UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------
HALLS CREEK PARTNERS INC.
P.O. Box 2370, Alvin, Texas, USA 77512
(Name of small business issuer in its charter)
Nevada 5961 76-0616464
(State or (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification
organization) Code Number)
------------------------------
2400 Loop 35 #1502
Alvin TX 77512-2370
281-331-5580
(Address and telephone number of principal executive offices)
Agent for Service With a copy to:
J.P. Beehner, President Shoss & Associates
Halls Creek Partners Inc. Roger L.Shoss, Esq.
P.O. Box 2370 700 Louisiana, Suite 4260
Alvin, Texas 77512-2370 Houston TX 77002-2732
(281 )331-5580 (713) 225-0502
Approximate date of proposed sale to the public
As soon as practicable after the effective date of this Registration Statement
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) unde
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount Maximum Maximum Amount
Title of each class to be Offering Aggregate of
of securities to be registered Price Offering Registration
registered Per Unit Price Fee
Class A Common Stock 4,000,000 $0.01 $40,000 $10.56
Note: Specific details relating to the fee calculation shall be furnished in
notes to the table, including references to provisions of Rule 457 (Section
230.457 of this chapter) relied upon, if the basis of the calculation is not
otherwise evident from the information presented in the table. If the filing
fee is calculated pursuant to Rule 457(o) under the Securities Act, only the
title of the class of securities to be registered, the proposed maximum
aggregate offering price for that class of securities and the amount of
registration fee needed to appear in the Calculation of Registration Fee
table. Any difference between the dollar amount of securities registered for
such offerings and the dollar amount of securities sold may be carried forward
on a future registration statement pursuant to Rule 429 under the Securities
Act.
The registration hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
PART I INFORMATION REQUIRED IN PROSPECTUS
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ We will amend or complete the information in this prospectus. The
information in this +
+ prospectus is not complete and may be changed. We may not sell these
securities until +
+ the registration statement filed with the Securities and Exchange
Commission is effective. +
+ This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy +
+ these securities in any state where the offer or sale is not permitted.
+
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS DATED: ____________, 2000
HALLS CREEK PARTNERS INC.
P.O. Box 2370
Alvin, Texas 77512-2370
(281) 331-5580
4,000,000 Shares of Common Stock to be offered by the Company.
This is the initial public offering of common stock of Halls Creek Partners
Inc., and no public market currently exists for shares of Halls Creek Partners
Inc.s common stock. The initial public offering price is $0.01 per share of
common stock. The offering is on a best effortsno minimum basis. There is no
date certain for closing the offering, no minimum purchase requirement, and no
arrangement to place funds in an escrow, trust, or similar account.
This is not an underwritten offering, and Halls Creek Partners Inc.s stock is
not listed on any national securities exchange or the Nasdaq Stock Market.
The Company intends to apply to have its shares traded on the OTC bulletin
board under the symbol: HCPI
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK
SEE RISK FACTORS WHICH BEGINS ON PAGE 7
Neither the Securities and Exchange Commission, nor any state securities
commission, has approved or disapproved these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
You should rely only on the information contained in this document. The
Company has not authorized anyone to provide you with information that is
different. This document may only be used where it is legal to sell these
securities. The information in this document may only be accurate on the date
of this document.
TABLE OF CONTENTS
Item 1. FRONT OF REGISTRATION STATEMENT AND OUTSIDE FRONT COVER OF PROSPECTUS.
Item 2. INSIDE FRONT AND OUTSIDE BACK COVER PAGES OF PROSPECTUS.
FORM SB-2 1
CALCULATION OF REGISTRATION FEE 2
PROSPECTUS SUMMARY 7
RISK FACTORS 8
USE OF PROCEEDS 21
DETERMINATION OF OFFERING PRICE 21
SELLING SECURITY HOLDERS 22
PLAN OF DISTRIBUTION 22
LEGAL PROCEEDINGS 22
DIRECTORS AND EXECUTIVE OFFICERS 22
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT 23
DESCRIPTION OF SECURITIES 24
INTEREST OF NAMED EXPERTS AND
COUNSEL 25
DISCLOSURE OF COMMISSION POSITION OF
INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES 25
DESCRIPTION OF BUSINESS 25
MANAGEMENT DISCUSSION AND ANALYSIS
OF PLAN OF OPERATION 36
Results of Operations 36
DESCRIPTION OF PROPERTY 37
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS 37
MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS 37
EXECUTIVE COMPENSATION 38
FINANCIAL STATEMENTS 39
RECENT SALE OF UNREGISTERED
SECURITIES 40
EXHIBITS 40
POST-AMENDMENT FILINGS 41
PART I--PROSPECTUS
PROSPECTUS SUMMARY
The following summary is qualified in its entirety and should be read in
conjunction with the more detailed information and the Financial Statements
and notes thereto appearing elsewhere in this Prospectus.
Halls Creek Partner Inc. (the Company) was incorporated under the laws of the
State of Nevada on August 18, 1999 and is in the early developmental and
promotional stages of its business. To date, the Companys only activities
have been organizational, directed at raising its initial capital and
developing its business plan. The Company has not commenced operations. The
Company has no full time employees and owns no real estate. Under its
corporate charter, the Company may engage in any activity for which
corporations may be organized under the General Corporation Law of the State
of Nevada. Currently the sole asset of the Company is a License Agreement
between it and David R. Mortenson & Associates (Exhibit 1.0) under which the
Company has the right to market vitamins, minerals and nutritional supplements
available through a third-party companys, Vitamineralherb.com Corp., web site,
in an area of all of the state of Indiana and the Illinois counties of Will,
Kankakee, Iroquois and Vermilion.
The primary objective of the business is designed to market high-quality, low-
cost vitamins, minerals, nutritional supplements, and other health and fitness
products to medical professionals, alternative health professionals, martial
arts studios and instructors, sports and fitness trainers, other health and
fitness professionals, school and other fund raising programs and other
similar types of customers via the Internet for sale to their clients.
In a License Agreement with David R. Mortenson & Associates, Halls Creek
Partners Inc. acquired the exclusive right to distribute Vitamineralherb.com
products to health and fitness professionals for sale to their customers in
the licensed territory via the Internet. Halls Creek Partners Inc. goal in
becoming a Vitamineralherb.com licensee is to eliminate the need to develop
products, store inventory, build and maintain a web-site, establish banking
liaisons, and develop a fulfillment system, thereby enabling Halls Creek
Partners Inc. to focus strictly on marketing and sales. All sales are
conducted over the Internet through Vitamineralherb.coms website. Health and
fitness professionals may order a variety of products, and may have the
products custom-labeled. Products are shipped directly to the client. Halls
Creek Partners Inc. and Vitamineralherb.com share the profit on product sales.
Background on the Manufacturer and Distributor
On June 9, 1999, Vitamineralherb.com entered into a manufacturing agreement
with International Formulation and Manufacturing Inc., a nutraceuticals
manufacturing firm, located in San Diego, California, USA. International
Formulation and Manufacturing Inc. is a contract manufacturer of vitamin,
mineral, nutritional supplement, and alternative health products for various
marketing organizations. In addition to a line of standard products,
International Formulation and Manufacturing Inc. is able to manufacture custom
blended products for customers, and to supply privately labeled products for
Halls Creek Partners Inc.s customers at a minimal added cost.
Market Opportunity
The vitamins, supplements and minerals market is projected to grow as the baby
boomer population becomes increasingly concerned with aging and disease,
preventative health care and natural products. According to Jupiter
Communications, online sales of such products are expected to be US $434
million in the year 2003, up from $1 million in 1998. For additional
information, see Description of Business--Industry Background.
Name, Address, and Telephone Number of Registrant
Halls Creek Partners Inc.
P.O. Box 2370
Alvin, Texas, USA 77512
(281) 331-5580
RISK FACTORS
You should carefully consider the following risk factors and all other
information contained in this prospectus before purchasing the common stock of
Halls Creek Partners Inc. Investing in Halls Creek Partners Inc.s common stock
involves a high degree of risk. Any of the following risks could adversely
affect Halls Creek Partners Inc.s business, financial condition and results of
operations and could result in a complete loss of your investment.
The Companys future success depends on a number of factors, many of which are
beyond the Companys control. These factors include the costs associated with
new customer acquisition, customer retention, capital expenditures and other
costs relating to expansion of operations, the timing of new product and
service announcements, changes in the Companys pricing policies and those of
its competitors, market acceptance of new and enhanced versions of the
Companys policies and those of its competitors, market acceptance of new and
enhanced versions of the Companys products and services, changes in operating
expenses, changes in the Companys strategy, personnel changes, the
introduction of alternative technologies, the effect of potential
acquisitions, increased competition in the Companys current and prospective
markets and other general economic factors.
The Companys operating results, cash flows and liquidity may fluctuate
significantly in the Future. The Companys revenues depend on its ability to
attract and retain customers. The Companys expense levels will be based, in
part, on its expectations as to future revenues. Furthermore, the Companys
operations often require up front expenses, but could result in trailing
revenues. To the extent that revenues are below depend on its ability to
attract and retain customers. The Companys expense levels will be based, in
part, on its expectations as to future revenues. Furthermore, the Companys
operations often require up front expenses, but could result in trailing
revenues. To the extent that revenues are below expectations, the Company may
be unable or unwilling to reduce expenses proportionately, and operating
results, cash flow and liquidity are likely to be adversely affected. To
remain competitive from a pricing standpoint, the Company may not be able to
increase prices to match increasing expenses and therefore, could experience
deteriorating profit margins or losses.
The Company is a new company in a new volatile industry. The Company expects
to encounter difficulties as an early stage company in the rapidly evolving
online commerce industry. The Companys business strategy is unproven, and it
may not be successful in addressing early stage challenges, such as
establishing its position in the market and expanding its online presence and
capabilities. The Company was organized on August 18, 1999. Since the
company has a limited operating history, it is impossible to determine whether
its operations will be profitable or that it will ever generate sufficient
revenues to meet its expenses and support its activities. Like any relatively
new business enterprise operating in a specialized and intensely competitive
market, the Company is subject to many business risks, which include, but are
not limited to, unforeseen marketing and promotional expenses, unforeseen
negative publicity, competition, product liability and lack of operating
experience. Many of the risks may be unforeseeable or beyond the control of
the Company. There can be no assurance that the Company will successfully
implement its business plan in a timely or effective manner, or that
management of the Company will be able to distribute and sell enough products
to generate sufficient revenues and continues as a going concern. See
Managements Discussion and Analysis of Plan of Operations and Financial
Statements.
Potential Investors Should Not Rely on Forward-Looking Statements Because They
Are Inherently Uncertain.
Potential investors should not rely on forward-looking statements in this
prospectus. This prospectus contains forward-looking statements that involve
risks and uncertainties. Words are used such as anticipates, believes, plans,
expects, future, intends and similar expressions to identify these forward-
looking statements. Prospective investors should not place undue reliance on
forward-looking statements, which apply only as of the date of this
prospectus. Halls Creek Partners Inc.s actual results could differ materially
from those anticipated in these forward-looking statements for many reasons,
including the risks faced by Halls Creek Partners Inc. as described in Risk
Factors and elsewhere in this prospectus.
Risks Related to Halls Creek Partners Inc.s Business
Halls Creek Partners Inc.s success is dependent on a number of factors that
should be considered by prospective investors. Halls Creek Partners Inc. has
only recently acquired its principal asset. It is a new company and has no
history of earnings or profit and there is no assurance that it will operate
profitably in the future. As such, there is no assurance that Halls Creek
Partners Inc. will provide a return on investment in the future.
Halls Creek Partners Inc. is in Its Earliest Stages of Development and May
Never Become Profitable.
Halls Creek Partners Inc. is in the extreme early stages of development and
could fail before implementing its business plan. It must be regarded as a
start up venture that will incur net losses for the foreseeable future. Halls
Creek Partners Inc. has no operating history or revenues from operations, and
it faces unforeseen costs, expenses, problems and difficulties that could
easily prevent it from ever becoming profitable. Halls Creek Partners Inc.s
success is dependent on a number of factors that should be considered by
prospective investors. Halls Creek Partners Inc. has only recently acquired
its principal asset. It is a relatively young company and has no history of
earnings or profit and there is no assurance that it will operate profitably
in the future. As such, there is no assurance that Halls Creek Partners Inc.
will provide a return on investment in the future.
Halls Creek Partners Inc. Has No Operating History and Financial Results Are
Uncertain
Halls Creek Partners Inc. is a young company with no history of earnings or
profit and there is no assurance that it will operate profitably in the
future. Halls Creek Partners Inc. faces all the risks of a new business. As a
result of Halls Creek Partners Inc.s limited operating history, it is
difficult to accurately forecast its potential revenue, and there is no
meaningful historical financial data upon which to base planned operating
expenses. Its revenue and income potential is unproven and its business model
is still emerging. As such, there is no assurance that Halls Creek Partners
Inc. will provide a return on investment in the future. An investor in Halls
Creek Partners Inc.s common stock must consider the challenges, risks and
uncertainties frequently encountered by early-stage companies using new and
unproven business models in new and rapidly evolving markets. These challenges
include the Companys ability to:
. execute on Halls Creek Partners Inc.s business model;
. create brand recognition;
. manage growth in Halls Creek Partners Inc.s operations;
. create a customer base cost-effectively;
. retain customers;
. access additional capital when required;
. attract and retain key personnel.
Halls Creek Partners Inc. cannot be certain that its business model will be
successful or that it will successfully address these and other challenges,
risks and uncertainties. Consumers of vitamins, supplements, minerals and
other similar products may not purchase products from our site, which would
reduce our revenues and prevent us from becoming profitable.
Halls Creek Partners Inc. May Lose Its Vitamineralherb License if
Vitamineralherb.com Defaults Under Its Agreement with Its Supplier
Vitamineralherb.com, through David R. Mortenson & Associates, granted the
distribution license to Halls Creek Partners Inc. based on
Vitamineralherb.coms Manufacturing Agreement with International Formulation
and Manufacturing Inc. If Vitamineralherb.com defaults under its agreement
with International Formulation and Manufacturing Inc., it could lose access to
its manufacturing source, and the rights granted to Halls Creek Partners Inc.
would become meaningless. Similarly, any dispute between International
Formulation and Manufacturing Inc. and Vitamineralherb.com (or their
successors) could impair Halls Creek Partners Inc.s ability to fully exploit
its license rights. Any termination or impairment of Halls Creek Partners
Inc.s license rights due to circumstances under the control of International
Formulation and Manufacturing Inc., Vitamineralherb.com or others with an
interest in the products, could prevent Halls Creek Partners Inc. from
implementing its business plan, thereby limiting its profitability and
decreasing the value of its stock.
Dependence on Use of the Internet for Commerce
If use of the Internet and growth of the market for online vitamins,
supplements, minerals and other similar products do not continue, Halls Creek
Partners Inc. may not achieve the critical mass of customers necessary for
sustaining revenues and achieving profitable operations. Halls Creek Partners
Inc.s future revenues and profits, if any, substantially depend upon the
widespread acceptance and use of the Internet as an effective medium of
business by target consumers. Rapid growth in the use of and interest in the
Internet has occurred only recently. As a result, acceptance and use may not
continue to develop at historical rates, and a sufficiently broad base of
consumers may not use the Internet and other online services as a medium of
commerce. Further, the online market for such products is in its infancy, and
is significantly less developed than the online market for books, auctions,
music, software and numerous other consumer products. Even if use of the
Internet and electronic commerce continues to increase, the rate of growth, if
any, of the online vitamins, supplements, minerals and other similar products
market could be significantly less than the online market for other products.
Halls Creek Partners Inc.s rate of revenue growth and prospects for
profitability could therefore be significantly less than that of other online
merchants.
Dependence on the Internet and Computer Technology
The market for Internet access is characterized by rapidly changing
technology, evolving industry standards, changes in users needs and frequent
new service introductions. Halls Creek Partners Inc.s future success will
depend, in part, on Vitamineralherb.coms use of leading technologies to
provide seamless access to and services through its Website. There can be no
assurance that Vitamineralherb.com will be successful in using new
technologies effectively, developing new services or enhancing existing
services on a timely basis.
Halls Creek Partners Inc.s success also depends on continued use and expansion
of the Internet. The Internet infrastructure may not be able to support the
demands placed on it by continued growth. The growth in volume of Internet
traffic may create instabilities in its structure such as shortages in
Internet addresses and overworked search engines. Such instabilities may have
an adverse affect on Halls Creek Partners Inc.s operations and business if
they are not addressed. The Internet could also lose its viability due to
delays in the development or adoption of new standards and protocols to handle
increased levels of Internet activity, security, reliability, cost, ease of
use, accessibility, and quality of service. Vitamineralherb.coms network
infrastructure may be vulnerable to computer viruses, hacking or similar
disruptive problems caused by users, other connected Internet sites, the
interconnecting networks and the various telephone networks. Computer viruses
or problems caused by third parties could lead to interruptions, delays or
cessation in service to Halls Creek Partners Inc.
The Internet may not be accepted as a viable long-term commercial marketplace
for a number of reasons, including potentially inadequate development of the
necessary network infrastructure or delayed development of enabling
technologies and performance improvements. Halls Creek Partners Inc.s success
will depend, in large part, upon third parties maintaining the Internet
infrastructure to provide a reliable network backbone with the speed, data
capacity, security and hardware necessary for reliable Internet access and
services.
Dependence on Telecommunications Carriers and Other Suppliers
Halls Creek Partners Inc. will rely on Vitamineralherb.coms providers such as
the local telephone companies and other companies to provide data-
communications via local telecommunications lines and leased long-distance
lines. The means of ordering and paying for products may be disrupted or
eliminated if Vitamineralherb.com experiences disruptions or capacity
constraints in its telecommunications services. There may be no means of
replacing these services on a timely basis or at all.
In addition, the inability or unwillingness of any third-party to provide
point of presence access to Halls Creek Partners Inc. or its inability to
secure alternative point of presence arrangements could significantly limit
its ability to service its existing customers and could limit its ability to
expand to new markets, which could, in turn, have a material adverse effect on
its business, financial condition and results of operations.
Profitability
Existing or future legislation could limit growth in use of the Internet,
which would curtail Halls Creek Partners Inc.s revenue growth. Statutes and
regulations directly applicable to Internet communications, commerce and
advertising are becoming more prevalent. The law remains largely unsettled,
however, even in areas where there has been legislative action. It may take
years to determine whether and how existing laws governing intellectual
property, privacy, libel and taxation apply to the Internet, electronic
commerce and online advertising. In addition, the growth and development of
electronic commerce may prompt calls for more stringent consumer protection
laws in the United States, Canada and abroad. It is possible that
jurisdictions may seek to impose sales tax collection obligations on Halls
Creek Partners Inc. If one or more states or any foreign country successfully
asserts that Halls Creek Partners Inc. should collect sales or other taxes on
the sale of its products, it could also prevent Halls Creek Partners Inc.s
business from growing or expose it to unanticipated liabilities.
Any new regulation or taxation of Internet commerce could damage Halls Creek
Partners Inc.s business, affect the profitability and perhaps the viability of
its business plan, and cause the price of its common stock to decline. Such
regulation or taxation could prove to be burdensome, and impose significant
additional costs on Halls Creek Partners Inc.s business or subject it to
additional liabilities. As Internet commerce continues to evolve, increasing
regulation by federal, state, or foreign agencies becomes more likely. Such
regulation is likely in the areas of user privacy, pricing, content, and
quality of products and services. Taxation of Internet use or other charges
imposed by government agencies or by private organizations for accessing the
Internet, may also be imposed. Laws and regulations applying to the
solicitation, collection, or processing of personal or consumer information
could limit Halls Creek Partners Inc.s activities. In addition, any regulation
imposing fees for Internet use could result in a decline in the use of the
Internet and the viability of Internet commerce, which could have a material
adverse effect on Halls Creek Partners Inc.s business, results of operations,
and financial condition.
Government Regulation of Products Could Adversely Affect Viability of Dietary
Supplements
U.S. federal, state and local government regulations may also restrict Halls
Creek Partners Inc.s products. The manufacture, packaging, labeling,
advertising, promotion, distribution and sale of Halls Creek Partners Inc.s
products are subject to regulation by numerous governmental agencies, the most
active of which is the U.S. Food and Drug Administration, which regulates
Halls Creek Partners Inc.s products under the Federal Food, Drug and Cosmetic
Act and regulations promulgated thereunder. Halls Creek Partners Inc.s
products are also subject to regulation by, among other regulatory entities,
the Consumer Product Safety Commission, the U.S. Department of Agriculture,
and the Environmental Protection Agency. Advertising and other forms of
promotion and methods of marketing of Halls Creek Partners Inc.s products are
subject to regulation by the U.S. Federal Trade Commission, which regulates
these activities under the Federal Trade Commission Act. The manufacture,
labeling and advertising of Halls Creek Partners Inc.s products are also
regulated by various state and local agencies as well as those of each foreign
country to which it distributes its products.
Halls Creek Partners Inc. cannot be certain that its attempts, or those of its
suppliers, to comply with laws and regulations in this area are or will be
deemed sufficient by the appropriate regulatory agencies. Enforcement actions
by any of these regulatory agencies can result in civil and criminal
penalties, an injunction to stop or modify certain selling methods, seizure of
Halls Creek Partners Inc.s products, adverse publicity or voluntary recalls
and labeling changes. If any governmental agency were to undertake an
enforcement action against Halls Creek Partners Inc., it could cause an
immediate decrease in its revenues, cause it to incur significant additional
expenses and result in a decrease in its stock price. Halls Creek Partners
Inc.s efforts to comply with existing laws and regulations may be costly, may
force it to change its selling strategy and may not be
successful. Halls Creek Partners Inc. cannot promise that it will be able to
comply with any existing or future laws, regulations, interpretations or
applications without incurring significant costs or adjusting its business
model. A more detailed discussion of the government regulations affecting
Halls Creek Partners Inc.s business is included in this prospectus under the
heading Description of BusinessRegulatory Environment.
Overlapping Management and Boards Of Directors Could Cause Conflicts of
Interest
The Companys secretary/treasurer, Dorothy Mortenson, is also the wife of David
R. Mortenson, the principal in David R. Mortenson & Associates, and thus has a
financial interest in David R. Mortenson & Associates. Vitamineralherb.com
Corp. granted a license to David R. Mortenson & Associates to market vitamins,
minerals and nutritional supplements under the Vitamineralherb label and with
the Vitamineralherb.com website. David R. Mortenson & Associates subsequently
granted a sublicense to the Company to market these products within the state
of Indiana and in certain counties in Illinois. Disagreements among the
entities involved may significantly impact the Companys ability to do business
and the management of the Company may find itself in a conflict of interest.
There is no provision in the Companys corporate charter or its bylaws for
officers or directors with a conflict of interest to step down or abstain from
decision-making in the event of a conflict of interest.
The Company Relies on Certain Key Personnel
The Company relies on Mr. J.P. Beehner and Ms. Dorothy A. Mortenson, who are
both officers and directors of the Company. Although each individual has a
large share position in the Company, neither is receiving a salary nor has an
employment agreement with the Company. The Company does not expect either
party to devote their full time efforts to it, but there is no agreement on
how much time either Mr. Beehner or Ms. Mortenson will devote to the Company.
Each may spend a majority of their time on other business ventures. The loss
of the services of Mr. Beehner or Ms. Mortenson and/or the failure to recruit
and retain qualified managers may result in an adverse impact on the
development of the Companys business. The Company has not obtained any key-
man life insurance on either Mr. Beehner or Ms. Mortenson.
Product Liability
Halls Creek Partners Inc., like other retailers, distributors and
manufacturers of dietary supplements designed for human consumption, faces an
inherent risk of exposure to product liability claims in the event that the
use of its products results in injury. Halls Creek Partners Inc. may be
subjected to various product liability claims, including, among others, that
its products include inadequate instructions for use or inadequate warnings
concerning possible side effects and interactions with other substances. Halls
Creek Partners Inc. relies on third party manufacturers for its products.
Halls Creek Partners Inc. has no product liability insurance coverage.
Although Vitamineralherb.com warrants the products and provides
indemnification to Halls Creek Partners Inc. for losses, claims, and expenses
arising from a breach of the product warranties, any such indemnification is
limited by its terms and, as a practical matter, is limited to the
creditworthiness of the indemnifying party. In the event that Halls Creek
Partners Inc. does not have adequate indemnification, product liabilities
relating to its products could have a material adverse effect on its business,
financial condition and results of operations.
Effect of Unfavorable Publicity
Halls Creek Partners Inc. believes the dietary supplement market is affected
by national media attention regarding the consumption of dietary supplements.
Future scientific research or publicity may not be favorable to the dietary
supplement industry or to any particular product, and may not be consistent
with earlier favorable research or publicity. Because of Halls Creek Partners
Inc.s dependence on consumers perceptions, adverse publicity associated with
illness or other adverse effects resulting from the consumption of its
products or any similar products distributed by other companies and future
reports of research that are perceived as less favorable or that question
earlier research could have a material adverse effect on Halls Creek Partners
Inc.s business, financial condition and results of operations. Halls Creek
Partners Inc. is highly dependent upon consumers perceptions of the safety and
quality of its products as well as dietary supplements distributed by other
companies. Thus, the mere publication of reports asserting that such products
may be harmful or questioning their efficacy could have a material adverse
effect on Halls Creek Partners Inc.s business, financial condition and results
of operations, regardless of whether such reports are scientifically supported
or whether the claimed harmful effects would be present at the dosages
recommended for such products.
Ability to Manage Growth
Halls Creek Partners Inc.s ability to manage growth depends in part upon its
ability to develop and expand operating, management, information and financial
systems, and production capacity, which may significantly increase its future
operating expenses. No assurance can be given that Halls Creek Partners Inc.s
business will grow in the future or that it will be able to effectively manage
such growth. Halls Creek Partners Inc.s inability to manage its growth
successfully could have a material adverse effect on its business, financial
condition and results of operations.
Absence of Conclusive Clinical Studies
Although many of the ingredients in Halls Creek Partners Inc.s products are
vitamins, minerals, herbs and other substances for which there is a long
history of human consumption, some of its products contain ingredients for
which no such history exists. In addition, although Halls Creek Partners Inc.
believes all of its products are safe when taken as directed on the product
labeling, there is little long-term experience with human consumption of
certain of these product ingredients in concentrated form. Accordingly, there
can be no assurance that Halls Creek Partners Inc.s products, even when used
as directed, will have the effects intended or will not have harmful side
effects. Any such unintended effects may result in adverse publicity or
product liability claims which could have a material adverse effect on Halls
Creek Partners Inc.s business, financial condition and results of operations.
Competition
The electronic commerce industry is new, rapidly evolving and intensely
competitive, and Halls Creek Partners Inc. expects competition to intensify in
the future. If it fails to attract and retain a large customer base and its
competitors establish a market position more prominent than Halls Creek
Partners Inc., it could experience declines in its revenue and a loss of
market share. Barriers to entry are minimal and current and new competitors
can launch sites at a relatively low cost. In addition, the vitamins,
supplements, minerals and alternative health products market is very
competitive and highly fragmented, with no clear dominant leader and
increasing public and commercial attention. Halls Creek Partners Inc. competes
with a variety of other companies, including traditional vitamins,
supplements, minerals and alternative health product retailers, the online
retail initiatives of several such traditional retailers and other
Vitamineralherb.com licensees. A more detailed discussion regarding the
competition Halls Creek Partners Inc. faces is included in this prospectus
under the heading Description of Business--Competition.
No Assurance of Future Industry Growth
There can be no assurance that the market is as large as reported in market
data referred to in this prospectus or that such projected growth will occur
or continue. Market data and projections such as those presented in this
prospectus are inherently uncertain, subject to change and often dated. In
addition, the underlying market conditions are subject to change based on
economic conditions, consumer preferences and other factors that are beyond
Halls Creek Partners Inc.s control. An adverse change in size or growth rate
of the market for dietary supplements is likely to have a material adverse
effect on Halls Creek Partners Inc.s business, financial condition and results
of operations.
Potential Business Combinations Dilute Stockholder Value
Because Halls Creek Partners Inc. may not be successful in developing a viable
market for Vitamineralherb.com products, its management will spend a
significant portion of the time it devotes to evaluating other business
opportunities that may be available to Halls Creek Partners Inc. In the event
of a business combination, the ownership interests of holders of existing
shares of Halls Creek Partners Inc.s stock will be diluted. Due to its limited
financial resources, the only way Halls Creek Partners Inc. will be able to
diversify its activities, should its business plan prove to be impractical,
would be to enter into a business combination.
Any asset acquisition or business combination would likely include the
issuance of a significant amount of Halls Creek Partners Inc.s common stock,
which would dilute the ownership interest of holders of existing shares, and
may result in a majority of the voting power being transferred to new
investors. Depending on the nature of the transaction, Halls Creek Partners
Inc.s stockholders may not have an opportunity to vote on whether to approve
it. For example, Halls Creek Partners Inc.s board of directors may decide to
issue a significant amount of stock to effect a share exchange with another
company. Such a transaction does not require shareholder approval, but Halls
Creek Partners Inc.s officers and directors must exercise their powers in good
faith and with a view to the interests of the corporation.
Potential Business Combinations Could Be Difficult to Integrate and Disrupt
Business
Any acquisition of or business combination with another company could disrupt
Halls Creek Partners Inc.s ongoing business, distract management and employees
and increase its expenses. If Halls Creek Partners Inc. acquires a company, it
could face difficulties in assimilating that companys personnel and
operations. In addition, the key personnel of the acquired company may decide
not to work for Halls Creek Partners Inc. Acquisitions also involve the need
for integration into existing administration, services, marketing, and support
efforts. Any amortization of goodwill or other assets, or other charges
resulting from the costs of these acquisitions, could limit Halls Creek
Partners Inc.s profitability and decrease the value of its stock. In addition,
Halls Creek Partners Inc.s liquidity and capital resources may be diminished
prior to or as a result of consummation of a business combination and its
capital may be further depleted by the operating losses (if any) of the
business entity which Halls Creek Partners Inc. may eventually acquire.
Halls Creek Partners Inc. May Enter into New Line of Business Which Investors
Could Not Evaluate
In the event of a business combination, acquisition, or change in shareholder
control, Halls Creek Partners Inc. may enter into a new line of business which
an investor did not anticipate and in which that investor may not want to
participate. Halls Creek Partners Inc. may make investments in or acquire
complementary products, technologies and businesses, or businesses completely
unrelated to its current business plan. Similarly, an asset acquisition or
business combination would likely include the issuance of a significant amount
of Halls Creek Partners Inc.s common stock, which may result in a majority of
the voting power being transferred to new investors. New investors may replace
Halls Creek Partners Inc.s management. New management may decide not to
continue to implement Halls Creek Partners Inc.s current business plan, and
may decide to enter into a business completely unrelated to the current
business plan which an investor did not anticipate and in which that investor
may not want to participate. In such case, an investor could lose its entire
investment on a business decision it did not get to evaluate at the time of
investing in Halls Creek Partners Inc.
Management Has Broad Discretion
The Companys management has broad discretion in it handling of the Companys
affairs. While currently the Company is solely focused on the marketing of
vitamins, minerals and nutritional supplements, the management of the Company
may choose to enter into completely different types of business and/or abandon
its current business. Investors may discover that the Company is engaged in a
business, which the investor never intended to invest in. The Companys
management may evaluates acquisition opportunities and, as a result, may
engage in acquisition discussions, may conduct due diligence activities in
connection with possible acquisitions, and where appropriate, may engage in
acquisition negotiations. Any completed acquisition would involve numerous
risks, including difficulties in assimilating operations, services, products
and personnel of the acquired company, the diversion of the Companys
managements attention from other business concerns, entry into markets in
which the Company has little or no prior experience, the potential loss of key
employees, and the Companys inability to maintain subscribers or good will of
the acquired businesses. In order to grow the business, management may
continue to acquire businesses that it believes are complementary or it may
seek businesses in entirely unrelated fields. Successfully implementing this
strategy depends on our managements ability to identify suitable acquisition
candidates, acquire companies on acceptable terms, integrate their operations
and technology successfully with the Companys, retain existing subscribers and
maintain the goodwill of the acquired business. The Company is unable to
predict whether or when any prospective acquisition candidate will become
available, or the likelihood that any acquisition will be completed. There
are not, as of the effective date, any pending acquisitions. There can be no
assurance that the Company will be successful in implementing its growth
strategy, and any failure could have a material adverse effect on the Companys
business, financial condition and results of operations.
In addition, any such transaction could materially adversely affect the
Companys operating results due to dilutive issuance of equity securities, the
incurrence of additional debt and the amortization of expenses related to
goodwill and other tangible assets, if any.
Halls Creek Partners Inc. May Need Additional Financing Which May Not Be
Available, or Which May Dilute the Ownership Interests of Investors
Halls Creek Partners Inc.s ultimate success will depend on its ability to
raise additional capital. No commitments to provide additional funds have been
made by management or other shareholders. Halls Creek Partners Inc. has not
investigated the availability, source or terms that might govern the
acquisition of additional financing. When additional capital is needed, there
is no assurance that funds will be available from any source or, if available,
that they can be obtained on terms acceptable to Halls Creek Partners Inc. If
not available, Halls Creek Partners Inc.s operations would be severely
limited, and it would be unable to implement its business plan.
Halls Creek Partners Inc. Common Stock Has No Prior Market, and Prices May
Decline After the Offering
There is no public market for Halls Creek Partners Inc.s common stock and no
assurance can be given that a market will develop or that any shareholder will
be able to liquidate its investment without considerable delay, if at all. The
trading market price of Halls Creek Partners Inc.s common stock may decline
below the offering price. If a market should develop, the price may be highly
volatile. In addition, an active public market for Halls Creek Partners Inc.s
common stock may not develop or be sustained. Factors such as those discussed
in this Risk Factors section may have a significant impact on the market price
of Halls Creek Partners Inc.s securities. Owing to the low price of the
securities, many brokerage firms may not be willing to effect transactions in
the securities. Even if a purchaser finds a broker willing to effect a
transaction in Halls Creek Partners Inc.s common stock, the combination of
brokerage commissions, state transfer taxes, if any, and other selling costs
may exceed the selling price. Further, many lending institutions will not
permit the use of such securities as collateral for loans. Thus, a purchaser
may be unable to sell or otherwise realize the value invested in Halls Creek
Partners Inc.s stock.
Investors May Face Significant Restrictions on the Resale of Halls Creek
Partners Inc. Stock Due to State Blue Sky Laws
Because Halls Creek Partners Inc.s securities have not been registered for
resale under the blue sky laws of any state, the holders of such shares and
those persons desiring to purchase them in any trading market that may develop
in the future should be aware that there may be significant state blue sky law
restrictions on the ability of investors to sell and on purchasers to buy
Halls Creek Partners Inc.s securities. Each state has its own securities laws,
often called blue sky laws, which limit sales of stock to a states residents
unless the stock is registered in that state or qualifies for an exemption
from registration, and govern the reporting requirements for broker-dealers
and stock brokers doing business directly or indirectly in the state. Before a
security is sold in a state, there must be a registration in place to cover
the transaction, and the broker must be registered in that state, or otherwise
be exempt from registration. Halls Creek Partners Inc. does not know whether
its stock will be registered under the laws of any states. A determination
regarding registration will be made by the broker-dealers, if any, who agree
to serve as the market-makers for Halls Creek Partners Inc.s stock.
Accordingly, investors should consider the secondary market for Halls Creek
Partners Inc.s securities to be a limited one. Investors may be unable to
resell their stock, or may be unable to resell it without the significant
expense of state registration or qualification.
Investors May Face Significant Restrictions on the Resale of Halls Creek
Partners Inc. Stock Due to Federal Penny Stock Regulations
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate penny stocks. Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities and Exchange Act of
1934, as amended. Because Halls Creek Partners Inc.s securities may constitute
a penny stock within the meaning of the rules, the rules would apply to Halls
Creek Partners Inc. and its securities. The rules may further affect the
ability of owners of Halls Creek Partners Inc.s shares to sell their
securities in any market that may develop for them. There may be a limited
market for penny stocks, due to the regulatory burdens on broker-dealers. The
market among dealers may not be active. Investors in penny stock often are
unable to sell stock back to the dealer that sold them the stock. The mark ups
or commissions charged by the broker-dealers may be greater than any profit a
seller may make. Because of large dealer spreads, investors may be unable to
sell the stock immediately back to the dealer at the same price the dealer
sold the stock to the investor. In some cases, the stock may fall quickly in
value. Investors may be unable to reap any profit from any sale of the stock,
if they can sell it at all.
Shareholders should be aware that, according to the Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include:
. control of the market for the security by one or a few broker-dealers
that are often related to the promoter or issuer;
. manipulation of prices through prearranged matching of purchases and
sales and false and misleading press releases;
. boiler room practices involving high pressure sales tactics and
unrealistic price projections by inexperienced sales persons;
. excessive and undisclosed bid-ask differentials and markups by selling
broker-dealers; and
. the wholesale dumping of the same securities by promoters and broker-
dealers after prices have been manipulated to a desired level, along
with the inevitable collapse of those prices with consequent investor
losses.
GENERAL
EMPLOYEES
The Company has no full time employees. The Companys president, Mr. Beehner,
and its secretary/treasurer, Ms. Mortenson, have agreed to allocate a portion
of their time to the activities of the Company, without compensation. They
anticipate that the business plan of the Company can be implemented by their
devoting no more than 80 hours per month to the business affairs of the
Company and, consequently, conflicts of interest may
arise with respect to the limited time commitment by each officer.
USE OF PROCEEDS
The net proceeds to Halls Creek Partners Inc. from the sale of the 4, 000,000
shares of common stock offered by Halls Creek Partners Inc. hereby at an
assumed initial public offering price of $0.01 per share are estimated to be
$40,000. Halls Creek Partners Inc. expects to use the net proceeds as
follows:
PURPOSE 50% Subscription* 100% Subscription**
Organizational $1,000 $1,000
Purposes
Feasibility of $1,500 $4,000
License/Market
Research
Working Capital $17,500 $35,000
* Assumes sale of 50% of the stock being offered.
** Assumes sale of 100% of the stock being offered.
Halls Creek Partners Inc. continually evaluates other business opportunities
that may be available to it, whether in the form of asset acquisitions or
business combinations. Halls Creek Partners Inc. may use a portion of the
proceeds for these purposes. Halls Creek Partners Inc. is not currently a
party to any contracts, letters of intent, commitments or agreements and is
not currently engaged in active negotiations with respect to any acquisitions.
Halls Creek Partners Inc. has not yet determined the amount of net proceeds to
be used specifically for any of the foregoing purposes. Accordingly, Halls
Creek Partners Inc.s management will have significant flexibility in applying
the net proceeds of the offering.
DETERMINATION OF OFFERING PRICE
Halls Creek Partners Inc. arbitrarily determined the price of the Units in
this Offering. The offering price is not an indication of and is not based
upon the actual value of Halls Creek Partners Inc. It bears no relationship
to the book value, assets or earnings of Halls Creek Partners Inc. or any
other recognized criteria of value. The offering price should not be regarded
as an indicator of the future market price of the securities.
SELLING SECURITY HOLDERS
There are no selling security holders.
PLAN OF DISTRIBUTION
Halls Creek Partners Inc. will sell a maximum of 4,000,000 shares of its
common stock to the public on a best efforts basis. There can be no assurance
that any of these shares will be sold. This is not an underwritten offering.
Halls Creek Partners Inc. has not committed to keep the registration statement
effective for any set period of time. The gross proceeds to Halls Creek
Partners Inc. will be $40,000 if all the shares offered are sold. No
commissions or other fees will be paid, directly or indirectly, by Halls Creek
Partners Inc., or any of its principals, to any person or firm in connection
with solicitation of sales of the shares. No public market currently exists
for shares of Halls Creek Partners Inc.s common stock. Halls Creek Partners
Inc. intends to apply to have its shares traded on the OTC bulletin board
under the symbol HCPI.
LEGAL PROCEEDINGS
Halls Creek Partners Inc. is not a party to any pending legal proceeding or
litigation, and none of its property is the subject of a pending legal
proceeding. Further, the officers and directors know of no legal proceedings
against Halls Creek Partners Inc. or its property contemplated by any
governmental authority.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age and position of each director and
executive officer of the Company:
Name Age Position
J.P. Beehner 52 President, Director
Dorothy A. Mortenson 50 Secretary/Treasurer, Director
J.P. Beehner has been an officer and director of the Company since its
incorporation in August, 1999. He has worked in business management and
corporate accounting for over thirty years. His business background includes
construction, insurance, manufacturing, real estate, retail, sales, service,
and trucking companies.
Dorothy Mortenson has been an officer and director of the Company since its
incorporation in August, 1999. She is a non-practicing accountant who works
with her husband, David R. Mortenson of David R. Mortenson & Associates to
develop strategic business plans for emerging growth companies. While living
in Belize, Central America, she was responsible for setting up and
implementing some of the first computerized accounting systems there.
The directors named above are elected for one-year terms at the annual
shareholders meeting. Officers will hold their positions at the pleasure of
the board of directors, absent any employment agreements. No employment
agreements currently exist or are contemplated. There is no arrangement or
understanding between the directors and officers of the Company and any other
person pursuant to which any director or officer was or is to be selected as a
director or officer.
Mr. Beehner and Ms. Mortenson will devote their time to the Companys affairs
on an as needed basis. As a result, the actual amount of time which they will
devote to the Companys affairs is unknown and is likely to vary substantially
from month to month.
Ms. Mortenson may have conflicts of interest with the Company. Her husband is
the president of Vitamineralherb.com Corp., a company which licenses rights to
market its products to David R. Mortenson & Associates, which in turn
sublicenses specific geographical marketing rights to the Company. Ms.
Mortenson thus has interest in David R. Mortenson & Associates, and that
partnership is operated principally by Ms. Mortensons husband, David R.
Mortenson. Disagreements between the directors may significantly impact the
Companys ability to do business. There is no provision in the Companys
corporate charter or bylaws for officers or directors to step down or abstain
from decision making in the event of a conflict of interest.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 2000, the Companys outstanding
common stock owned of record or beneficially by each executive officer and
director and by each person who owned of record, or was known by the Company
to own beneficially, more than 5% of the Companys common stock, and the
shareholdings of all executive officers and directors as a group.
Name Shares Owned Percentage of Shares
Owned
J.P. Beehner, President 1,250,000 5%
3030 FM518 - # 221
Pearland TX 77584
Dorothy Mortenson 1,650,000 (1) 6 2/3%
2400 Loop 35 - # 1502
Alvin TX 77511
All Executive Officers and 2900000 11 2/3%
Directors as a Group
(2 individuals)
(1) Dorothy Mortensons shares include 1,250,000 owned by her, 200,000 shares
owned by her husband David R. Mortenson and 200,000 shares owned by her step-
son Joshua J. Mortenson.
DESCRIPTION OF SECURITIES
The following description of the Companys capital stock is a summary of the
material terms of the Companys capital stock. This summary is subject to and
qualified in its entirety by the Companys articles of incorporation and
bylaws, which are included as exhibits to the registration statement of which
this prospectus forms a part, and by the applicable provisions of Nevada law.
The Companys authorized capital consists of 25,000,000 shares of common stock,
par value $.001 per share. Immediately prior to this offering, 4,500,000
shares were issued and outstanding. Each record holder of common stock is
entitled to one vote for each share held on all matters properly submitted to
the shareholders for their vote. The articles of incorporation do not permit
cumulative voting for the election of directors, and shareholders do not have
any preemptive rights to purchase shares in any future issuance of the
Companys common stock.
Because the holders of shares of the Companys common stock do not have
cumulative voting rights, the holders of more than 50% of the Companys
outstanding shares, voting for the election of directors, can elect all of the
directors to be elected, if they so choose. In such event, the holders of the
remaining shares will not be able to elect any of the Companys directors.
The holders of shares of common stock are entitled to dividends, out of funds
legally available therefore, when and as declared by the Board of Directors.
The Board of Directors has never declared a dividend and does not anticipate
declaring a dividend in the future. In the event of liquidation, dissolution
or winding up of the affairs of the Company, holders are entitled to receive,
ratably, the net assets of the Company available to shareholders after payment
of all creditors.
All of the issued and outstanding shares of common stock are duly authorized,
validly issued, fully paid, and non-assessable. To the extent that additional
shares of the Companys common stock are issued, the relative interests of
existing shareholders may be diluted.
INTEREST OF NAMED EXPERTS AND COUNSEL
Neither Elliott Tulk Pryce Anderson nor Roger Shoss & Associates was employed
on a contingent basis in connection with the registration or offering of the
Companys common stock.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Halls Creek Partners Inc.s articles of incorporation, filed herewith as
Exhibit 1.8, provide that it will indemnify its officers and directors to the
full extent permitted by Nevada state law. Halls Creek Partners Inc. bylaws,
filed herewith as Exhibit 1.9, provide that it will indemnify and hold
harmless each person who was, is or is threatened to be made a party to or is
otherwise involved in any threatened proceedings by reason of the fact that he
or she is or was a director or officer of Halls Creek Partners Inc. or is or
was serving at the request of Halls Creek Partners Inc. as a director,
officer, partner, trustee, employee, or agent of another entity, against all
losses, claims, damages, liabilities and expenses actually and reasonably
incurred or suffered in connection with such proceeding.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of Halls
Creek Partners Inc. pursuant to the forgoing provisions or otherwise, Halls
Creek Partners Inc. has been advised that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in that Act and is, therefore, unenforceable.
DESCRIPTION OF BUSINESS
Halls Creek Partner Inc. (the Company) was incorporated under the laws of the
State of Nevada on August 18, 1999 and is in the early developmental and
promotional stages. To date, the Companys only activities have been
organizational, directed at raising its initial capital and developing its
business plan. The Company has not commenced operations. The Company has no
full time employees and owns no real estate. Under its corporate charter, the
Company may engage in any activity for which corporations may be organized
under the General Corporation Law of the State of Nevada. The Company has not
been subject to any bankruptcy, receivership or similar proceeding, nor has it
undergone any material reclassification, merger, consolidation or asset
purchase outside of the ordinary course of business.
The Company is in the business of marketing vitamins, minerals and nutritional
supplements in an area defined as all of the state of Indiana and the Illinois
counties of Will, Kankakee, Iroquois, and Vermilion. This activity will be
carried out pursuant to a License Agreement with David R. Mortenson &
Associates which is itself subject to a License Agreement between David R.
Mortenson & Associates and Vitamineralherb.com Corp. The Company will take
orders for products offered by Vitamineralherb.com and transmit them through
Vitamineralherb.coms web site. Customers may also directly access
Vitamineralherb.coms website; if such customers originate from the marketing
area licensed to the Company they will be deemed the Companys customers.
Vitamineralherb.com will collect an annual fee for the operation of its web
site and ten percent of the gross of each sale. Vitamineralherb.com itself
will not produce the products being marketed under its name and label. It has
an arrangement with International Formulators and Manufacturers, Inc. to
produce and label products for Vitamineralherb.com. Fulfillment of customer
orders will be by third-party shippers directly from IFM to the customers.
Halls Creek Partners Inc. has a three year license, dated February 14, 2000
filed herewith as Exhibit 1.0, to market and sell vitamins, minerals,
nutritional supplements, and other health and fitness products to medical
professionals, alternative health professionals, martial arts studios and
instructors, sports and fitness trainers, other health and fitness
professionals, school and other fund raising programs and other similar types
of customers via the Internet for sale to their clients. The license will be
automatically renewed unless Halls Creek Partners Inc. or David R. Mortenson &
Associates gives the other notice of its intent not to renew.
As a licensee of David R. Mortenson & Associates, Halls Creek Partners Inc.
eliminates the need to develop products, store inventory, build and maintain a
website, establish banking liaisons, and develop a fulfillment system, thereby
enabling Halls Creek Partners Inc. to focus strictly on marketing and sales.
Halls Creek Partners Inc. plans to target health and fitness professionals in
its licensed area who wish to offer health and fitness products to their
customers.
Halls Creek Partners Inc. (and its customers) will have access to all products
offered on the Vitamineralherb website, as well as the ability to order custom-
formulated and custom-labeled products. Vitamineralherb.com sets the price for
products based on the manufacturers price, plus a mark up which provides a 10%
commission to Vitamineralherb.com and a profit for Halls Creek Partners Inc.
Three different labeling options are available to customers: First, products
may be ordered with the manufacturers standard label with no customization.
Second, the fitness or health professional may customize the labels by adding
its name, address, and phone number to the standard label. In most cases,
these labels would be a standardized label with product information and a
place on the label for the wording Distributed by. This gives these health and
fitness professionals a competitive edge. Third, labels may be completely
customized for the health or fitness professional.
When a fitness or health professional becomes a client, Halls Creek Partners
Inc.s salesperson will show the client how to access the Vitamineralherb
website. The client is assigned an identification number that identifies it
by territory, salesperson, and business name, address, and other pertinent
information. The health or fitness professional may then order the products it
desires directly through the Vitamineralherb.com website, paying for the
purchase with a credit card, electronic check (e-check), or debit card. All
products are shipped by the manufacturer directly to the professional or its
clients.
The website is maintained by Vitamineralherb.com, and each licensee pays an
annual website maintenance fee of $500. All financial transactions are handled
by Vitamineralherb.coms Internet clearing bank. The Vitamineralherb webmaster
downloads e-mail orders several times a day, checks with clearing bank for
payment and then submits the product order and electronic payment to
International Formulation and Manufacturing. Vitamineralherb.com then forwards
the money due Halls Creek Partners Inc.via electronic funds transfer.
Vitamineralherbs software tracks all sales through the customers
identification number, and at month end, e-mails to Halls Creek Partners
Inc.and customer a detailed report including sales commissions.
Vitamineralherb has indicated that it will use e-commerce advertising such as
banner ads on major servers and websites, as well as trying to insure that all
major search engines pick Vitamineralherb.com first. Sales originating from
the website to customers located in the licensed area will automatically be
assigned to Halls Creek Partners Inc.
As discussed in Risk Factors this is a competitive industry, with low barriers
to entry. The Company has not yet gone beyond the developmental stage. The
Company will be identified with the Vitamineralherb.com name and website and
that third-partys ability to protect its intellectual property rights and its
technological functionality is vital to the Companys viability. The nature of
the products that the Company is marketing is such that the federal or state
government may increase regulation. See Risk Factors for a more detailed
discussion of these matters.
The Company currently has no full time employees. It has two officers who
work on an as-needed basis. The Company does not have employment agreements
or key man insurance on these officers.
The Company has filed with the Securities and Exchange Commission a
registration statement on Form SB-2 with respect to the common stock offered
by this prospectus. This prospectus, which constitutes a part of the
registration statement, does not contain all of the information set forth in
the registration statement or the exhibits and schedules which are a part of
the registration statement. For further information, with respect to the
Company and its common stock, see the registration statement and the exhibits
and schedules thereto. Any document the Company files may be read and copied
at the Commissions public reference rooms in Washington, D.C.; New York, New
York; and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for
further information about the public reference rooms. The Companys filings
with the Commission are also available to the public from the Commissions
website at http://www.sec.gov.
Upon completion of this offering, the Company will become subject to the
information and periodic reporting requirements of the Securities Act and,
accordingly, will file periodic reports, proxy statements and other
information with the Commission. Such periodic reports, proxy statements and
other information will be available for inspection and copying at the
Commissions public reference rooms, and the website of the Commission referred
to above.
Background on the Manufacturer and Distributor
On June 9, 1999, Vitamineralherb.com entered into a manufacturing agreement
with International Formulation and Manufacturing Inc. a nutraceuticals
manufacturing firm, located in San Diego, California, USA. International
Formulation and Manufacturing is a contract manufacturer of vitamin, mineral,
nutritional supplement, and alternative health products for various marketing
organizations; International Formulation and Manufacturing does no retail
marketing. In addition to a line of standard products, International
Formulation and Manufacturing is able to manufacture custom blended products
for customers. International Formulation and Manufacturing also has the
capability to supply privately labeled products for Halls Creek Partners Inc.s
customers at a minimal added cost.
Industry Background
Growth of the Internet and electronic commerce. The Internet has become an
increasingly significant medium for communication, information and commerce.
According to NUA Internet Surveys, as of February 2000, there were
approximately 275.5 million Internet users worldwide. At the IDC Internet
Executive Forum held on September 28-29, 1999, IDC stated that in 1999 US $109
billion in purchases were impacted by the Internet. IDCs vice president, Sean
Kaldor, indicated that figure is expected to increase more than ten-fold over
the next five years to US $1.3 trillion in 2003, with $842 million completed
directly over the Web. Halls Creek Partners Inc. believes that this dramatic
growth presents significant opportunities for online retailers.
The vitamin, supplement, mineral and alternative health product market. In
recent years, a growing awareness of vitamins, herbs, and other dietary
supplements by the general public has created a whole new segment in the field
of medicine and health care products. According to Jupiter Communications,
online sales of such products are expected to be US $434 million in the year
2003, up from $1 million in 1998. Halls Creek Partners Inc. believes that
several factors are driving this growth, including a rapidly growing segment
of the population that is concerned with aging and disease, a growing interest
in preventative health care, favorable consumer attitudes toward alternative
health products and a favorable regulatory statute, the Dietary Supplement
Health and Education Act of 1994.
Competition
The electronic commerce industry is new, rapidly evolving and intensely
competitive, and Halls Creek Partners Inc. expects competition to intensify in
the future. Barriers to entry are minimal and current and new competitors can
launch sites at a relatively low cost. In addition, the vitamin, supplement,
mineral and alternative health product market is very competitive and highly
fragmented, with no clear dominant leader and increasing public and commercial
attention.
Many of Halls Creek Partners Inc.s potential competitors have longer operating
histories, larger customer or user bases, greater brand recognition and
significantly greater financial, marketing and other resources than Halls
Creek Partners Inc. has. In addition, an online retailer 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 electronic services increases. Competitors have and may continue to
adopt aggressive pricing or inventory availability policies and devote
substantially more resources to website and systems development than Halls
Creek Partners Inc. does. Increased competition may result in reduced
operating margins and loss of market share.
Halls Creek Partners Inc.s competitors can be divided into several groups
including:
. traditional vitamins, supplements, minerals and alternative health
products retailers;
. the online retail initiatives of several traditional vitamins,
supplements, minerals and alternative health products retailers;
. online retailers of pharmaceutical and other health-related products
that also carry vitamins, supplements, minerals and alternative health
products;
. independent online retailers specializing in vitamins, supplements,
minerals and alternative health products;
. mail-order and catalog retailers of vitamins, supplements, minerals and
alternative health products, some of which have already developed online
retail outlets; and
. direct sales organizations, retail drugstore chains, health food store
merchants, mass market retail chains and various manufacturers of
alternative health products.
Halls Creek Partners Inc. believes that the principal competitive factors in
its market
are:
. ability to attract and retain customers;
. breadth of product selection;
. product pricing;
. ability to customize products and labeling;
. quality and responsiveness of customer service.
Halls Creek Partners Inc. believes that it can compete favorably on these
factors. However, Halls Creek Partners Inc. will have no control over how
successful its competitors are in addressing these factors. In addition, with
little difficulty, Halls Creek Partners Inc. online competitors can duplicate
many of the products or services offered on
the Vitamineralherb.com site.
Halls Creek Partners Inc. believes that traditional retailers of vitamins,
supplements, minerals and other alternative health products face several
challenges in succeeding:
. Lack of convenience and personalized service. Traditional retailers have
limited store hours and locations. Traditional retailers are also unable
to provide consumers with product advice tailored to their particular
situation..
. Limited product assortment. The capital and real estate intensive nature
of store-based retailers limit the product selection that can be
economically offered in each store location.
. Lack of Customer Loyalty. Although the larger traditional retailers
often attract customers, many of these customers are only one-time
users. People are often attractive to the name brands, but find the
products too expensive. It is understood that these are quality products
and have value, but the multilevel structure of marketing often employed
by large retailers mandate high prices.
As a result of the foregoing limitations, Halls Creek Partners Inc.s believes
there is significant unmet demand for an alternative shopping channel that can
provide consumers of vitamins, supplements, minerals and other alternative
health products with a broad array of products and a convenient and private
shopping experience.
Halls Creek Partners Inc. hopes to attract and retain consumers through the
following key attributes of its business:
. Broad Expandable Product Assortment. Halls Creek Partners Inc.s product
selection is
substantially larger than that offered by store-based retailers.
. Low Product Prices. Product prices can be kept low due to volume
purchases through
Halls Creek Partners Inc.s affiliation with Vitamineralherb.com and other
licensees.
Product prices will also be lower due to
Halls Creek Partners Inc.s lack of need of inventory and warehouse space. All
products are shipped from International Formulation and Manufacturings
inventory.
. Accessibility to Customized Products. At minimal cost, health and
fitness practitioners may offer their customers customized products.
. Access to Personalized Programs. Health or fitness professional can
tailor vitamin and dietary supplement regimes to their clients.
Regulatory Environment
The manufacturing, processing, formulating, packaging, labeling and
advertising of the products Halls Creek Partners Inc. sells may be subject to
regulation by one or more U.S. federal agencies, including the Food and Drug
Administration, the Federal Trade Commission, the United States Department of
Agriculture and the Environmental Protection Agency. These activities also may
Be regulated by various agencies of the states, localities and foreign
countries in which consumers reside.
The Food and Drug Administration, in particular, regulates the formulation,
manufacture, labeling and distribution of foods, including dietary
supplements, cosmetics and over-the- counter or homeopathic drugs. Under the
Federal Food, Drug, and Cosmetic Act, the Food and Drug Administration may
undertake enforcement actions against companies marketing unapproved drugs, or
adulterated or misbranded products. The remedies available to the Food and
Drug Administration include: criminal prosecution; an injunction to stop the
sale of a companys products; seizure of products; adverse publicity; and
voluntary recalls and labeling changes.
Food and Drug Administration regulations require that certain informational
labeling be presented in a prescribed manner on all foods, drugs, dietary
supplements and cosmetics. Specifically, the Food, Drug, and Cosmetic Act
requires that food, including dietary supplements, drugs and cosmetics, not be
misbranded. A product may be deemed an unapproved drug and misbranded if it
bears improper claims or improper labeling. The Food and Drug Administration
has indicated that promotional statements made about dietary supplements on a
companys website may constitute labeling for purposes of compliance with the
provisions of the Food, Drug, and Cosmetic Act. A manufacturer or distributor
of dietary supplements must notify the Food and Drug Administration when it
markets a product with labeling claims that the product has an effect on the
structure or function of the body. Noncompliance with the Food, Drug, and
Cosmetic Act, and recently enacted amendments to that Act discussed below,
could result in enforcement action by the Food and Drug Administration.
The Food, Drug, and Cosmetic Act has been amended several times with respect
to dietary supplements, most recently by the Nutrition Labeling and Education
Act of 1990 and the Dietary Supplement Health and Education Act of 1994. The
Dietary Supplement Health and Education Act created a new statutory framework
governing the definition, regulation and labeling of dietary supplements. With
respect to definition, the Dietary Supplement Health and Education Act created
a new class of dietary supplements, consisting of vitamins, minerals, herbs,
amino acids and other dietary substances for human use to supplement the diet,
as well as concentrates, metabolites, extracts or combinations of such dietary
ingredients. Generally, under the Dietary Supplement Health and Education Act,
dietary ingredients that were on the market before October 15, 1994 may be
sold without Food and Drug Administration pre-approval and without notifying
the Food and Drug Administration. In contrast, a new dietary ingredient, i.e.,
one not on the market before October 15, 1994, requires proof that it has been
used as an article of food without being chemically altered or evidence of a
history of use or other evidence of safety establishing that it is reasonably
expected to be safe. Retailers, in addition to dietary supplement
manufacturers, are responsible for ensuring that the products they market for
sale comply with these regulations. Noncompliance could result in enforcement
action by the Food and Drug Administration, an injunction prohibiting the sale
of products deemed to be noncompliant, the seizure of such products and
criminal prosecution.
The Food and Drug Administration has indicated that claims or statements made
on a companys website about dietary supplements may constitute labeling and
thus be subject to regulation by the Food and Drug Administration. With
respect to labeling, the Dietary Supplement Health and Education Act amends,
for dietary supplements, the Nutrition Labeling and Education Act by providing
that statements of nutritional support, also referred to as structure/function
claims, may be used in dietary supplement labeling without Food and Drug
Administration pre-approval, provided certain requirements are met. These
statements may describe how particular dietary ingredients affect the
structure or function of the body, or the mechanism of action by which a
dietary ingredient may affect body structure or function, but may not state a
drug claim, i.e., a claim that a dietary supplement will diagnose, mitigate,
treat, cure or prevent a disease. A company making a statement of nutritional
support must possess substantiating evidence for the statement, disclose on
the label that the Food and Drug Administration has not reviewed the statement
and that the product is not intended for use for a disease and notify the Food
and Drug Administration of the statement within 30 days after its initial use.
It is possible that the statements presented in connection with product
descriptions on Halls Creek Partners Inc.s site may be determined by the Food
and Drug Administration to be drug claims rather than acceptable statements of
nutritional support. In addition, some of Halls Creek Partners Inc.s suppliers
may incorporate objectionable statements directly in their product names or on
their products labels, or otherwise fail to comply with applicable
manufacturing, labeling and registration requirements for over-the-counter or
homeopathic drugs or dietary supplements. As a result, Vitamineralherb.com may
have to remove objectionable statements or products from its site or modify
these statements, or product names or labels, in order to comply with Food and
Drug Administration regulations. Such changes could interfere with Halls Creek
Partners Inc.s marketing of products and could cause us to incur significant
additional expenses.
In addition, the Dietary Supplement Health and Education Act allows the
dissemination of third party literature in connection with the sale of dietary
supplements to consumers at retail if the publication meets statutory
requirements. Under the Dietary Supplement Health and Education Act, third
party literature may be distributed if, among other things, it is not false or
misleading, no particular manufacturer or brand of dietary supplement is
promoted, a balanced view of available scientific information on the subject
matter is presented and there is physical separation from dietary supplements
in stores. The extent to which this provision may be used by online retailers
is not yet clear, and Halls Creek Partners Inc. cannot assure you that all
pieces of third party literature that may be disseminated in connection with
the products Halls Creek Partners Inc. offers for sale will be determined to
be lawful by the Food and Drug Administration. Any such failure could render
the involved product an unapproved drug or a misbranded product, potentially
subjecting us to enforcement action by the Food and Drug Administration, and
could require the removal of the noncompliant literature from
Vitamineralherb.coms website or the modification of Halls Creek Partners Inc.s
selling methods, interfering with Halls Creek Partners Inc. continued
marketing of that product and causing us to incur significant additional
expenses. Given the fact that the Dietary Supplement Health and Education Act
was enacted only five years ago, the Food and Drug Administrations regulatory
policy and enforcement positions on certain aspects of the new law are still
evolving. Moreover, ongoing and future litigation between dietary supplement
companies and the Food and Drug Administration will likely further refine the
legal interpretations of the Dietary Supplement Health and Education Act. As a
result, the regulatory status of certain types of dietary supplement products,
as well as the nature and extent of permissible claims will remain unclear for
the foreseeable future. Two areas in particular that pose potential regulatory
risk are the limits on claims implying some benefit or relationship with a
disease or related condition and the application of the physical separation
requirement for third party literature as applied to Internet sales.
In addition to the regulatory scheme under the Food, Drug and Cosmetic Act,
the advertising and promotion of dietary supplements, foods, over-the-counter
drugs and cosmetics is subject to scrutiny by the Federal Trade Commission.
The Federal Trade Commission Act prohibits unfair or deceptive advertising or
marketing practices, and the Federal Trade Commission has pursued numerous
food and dietary supplement manufacturers and retailers for deceptive
advertising or failure to substantiate promotional claims, including, in many
instances, claims made via the Internet. The Federal Trade Commission has the
power to seek administrative or judicial relief prohibiting a wide variety of
claims, to enjoin future advertising, to seek redress or restitution payments
and to seek a consent order and seek monetary penalties for the violation of a
consent order. In general, existing laws and regulations apply fully to
transactions and other activity on the Internet. The Federal Trade Commission
is in the process of reviewing its policies regarding the applicability of its
rules and its consumer protection guides to the Internet and other electronic
media. The Federal Trade Commission has already undertaken a new monitoring
and enforcement initiative, Operation Cure-All, targeting allegedly bogus
health claims for products and treatments offered for sale on the Internet.
Many states impose their own labeling or safety requirements that differ from
or add to existing federal requirements.
Halls Creek Partners Inc. cannot predict the nature of any future U.S. laws,
regulations, interpretations or applications, nor can it determine what effect
additional governmental regulations or administrative orders, when and if
promulgated, would have on its business in the future. Although the regulation
of dietary supplements is less restrictive than that of drugs and food
additives, Halls Creek Partners Inc. cannot assure you that the current
statutory scheme and regulations applicable to dietary supplements will remain
less restrictive. Further, Halls Creek Partners Inc. cannot assure you that,
under existing laws and regulations, or if more stringent statutes are
enacted, regulations are promulgated or enforcement policies are adopted, it
is or will be in compliance with these existing or new statutes, regulations
or enforcement policies without incurring material expenses or adjusting its
business strategy. Any laws, regulations, enforcement policies,
interpretations or applications applicable to Halls Creek Partners Inc.s
business could require the reformulation of certain products to meet new
standards, the recall or discontinuance of certain products not capable of
reformulation, additional record keeping, expanded documentation of the
properties of certain products, expanded or different labeling or scientific
substantiation.
Regulation of the Internet. In general, existing laws and regulations apply to
transactions and other activity on the Internet; however, the precise
applicability of these laws and regulations to the Internet is sometimes
uncertain. The vast majority of such laws were adopted prior to the advent of
the Internet and, as a result, do not contemplate or address the unique issues
of the Internet or electronic commerce. Nevertheless, numerous federal and
state government agencies have already demonstrated significant activity in
promoting consumer protection and enforcing other regulatory and disclosure
statutes on the Internet. Additionally, due to the increasing use of the
Internet as a medium for commerce and communication, it is possible that new
laws and regulations may be enacted with respect to the Internet and
electronic commerce covering issues such as user privacy, freedom of
expression, advertising, pricing, content and quality of products and
services, taxation, intellectual property rights and information security. The
adoption of such laws or regulations and the applicability of existing laws
and regulations to the Internet may impair the growth of Internet use and
result in a decline in Halls Creek Partners Inc.s sales.
A number of legislative proposals have been made at the federal, state and
local level, and by foreign governments, that would impose additional taxes on
the sale of goods and services over the Internet, and certain states have
taken measures to tax Internet-related activities. Although Congress recently
placed a three-year moratorium on new state and local taxes on Internet access
or on discriminatory taxes on electronic commerce, existing state or local
laws were expressly excepted from this moratorium. Further, once this
moratorium is lifted, some type of federal and/or state taxes may be imposed
upon Internet commerce. Such legislation or other attempts at regulating
commerce over the Internet may substantially impair the growth of commerce on
the Internet and, as a result, adversely affect Halls Creek Partners Inc.s
opportunity to derive financial benefit from such activities.
MANAGEMENT DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
The following discussion and analysis should be read in conjunction with the
Companys Financial Statements and Notes thereto and other financial
information included elsewhere in this Form SB-2. This Form SB-2 contains, in
addition to historical information, forward-looking statements that involve
risks and uncertainties. The Companys actual results could differ materially
from the results discussed in the forward-looking statements. Factors that
could cause or contribute to such differences include those discussed below,
as well as those discussed elsewhere in this Form SB-2.
Results of Operations
During the period from August 18, 1999 (inception) through March 31, 2000, the
Company has engaged in no significant operations other than organizational
activities, acquisition of the License Agreement for marketing
Vitamineralherb.com products and preparation for registration of its
securities under the Securities Act of 1933. The Company received no revenues
during this period.
For the current fiscal year, the Company anticipates incurring a loss as a
result of organizational expenses, expenses associated with registration under
the Securities Act of 1933, and expenses associated with setting up a company
structure to begin implementing its business plan. The Company anticipates
that until these procedures are completed, it will not generate revenues other
than interest income, and may continue to operate at a loss thereafter,
depending upon the performance of the business.
Liquidity and Capital Resources
The Company remains in the development stage and, since inception, has
experienced no significant change in liquidity or capital resources or
stockholders equity. Consequently, the Companys balance sheet as of March 31,
2000 reflects current assets of $0.
The Company will carry out its plan of business as discussed above. The
Company cannot predict to what extent its liquidity and capital resources will
be diminished.
The Company may need additional capital to expand its business. No
commitments to provide additional funds have been made by management or
stockholders. Accordingly, there can be no assurance that any additional funds
will be available on terms acceptable to the Company or at all. Irrespective
of whether the Companys cash assets prove to be inadequate to meet its
operational needs, the Company might seek to compensate providers of services
by issuances of stock in lieu of cash.
DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no agreements to acquire
any properties. The officers of the Company currently work out of space they
already maintain for their other business investments.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No director, executive office or nominee for election as a director of the
Company, and no owner of five percent or more of the Companys outstanding
shares or any member of their immediate family has entered into or proposed
any transaction in which the amount involved exceeds $60,000. Director,
officer and initial shareholder, Dorothy A. Mortenson, is the wife of David R.
Mortenson, the principal manager of David R. Mortenson & Associates. She thus
has an interest in David R. Mortenson & Associates, the licensor of the
Companys right to market Vitamineralherb.coms products in the state of Indiana
and certain counties in the state of Illinois, and payments to
Vitamineralherb.com may substantially exceed $60,000.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No established public trading market exists for the Companys securities. The
Company has no common equity subject to outstanding purchase options or
warrants. The Company has no securities convertible into its common equity.
There is no common equity that could be sold pursuant to Rule 144 under the
Securities Act or that the Company has agreed to register under the Securities
Act for sale by shareholders. Except for this offering, there is no common
equity that is being, or has been publicly proposed to be, publicly offered by
the Company.
As of March 31, 2000, there were 4,500,000 shares of common stock outstanding,
held by twelve shareholders of record. Upon effectiveness of the registration
statement that includes this prospectus, all of the Companys outstanding
shares will be eligible for sale.
To date the Company has not paid any dividends on its common stock and does
not expect to declare or pay any dividends on its common stock in the
foreseeable future. Payment of any dividends will depend upon the Companys
future earnings, if any, its financial condition, and any other factors as
deemed relevant by the Board of Directors.
EXECUTIVE COMPENSATION
The Companys officers and directors do not receive any compensation for their
services rendered to the Company, have not received such compensation in the
past, and are not accruing any compensation pursuant to any agreement with the
Company.
The officers and directors of the Company will not receive any finders fee,
either directly or indirectly, as a result of their efforts to implement the
Companys business plan outlined herein. However, the officers and directors of
the Company anticipate receiving benefits as shareholders of the Company.
No retirement, pension, profit sharing, stock option or insurance programs or
other similar programs have been adopted by the Company for the benefit of its
employees.
FINANCIAL STATEMENTS
Halls Creek Partners Inc.
(A Development Stage Company)
Index
Independent Auditors Report F1
Balance Sheets F2
Statements of Operations F3
Statements of Cash Flows F4
Statement of Stockholders Equity F5
Notes to the Financial Statements F6 to F7
Independent Auditors Report
To the Board of Directors
Halls Creek Partners Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Halls Creek Partners Inc. (A
Development Stage Company) as of April 30, 2000 and the related statements of
operations, stockholders equity and cash flows for the period from August 18,
1999 (Date of Inception) to April 30, 2000. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with U.S. 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. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the aforementioned financial statements present fairly, in all
material respects, the financial position of Halls Creek Partners Inc. (A
Development Stage Company), as of April 30, 2000, and the results of its
operations and its cash flows for the period from August 18, 1999 (Date of
Inception) to April 30, 2000, in conformity with U.S. generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has not generated any revenues or conducted any
operations since inception. These factors raise substantial doubt about the
Companys ability to continue as a going concern. Managements plans in regard
to these matters are also discussed in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
Elliott, Tulk, Pryce, Anderson
CHARTERED ACCOUNTANTS
Vancouver, Canada
May 8, 2000
Halls Creek Partners Inc.
(A Development Stage Company)
Balance Sheet
(expressed in U.S. dollars)
April 30,
2000
$
Assets
Licenses (Note 3)
Liabilities and Stockholders Equity
Current Liabilities
Accounts payable 1,200
Accrued offering cost 12,000
13,200
Contingent Liability (Note 1)
Stockholders Equity
Common Stock, 25,000,000 shares authorized with
a par value of $.001; 4,500,000 shares issued and
outstanding 4,500
Additional Paid-in Capital 75
4,575
Deficit Accumulated During the Development Stage (17,775)
(13,200)
Halls Creek Partners Inc.
(A Development Stage Company)
Statements of Operations
(expressed in U.S. dollars)
From August 18, 1999
(Date of Inception)
to April 30, 2000
$
Revenues -
Expenses
Amortization of license 500
License written-off 1,500
Offering costs 12,000
Organization expenses 2,575
Transfer agent 1,200
17,775
Net Loss (17,775)
Halls Creek Partners Inc.
(A Development Stage Company)
Statements of Cash Flows
(expressed in U.S. dollars)
From August 18, 1999
(Date of Inception)
to April 30, 2000
$
Cash Flows to Operating Activities
Net loss (17,775)
Non cash items
Expenses not paid with cash 2,575
Accounts payable 1,200
Accrued offering costs 12,000
Amortization of license 500
License written-off 1,500
Net Cash Used by Operating Activities -
Cash Flows from Financing Activities
Increase in shares issued -
Net Cash Provided by Financing Activities -
Change in cash
Cash - beginning of period -
Cash - end of period -
Non-Cash Financing Activities
A total of 2,000,000 shares were issued at
a fair market value of $0.001 per share for
the acquisition of a License (Note 3) 2,000
Organization costs paid for by a director
for no consideration treated as additional
paid in capital 75
2,075
Supplemental Disclosures
Interest paid -
Income tax paid -
Halls Creek Partners Inc.
(A Development Stage Company)
Statement of Stockholders Equity
From August 18, 1999 (Date of Inception) to April 30, 2000
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Total Stage
$ $ $ $ $
<S> <C> <C> <C> <C> <C>
Balance - August 18,
1999 (Date of Inception) - - - - -
Stock issued for $2,500 of
organizational expenses 2500000 2,500 - 2,500 -
Additional paid in capital
for organizational expenses
incurred by a director on
behalf of the Company - - 75 75 -
Stock issued for The
Biocatalyst License at a
fair market value
of $0.001 per share 2000000 2000 - 2,000 -
Net loss for the period - - - - (17,775)
Balance - April 30, 2000 4500000 4500 75 4575 (17,775)
</TABLE>
Halls Creek Partners Inc.
(A Development Stage Company)
Notes to the Financial Statements (expressed in U.S. dollars)
1. Development Stage Company
Halls Creek Partners Inc. herein (the Company) was
incorporated in the State of Nevada, U.S.A. on August 18,
1999. The Company acquired a license to market and
distribute a product in the State of Hawaii. As discussed
in Note 3, this license is in jeopardy and the Company has
retained the right to sue the vendor. As a replacement for
this license, the Company was granted additional rights to
market and distribute vitamins, minerals, nutritional
supplements, and other health and fitness products in the
State of Indiana and the Illinois Counties of Will,
Kankakee, Iroquois and Vermillion. The grantor of the
license offers these products for sale from various
suppliers on their Web Site. See Note 4 regarding related
party transactions.
In a development stage company, management devotes most of
its activities in investigating business opportunities.
Planned principal activities have not yet begun. The
ability of the Company to emerge from the development
stage with respect to any planned principal business
activity is dependent upon its successful efforts to raise
additional equity financing and find an appropriate merger
candidate. There is no guarantee that the Company will be
able to raise any equity financing or find an appropriate
merger candidate. There is substantial doubt regarding the
Companys ability to continue as a going concern.
2. Summary of Significant Accounting Policies
(a) Year end
The Companys fiscal year end is July 31.
(b)Licenses
Costs to acquire licenses are capitalized as incurred.
These costs will be amortized on a straight-line basis
over their remaining estimated useful lives.
(c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a
maturity of three months or less at the time of issuance
to be cash equivalents.
(d) Use of 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 revenues and expenses during the periods. Actual
results could differ from those estimates.
3. Licenses
(a) On August 20, 1999 the Company acquired a license for a product
called Biocatalyst. The Company has the exclusive right to
distribute and market the product under a private label in the State
of Hawaii for a period of three years expiring August 20, 2002.
Biocatalyst is an oxygen enriched water product used to enhance the
growth of microbes in soils located underground. The Company issued
2,000,000 shares at a fair market value of $.001 or $2,000. The
shares were issued to the licensor who are members of a partnership
and whose general partner is also a spouse of a director and officer
of the Company. Once the Company purchases a minimum of 5,000
gallons of product for a minimum period of six consecutive months,
then a license will be granted to the Company to produce the product
in a location to be mutually agreed upon. A producer license will
also be granted if the Company can demonstrate its financial
capability, pay the licensor a one-time fee of $25,000, an
additional one-time payment of $10,000 to reimburse unspecified
expenses, and pay minimum annual royalties of $20,000. If no
producing license is granted then the Company is committed to
purchase $125,000 of Biocatalyst product by August 20, 2000, and a
further $175,000 of Biocatalyst product by August 20, 2001, to
retain its distribution license.
3.Licenses (continued)
(a) (continued)
The current price for Biocatalyst is $2.00 per gallon; Mortenson &
Associates may change the price on 10 days notice. The license is
amortized to operations over one year starting September 1, 1999.
The Companys right to use this license is in jeopardy due to a lawsuit
between the vendor of the license and the original owner. As a result,
the unamortized balance of $1,500 has been written-off to operations. The
Company and its shareholder have the right to sue for breach of contract.
(b) As a replacement for the above license, at no additional cost, the
Company was granted additional rights to market vitamins, minerals,
nutritional supplements and other health and fitness products through the
Grantors Web Site. The Company desires to market these products to
medical practitioners, alternative health professionals, martial arts
studios and instructors, sports and fitness trainers, other health and
fitness practitioners, school and other fund raising programs and other
similar types of customers in the State of Indiana and the Illinois
Counties of Will, Kankakee, Iroquois and Vermillion. The license was
acquired on February 14, 2000 for a term of three years. The Company must
pay an annual fee of $500 for maintenance of the Grantors Web Site
commencing on the anniversary date. The Grantor of the license retains
10% of the gross sales.
April 30,
2000
$
License - Biocatalyst
Cost 2,000
Less accumulated
amortization (500)
Less amount written-off (1,500)
-
4.Related Party Transactions
The Licenses referred to in Note 3 were sold to the Company by a
partnership whose general manager is the spouse of the Secretary/Treasurer
of the Company and a director for consideration of 2,000,000 shares for
total fair market consideration of $2,000, being the transferors cost of
such license. These shares were paid evenly to the ten partners. The
replacement license was also owned by the same partnership.
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Companys Articles of Incorporation provide for indemnification of its
directors, officers, employees and agents, under certain circumstances,
against attorneys fees and other expenses incurred by them in any litigation
to which they become a party arising from their association with, or their
activities on behalf of, the Company. The Company will also bear the expense
of such litigation for any of its directors, officers, employees or agents,
upon such persons promise to repay the Company therefore, if it is ultimately
determined that any such person shall not have been entitled to
indemnification. This indemnification policy could result in substantial
expenditures by the Company.
RECENT SALE OF UNREGISTERED SECURITIES
None.
EXHIBITS
Exhibit 3.1 -- Articles of Incorporation
ARTICLES OF INCORPORATION
OF
Halls Creek Partners Inc.
The undersigned natural person of the age of eighteen years or more,
acting as incorporator of a corporation under and pursuant to the laws of the
State of Nevada, hereby adopts the following Articles of Incorporation for
such corporation:
ARTICLE I
The name of the corporation is Halls Creek Partners Inc.
ARTICLE II
The principal office of this corporation is to be at 50 West Liberty
Street, Suite 880, Reno 89501, State of Nevada. The registered office of this
corporation is the same as its principal office. The Nevada Agency and Trust
Company is hereby named as Resident Agent of this corporation and in charge of
its said office in Nevada.
ARTICLE III
The nature of the business, objects and purposes to be transacted,
promoted, or carried on by the corporation are:
A. To conduct any lawful business, to promote any lawful purpose, and to
engage in any lawful act or activity for which corporations maybe organized
under the General Corporation Law of the State of Nevada and to act in every
kind of fiduciary capacity. and generally to do all things necessary or
convenient which are incident to or which a natural person might or could do.
B. To purchase, receive, take by grant, gift, devise, bequest, or
otherwise. lease, or otherwise acquire, own, hold, improve, employ, use and
otherwise deal in and with real or personal property, or any interest therein,
wherever situated, and to sell, convey, lease, exchange, transfer or otherwise
dispose of, or mortgage or pledge, all or any of its property and assets, or
any interests therein, wherever situated.
C. To engage generally in the real estate business as principal, and in
any lawful capacity, and generally to take, lease, purchase, or otherwise
acquire, and to own, use, hold, sell, convey, exchange, lease, mortgage, work,
clear, improve, develop, divide, and otherwise handle, manage, operate, deal
in and dispose of mining claims, oil leases, oil and gas wells, real estate,
real property, lands, multiple-dwelling structures, houses, buildings and
other works and any interest or right therein; to take, lease, purchase or
otherwise handle or acquire, and to own, use, hold, sell, convey, exchange,
hire, lease, pledge, mortgage, and otherwise handle, and deal in and dispose
of, as principal agent or in any lawful capacity, such personal property,
chattels, chattels real, rights, easements, privileges, causes in action,
notes, bonds, mortgages, and securities as may lawfully be acquired, held or
disposed of and to acquire, purchase, sell, assign, transfer, dispose of and
generally deal in and with as principal, agent, broker, and in any lawful
capacity, mortgages and other interests in real, personal, and mixed
properties; to carry on a general oil exploration, mining exploration and
management business as principal, agent, representative, contractor, sub-
contractor, and in any other lawful capacity. To manufacture, purchase or
acquire in any lawful manner and to hold, own, mortgage, pledge, sell,
transfer, or in any manner dispose of, and to deal and trade in goods, wares,
merchandise, and property of any and every class and description, and in any
part of the world.
D. To apply for, register, obtain, purchase, lease, take licenses in
respect of or otherwise acquire, and to hold, own, use, operate, develop,
enjoy, turn to account, grant licenses and immunities in respect of,
manufacture under and to introduce, sell, assign, mortgage, pledge or
otherwise dispose of and, in any manner deal with and contract with reference
to:
1. Inventions, devices, formulas, processes, improvements and
modifications thereof;
2. Letters patent, patent rights, patented processes, rights, designs,
and similar rights, trademarks, trade names, trade symbols and other
indications or origin and ownership granted by or recognized under the
laws of the United States of America, any state or subdivision thereof,
and any commonwealth, territory, possession, dependency, colony,
possession agency or instrumentality of the United States of America
and of any foreign country, and all rights connected therewith or
appertaining thereto.
3. Franchises, licenses, grants and concessions.
A. To make, enter into, perform and carry out contracts of every kind and
description with any person, firm, association, corporation or government or
agency or instrumentality thereof.
B. To lend money in furtherance of its corporate purposes and to invest
and reinvest its funds from time to time to such extent, to such persons,
firms, associations, corporations, governments or agencies or
instrumentalities thereof, and on such terms and on such security, if any, as
the Board of Directors of the corporation may determine and direct any officer
to complete.
C. To borrow money without limit as to amount and at such rates of
interest as it may determine; from time to time to issue and sell its own
securities, including its shares of stock, notes, bonds, debentures, and other
obligations, in such amounts, on such terms and conditions, for such purposes
and for such prices, now or hereafter permitted by the laws of the State of
Nevada and by the Board of Directors of the corporation as they may determine;
and to secure any of its obligations by mortgage, pledge or other encumbrance
of any or all of its property, franchises and income.
D. To be a promoter or manager of other corporations of any type or kind;
and to participate with others in any corporation, partnership, limited
partnership, joint venture, or other association of any kind, or in any
transaction, undertaking or arrangement which the corporation would have power
to conduct by itself, whether or not such participation involves sharing or
delegation of control with or to others.
E. To promote and exercise all or any part of the foregoing purposes and
powers in and all parts of the world, and to conduct its business in all or
any branches in any lawful capacity.
The foregoing enumeration of specific purposes and powers shall not be
held to limit or restrict in any manner the purposes and powers of the
corporation by references to or inference from the terms or provisions
of any other clause, but shall be regarded as independent purposes.
ARTICLE IV
The aggregate number of shares which the corporation shall have
authority to issue is twenty-five million shares of common stock having a par
value of $0.001 each.
No shareholder of the corporation shall have the right of cumulative
voting at any election of directors or upon any other matter.
No holder of securities of the corporation shall be entitled as a
matter of right, preemptive or otherwise, to subscribe for or purchase any
securities of the corporation now or hereafter authorized to be issued, or
securities held in the treasury of the corporation, whether issued or sold for
cash or other consideration or as a share dividend or otherwise. Any such
securities may be issued or disposed of by the board of directors to such
persons and on such terms as in its discretion it shall deem advisable.
ARTICLE V
Any action required to, or that may, be taken at any annual or special
meeting of shareholders may be taken without a meeting, without prior notice
and without a vote, if a consent or consents in writing, setting forth the
action so taken, shall be signed by the holder or holders of shares having not
less than the minimum number of votes that would be necessary to take such
action at a meeting at which the holders of all shares entitled to vote on the
action were present and voted.
ARTICLE VI
The members of the governing board shall be styled DIRECTORS and the number of
such Directors shall be not less than one (l), or more than five (5). The
first board of directors shall be 2. Members whose names and post office
addresses are as follows:
J.P. Beehner
PO Box 2370
Alvin TX 77512-2370
Dorothy A. Mortenson
PO Box 5034
Alvin TX 77512-5034
ARTICLE VII
The initial number of stockholders will be 2. Additional stockholders may be
obtained. The number of directors may be changed as provided in N.R.S. 78.330.
ARTICLE VIII
A. No director of the corporation shall be liable to the corporation or
any of its shareholders for monetary damages for an act or omission in the
directors capacity as a director, except that this Article VIII shall not
authorize the elimination or limitation of liability of a director of the
corporation to the extent the director is found liable for: (i) a breach of
such directors duty of loyalty to the corporation or its shareholders; (ii) an
act or omission not in good faith that constitutes a breach of duty of such
director to the corporation or an act or omission that involves intentional
misconduct or a knowing violation of the law; (iii) a transaction from which
such director received an improper benefit, whether or not the benefit
resulted from an action taken within the scope of the directors office; or
(iv) an act or omission for which the liability of a director is expressly
provided by an applicable statute.
B. The capital stock of this corporation after the amount of the
subscription price or par value has been paid in, shall not be subject to
assessment to pay debts of this corporation and no stock issued as fully paid
up shall ever be assessable or assessed and the Articles of Incorporation
shall not be amended in this particular.
ARTICLE IX
This corporation is to have perpetual existence.
Dorothy A. Mortenson, the undersigned, being the original incorporator
for the purpose of forming a corporation to do business both within and
without the state of Nevada, and in pursuance of the General Corporation Law
of the State of Nevada, effective March 31, 1925 and as subsequently amended
do make and file this certificate, hereby declaring and certifying that the
facts herein above stated are true.
This 14th day of August , 1999.
/s/ Dorothy A. Mortenson
Address: PO Box 5034
Alvin TX 77512-5034
On August 14, 1999 before me, the undersigned, a Notary Public in and for said
State, personally appeared Dorothy A. Mortenson to me known to be the person
whose name is subscribed to the within instrument and acknowledged to me that
he executed the same.
WITNESS my hand and official seal.
/s/ Melissa Houston
Notary Public
Notary Seal]
Exhibit 3.2 -- By-laws
BYLAWS OF
Halls Creek Partners Inc.
CONTENTS OF INITIAL BYLAWS
ARTICLE Page
1.00 CORPORATE CHARTER AND BYLAWS
1.01 Corporate Charter Provisions 4
1.02 Registered Agent or Office Requirement
of Filing Changes with Secretary of State 4
1.03 Initial Business Office 4
1.04 Amendment of Bylaws 4
2.00 DIRECTORS AND DIRECTORS MEETINGS
2.01 Action Without Meeting 5
2.02 Telephone Meetings 5
2.03 Place of Meetings 5
2.04 Regular Meetings 5
2.05 Call of Special Meeting 5
2.06 Quorum 6
2.07 Adjournment Notice of Adjourned Meetings 6
2.08 Conduct of Meetings 6
2.09 Powers of the Board of Directors 6
2.10 Board Committees Authority to Appoint 7
2.11 Transactions with Interested Directors 7
2.12 Number of Directors 7
2.13 Term of Office 7
2.14 Removal of Directors 8
2.15 Vacancies 8
2.15(a) Declaration of Vacancy 8
2.15(b) Filling Vacancies by Directors 8
2.15(c) Filling Vacancies by Shareholders 8
2.16 Compensation 9
2.17 Indemnification of Directors and Officers 9
2.18 Insuring Directors, Officers, and Employees 9
3.00 SHAREHOLDERS MEETINGS
3.01 Action Without Meeting 9
3.02 Telephone Meetings 9
3.03 Place of Meetings 10
3.04 Notice of Meetings 10
3.05 Voting List 10
3.06 Votes per Share 11
3.07 Cumulative Voting 11
3.08 Proxies 11
3.09 Quorum 11
3.09(a) Quorum of Shareholders 11
3.09(b) Adjourn for Lack or Loss of Quorum 12
3.10 Voting by Voice or Ballot 12
3.11 Conduct of Meetings 12
3.12 Annual Meetings 12
3.13 Failure to Hold Annual Meeting 12
3.14 Special Meetings 13
4.00 OFFICERS
4.01 Title and Appointment 13
4.01(a) Chairman 13
4.01(b) President 13
4.01(c) Vice President 14
4.01(d) Secretary 14
4.01(e) Treasurer 15
4.01(f) Assistant Secretary or
Assistant Treasurer 15
4.02 Removal and Resignation 15
4.03 Vacancies 16
4.04 Compensation 16
5.00 AUTHORITY TO EXECUTE INSTRUMENTS
5.01 No Authority Absent Specific Authorization 16
5.02 Execution of Certain Instruments 16
6.00 ISSUANCE AND TRANSFER OF SHARES
6.01 Classes and Series of Shares 17
6.02 Certificates for Fully Paid Shares 17
6.03 Consideration for Shares 17
6.04 Replacement of Certificates 17
6.05 Signing Certificates Facsimile Signatures 17
6.06 Transfer Agents and Registrars 18
6.07 Conditions of Transfer 18
6.08 Reasonable Doubts as to Right to Transfer 18
7.00 CORPORATE RECORDS AND ADMINISTRATION
7.01 Minutes of Corporate Meetings 18
7.02 Share Register 19
7.03 Corporate Seal 19
7.04 Books of Account 19
7.05 Inspection of Corporate Records 19
7.06 Fiscal Year 20
7.07 Waiver of Notice 20
8.00 ADOPTION OF INITIAL BYLAWS 20
ARTICLE ONE CORPORATE CHARTER AND BYLAWS
1.01 CORPORATE CHARTER PROVISIONS
The Corporations Charter authorizes Twenty-five Million (25,000,000)
shares to be issued. The officers and transfer agents issuing shares of the
Corporation shall ensure that the total number of shares outstanding at any
given time does not exceed this number. Such officers and agents shall advise
the Board at least annually of the authorized shares remaining available to be
issued. No shares shall be issued for less than the par value stated in the
Charter. Each Charter provision shall be observed until amended by Restated
Articles or Articles of Amendment duly filed with the Secretary of State.
1.02 REGISTERED AGENT AND OFFICE EQUIREMENT OF FILING CHANGES WITH SECRETARY
OF STATE
The address of the Registered Office provided in the Articles of
Incorporation, as duly filed with the Secretary of State for the State of
Nevada is: 50 West Liberty Street, #880, Reno NV 89501.
The name of the Registered Agent of the Corporation at such address, as
set forth in its Articles of Incorporation, is: The Nevada Agency and Trust
Company.
The Registered Agent or Office may be changed by filing a Statement of
Change of Registered Agent or Office or Both with the Secretary of State, and
not otherwise. Such filing shall be made promptly with each change.
Arrangements for each change in Registered Agent or Office shall ensure that
the Corporation is not exposed to the possibility of a default judgment. Each
successive Registered Agent shall be of reliable character and well informed
of the necessity of immediately furnishing the papers of any lawsuit against
the Corporation to its attorneys.
1.03 INITIAL BUSINESS OFFICE
The address of the initial principal business office of the Corporation
is hereby established as: PO Box 5034, Alvin TX 77512-5034.
The Corporation may have additional business offices within the State of
Nevada, and where it may be duly qualified to do business outside of Nevada,
as the Board of Directors may from time to time designate or the business of
the Corporation may require.
1.04 AMENDMENT OF BYLAWS
The Shareholders or Board of Directors, subject to any limits imposed by
the Shareholders, may amend or repeal these Bylaws and adopt new Bylaws. All
amendments shall be upon advice of counsel as to legality, except in
emergency. Bylaw changes shall take effect upon adoption unless otherwise
specified. Notice of Bylaws changes shall be given in or before notice given
of the first Shareholders meeting following their adoption.
ARTICLE TWO DIRECTORS AND DIRECTORS MEETINGS
2.01 ACTION BY CONSENT OF BOARD WITHOUT MEETING
Any action required or permitted to be taken by the Board of Directors
may be taken without a meeting, and shall have the same force and effect as a
unanimous vote of Directors, if all members of the Board consent in writing to
the action. Such consent may be given individually or collectively.
2.02 TELEPHONE MEETINGS
Subject to the notice provisions required by these Bylaws and by the
Business Corporation Act, Directors may participate in and hold a meeting by
means of conference call or similar communication by which all persons
participating can hear each other. Participation in such a meeting shall
constitute presence in person at such meeting, except participation for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
2.03 PLACE OF MEETINGS
Meetings of the Board of Directors shall be held at the business office
of the Corporation or at such other place within or without the State of
Nevada as may be designated by the Board.
2.04 REGULAR MEETINGS
Regular meetings of the Board of Directors shall be held, without call or
notice, immediately following each annual Shareholders meeting, and at such
other regularly repeating times as the Directors may determine.
2.05 CALL OF SPECIAL MEETING
Special meetings of the Board of Directors for any purpose may be called
at any time by the President or, if the President is absent or unable or
refuses to act, by any Vice President or any two Directors. Written notices of
the special meetings, stating the time and place of the meeting, shall be
mailed ten days before, or telegraphed or personally delivered so as to be
received by each Director not later than two days before, the day appointed
for the meeting. Notice of meetings need not indicate an agenda. Generally, a
tentative agenda will be included, but the meeting shall not be confined to
any agenda included with the notice.
Meetings provided for in these Bylaws shall not be invalid for lack of
notice if all persons entitled to notice consent to the meeting in writing or
are present at the meeting and do not object to the notice given. Consent may
be given either before or after the meeting.
Upon providing notice, the Secretary or other officer sending notice
shall sign and file in the Corporate Record Book a statement of the details of
the notice given to each Director. If such statement should later not be
found in the Corporate Record Book, due notice shall be presumed.
2.06 QUORUM
The presence throughout any Directors meeting, or adjournment thereof, of
a majority of the authorized number of Directors shall be necessary to
constitute a quorum to transact any business, except to adjourn. If a quorum
is present, every act done or resolution passed by a majority of the Directors
present and voting shall be the act of the Board of Directors.
2.07 ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS
A quorum of the Directors may adjourn any Directors meeting to meet again
at a stated hour on a stated day. Notice of the time and place where an
adjourned meeting will be held need not be given to absent Directors if the
time and place is fixed at the adjourned meeting. In the absence of a quorum,
a majority of the Directors present may adjourn to a set time and place if
notice is duly given to the absent members, or until the time of the next
regular meeting of the Board.
2.08 CONDUCT OF MEETINGS
At every meeting of the Board of Directors, the Chairman of the Board, if
there is such an officer, and if not, the President, or in the Presidents
absence, a Vice President designated by the President, or in the absence of
such designation, a Chairman chosen by a majority of the Directors present,
shall preside. The Secretary of the Corporation shall act as Secretary of the
Board of Directors meetings. When the Secretary is absent from any meeting,
the Chairman may appoint any person to act as Secretary of that meeting.
2.09 POWERS OF THE BOARD OF DIRECTORS
The business and affairs of the Corporation and all corporate powers
shall be exercised by or under authority of the Board of Directors, subject to
limitations imposed by law, the Articles of Incorporation, any applicable
Shareholders agreement, and these Bylaws.
2.10 BOARD COMMITTEES AUTHORITY TO APPOINT
The Board of Directors may designate an executive committee and one or
more other committees to conduct the business and affairs of the Corporation
to the extent authorized. The Board shall have the power at any time to change
the powers and membership of, fill vacancies in, and dissolve any committee.
Members of any committee shall receive such compensation as the Board of
Directors may from time to time provide. The designation of any committee and
the delegation of authority thereto shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed by law.
2.11 TRANSACTIONS WITH INTERESTED DIRECTORS
Any contract or other transaction between the Corporation and any of its
Directors (or any corporation or firm in which any of its Directors are
directly or indirectly interested) shall be valid for all purposes
notwithstanding the presence of that Director at the meeting during which the
contract or transaction was authorized, and notwithstanding the Directors
participation in that meeting. This section shall apply only if the contract
or transaction is just and reasonable to the Corporation at the time it is
authorized and ratified, the interest of each Director is known or disclosed
to the Board of Directors, and the Board nevertheless authorizes or ratifies
the contract or transaction by a majority of the disinterested Directors
present. Each interested Director is to be counted in determining whether a
quorum is present, but shall not vote and shall not be counted in calculating
the majority necessary to carry the vote. This section shall not be construed
to invalidate contracts or transactions that would be valid in its absence.
2.12 NUMBER OF DIRECTORS
The number of Directors of this Corporation shall be 2. No Director need
be a resident of Nevada or a Shareholder. The number of Directors may be
increased or decreased from time to time by amendment to these Bylaws. Any
decrease in the number of Directors shall not have the effect of shortening
the tenure which any incumbent Director would otherwise enjoy.
2.13 TERM OF OFFICE
Directors shall be entitled to hold office until their successors are
elected and qualified. Election for all Director positions, vacant or not
vacant, shall occur at each annual meeting of the Shareholders and may be held
at any special meeting of Shareholders called specifically for that purpose.
2.14 REMOVAL OF DIRECTORS
The entire Board of Directors or any individual Director may be removed
from office by a vote of Shareholders holding a majority of the outstanding
shares entitled to vote at an election of Directors. However, if less than the
entire Board is to be removed, no one of the Directors may be removed if the
votes cast against his removal would be sufficient to elect him if then
cumulatively voted at an election of the entire Board of Directors. No
director may be so removed except at an election of the class of Directors of
which he is a part. If any or all Directors are so removed, new Directors may
be elected at the same meeting. Whenever a class or series of shares is
entitled to elect one or more Directors under authority granted by the
Articles of Incorporation, the provisions of this Paragraph apply to the vote
of that class or series and not to the vote of the outstanding shares as a
whole.
2.15 VACANCIES
Vacancies on the Board of Directors shall exist upon the occurrence of
any of the following events: (a) the death, resignation, or removal of any
Director; (b) an increase in the authorized number of Directors; or (c) the
failure of the Shareholders to elect the full authorized number of Directors
to be voted for at any annual, regular, or special Shareholders meeting at
which any Director is to be elected.
2.15(a) DECLARATION OF VACANCY
A majority of the Board of Directors may declare vacant the office of a
Director if the Director: (a) is adjudged incompetent by a court order; (b) is
convicted of a crime involving moral turpitude; (c) or fails to accept the
office of Director, in writing or by attending a meeting of the Board of
Directors, within thirty (30) days of notice of election.
2.15(b) FILLING VACANCIES BY DIRECTORS
Vacancies other than those caused by an increase in the number of
Directors may be filled temporarily by majority vote of the remaining
Directors, though less than a quorum, or by a sole remaining Director. Each
Director so elected shall hold office until a qualified successor is elected
at a Shareholders meeting.
2.15(c) FILLING VACANCIES BY SHAREHOLDERS
Any vacancy on the Board of Directors, including those caused by an
increase in the number of Directors shall be filled by the Shareholders at the
next annual meeting or at a special meeting called for that purpose. Upon the
resignation of a Director tendered to take effect at a future time, the Board
or the Shareholders may elect a successor to take office when the resignation
becomes effective.
2.16 COMPENSATION
Directors shall receive such compensation for their services as Directors
as shall be determined from time to time by resolution of the Board. Any
Director may serve the Corporation in any other capacity as an officer, agent,
employee, or otherwise, and receive compensation therefor.
2.17 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Board of Directors shall authorize the Corporation to pay or
reimburse any present or former Director or officer of the Corporation any
costs or expenses actually and necessarily incurred by that officer in any
action, suit, or proceeding to which the officer is made a party by reason of
holding that position, provided, however, that no officer shall receive such
indemnification if finally adjudicated therein to be liable for negligence or
misconduct in office. This indemnification shall extend to good-faith
expenditures incurred in anticipation of threatened or proposed litigation.
The Board of Directors may in proper cases, extend the indemnification to
cover the good-faith settlement of any such action, suit, or proceeding,
whether formally instituted or not.
2.18 INSURING DIRECTORS, OFFICERS, AND EMPLOYEES
The Corporation may purchase and maintain insurance on behalf of any
Director, officer, employee, or agent of the Corporation, or on behalf of any
person serving at the request of the Corporation as a Director, officer,
employee, or agent of another corporation, partnership, joint venture, trust,
or other enterprise, against any liability asserted against that person and
incurred by that person in any such corporation, whether or not the
Corporation has the power to indemnify that person against liability for any
of those acts.
ARTICLE THREE SHAREHOLDERS MEETINGS
3.01 ACTION WITHOUT MEETING
Any action that may be taken at a meeting of the Shareholders under any
provision of the Nevada Business Corporation Act may be taken without a
meeting if authorized by a consent or waiver filed with the Secretary of the
Corporation and signed by the holders of 51% of shares which would be entitled
to vote on that action at a Shareholders meeting. Each such signed consent or
waiver, or a true copy thereof, shall be placed in the Corporate Record Book.
3.02 TELEPHONE MEETINGS
Subject to the notice provisions required by these Bylaws and by the
Business Corporation Act, Shareholders may participate in and hold a meeting
by means of conference call or similar communication by which all persons
participating can hear each other. Participation in such a meeting shall
constitute presence in person at such meeting, except participation for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
3.03 PLACE OF MEETINGS
Shareholders meetings shall be held at the business office of the
Corporation, or at such other place within or without the State of Nevada as
may be designated by the Board of Directors or the Shareholders.
3.04 NOTICE OF MEETINGS
The President, the Secretary, or the officer or persons calling a
Shareholders Meeting. shall give notice, or cause it to be given, in writing
to each Director and to each Shareholder entitled to vote at the meeting at
least ten (10) but not more than sixty (60) days before the date of the
meeting. Such notice shall state the place, day, and hour of the meeting, and,
in case of a special meeting, the purpose or purposes for which the meeting is
called. Such written notice may be given personally, by mail, or by other
means. Such notice shall be addressed to each recipient at such address as
appears on the Books of the Corporation or as the recipient has given to the
Corporation for the purpose of notice. Meetings provided for in these Bylaws
shall not be invalid for lack of notice if all persons entitled to notice
consent to the meeting in writing or are present at the meeting in person or
by proxy and do not object to the notice given, Consent may be given either
before or after the meeting. Notice of the reconvening of an adjourned meeting
is not necessary unless the meeting is adjourned more than thirty days past
the date stated in the notice, in which case notice of the adjourned meeting
shall be given as in the case of any special meeting. Notice may be waived by
written waivers signed either before or after the meeting by all persons
entitled to the notice.
3.05 VOTING LIST
At least ten (10), but not more than sixty (60), days before each
Shareholders meeting, the officer or agent having charge of the Corporations
share transfer books shall make a complete list of the Shareholders entitled
to vote at that meeting or any adjournment thereof, arranged in alphabetical
order, with the address and the number of shares held by each. The list shall
be kept on file at the Registered Office of the Corporation for at least ten
(10) days prior to the meeting, and shall be subject to inspection by any
Director, officer, or Shareholder at any time during usual business hours. The
list shall also be produced and kept open at the time and place of the meeting
and shall be subject, during the whole time of the meeting, to the inspection
of any Shareholder. The original share transfer books shall be prima facie
evidence as to the Shareholders entitled to examine such list or transfer
books or to vote at any meeting of Shareholders. However, failure to prepare
and to make the list available in the manner provided above shall not affect
the validity of any action taken at the meeting.
3.06 VOTES PER SHARE
Each outstanding share, regardless of class, shall be entitled to one (1)
vote on each matter submitted to a vote at a meeting of Shareholders, except
to the extent that the voting rights of the shares of any class or classes are
limited or denied pursuant to the Articles of Incorporation. A Shareholder may
vote in person or by proxy executed in writing by the Shareholder, or by the
Shareholders duly authorized attorney-in-fact.
3.07 CUMULATIVE VOTING
Subject to any limitation stated in the Articles of Incorporation, every
Shareholder entitled to vote at any election of Directors may cumulate votes.
For this purpose, each Shareholder shall have a number of votes equal to the
number of Directors to be elected multiplied by the number of votes to which
the Shareholders shares are entitled. The Shareholder may cast all these votes
for one candidate or may distribute the votes among any number of candidates.
The candidates receiving the highest number of votes are elected, up to the
number of vacancies to be filled. No Shareholder may cumulate votes unless
that Shareholder gives written notice of his or her intention to do so to the
Secretary of the Corporation on or before the day preceding the election at
which the votes will be cumulated. If any Shareholder gives written notice as
provided above, all Shareholders may cumulate their votes.
3.08 PROXIES
A Shareholder may vote either in person or by proxy executed in writing
by the Shareholder or his or her duly authorized attorney in fact. Unless
otherwise provided in the proxy or by law, each proxy shall be revocable and
shall not be valid after eleven (11) months from the date of its execution.
3.09 QUORUM
3.09(a) QUORUM OF SHAREHOLDERS
As to each item of business to be voted on, the presence (in person or by
proxy) of the persons who are entitled to vote a majority of the outstanding
voting shares on that matter shall constitute the quorum necessary for the
consideration of the matter at a Shareholders meeting. The vote of the holders
of a majority of the shares entitled to vote on the matter and represented at
a meeting at which a quorum is present shall be the act of the Shareholders
meeting.
3.09(b) ADJOURNMENT FOR LACK OR LOSS OF QUORUM
No business may be transacted in the absence of a quorum, or upon the
withdrawal of enough Shareholders to leave less than a quorum, other than to
adjourn the meeting from time to time by the vote of a majority of the shares
represented at the meeting.
3.10 VOTING BY VOICE OR BALLOT
Elections for Directors need not be by ballot unless a Shareholder
demands election by ballot before the voting begins.
3.11 CONDUCT OF MEETINGS
Meetings of the Shareholders shall be chaired by the President, or, in
the Presidents absence, a Vice President designated by the President, or, in
the absence of such designation, any other person chosen by a majority of the
Shareholders of the Corporation present in person or by proxy and entitled to
vote. The Secretary of the Corporation, or, in the Secretarys absence, an
Assistant Secretary, shall act as Secretary of all meetings of the
Shareholders. In the absence of the Secretary or Assistant Secretary, the
Chairman shall appoint another person to act as Secretary of the meeting.
3.12 ANNUAL MEETINGS
The time, place, and date of the annual meeting of the Shareholders of
the Corporation, for the purpose of electing Directors and for the transaction
of any other business as may come before the meeting, shall be set from time
to time by a majority vote of the Board of Directors. If the day fixed for the
annual meeting shall be on a legal holiday in the State of Nevada, such
meeting shall be held on the next succeeding business day. If the election of
Directors is not held on the day thus designated for any annual meeting, or at
any adjournment thereof, the Board of Directors shall cause the election to be
held at a special meeting of the Shareholders as soon thereafter as possible.
3.13 FAILURE TO HOLD ANNUAL MEETING
If, within any 13-month period, an annual Shareholders Meeting is not
held, any Shareholder may apply to a court of competent jurisdiction in the
county in which the principal office of the Corporation is located for a
summary order that an annual meeting be held.
3.14 SPECIAL MEETINGS
A special Shareholders meeting may be called at any time by. (a) the
President; (b) the Board of Directors; or (c) one or more Shareholders holding
in the aggregate one-tenth or more of all the shares entitled to vote at the
meeting. Such meeting may be called for any purpose. The party calling the
meeting may do so only by written request sent by registered mail or delivered
in person to the President or Secretary. The officer receiving the written
request shall within ten (10) days from the date of its receipt cause notice
of the meeting to be sent to all the Shareholders entitled to vote at such a
meeting. If the officer does not give notice of the meeting within ten (10)
days after the date of receipt of the written request, the person or persons
calling the meeting may fix the time of the meeting and give the notice. The
notice shall be sent pursuant to Section 3.04 of these Bylaws. The notice of a
special Shareholders meeting must state the purpose or purposes of the meeting
and, absent consent of every Shareholder to the specific action taken, shall
be limited to purposes plainly stated in the notice, notwithstanding other
provisions herein.
ARTICLE FOUR OFFICERS
4.01 TITLE AND APPOINTMENT
The officers of the Corporation shall be a President and a Secretary, as
required by law. The Corporation may also have, at the discretion of the Board
of Directors, a Chairman of the Board, one or more Vice Presidents, a
Treasurer, one or more Assistant Secretaries, and one or more Assistant
Treasurers. Any two or more offices, including President and Secretary, may
be held by one person. All officers shall be elected by and hold office at the
pleasure of the Board of Directors, which shall fix the compensation and
tenure of all officers.
4.01(a) CHAIRMAN OF THE BOARD
The Chairman, if there shall be such an officer, shall, if present,
preside at the meetings of the Board of Directors and exercise and perform
such other powers and duties as may from time to time be assigned to the
Chairman by the Board of Directors or prescribed by these Bylaws.
4.01(b) PRESIDENT
Subject to such supervisory powers, if any, as may be given to the
Chairman, if there is one, by the Board of Directors, the President shall be
the chief executive officer of the Corporation and shall, subject to the
control of the Board of Directors, have general supervision direction, and
control of the business and officers of the Corporation. The President shall
have the general powers and duties of management usually vested in the office
of President of a corporation; shall have such other powers and duties as may
be prescribed by the Board of Directors or the Bylaws; and shall be ex officio
a member of all standing committees, including the executive committee, if
any. In addition, the President shall preside at all meetings of the
Shareholders and in the absence of the Chairman, or if there is no Chairman,
at all meetings of the Board of Directors.
4.01(c) VICE PRESIDENT
Any Vice President shall have such powers and perform such duties as from
time to time may be prescribed by these Bylaws, by the Board of Directors, or
by the President. In the absence or disability of the President, the senior or
duly appointed Vice President, if any, shall perform all the duties of the
President, pending action by the Board of Directors when so acting, such Vice
President shall have all the powers of, and be subject to all the restrictions
on, the President.
4.01(d) SECRETARY
The Secretary shall:
(1) See that all notices are duly given in accordance with the
provisions of these Bylaws and as required by law. In case of the absence or
disability of the Secretary. or the Secretarys refusal or neglect to act,
notice may be given and served by an Assistant Secretary or by the Chairman,
the President, any Vice President, or by the Board of Directors.
(2) Keep the minutes of corporate meetings, and the Corporate Record
Book, as set out in Section 7.01 hereof.
(3) Maintain, in the Corporate Record Book, a record of all share
certificates issued or canceled and all shares of the Corporation canceled or
transferred.
(4) Be custodian of the Corporations records and of any seal which the
Corporation may from time to time adopt. when the Corporation exercises its
right to use a seal, the Secretary shall see that the seal is embossed on all
share certificates prior to their issuance and on all documents authorized to
be executed under seal in accordance with the provisions of these Bylaws.
(5) In general, perform all duties incident to the office of Secretary,
and such other duties as from time to time may be required by Sections 7.01,
7.02, and 7.03 of these Bylaws, by these Bylaws generally, by the Board of
Directors, or by the President.
4.01(e) TREASURER
The Treasurer shall:
(1) Have charge and custody of, and be responsible for, all funds and
securities of the Corporation, and deposit all funds in the name of the
Corporation in those banks, trust companies, or other depositories that shall
be selected by the Board of Directors.
(2) Receive, and give receipt for, monies due and payable to the
Corporation.
(3) Disburse or cause to be disbursed the funds of the Corporation as
may be directed by the Board of Directors, taking proper vouchers for those
disbursements.
(4) If required by the Board of Directors or the President, give to the
Corporation a bond to assure the faithful performance of the duties of the
Treasurers office and the restoration to the Corporation of all corporate
books, papers, vouchers, money, and other property of whatever kind in the
Treasurers possession or control, in case of the Treasurers death,
resignation, retirement, or removal from office. Any such bond shall be in a
sum satisfactory to the Board of Directors, with one or more sureties or a
surety company satisfactory to the Board of Directors.
(5) In general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to the
Treasurer by Sections 7.O4 and 7.05 of these Bylaws, by these Bylaws
generally, by the Board of Directors, or by the President.
4.01(f) ASSISTANT SECRETARY AND ASSISTANT TREASURER
The Assistant Secretary or Assistant Treasurer shall have such powers and
perform such duties as the Secretary or Treasurer, respectively, or as the
Board of Directors or President may prescribe. In case of the absence of the
Secretary or Treasurer, the senior Assistant Secretary or Assistant Treasurer,
respectively, may perform all of the functions of the Secretary or Treasurer.
4.02 REMOVAL AND RESIGNATION
Any officer may be removed, either with or without cause, by vote of a
majority of the Directors at any regular or special meeting of the Board, or,
except in case of an officer chosen by the Board of Directors, by any
committee or officer upon whom that power of removal may be conferred by the
Board of Directors. Such removal shall be without prejudice to the contract
rights, if any, of the person removed. Any officer may resign at any time by
giving written notice to the Board of Directors, the President, or the
Secretary of the Corporation. Any resignation shall take effect on the date of
the receipt of that notice or at any later time specified therein, and, unless
otherwise specified therein, the acceptance of that resignation shall not be
necessary to make it effective.
4.03 VACANCIES
Upon the occasion of any vacancy occurring in any office of the
Corporation, by reason of death, resignation, removal, or otherwise, the Board
of Directors may elect an acting successor to hold office for the unexpired
term or until a permanent successor is elected.
4.04 COMPENSATION
The compensation of the officers shall be fixed from time to time by the
Board of Directors, and no officer shall be prevented from receiving a salary
by reason of the fact that the officer is also a Shareholder or a Director of
the Corporation, or both.
ARTICLE FIVE AUTHORITY TO EXECUTE INSTRUMENTS
5.01 NO AUTHORITY ABSENT SPECIFIC AUTHORIZATION
These Bylaws provide certain authority for the execution of instruments.
The Board of Directors, except as otherwise provided in these Bylaws, may
additionally authorize any officer or officers, agent or agents, to enter into
any contract or execute and deliver any instrument in the name of and on
behalf of the Corporation, and such authority may be general or confined to
specific instances. Unless expressly authorized by these Bylaws or the Board
of Directors, no officer, agent, or employee shall have any power or authority
to bind the Corporation by any contract or engagement nor to pledge its credit
nor to render it pecuniarily liable for any purpose or in any amount.
5.02 EXECUTION OF CERTAIN INSTRUMENTS
Formal contracts of the Corporation, promissory notes, deeds, deeds of
trust, mortgages, pledges, and other evidences of indebtedness of the
Corporation, other corporate documents, and certificates of ownership of
liquid assets held by the Corporation shall be signed or endorsed by the
President or any Vice President and by the Secretary or the Treasurer, unless
otherwise specifically determined by the Board of Directors or otherwise
required by law.
ARTICLE SIX-ISSUANCE AND TRANSFER OF SHARES
6.01 CLASSES AND SERIES OF SHARES
The Corporation may issue one or more classes or series of shares, or
both. Any of these classes or series may have full, limited, or no voting
rights, and may have such other preferences, rights, privileges, and
restrictions as are stated or authorized in the Articles of Incorporation. All
shares of any one class shall have the same voting, conversion, redemption,
and other rights, preferences, privileges, and restrictions, unless the class
is divided into series, If a class is divided into series, all the shares of
any one series shall have the same voting, conversion, redemption, and other.
rights, preferences, privileges, and restrictions. There shall always be a
class or series of shares outstanding that has complete voting rights except
as limited or restricted by voting rights conferred on some other class or
series of outstanding shares.
6.02 CERTIFICATES FOR FULLY PAID SHARES
Neither shares nor certificates representing shares may be issued by the
Corporation until the full amount of the consideration has been received. When
the consideration has been paid to the Corporation, the shares shall be deemed
to have been issued and the certificate representing the shares shall be
issued to the shareholder.
6.03 CONSIDERATION FOR SHARES
Shares may be issued for such consideration as may be fixed from time to
time by the Board of Directors, but not less than the par value stated in the
Articles of Incorporation. The consideration paid for the issuance of shares
shall consist of money paid, labor done, or property actually received, and
neither promissory notes nor the promise of future services shall constitute
payment nor partial payment for shares of the Corporation.
6.04 REPLACEMENT OF CERTIFICATES
No replacement share certificate shall be issued until the former
certificate for the shares represented thereby shall have been surrendered and
canceled, except that replacements for lost or destroyed certificates may be
issued, upon such terms, conditions, and guarantees as the Board may see fit
to impose, including the filing of sufficient indemnity.
6.05 SIGNING CERTIFICATES-FACSIMILE SIGNATURES
All share certificates shall be signed by the officer(s) designated by
the Board of Directors. The signatures of the foregoing officers may be
facsimiles. If the officer who has signed or whose facsimile signature has
been placed on the certificate has ceased to be such officer before the
certificate issued, the certificate may be issued by the Corporation with the
same effect as if he or she were such officer on the date of its issuance.
6.06 TRANSFER AGENTS AND REGISTRARS
The Board of Directors may appoint one or more transfer agents or
transfer clerks, and one or more registrars, at such times and places as the
requirements of the Corporation may necessitate and the Board of Directors may
designate. Each registrar appointed, if any, shall be an incorporated bank or
trust company, either domestic or foreign.
6.07 CONDITIONS OF TRANSFER
The party in whose name shares of stock stand on the books of the
Corporation shall be deemed the owner thereof as regards the Corporation,
provided that whenever any transfer of shares shall be made for collateral
security, and not absolutely, and prior written notice thereof shall be given
to the Secretary of the Corporation, or to its transfer agent, if any, such
fact shall be stated in the entry of the transfer.
6.08 REASONABLE DOUBTS AS TO RIGHT TO TRANSFER
When a transfer of shares is requested and there is reasonable doubt as
to the right of the person seeking the transfer, the Corporation or its
transfer agent, before recording the transfer of the shares on its books or
issuing any certificate therefor, may require from the person seeking the
transfer reasonable proof of that persons right to the transfer. If there
remains a reasonable doubt of the right to the transfer, the Corporation may
refuse a transfer unless the person gives adequate security or a bond of
indemnity executed by a corporate surety or by two individual sureties
satisfactory to the Corporation as to form, amount, and responsibility of
sureties. The bond shall be conditioned to protect the Corporation, its
officers, transfer agents, and registrars, or any of them, against any loss,
damage, expense, or other liability for the transfer or the issuance of a new
certificate for shares.
ARTICLE SEVEN CORPORATE RECORDS AND ADMINISTRATION
7.01 MINUTES OF CORPORATE MEETINGS
The Corporation shall keep at the principal office, or such other place
as the Board of Directors may order, a book recording the minutes of all
meetings of its Shareholders and Directors, with the time and place of each
meeting, whether such meeting was regular or special, a copy of the notice
given of such meeting, or of the written waiver thereof, and, if it is a
special meeting, how the meeting was authorized. The record book shall further
show the number of shares present or represented at Shareholders meetings, and
the names of those present and the proceedings of all meetings.
7.02 SHARE REGISTER
The Corporation shall keep at the principal office, or at the office of
the transfer agent, a share register showing the names of the Shareholders,
their addresses, the number and class of shares issued to each, the number and
date of issuance of each certificate issued for such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
The above information may be kept on an information storage device such as a
computer, provided that the device is capable of reproducing the information
in clearly legible form. If the Corporation is taxed under Internal Revenue
Code Section 1244 or Subchapter S, the Officer issuing shares shall maintain
the appropriate requirements regarding issuance.
7.03 CORPORATE SEAL
The Board of Directors may at any time adopt, prescribe the use of, or
discontinue the use of, such corporate seal as it deems desirable, and the
appropriate officers shall cause such seal to be affixed to such certificates
and documents as the Board of Directors may direct.
7.04 BOOKS OF ACCOUNT
The Corporation shall maintain correct and adequate accounts of its
properties and business transactions, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, surplus, and
shares. The corporate bookkeeping procedures shall conform to accepted
accounting practices for the Corporations business or businesses. subject to
the foregoing, The chart of financial accounts shall be taken from, and
designed to facilitate preparation of, current corporate tax returns. Any
surplus, including earned surplus, paid-in surplus, and surplus arising from a
reduction of stated capital, shall be classed by source and shown in a
separate account. If the Corporation is taxed under Internal Revenue Code
Section 1244 or Subchapter S, the officers and agents maintaining the books of
account shall maintain the appropriate requirements.
7.05 INSPECTION OF CORPORATE RECORDS
A Director or Shareholder demanding to examine the Corporations books or
records may be required to first sign an affidavit that the demanding party
will not directly or indirectly participate in reselling the information and
will keep it confidential other than in use for proper purposes reasonably
related to the Directors or Shareholders role. A Director who insists on
examining the records while refusing to sign this affidavit thereby resigns as
a Director.
7.06 FISCAL YEAR
The fiscal year of the Corporation shall be as determined by the Board of
Directors and approved by the Internal Revenue Service. The Treasurer shall
forthwith arrange a consultation with the Corporations tax advisers to
determine whether the Corporation is to have a fiscal year other than the
calendar year. If so, the Treasurer shall file an election with the Internal
Revenue Service as early as possible, and all correspondence with the IRS,
including the application for the Corporations Employer Identification Number,
shall reflect such non-calendar year election.
7.07 WAIVER OF NOTICE
Any notice required by law or by these Bylaws may be waived by execution
of a written waiver of notice executed by the person entitled to the notice.
The waiver may be signed before or after the meeting.
ARTICLE VIII ADOPTION OF INITIAL BYLAWS
The foregoing bylaws were adopted by the Board of Directors on August 19,
1999.
/s/ J. P. Beehner
J.P. Beehner
/s/ Dorothy A. Mortenson
Dorothy A. Mortenson
Attested to, and certified by:
/s/ Dorothy A. Mortenson
C/S Secretary
Exhibit 5.1 -- Opinion re: legality
Halls Creek Partners, Inc.
July 26, 2000
Re: Halls Creek Partners, Inc. Registration Statement on Form SB-2
Ladies and Gentlemen:
We have acted as counsel for Halls Creek Partners, Inc., a Nevada
corporation (the Company), in connection with the preparation of the
Companys registration statement on Form SB-2 filed with the
Securities and Exchange Commission relating to the public offering of
up to 4,000,000 shares of the Companys public stock pursuant to the
Securities Act of 1933. This opinion is being furnished pursuant to
Item 601(b)(5) of Regulation S-K under the Act.
In rendering the opinion set forth below, we have reviewed: (a)
the Registration Statement and the exhibits thereto; (b) the Companys
organizational documents and minute books, and; (c) such statutes,
records and other documents as we have deemed relevant. In our
examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and
conformity with the originals of all documents submitted to us as
copies thereof. In addition, we have made such other examinations of
law and fact as we have deemed relevant in order to form a basis for
the opinion hereinafter expressed.
Based upon the foregoing, we are of the opinion that the
Companys shares are validly issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an Exhibit to the
Registration statement and to all references to this Firm under the
caption Interests of Named Experts and Counsel on the Registration
Statement.
Very truly yours,
/s/ Roger L. Shoss
SHOSS & ASSOCIATES
Exhibit 10.1 -- License Agreement
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (Agreement) is made and effective as of February 14,
2000 by and between David R. Mortenson & Associates, a Texas general
partnership (DRM), and Halls Creek Partners Inc., a Nevada corporation
(Licensee), with reference to the following facts:
A. On August 20, 1999, DRM and Licensee entered into an agreement granting
Licensee certain rights for the use of DRMs oxygen-enriched water product (the
Water Rights). In consideration therefor, Licensee issued DRM 2,000,000 shares
of Licensees common stock (the Shares). Subsequent to the grant of the Water
Rights, the underlying contract granting DRM the rights to the technology to
produce the oxygen-enriched water came into dispute. In order to enable
Licensee to conduct a business and to preserve the value of the Shares, DRM
desires to grant additional rights to Licensee which are not in dispute.
A. DRM is the holder of certain rights to an Internet marketing system for
vitamins, minerals, nutritional supplements, and other health and fitness
products (the Products) pursuant to an agreement between Vitamineralherb.com
Corp. (Vita), a Nevada corporation, appended hereto as Exhibit C, which rights
include the right to grant licenses for use of the system in various
territories.
A. Licensee desires to market the Products to medical professionals,
alternative health professionals, martial arts studios and instructors, sports
and fitness trainers, other health and fitness practitioners, school and
other fund raising programs and other similar types of customers (Customer(s))
in the Territory, as hereinafter defined. Customers will be able to buy the
Products on a continuing basis through Vitas Web Site.
NOW THEREFORE, in consideration of the mutual promises, warranties and
covenants herein contained, the parties hereby agree as follows:
1. Scope of Agreement. This Agreement shall govern all Products sold through
Vitas Web Site to any of Licensees customers (Customer(s)). Exhibit A
contains detailed information regarding specifications, quality control,
pricing and other terms relating to the Product(s) to be ordered through Vitas
Web Site. The parties agree that Exhibit A will be amended from time to time
to include similar information with respect to any future orders of the same
product or orders of future Product(s) ordered through Vita by DRM or by Sub-
licensee(s) or Customers. Pricing may be amended from time to time on the Web
Site. The price posted on the Web Site at the time of order shall prevail. IN
THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THIS AGREEMENT AND ANY PURCHASE
ORDER SUBMITTED BY CUSTOMER, THE TERMS OF THIS AGREEMENT WILL CONTROL.
1. Grant of License; Territory. Territory shall be the State of Indiana
plus the following counties located in the State of Illinois: Will, Kankakee,
Iroquois, and Vermillion. DRM grants to Licensee the exclusive rights to
market the Products in the Territory through the Web Site.
1. Manufacture of Products. All Products marketed through Vitas Web Site
shall be manufactured, packaged, prepared, and shipped in accordance with the
specifications and requirements described on Exhibit A hereto as it may be
modified from time to time. Quality control standards relating to the Products
weight, color, consistency, micro-biological content, labeling and packaging
are also set forth on Exhibit A. In the event that Exhibit A is incomplete,
Products shall be manufactured and shipped in accordance with industry
standards.
1. Labeling; Packaging. Products shall be labeled with Standard Labels,
except for Private Label Products, as described herein. Standard labels shall
contain all information necessary to conform to regulatory and industry
requirements.
1. Private Label Products. Vitamins, minerals, herbs, and nutritional
supplement products may be available for sale with labels customized for
Customer (Private Label Products). DRM shall cause supplier to affix labels
to the Private Label Products which have been furnished by Customer which are
consistent with suppliers labeling equipment and meet all federal and/or state
labeling requirements for the Private Label Product(s) ordered. Pricing for
Private Label Products shall be as determined by supplier and posted on the
Web Site at the time of order.
1. Shipping. Shipping shall be by UPS ground unless Customer requests and
pays for overnight shipping by UPS. Shipping and handling fees for overnight
shipping will be posted on the Web Site. The price shall be the price posted
on the Web Site at the time of order. All orders from suppliers stock shall
be shipped within seventy-two (72) hours of receipt of order. Items not in
stock (back orders) shall be shipped on a timely basis, but not later than
four to six weeks from time of order.
1. Products and Pricing. The initial pricing for the Product(s) is set forth
on Exhibit A and may be amended from time to time, and such amendments will be
posted on the Web Site. Terms are payment by credit card or electronic funds
transfer at time of purchase.
2. Minimum Order Quantities for Vitamin, Mineral, and/or Nutritional
Supplements. The minimum order quantity is 100 bottles per formulation for
standard Products. Customer Formulas, as defined herein, shall have minimum
purchase quantities of 5,000 units.
1. Web Site Maintenance; Fees. Vita will maintain Vitas Web Site (the Web
Site). The Web Site shall post current prices for all Products. Customers
will be able to obtain unique identification codes (Userid(s)) and select
passwords on the Web Site. The Web Site will be operated in a manner that
ensures secure Internet financial transactions. Licensee shall pay Vita a
maintenance fee of $500 yearly, beginning on the anniversary date of this
Agreement, for maintenance of the Web Site.
1. Orders. All Products shall be ordered through the Web Site. In
jurisdictions in which sales tax would be collected on retail sales of hte
Products, Licensee shall ensure that each Customer provides a sales tax ID
number for exemption from sales tax. Licensee shall assist its Customer to
register on the Web Site. Each Customer shall be issued a Userid and shall
select a password upon registration. Upon ordering, Customer must pay for
Product by credit card, debit card, or by electronic funds transfer (e-check)
and all funds will be remitted to Vita. Upon receipt of order, Vita will
email the supplier to purchase the Product(s) ordered. Supplier will drop-ship
the order directly to customer in accordance with Section 7, Shipping.
1. Override; Payment to Licensee. Licensee agrees that Vita shall retain a
10% override on gross sales made through the Web Site by Licensee. Vita
agrees to pay supplier for the Product purchased upon receipt of cleared
funds. Vita will retain its override and will remit the balance to Licensee by
the tenth day of the month following sales. Vita further agrees to provide
Licensee with a Monthly Sales Report of all sales made by Licensee through the
Web Site detailing the purchases from each Customer. Vita will e-mail the
Monthly Sales Report to Licensee by the tenth day of the month following such
sales.
1. Warranties and Indemnification. DRM warrants that all Products,
including Joint Formula Products but not including Customer Formula Products,
shall be fit for the purpose for which produced and shall be in full and
complete compliance with all local, state, and federal laws applicable
thereto. DRM warrants that all Custom Products shall be manufactured in
accordance with Customers specifications. DRM warrants that all non-Private
Label Products shall be correctly and accurately described on each label
affixed thereto, and that all labeling affixed thereto shall be in full and
complete compliance with all local, state, and federal laws applicable
thereto. DRM warrants, covenants and certifies that its supplier(s)
manufacturing facilities comply with applicable federal, state, city, county,
and municipal laws, rules, regulations, ordinances, and codes in all material
respects. DRM hereby agrees to indemnify, hold harmless and defend Licensee,
its Customers, Buyers, affiliates, directors, officers, agents and
representatives from and against any loss, claim, and expense (including
attorneys fees and costs, and costs of a recall of Product) incurred or
suffered as a consequence of DRMs breach of its product warranties as set
forth herein.
1. Nature of Relationship. (a) This Agreement does not constitute nor
empower the Licensee as the agent or legal representative of the DRM for any
purpose whatsoever. Licensee is and will continue to be an independent
contractor.
(b) The arrangement created by this Agreement is not, and is not
intended to be, a franchise or business opportunity under the United
States Federal Trade Commission Rule: Disclosure Requirements and
Prohibitions Concerning Franchising and Business Opportunity Ventures and
is not a franchise, business opportunity or seller assisted marketing
plan or similar arrangement under any other federal, state, local or
foreign law, rule or regulation.
(c) Licensee is not prohibited by this Agreement from pursuing
other business opportunities or other employment.
1. Rights in Formulas.
(a) Customer Formulas. Any formula provided exclusively by Licensees
Customer shall be owned by Customer (Customer Formula), provided
that such Customer Formula does not substantially duplicate an
existing Vita formula. Vita agrees not to sell products to other
customers using any Customer Formula during the period in which
Customer is ordering products containing the formula and for so long
as Customer continues to purchase products containing the Customer
Formula.
(c) Joint Formulas. If Vita and Customer jointly create a formula
(Joint Formula), such Joint Formula will be jointly owned by the
parties. Vita agrees not to sell products to other customers using
the Joint Formula during the period in which Customer is ordering
products containing the Joint Formula from Vita without written
permission from Customer. In the event that Customer fails to order
a specific Joint Formula Product for a period of 3 months, Vita
shall be free to sell products containing the Joint Formula to other
customers.
1. Term of Agreement; Breach of Agreement. This Agreement shall continue for
three (3) years, and shall be automatically renewed unless one of the parties
provides written notice of termination to the other party ninety (90) days
prior to the end of the term. Licensee may terminate this Agreement for any
reason at any time upon ninety (90) days written notice to DRM. In the event
of a material breach of this Agreement, the non-breaching party may provide
written notice of breach. Upon notice from the non-breaching party, the
breaching party shall have fourteen (14) days to cure the breach, after which
period, if not cured, the Agreement shall be automatically terminated. In no
event shall Vita be required to accept or deliver product under any purchase
order if Vita has not received the outstanding balance due on any previous
purchase order in a timely manner. Failure to so perform shall not be deemed a
breach of this Agreement by Vita.
1. Override; Payment to Licensee. All purchases shall be made through the
Web Site, and payments shall be made by credit card or other approved method
of payment, such as be electronic funds transfer or debit card. Licensee
agrees that Vita shall retain a 10% override on all sales made through the Web
Site by Licensee(s). Vita agrees to pay supplier for the Product purchased,
retain Vitas override, and remit the balance to Licensee. Vita further agrees
to provide Licensee with a Monthly Sales Report of all sales made by Licensee
through the Web Site. Vita will deliver the printed breakdown by the tenth
day of the month following such sales.
1. Trade Secrets. Vita and DRM and Licensee(s) are the owners of certain
products, technology, information, customer lists, services, processes,
financial information, pending or prospective transactions/proposals,
operating and marketing plans and procedures, designs, product formulas,
specifications, manufacturing methods, ideas, prototypes, software, patent,
trademark and copyright applications or registrations and other similar data
relating to each partys business which data is not publicly known and derives
economic value from not being publicly known (collectively Trade Secrets).
Each party agrees that it will not use or disclose to third parties any Trade
Secret it receives from the other, except as may be contemplated by this
Agreement. Each party agrees that it will take all reasonable precautions to
assure that no Trade Secret is conveyed to any officer, employee, agent,
manufacturer or other third party who does not have a need to know such Trade
Secret. The obligations created by this Section 10 shall survive the
termination of this Agreement or any business relationship between the
parties. Any Trade Secret contained in any writing will be returned to the
other party promptly upon written request, together with any reproductions
thereof.
1. Governing Law; Dispute Resolution. This Agreement shall be governed by
Texas law in accordance with the Dispute Resolution Agreement attached hereto
as Exhibit B.
1. Miscellaneous Provisions. This Agreement constitutes the entire Agreement
between the parties and supersedes any prior or contemporaneous agreements,
oral or written. This Agreement may only be amended by a writing signed by
both parties. This Agreement may not be assigned without the written consent
of the other party; provided that this Agreement may be assigned without
consent to an entity acquiring all or substantially all of the assets of
either party. Any notice required or permitted to be given under this
Agreement shall be in writing and sent by telecopy, personal delivery or
certified mail, return receipt requested, as follows:
If to Vitamineralherb.Com, Inc.: Mr. David R. Mortenson, President
P.O. Box 2370
Alvin TX 77512-2370
If to David R. Mortenson & Associates:
Mr. David R. Mortenson
P. O. Box 5034
Alvin TX
77512-5034
Fax: (281)388-1047
If to Licensee: Halls Creek Partners Inc.
P. O. Box 5034
Alvin TX 77512-5034
Notice shall be deemed effective upon receipt if made by confirmed
telecopy, personal delivery or 48 hours after deposit in the United
States mail with the required postage.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as
of
the date first above written.
Halls Creek Partners Inc.
a Nevada corporation
By:
J. P. Beehner, President
DAVID R. MORTENSON & ASSOCIATES
a Texas General Partnership
By _________________________________
David R. Mortenson, General Partner
EXHIBIT A
PRODUCT SPECIFICATIONS
In the event of any inconsistency between the terms of Customers purchase
order and this Product Specification Sheet, this Sheet and the terms of the
Manufacturing Agreement shall control.
Short Product Name: _____________________________
Exact Product Ingredients and Percentages:
Other Product Specifications:
Color: ___________ Tablet Type: ____________ Consistency:______________
Weight: _______ Bottle Size/Color:____________ Bottle Count: ___________
Cotton Insert:____ Bottle Seal:____ Shrink Wrap Neck Band:___ Silicon
Pack:____
Micro-biological content: Customer to specify any requirements, if none
specified, product will be manufactured to industry standards.
Labels: Labels and/or boxes to be provided by Customer [identify any size]
_________
Labels/Boxes to be Received by [date] _____ to ensure timely delivery
Master Pack/Wrapping/Palleting Requirements (if any):_________________________
Ship to Address: _________________________________________________
Order Quantity: (minimum 5,000 BOTTLES): ________
Price: _____________ FOB IFMs facility in San Diego, CA.
Delivery Dates(s): _______________________________________
Terms of Sale: 50% with submission of purchase order; 50% due upon completion
of manufacturing, unless otherwise specified _________________________
Purchase Order Number: ________________
Date of Purchase Order: ________________
EXHIBIT B
DISPUTE RESOLUTION AGREEMENT THIS DISPUTE RESOLUTION AGREEMENT (Dispute
Resolution Agreement) is entered into and effective as of February 14, 2000 by
and between David R. Mortenson & Associates, a Texas general partnership, and
Halls Creek Partners Inc., a Nevada corporation.
1. INTENT OF PARTIES. The parties desire to establish a quick, final and
binding out-of-court dispute resolution procedure to be followed in the
unlikely event any dispute arising out of or related to the Manufacturing
Agreement dated February 14, 2000 between the parties (Agreement). As used in
this Dispute Resolution Agreement, the term dispute is used in its broadest
and most inclusive sense and shall include, without limitation, any
disagreement, controversy, claim, or cause of action between the parties
arising out of, related to, or involving the Agreement or the transactions
evidenced by the Agreement (collectively Dispute).
2. NEGOTIATION. It is the intent of the parties that any Dispute be resolved
informally and promptly through good faith negotiation between the parties.
Therefore, in the event of a Dispute between the parties, the following will
apply:
A. Correspondence. Either party may initiate negotiation
proceedings by writing a certified or registered letter, return
receipt requested, to the other party referencing this Dispute
Resolution Agreement, setting forth the particulars of the Dispute,
the term(s) of the Agreement involved and a suggested resolution of
the problem. The recipient of the letter must respond within ten
(10) days after its receipt of the letter with an explanation and
response to the proposed solution.
B. Meeting. If correspondence does not resolve the Dispute, then
the authors of the letters or their representatives shall meet on at
least one occasion and attempt to resolve the matter. Such meeting
shall occur not later than thirty (30) days from the parties last
correspondence. If the parties are unable to agree on the location
of such a meeting, the meeting shall be held at DRMs corporate
offices. Should this meeting not produce a resolution of the matter,
then either party may request mandatory mediation (as provided
below) by written notice to the other party.
1. MEDIATION.
A. There shall be a single mediator. If the parties cannot agree
upon an acceptable mediator within ten (10) days of termination of
the negotiation, each party shall select one mediator from a list of
not less than five (5) mediators provided by the other party. These
two mediators shall select a third mediator who shall serve as the
sole mediator.
B. Subject to the availability of the mediator, the mediation
shall occur not more than thirty (30) days after the request for
mediation. The mediation shall be held in Houston, Texas. The cost
of mediation shall be borne equally by the parties. The mediation
process shall continue until the Dispute (or any part thereof) is
resolved or until such time as the mediator makes a finding that
there is no possibility of resolution short of referring the parties
to final and binding arbitration.
1. FINAL AND BINDING ARBITRATION. Should any Dispute (or part thereof)
remain between the parties after completion of the negotiation and mediation
process set forth above, such Dispute shall be submitted to final and binding
arbitration in Houston, Texas. The arbitration shall be governed by the laws
of the State of Texas and the following provisions, which shall supersede the
Texas rules of civil procedure in the event of any inconsistency:
A. Selection of Arbitrator(s). There shall be a single arbitrator,
except in the case where the amount in dispute exceeds $100,000, in
which case there shall be three arbitrators. If the parties cannot
agree upon acceptable arbitrators(s) within ten (10) days of the
termination of the mediation, each party shall select one arbitrator
from a list of not less than five (5) arbitrators provided by the
other party. These two arbitrators shall select a third arbitrator
who shall serve as the sole arbitrator or the third arbitrator, as
the case may be. The determination of a majority of the arbitrators
or the sole arbitrator, as the case may be, shall be conclusive upon
the parties and shall be non-appealable.
B. Discovery. No discovery shall be permitted, absent a showing of
good cause. Any discovery request should be reviewed with the
knowledge that this dispute resolution process was mutually agreed
upon and bargained for by the parties with the intent to provide a
cost-effective and timely method of resolving disputes. Any
discovery granted by the arbitrator should be limited to that
necessary to protect the minimum due process rights of the parties.
C. Equitable Remedies. Any party shall have the right to seek a
temporary restraining order, preliminary or permanent injunction or
writ of attachment, without waiving the negotiation, mediation and
arbitration provision hereof. Any other form of equitable or
provisional relief and all substantive matters relating to the
Dispute shall be determined solely by the arbitrator(s).
D. Attorneys Fees; Arbitration Costs. Each party may be
represented by an attorney or other representative selected by the
party. The costs of the arbitration shall be borne equally by the
parties. Each party shall bear its own attorneys/representatives
fees and costs; provided that if the arbitrator(s) find either party
has acted in bad faith, the arbitrator(s) shall have discretion to
award attorneys fees to the other party.
E. Scope of Arbitration; Limitation on Powers of Arbitrator(s);
Applicable Law. No party may raise new claims against the other
party in the arbitration not raised in the mediation. The arbitrator
shall have the power to resolve all Disputes between the parties.
The arbitrator(s) shall not have the power to award treble, punitive
or exemplary damages and the parties hereby waive their right to
receive treble, punitive or exemplary damages, to the extent
permitted by law. The arbitrator(s) shall only interpret and apply
the terms and provision of the Agreement and shall not change any
such terms or provisions or deprive either party of any right or
remedy expressly or impliedly provided for in the Agreement. The
arbitrator(s) shall apply the law of the State of Texas or federal
law, in those instances in which federal law applies.
F. Designation of Witnesses/Exhibits; Duration of Arbitration
Process; Written Decision. At least thirty (30) days before the
arbitration is scheduled to commence, the parties shall exchange
lists of witnesses and copies of all exhibits intended to be used in
arbitration. The arbitration shall be completed within 90 days o
fthe selection of the first arbitrator. The arbitrator(s) shall
render a written decision, which contains findings of fact and
conclusions of law, within 30 days of the conclusion of the
arbitration and shall specify a time within which the award shall be
performed. Judgment upon the award may be entered in any court of
competent jurisdiction.
1. MISCELLANEOUS
A. Enforcement of Negotiation/Mediation Provisions. If a party
demanding such compliance with this Agreement obtains a court order
directing the other party to comply with this Dispute Resolution
Agreement, the party demanding compliance shall be entitled to all
of its reasonable attorneys fees and costs in obtaining such order,
regardless of which party ultimately prevails in the matter.
B. Severability. Should any portion of this Dispute Resolution
Agreement be found to be invalid or unenforceable such portion will
be severed from this Dispute Resolution Agreement, and the remaining
portions shall continue to be enforceable unless to do so would
materially alter the effectiveness of this Dispute Resolution
Agreement in achieving the stated intent of the parties.
C. Confidentiality. The parties agree that they will not disclose to
any third party that (1) they are engaged in the dispute resolution
process described herein, (2) the fact of, nature or amount of any
compromise resulting herefrom, or (3) the fact of, nature or amount
of any arbitration award. This confidentiality obligation shall not
extend to the partys employees, spouses, accountant, bankers,
attorneys or insurers or in the event that disclosure is otherwise
required by law.
D. Time to Initiate Claims. An aggrieved party must mail and the
other party must receive the correspondence which initiates
negotiation proceedings in connection with a Dispute as specified in
Paragraph 2(A) (1) within one (1) year of the date the aggrieved
party first has, or with the exercise of reasonable diligence should
have had, knowledge of the event(s) giving rise to the Dispute (the
One Year Statute of Limitations). No Dispute may be raised under
this Dispute Resolution Agreement after the expiration of the One
Year Statute of Limitations.
E. Entire Agreement. These dispute resolution provisions express the
entire agreement of the parties and there are no other agreements,
oral or written, concerning dispute resolution, except as provided
herein. Any ambiguity in the provisions hereof shall not be
construed against the drafter. This Dispute Resolution Agreement may
only be modified in a writing signed by both parties.
F. Successors. This Dispute Resolution Agreement is binding upon
and inures to the benefit of the parties, their agents, heirs,
assigns, successors-in-interest, and any person, firm or
organization acting for or through them.
G. Venue and Jurisdiction. Venue and exclusive jurisdiction for any
action arising out of or related to this Dispute Resolution
Agreement (including, but not limited to, equitable actions
contemplated by Section 4 (C) and actions brought to enforce or
interpret this Dispute Resolution Agreement) shall be in the state
courts for the County of Harris, Texas or the federal court for the
Southern District of Texas.
H. Notice. Any notice or communication required to be given
hereunder shall be in writing and shall be mailed via the United
States Postal Service by Certified Mail or Registered Mail, Return
Receipt Requested, or by Federal Express or other overnight courier
which can document delivery, to the address of the party to be
served as shown below (or such other address as the party shall from
time to time notify). Such notice shall be deemed to have been
served at the time when the same is received by the party being
served.
David R. Mortenson & Assoc.: David R. Mortenson, Gen. Partner
P. O. Box 5034
Alvin, Texas
77512-5034
Fax: 281-388-1047
Phone: 281-331-5580
Halls Creek Partners Inc.: J. P. Beehner
3030 FM 518 Apt 221
Pearland, TX
77584-7817
Fax: 281-331- 9442
Phone: 713-436-2787
I. Acknowledgment of Legal Effect of this Dispute Resolution
Agreement. By signing this Dispute Resolution Agreement, the parties
acknowledge that they are giving up any rights they may possess to
have Disputes litigated in a court and are hereby waiving the right
to a trial by jury. The parties further acknowledge that they are
agreeing to a one year statute of limitations regarding all Disputes
and that they are giving up their judicial rights to discovery and
to appeal, unless such rights are specifically set forth above. The
parties acknowledge that if they refuse to submit to the provisions
of this Dispute Resolution Agreement they may be compelled to do so.
The parties acknowledge that they have had the opportunity to
consult counsel regarding the meaning and legal effect of this
Dispute Resolution Agreement and enter into it knowingly and
voluntarily.
IN WITNESS WHEREOF, the parties have entered into this Dispute Resolution
Agreement as of the date first above written.
Halls Creek Partners Inc. David R. Mortenson & Associates
a Nevada corporation a Texas General Partnership
By: /s/ J.P. Beehner By: /s/David R. Mortenson
Title: President Title: General Partner
Exhibit 23.1 -- Consent of Independent Auditors
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions
Accountants On Accounting And Financial Disclosure and
Interests Of Named Experts And Counsel and to the use of our
report dated July 5, 2000 in the Form SB-2 Registration Statement
of Brazos Scientific Inc. for the registration of shares of its
common stock.
Vancouver, Canada
July 11, 2000
Elliott, Tulk, Pryce, Anderson
CHARTERED ACCOUNTANTS
/s/ Elliott, Tulk, Pryce, Anderson
Elliott, Tulk, Pryce, Anderson
Exhibit 27.1 -- Financial Data Schedule
POST-AMENDMENT FILINGS
The Company hereby undertakes to file a post-effective amendment to this
registration statement during any period in which it offers or sells
securities pursuant to Rule 415, and will include an updated prospectus with
such amendment as required by the Securities Act.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
City of Alvin, State of Texas, on July 31, 2000., 2000
(Registrant) Halls Creek Partners, Inc., a Nevada corporation
By (Signatures and Title)
/s/ J. P. Beehner
J.P. Beehner, President and Director
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
and on the dates stated:
/s/ J. P. Beehner
J.P. Beehner, President and Director
/s/ Dorothy A. Mortenson
Dorothy A. Mortenson, Secretary/Treasurer and Director
July 31, 2000
