrant's Common
Equity and Other Stockholder matters
A. Market Information
The common stock of the Company is currently not traded on the NASDAQ
OTC Bulletin Board or any other formal or national securities
exchange. This is no trading market for the Company's Common Stock at
present and this has been no trading market to date. At this time,
management has not undertaken any discussions, preliminary or
otherwise, with any prospective market maker concerning the
participation of such market maker in the aftermarket for the
Company's securities, but the Company may initiate such discussions in
the future following receipt of an effective date for this
Registration Statement.
(i) There is currently no Common Stock which is subject to
outstanding options or warrants to purchase, or securities convertible
into, the Company's common stock.
(ii) There is currently no common stock of the Company which could be
sold under Rule 144 under the Securities Act of 1933 as amended or
that the registrant has agreed to register for sale by security
holders.
(iii) There is currently no common equity that is being or is proposed
to be publicly offered by the registrant, the offering of which could
have a material effect on the market price of the issuer's common
equity.
B. Holders
As of August 26, 1999, the Company has approximately thrity-four (34)
stockholders of record. Penny Stock Regulation Broker-dealer
practices in connection with transactions in "Penny Stocks" are
regulated by certain penny stock rules adopted by the Securities and
Exchange Commission. Penny stocks generally are equity securities with
a price of less than $5.00 (other than securities registered on
certain national securities exchanges or quoted on the NASDAQ system).
The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document that provides information about
penny stocks and the risk associated with the penny stock market. The
broker-dealer must also provide the customer with current bid and
offer quotations for the penny stock, the compensation of the broker-
dealer and its salesperson in the transaction, and monthly account
statements showing the market value of each penny stock held in the
customer's account. In addition, the penny stock rules generally
require that prior to a transaction in a penny stock, the broker-
dealer must make a written determination that the penny stock is a
suitable investment for the purchaser and receive the purchaser's
written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the
secondary market for a stock that becomes subject to the penny stock
rules. When the Registration Statement becomes effective and
the Company's securities become registered, the stock will likely have
a trading price of less than $5.00 per share and will not be traded on
any exchanges. Therefore, the Company's stock will become subject to
the penny stock rules and investors may find it more difficult to sell
their securities, should they desire to do so.
C. Dividend Policy
The Company has not paid any dividends to date. In addition, it does
not anticipate paying dividends in the immediate foreseeable future.
The Board of Directors of the Company will review its dividend policy
from time to time to determine the desirability and feasibility of
paying dividends after giving consideration to the Company's earnings,
financial condition, capital requirements and such other factors as
the Board may deem relevant.
31
<PAGE>
D. Reports to Shareholders
The Company intends to furnish its shareholders with annual reports
containing audited financial statements and such other periodic
reports as the Company may determine to be appropriate or as may be
required by law. Upon the effectiveness of this Registration
Statement, the Company will be required to comply with periodic
reporting, proxy solicitation and certain other requirements by the
Securities Exchange Act of 1934.
E. Transfer Agent and Registrar
The Transfer Agent for the shares of common voting stock of the
Company is Holliday Stock Transfer, 2939 North 67th Place, Scottsdale,
Arizona, Phone: 480-481-3940.
Item 2. Legal Proceedings
The Company is not currently involved in any legal proceedings nor
does it have knowledge of any threatened litigation.
Item 3. Recent sale of Unregistered Securities
A total of two million (2,000,000) shares of its common stock were purchased
by the three founders of the Company, on February 18, 1999 for cash. Between
February 23 and February 28, 1999, the Company sold One Million (1,000,000)
shares of its common stock in connection with a public offering at a price of
$0.025 per share. On or about February 28, 1999, the Company completed a
public offering of shares of common stock of the Company pursuant to
Regulation "D," Rule 504 of the Securities Act of 1933, as amended, whereby it
sold one million (1,000,000) shares of the Common Stock of the Company for
twenty-five thousand ($25,000) dollars to approximately twenty-five (25)
unaffiliated shareholders of record. The Company filed an original Form D with
the Securities and Exchange Commission on or about February 25, 1999. On
August 26, 1999, the company completed a subsequent Public Offering that was
offered without registration under the Securities Act of 1933, as amended (The
"Act"), in reliance upon the exemption from registration afforded by sections
4(2) and 3 (b) of the Securities Act and Regulation "D" promulgated
thereunder. The Company sold to six 6) additional unaffiliated shareholders,
one million (1,000,000) shares of common stock at a price of $.05 per share
for a total amount raised of fifty thousand ($50,000) dollars. As of August
26, 1999, the Company has four million shares (4,000,000) shares of its
$0.001 par value common voting stock issued and outstanding which are held
by approximately thirty-four (34) shareholders, including the three founding
shareholders, of record.
32
<PAGE>
The Company Shareholder List as of August 30, 1999 is the following:
<TABLE>
<CAPTION>
Shareholder Number of Shares
----------- ----------------
<S> <C> <C>
1. Thomas A. Todd Sr. 37,500
2. Lorrie L. Todd 42,500
3. Thomas A Todd Jr 40,000
4. Kristine D. Todd 40,000
5. Fran Muro 40,000
6. Joanne L. Richardson 40,000
7. J.R. Steward 40,000
8. Robert D. Morgan 40,000
9. Mardelle Steward 40,000
10. Carole Williams 40,000
11. William C. Todd 40,000
12. Robert Sletner 40,000
13. Joanne Sletner 40,000
14. Lucille Sletner 40,000
15. Terrance Moore 40,000
16. David Williams 40,000
17. Norma Moore 40,000
18. Enrique C. Parecki 40,000
19. Darius Williams 40,000
20. Kenneth Atkinson 40,000
21. Doug Walkup 40,000
22. Michael Fiscus 40,000
23. Mary Jane Fiscus 40,000
24. Jason Moran 40,000
25. Adam W. Steward 40,000
Restricted Common Stock:
- -----------------------
Founders Shares, purchased February 18, 1999:
26. Georgios Polyhronopoulos 1,500,000
27. Stephen J. Antol 250,000
28. Larry Richardson 250,000
Private Placement Stock sold on or before August 26, 1999:
29. Rob Frost 150,000
30. Carole Vye 183,000
31. Lora Oecchia 160,000
32. Joseph Terek 173,000
33. 656045 Alberta Ltd. 176,000
34. Ann Nixon 158,000
</TABLE>
33
<PAGE>
Item 4. Description of Securities
A. Common Stock
(1) Description of Rights and Liabilities of Common Stockholders
i. Dividend Rights - The holders of outstanding shares of common
stock are entitled to receive dividends out of assets legally
available Therefore at such times and in such amounts as the board of
directors of the Company may from time to time determine.
ii. Voting Rights - Each holder of the Company's common stock are
entitled to one vote for each share held of record on all matters
submitted to the vote of stockholders, including the election of
directors. All voting is noncumulative, which means that the holder
of fifty percent (50%) of the shares voting for the election of the
directors can elect all the directors. The board of directors may
issue shares for consideration of previously authorized but unissued
common stock without future stockholder action.
iii. Liquidation Rights - Upon liquidation, the holders of the common
stock are entitled to receive pro rata all of the assets of the
Company available for distribution to such holders.
iv. Preemptive Rights - Holders of common stock are not entitled to
preemptive rights.
v. Conversion Rights - No shares of common stock are currently
subject to outstanding options, warrants, or other convertible
securities.
vi. Redemption rights - no redemption rights exist for shares of
common stock.
vii. Sinking Fund Provisions - No sinking fund provisions exist.
viii. Further Liability For Calls - No shares of common stock are
subject to Further call or assessment by the issuer. The Company has
not issued stock options as of the date of this Registration
Statement.
(2) Potential Liabilities of Common Stockholders to State and
Local Authorities
No material potential liabilities are anticipated to be imposed on
stockholders under state statues. Certain Nevada regulations, however,
require regulation of beneficial owners of more than 5% of the voting
securities. Stockholders that fall into this category, Therefore, may
be subject to fines in circumstances where non-compliance with these
regulations are established.
B. Debt Securities
The Company is not registering any debt securities, nor are any
outstanding.
C. Other Securities To Be Registered
The Company is not registering any security other than its common
stock.
34
<PAGE>
Item 5. Indemnification of Directors and Officers
THE ARTICLES OF INCORPORATION AND BY-LAWS OF THE COMPANY PROVIDE FOR
INDEMNIFICATION OF EMPLOYEES AND OFFICERS IN CERTAIN CASES. INSOFAR
AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING
THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN
INFORMED THAT IN THE OPINION OF THE SECURTIES AND EXCHANGE COMMISSION
SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT
AND IS THEREFORE UNENFORCEABLE.
Article 10 of the Articles of Incorporation states: "No Director or Officer of
this Corporation shall be personally liable to the Corporation or to any of
its stockholders for damages for breach of fiduciary duty as a director or
officer involving any act or commission of any such director or officer
provided, however, that the foregoing provision shall not eliminate or limit
the liability of a director or officer for acts of omissions which involve
intentional misconduct, fraud or a knowing violation of law, or the payment of
dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any
repeal or modification of this Article by the Stockholders shall be prospective
only, and shall not adversely affect any limitation on the personal liability
of a director or officer of the Corporation for acts or omissions prior to such
repeal or modification."
Article 11 of the Company's By-laws state: "Every person who was or is a
party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that he or a person of whom he is the legal
representative is or was a director or officer of the corporation or is
or was serving at the request of the corporation or for its benefit as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless to the fullest extent legally permissible under the General
Corporation Law of the State of Nevada from time to time against all expenses,
liability and loss (including moneys' fees, judgments, fines and amounts paid
or to be paid in settlement) reasonably incurred or suffered by him in
connection therewith. The expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by
a court of competent jurisdiction that he is not entitled to be indemnified
by the corporation. Such right of indemnification shall be a contract right
which may be enforced in any manner desired by such person. Such right of
indemnification shall not be exclusive of any other right which such directors,
officers or representatives may have or hereafter acquire and, without limiting
the generality of such statement, they shall be entitled to their respective
rights of indemnification under any bylaw, agreement, vote of stockholders,
provision of law or otherwise, as well as their rights under this Article.
The Board of Directors may cause the corporation to purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or arising
out of such status, whether or not the corporation would have the power to
indemnify such person.
The Board of Directors may from time to time adopt further Bylaws with respect
to indemnification and may amend these and such Bylaws to provide at all times
the fullest indemnification permitted by the General Corporation Law of the
State of Nevada."
35
<PAGE>
Part F/S
Item 1. Financial Statements
The following documents are filed as part of this report:
a) Global SmartCards, Inc.
Report of Barry L. Friedman, CPA
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS
TABLE OF CONTENTS
PAGE #
<S> <C>
INDEPENDENT AUDITORS REPORT F-1
ASSETS F-2
LIABILITIES AND STOCKHOLDERS' EQUITY F-3
STATEMENT OF OPERATIONS F-4
STATEMENT OF STOCKHOLDERS' EQUITY F-5
STATEMENT OF CASH FLOWS F-6
NOTES TO FINANCIAL STATEMENTS F-7-11
<PAGE>
</TABLE>
b) Interim Financial Statements are not provided at this time as
they are not applicable at this time.
c) Financial Statements of Businesses Acquired or to be Acquired
are not provided at this time as they are not applicable at this time.
d) Pro-forma Financial Information is not provided at this time as
it is not applicable at this time.
Item 2. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
None -- Not Applicable
36
<PAGE>
BARRY L. FRIEDMAN, P.C.
Certified Public Accountant
1582 TULITA DRIVE OFFICE (702) 361-8414
LAS VEGAS, NEVADA 89123 FAX NO. (702) 896-0278
INDEPENDENT AUDITORS' REPORT
------------------------------
Board of Directors
September 10, 1999
Global Smartcards Inc.
Las Vegas, Nevada
I have audited the accompanying Balance Sheets of Global
Smartcards Inc., (A Development Stage Company), as of August 26,
1999, and the related statements of operations, stockholders'
equity and cash flows for the period February 16, 1999,
(inception) to August 26, 1999. These financial statements are
the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Global Smartcards Inc. (A Development Stage Company), as of
August 26, 1999, and the results of its operations and cash flows
for the period February 16, 1999, (inception) to August 26, 1999,
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 #5 to the financial statements, the Company has
suffered recurring losses from operations and has no established
source of revenue. This raises substantial doubt about its
ability to continue as a going concern. Management's plan in
regard to these matters is described in Note #5. These financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
s/s Barry L. Friedman
- ---------------------------------------
Barry L. Friedman
Certified Public Accountant
F-1
<PAGE>
Global Smartcards Inc.
(A Development Stage Company)
<TABLE>
<CAPTION>
BALANCE SHEET
ASSETS
------
August 26, 1999
<S> <C>
CURRENT ASSETS
CASH $ 44,311
TOTAL CURRENT ASSETS $ 44,311
OTHER ASSETS ORGANIZATION COST (NET) $ 529
TOTAL OTHER ASSETS $ 529
---------
TOTAL ASSETS $ 44,840
---------
</TABLE>
See accompanying notes to financial statements & audit report
F-2-
<PAGE>
Global Smartcards Inc.
(A Development Stage Company)
<TABLE>
<CAPTION>
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
August 26, 1999
<S> <C>
CURRENT LIABILITIES
OFFICER'S ADVANCES (Note #5) $ 500
TOTAL CURRENT LIABILITIES $ 500
STOCKHOLDERS' EQUITY (Note #4)
Common stock
PAR VALUE, $.001
Authorized 25,000,000 shares
Issued and outstanding at
August 26, 1999 -
4,000,000 shares $ 4,000
Additional Paid-In Capital 73,000
Deficit accumulated during
the development stage -32,660
---------
TOTAL STOCKHOLDERS' EQUITY $ 44,340
---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 44,840
---------
</TABLE>
See accompanying notes to financial statements & audit report
F-3
Global Smartcards Inc.
(A Development Stage Company)
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Feb. 16, 1999
(Inception)
to Aug. 26,
1999
------------
<S> <C>
INCOME
Revenue $ 0
EXPENSES
Consulting Fees $ 24,123
Amortization 59
Telephone 875
Filing Fees 658
Internet Expense 130
Office Expense 310
Delivery 140
Auto Lease 1,365
Auto Expense 50
Miscellaneous 1,200
SEC Listing Expense 3,750
----------
TOTAL EXPENSES $ 32,660
----------
NET PROFIT/LOSS (-) $ -32,660
-----------
Net Profit/Loss(-)
per weighted share
(Note #1) $ -.0138
-----------
Weighted average
Number of common
shares outstanding 2,369,792
</TABLE>
See accompanying notes to financial statements & audit report
F-4
<PAGE>
Global Smartcards Inc.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
---------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Additional Accumu-
Common Stock paid-in lated
Shares Amount Capital Deficit
------ ------ ------- -------
<S> <C> <C> <C> <C>
February 17, 1999
Issued for cash 2,000,0000 $ 2,000 $ 0 $ 0
June 18, 1999
Issued from Public 1,000,000 1,000 24,000
Offering
August 26, 1999
Issued from Public
Offering 1,000,000 1,000 49,000
Net loss, February 16,
1999 (inception) to $-32,660
August 26, 1999 ----------- -------- --------- -------
Balance,
August 26, 1999: 4,000,000 $4,000 $73,000 $-32,660
</TABLE>
See accompanying notes to financial statements & audit report
F-5
<PAGE>
Global Smartcards, Inc.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
Feb. 16, 1999
(Inception)
to Aug. 26,
1999
-------------
<S> <C>
Cash Flows from
Operating Activities
Net Loss $ -32,660
Amortization +59
Adjustment to
Reconcile net loss
To net cash provided
by operating
Activities 0
Changes in assets and
Liabilities
Officer's Advances +500
---------
Net cash used in
Operating activities $ -32,101
Cash Flows from
Investing Activities
Organization costs -588
Cash Flows from
Financing Activities
Issuance of Common
Stock for Cash +77,000
--------
Net Increase (decrease) $ 44,311
Cash,
Beginning of period 0
--------
Cash, End of Period $ 44,311
--------
</TABLE>
See accompanying notes to financial statements & audit report
F-6
<PAGE>
Global Smartcards Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
August 26, 1999
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized February 16, 1999, under the of the
State of Nevada as Global Smartcards Inc. Company currently has
no operations and in accordance SFAS #7, is considered a
development stage company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accountinq Method
- -----------------
The Company records income and expenses on the accrual method.
Estimates
- ---------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and equivalents
- ---------------------
The Company maintains a cash balance in a non-interest-bearing
bank that currently does not exceed federally insured limits. For
the purpose of the statements of cash flows, all highly liquid
investments with the maturity of three months or less are
considered to be cash equivalents. There are no cash equivalents
as of August 26, 1999.
F-7
<PAGE>
Global Smartcards Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
August 26, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
- -------------
Income taxes are provided for using the liability method of
accounting in accordance with Statement of Financial Accounting
Standards No.109 (SFAS #109) "Accounting for Income Taxes" . A
deferred tax asset or liability is recorded for all temporary
difference between financial and tax reporting. Deferred tax
expense (benefit) results from the net change during the year of
deferred tax assets and liabilities.
Orqanization Costs
- ------------------
Costs incurred to organize the Company are being amortized on a
straight-line basis over a sixty-month period.
Loss Per Share
- ---------------
Net loss per share is provided in accordance with Statement of
Financial Accounting Standards No.128 (SFAS #128) "Earnings Per
Share". Basic loss per share is computed by dividing losses
available to common stockholders by the weighted average number
of common shares outstanding during the period. Diluted loss per
share reflects per share amounts that would have resulted if
dilative common stock equivalents had been converted to common
stock. As of August 26, 1999, the Company had no dilative common
stock equivalents such as stock options.
Year End
- ---------
The Company has selected December 31st as its year-end.
F-8
<PAGE>
Global Smartcards Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
August 26, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Year 2000 Disclosure
- ---------------------
Computer programs that have time sensitive software may recognize
a date using "00" as the year 1900 rather than the year 2000.
This could result in a system failure or miscalculations causing
disruption or normal business activities.
Based on a recent and ongoing assessment, the Company has
determined that any purchased software will be off-the-shelf
software and will be certified Year 2000 compatible for all of
its computing requirements. The Company presently believes that
with modifications to existing off-the-shelf software or
conversions to new software, the Year 2000 issue will not pose
significant operational problems and will not materially affect
future financial results.
The Company currently anticipates purchasing new off-the-shelf
Year 2000 compatible software in the near future, which is prior
to any anticipated impact on its operating systems. The total
cost of this new software is not anticipated to be a material
expense to the Company at this time. However, there can be no
guarantee that these new off-the-shelf software products will be
adequately modified which could have a material adverse effect on
the Company's results of operations.
NOTE 3 - INCOME TAXES
There is no provision for any future income taxes for the period
after February 16, 1999, due to the net loss and no state income
tax in Nevada, the state of the Company's domicile and
operations. The Company's total deferred tax asset as of August
26, 1999 is as follows:
Net operation loss carry forward $ 0
Valuation allowance $ 0
Net deferred tax asset $ 0
F-9
<PAGE>
Global Smartcards Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
------------------------------------------
August 26, 1999,
NOTE 4- STOCKHOLDERS' EQUITY
Common Stock
- ------------
The authorized common stock of the corporation consists of
25,000,000 shares with a par value $.001 per share.
Preferred Stock
- ----------------
Global Smartcards Inc. has no preferred stock.
On February 17, 1999 the company issued 2,000,000 shares for
consideration of $2,000 to its directors.
On February 28, 1999, the company completed a Public Offering that
was offered without registration under the Securities Act of
1933, as amended (The "Act"), in reliance upon the exemption from
registration afforded by sections 4(2) and 3(b) of the Securities
Act and Regulation "D" promulgated thereunder. The Company sold
1,000,000 share of common stock at a price of $.025 per share for
a total amount raised of $25,000.
On August 26 1999, the company completed a Public Offering that
was offered without registration under the Securities Act of
1933, as amended (The "Act"), in reliance upon the exemption from
registration afforded by sections 4(2) and 3 (b) of the
Securities Act and Regulation "D" promulgated thereunder. The
Company sold 1,000,000 share of common stock at a price of $.05
per share for a total amount raised of $50,000.
F-10
<PAGE>
Global Smartcards Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTTINUED)
------------------------------------------
August 26, 1999
NOTE 5- GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern
which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the
Company does not have significant cash or other material assets,
nor does it have an established source of revenues sufficient to
cover its operating costs and to allow it to continue as a going
concern. It is the intent of the Company to seek a merger with an
existing, operating company. Until that time, the
stockholders/officers and or directors have committed to
advancing the operating costs of the Company interest free.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal
property. An officer of the corporation provides office services
without charge. Such costs are immaterial to the financial
statements and accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other
business activities and may in the future, become involved in
other business opportunities. If a specific business opportunity
becomes available, such persons may face a conflict in selecting
between the Company and their other business interests. The
Company has not formulated a policy for the resolution of such
conflicts.
NOTE 7 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any
additional share of common stock.
F-11
<PAGE>
Part III
Item 1. Index to Exhibits (Pursuant to Item 601 of Regulation SB)
Exhibit Number Name and/or Identification of Exhibit
1. Underwritten agreement
None. Not Applicable
2. Plan of Acquisition, Reorganization, Arrangement, Liquidation,
or
Succession.
None. Not Applicable
b) Asset Purchase and Liability Assumption Agreement
None. Not Applicable
c) Interest Purchase Agreement
None. Not Applicable
d) Agreement for Bill of Sale and Assignment of Assets
None. Not Applicable
e) Exchange Stock Agreement
None. Not Applicable
3. Articles of Incorporation & By-Laws
3.1 Articles of Incorporation of the Company Filed February 16, 1999
3.2 By-Laws of the Company adopted March 2, 1999
4. Instruments Defining the Rights of Security Holders
Those included in exhibit 3, and sample of Stock Certificate
5. Opinion on Legality
None. Not Applicable
6. No Exhibit Required
Not Applicable
7. Opinion on Liquidation Preference
None. Not Applicable
8. Opinion on Tax Matters
None. Not Applicable
9. Voting Trust Agreement and Amendments
None. Not Applicable
10. Material Contracts
Employment Agreements with:
10.1 Georgios Polyhronopoulos
37
<PAGE>
11. Statement Re Computation of Per Share Earnings
None. Not Applicable. Computation of per share earnings can
be clearly determined from the Statement of Operation from the
Company's financial statements.
12. No Exhibit Required
13. Annual or Quarterly Reports - Form 10-Q
None. Not Applicable
14. Material Foreign Patents
None. Not Applicable
15. Letters on Unaudited Interim Financial Information
None. Not Applicable
16. Letter on Change in Certifying Accountant
None. Not Applicable
17. Letter of Director Resignation
None. Not Applicable
18. Letter on Change in Accounting Principles
None. Not Applicable
19. Reports Furnihed to Security Holders
None. Not Applicable
20. Other Documents or Statements to Security Holders
None. Not Applicable
21. Subsidiaries of Small Business Issuers
None. Not Applicable
38
<PAGE>
22. Published Report Regarding Matters Submitted to Vote of
None. Not Applicable
23. Consent of Experts and Counsel
Exhibit 23, Barry L. Friedman, CPA
24. Power of Attorney
None. Not Applicable
25. Statement of Eligibility of Trustee
None. Not Applicable
26. Invitations for Competitive Bids
None. Not Applicable
27. Financial Data Schedule
Exhibit 27
28. Information from Reports Furnished to State Insurance
Regulatory Authorities
None. Not Applicable
29. Additional Exhibits
None. Not Applicable
39
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its
behalf by the undersigned, hereunto duly authorized.
Global SmartCards, Inc.
--------------------
(Registrant)
Dated: October 4, 1999
By: s/s Georgios Polyhronopoulos
- ---------------------------------------------------------
Georgios Polyhronopoulos, Chairman of the Board, President
and Chief Executive Officer
By: s/s Larry L. Richardson
- ---------------------------------------------------------
Larry L. Richardson, Director, Corporate Secretary
40
<PAGE>
EXHIBIT 3.1
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
FEB 16, 1999
No. C-3690-99
s/s Dean Heller
Dean Heller, Secretary of State
Articles of Incorporation
for
GLOBAL SMARTCARDS, INC.
Know all men by these presents:
That the undersigned, have this day voluntarily associated ourselves
together for the purpose of forming a corporation under pursuant to
the provision of Nevada Revised Statutes 78.010 to Nevada Revised
Statutes 78.090 inclusive, as amended, and certify that;
1. The name of the corporation is GLOBAL SMARTCARDS INC.
2. Offices for the transaction of any business of the
corporation, and where meetings of the board of Directors and
Stockholders may be held, may be established and maintained in
any part of the State of Nevada, or in any other state,
territory, or possession of the United States.
3. The nature of the business is to engage in any lawful activity.
4. The capital stock shall consist of: 25,000,000 shares or common
stock, $0.001 par value.
5. The members of the governing board of the corporation shall
be styled directors, of which there shall be one or more, with
the exact number to be fixed by the by-laws of the corporation,
provided the number so fixed by the by-laws may be increased or
decreased from time to time. Directors of the corporation need
not be stockholders. The FIRST BOARD OF DIRECTORS shall consist
of ONE director(s) and the names and addresses are, as follows:
(1) GEORGIOS POLYHRONOPOULOS, 38820 N. 25TH AVENUE,
PHOENIX,AZ 85027
(2)
(3)
6. This corporation shall have perpetual existence.
7. This corporation shall have a President, Secretary, a
treasurer, and a resident agent, to be chosen by the Board of
Directors. Any person may hold two or more offices.
8. The Resident Agent of this corporation shall be:
RITE, INC., 1905 S. Eastern Ave., Las Vegas, NV 89104
9. The stock of this corporation, after the fixed consideration
thereof has been paid or performed, shall not be subject to
assessment, and no individual stockholder shall be liable for the
debts and liabilities of the Corporation. The Articles of
Incorporation shall never be amended as to the aforesaid
provisions.
<PAGE>
10. No Director or Officer of this Corporation shall be
personally liable to the Corporation or to any of
its stockholders for damages for breach of fiduciary duty as
a director or officer involving any act or commission of any such
director or officer provided, however, that the foregoing provision
shall not eliminate or limit the liability of a director or officer
for acts of omissions which involve intentional misconduct, fraud or a
knowing violation of law, or the payment of dividends in violation of
Section 78.300 of the Nevada Revised Statutes. Any repeal or
modification of this Article by the Stockholders shall be prospective
only, and shall not adversely affect any limitation on the personal
liability of a director or officer of the Corporation for acts or
omissions prior to such repeal or modification.
SIGNATURE OF INCORPORATOR: (Signature of incorporator must be
notarized) FOR GLOBAL SMARTCARDS INC.
I, the undersigned, being the incorporator for the purpose of
forming a corporation pursuant to the general corporation law of the
State of Nevada, do make and file these Articles of Incorporation,
hereby declaring and certifying that the facts within stated are true,
and accordingly have hereunto set my hand this 16th day of February,
1999
s/s Dolores J. Passaretti
- ----------------------------
Dolores J. Passaretti
Signature
1905 S. Eastern Ave., Las Vegas, NV 89104
State of Nevada )
)SS
County of Clark )
On the 16th of February, 1999, personally known to me to be the
person whose names are subscribed to the within document and
acknowledged to me that they executed the same in their authorized
capacity.
s/s Noal D. Farmer
- -----------------------
Signature
Noal D. Farmer
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
No. C-3690-99
FEB 16, 1999
s/s Dean Heller
Dean Heller, Secretary of State
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT BY
RESIDENT AGENT
In the matter of: GLOBAL SMARTCARDS INC.
I, RITE, INC. 1905 S. Eastern Ave., Las Vegas, NV
89104, County of CLARK.
Do hereby accept the appointment as Resident Agent of
the above named Corporation in accordance with NRS 78.090.
Furthermore that the registered
office in Nevada is located at;
1905 S. Eastern Ave., Las
Vegas, NV 89104
In witness Whereof, I have hereunto set my hand this 16th day
of February, 1999
By s/s Dolores J. Passaretti FOR RITE, INC.
- --------------------------------------------
Dolores J. Passaretti
Signature
NRS 78.090 Except for any period of vacancy described in NRS 78097,
Every Corporation shall have a Resident Agent, Who may be either a
natural person or a corporation, resident or located in this state, in
charge of the registered office. The resident agent may be any bank or
banking corporation, or other corporation located and doing business
in
this state. The certificate of acceptance must be filed at the time
of the initial filing of the corporate papers.
<PAGE>
STATE OF NEVADA
Secretary of State
I hereby certify that this is a
true and complete copy of
the document as filed in this
Office.
FEB 16 '99
s/s Dean Heller
- ------------------
Dean Heller
Secretary of State
By: s/s Shaynee Davis
- --------------------------
<PAGE>
EXHIBIT 3.2
TABLE OF CONTENTS
BY-LAWS
ARTICLE ONE - OFFICES
1.1 Registered Office.
1.2 Other Offices.
ARTICLE TWO - MEETINGS OF STOCKHOLDERS
2.1 Place.
2.2 Annual Meetings.
2.3 Special Meetings.
2.4 Notices of Meetings.
2.5 Purpose of Meetings.
2.6 Quorum.
2.7 Voting.
2.8 Share Voting.
2.9 Proxy.
2.10 Written Consent in Lieu of Meeting.
ARTICLE THREE - DIRECTORS
3.1 Powers
3.2 Number of Directors.
3.3 Vacancies.
ARTICLE FOUR - MEETINGS OF THE BOARD OF DIRECTORS
4.1 Place.
4.2 First Meeting.
4.3 Regular Meetings.
4.4 Special Meetings.
4.5 Notice.
4.6 Waiver.
4.7 Quorum.
4.8 Adjournment.
ARTICLE FIVE - COMMIITTEES OF DIRECTORS
5.1 Power to Designate.
5.2 Regular Minutes.
5.3 Written Consent.
ARTICLE SIX -- COMPENSATION OF DIRECTORS
6.1 Compensation.
ARTICLE SEVEN - NOTICES
7.1 Notice.
7.2 Consent.
7.3 Waiver of Notice.
<PAGE>
ARTICLE EIGHT - OFFICERS
8.1 Appointment of Officers.
8.2 Time of Appointment.
8.3 Additional Officers.
8.4 Salaries.
8.5 Vacancies.
8.6 Chairman of the Board.
8.7 Vice-Chairman.
8.8 President
8.9 Vice President
8.10 Secretary.
8.11 Assistant Secretaries.
8.12 Treasurer.
8.13 Surety.
8.14 Assistant Treasurer.
ARTICLE NINE - CERTIFICATES OF STOCK
9.1 Share Certificates.
9.2 Transfer Agents.
9.3 Lost or Stolen Certificates.
9.4 Share Transfers.
9.5 Voting Shareholder.
9.6 Shareholders Record.
ARTICLE TEN - GENERAL PROVISIONS
10.1 Dividends.
10.2 Reserves.
10.3 Checks.
10.4 Fiscal Year.
10.5 Corporate Seal.
ARTICLE ELEVEN - INDEMNIFICATION
ARTICLE TWELVE - AMENDMENTS
12.1 By Shareholder.
12.2 By Board of Directors.
<PAGE>
BY-LAWS
OF
GLOBAL SMARTCARDS, INC.
------------------------------------------------
A NEVADA CORPORATION
ARTICLE ONE
OFFICES
Section 1.1. Registered Office - The registered office of this
corporation shall Be in the County of Clark, State of Nevada.
Section 1.2. Other Offices - The corporation may also have offices at
such other places both within and without the State of Nevada as the
Board of Directors may from time to time determine or the business of
the corporation may require.
ARTICLE TWO
MEETINGS OF STOCKHOLDERS
Section 2.1. - All annual meetings of the stockholders shall be held
at the registered office of the corporation or at such other place
within or without the State of Nevada as the directors shall
determine. Special meetings of the stockholders may be held at such
time and place within or without the State of Nevada as shall be
stated in the notice of the meeting, or in a duly executed waiver of
notice thereof.
Section 2.2. Annual Meetings - Annual meetings of the
stockholders, commencing with the year 1999 , shall be held on the
17th day of February each year if not a legal holiday and, if a legal
holiday, then on the next secular day following, or at such other time
as may be set by the Board of Directors from time to time, at which
the stockholders shall elect by vote a Board of Directors and transact
such other business as may properly be brought before the meeting.
Section 2.3. Special Meetings - Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by statute or
by the Articles of Incorporation, may be called by the President or
the Secretary by resolution of the Board of Directors or at the
request in writing of stockholders owning a majority in amount of the
entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose of the proposed
meeting.
Section 2.4. Notices of Meetings - Notices of meetings shall be in
writing and signed by the President or a Vice-President or the
Secretary or an Assistant Secretary or by such other person or persons
as the directors shall designate. Such notice shall state the purpose
or purposes for which the meeting is called and the time and the
place, which may be within or without this State, where it is to be
held. A copy of such notice shall be either delivered personally to or
shall be mailed, postage prepaid, to each stockholder of record
entitled to vote at such meeting not less than ten nor more than sixty
days before such meeting. If mailed, it shall be directed to a
stockholder at his address as it appears upon the records of the
corporation and upon such mailing of any such notice, the service
thereof shall be complete and the time of the notice shall being to
run from the date upon which such notice is deposited in the mail for
transmission to such stockholder. Personal delivery of any such notice
to any officer of a corporation or association or to any member of a
partnership shall constitute delivery of such notice to such
corporation, association or partnership. In the event of the transfer
of stock after delivery of such notice of and prior to the holding of
the meeting it shall not be necessary to deliver or mail notice of the
meeting to the transferee.
<PAGE>
Section 2.5. Purpose of Meetings - Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the
notice.
Section 2.6. Quorum - The holders of a majority of the stock issued
and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise
provided by statute or by the Articles of Incorporation. If, however,
such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in
person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such
adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the
meeting as originally notified.
Section 2.7. Voting - When a quorum is present or represented at any
meeting, the vote of the holders of a majority of the stock having
voting power present in person or represented by proxy shall be
sufficient to elect Directors or to decide any questions brought
before such meeting, unless the question is one upon which by express
provision of the statutes or of the Articles of Incorporation, a
different vote is required in which case such express provision shall
govern and control the decision of such question.
Section 2.8. Share Voting - Each stockholder of record of the
corporation shall be entitled at each meeting of stockholders to one
vote for each share of stock standing in his name on the books of the
corporation. Upon the demand of any stockholder, the vote for
directors and the vote upon any question before the meeting shall be
by ballot.
Section 2.9. At any meeting of the stockholders any stockholder may be
represented and vote by a proxy or proxies appointed by an instrument
in writing. In the event that any such instrument in writing shall
designate two or more persons to act as proxies, a majority of such
persons present at the meeting, or, if only one shall be present. then
that one shall have and may exercise all of the powers conferred by
such written instrument upon all of the persons so designated unless
the instrument shall otherwise provide. No proxy or power of attorney
to vote shall be used to vote at a meeting of the stockholders unless
it shall have been filed with the secretary of the meeting when
required by the inspectors of election. All questions regarding the
qualification of voters, the validity of proxies and the acceptance or
rejection of votes shall be decided by the inspectors of election who
shall be appointed by the Board of Directors, or if not so appointed,
then by the presiding officer of the meeting.
Section 2.10. Written Consent in Lieu of Meeting - Any action which
may be taken by the vote of the stockholders at a meeting may be taken
without a meeting if authorized by the written consent of stockholders
holding at least a majority of the voting power, unless the provisions
of the statutes or of the Articles of Incorporation require a greater
proportion of voting power to authorize such action in which case such
greater proportion of written consents shall be required.
<PAGE>
ARTICLE THREE
DIRECTORS
Section 3.1. Powers - The business of the corporation shall be managed
by its Board of Directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by
statute or by the Articles of Incorporation or by these Bylaws
directed or required to be exercised or done by the stockholders.
Section 3.2. Number of Directors - The number of directors which shall
constitute the whole board shall be Two (2). The number of directors
may from time to time be increased or decreased to not less
than one nor more than fifteen by action of the Board of Directors.
The directors shall be elected at the annual meeting of the
stockholders and except as provided in Section 2 of this
Article, each director elected shall hold office until his successor
is elected and qualified. Directors need not be stockholders.
Section 3.3. Vacancies- Vacancies in the Board of Directors including
those caused by an increase in the number of directors, may be filled
by a majority of the remaining directors, though less than a
quorum, or by a sole remaining director, and each director so elected
shall hold office until his successor is elected at an annual or a
special meeting of the stockholders. The holders of a two-thirds
of the outstanding shares of stock entitled to vote may at any time
peremptorily terminate the term of office of all or any of the
directors by vote at a meeting called for such purpose or by a written
statement filed with the secretary or, in his absence, with any other
officer . Such removal shall be effective immediately, even if
successors are not elected simultaneously and the vacancies on the
Board of Directors resulting therefrom shall be filled only by
the stockholders. A vacancy or vacancies in the Board of Directors
shall be deemed to exist in case of the death, resignation or removal
of any directors, or if the authorized number of directors be
increased, or if the stockholders fail at any annual or special
meeting of stockholders at which any director or directors are elected
to elect the full authorized number of directors to be voted for at
that meeting.
The stockholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors. If the Board of
Directors accepts the resignation of a director tendered to take
effect at a future time, the Board or the stockholders shall have
power to elect a successor to take office when the resignation is to
become effective. No reduction of the authorized number of directors
shall have the effect of removing any director prior to the expiration
of his term of office.
<PAGE>
ARTICLE FOUR
MEETINGS OF THE BOARD OF DIRECTORS
Section 4.1. ~ - Regular meetings of the Board of Directors shall be
held at any place within or without the State which has been
designated from time to time by resolution of the Board or by written
consent of all members of the Board. In the absence of such
designation regular meetings shall be held at the registered office of
the corporation. Special meetings of the Board may be held either at a
place so designated or at the registered office.
Section 4.2. First Meeting - The first meeting of each newly elected
Board of Directors shall be held immediately following the adjournment
of the meeting of stockholders and at the place thereof. No notice of
such meeting shall be necessary to the directors in order legally to
constitute the meeting, provided a quorum be present. In the event
such meeting is not so held, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided
for special meetings of the Board of Directors.
Section 4.3. Regular Meetings - Regular meetings of the Board of
Directors may be held without call or notice at such time and at such
place as shall from time to time be fixed and determined by the Board
of Directors.
Section 4.4. Special Meetings - Special Meetings of the Board of
Directors may be called by the Chairman or the President or by any
Vice-President or by any two directors.
Written notice of the time and place of special meetings shall be
delivered personally to each director, or sent to each director by
mail or by other form of written communication, charges prepaid,
addressed to him at his address as it is shown upon the records or is
not readily ascertainable, at the place in which the meetings of the
directors are regularly held. In case such notice is mailed or
telegraphed, it shall be deposited in the United States mail or
delivered to the telegraph company at lease forty-eight (48) hours
prior to the time of the holding of the meeting. In case such notice
is delivered as above provided, it shall be so delivered at lease
twenty-four (24) hours prior to the time of the holding of the
meeting. Such mailing, telegraphing or delivery as above provided
shall be due, legal and personal notice to such director .
Section 4.5. Notice - Notice of the time and place of holding an adjourned
meeting need not be given to the absent directors if the time and
place be fixed at the meeting adjourned.
Section 4.6. Waiver - The transactions of any meeting of the Board of
Directors, however called and noticed or wherever held, shall be as
valid as though had at a meeting duly held after regular call and
notice, if a quorum be present, and if. either before or after the
meeting, each of the directors not present signs a written waiver of
notice, or a consent to holding such meeting, or an approval of the
minutes thereof. All such waivers, consents or approvals shall be
filed with the corporate records or made a part of the minutes of the
meeting.
Section 4.7. Quorum - A majority of the authorized number of directors
shall be necessary to constitute a quorum for the transaction of
business, except to adjourn as hereinafter provided. Every act or
decision done or made by a majority of the directors present at a
meeting duly held at which a quorum is present shall be regarded as
the act of the Board of Directors, unless a greater number be required
by law or by the Articles of Incorporation. Any action of a majority,
although not at a regularly called meeting. and the record thereof, if
assented to in writing by all of the other members of the Board shall
be as valid and effective in all respects as if passed by the Board in
regular meeting.
Section 4.8. Adjournment - A quorum of the directors may adjourn any
directors meeting to meet again at a stated day and hour; provided,
however, that in the absence of a quorum, a majority of the directors
present at any directors meeting. either regular or special, may
adjourn from time to time until the time fixed for the next regular
meeting of the Board.
<PAGE>
ARTICLE FIVE
COMMITTIES OF DIRECTORS
Section 5.1. Power to Designate - The Board of Directors may, by
resolution adopted by a majority of the whole Board, designate one or
more committees of the Board of Directors, each committee to consist
of one or more of the directors of the corporation which, to the
extent provided in the resolution, shall have and may exercise the
power of the Board of Directors in the management of the business and
affairs of the corporation and may have power to authorize the seal of
the corporation to be affixed to all papers which may require it. Such
committee or committees shall have such name or names as may be
determined from time to time by the Board of Directors. The members of
any such committee present at any meeting and not disqualified from
voting may, whether or not they constitute a quorum, unanimously
appoint another member of the Board of Directors to act at the meeting
in the place of any absent or disqualified member . At meetings of
such committees, a majority of the members or alternate members shall
constitute a quorum for the transaction of business, and the act of a
majority of the members or alternate members at any meeting at which
there is a quorum shall be the act of the committee.
Section 5.2. Regular Minutes - The committees shall keep regular
minutes of their proceedings and report the same to the Board of
Directors.
Section 5.3. Written Consent - Any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting if a written consent thereto is
signed by all members of the Board of Directors or of such committee,
as the case may be, and such written consent is filed with the minutes
of proceedings of the Board or committee.
ARTICLE SIX
COMPENSATION OF DIRECTORS
Section 6.1. Compensation - The directors may be paid their expenses
of attendance at each meeting of the Board of Directors and may be
paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other
capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like reimbursement and compensation
for attending committee meetings.
<PAGE>
ARTICLE SEVEN
NOTICES
Section 7.1. Notice - Notices to directors and stockholders shall be
in writing and delivered personally or mailed to the directors or
stockholders at their addresses appearing on the books of the
corporation. Notice by mail shall be deemed to be given at the time
when the same shall be mailed. Notice to directors may also be given
by telegram.
Section 7.2. Consent - Whenever all parties entitled to vote at any
meeting, whether of directors or stockholders, consent, either by a
writing on the records of the meeting or filed with the secretary, or
by presence at such meeting and oral consent entered on the minutes,
or by taking part in the deliberations at such meeting without
objection. the doings of such meetings shall be as valid as if had at
a meeting regularly called and noticed, and at such meeting any
business may be transacted which is not excepted from the written
consent or to the consideration of which no objection for want of
notice is made at the time, and if any meeting be irregular for want
of notice or of such consent, provided a quorum was present at such
meeting, the proceedings of said meeting may be ratified and approved
and rendered likewise valid and the irregularity or defect therein
waived by a writing signed by all parties having the right to vote at
such meeting; and such consent or approval of stockholders may be by
proxy or attorney, but all such proxies and powers of attorney must be
in writing.
Section 7.3. Waiver of Notice - Whenever any notice whatever is
required to be given under the provisions of the statutes, of the
Articles of Incorporation or of these Bylaws, a waiver thereof in
writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE EIGHT
OFFICERS
Section 8.1. Appointment of Officers - The officers of the corporation
shall be chosen by the Board of Directors and shall be a President, a
Secretary and a Treasurer. Any person may hold two or more offices.
Section 8.2. Time of Appointment - The Board of Directors at its first
meeting after each annual meeting of stockholders shall choose a
Chairman of the Board who shall be a director, and shall choose a
President, a Secretary and a Treasurer. none of whom need be
directors.
Section 8.3. Additional Officers - The Board of Directors may appoint
a Vice Chairman of the Board, Vice- Presidents and one or more
Assistant Secretaries and Assistant Treasurers and such other officers
and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.
Section 8.4. Salaries - The salaries and compensation of all officers
of the corporation shall be fixed by the Board of Directors.
Section 8.5. Vacancies - The officers of the corporation shall hold
office at the pleasure of the Board of Directors. Any officer elected
or appointed by the Board of Directors may be removed at any time by
the Board of Directors. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise shall be
filled by the Board of Directors.
<PAGE>
Section 8.6. Chairman of the Board - The Chairman of the Board shall
preside at meetings of the stockholders and the Board of Directors,
and shall see that all orders and resolutions of the Board of
Directors are carried into effect.
Section 8.7. Vice-Chairman - The Vice-Chairman shall, in the absence
or disability of the Chairman of the Board, perform the duties and
exercise the powers of the Chairman of the Board and shall perform
such other duties as the Board of Directors may from time to time
prescribe.
Section 8.8. President - The President shall be the chief executive
officer of the corporation and shall have active management of the
business of the corporation. He shall execute on behalf of the
corporation all instruments requiring such execution except to the
extent the signing and execution thereof shall be expressly designated
by the Board of Directors to some other officer or agent of the
corporation.
Section 8.9. Vice-President - The Vice-President shall act under the
direction of the President and in the absence or disability of the
President shall perform the duties and exercise the powers of the
President. They shall perform such other duties and have such other
powers as the President or the Board of Directors may from time to
time prescribe. The Board of Directors may designate one or more
Executive Vice Presidents or may otherwise specify the order of
seniority of the Vice-Presidents. The duties and powers of the
President shall descend to the Vice-Presidents in such specified order
of seniority.
Section 8.10. Secretary- The Secretary shall act under the direction
of the President. Subject to the direction of the President he shall
attend all meetings of the Board of Directors and all meetings of the
stockholders and record the proceedings. He shall perform like duties
for the standing committees when required. He shall give, or cause to
be given, notice of all meetings of the stockholders and special
meetings of the Board of Directors, and shall perform such other
duties as may be prescribed by the President or the Board of
Directors.
Section 8.11. Assistant Secretaries - The Assistant Secretaries shall
act under the direction of the President. In order of their seniority,
unless otherwise determined by the President or the Board of
Directors, they shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary. They
shall perform such other duties and have such other powers as the
President or the Board of Directors may from time to time prescribe.
Section 8.12. Treasurer - The Treasurer shall act under the direction
of the President. Subject to the direction of the President he shall
have custody of the corporate funds and securities and shall keep full
and accurate accounts of receipts and disbursements in books belonging
to the corporation and shall deposit all monies and other valuable
effects in the name and to the credit of the corporation in such
depositories as may be designated by the Board of Directors. He shall
disburse the funds of the corporation as may be ordered by the
President or the Board of Directors, taking proper vouchers for such
disbursements. and shall render to the President and the Board of
Directors, at its regular meetings, or when the Board of Directors so
requires, an account of all his transactions as Treasurer and of the
financial condition of the corporation.
<PAGE>
Section 8.13. ~ - If required by the Board of Directors, he shall give
the corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful
performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other property
of whatever kind in his possession or under his control belonging to
the corporation.
Section 8.14. Assistant Treasurer- The Assistant Treasurer in the
order of their seniority, unless otherwise detem1ined by the President
or the Board of Directors, shall, in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the
Treasurer. They shall perform such other duties and have such other
powers as the President or the Board of Directors may from time to
time prescribe.
ARTICLE NINE
CERTIFICATES OF STOCK
Section 9.1. Share Certificates - Every stockholder shall be entitled
to have a certificate signed by the President or a Vice-President and
the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the corporation, certifying the number of
shares owned by him in the corporation. If the corporation shall be
authorized to issue more than once class of stock or more than one
series of any class, the designations, preferences and relative,
participating, optional or other special rights of the various classes
of stock or series thereof and the qualifications, limitations or
restrictions of such rights, shall be set forth in full or summarized
on the face or back of the certificate which the corporation shall
issue to represent such stock.
Section 9.2. Transfer Agents - If a certificate is signed (a) by a
transfer agent other than the corporation or its employees or (b) by a
registrar other than the corporation or its employees, the signatures
of the officers of the corporation may be facsimiles. In case any
officer who has signed or whose facsimile signature has been placed
upon a certificate shall cease to be such officer before such
certificate is issued, such certificate may be issued with the same
effect as though the person had not ceased to be such officer. The
seal of the corporation. or a facsimile thereof, may, but need not be,
aff1Xcd to certificates of stock.
Section 9.3. Lost or Stolen Certificates - The Board of Directors may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation
alleged to have been lost or destroyed upon the making of an affidavit
o that fact by the person claiming the certificate of stock to be lost
or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall
require and/or give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost
or destroyed.
Section 9.4. Share Transfers - Upon surrender to the corporation or
the transfer agent of the corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment
or authority to transfer, it shall be the duty of the corporation, if
it is satisfied that all provisions of the laws and regulations
applicable to the corporation regarding transfer and ownership of
shares have been complied with, to issue a new certificate to the
person entitled thereto, cancel the old certificate and record the
transaction upon its books.
<PAGE>
Section 9.5. Voting Shareholder- The Board of Directors may fix in
advance a date not exceeding sixty (60) days nor less than ten (10)
days preceding the date of any meeting of stockholders, or the date
for the payment of any dividend, or the date for the allotment of
rights, or the date when any change or conversion or exchange of
capital stock shall go into effect, or a date in connection with
obtaining the consent of stockholders for any purpose, as a record
date for the determination of the stockholders entitled to notice of
and to vote at any such meeting, and any adjournment thereof, or
entitled to receive payment of any such dividend, or to give such
consent, and in such case, such stockholders, and only such
stockholders as shall be stockholder of record on the date so fixed,
shall be entitled to notice of and to vote at such meeting, or any
adjournment thereof, or to receive payment of such dividend, or to
receive such allotment of rights, or to exercise such rights, or to
give such consent, as the case may be, notwithstanding any transfer of
any stock on the books of the corporation after any such record date
fixed as aforesaid.
Section 9.6. Shareholders Record - The corporation shall be entitled
to recognize the person registered on its books as the owner of shares
to be the exclusive owner for all purposes including voting and
dividends, and the corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the
part of any other person, whether or not it shall have express or
other notice thereof, except as other wise provided by the laws of
Nevada.
ARTICLE TEN
GENERAL PROVISIONS
Section 10.1. Dividends - Dividends upon the capital stock of the
corporation, subject to the provisions of the Articles of
Incorporation, if any, may be declared by the Board of Directors at
any regular or special meeting, pursuant to law. Dividends may be paid
in cash, in property or in shares of the capital stock, subject to the
provisions of the Articles of Incorporation.
Section 10.2. Reserves. Before payment of any dividend, there may be
set aside out of any funds of the corporation available for dividends
such sum or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends or for repairing or
maintaining any property of the corporation or for such other purpose
as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve
in the manner in which it was created.
Section 10.3. Checks - All checks or demands for money and notes of
the corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to
time designate.
Section 10.4. Fiscal Year - The fiscal year of the corporation shall
be fixed by resolution of the Board of Directors.
Section 10.5. Corporate Seal - The corporation mayor may not have a
corporate seal, as may from time to time be determined by resolution
of the Board of Directors. If a corporate seal is adopted, it shall
have inscribed thereon the name of the Corporation and the words
"Corporate Seals." and "Nevada... The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or in any manner
reproduced.
<PAGE>
ARTICLE ELEVEN
INDEMNIFICATION
Every person who was or is a party or is threatened to be made a party
to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that
he or a person of whom he is the legal representative is or was a
director or officer of the corporation or is or was serving at the
request of the corporation or for its benefit as a director or officer
of another corporation, or as its representative in a partnership,
joint venture, trust or other enterprise, shall be indemnified and
held harmless to the fullest extent legally permissible under the
General Corporation Law of the State of Nevada from time to time
against all expenses, liability and loss (including moneys' fees.
judgments, fines and amounts paid or to be paid in settlement)
reasonably incurred or suffered by him in connection therewith. The
expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding must be paid by the corporation as
they are incurred and in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director or officer to repay the amount if it is
ultimately determined by a court of competent jurisdiction that he is
not entitled to be indemnified by the corporation. Such right of
indemnification shall be a contract right which may be enforced in any
manner desired by such person. Such right of indemnification shall not
be exclusive of any other right which such directors, officers or
representatives may have or hereafter acquire and, without limiting
the generality of such statement, they shall be entitled to their respective
rights of indemnification under any bylaw, agreement, vote of stockholders,
provision of law or otherwise, as well as their rights under this
Article.
The Board of Directors may cause the corporation to purchase and
maintain insurance on behalf of any person who is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other
enterprise against any liability asserted against such person and
incurred in any such capacity or arising out of such status, whether
or not the corporation would have the power to indemnify such person.
The Board of Directors may from time to time adopt further Bylaws with
respect to indemnification and may amend these and such Bylaws to
provide at all times the fullest indemnification permitted by the
General Corporation Law of the State of Nevada.
<PAGE>
ARTICLE TWELVE
AMENDMENTS
Section 12.1. By Shareholder - The Bylaws may be amended by a majority
vote of all the stock issued and outstanding and entitled to vote at
any annual or special meeting of the stockholders, provided notice of
intention to and shall have been contained in the notice of the
meeting.
Section 12.2. By Board of Directors - The Board of Directors by a
majority vote of the whole Board at any meeting may amend these
Bylaws, including Bylaws adopted by the stockholders, but the
stockholders may from time to time specify particular provisions of
the Bylaws which shall not be amended by the Board of Directors.
APPROVED AND ADOPTED this 17th day of February, 1999
s/s Larry Richardson
- --------------------------
Larry Richardson
Secretary
<PAGE>
CERTIFICATE OF SECRETARY
I hereby certify that I am the Secretary of GLOBAL SMARTCARDS INC.,
and that the foregoing BYLAWS, consisting of 11 pages, constitute the
code of Bylaws of GLOBAL SMARTCARDS INC., as duly adopted at a the
First Meeting of the Board of Directors of the corporation held
February 17, 1999. IN WITNESS WHEREOF, I have hereunto subscribed my
name this 17th day of February, 1999.
s/s Larry Richardson
- --------------------------
Larry Richardson
Secretary
<PAGE>
EXHIBIT 4.1
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA NUMBER [ ]
SHARES [ ]
CUSIP # 37939A 10 6
Global SmartCards, INC.
Total Authorized issue 25,000,000 Shares
PAR VALUE $0.001 EACH COMMON STOCK
This is to Certify that [ ] is the owner of [ ] Fully Paid and
non-
assessable Shares of Common Stock, no par value of Global SmartCards,
Inc. transferable on the books of the Corporation by the holder hereof
in person or by duly authorized Attorney upon surrender of this
Certificate properly endorsed.
WITNESS, the seal of the Corporation and the signatures of its Duly
authorized officers.
Dated
Stock Transfer Agent:
Seal
[signature] [signature]
- ------------------------ ------------------------------
Larry L. Richardson, Secretary Georgios Polyhronopoulos,
President
1
<PAGE>
The following abbreviations, when used in the inscription on the face
of
this certificate, shall be construed as though they were written out
in
full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants
in common UNIF GIFT MIN ACT - . . . . Custodian. . . .
(Cust) (Minor) under Uniform Gifts to Minors Act
____________
(State)
Additional abbreviations may also be used though
not in the above list.
For the value received _____________ hereby sell,
assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
[
]
Please print or typewrite name and address including
postal zip code of assignee
- ----------------- Shares
represented by the within Certificate, and do
hereby irrevocably constitute and appoint
to transfer the sad Shares, on the books of the within names
Corporation
with full power of substitution in the premises.
Dated -----------------------
In presence of
2
<PAGE>
EXHIBIT 10(a)
EMPLOYMENT AGREEMENT BY AND BETWEEN THE COMPANY AND Georgios
Polyhronopoulos DATED FEBRUARY 16, 1998 EMPLOYMENT AGREEMENT THIS
EMPLOYMENT AGREEMENT (the "Agreement"), effective as of the 1st day of
February 1999, by and between Global SmartCards, INC., a Nevada
corporation with its principal place of business located at 38820 N.
25th Avenue, Phoneix, AZ 85027 (hereinafter referred to as "Company"
or "Employer") and Georgios Polyhronopoulos (hereinafter referred to as
the "Employee"). The Company hereby employs the Employee and the
Employee hereby accepts employment on the terms and conditions
hereinafter set forth.
1. Term.
Subject to the provisions for termination hereinafter provided, the
initial term of this Agreement shall commence on February 19, 1999 and
terminate on February 18, 2001, and shall continue hereafter on a year
to year basis unless terminated by the Company by delivery of written
notice to the Employee not later than thirty (30) days prior to the
date for termination as indicated in said notice.
2. Compensation and Performance Review
The employee shall receive a salary of $12,000 per year, paid on a monthly
basis.
3. Duties.
Employee is engaged as the President, Chief Executive Officer, and
Chief Financial Officer of the Company. In such capacities, Employee
shall exercise detailed supervision over the operations of the Company
subject, however, to control by the Board of Directors. The Employee
shall perform all duties incident to the title of President, Chief
Executive Officer, and Chief Financial Officer and such other duties
as from time to time may be assigned to him by the Board of Directors.
1
<PAGE>
4. Best Efforts of Employee.
The Employee shall devote his best efforts to the business of the
Company and to all of the duties that may be required by the terms of
this Agreement to the reasonable satisfaction of the Company. The
Employee shall at all times faithfully, with diligence and to the best
of his ability, experience and talents, perform all the duties that
may be required of and from his pursuant to the express and implicit
terms hereof to the reasonable satisfaction of the Company. Such
services shall be rendered at such other place or places as the Company
shall in good faith require or as the interest, needs, business or
opportunity of the Company shall require. The Employee agrees not to
engage in any employment or consulting work or any trade or business
for his account or for or on behalf of any other person, firm or
corporation, which would conflict with the operations of the Company's
business, unless the Employee obtains prior written consent from the
Board of Directors of the Company.
5. Working Facilities.
The Employee shall be furnished with all such facilities and services
suitable to his position and adequate for the performance of his
duties. In this case, the Employee is utilizing their own facilities
at no cost to the Company.
6. Expenses.
The Employee is authorized to incur reasonable expenses for promoting
the business of the Company, including his out-of-pocket expenses for
entertainment, travel and similar items. The Company shall reimburse
the Employee for all such expenses on the presentation by the Employee,
from time to time, of an itemized account of such expenditures in
accordance with the guidelines set forth by the Internal Revenue
Service for travel and entertainment.
7. Vacation.
The Employee shall be entitled each year to a vacation of a reasonable
amount during which time his compensation, as described above, shall
be paid in full, that is, provided he is receiving compensation based
on the incentive performance program described above.
8. Disability.
(a) Should the Employee, by reason of illness or incapacity, be
unable to perform his job for a period of up to and including a maximum
of twelve (12) months, the compensation payable to his for and during
such period under this Agreement shall be unabated. The Board of
Directors shall have the right to determine the incapacity of the
Employee for the purposes of this provision, and any such determination
shall be evidenced by its written opinion delivered to the Employee.
Such written opinion shall specify with particularity the reasons
supporting such opinion and be manually signed by at least a majority of
the Board.
(b) The Employee's compensation hereafter shall be reduced to zero.
The Employee shall receive full compensation upon his return to
employment and regular discharge of his full duties hereunder. Should
the Employee be absent from his employment for whatever
cause for a continuous period of more than 365 calendar days, the
Company may terminate this Agreement and all obligations of the
Company hereunder shall cease upon such termination.
2
<PAGE>
9. Termination.
(a) The Company may terminate this Agreement with cause at any time
under immediate notice to the Employee thereof, and such notice having
been given, this Agreement shall terminate in accordance therewith.
For the purpose of this section, "cause" shall be defined as meaning
such conduct by the Employee which constitutes in fact and/or law a
breach of fiduciary duty or felonious conduct having the effect, in the
opinion of the Board of Directors, of materially adversely affecting
the Company and/or its reputation.
(b) The Company may terminate this Agreement without cause by giving
90 days written notice to the Employee, and such notice having been
given, this Agreement shall terminate in accordance therewith.
(c) The Employee may terminate this Agreement without cause by
giving 90 days written notice to the Company, and such notice having
been given, this Agreement shall terminate in accordance therewith.
(d) In the event of termination herein, the Employee shall be
entitled to receive compensation based upon his prorated incentive
compensation, up and until the date of termination. After the date of
termination, the Employee shall not be entitled to receive additional
compensation of any kind or nature from the Employer and all benefit
and incentive programs then in place shall terminate.
10. Confidentiality.
The Employee shall not divulge to others any information he may obtain
during the course of his employment relating to the business of the
Company without first obtaining written permission of the Company.
11. Notices.
All notices, demands, elections, opinions or requests (however
characterized or described) required or authorized hereunder shall be
deemed given sufficiently if in writing and sent by registered or
certified mail, return receipt requested and postage prepaid, or by
tested telex, telegram or cable to, in the case of the Company:
Global SmartCards, Inc., 38820 N. 25th Avenue, Phoenix, AZ 85027, and
in the case of the Employee: Georgios Polyhronopoulos, 38820 N. 25th
Avenue, Phoenix, AZ 85027
12. Assignment of Agreement.
No party may assign or otherwise transfer this Agreement or any of its
rights or obligations hereunder without the prior written consent to
such assignment or transfer by the other party hereto; and all the
provisions of this Agreement shall be binding upon the respective
employees, delegates, successors, heirs and assigns of the parties.
3
<PAGE>
13. Survival of Representations, Warranties and Covenants.
This Agreement and the representations, warranties, covenants and
other agreements (however characterized or described) by both parties
hereto and contained herein or made pursuant to the provisions hereof
shall survive the execution and delivery of this Agreement and any
inspection or investigation made at any time with respect to any
thereof until any and all monies, payments, obligations and liabilities
which either party hereto shall have made, incurred or become liable
for pursuant to the terms of this Agreement shall have been paid in
full.
14. Further Instruments.
The parties shall execute and deliver any and all such other
instruments and shall take any and all such other actions as may be
reasonably necessary to carry the intent of this Agreement into full
force and effect.
15. Severability.
If any provisions of this Agreement shall be held, declared or
pronounced void, violable, invalid, unenforceable or inoperative for
any reason by any court of competent jurisdiction, government
authority or otherwise, such holding, declaration or pronouncement
shall not affect adversely any other provision of this Agreement, which
shall otherwise remain in full force and effect and be enforced in
accordance with its terms and the effect of such holding, declaration
or pronouncement shall be limited to the territory or jurisdiction in
which made.
16. Waiver.
All the rights and remedies of either party under this Agreement are
cumulative and not exclusive of any other rights and remedies provided
by law. No delay or failure on the part of either party in the
exercise of any right or remedy arising from a breach of this Agreement
shall operate as a waiver of any subsequent right or remedy arising
from a subsequent breach of this Agreement. The consent of any party
where required hereunder to any act of occurrence shall not be deemed
to be a consent to any other act of occurrence.
17. General Provisions.
This Agreement shall be construed and enforced in accordance with, and
governed by, the laws of the State of Arizona. Except as otherwise
expressly stated herein, time is of the essence in performing
hereunder.
This Agreement embodies the entire agreement and understanding
between the parties and supersedes all prior agreements and
understanding relating to the subject matter hereof, and this Agreement
may not be modified or amended or any term of provision hereof waived
or discharged except in writing signed by the party against whom such
amendment, modification, waiver of discharge is sought to be enforced.
The headings of this Agreement are for convenience in reference only
and shall not limit or otherwise affect the meaning thereof.
The Agreement may be executed in any number of counterparts, each of
which shall be deemed an original but all of which taken together
shall constitute one and the same instrument.
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first above written.
THE COMPANY: THE EMPLOYEE:
Global SmartCards, Inc., Georgios Polyhronopoulos
s/s Larry L. Richardson s/s Georgios Polyhronopoulos
- --------------------------- -----------------------------
Witnessed:
Corporate Secretary
5
<PAGE>
BARRY L. FRIEDMAN, P.C.
Certified Public Accountant
1582 TULITA DRIVE OFFICE (702) 361-8414
LAS VEGAS, NEVADA 89123 FAX NO. (702) 896-0278
To Whom It May Concern: September 10, 1999
The firm of Barry L. Friedman, P.C., Certified Public Accountant
consents to the inclusion of their report of September 10, 1999,
on the Financial Statements of Global Smartcards Inc., as of
August 26, 1999, in any filings that are necessary now or in the
near future with the U.S. Securities and Exchange Commission.
Very truly yours,
s/s Barry L. Friedman
- ----------------------------
Barry L. Friedman
Certified Public Accountant
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE BALANCE SHEET, THE STATEMENT OF OPERATIONS, AND THE STATEMENT OF CASH
FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> FEB-16-1998
<PERIOD-END> AUG-26-1999
<CASH> 44,311
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 44,311
<PP&E> 529
<DEPRECIATION> 0
<TOTAL-ASSETS> 44,840
<CURRENT-LIABILITIES> 500
<BONDS> 0
0
0
<COMMON> 4,000
<OTHER-SE> 40,340
<TOTAL-LIABILITY-AND-EQUITY> 44,840
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 32,660
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (32,660)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
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