SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form For Registration of Securities
of Small Business Issuers Under
Section 12(b) or (g) of
the Securities Exchange Act of 1934
Promos, Inc.
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(Exact Name of Small Business Issuer as specified in its charter)
Colorado 84-1209909
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(State or other (IRS Employer File Number)
jurisdiction of
incorporation)
6000 E. Evans, Suite 2-020
Denver, Colorado 80222
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(Address of principal executive offices) (zip code)
(303) 758-3537
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(Registrant's telephone number, including area code)
Securities to be Registered Pursuant to Section 12(b) of the
Act:
None
Securities to be Registered Pursuant to Section 12(g) of the
Act:
Common Stock, $.0.001 per share par value
DOCUMENTS INCORPORATED BY REFERENCE
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Documents incorporated by reference are found in Item 15.
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References in this document to "us," "we," or "the Company" refer to Promos,
Inc.
Item 1. Description of Business.
(a) General Development of Business
We are a Colorado corporation. Our principal business address is 6000 E.
Evans, Suite 2- 020, Denver, Colorado 80222.
We were incorporated under the laws of the State of Colorado on September
24, 1992. We are a full service, innovative brand marketing organization whose
activities are centered around our client's products.
On August 30, 1999, our shareholders approved an 8,000- for-one forward
split of the Common Stock. As of the date of this Registration Statement, we
have 10,033,600 shares of Common Stock issued and outstanding.
The Company has not been subject to any bankruptcy, receivership or similar
proceeding.
(b) Narrative Description of the Business
General
We have had operations since inception. No independent market surveys have
ever been conducted to determine demand for our products and services. During
this period, we have had operations and generated revenues. We also have had
minimal profit from time to time, although we were unprofitable last fiscal
year. Our fiscal year end is December 31st.
Organization
We are comprised of one corporation with no subsidiaries or parent
entities.
We are filing this Form 10-SB on a voluntary basis because we plan to
engage in equity and/or debt financing in the foreseeable future and believe
that our fund raising will be enhanced by having a record of regular disclosure
under the Securities Exchange Act of 1934 (the "1934 Act"). We have no plans in
the foreseeable future, under any circumstances, to terminate our registration
under the 1934 Act.
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(c) Operations
Since inception, we have been a full service, innovative brand marketing
organization whose activities are centered around our client's products. Brand
marketing builds the value of the brand by connecting it with target audiences
to achieve strategic marketing objectives.
Our efforts are organized into four operating segments, composed of
promotional products and marketing services. The marketing services segment
includes promotion marketing, brand strategy and identity, presence marketing
and consumer event marketing. Each one of the segments has similar products and
services, production processes, types of clients, distribution methods and
regulatory environments. We attempt to physically connect the brand with
identified target markets and individuals through repeated exposure to
merchandise that builds brand awareness, enhances brand recognition and creates
brand loyalty.
PROMOTION MARKETING. This segment connects the brand with the consumer at
strategic points of contact through consumer and retail promotion, merchandising
and sponsorship activation.
BRAND STRATEGY AND IDENTITY. This segment connects a company product,
service or image with a target audience by creating, revitalizing, or leveraging
a brand through brand identity, design, and integrated communication programs.
PRESENCE MARKETING. This segment connects the brand with the target
audience through sports and corporate sponsorships, licensing, corporate
meetings, events and sales incentive programs.
RELATIONSHIP MARKETING. This segment connects the brand with the target
audience through consumer events--including a new product sampling and brand
awareness programs.
We plan to continue to generate revenues in each of these segments and to
focus on expanding our client base as a method of developing our business.
Our larger clients include: First Trust, Incorporated, a subsidiary of
Fiserv, Inc.; KMGH-TV, Channel 7, the ABC affiliate in Denver; Distinctive
Properties, a real estate broker in the Denver Metropolitan area; ReMax, a
worldwide real estate franchising company; Hallmark Entertainment; and the
National Potato Promotion Board.
In addition we plan to expand through acquisition. We will not only look at
our present industry but will reserve the right to investigate and, if
warranted, merge with or acquire the assets or common stock of an entity
actively engaged in business which generates revenues. We will seek
opportunities for long-term growth potential as opposed to short-term earnings.
As of the date hereof, we have no business opportunities under investigation.
None of our officers, directors, promoters or affiliates have engaged in any
preliminary contact or discussions with any representative of any other company
regarding the possibility of an acquisition or merger between us and such other
company.
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We have one full-time employee, our President, who receives a salary. Our
Secretary-Treasurer has agreed to allocate a portion of his time to our
activities, without compensation. These officers anticipate that our business
plan can be implemented by their collectively devoting approximately sixty hours
per month to our business affairs, consequently, conflicts of interest may arise
with respect to the limited time commitment of such officers. These officers
will use their best judgements to resolve all such conflicts.
(d) Markets
Our marketing plan is focused completely on expanding our client base. We
will use the efforts of our officers and directors and will rely upon the
satisfaction of previous clients to market our services.
(e) Raw Materials
The use of raw materials is not now material factor in our operations at
the present time.
(f) Customers and Competition
At the present time, we expect to be an insignificant participant among the
firms which engage in the brand marketing industry. There are a number of
established companies, most of which are larger and better capitalized than we
are and/or have greater personnel resources and technical expertise. In view of
our combined extremely limited financial resources and limited management
availability, we believe that we will continue to be at a significant
competitive disadvantage compared to our competitors. There can be no guarantee
that we will continue to generate substantial revenues or continue to be
profitable.
(g) Backlog
At September 30, 1999, we had no backlogs.
(h) Employees
At as of the date hereof, we have one employee. We do not plan to hire
employees in the future.
(i) Proprietary Information
We own no proprietary information.
(j) Government Regulation
We are not subject to any material governmental regulation or approvals.
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(k) Research and Development
We have never spent any amount in research and development activities.
(l) Environmental Compliance
We are not subject to any costs for compliance with any environmental laws.
Item 2. Management's Discussion and Analysis or Plan of Operation
Forward-Looking Statements
The following discussion contains forward-looking statements regarding our
Company, its business, prospects and results of operations that are subject to
certain risks and uncertainties posed by many factors and events that could
cause our actual business, prospects and results of operations to differ
materially from those that may be anticipated by such forward-looking
statements. Factors that may affect such forward-looking statements include,
without limitation: our ability to successfully develop new products for new
markets; the impact of competition on our revenues, changes in law or regulatory
requirements that adversely affect or preclude clients from using our products
for certain applications; delays our introduction of new products or services;
and our failure to keep pace with emerging technologies.
When used in this discussion, words such as "believes", "anticipates",
"expects", "intends" and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
report. Our Company undertakes no obligation to revise any forward-looking
statements in order to reflect events or circumstances that may subsequently
arise. Readers are urged to carefully review and consider the various
disclosures made by us in this report and other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and factors that may affect our business.
Results of Operations
We have generated revenues from operations since inception. Our revenues
decreased from $122,768 for the year ended December 31, 1997 by approximately 6%
to $115,441 for the year ended December 31, 1998. The decrease was primarily due
to the completion of certain projects which were not immediately replaced.
During the nine month period ended September 30,1999, our revenues were $112,030
compared to the revenue in the previous year's period of $88,319. This increase
should continue through to the end of the fiscal year, since these revenues
involve projects which will continue into the next fiscal year.
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Costs of goods include all direct costs incurred in the process of
representing clients. The difference between our gross revenues and cost of
goods is our gross profit.
Gross profit from operations was $37,725 or approximately 33% of gross
revenues for the year ended December 31, 1998, a decrease by approximately 5%
from $46,924 or 38% of revenue for the year ended December 31, 1997. Gross
profit from operations for the nine month period ended September 30, 1999 was
$51,727 or approximately 46% of gross revenues, an increase of approximately
167% for the period compared to the same period in the previous year. Gross
profit from operations in the same period of the previous year was $30,912, or
approximately 35% of gross revenues.
Our operating expenses were $43,537 or approximately 36% of gross revenue
for the year ended December 31, 1997 compared to $44,845, or approximately 39%
of gross revenue for the year ended December 31, 1998. The principal variance
was a $3,500 increase in officer salaries. Our operating expenses were $32,859
or approximately 29% of gross revenue for the nine month period ended September
30, 1999, and $32,281 for the same period in the previous year, or approximately
37% of gross revenue for the same period of the previous fiscal year. Our
operating expenses during the first nine months of 1999 were essentially the
static from the previous year. The major components of operating expenses are
office salaries and associated payroll costs, general and health insurance
costs, rent and telephone expenses.
The principal difference between 1997 and 1998 was the reduction of gross
revenues. We have replaced the projects which had terminated so that the
revenues for fiscal year 1999 are expected to exceed those of 1997. Since our
operating expenses are static, we should see a larger profit in 1999 than we had
in 1997, assuming that our current expense trends continue.
Liquidity and Capital Resources
Net cash decreased to $746 for the year ended December 31, 1998, compared
to $4,069 for the year ended December 31, 1997. Net cash for the nine month
period ended September 30, 1999 increased to $11,002, compared to $5,491 for the
same period ended September 30, 1998.
Accounts receivable decreased slightly for the year ended December 31, 1998
to $15,741, compared to $18,271 for the year ended December 31, 1997. Accounts
receivable were $11,017 for the period ended September 30, 1999.
Prepaid Expenses remained relatively constant for all reporting periods,
except for the nine month period ended September 30, 1999 and increased to
$1,189..
Accounts payable decreased for the year ended December 31, 1998 to $9,986,
compared to $13,533 for the year ended December 31, 1997. Accounts payable
increased for the nine month period ended September 30, 1999 to $10,654,
compared to $9,986 for the period ended September 30, 1998.
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We were profitable in 1997 but sustained a loss in 1998. Our operating
expenses were relatively the same during both periods. The variation in client
projects accounts for the difference between a profit and a loss. In any case,
we try to operate with minimal overhead. Our primary activity will be to seek to
expand our client base and, consequently, our revenues. If we succeed in
expanding our client base and generating sufficient revenues, we will again
become profitable. We cannot guarantee that this will ever occur. Our plan is to
build our Company in any manner which will be successful. To that end, we may
also look for an acquisition candidate, although we have concluded no
acquisitions and have spoken with no potential candidates.
We feel that we have inadequate working capital to pursue any business
opportunities other than seeking additional clients or an acquisition candidate.
During the next twelve months, we plan to investigate an offering of our
securities, whether through a private placement or a public offering. At the
present time, we have no firm arrangements with regard to either type of
offering. We do not intend to pay dividends in the foreseeable future.
Item 3. Description of Properties
Our business office is located at 6000 E. Evans, Suite 2-020, Denver,
Colorado 80222. We pay $336 per month in rent for this office space to an
unaffiliated third party under a lease which expires on February 28, 2001. We
have no properties other than office equipment and furniture.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following sets forth the number of shares of the Registrant's $.0.001
par value common stock beneficially owned by (i) each person who, as of
September 30, 1999, was known by the Company to own beneficially more than five
percent (5%) of its common stock; (ii) the individual Directors of the
Registrant and (iii) the Officers and Directors of the Registrant as a group.
These shares reflect an 8,000- for-one forward split of the Common Stock.
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership (1)(2) Class
- ------------------- -------------------------- ----------
Judith F.Harayda(3) 8,000,000 80%
6000 E. Evans, Suite 2-020
Denver, Colorado 80222
Stephan R. Levy -0- -0-
2121 South Oneida, #332
Denver, Colorado 80224
All Officers and Directors as a Group 8,000,000 80%
(two persons)
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(1) All ownership is beneficial and on record, unless indicated otherwise.
(2) Beneficial owners listed above have sole voting and investment power
with respect to the shares shown, unless otherwise indicated.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The Directors and Executive Officers of the Company, their ages and present
positions held in the Company are as follows:
NAME AGE POSITION HELD
---- --- -------------
Judith F. Harayda 51 President and Director
Stephan R. Levy 60 Secretary, Treasurer and Director
The Company's Directors will serve in such capacity until the next annual
meeting of the Company's shareholders and until their successors have been
elected and qualified. The officers serve at the discretion of the Company's
Directors. There are no family relationships among the Company's officers and
directors, nor are there any arrangements or understandings between any of the
directors or officers of the Company or any other person pursuant to which any
officer or director was or is to be selected as an officer or director.
Ms. Harayda should be considered the "parent" or "promoter" of the Company
because of the shareholdings and control positions held by her in the Company.
Judith F. Harayda . Ms. Harayda has been the President and a Director of
the Company since inception. She has also previously been President of United
Venture Capital Fund, Inc. and the Treasurer of New World Publishing, Inc., both
of which were public companies at the time. Ms. Harayda received a Bachelors
Degree in Education from Edinboro University.
Stephan R. Levy. Mr. Levy has been Secretary-Treasurer and a Director of
the Company since inception. He has been retired since August, 1990. Prior to
that time, he was an officer and director of Tofruzen, Inc., a public company
which manufactured and marketed a non-dairy frozen dessert, novelty food
products, and promotional items. He has previously served as Secretary-Treasurer
of two public companies, Central Oil Corp. and United Venture Capital Fund, Inc.
He attended the University of Texas and graduated in 1961 from the University of
Colorado with a Bachelor of Science in Business. He is a member of the
International Monetary Market, which is a division of the Chicago Mercantile
Exchange and was appointed by the Governor of Colorado as a member of the
Colorado Municipal Bond Supervisory Board.
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Item 6. Executive Compensation
None of our executive officers received compensation in excess of $100,000
during the fiscal years ended December 31, 1996, 1997, or 1998. Compensation
does not include minor business-related and other expenses paid by us. Such
amounts in the aggregate do not exceed $10,000. Our President, Judith F.
Harayda, received compensation of $20,836, and $17,340 for 1998, and 1997,
respectively. Ms. Harayda serves as our President on a full-time basis.
We have granted no shares of our capital stock as additional compensation
and have no plans to do so.
For the fiscal years 1996, 1997, and1998, we paid our President's health
care. We have a Self Employment pension plan for the benefit of our President.
We have no plans or agreements which provide compensation on the event of
termination of employment or change in our control.
We do not pay members of our Board of Directors any fees for attendance or
similar remuneration, but reimburse them for any out-of- pocket expenses
incurred by them in connection with our business.
Item 7. Certain Relationships and Related Transactions
We paid our President, Judith F. Harayda, salary expenses of $15,000 during
fiscal year 1998. We also paid her auto rental, which is currently $403.38 per
month, and auto insurance.
On August 30, 1999, our shareholders approved an 8,000- for-one forward
split of the Common Stock. As of the date of this Registration Statement, we
have 10,033,600 shares of Common Stock issued and outstanding.
Item 8. Description of Securities.
We are authorized to issue 50,000,000 shares of Common Stock, par value
$.0.001 per share, and 10,000,000 shares of non-voting Preferred Stock, par
value $.0.01 per share. As of June 30, 1999, we had 1,250 shares of Common Stock
issued and outstanding. On August 30, 1999, the shareholders approved an 8,000-
for-one forward split of the Common Stock. As of the date of this Registration
Statement, we have 10,033,600 shares of Common Stock issued and outstanding. No
Preferred Stock has ever been issued or outstanding.
Common Stock
The holders of Common Stock have one vote per share on all matters
(including election of Directors) without provision for cumulative voting. Thus,
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors, if they choose to do so. The Common Stock is not
redeemable and has no conversion or preemptive rights.
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The Common Stock currently outstanding is validly issued, fully paid and
non-assessable. In the event of liquidation of the Company, the holders of
Common Stock will share equally in any balance of the Company's assets available
for distribution to them after satisfaction of creditors and the holders of the
Company's senior securities, whatever they may be. The Company may pay
dividends, in cash or in securities or other property when and as declared by
the Board of Directors from funds legally available therefor, but has paid no
cash dividends on its Common Stock.
Preferred Stock
Under the Articles of Incorporation, the Board of Directors has the
authority to issue non-voting Preferred Stock and to fix and determine its
series, relative rights and preferences to the fullest extent permitted by the
laws of the State of Colorado and such Articles of Incorporation. As of the date
of this Registration Statement, no shares of Preferred Stock are issued or
outstanding. The Board of Directors has no plan to issue any Preferred Stock in
the foreseeable future.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Shares and
Other Shareholder Matters.
(a) Principal Market or Markets
Our securities have never been listed for trading on any market and are not
quoted at the present time. At the present time, we do not know where secondary
trading will eventually be conducted. Because of our size, we believe that we
could potentially begin trading on the NASD's "Electronic Bulletin Board." To
the extent, however, that trading will be conducted in the over-the-counter
market in the so-called "pink sheets" or the NASD's "Electronic Bulletin Board,"
a shareholder may find it more difficult to dispose of or obtain accurate
quotations as to price of our securities. In addition, The Securities
Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure
related to the market for penny stock and for trades in any stock defined as a
penny stock.
(b) Approximate Number of Holders of Common Stock
As of the date hereof, a total of 10,033,600 of shares of our Common Stock
were outstanding and the number of holders of record of our common stock at that
date was approxi mately one hundred. These shares reflect an 8,000- for-one
forward split of the Common Stock.
(c) Dividends
Holders of common stock are entitled to receive such dividends as may be
declared by our Board of Directors. No dividends on the common stock were paid
by us during the periods reported herein nor do we anticipate paying dividends
in the foreseeable future.
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(d) The Securities Enforcement and Penny Stock Reform Act of 1990
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure and documentation related to the market for penny stock
and for trades in any stock defined as a penny stock. Unless we can acquire
substantial assets and trade at over $5.00 per share on the bid, it is more
likely than not that our securities, for some period of time, would be defined
under that Act as a "penny stock." As a result, those who trade in our
securities may be required to provide additional information related to their
fitness to trade our shares. These requirements present a substantial burden on
any person or brokerage firm who plans to trade our securities and would thereby
make it unlikely that any liquid trading market would ever result in our
securities while the provisions of this Act might be applicable to those
securities.
Item 2. Legal Proceedings.
No legal proceedings of a material nature to which we are a party were
pending during the reporting period, and we know of no legal proceedings of a
material nature pending or threatened or judgments entered against any of our
directors or officers in their capacity as such.
Item 3. Changes In and Disagreements With Accountants.
We did not have any disagreements on accounting and financial disclosures
with our accounting firm during the reporting period.
Item 4. Recent Sales of Unregistered Securities.
The following shareholders acquired their respective shares in October,
1999 at a price of $1.00 per share. These shares were issued after an 8,000-
for-one forward split of the Common Stock.
Name Number of Shares
- ---- ----------------
Anderson, Greg 500
Ayers, Patricia H. 500
Bardakjian, Annette 500
Bayer, Julie 100
Bayer, Judith 100
Bayer, Jordan 100
Bayer, Gary 500
Berggren, Scot 100
Bliss, Betty 100
Boylan, Jason 100
Boylan, Jeanette 100
Boylan, Jim 100
Bozorgpour, Hassan 1500
Bozorgpour, Susan 500
Bozorgpour, Dariush 500
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Brown, Ronald 500
Carter, Stephen L. 500
Connelly, Michael A. 500
Connelly, Michael A. 500
Connelly, Deborah 500
Connelly, Casey 500
Dang, Nghien 500
Duong, Kelly 200
Duong, Duc 500
Duong, Nhu V. 500
Gelfenbaum, Lynn 500
Gelfenbaum, Guy 500
Gibbons, Garth W. 500
Godfrey, Michael 100
Godfrey, Christina 100
Godfrey, Karen E. 100
Harayda, Irene 100
Hegwer, Leasha 100
Hegwer, Tom 100
Ho, An T. 500
Hollberg, Regina 100
Jallad, Armande 500
Jalland, Sami 500
Johnson, Lisa 500
Kim, Byung 400
Koppeman, Carrie 100
Kopperman, Kyle 500
Kosmiski, David 500
Kosmiski, James 500
Kosmiski, Lisa 500
Kosmiski, Pensopa 500
Kosmiski, Susan 500
Krantz, Mori 500
Lawrence, Carol 500
Lawrence, Mark 500
Lawrence, Megan 500
Levy, Jenna 500
Levy, Darrin 500
Levy, Todd 500
Levy, Lee 500
Levy, Herriet 500
Levy, Marc 500
Levy, Mindy 500
Levy, Brandon 500
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Levy, Burton 500
Levy, Jay R. 500
Martinez, Stephanie L. 100
Pachello, Lillian 500
Pachello, Geraldine 500
Reiver, Jannie 100
Rhodus, Tom 100
Rosenberg, Eric 500
Rosenberg, Evan 500
Rosenberg, Brian 500
Saiz, Vicki D. 100
Sanner, John 100
Schulteis, Cindy 500
Schultheis, John 500
Sckrabaz, Dan 500
Shearer, Dawn 500
Shearer, Norman 500
Sher, Laurie Levy 500
Siegel, Larry 500
Southwell, Shelley 100
Southwell, Paul 100
Spagnola, Cindy 100
Spagnola, Robert 100
Thompson, Donald W. 100
Weisbart, Letty 500
Weisbart, Graig 100
Williams, Dianne 300
Williams, Bryan 500
Zeppelin, Kalman 500
Total Shares 33,600
We believe that the offers and sales described above were exempt from
registration under Rule 504 of Regulation D under the Securities Act because
those offers and sales met all the conditions of Rule 504 as then in effect,
including the dollar limitation, and we were not at the time of such
transactions within any of the categories of issuers prohibited from using Rule
504.
Item 5. Indemnification of Directors and Officers.
The Company's Articles of Incorporation authorize the Board of Directors,
on behalf of the Company and without shareholder action, to exercise all of the
Company's powers of indemnifica tion to the maximum extent permitted under the
applicable statute. Title 7 of the Colorado Revised Statutes, 1986 Replacement
Volume ("CRS"), as amended, permits the Company to indemnify its directors,
officers, employees, fiduciaries, and agents as follows:
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Section 7-109-102 of CRS permits a corporation to indemnify such persons
for reasonable expenses in defending against liability incurred in any legal
proceeding if:
(a) The person conducted himself or herself in good faith;
(b) The person reasonably believed:
(1) In the case of conduct in an official capacity with the
corporation, that his or her conduct was in the corporation's best interests;
and
(2) In all other cases, that his or her conduct was at least not
opposed to the corporation's best interests; and
(c) In the case of any criminal proceeding, the person had no reasonable
cause to believe that his or her conduct was unlawful.
A corporation may not indemnify such person under this Section 7-109-102 of CRS:
(a) In connection with a proceeding by or in the right of the corporation
in which such person was adjudged liable to the corporation; or
(b) In connection with any other proceeding charging that such person
derived an improper benefit, whether or not involving action in an official
capacity, in which proceeding such person was adjudged liable on the basis that
he or she derived an improper personal benefit.
Unless limited by the Articles of Incorporation, and there are not such
limitations with respect to the Company, Section 7-109-103 of CRS requires that
the corporation shall indemnify such a person against reasonable expenses who
was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which the person was a party because of his status with the
corporation.
Under Section 7-109-104 of CRS, the corporation may pay reasonable fees in
advance of final disposition of the proceeding if:
(a) Such person furnishes to the corporation a written affirmation of the
such person's good faith belief that he or she has met the Standard of Conduct
described in Section 7-109-102 of CRS;
(b) Such person furnishes the corporation a written undertaking, executed
personally or on person's behalf, to repay the advance if it is ultimately
determined that he or she did not meet the Standard of Conduct in Section
7-109-102 of CRS; and
(c) A determination is made that the facts then known to those making the
determination would not preclude indemnification.
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Under Section 7-109-106 of CRS, a corporation may not indemnify such
person, including advanced payments, unless authorized in the specific case
after a determination has been made that indemnification of such person is
permissible in the circumstances because he met the Standard of Conduct under
Section 7-109-102 of CRS and such person has made the specific affirmation and
undertaking required under the statute. The required determinations are to be
made by a majority vote of a quorum of the Board of Directors, utilizing only
directors who are not parties to the proceeding. If a quorum cannot be obtained,
the determination can be made by a majority vote of a committee of the Board,
which consists of at least two directors who are not parties to the proceeding.
If neither a quorum of the Board nor a committee of the Board can be
established, then the determination can be made either by the Shareholders or by
independent legal counsel selected by majority vote of the Board of Directors.
The corporation is required by Section 7-109-110 of CRS to notify the
shareholders in writing of any indemnification of a director with or before
notice of the next shareholders' meeting.
Under Section 7-109-105 of CRS, such person may apply to any court of
competent jurisdiction for a determination that such person is entitled under
the statute to be indemnified from reasonable expenses.
Under Section 7-107(1)(c) of CRS, a corporation may also indemnify and
advance expenses to an officer, employee, fiduciary, or agent who is not a
director to a greater extent than the foregoing indemnification provisions, if
not inconsistent with public policy, and if provided for in the corporation's
bylaw, general or specific action of the Board of Directors, or shareholders, or
contract.
Section 7-109-108 of CRS permits the corporation to purchase and maintain
insurance to pay for any indemnification of reasonable expenses as discussed
herein.
The indemnification discussed herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under the Articles of
Incorporation, any Bylaw, agreement, vote of shareholders, or disinterested
directors, or otherwise, and any procedure provided for by any of the foregoing,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of
heirs, executors, and administrators of such a person.
Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expense incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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PART F/S
PROMOS, INC.
INDEX TO QUARTERLY REPORT
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
PAGE
ITEM 1 - Financial Statements
Unaudited Balance Sheets at September
30, 1999 and December 31, 1998 (audited)............................. F-2
Unaudited Statements of Operations
for three and nine months ended
September 30, 1999 and 1998 ......................................... F-3
Statement of Stockholders' Equity (Deficit).......................... F-4
Unaudited Statements of Cash
Flows for nine months ended
September 30, 1999 and 1998 ......................................... F-5
Notes to Condensed Financial Statements ............................. F-6
F-1
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
BALANCE SHEETS
September 30, December 31,
1999 1998
(Unaudited) (Audited)
----------- -----------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents .......................................................... $ 11,002 $ 746
Accounts receivable, net of
Allowance of doubtful accounts
$0 and $839 ........................................................................ 11,017 15,741
Prepaid expenses ................................................................... 1,189 100
--------- --------
Total Current Assets ........................................................... 23,208 $ 16,587
--------- --------
Fixed assets, at cost, net
Of accumulated depreciation
Of 1,520 and $ 1,280 ............................................................... 80 320
Security Deposit ................................................................... 260 260
--------- --------
Total Assets ................................................................... $ 23,548 $ 17,167
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable ................................................................... 10,654 9,986
Sales and payroll taxes payable .................................................... 777 1,577
Corporate Income taxes payable ..................................................... 3,681 0
Accrued expenses ................................................................... 0 3,840
Bank's line of credit,
Current portion .................................................................... 0 4,126
--------- --------
Total Current Liabilities ....................................................... $ 15,112 $ 19,529
--------- --------
LONG-TERM LIABILITIES:
Stockholder's Loan ................................................................. 576 4,500
--------- --------
Total Liabilities .............................................................. 15,688 24,029
--------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, 10,000,000
Shares of non-voting authorized,
Par value of $0.01 per share,
None issued ........................................................................ 0 0
Common stock, par value of $.001
Per share, 50,000,000 shares
Authorized 10,000,000 shares issued
And outstanding at September 30, 1999
And December 31, 1998 * ............................................................ 1,250 1,250
Retained earnings (Deficit) ........................................................ 6,610 (8,112)
--------- --------
Total Stockholders' Equity ..................................................... 7,860 (6,862)
--------- --------
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY ................................................................ $ 23,548 $ 17,167
========= ========
</TABLE>
* Adjusting for an 8,000-for-one forward split of common stock.
"See notes to condensed financial statements."
F-2
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
CONDENSED STATEMENTS OF OPERATIONS
For Three and Nine Months Ended September 30, 1999 and 1998
For the three For the nine
Months ended Months ended
September 30, September 30,
------------------------ ------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Sales ....................................... $ 61,391 $ 32,693 $ 112,030 $ 88,319
---------- ---------- ---------- ----------
COSTS OF GOODS SOLD:
Purchases and freight ....................... 31,309 17,981 60,303 57,407
---------- ---------- ---------- ----------
GROSS PROFIT ............................ $ 30,082 14,712 51,727 30,912
---------- ---------- ---------- ----------
OPERATING PROFITS:
Advertising ................................. 235 156 945 596
Auto Expenses ............................... 225 205 675 608
Auto Rental ................................. 1,210 1,210 3,630 5,213
Delivery Expenses ........................... 141 387 424 854
Dues and Subscriptions ...................... 195 435 771 976
Depreciation ................................ 80 80 240 240
Employee Benefits ........................... 705 668 2,121 1,700
Insurance ................................... 180 288 539 827
Licenses and Taxes .......................... 305 378 1,222 986
Office Supplies and
Expenses .................................... 1,824 945 4,445 1,954
Officer's Salary ............................ 1,500 3,000 9,000 9,000
Professional Fees ........................... 241 0 394 0
Rent and Maintenance ........................ 1,008 1,008 3,445 4,857
Samples ..................................... 410 228 612 268
Telephone Expenses .......................... 1,572 1,527 3,817 3,684
Travel Expenses ............................. 421 368 579 518
---------- ---------- ---------- ----------
Total Operating Expenses ................. 10,252 10,883 32,859 32,281
---------- ---------- ---------- ----------
Net Income (Loss) Before
Other Income and (Expenses) ...................... 19,830 3,829 18,868 (1,369)
---------- ---------- ---------- ----------
Other Income and Expenses:
Interest Income ............................. 4 7 11 14
Interest Expense ............................ (132) (232) (476) (887)
---------- ---------- ---------- ----------
Total Other Income
And Expense ................................. (128) (225) (465) (873)
---------- ---------- ---------- ----------
Net Income (Loss) Before
Provision for Income Taxes .................. 19,702 3,604 18,403 (2,242)
Provision for Income Taxes ....................... (3,941) (48) (3,681) (125)
---------- ---------- ---------- ----------
NET INCOME (LOSS) ........................... $ 15,761 $ 3,556 $ 14,722 $ (2,367)
========== ========== ========== ==========
NET INCOME (LOSS) PER SHARE ...................... .002 N/A $ .001 N/A
========== ========== ========== ==========
NUMBER OF SHARES OUTSTANDING ..................... 10,000,000 10,000,000* 10,000,000 10,000,000*
========== ========== ========== ==========
</TABLE>
* Shares adjusted for an 8,000-for-one forward split of Common Stock
"See notes to condensed financial statements."
F-3
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
For the Nine Months Ended September 30, 1999
(Unaudited)
Common Total
Stock Common (Deficit) Stockholders'
Number of Stock Retained Equity
Shares Amount Earnings (Deficit)
--------- ------ -------- ------------
<S> <C> <C> <C> <C>
Balance
January 1, 1998 ...... 1,250 $ 1,250 $ (8,112) $ (6,862)
8,000 - For
one forward
split on
August 30, 1999 ...... 9,998,750 0 0 0
Net income
for nine
months ended
September 30, 1999 ... 0 0 14,722 14,722
---------- ---------- ---------- -----------
Balance,
September 30, 1999 ... 10,000,000 $ 1,250 $ 6,610 $ 7,860
========== ========== ========== ===========
</TABLE>
"See notes of condensed financial statements"
F-4
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1999 and 1998
For the nine For the nine
Months ended Months ended
September 30 ,1999 September 30, 1998
------------------- ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITITES:
Net Income ................................ $ 14,722 $ (2,367)
Adjustments to Reconcile
Net (Loss) to Cash Flow
From Operating Activities
Depreciation .............................. 240 240
Decrease (Increase) in
Accounts Receivable ....................... 4,724 4,113
(Increase) in Prepaid Expenses ................. (1,089) 0
Increase (Decrease) in
Payables .................................. 3,549 (564)
(Decrease) in Accrued Expenses ............ (3,840) 0
(Decrease) in Bank's Line
Of Credit ............................. (4,126) 0
--------- ---------
Cash (Used) by Operating
Activities ............................... 14,180 1,422
CASH FLOWS FROM (TO)
FINANCING ACTIVITIES:
(Decrease) in Stockholders' Loan ............... (3,924) 0
--------- ---------
Net Cash (Used) by Financing
Activities ................................ (3,924) 0
--------- ---------
Net Increase (Decrease)
In Cash ................................... 10,256 1,422
CASH, BEGINNING OF PERIOD ................. 746 4,069
--------- ---------
CASH, END OF THE
PERIOD ................................ $ 11,002 $ 5,491
========= =========
</TABLE>
"See notes to condensed financial statements"
F-5
<PAGE>
PROMOS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Regulation S-B. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The
accompanying statements should be read in conjunction with the audited financial
statements included in the Company's December 31, 1998 and 1997 audits. In the
opinion of management, all adjustments (Consisting only of normal recurring
accruals) considered necessary in order to make the financial statements not
misleading, have been included. Operating results for the nine months ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the full calendar year ended December 31, 1999. The financial
statements are presented on the accrual basis.
F-6
<PAGE>
PROMOS, INC.
INDEX TO FINANCIAL STATEMENTS
TABLE OF CONTENTS
ITEM PAGE
Report of Certified Public Accountant................................. F-8
Balance Sheets,
December 31, 1998 and 1997 .......................................... F-9
Statements of Operations, for the years
Ended December 31, 1998 and 1997 ..................................... F-10
Statements of Stockholders' Equity, for
The years ended December 31, 1998 and 1997 ........................... F-11
Statements of Cash Flows, for the years ended
December 31, 1998 and 1997 .......................................... F-12
Notes to Financial Statements ........................................ F-13-F-14
F-7
<PAGE>
Janet Loss, C.P.A., P.C.
Certified Public Accountant
3525 South Tamarac Drive, Suite 120
Denver, Colorado 80237
(303) 220-0227
Board of Directors
Promos, Inc.
6000 Evans Avenue, Building 2-20
Denver, Colorado 80222-5406
I have audited the accompanying Balance Sheets of Promos, Inc. as of December
31, 1998 and 1997, and the Statements of Operations, Stockholders' Equity, and
Cash Flows for the years ended December 31, 1998 and 1997.
I conducted my audit in accordance with generally accepted auditing standards.
These standards require that I plan and perform the audit to obtain reasonable
assurances about whether the financial statements are free of material
misstatements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentations.
In my opinion, the financial statements referred to above present fairly, in all
materials respects, the financial position of Promos, Inc. as of December 31,
1998 and 1997, and the results of its operations and its cash flow for the years
ended December 31, 1998 and 1997.
/s/ Janet Loss, C.P.A., P.C.
Janet Loss, C.P.A., P.C.
October 26,1999
F-8
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
BALANCE SHEETS
For the Years Ended December 31, 1998 and 1997
ASSETS 1998 1997
------ ---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ............................... $ 746 $ 4,069
Accounts receivable, net of
Allowance of for doubtful accounts
$839 and $1,323 ......................................... 15,741 18,271
Prepaid Taxes ........................................... 100 0
-------- --------
Total Current Assets ............................... 16,587 22,340
-------- --------
Fixed assets at cost, net
Of accumulated depreciation
Of $1,280 and $960 ...................................... 320 640
Security Deposit ........................................ 260 260
-------- --------
Total Assets ....................................... $ 17,167 $ 23,240
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable ........................................ $ 9,986 $ 13,533
Sales and Payroll Taxes Payable ......................... 1,577 977
Corporate Income Taxes Payable .......................... 0 326
Accrued Expenses ........................................ 3,840 390
Bank's Line of Credit,
Current Portion .................................... 4,126 0
-------- --------
Total Current Liabilities ............................... 19,529 15,226
-------- --------
LONG TERM LIABILITIES:
Stockholder's Loan ...................................... 4,500 6,500
-------- --------
Total Liabilities .................................. $ 24,029 $ 21,726
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, no par value,
50,000 shares authorized, 1,250
shares issued and outstanding at
December 31, 1998 and 1997 .............................. 1,250 1,250
Retained earnings (Deficit) ............................. (8,112) 264
-------- --------
Total Stockholders' Equity .............................. (6,862) 1,514
-------- --------
Total Liabilities and
Stockholders' Equity ................................. $ 17,167 $ 23,240
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-9
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1998 and 1997
1998 1997
---- ----
<S> <C> <C>
REVENUES:
Sales ...................................................... $ 115,441 $ 122,768
--------- ---------
COSTS OF GOODS SOLD:
Purchases and freight ...................................... 77,716 75,844
--------- ---------
GROSS PROFIT ............................................ 37,725 46,924
--------- ---------
OPERATING EXPENSES:
Advertising ................................................ 748 690
Auto Expenses .............................................. 787 849
Auto Rental ................................................ 4,840 6,422
Bad Debts .................................................. 0 1,323
Delivery Expenses .......................................... 1,006 873
Dues and Subscriptions ..................................... 1,175 892
Depreciation Expense ....................................... 320 320
Employee Benefits .......................................... 4,266 4,129
Insurance Expense .......................................... 1,044 1,187
Licenses and Taxes ......................................... 1,226 554
Office Supplies and Expenses ............................... 2,606 3,646
Officer's Salary ........................................... 15,000 11,500
Rent and Maintenance ....................................... 6,209 5,680
Samples .................................................... 451 500
Telephone Expenses ......................................... 4,451 4,562
Travel Expenses ............................................ 716 410
--------- ---------
Total Operating Expenses .............................. 44,845 43,537
--------- ---------
NET INCOME (LOSS) BEFORE
OTHER (EXPENSES) ........................................... (7,120) 3,387
--------- ---------
OTHER INCOME AND (EXPENSES):
Interest Income ............................................ 18 19
Interest (Expense) ......................................... (1,074) (904)
--------- ---------
Total Other Income and
(Expenses) .............................................. (1,056) (885)
--------- ---------
Net Income (Loss) before
Provision for Income Taxes .............................. (8,176) 2,502
Provision for Income Taxes ................................. 200 326
--------- ---------
NET INCOME (LOSS) .......................................... $ (8,376) $ 2,176
========= =========
NET INCOME (LOSS) PER SHARE ................................ $ (6.70) $ 1.74
========= =========
NUMBER OF SHARES OUTSTANDING ............................... 1,250 1,250
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-10
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Years Ended December 31, 1998 and 1997
Common
Stock (Deficit) Total
Number of Common Stock Retained Stockholders'
Shares Amount Earnings Equity
--------- ------------ -------- -------------
<S> <C> <C> <C> <C>
Balance
January 1, 1997 ................. 1,250 $ 1,250 $(1,912) $ (662)
Net income for
the year ended
December 31, 1997 ............... 0 0 2,176 2,176
------- ------- ------- -------
Balance
December 31, 1997 ............... 1,250 $ 1,250 $ 264 $ 1,514
Net (Loss) for
the year ended
December 31, 1998 ............... 0 0 (8,376) (8,376)
------- ------- ------- -------
Balance
December 31, 1998 ............... 1,250 $ 1,250 $(8,112) $(6,862)
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-11
<PAGE>
<TABLE>
<CAPTION>
PROMOS, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1998 and 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
1998 1997
---- ----
<S> <C> <C>
Net Income (Loss) ........................................ $(8,376) $ 2,176
Adjustments to Reconcile
Net (Loss) to Cash Flow From
Operating Activities:
Depreciation ............................................. 320 320
Decrease (Increase) in
Accounts receivable .................................. 2,530 (8,756)
(Increase) in prepaid
Expenses ............................................. (100) 0
Increase (Decrease) in
Payables ............................................. (3,273) 9,437
Increase in Accrued
Expenses .............................................. 3,450 0
Increase in Banks
Line of Credit ........................................ 4,126 0
------- -------
Cash Provided (Used)By
Operating Activities ..................................... (1,323) 3,177
------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Decrease in Stockholders'
Loan ................................................. (2,000) 0
------- -------
Net Cash (Used) by
Financing Activities ................................. (2,000) 0
Net Increase (Decrease) in
Cash ..................................................... (3,323) 3,177
------- -------
CASH, BEGINNING OF PERIOD ..................................... 4,069 892
------- -------
CASH, END OF PERIOD ........................................... $ 746 $ 4,069
======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-12
<PAGE>
PROMOS, INC.
NOTES TO FINANCIAL STATEMENTS
For the Years Ended December 31, 1998 and 1997
NOTE I - ORGANIZATION AND HISTORY
The Company is a Colorado corporation and has been incorporated since September
24, 1992. The business purpose of this corporation is to engage in the sale of
promotional products to other business companies.
NOTE II - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The company record income and expenses on the accrual method.
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, cash on deposit and highly
liquid investments with maturities generally of three months or less.
Sales and Expenses
Sales and expenses are recorded using the accrual basis of accounting.
Fixed Assets and Accumulated Depreciation
Fixed assets consists of office equipment and are stated at cost less
accumulated depreciation which is provided for by charges to operations over the
estimated useful lives of the assets. The assets are depreciated over five
years.
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
revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-13
<PAGE>
NOTE III - AGING OF ACCOUNTS RECEIVABLE AND PAYABLE
The percentage aging of trade accounts receivable and accounts payable at
December 31, 1998 and 1997 is as follows:
Accounts Receivable Accounts Payable
Current 45% 100%
30-60 days 40%
over 60 days 15%
Bad Debt Policy
The Company uses the direct write-off method for its allowance for doubtful
accounts.
NOTE IV - LEASES AND OTHER COMMITMENTS
The Company leases its premises for $366.00 per month and currently has a two
year lease from March 1, 1999 through February 28, 2001.
NOTE V - RELATED PARTY TRANSACTIONS
The Company has incurred salary expenses of $15,000.00 and $11,500.00 for 1998
and 1997, respectively to its president. The Company also pays auto rental for
its president, this is currently $403.38 per month.
NOTE VI - LINE OF CREDIT
The Company has obtained a line of credit for $35,000.00. The interest rate
varies and is approximately 10.50 percent.
F-14
<PAGE>
PART III
Item 1. Index to Exhibits.
Exhibit Page or
Number Description Cross Reference
------- ----------- ---------------
3A Articles of Incorporation
3B Amended and Restated Articles of Incorporation
3C Bylaws
27.1 Financial Data Schedule at September 30, 1999 and December 31,
1999 and 1998
27.2 Financial Data Schedule years ended December 31, 1998 and 1997
Item 2. Description of Exhibits.
Original Articles of Incorporation, filed September 23, 1992.
Amended and Restated Articles of Incorporation, filed on August 27, 1999.
Bylaws of The Company, approved on August 5, 1999.
15
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Promos, Inc.
Dated: 11/1/99 By: /s/ Judith F. Harayda
-------------------------------
Judith F. Harayda
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
CHIEF FINANCIAL OFFICER
Dated: 11/1/99 By: /s/ Stephan R. Levy
-------------------------------
Stephan R. Levy
Treasurer and Director
Dated: 11/1/99 By: /s/ Judith F. Harayda
-------------------------------
Judith F. Harayda
Director
16
3A
Articles of Incorporation
<PAGE>
ARTICLES OF INCORPORATION
OF
PROMOS, INC.
The undersigned, being more than eighteen years of age, acting as
incorporator in order to organize and establish a corporation under and pursuant
to the Colorado Corporation Code, hereby adopts the following Articles of
Incorporation:
ARTICLE I
The name of the corporation is PROMOS, INC.
ARTICLE II
The period of duration of the corporation Shall be perpet ual.
ARTICLE III
The purposes for which the corporation is organized are to engage in the
sale of promotional products and to engage in all other businesses and
activities in which a corporation may engage under the' laws of the State of
Colorado or any other applicable jurisdiction pursuant to the Colorado
Corporation Code.
ARTICLE IV
In furtherance of the purposes set forth in Article III the corporation
shall have and may exercise all of the rights, powers and privileges now or
hereafter conferred upon corpora tions organized under the laws of the State of
Colorado and may conduct Its business in the State of Colorado and other parts
of the United States or any foreign Jurisdiction.
ARTICLE V
A. Authorized Shares. The aggregate number of shares which the corporation
shall have authority to issue is 50,000 shares of common stock of no par value.
B. Transfer Restrictions. The corporation shall have the right by
appropriate action to impose restrictions upon the transfer of any shares of its
common stock, or any interest therein, whenever issued, provided that such
1
<PAGE>
restriction or notice thereof shall be set forth upon the face or back of the
certificate or certificates representing such shares.
C. No Pre-Emptive rights. The holders of the shares of common stock of the
corporation shall not be entitled as of right to purchase or subscribe for any
unissued or treasury shares of any class, or any additional shares of any class
to be issued by reason of any increase of the authorized shares of tile
corporation of any class, or any bonds, certificates of Indebtedness, debentures
or other securities, rights warrants, or options convertible Into shares of the
corporation or carry ing any right to purchase shares of any class in accordance
with their proportionate equity in the corporation.
D. Cumulative Voting. Tile cumulative system of voting for directors Or for
any other purpose shall not be allowed.
E. Quorum. At all meetings of shareholders a majority of the shares
entitled to vote at such meetings, represented in person or by proxy, shall
constitute a quorum.
ARTICLE VI
The board of directors may from time to time distribute to the shareholders
in partial liquidation, out of stated capital or out of capital surplus of the
corporation, a portion of its assets in cash or property, subject to the
limitations contained in the statutes of Colorado.
ARTICLE VII
The number of directors of this corporation shall be fixed in accordance
with the bylaws. So long as the number of direc tors shall be less than three
(1) no shares of this corporation may be Issued and held of record by more
shareholders than there are directors; (2) any shares issued in violation of
this para graph shall be null and void; and (3) this provision shall also
constitute a restriction on the transfer of shares and the legend shall be
conspicuously placed on each certificate re specting shares preventing transfer
of the shares to more share holders than there are directors.
The names and addresses of the persons who are to serve as directors of the
corporation until the first annual meeting of shareholders, and until their
successors shall be elected and shall qualify, are as follows: Judith F. Harayda
1190 S. Colo rado Blvd. #205 Denver, Colorado 80222.
2
<PAGE>
ARTICLE VIII
The name of the registered agent of the corporation and the registered
office address of the corporation are as follows:
Registered Agent Registered Office
---------------- -----------------
Judith F. Harayda 1190 S. Colorado Blvd. #205
Denver, Colorado 80222
ARTICLE IX
The corporation may conduct part or all of its business in the State of
Colorado, other parts of the United States, or any foreign Jurisdiction. The
corporation may hold, purchase, mort gage, lease and convey real and personal
property in any of such places.
ARTICLE X
The following provisions are inserted for the management of business and
conduct of affairs of the corporation, and the same are in furtherance of and
not in limitation or exclusion of the powers conferred by law.
A. Contracts With Directors. No contract or any other transaction of t
corporation with any person, firm or corpora tion, or in which this corporation
is interested shall be af fected or invalidated by: (1) the fact that any one or
more of the directors or officers of this corporation is interested in or is a
director or officer of another corporation; or (2) the fact that any director or
officer, individually or jointly with others, may be a party to or may be
interested in any such contract or transaction. Each person who may become a
director or officer of this corporation is hereby relieved from any liability
that might otherwise arise by reason of his or her contracting with this
corporation for the benefit of himself or herself with, any firm or corporation
in which he or she may be in any way interested.
B. Negation of Equitable Interests. The corporation shall be entitled to
treat the registered holder of any shares of the corporation as the owner
thereof for all purposes, including all rights deriving from such shares, and
shall not be bound to recognize any equitable or other claim to, or interest in,
such share's or rights deriving from such shares, on the part of any other
person including, but without limiting the generality of, a purchaser, assignee,
or transferee of such shares or rights deriving from such shares, unless and
3
<PAGE>
until such purchaser, assignee, transferee or other person becomes the
registered holder of such shares, whether or not the corporation shall have
either actual or constructive notice of the interest of such purchaser,
assignee, transferee or other person. The purchaser, assignee or transferee of
any of the shares of this corporation shall not be entitled (i) to receive
notice of meetings of the shareholders; (ii) to vote at such meetings; (M) to
examine a list of the shareholders; (iv) to be paid dividends or other sums
payable to shareholders; or (v) to own, enjoy or exercise any other property or
rights deriving from such shares against the corporation, until such purchaser,
assignee or transferee has become the registered holder of such shares.
ARTICLE XI
The corporation reserves the right to amend, alter, change or repeat any
provisions contained in, or to add any provisions to, its Articles of
Incorporation from time to time, in any manner now or hereafter permitted by the
Colorado Corporation Code, and all rights and powers conferred upon directors
and shareholders hereby are granted subject to this reservation.
ARTICLE XII
The name and address of the incorporator of the corporation is:
Jeffrey If. Sachs
1777 S. Harrison St.
Denver, Colorado 80210
IN WITNESS WHEREOF the undersigned, being the incorporator, named in
Article III of the foregoing Articles of Incorporation, has executed said
Articles of Incorporation as of the 22nd day of September ,1992.
//Signed//
--------------------------------------
4
<PAGE>
STATE OF COLORADO )
) ss.
City &
COUNTY OF DENVER )
I, Cecilia A. Malatirre, notary public, hereby certify that Jeffrey H.
Sachs known to me , to be the person whose name is subscribed to the foregoing
Articles of Incorporation, appeared before me this day, in person and by me
first duly sworn, ac knowledged and declared that said person's execution of
said Articles of Incorporation was a free and voluntary act and deed done for
the uses and purposes therein set forth and that the statements therein
contained are true.
My commission expires August 3, 1993
Witness my hand and official seal on this 22nd day of September, 1992.
/signed/
-----------------------------------
Notary Public
STAMP
5
3B
Amended and Restated Articles of Incorporation
<PAGE>
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
Promos, Inc.
Pursuant to the provisions of the Colorado Business Corpora tion Act, the
undersigned Corporation adopts the following amended and restated Articles of
Incorporation. These articles correctly set forth the provisions of the Articles
of Incorporation, as amended, and supersede the original Articles of
Incorporation and all amendments thereto.
ARTICLE I
Name
The name of the Corporation shall be Promos, Inc.
ARTICLE II
Manner of Adoption
The following amended and restated Articles of Incorporation were adopted
on August 5, 1999. The amended and restated Articles of Incorporation were
adopted by the Directors of the Corporation and approved by the Shareholders of
the Corporation as of such date.
ARTICLE III
Authorized Shares
Section 1: Number. The aggregate number of shares which the Corporation
shall have authority to issue is Fifty Million (50,000,000) Common Shares of one
class, with unlimited voting rights, all with a par value of $0.001 per share,
and Ten Million (10,000,000) Preferred Shares, all with a par value of $0.01 per
share, to have such classes and preferences as the Board of Directors may
determine from time to time.
Section 2: Dividends. Dividends in cash, property or shares of the
Corporation may be paid upon the stock, as and when declared by the Board of
Directors, out of funds of the Corpora tion to the extent and in the manner
permitted by law.
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ARTICLE IV
Preemptive Rights
The holders of the capital stock of this Corporation shall not have the
preemptive right to acquire additional unissued shares or treasury shares of the
capital stock of this Corpora tion, or securities convertible into shares of
capital stock or carrying capital purchase warrants or privileges.
ARTICLE V
Cumulative Voting
Cumulative voting of shares of stock of the Corporation shall not be
allowed or authorized in the election of the Board of Directors of the
Corporation.
ARTICLE VI
Provisions for Regulation of the
Internal Corporate Affairs
The following provisions are inserted for the management of the business
and for the regulation of the internal affairs of the Corporation, and the same
are in furtherance of and not in limitation or exclusion of the powers conferred
by law.
Section 1: Bylaws. The Board of Directors shall have the power to adopt,
alter, amend or repeal, from time to time, such Bylaws as it deems proper for
the management of the affairs of the Corporation, according to these Articles
and the laws in such cases made and provided.
Section 2: Executive Committee. The Bylaws may provide for designation by
the Board of Directors of an Executive Commit tee and one or more other
committees, the personnel and authority of which and the other provisions
relating to which shall be as may be set forth in the Bylaws.
Section 3: Place of Meetings. Both Stockholders' and Directors' meetings
may be held either within or without the State of Colorado, as may be provided
in the Bylaws.
Section 4: Compensation to Directors. The Board of Directors is authorized
to make provisions for reasonable compen sation to its members for their
services as Directors. Any Director of the Corporation may also serve the
Corporation in any other capacity and receive compensation therefor in any form.
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Section 5: Conflicts of Interest. No contract or other transaction of the
Corporation with any other person, firm or corporation, or in which this
Corporation is interested, shall be affected or invalidated solely by: (a) the
fact that any one or more of the Directors or Officers of this Corporation is
inter ested in or is a director or officer of another corporation; or (b) the
fact that any Director or Officer, individually or jointly with others, may be a
party to or may be interested in any such contract or transaction.
Section 6: Registered Owner of Stock. The Corporation shall be entitled to
treat the registered holder of any shares of the Corporation as the owner
thereof for all purposes, including all rights deriving from such shares, on the
part of any other person, including, but not limited to, a purchaser, assignee
or transferee of such shares or rights deriving from such shares, unless and
until such purchaser, assignee, transferee or other person becomes the
registered holder of such shares, whether or not the Corporation shall have
either actual or constructive notice of the interest of such purchaser,
assignee, transferee or other person. The purchaser, assignee or transferee of
any of the shares of the Corporation shall not be entitled to: (a) receive
notice of the meetings of the Shareholders; (b) vote at such meetings; (C)
examine a list of the Shareholders; (d) be paid dividends or other sums payable
to Shareholders, or (e) own, enjoy or exercise any other property or rights
deriving from such shares against the Corporation, until such purchaser,
assignee or transferee has become the registered holder of such shares.
Section 7: Conduct of Business. The Corporation may conduct part or all of
its business, not only in the State of Colorado, but also in every other state
of the United States and the District of Columbia, and in any territory,
district and possession of the United States, and in any foreign country, and
the Corporation may qualify to do business in any of such loca tions and appoint
an agent for service of process therein. The Corporation may hold, purchase,
mortgage, lease and convey real and personal property in any of such locations.
Part or all of the business of the Corporation may be carried on beyond the
limits of the State of Colorado, and the Corporation may have one or more
offices out of the State of Colorado.
Section 8: Vote of the Shareholders. To the fullest extent now or hereafter
permitted by the Colorado Business Corporation Act, the vote of a majority of
the issued and out standing shares of the Corporation entitled to vote on such
matter shall be sufficient to approve any matter to come before the shareholders
of the Corporation, including, but not limited to, the right from time to time,
to amend, alter or repeal, or add any provisions to, the Corporation's Articles
of Incorporation.
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Section 9: Quorum For Voting. A quorum of Shareholders for any matter to
come before any meeting of Shareholders of the Corporation shall consist of a
majority of the issued and out standing shares entitled to vote on the matter.
Section 10: Restrictions on Stock. The Directors shall have the right, from
time to time, to impose restrictions or to enter into agreements on behalf of
the Corporation imposing restrictions on the transfer of all or a portion of the
Corpora tion's shares, provided that no restrictions shall be imposed on the
transfer of shares outstanding at the time the restrictions are adopted unless
the holder of such shares consents to the restrictions.
Section 11: Indemnification of Directors. A director of the Corporation
shall not be personally liable to the Corporation or to its shareholders for
damages for breach of fiduciary duty as a director of the Corporation or to its
shareholders for damages otherwise existing for (I) any breach of the director's
duty of loyalty to the Corporation or to its shareholders; (ii) acts or
omissions not in good faith or which involve intentional miscon duct or a
knowing violation of the law; (iii) acts specified in Section 7-108-403 of the
Colorado Business Corporation Act; or (iv) any transaction from which the
director directly or indi rectly derived any improper personal benefit. If the
Colorado Business Corporation Act is hereafter amended to eliminate or limit
further the liability of a director, then, in addition to the elimination and
limitation of liability provided by the foregoing, the liability of each
director shall be eliminated or limited to the fullest extent permitted under
the provisions of the Colorado Business Corporation Act as so amended. Any
repeal or modification of the indemnification provided in these Articles shall
not adversely affect any right or protection of a director of the Corporation
under these Articles, as in effect immediately prior to such repeal or
modification, with respect to any liabil ity that would have accrued, but for
this limitation of liability, prior to such repeal or modification.
Section 12: Indemnification. The Corporation shall indem nify, to the
fullest extent permitted by applicable law in effect from time to time, any
person, and the estate and personal representative of any such person, against
all liability and expense (including, but not limited to, attorneys' fees)
incurred by reason of the fact that he is or was a director or officer of the
Corporation, he is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee, fiduciary, or agent of, or in any
similar managerial or fiduciary position of, another domestic or foreign
corporation or other individual or entity or of an employee benefit plan. The
Corpora tion shall also indemnify any person who is serving or has served the
Corporation as director, officer, employee, fiduciary, or agent, and that
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person's estate and personal representative, to the extent and in the manner
provided in any bylaw, resolution of the shareholders or directors, contract, or
otherwise, so long as such provision is legally permissible.
ARTICLE VII
Registered Office and Agent
The address of the initial registered office of the Corpora tion is
Penthouse Suite, 8400 E. Prentice Ave., Englewood, Colorado 80111, and the name
of the registered agent at such address is Corporate Filing Corp. The books of
accounts, records, documents and other papers may be kept at the registered
office of the Corporation or at such other place as may be determined by the
Board of Directors.
ARTICLE VIII
Initial Principal Office
The address of the initial principal office of the Corpora tion is
Penthouse Suite, 8400 E. Prentice Ave., Englewood, Colorado 80111. The principal
office of the Corporation may be relocated to such other place or places from
time to time as may be determined by the Board of Directors.
DATED this 5th day of August, 1999.
Promos, Inc.
By: ///Signed///
-------------------------------
Judith Harayda
President
CONSENT OF REGISTERED AGENT
The Undersigned hereby consents to the appointment as the Registered Agent
of Promos, Inc., a Colorado Corporation.
Corporate Filing Corp.
By ///Signed///
-------------------------------
Authorized Officer
5
3C
Bylaws
<PAGE>
BYLAWS
OF
Promos, Inc.
ARTICLE I
Offices
The principal office of the Corporation shall initially be located at
Penthouse Suite, 8400 E. Prentice Ave., Englewood, Colorado 80111. The
Corporation may have other offices at such places within or without the State of
Colorado as the Board of Directors may from time to time establish.
ARTICLE II
Registered Office and Agent
The registered office of the Corporation in Colorado shall be located at
Penthouse Suite, 8400 E. Prentice Ave., Englewood, Colorado 80111 and the
registered agent shall be Corporate Filing Corp. The Board of Directors may, by
appropriate resolution from time to time, change the registered office and/or
agent.
ARTICLE III
Meetings of Stockholders
Section 1. Annual Meetings. The annual meeting of the Stockholders for the
election of Directors and for the transaction of such other business as may
properly come before such meeting shall be held at such time and date as the
Board of Directors shall designate from time to time by resolution duly adopted.
Section 2. Special Meetings. A special meeting of the Stockholders may be
called at any time by the President or the Board of Directors, and shall be
called by the President upon the written request of Stockholders of record
holding in the aggregate twenty per cent (20%) or more of the outstanding shares
of stock of the Corporation entitled to vote, such written request to state the
purpose or purposes of the meeting and to be delivered to the President.
Section 3. Place of Meetings. All meetings of the Stockholders shall be
held at the principal office of the Corporation or at such other place, within
or without the State of Colorado, as shall be determined from time to time by
the Board of Directors or the Stockholders of the Corporation.
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Section 4. Change in Time or Place of Meetings. The time and place
specified in this Article III for annual meetings shall not be changed within
thirty (30) days next before the day on which such meeting is to be held. A
notice of any such change shall be given to each Stockholder at least twenty
(20) days before the meeting, in person or by letter mailed to his last known
post office address.
Section 5. Notice of Meetings. Written notice, stating the place, day and
hour of the meeting, and in the case of a special meeting, the purposes for
which the meeting is called, shall be given by or under the direction of the
President or Secretary at least ten (10) days but not more than fifty (50) days
before the date fixed for such meeting; except that if the number of the
authorized shares of the Corporation are to be increased, at least thirty (30)
days' notice shall be given. Notice shall be given to each Stockholder entitled
to vote at such meeting, of record at the close of business on the day fixed by
the Board of Directors as a record date for the determination of the
Stockholders entitled to vote at such meeting, or if no such date has been
fixed, of record at the close of business on the day next preceding the day on
which notice is given. Notice shall be in writing and shall be delivered to each
Stockholder in person or sent by United States Mail, postage prepaid, addressed
as set forth on the books of the Corporation. A waiver of such notice, in
writing, signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent to such notice.
Except as otherwise required by statute, notice of any adjourned meeting of the
Stockholders shall not be required.
Section 6. Quorum. Except as may otherwise be required by statute, the
presence at any meeting, in person or by proxy, of the holders of record of a
majority of the shares then issued and outstanding and entitled to vote at the
meeting shall be necessary and sufficient to constitute a quorum for the
transaction of business. In the absence of a quorum, a majority in interest of
the Stockholders entitled to vote, present in person or by proxy, or, if no
Stockholder entitled to vote is present in person or by proxy, any Officer
entitled to preside or act as secretary of such meeting, may adjourn the meeting
from time to time for a period not exceeding sixty (60) days in any one case. At
any such adjourned meeting at which a quorum may be present, any business may be
transacted which might have been transacted at the meeting as originally called.
The Stockholders present at a duly organized meeting may continue to do business
until adjournment, notwithstanding the withdrawal of enough Stockholders to
leave less than a quorum.
Section 7. Voting. Except as may otherwise be provided by statute or these
Bylaws, including the provisions of Section 4 of Article VIII hereof, each
Stockholder shall at every meeting of the Stockholders be entitled to one (1)
vote, in person or by proxy, for each share of the voting capital stock held by
such Stockholder. However, no proxy shall be voted on after eleven (11) months
from its date, unless the proxy provides for a longer period. At all meetings of
the Stockholders, except as may otherwise be required by statute, the Articles
of Incorporation of this Corporation, or these Bylaws, if a quorum is present,
the affirmative vote of the majority of the shares represented at the meeting
and entitled to vote on the subject matter shall be the act of the Stockholders.
Persons holding stock in a fiduciary capacity shall be entitled to vote the
shares so held, and persons whose stock is pledged shall be entitled to vote,
unless in the transfer by the pledgor on the books of the Corporation he shall
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<PAGE>
have expressly empowered the pledgee to vote thereon, in which case only the
pledgee or his proxy may represent said stock and vote thereon.
Shares of the capital stock of the Corporation belonging to the Corporation
shall not be voted directly or indirectly.
Section 8. Consent of Stockholders in Lieu of Meeting. Whenever the vote of
Stockholders at a meeting thereof is required or permitted to be taken in
connection with any corporate action, by any provision of statute, these Bylaws,
or the Articles of Incorporation, the meeting and vote of Stockholders may be
dispensed with if all the Stockholders who would have been entitled to vote upon
the action if such meeting were held shall consent in writing to such corporate
action being taken.
Section 9. Telephonic Meeting. Any meeting held under this Article III may
be held by telephone, in accordance with the provisions of the Colorado Business
Corporation Act.
Section 10. List of Stockholders Entitled to Vote. The Officer who has
charge of the stock ledger of the Corporation shall prepare and make, at least
ten (10) days before every annual meeting, a complete list of the Stockholders
entitled to vote at such meeting, arranged in alphabetical order and showing the
address of each Stockholder and the number of shares registered in the name of
each Stockholder. Such list shall be open to the examination of any Stockholder
during ordinary business hours, for a period of at least ten (10) days prior to
election, either at a place within the city, town or village where the election
is to be held, which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where said meeting is to be held. The list
shall be produced and kept at the time and place of election during the whole
time thereof and be subject to the inspection of any Stockholder who may be
present.
ARTICLE IV
Board of Directors
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by the Board of Directors, except as otherwise provided by
statute, the Articles of Incorporation of the Corporation, or these Bylaws.
Section 2. Number and Qualifications. The Board of Directors shall consist
of at least one (1) member, and not more than five (5) members, as shall be
designated by the Board of Directors from time to time, and in the absence of
such designation, the Board of Directors shall consist of one (1) member. This
number may be changed from time to time by resolution of the Board of Directors.
However, no such change shall have the effect of reducing the number of members
below one (1). Directors need not be residents of the State of Colorado or
Stockholders of the Corporation. Directors shall be natural persons of the age
of eighteen (18) years or older.
Section 3. Election and Term of Office. Members of the initial Board of
Directors of the Corporation shall hold office until the first annual meeting of
Stockholders. At the first annual meeting of Stockholders, and at each annual
meeting thereafter, the Stockholders shall elect Directors to hold office until
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<PAGE>
the next succeeding annual meeting. Each Director shall hold office until his
successor is duly elected and qualified, unless sooner displaced. Election of
Directors need not be by ballot.
Section 4. Compensation. The Board of Directors may provide by resolution
that the Corporation shall allow a fixed sum and reimbursement of expenses for
attendance at meetings of the Board of Directors and for other services rendered
on behalf of the Corporation. Any Director of the Corporation may also serve the
Corporation in any other capacity, and receive compensation therefor in any
form, as the same may be determined by the Board in accordance with these
Bylaws.
Section 5. Removals and Resignations. Except as may otherwise be provided
by statute, the Stockholders may, at any special meeting called for the purpose,
by a vote of the holders of the majority of the shares then entitled to vote at
an election of Directors, remove any or all Directors from office, with or
without cause.
A Director may resign at any time by giving written notice to the Board of
Directors, the President or the Secretary of the Corporation. The resignation
shall take effect immediately upon the receipt of the notice, or at any later
period of time specified therein. The acceptance of such resignation shall not
be necessary to make it effective, unless the resignation requires acceptance
for it to be effective.
Section 6. Vacancies. Any vacancy occurring in the office of a Director,
whether by reason of an increase in the number of directorships or otherwise,
may be filled by a majority of the Directors then in office, though less than a
quorum. A Director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office, unless sooner displaced.
When one or more Directors resign from the Board, effective at a future
date, a majority of the Directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations shall become effective.
Each Director so chosen shall hold office as herein provided in the filling of
other vacancies.
Section 7. Executive Committee. By resolution adopted by a majority of the
Board of Directors, the Board may designate one or more committees, including an
Executive Committee, each consisting of one (1) or more Directors. The Board of
Directors may designate one (1) or more Directors as alternate members of any
such committee, who may replace any absent or disqualified member at any meeting
of such committee. Any such committee, to the extent provided in the resolution
and except as may otherwise be provided by statute, shall have and may exercise
the powers of the Board of Directors in the management of the business and
affairs of the Corporation and may authorize the seal of the Corporation to be
affixed to all papers which may require the same. The designation of such
committee and the delegation thereto of authority shall not operate to relieve
the Board of Directors, or any member thereof, of any responsibility imposed
upon it or him by law. If there be more than two (2) members on such committee,
a majority of any such committee may determine its action and may fix the time
and place of its meetings, unless provided otherwise by the Board. If there be
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only two (2) members, unanimity of action shall be required. Committee action
may be by way of a written consent signed by all committee members. The Board
shall have the power at any time to fill vacancies on committees, to discharge
or abolish any such committee, and to change the size of any such committee.
Except as otherwise prescribed by the Board of Directors, each committee
may adopt such rules and regulations governing its proceedings, quorum, and
manner of acting as it shall deem proper and desirable.
Each such committee shall keep a written record of its acts and proceedings
and shall submit such record to the Board of Directors. Failure to submit such
record, or failure of the Board to approve any action indicated therein will
not, however, invalidate such action to the extent it has been carried out by
the Corporation prior to the time the record of such action was, or should have
been, submitted to the Board of Directors as herein provided.
ARTICLE V
Meetings of Board of Directors
Section 1. Annual Meetings. The Board of Directors shall meet each year
immediately after the annual meeting of the Stockholders for the purpose of
organization, election of Officers, and consideration of any other business that
may properly be brought before the meeting. No notice of any kind to either old
or new members of the Board of Directors for such annual meeting shall be
necessary.
Section 2. Regular Meetings. The Board of Directors from time to time may
provide by resolution for the holding of regular meetings and fix the time and
place of such meetings. Regular meetings may be held within or without the State
of Colorado. The Board need not give notice of regular meetings provided that
the Board promptly sends notice of any change in the time or place of such
meetings to each Director not present at the meeting at which such change was
made.
Section 3. Special Meetings. The Board may hold special meetings of the
Board of Directors at any place, either within or without the State of Colorado,
at any time when called by the President, or two or more Directors. Notice of
the time and place thereof shall be given to and received by each Director at
least three (3) days before the meeting. A waiver of such notice in writing,
signed by the person or persons entitled to said notice, either before or after
the time stated therein, shall be deemed equivalent to such notice. Notice of
any adjourned special meeting of the Board of Directors need not given.
Section 4. Quorum. The presence, at any meeting, of a majority of the total
number of Directors shall be necessary and sufficient to constitute a quorum for
the transaction of business. Except as otherwise required by statute, the act of
a majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors; however, if only one (1) Director is
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present, unanimity of action shall be required. In the absence of a quorum, a
majority of the Directors present at the time and place of any meeting may
adjourn such meeting from time to time until a quorum is present.
Section 5. Consent of Directors in Lieu of Meeting. Unless otherwise
restricted by statute, the Board may take any action required or permitted to be
taken at any meeting of the Board of Directors without a meeting, if a written
consent thereto is signed by all members of the Board, and such written consent
is filed with the minutes of proceedings of the Board.
Section 6. Telephonic Meeting. Any meeting held under this Article V may be
held by telephone, in accordance with the provisions of the Colorado Business
Corporation Act.
Section 7. Attendance Constitutes Waiver. Attendance of a Director at a
meeting constitutes a waiver of any notice to which the Director may otherwise
have been entitled, except where a Director attends a meeting for the express
purpose of objecting the transaction of any business because the meeting is not
lawfully called or convened.
ARTICLE VI
Officers
Section 1. Number. The Corporation shall have a President, one or more Vice
Presidents as the Board may from time to time elect, a Secretary and a
Treasurer, and such other Officers and Agents as may be deemed necessary. One
person may hold any two offices except the offices of President and Secretary.
Section 2. Election, Term of Office and Qualifications. The Board shall
choose the Officers specifically designated in Section 1 of this Article VI at
the annual meeting of the Board of Directors and such Officers shall hold office
until their successors are chosen and qualified, unless sooner displaced.
Officers need not be Directors of the Corporation.
Section 3. Subordinate Officers. The Board of Directors, from time to time,
may appoint other Officers and Agents, including one or more Assistant
Secretaries and one or more Assistant Treasurers, each of whom shall hold office
for such period, and each of whom shall have such authority and perform such
duties as are provided in these Bylaws or as the Board of Directors from time to
time may determine. The Board of Directors may delegate to any Officer the power
to appoint any such subordinate Officers and Agents and to prescribe their
respective authorities and duties.
Section 4. Removals and Resignations. The Board of Directors may, by vote
of a majority of their entire number, remove from office any Officer or Agent of
the Corporation, appointed by the Board of Directors.
Any Officer may resign at any time by giving written notice to the Board of
Directors. The resignation shall take effect immediately upon the receipt of the
notice, or any later period of time specified therein. The acceptance of such
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resignation shall not be necessary to make it effective, unless the resignation
requires acceptance for it to be effective.
Section 5. Vacancies. Whenever any vacancy shall occur in any office by
death, resignation, removal, or otherwise, it shall be filled for the unexpired
portion of the term in the manner prescribed by these Bylaws for the regular
election or appointment to such office, at any meeting of Directors.
Section 6. The President. The President shall be the chief executive
officer of the Corporation and, subject to the direction and under the
supervision of the Board of Directors, shall have general charge of the
business, affairs and property of the Corporation, and shall have control over
its Officers, Agents and Employees. The President shall preside at all meetings
of the Stockholders and of the Board of Directors at which he is present. The
President shall do and perform such other duties and may exercise such other
powers as these Bylaws or the Board of Directors from time to time may assign to
him.
Section 7. The Vice President. At the request of the President or in the
event of his absence or disability, the Vice President, or in case there shall
be more than one Vice President, the Vice President designated by the President,
or in the absence of such designation, the Vice President designated by the
Board of Directors, shall perform all the duties of the President, and when so
acting, shall have all the powers of, and be subject to all the restrictions
upon, the President. Any Vice President shall perform such other duties and may
exercise such her powers as from time to time these Bylaws or by the Board of
Directors or the President be assign to him.
Section 8. The Secretary. The Secretary shall:
a. record all the proceedings of the meetings of the Corporation and
Directors in a book to be kept for that purpose;
b. have charge of the stock ledger (which may, however, be kept by any
transfer agent or agents of the Corporation under the direction of the
Secretary), an original or duplicate of which shall be kept at the
principal office or place of business of the Corporation in the State
of Colorado;
c. see that all notices are duly and properly given;
d. be custodian of the records of the Corporation and the Board of
Directors, and the and of the seal of the Corporation, and see that
the seal is affixed to all stock certificates prior to their issuance
and to all documents for which the Corporation has authorized
execution on its behalf under its seal;
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e. see that all books, reports, statements, certificates, and other
documents and records required by law to be kept or filed are properly
kept or filed;
f. in general, perform all duties and have all powers incident to the
office of Secretary, and perform such other duties and have such other
powers as these Bylaws, the Board of Directors or the President from
time to time may assign to him; and
g. prepare and make, at least ten (10) days before every election of
Directors, a complete list of the Stockholders entitled to vote at
said election, arranged in alphabetical order.
Section 9. The Treasurer. The Treasurer shall:
a. have supervision over the funds, securities, receipts and disburse
ments of the Corporation;
b. cause all moneys and other valuable effects of the Corporation to be
deposited in its name and to its credit, in such depositories as the
Board of Directors or, pursuant to authority conferred by the Board of
Directors, its designee shall select;
c. cause the funds of the Corporation to be disbursed by checks or drafts
upon the authorized depositories of the Corporation, when such
disbursements shall have been duly authorized;
d. cause proper vouchers for all moneys disbursed to be taken and
preserved;
e. cause correct books of accounts of all its business and transactions
to be kept at the principal office of the Corporation;
f. render an account of the financial condition of the Corporation and of
his transactions as Treasurer to the President or the Board of
Directors, whenever requested;
g. be empowered to require from the Officers or Agents of the Corporation
reports or statements giving such information as he may desire with
respect to any and all financial transactions of the Corporation; and
h. in general, perform all duties and have all powers incident to the
office of Treasurer and perform such other duties and have such other
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powers as from time to time may be assigned to him by these Bylaws or
by the Board of Directors or the President.
Section 10. Salaries. The Board of Directors shall from time to time fix
the salaries of the Officers of the Corporation. The Board of Directors may
delegate to any person the power to fix the salaries or other compensation of
any Officers or Agents appointed, in accordance with the provisions of Section 3
of this Article VI. No Officer shall be prevented from receiving such salary by
reason of the fact that he is also a Director of the Corporation. Nothing
contained in this Bylaw shall be construed so as to obligate the Corporation to
pay any Officer a salary, which is within the sole discretion of the Board of
Directors.
Section 11. Surety Bond. The Board of Directors may in its discretion
secure the fidelity of any or all of the Officers of the Corporation by bond or
otherwise.
ARTICLE VII
Execution of Instruments
Section 1. Checks, Drafts, Etc. The President and the Secretary or
Treasurer shall sign all checks, drafts, notes, bonds, bills of exchange and
orders for the payment of money of the Corporation, and all assignments or
endorsements of stock certificates, registered bonds or other securities, owned
by the Corporation, unless otherwise directed by the Board of Directors, or
unless otherwise required by law. The Board of Directors may, however, authorize
any Officer to sign any of such instruments for and on behalf of the Corporation
without necessity of countersignature, and may designate Officers or Employees
of the Corporation other than those named above who may, in the name of the
Corporation, sign such instruments.
Section 2. Execution of Instruments Generally. Subject always to the
specific direction of the Board of Directors, the President shall execute all
deeds and instruments of indebtedness made by the Corporation and all other
written contracts and agreements to which the Corporation shall be a party, in
its name, attested by the Secretary. The Secretary, when necessary required,
shall affix the corporate seal thereto.
Section 3. Proxies. The President and the Secretary or an Assistant
Secretary of the Corporation or by any other person or persons duly authorized
by the Board of Directors may execute and deliver proxies to vote with respect
to shares of stock of other corporations owned by or standing in the name of the
Corporation from time to time on behalf of the Corporation.
ARTICLE VIII
Capital Stock
Section 1. Certificates of Stock. Every holder of stock in the Corporation
shall be entitled to have a certificate, signed in the name of the Corporation
by the President and by the Secretary of the Corporation, certifying the number
of shares owned by that person in the Corporation.
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Certificates of stock shall be in such form as shall, in conformity to law,
be prescribed from time to time by the Board of Directors.
Section 2. Transfer of Stock. Shares of stock of the Corporation shall only
be transferred on the books of the Corporation by the holder of record thereof
or by his attorney duly authorized in writing, upon surrender to the Corporation
of the certificates for such shares endorsed by the appropriate person or
persons, with such evidence of the authenticity of such endorsement, transfer,
authorization and other matters as the Corporation may reasonably require.
Surrendered certificates shall be cancelled and shall be attached to their
proper stubs in the stock certificate book.
Section 3. Rights of Corporation with Respect to Registered Owners. Prior
to the surrender to the Corporation of the certificates for shares of stock with
a request to record the transfer of such shares, the Corporation may treat the
registered owner as the person entitled to receive dividends, to vote, to
receive notifications, and otherwise to exercise all the rights and powers of an
owner.
Section 4. Closing Stock Transfer Book. The Board of Directors may close
the Stock Transfer Book of the Corporation for a period not exceeding fifty (50)
days preceding the date of any meeting of Stockholders, the date for payment of
any dividend, the date for the allotment of rights, the date when any change,
conversion or exchange of capital stock shall go into effect or for a period of
not exceeding fifty (50) days in connection with obtaining the consent of
Stockholders for any purpose. However, in lieu of closing the Stock Transfer
Book, the Board of Directors may in advance fix a date, not exceeding fifty (50)
days preceding the date of any meeting of Stockholders, the date for the payment
of any dividend, the date for the allotment of rights, the date when any change
or conversion or exchange of capital stock shall go into effect, or a date in
connection with obtaining such consent, as a record date for the determination
of the Stockholders entitled to notice of, and to vote at, any such meeting and
any adjournment thereof, or entitled to receive payment of any such dividend, or
to any such allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, or to give such consent.
In such case such Stockholders of record on the date so fixed, and only such
Stockholders shall be entitled to such notice of, and to vote at, such meeting
and any adjournment thereof, or to receive payment of such dividend, or to
receive such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as aforesaid.
Section 5. Lost, Destroyed and Stolen Certificates. The Corporation may
issue a new certificate of shares of stock in the place of any certificate
theretofore issued and alleged to have been lost, destroyed or stolen. However,
the Board of Directors may require the owner of such lost, destroyed or stolen
certificate or his legal representative, to: (a) request a new certificate
before the Corporation has notice that the shares have been acquired by a bona
fide purchaser; (b) furnish an affidavit as to such loss, theft or destruction;
(c) file with the Corporation a sufficient indemnity bond; or (d) satisfy such
other reasonable requirements, including evidence of such loss, destruction, or
theft as may be imposed by the Corporation.
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ARTICLE IX
Dividends
Section 1. Sources of Dividends. The Directors of the Corporation, subject
to the Colorado Business Corporation Act, may declare and pay dividends upon the
shares of the capital stock of the Corporation.
Section 2. Reserves. Before the payment of any dividend, the Directors of
the Corporation may set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper purpose, and the
Directors may abolish any such reserve in the manner in which it was created.
Section 3. Reliance on Corporate Records. A Director in relying in good
faith upon the books of account of the Corporation or statements prepared by any
of its officials as to the value and amount of the assets, liabilities, and net
profits of the Corporation, or any other facts pertinent to the existence and
amount of surplus or other funds from which dividends might properly be declared
and paid shall be fully protected.
Section 4. Manner of Payment. Dividends may be paid in cash, in property,
or in shares of the capital stock of the Corporation.
ARTICLE X
Seal and Fiscal Year
Section 1. Seal. The corporate seal, subject to alteration by the Board of
Directors, shall be in the form of a circle, shall bear the name of the
Corporation, and shall indicate its formation under the laws of the State of
Colorado and the year of incorporation. Such seal may be used by causing it or a
facsimile thereof to be impressed, affixed, or otherwise reproduced.
Section 2. Fiscal Year. The Board of Directors shall, in its sole
discretion, designate a fiscal year for the Corporation.
ARTICLE XI
Amendments
Except as may otherwise be provided herein, a majority vote of the whole
Board of Directors at any meeting of the Board shall be sufficient to amend or
repeal these Bylaws.
ARTICLE XII
Indemnification of Officers and Directors
Section 1. Exculpation. No Director or Officer of the Corporation shall be
liable for the acts, defaults, or omissions of any other Director or Officer, or
11
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for any loss sustained by the Corporation, unless the same has resulted from his
own willful misconduct, willful neglect, or gross negligence.
Section 2. Indemnification. Each Director and Officer of the Corporation
and each person who shall serve at the Corporation's request as a director or
officer of another corporation in which the Corporation owns shares of capital
stock or of which it is a creditor shall be indemnified by the Corporation
against all reasonable costs, expenses and liabilities (including reasonable
attorneys' fees) actually and necessarily incurred by or imposed upon him in
connection with, or resulting from any claim, action, suit, proceeding,
investigation, or inquiry of whatever nature in which he may be involved as a
party or otherwise by reason of his being or having been a Director or Officer
of the Corporation or such director or officer of such other corporation,
whether or not he continues to be a Director or Officer of the Corporation or a
director or officer of such other corporation, at the time of the incurring or
imposition of such costs, expenses or liabilities, except in relation to matters
as to which he shall be finally adjudged in such action, suit, proceeding,
investigation, or inquiry to be liable for willful misconduct, willful neglect,
or gross negligence toward or on behalf of the Corporation in the performance of
his duties as such Director or Officer of the Corporation or as such director or
officer of such other corporation. As to whether or not a Director or Officer
was liable by reason of willful misconduct, willful neglect, or gross negligence
toward or on behalf of the Corporation in the performance of his duties as such
Director or Officer of the Corporation or as such director or officer of such
other corporation, in the absence of such final adjudication of the existence of
such liability, the Board of Directors and each Director and Officer may
conclusively rely upon an opinion of independent legal counsel selected by or in
the manner designated by the Board of Directors. The foregoing right to
indemnification shall be in addition to and not in limitation of all other
rights which such person may be entitled as a matter of law, and shall inure to
the benefit of the legal representatives of such person.
Section 3. Liability Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation or who is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, association, or other enterprise against any
liability asserted against him and incurred by him in any such capacity or
arising out of his status as such, whether or not he is indemnified against such
liability by this Article XII.
12
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