<PAGE>
As filed with the Securities and Exchange Commission on December 13, 1999.
File No. ____________
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
JAGGED EDGE MOUNTAIN GEAR, INC.
(Name of Small Business Issuer in its Charter)
COLORADO 84-144-8778
(State or other jurisdiction of (IRS Employer Identification
Incorporation or Organization) Number)
52 PILOT KNOB LANE, TELLURIDE, CO 81435
(Address of Principal Executive Offices) (Zip Code)
(970) 728-0175
(Issuer's Telephone Number)
SECURITIES TO BE REGISTERED UNDER SECTION 12(b) OF THE ACT:
(None)
SECURITIES TO BE REGISTERED UNDER SECTION 12(g) OF THE ACT:
COMMON STOCK, $.001 PAR VALUE
(Title of Class)
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JAGGED EDGE MOUNTAIN GEAR, INC.
FORM 10SB - GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
TABLE OF CONTENTS
Forward Looking Statements
PART I
Item 1. Description of Business
Item 2. Management's Discussion and Analysis or Plan of Operation
Item 3. Description of Property
Item 4. Security Ownership of Certain Beneficial Owners and Management
Item 5. Directors, Executive Officers, Promoters and Control Persons
Item 6. Executive Compensation
Item 7. Certain Relationships and Related Transactions
Item 8. Description of Securities
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
Item 2. Legal Proceedings
Item 3. Changes in and Disagreements with Accountants
Item 4. Recent Sales of Unregistered Securities
Item 5. Indemnification of Directors and Officers
PART F/S
Financial Statements
PART III
Item 1. Index to Exhibits
Item 2. Description of Exhibits
Signatures
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<PAGE>
FORWARD LOOKING STATEMENTS
All statements contained in this Form 10SB that are not statements of
historical facts are forward looking statements that are entitled to the
protection of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are estimates reflecting the best judgement of the
Company based on current information and involve a number of risks and
uncertainties. Although Jagged Edge Mountain Gear, Inc. believes the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, we can give no assurance that our expectations will
be met. Factors that could cause actual results to differ from expectations
include: the stability of the US and/or Japanese economies; the stability of
the economies in the countries that produce the Company's goods (mainly
China); winter snowfall in the ski resorts where the Company's retail stores
are located; the Company's continued ability to attract sufficient financing
for future growth; and the Company's ability to maintain sufficient margins
to become profitable. Forward-looking statements contained in this Form 10SB
should be considered in light of those factors.
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<PAGE>
PART I
Item 1. Description of Business
Business
Jagged Edge Mountain Gear, Inc. ("Jagged Edge" or "Company") designs, produces
and sells technical outdoor clothing and accessories, using high-performance
fabrics, for outdoor sports activities under the name Jagged Edge Mountain Gear.
The Company owns and operates five retail stores under the name Jagged Edge
Mountain Gear, a retail web site, a catalog mail-order division and a wholesale
division. The retail stores are all located in Colorado resort towns. The web
site and catalog cover a national market. Wholesale sales are both domestic and
international. The Company was originally formed as a Utah LLC and was converted
to a Colorado corporation in 1997.
The Company's primary means of distribution of its products are:
-Retail, through its own stores
-Wholesale, through its wholesale division, supplying retail and
wholesale accounts in both the US and overseas, primarily Japan.
-Catalog mail-order sales
-E-commerce, through the Company's own website and through
affiliations with major web portals such as Amazon.com
The Company introduces a line consisting of new and revised products every six
months. Each season, there are at least 45 products in the current line. The
lines are offered at national trade shows and through independent sales
representatives.
Competition
The Company's industry is intensely competitive, with many other manufactures of
technical outdoor clothing competing in the national and international
marketplace. Moreover, there are now other non-technical clothing companies
entering the outerwear market. Jagged Edge's competitors include Patagonia, The
North Face, Marmot, Moonstone, Sierra Designs and other technical outerwear
manufactures. The Company is still a relatively small player in the industry,
but has already built strong brand recognition. The Company is recognized as a
highly creative producer of innovative and functional products. Through
continued wholesale distribution, direct mail, Jagged Edge Mountain Gear retail
stores and the web site, Jagged Edge expects that it will continue to expand its
market share.
Sources of Raw Materials
The Company has well-established relationships with several major suppliers of
materials in the market. Some of these suppliers are: Malden Mills (Fleece
Fabrics), Dyersburg Fabrics (Fleece), Burlington Mills (Technical Fabrics), YKK
(zippers) and several others to a lesser degree. To diversify dependence on the
two primary fleece suppliers, orders have been historically divided between
Dyersburg and Malden Mills. Also by creating garments in unrelated fabric
technologies, dependence on these major suppliers reduces Jagged Edge's exposure
and risk.
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Orders for fabric and, to a lesser extent for completed garments, are typically
placed before the beginning of the season and only limited re-ordering is
possible once the season has started. Historically, the Company has had a good
record of forecasting seasonal sales and, with the exception of the most recent
fiscal year, inventories on hand at the end of the fiscal year were at
acceptable levels.
The Company is not dependent on any one major customer. No customer accounts for
more than 5% of sales. However, seasonal factors do determine the Company's
fortunes to a great extent. In particular, since Jagged Edge sells its technical
mountain gear to skiers in the five resort towns in which it runs retail stores,
as well as through other retailers located in winter resorts, each year's
snowfall has a significant effect on customer traffic and sales. On the positive
side, much of the mountain gear sold by Jagged Edge is purchased by sports
enthusiasts in other geographic areas and in the summer, mountain climbing
months.
Trademarks
The Company has one trademark registered with the United States Patent and
Trademark Office: Jagged Edge Mountain Gear. Royalties are paid to Renee Merlo
for the use of the name Jagged Edge. Royalties amount to $500 per quarter up to
$2 million in sales and $1,000 per quarter above that level, applying strictly
to sales of Jagged Edge branded merchandise.
The Company owns the domain name for its web site jagged-edge.com and has
recently purchased the domain name jaggededge.com.
Government Regulations: Sales Tax, Import and Export Restrictions
1. Sales tax
Sales tax is calculated and paid on a monthly basis in Colorado.
2. Import and Export restrictions
Jagged Edge currently utilizes the services of a customs broker (Newport
Express) and the international department of First Security Bank of Utah to
comply with import and export regulations.
Research and development expenses for the past two years were nominal.
Employees
Jagged Edge Mountain Gear employs 38 people, of which 17 are full time
employees.
Item 2. Management's Discussion and Analysis or Plan of Operation
General
During fiscal year 1999, Jagged Edge experienced a reduction in gross margins
across the whole spectrum of its products, caused by pricing pressures in the
industry. The two primary reasons were a softening of Asian economies, where
numerous outdoor apparel items are made, and the operating problems at one of
the industry leaders. Industry wide price cutting and the Company's own
aggressive discounting led to a decline in Jagged Edge's gross margins from
53.6% in fiscal 1998 to 36.3% in fiscal 1999. This trend is being reversed in
the second half of 1999 and the Company expects its gross margins to return to
normal levels soon.
1999 sales were ahead of 1998 by 69%, largely as a result of a larger number of
stores and greater demand for the Company's products. Jagged Edge offers a line
of mountaineering garments that are also used by skiers. As with any outdoor
products business, the weather is an important determinant of sales levels
during the peak seasons. As a result, the Company's sales are concentrated in
the winter months, when ski resorts are in full operation, and the summer
months, when mountain climbing is at its seasonal peak.
Due to its undercapitalization and the need to place all orders with
manufacturers prior to the season, the Company has to control and allocate
its inventory selectively. In fiscal year 2000, the greater number of
catalogs sent out and the growing success of the Company's wholesale division
will exacerbate the resource problem. On the positive side, the Company has
instituted across-the-board price increases and eliminated much of the
discounting that took place both at the retail and wholesale level in fiscal
year 1999 and is able to get better prices for merchandise that, in prior
years, would have been discounted. International sales, which are growing,
are made at list price. This area is a primary strategic focus for the
current year.
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Another noteworthy development during fiscal 1999 was the expansion of the
Company's management team, as Jagged Edge transitions from a small, specialized
business to one of the most recognized brands in the technical outdoor garment
industry, known for innovation and functionality. Areas of management where
significant additions were made during calendar 1999 are Design, Finance,
Operations, Marketing and Domestic Wholesale Sales.
In 1998, Small Business 2000 produced a documentary video for PBS describing the
Company's success. As a result, IBM, one of the sponsors of the Small Business
2000, entered into a relationship with the Company whereby IBM permits Jagged
Edge to upgrade its computer and network capabilities to better track its sales,
inventory and financial results. The Company and IBM have also begun discussing
the possibility of engaging in joint marketing activities.
Results of Operations
At the beginning of fiscal 1999, Jagged Edge opened two new stores, for a total
of five Jagged Edge retail stores currently in operation. During fiscal 1999,
the following stores were opened:
<TABLE>
<CAPTION>
Store Date Opened Square Feet
<S> <C> <C>
Breckenridge, CO July 1998 1,100
Crested Butte, CO August 1998 1,400
</TABLE>
Given the healthy revenue growth year-to-year, 1999 sales in all the stores have
been satisfactory, with the exception of the Ouray store. The latter, as a
result of a decision taken in November 1999, is temporarily closed at the time
that this filing is submitted. Though this store has not been a significant
drain on the Company's resources, the potential value of its inventory to the
other stores and its short sales season - 4 summer months - made it imperative
to close the store for now.
As a result of the management hires described above, SG&A expenses rose by 41%
from fiscal 1998 to 1999. These expense levels will rise slightly in fiscal 2000
as well, however the Company anticipates significantly higher sales, not only at
the retail level, but also in catalog sales, wholesale and e-commerce. The
management additions were an important investment in the Company's future
success.
The Company's advertising expenditures were approximately $19,757, or.9% of
sales. The Company expects to increase its advertising and marketing budget each
year for the foreseeable future.
The Company's reported operating loss of $488,162 is expected to be the trough
in its operating performance. The loss was a result of aggressive expansion in
fiscal 1999, concurrent with the significant decline in gross margins explained
above.
Liquidity and Capital Resources
The Company's balance sheet at the end of fiscal 1999 showed a low cash balance,
seasonally low accounts receivable and a higher inventory level than management
would have desired. The inventory build-up was addressed after the end of fiscal
1999 and the Company was going into the peak winter season 1999-2000 with normal
inventory levels and very little obsolete inventory.
In addition to the above items, the Accounts Receivable - Settlement
outstanding at the end of fiscal 1999 was also collected in fiscal 2000. It
was the result of a settlement with a defendant whose actions damaged the
Company, in the opinion of the Courts. This settlement also entailed the
return of 640,000 common shares to the Company. As a result of this
settlement, the number of shares issued and outstanding as of November 1999
is 12,666,638.
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Strategic Plan
The Company intends to capitalize on its strengths in fiscal 2000: a strong
brand identity, a reputation for creative use of fabrics and other features in
its garments, and a reputation for technical superiority. As the market leaders
have to sell "down-market" (into Wal-Marts, for example) to survive, Jagged Edge
is attracting new customers to its high-quality technical line of products. The
winter 2000 catalog had a print run of 200,000, a 100% increase over 1999. The
Company feels that the quality of its catalog and mailing lists are higher than
in previous years and that catalog sales will increase significantly compared to
1999. There now appears to be sufficient inventory on hand to satisfy both a
double-digit percentage increase in catalog sales and significantly higher
wholesale sales.
The Company is getting more and more exposure in specialized magazines and it
expects to continue getting free publicity due to the quality of its product
line and to the fact that the Company is run by the twin Quenemoen sisters.
Also, international sales are growing rapidly, especially in Japan, where the
Jagged Edge Mountain Gear brand is meeting with excellent demand and has a
better distribution network than in prior years.
The Company is targeting break-even cash flow as its near-term operating goal.
This goal could conceivably be achieved in the current fiscal year if there is
good snow in Colorado and if the Company can avoid excessive discounting of its
less popular products. For the foreseeable future, the Company expects to be
able to finance its operations from sales and existing financial resources,
however contingency plans are being made for private placements of common stock,
if needed. No such specific plans are being implemented at this time.
Year 2000
The Company has received representation from Apple Computer, Inc. that all
computer hardware is compliant. All Company run software has been certified
compliant by the provider. The Company has assessed its state of readiness and
views its most reasonably likely worst case scenario to consist of temporary
difficulties with customer contact via the Company's e-commerce web site. The
Company does not view the risks as substantial enough to merit additional
expense. In the event that the Company's worst case scenario does occur,
processes will be handled manually.
Item 3: Description of Property
Property leased by Jagged Edge Mountain Gear:
<TABLE>
<CAPTION>
Location Rent Lease Exp.
<S> <C> <C>
Jagged Edge HQ: 52 Pilot Knob Lane, Telluride CO 81435 $3,600/mo Nov. 1, 2004
Telluride, CO: 129 W. Colo. Avenue, Telluride, CO 81435 $3,000/mo. May 15, 2005
Ouray, CO: 612 Main Street, Ouray CO 81427 $950/mo. Feb. 28, 2001
Crested Butte, CO: 201 Elk Avenue, Crested Butte CO 81224 $4,193/mo. June 2, 2015
Breckenridge, CO: 326 Main Street, Breckenridge, CO 80424 $3,705/mo. Sep. 1, 2000
Mountain Village, CO: 565 Mt. Village Blvd, Mt. Village, CO 81435 $553/mo. Mar. 1, 2017
Salt Lake City, UT: 13 N. State Street, SLC, UT 84103 $450/mo. Oct. 31, 1999
</TABLE>
Option to Purchase
Jagged Edge HQ: 52 Pilot Knob Lane, Telluride CO 81435
The Company's lease contains an option to purchase.
Renovation Plans
Telluride, CO: 129 W. Colo. Avenue, Telluride, CO 81435
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<PAGE>
The Company plans to increase the retail selling area by 400 square feet in
November 1999, expected to cost approximately $14,000, which will financed
out of working capital.
Competitive Conditions
Jagged Edge Mountain Gear may experience competitive conditions at the
expiration of one of its leases. It is possible that renewal may become onerous,
however that has not been the experience historically.
Insurance
A comprehensive business insurance policy provides coverage for all Jagged Edge
properties up to four million dollars each occurrence.
Jagged Edge Locations: Address, Square Footage, and Annual Rent:
Jagged Edge HQ: 52 Pilot Knob Lane, Telluride CO 81435
Area Square Feet: 5,000
Annual Rent: $43,200
Telluride, CO: 129 W. Colo. Avenue, Telluride, CO 81435
Area Square Feet: 1,838
Annual Rent: $36,000
Ouray, CO: 612 Main Street, Ouray CO 81427
Area Square Feet: 1,000
Annual Rent: $11,400
Crested Butte, CO: 201 Elk Avenue, Crested Butte CO 81224
Area Square Feet: 1,400
Annual Rent: $50,316
Breckenridge, CO: 326 Main Street, Breckenridge, CO 80424
Area Square Feet: 1,100
Annual Rent: $44,460
Mountain Village, CO: 565 Mt. Village Blvd, Mountain Village, CO 81435
Area Square Feet: 689
Annual Rent: $6,636
Salt Lake City, UT: 13 N. State Street, SLC, UT 84103
Area Square Feet: 925
Annual Rent: $5,400
Gross Annual Rental:
The gross annual rental represented by Jagged Edge Mountain Gear leases totals
$197,406.
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<PAGE>
Item 4. Security Ownership of Certain Beneficial Owners and Management
<TABLE>
<CAPTION>
Name and Address Common Stock
Of Beneficial Owner Number of Shares Percent of Class
<S> <C> <C>
Margaret Quenemoen 4,236,000 31.8%
President / CEO / Director
PO Box 2514
Telluride, CO 81435
Paula Quenemoen 2,824,000 21.2%
Vice President / Director
PO Box 2514
Telluride, CO 81435
</TABLE>
Item 5: Directors and Executive Officer, Promoters and Control Persons
Directors and Executive Officers
Margaret Quenemoen, CEO, President, Director, & founder of Jagged Edge
Mountain Gear. In 1998, Ms. Quenemoen was a finalist for the Ernst and Young
Entrepreneur of the Year Award. Margaret's organizational skills are
demonstrated by her competent overseeing all departments and aspects of
Jagged Edge Mountain Gear including, design, image, staff management and
strategy. She steers and directs Jagged Edge Mountain Gear, devising Company
plans and goals. Ms. Quenemoen works closely with bankers, lawyers and other
advisors. Previous employment includes an outerwear production management
position at Odyssey of America, (a former North Face plant) overseeing 100
plus employees. Margaret graduated from the University of Colorado at Boulder
with a BA in Economics. Ms. Quenemoen has served as a director of the Company
since its inception. Ms. Quenemoen holds no directorships in any other
companies.
Paula Quenemoen, Executive Vice President, Director
Ms. Quenemoen began with Jagged Edge in 1993. Her role encompasses all areas of
management, with special emphasis placed on catalog production and design, web
site development, wholesale development, trade shows and business strategy. Ms.
Quenemoen oversees the image and marketing of the Company. Ms. Quenemoen's
business experience includes working as an international offshore buyer in China
for Occidental Petroleum. Her fluent Chinese and contacts in China have been
utilized in establishing relationships with manufacturers in China and Hong
Kong. She graduated from the University of Utah with BA majors in Asian Studies
and Political Science, a Minor in Chinese and a Certificate of International
Relations. Ms. Quenemoen has served as a director of the Company since its
inception. Ms. Quenemoen holds no other directorships in any companies.
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<PAGE>
Significant Employees
Members of management who make significant contributions to Jagged Edge Mountain
Gear include:
a. Kelvin Verity, Financial Controller
Mr. Verity came to Jagged Edge in April 1999 with a strong business and
accounting background. Formerly a commercial banker with Norwest Bank in
Telluride, Mr. Verity became interested in working with Jagged Edge after
working on the Company's banking relationship. His position includes
implementing strategic plans, financial analysis, budgeting, forecasting and all
other aspects of the Company's finances. In addition, Mr. Verity will be working
with production and planning to best manage cash flow. Mr. Verity is also
creating systems within Jagged Edge to accommodate future growth.
b. Eric Gilmore: Lead Designer, Production Manager
Mr. Gilmore is Jagged Edge Mountain Gear's lead outerwear and clothing designer.
He specs designs, sources materials, oversees production, and is an expert in
high tech fabrics. He also acts as liaison between the Asian and domestic
clothing factories and the Company. Mr. Gilmore joined the Company from Eastern
Mountain Sports, where he was a Product Developer/Designer.
c. Allison Baumhefner, Operations Manager
Ms. Baumhefner came to Jagged Edge in April of 1999 with extensive knowledge in
retail systems, marketing and inventory management. Ms. Baumhefner oversees the
operations and departments for retail, mail order, inventory and wholesale
systems management. Ms. Baumhefner earned a Masters in International management
from Thunderbird University and is a key member of Jagged Edge's management
team.
d. Jordan Campbell, Marketing and PR Director
Jordan is a dynamic marketing manager, previously with The North Face, Inc. He
possesses extensive knowledge and experience in promoting outdoor garments to
retailers and the public. Mr. Campbell's skills will accelerate Jagged Edge
Mountain Gear growth. Mr. Campbell graduated from the University of Colorado
with a degree in marketing and communication.
e. Douglas Ross, National Sales Manager
Mr. Ross was hired to increase wholesale sales for Jagged Edge through growing
existing accounts, establishing new accounts and managing a national sales team
of independent sales representatives. Mr. Ross will be implementing a long-term
strategic sales plan for the Company. He was formerly with Helly Hansen and Vail
Resorts, and graduated from the University of Denver with an MBA in marketing
and strategic planning.
Family Relationships
Margaret Quenemoen, CEO / President, and Paula Quenemoen, Executive Vice
President, are twin sisters and form the whole Board of Directors.
No Director, Executive Officer, Promoter or Control Person of Jagged Edge
Mountain Gear has filed bankruptcy, has any convictions in any criminal
proceedings, is involved in any criminal proceedings, is the subject of any
order, judgment, order or decree involving any type of business, securities or
banking activities or violated any federal or state securities commodities law.
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Item 6: Executive Compensation
Margaret Quenemoen, President / CEO is paid $15,000 annually for all services
performed on behalf the Company. The Company also pays approximately $425 per
month for the Company car used by Ms. Quenemoen and approximately $750 per month
for Ms. Quenemoen's living and miscellaneous personal expenses. Ms. Quenemoen is
committed to the viability and growth of Jagged Edge. Her financial needs are
minimal and she chooses to the have the funds stay in the Company at this time.
No cash, stock or other compensation plan exists for Ms. Quenemoen.
Paula Quenemoen, Executive Vice-President is paid $24,960 annually for all
services performed on behalf the Company. The Company also pays approximately
$90 per month for the Company car used by Ms. Quenemoen and approximately $500
per month for Ms. Quenemoen's living and miscellaneous personal expenses. Ms.
Quenemoen is committed to the viability and growth of Jagged Edge. Her financial
needs are minimal and she chooses to have the funds stay in the Company at this
time. No cash, stock or other compensation plan exists for Ms. Quenemoen.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Restricted All other
Position Year Salary Bonus Other Stock Award Compensation
<S> <C> <C> <C> <C> <C> <C>
Margaret Quenemoen
President / CEO 1999 $15,000 $0 $14,100 0 $0
1998 $7,346 $0 $10,115 0 $0
1997 $15,703 $0 $6,740 4,236,000 $0
Paula Quenemoen
Executive VP 1999 $24,960 $0 $7,080 0 $0
1998 $24,960 $0 $6,615 0 $0
1997 $14,825 $0 $4,480 2,824,000 $0
</TABLE>
Item 7: Certain Relationships and Related Transactions
Eileen W. Cotro-Manes, mother of the Quenemoen sisters is a shareholder with
ownership listed below:
Eileen W. Cotro-Manes
1899 Wellington Circle
Salt Lake City, Utah 84117
Common stock (Restricted), 300,000 shares
d) Transactions with Promoters:
An Investor Relations Service firm was engaged by Jagged Edge Mountain Gear in
1998: Corporate Relations Group, Inc. (CRG, Inc. d.b.a. Stratcom Media, Inc.)
1947 Lee Road, Winter Park, FL 32789. In May, 1998 CRG was given 750,000 shares
of common stock in exchange for $35,000, a service contract for investor
relations, public relations, printing and advertising for promotion of Jagged
Edge Mountain Gear's stock.
Item 8: Description of Securities
The Company does not have any voting, dividend or preemptive rights
provisions.
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<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
Market Information
The Company's common stock is quoted on the OTC BB under the symbol JEMG.
<TABLE>
<CAPTION>
Quarter High Low
<S> <C> <C>
8/1/98-10/31/98* 1.00 0.08
11/1/98-1/31/99 0.49 0.09
2/1/99-4/30/99 0.91 0.3125
5/1/99-7/31/99 0.75 0.4063
</TABLE>
* The OTC began quoting the Company's common stock in July of 1998.
As of July 31, 1999 the Company had approximately 134 holders of record for its
common stock.
Dividends
At this time the Company intends to retain all earnings if and when derived, for
the use in its business and does not anticipate paying dividends in the near
future.
Common Stock:
Each share of common stock is entitled to one vote for each share held of
record. All shares of common stock will participate equally in dividends when
and if declared by the Board of Directors. The shares of common stock have no
preference, conversion, exchange, preemptive or cumulative rights.
Preferred Stock:
As of this date, no preferred shares have been issued.
Common Stock Material Rights
All Common Stock will participate equally in net assets on liquidation.
Item 2: Legal Proceedings
As of November 1999 the following matter has been settled:
The following legal proceeding was pending as of July 31, 1999, in Telluride,
Colorado. Jagged Edge Mountain Gear, Inc. a Colorado Corporation; Margaret
Quenemoen and Paula Quenemoen, plaintiffs v. Robert Miller, as personally
representative of the Estate of M. Jack Duksin, defendant, civil action No.99 CV
65 (Division 1), filed July 1999. Jagged Edge Mountain Gear, Margaret and Paula
Quenemoen sought a $100,000 cash recovery of legal fees and damages, 640,000
shares of Jagged Edge Mountain Gear restricted stock and the nullification of
the August 11, 1997 agreement between the three parties. In November of 1999,
this matter was completely settled for the items listed above.
Item 3: Changes in and Disagreements with Accountants
There are no disagreements between the Company and its auditors.
Item 4: Recent Sales of Unregistered Securities
In 1997, the Company conducted a Limited Offering pursuant to Rule 504 under
Regulation D. Net proceeds from the Company's Rule 504 offering were
approximately $850,000. In addition, the Company has issued restricted stock
in exchange for forgiveness of debt and in private placement and other
transactions exempt from the registration requirements of the Securities Act
of 1933. The Company has also granted restricted common stock to its
officers, directors, employees and consultants pursuant to the Company's
Stock Plan.
Item 5: Indemnification of Directors and Officers
The Company's bylaws provide for indemnification of officers, directors,
employees and agents to the fullest extent permitted by Colorado law. The
Company carries no Directors and Officers (D&O) insurance policy.
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<PAGE>
PART F/S
INDEX TO FINANCIAL STATEMENTS
Independent Auditor's Report
Balance Sheet - July 31, 1999
Statement of Operations - Twelve Months Ended July 30, 1999
Statement of Change in Stockholders Equity - For Year Ended July 31, 1999
Statement of Cash Flows - Twelve Months Ended July 30, 1999
Notes to Financial Statements
Balance Sheet - July 31, 1998 (unaudited)
Statement of Operations - Twelve Months Ended July 31, 1998 (unaudited)
Statement of Cash Flows - Twelve Months Ended July 31, 1998 (unaudited)
Notes to Financial Statements (unaudited)
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<PAGE>
PART III
EXHIBITS INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
3.1 Articles of Incorporation, Jagged Edge Mountain Gear, Inc.
3.2 By-Laws, Jagged Edge Mountain Gear, Inc.
10.1 Jagged Edge Mountain Gear, Inc. Stock Plan
27.1 Financial Data Schedule
</TABLE>
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<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Jagged Edge Mountain Gear, Inc.
Dated: December 10, 1999 By: /s/ Margaret A. Quenemoen
Margaret A. Quenemoen, President
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<PAGE>
INDEX TO FINANCIAL STATEMENTS
Independent Auditor's Report
Balance Sheet - July 31, 1999
Statement of Operations - Twelve Months Ended
July 30, 1999
Statement of Change in Stockholders Equity -
For Year Ended July 31, 1999
Statement of Cash Flows - Twelve Months Ended
July 30, 1999
Notes to Financial Statements
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<PAGE>
Jagged Edge Mountain Gear, Inc.
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of Jagged Edge Mountain Gear,
Inc. as of July 31, 1999, and the related statements of operations,
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Jagged Edge Mountain Gear,
Inc. as of July 31, 1999, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 10 to the
financial statements, the Company has suffered recurring losses from operations
and a liquidity shortage, which raise substantial doubt about its ability to
continue as a going concern. Management's plans regarding those matters are also
described in Note 10. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
DALBY, WENDLAND & CO., P.C.
Grand Junction, Colorado
October 16, 1999
-17-
<PAGE>
JAGGED EDGE MOUNTAIN GEAR, INC.
BALANCE SHEET
July 31, 1999
<TABLE>
<S> <C>
ASSETS
Current Assets
Cash $ 42,606
Accounts receivable 61,992
Accounts receivable - settlement 100,000
Inventories 866,558
Prepaid expenses 525
-----------
TOTAL CURRENT ASSETS 1,071,681
Equipment and Leasehold Improvements, at cost, net 125,618
Other Assets
Deposits 32,361
-----------
TOTAL ASSETS $1,229,660
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 351,897
Credit cards 64,980
Short-term debt 106,100
Current portion of long-term debt 33,786
-----------
TOTAL CURRENT LIABILITIES 556,263
Long-Term Debt, net of current portion 162,198
-----------
TOTAL LIABILITIES 718,961
-----------
Stockholders' Equity
Common stock $.001 par value; 50,000,000 shares authorized, 13,307
13,306,638 shares issued and outstanding
Common stock subscribed 13
Additional paid-in capital 1,235,388
Retained deficit (738,009)
-----------
Total Stockholders' Equity 510,699
-----------
Total Liabilities and Stockholders' Equity $1,229,660
===========
</TABLE>
-18-
<PAGE>
JAGGED EDGE MOUNTAIN GEAR, INC.
STATEMENT OF OPERATIONS
For the year ended July 31, 1999
<TABLE>
<S> <C>
Sales $ 2,206,384
Cost of Goods Sold 1,406,694
-----------
GROSS PROFIT 799,690
Operating Expenses
Selling 143,372
General and administrative 1,123,883
-----------
LOSS FROM OPERATIONS (467,565)
Other Income (Expense)
Interest expense (21,531)
Other income 934
-----------
NET LOSS BEFORE INCOME TAX (488,163)
Provision for Income Tax --
-----------
NET LOSS $ (488,162)
===========
LOSS PER SHARE $ (.04)
===========
</TABLE>
-19-
<PAGE>
JAGGED EDGE MOUNTAIN GEAR, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the year ended July 31, 1999
<TABLE>
<CAPTION>
Common Stock Additional Total
Common Stock Subscribed Paid-in Retained Stockholders'
Shares Amount Shares Amount Capital Deficit Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance -
July 31, 1998 12,380,000 $12,380 - $ - $ 972,558 $ (249,847) $735,091
Net loss - - - - - (488,162) (488,162)
Issuance of stock 926,638 927 13,395 13 262,830 - 263,770
---------- ------- ------ --- ---------- ---------- ---------
Balance -
July 31, 1999 13,306,638 $13,307 13,395 $13 $1,235,388 $ (738,009) $510,699
========== ======= ====== === ========== ========== =========
</TABLE>
-20-
<PAGE>
JAGGED EDGE MOUNTAIN GEAR, INC.
STATEMENT OF CASH FLOWS
For the year ended July 31, 1999
Cash Flows from Operating Activities
<TABLE>
<S> <C>
Net loss $(488,162)
Depreciation and amortization 28,015
Common stock issued as compensation 20,040
Common stock issued as interest on notes payable 9,523
Changes in assets and liabilities
Decrease in accounts receivable 18,556
Increase in accounts receivable - settlement (100,000)
Increase in inventories (155,729)
Increase in prepaid assets (525)
Increase in other assets (17,100)
Increase in accounts payable and accrued liabilities 245,478
Increase in credit cards 52,006
---------
NET CASH USED BY OPERATING ACTIVITIES (387,898)
---------
Cash Flows from Investing Activities
Purchase of equipment (80,222)
---------
NET CASH USED BY INVESTING ACTIVITIES (80,222)
---------
Cash Flows from Financing Activities
Proceeds from short-term debt 147,518
Principal payments on short-term debt (51,419)
Proceeds from long-term debt 224,159
Principal payments on long-term debt (66,443)
Proceeds from issuance of stock 209,207
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 463,022
---------
DECREASE IN CASH AND CASH EQUIVALENTS (5,098)
Cash and Cash Equivalents - beginning of year 47,704
---------
Cash and Cash Equivalents - end of year $ 42,606
=========
</TABLE>
-21-
<PAGE>
JAGGED EDGE MOUNTAIN GEAR, INC.
NOTES TO FINANCIAL STATEMENTS
July 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Jagged Edge Mountain Gear, Inc. (the Company), incorporated July 27, 1997, under
the laws of the State of Colorado, is engaged in the design and sale of outdoor
garments. Sales are made through five Company operated retail stores located in
resort communities of Colorado, catalogue, internet, and other retail vendors.
Following is a summary of significant accounting policies:
Inventories
Inventories are valued at the lower of cost (first-in, first-out) or market.
Equipment and Leasehold Improvements
Equipment and leasehold improvements are stated at cost. Equipment is
depreciated using the straight-line method over the estimated economic life.
Leasehold improvements are amortized over the lesser of the lease term or the
economic life of the improvements using the straight-line method.
Income Taxes
The Company accounts for income taxes using an asset and liability approach for
financial accounting and reporting for income taxes. Under this method, deferred
tax assets and liabilities are recognized on temporary differences between the
financial statements and tax bases of assets and liabilities using applicable
enacted tax rates.
Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less, as
well as demand deposits, to be cash equivalents.
Business and Credit Concentrations
The Company's customers are not concentrated in any specific geographic region.
No single customer accounted for a significant amount of the Company's sales and
there were no significant accounts receivable from a single customer. The
Company considers accounts receivable to be fully collectible. Accordingly, no
allowance for doubtful accounts has been established. If amounts become
uncollectible, they are charged to operations when that determination is made.
Research and Development
All research and development costs are expensed when incurred.
Advertising Expenses
The Company expenses all advertising costs as incurred. Advertising charged to
expense for the year ended July 31, 1999 was $19,758.
Earnings Per Share
In accordance with SFAS No. 128, earnings (loss) per share is computed based on
the weighted average number of common shares outstanding during the reporting
period.
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 at the date of the
financial statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Comprehensive Income
The Company has no comprehensive income, therefore no statement of comprehensive
income is included with these financial statements.
-22-
<PAGE>
NOTE 2 - INVENTORIES
<TABLE>
<S> <C>
Raw materials $ 130,829
Finished goods 735,729
---------
$ 866,558
---------
</TABLE>
NOTE 3 - EQUIPMENT AND LEASEHOLD IMPROVEMENTS
<TABLE>
<S> <C>
Leasehold improvements $ 86,982
Office fixtures and equipment 56,682
Auto 24,400
---------
168,064
Accumulated depreciation (42,446)
---------
$ 125,618
=========
</TABLE>
Depreciation expense for the year ended July 31, 1999 was $28,015.
-23-
<PAGE>
NOTE 4 - DEBT
<TABLE>
<S> <C>
Short term debt
Note payable to bank, interest at 10%, matures September 26, 1999.
Collateralized by accounts receivable, inventory, equipment, and personal
guarantee of President and Vice-President $100,000
Note payable, interest 8.50%, matures November 25, 1999. Collateralized by
inventory and equipment. 6,100
--------
TOTAL SHORT TERM $106,100
========
Long term debt
Notes payable:
Note payable, monthly payments of $221, interest at 11.75%, matures
November 15, 2000. Collateralized by accounts receivable, inventory,
equipment, and personal guarantee of President and Vice-President. $ 3,524
Note payable, interest at 9.38%, matures October 13, 1999. Collateralized
by equipment. 3,500
--------
TOTAL NOTES PAYABLE 7,024
--------
Stockholder debt:
Note to stockholder, interest at 8.00%, matures March 31, 2002. Unsecured. 5,000
Note to stockholder, interest at 8.00%, matures March 31, 2002. Unsecured. 10,000
Note to stockholder, interest at 8.00%, matures April 1, 2003. Unsecured. 15,000
Note to stockholder, interest at 10.50%, matures March 31, 2003.
Unsecured. (1) 125,271
--------
TOTAL STOCKHOLDER DEBT 155,271
--------
Related party debt:
Note payable to bank, assigned to the Company by officer, monthly payments
of $340, interest at 9.47%, matures February 22, 2002. Collateralized by
truck. (2) 9,368
Note payable to bank, assigned to the Company by officer, interest at 8.50%,
matures November 24, 1999. Collateralized by accounts with lender. (2) 11,735
Note to related party. Unsecured. 2,586
Note to related party, interest at 8.00%. Unsecured. 10,000
--------
TOTAL RELATED PARTY DEBT 33,689
--------
TOTAL LONG TERM DEBT 195,984
Less current portion (33,786)
--------
Long term portion $162,198
========
</TABLE>
The terms of this note include issuance of 1,500 shares of the Company's common
stock to the payee for each thirty days the note is outstanding. As of July 31,
1999, the Company has recorded this obligation as common stock subscribed,
additional paid-in-capital and interest expense based on the estimated fair
value of the common stock and the number of days the note was outstanding during
the year ended July 31, 1999. The note is secured by a life insurance policy on
the President of the Company.
These notes were made individually in the name of the President of the Company.
The Company has assumed the responsibility for these obligations.
Annual maturity requirements for notes payable and long-term debt for the years
ending July 31 are as follows:
<TABLE>
<S> <C>
2000 $33,786
2001 4,620
2002 17,306
2003 140,272
---------
$195,984
=========
</TABLE>
Based on the borrowing rates currently available to the Corporation for bank
loans with similar terms and average maturities, the fair value of long-term
debt is approximately $135,000.
-24-
<PAGE>
NOTE 5 - OPERATING LEASES
The Company leases all of its retail stores, warehouse and office space. The
total rental expense for the year ended July 31, 1999 was $197,406. The
following summarizes the future minimum lease payments under all lease
commitments:
<TABLE>
<S> <C>
2000 $198,867
2001 $200,122
2002 $158,467
2003 $163,521
</TABLE>
The Company has the option to purchase the warehouse being leased in Telluride
for $455,000, which expires June 1, 2000.
NOTE 6 - TRADEMARK
The Company uses a distinctive trademark including the words "Jagged Edge" on
all of its products. The trademark "Jagged Edge" is owned by an individual,
unrelated to the Company, who has licensed the trademark to Jagged Edge Mountain
Gear, Inc. under a royalty agreement. No ownership rights are created by this
agreement for the licensee. The agreement is perpetual as long as the licensee
remains in business and does not breech the terms of the agreement. Royalties
are payable quarterly. The royalty amount is based on sales of "Licensed
Products". Annual sales volumes less than $2 million require a quarterly payment
of $500. Annual sales volumes greater than $2 million cause the royalty to
increase to $1,000 per quarter. For the year ended July 31, 1999, $2000 was paid
under this agreement.
NOTE 7 - SETTLEMENT
On October 15, 1999, the Company received a favorable settlement related to a
dispute over the terms of an agreement with former legal counsel. The terms of
the settlement included a monetary award of $100,000 as reimbursement for
Company expenses resulting from the agreement and a return of 640,000 shares of
common stock.
The settlement was recorded as a receivable and a reduction of expense as of
July 31, 1999. The shares of common stock were still outstanding at July 31,
1999.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Year 2000 Compliance
The Company relies on computers for the daily conduct of its business and for
general data processing. Significant national attention is directed at possible
problems that may occur with computer programs and data processing systems when
they start utilizing the year 2000 data fields.
The Company has considered information systems and other date sensitive
equipment and services and believe they have taken necessary steps to minimize
internal risks associated with the year 2000.
NOTE 9 - PROVISION FOR INCOME TAX
At July 31, 1999, the Company had a deferred tax asset of approximately $287,000
resulting from net operating loss carryforwards. There are no other temporary
differences between financial reporting and federal and state income tax
purposes. A valuation allowance of $287,000 has been established as of July 31,
1999. Net operating loss carryforwards begin to expire in 2013.
NOTE 10 - FUTURE PLANS
The Company has incurred significant losses in the last two years and this,
coupled with a shortage of liquidity, raises substantial doubt about its ability
to continue as a going concern. These conditions are the result of management's
decision to increase both staff and inventory to accommodate expected future
sales and price discounting in the industry. Also, poor snow conditions in the
resort areas where the Company operates retail stores contributed to less than
expected sales volumes during the year ended July 31, 1999. The Company is
planning for increased future sales volume by hiring a national sales manager,
increasing the distribution of their merchandise catalog, substantially
increasing the number of wholesale accounts, improving the web site exposure to
attract more online shoppers and opening additional Company owned stores.
Management expects to improve the gross margin by increasing sales prices,
reducing production costs and controlling discounting. The success of these
plans will directly affect the Company's ability to meet its short-term
obligations, allow continued growth and achieve profitable operations.
-25-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Jagged Edge Mountain Gear, Inc.
Balance Sheet - July 31, 1998 (unaudited)
Statement of Operations - Twelve Months Ended
July 31, 1998 (unaudited)
Statement of Cash Flows - Twelve Months Ended
July 31, 1998 (unaudited)
Notes to Financial Statements (unaudited)
-26-
<PAGE>
JAGGED EDGE MOUNTAIN GEAR, INC.
BALANCE SHEET (unaudited)
July 31, 1998
<TABLE>
<S> <C>
ASSETS
Current Assets
Cash $ 47,704
Accounts receivable 42,049
Accounts receivable - stock sales 38,500
Inventories 710,828
---------
TOTAL CURRENT ASSETS 839,081
Equipment and Leasehold Improvements, at cost, net 70,825
---------
Other Assets
Deposits 15,261
---------
TOTAL ASSETS $925,167
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 71,106
Credit cards 12,974
Short-term debt 18,499
---------
TOTAL CURRENT LIABILITIES 102,579
Long Term Debt, net of current portion 70,682
---------
TOTAL LIABILITIES 173,261
---------
Stockholders' Equity
Common stock $.001 par value; 50,000,000 shares authorized,
12,379,638 shares issued and outstanding 12,380
MQ Draws (19,554)
PQ Draws (19,554)
Current Earnings (197,425)
---------
Total Stockholders' Equity 751,906
---------
Total Liabilities and Stockholders' Equity $925,167
=========
</TABLE>
-27-
<PAGE>
JAGGED EDGE MOUNTAIN GEAR, INC.
STATEMENT OF OPERATIONS (unaudited)
For the year ended July 31, 1998
<TABLE>
<S> <C>
Sales $ 1,301,278
Cost of Goods Sold 603,504
-----------
GROSS PROFIT 697,773
Operating Expenses
Selling 194,854
General and administrative 699,020
-----------
LOSS FROM OPERATIONS (196,101)
Other Income (Expense)
Interest expense (2,292)
Other income 968
-----------
NET LOSS BEFORE INCOME TAX (197425)
Provision for Income Tax --
-----------
NET LOSS $ (197,425)
===========
</TABLE>
-28-
<PAGE>
JAGGED EDGE MOUNTAIN GEAR, INC.
STATEMENT OF CASH FLOWS (unaudited)
For the year ended July 31, 1998
<TABLE>
<S> <C>
Cash Flows from Operating Activities
Net loss $(236,532)
Depreciation and amortization 14,431
Common stock issued as compensation 18,547
Common stock issued as interest on notes payable 47,693
Changes in assets and liabilities
Increase in accounts receivable (64,403)
Increase in inventories (407,377)
Increase in checks in excess of balance 13,402
Increase in other assets (7,486)
Decrease in accounts payable and accrued liabilities (41,167)
Decrease in credit cards (55,585)
---------
NET CASH USED BY OPERATING ACTIVITIES (718,477)
---------
Cash Flows from Investing Activities
Purchase of equipment (49,356)
---------
NET CASH USED BY INVESTING ACTIVITIES (49,356)
---------
Cash Flows from Financing Activities
Decrease in short-term debt (45,608)
Decrease in long-term debt (118,711)
Proceeds from issuance of stock 939,400
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 775,081
---------
INCREASE IN CASH AND CASH EQUIVALENTS 7,248
Cash and Cash Equivalents - beginning of year 40,456
---------
Cash and Cash Equivalents - end of year $ 47,704
=========
</TABLE>
Supplemental disclosure of cash flow information:
During the period ended July 31, 1998, the holders of convertible notes payable
totaling $80,000 elected to convert the notes into 412,642 shares of restricted
stock in accordance with the conversion option.
During the period ended July 31, 1998, 164,000 shares of restricted stock at a
market valued of $18,547 were issued to employees as compensation.
-29-
<PAGE>
JAGGED EDGE MOUNTAIN GEAR, INC.
NOTES TO FINANCIAL STATEMENTS (unaudited)
For the year ended July 31, 1998
1. Management's Representation:
The management of Jagged Edge Mountain Gear, Inc. (JEMG) without audit has
prepared the attached financial statements. Certain information and note
disclosures normally included in the financial statements prepared in accordance
with generally accepted accounting principles have been omitted. In opinion of
the management of the JEMG, all adjustments considered necessary for fair
presentation of financial statements have been included and were of a normal
recurring nature, and the attached financial statements present fairly the
financial position for the period ended on July 31, 1998 of JEMG.
It is suggested that these financial statements be read in conjunction with the
JEMG audited financial statements for the period ended July 31, 1999, included
in this form 10SB.
2. Rule 504 Offering
On July 6, 1998, JEMG completed a private placement of 1,714,000 shares of
common stock under Rule 504 of Regulation D under the Securities Act of 1933
3. Change of Accounting Period:
During the period ended July 31, 1998, the accounting period was changed from
ending December 31 to ending July 31.
-30-
<PAGE>
EXHIBITS INDEX
Item 1. Index to Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
3.1 Articles of Incorporation, Jagged Edge Mountain Gear, Inc.
3.2 By-Laws, Jagged Edge Mountain Gear, Inc.
10.1 Jagged Edge Mountain Gear, Inc. Stock Plan
27.1 Financial Data Schedule
</TABLE>
-31-
<PAGE>
Exhibit 3.1
ARTICLES OF INCORPORATION
ARTICLE I: Name: The name of the Corporation is JAGGED EDGE
MOUNTAIN GEAR, INC.
ARTICLE II: Capitalization. The total number of shares of capital
stock which the common stock which the Corporation is authorized to issue is
fifty million (50,000,000) and the par value of each share of such common stock
is one-tenth of one cent ($.001) for an aggregate par value of fifty thousand
dollars ($50,000). The total number of shares of preferred stock which the
Corporation is authorized to issue is ten million (10,000,000) and the par value
of each share of such preferred stock is one-tenth of one cent ($.001) for an
aggregate par value of ten thousand dollars ($10,000). The voting powers,
designations, preferences and relative, participating, optional or other rights,
if any, and the qualifications, limitations or restrictions, if any, of the
preferred stock, in one or more series, shall be fixed by one or more
resolutions providing for the issuance of such stock adopted by the Corporations
board of directors (the Board of Directors), in accordance with the provisions
of the Colorado Business Corporation Act and the Board of Directors is expressly
vested with authority to adopt one or more such resolutions.
ARTICLE III: Registered Office and Registered Agent. The address
of the Corporation's registered office in the State of Colorado is 52 Pilot Knob
Lane, P.O Box 2514, Telluride, CO 81435. The name of the registered agent of the
Corporation at such address is Margaret A. Quenemoen.
ARTICLE IV: Initial Principal Office. The address of the
Corporation's initial principal office in the State of Colorado is 52 Pilot
Knob Lane, P.O Box 2514, Telluride, CO 81435.
ARTICLE V: Incorporator. The name and mailing address of the
incorporator was M. Jack Duksin, (now deceased) 239 N. Davis PO Box 1204,
Telluride CO 81435. The powers of the incorporator terminated upon filing of
these Articles of Incorporation.
ARTICLE VI: Nature of Purpose of Business. The nature of the
business of the Corporation to be conducted, or purposes for which the
corporation is organized, or the purposes promoted by the Corporation, which
shall include the authority to engage in any lawful act or activity for which
corporations may be organized under the Colorado Business Corporation Act,
and to have all the general powers granted to corporations thereunder,
whether granted mercantile, retail, wholesale, industrial, investing and
trading business in all its branches; to devise, invent, manufacture,
fabricate, assemble, install, service, maintain, alter, buy, sell, import,
export, license as licenser or licensee, lease as lessor or lessee,
distribute, job, enter into, negotiate, execute, acquire, and assign
contracts in respect of, acquire, receive, grant and assign licensing
arrangements, options, franchises, and other rights in respect of, and
generally deal in and with, at wholesale and retail, as principal, and as
sales, business, special, or general agent, representative, broker, factor,
merchant, distributor jobber, advisor, and in any other lawful capacity,
goods, wares, merchandise, commodities, and unimproved, improved, finished,
processed, and other real, personal, and mixed property of any and all kinds,
together with the components, resultants, and byproducts thereof; to acquire
by purchase or otherwise own, hold, lease, mortgage, sell, or otherwise
dispose of, erect, construct, make, alter, enlarge, improve, and to aid or
subscribe toward the construction, acquisition, or improvement of any
factories, shops, storehouses, buildings, and commercial and retail
establishments of every character, including all equipment, fixtures,
machinery, implements, and supplies necessary, or incidental to, or connected
with, any of the purposes or business of the corporation; and generally to
perform any and all acts connected therewith or arising therefrom or
incidental thereto, and all acts proper or necessary for the purpose of the
business.
ARTICLE VII: Directors. (a) The number of directors of the
Corporation shall be subject to the Corporation's bylaws (the Bylaws),
provided however, the number of directors of the Corporation may not be fewer
than two, unless the Corporation has fewer than two stockholders, in which
case the number of directors may not be fewer than the number of
stockholders. The Board of directors is authorized to make, alter or repeal
the Bylaws or any provision thereof, provided, however, that any such
alteration or repeal shall be adopted by the affirmative vote of at least
two-thirds (2/3) of the directors then in office at a meeting of the Board of
Directors for that purpose or by written resolution setting forth and
declaring advisable such alteration or repeal. The names of the directors who
shall act until the first meeting of stockholders or until their successors
are duly elected and qualified are Paula Quenemoen and Margaret Quenemoen.
-1-
<PAGE>
(b) If there shall be more than one director, the directors
shall be classified, in respect solely to the time for which they shall
severally hold office, by dividing them into three classes (two classes if
there are only two directors), each such class to be as nearly as possible
equal in number of directors to each other class. If there are three or more
directors; (i) the first term of office of directors of the first class shall
expire at the first annual meeting after their election, and thereafter such
terms shall expire on each three year anniversary of such date; (ii) the term
of office of the directors of the second class shall expire on the one year
anniversary of such one year anniversary; and (iii) the term of office of the
directors of the third class shall expire on the two year anniversary of such
two year anniversary of the first annual meeting after their election, and
thereafter such terms shall expire on each three year anniversary of such two
year anniversary. If there are two directors: (i) the first term of office of
directors of the first class shall expire at the first annual meeting after
their election, and thereafter such terms shall expire on each two year
anniversary of such date; and (ii) the term of office of the directors of the
second class shall expire on the one year anniversary of the first annual
meeting after their election, and thereafter such terms shall expire on each
two year anniversary of such one year anniversary. If there is one director,
the term of office such director shall expire at the first annual meeting
after this election. At each succeeding annual meeting, the stockholders of
the Corporation shall elect directors for a full term or the remainder
thereof, as the case may be, to succeed those whose terms have expired. Each
director shall hold office for the term for which elected and until his or
her successor shall be elected and shall qualify, or until he or she shall
resign or be removed as set forth below.
(c) Any directors, any class of directors or the entire Board
of Directors may be removed from office by stockholder vote at anytime,
without assigning any cause, buy only if the holders of not less that
two-thirds (2/3) of the outstanding shares of capital stock of the
Corporation entitled to vote upon election of directors, voting together as a
single class, shall vote in favor of such removal.
ARTICLE VIII: Liability of Directors. No director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director; provided
however, that the foregoing clause shall not eliminate or limit the liability
of a director for the following: (i) any breach of such director's duty of
loyalty to the Corporation or its stockholders; (ii) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under applicable provisions of the Colorado Business Corporations
Act; or (iv) any transition from which such director derived an improper
personal benefit.
ARTICLE IX: No Preemptive rights. No holder of any of the
shares of any class of the corporation shall be entitled as a right to
subscribe for, purchase, or otherwise acquire any shares of any class of the
corporation proposes to issue or any rights or options which the corporation
proposes to grant for the purchase of shares of any class of the corporation
or for the purchase of any shares, bonds, securities, or obligations of the
corporation which are convertible into or exchangeable for, or which carry
any rights to subscribe for, purchase, or otherwise acquire shares of any
class of the corporation; and any and all of such shares, bonds, securities,
or obligations of the corporation, whether now or hereafter authorized or
created, may be issued, or may be reissued if the same have been reacquired
and if their reissue is not prohibited, and any and all of such rights and
options may be granted by the Board of Directors to such individuals and
entities, and for such lawful considerations, and on such terms, as the Board
of Directors in its discretion may determine, without first offering the
same, or any thereof, to any said holder.
ARTICLE X: Duration. The duration of the Corporation shall
be perpetual.
ARTICLE XI: Indemnification. The Corporation, by action of
the Board of Directors, may indemnify its directors, officers, agents and/or
employees to the fullest extent permitted by the Colorado Business
Corporation Act, as such law is amended from time to time.
-2-
<PAGE>
ARTICLE XII: Amendments. Any amendment hereof shall be made and
effected only as follows; (a) the Board of Directors shall adopt such
amendment by the affirmative vote of at least two-thirds (2/3) of directors
then in office at a meeting of the Board of Directors called for that purpose
or by written resolution which sets forth and declared advisable the proposed
amendment, and the Board of Directors shall either call a special meeting of
the stockholders entitled to vote in respect thereof for consideration of
such amendment or direct that the proposed amendment be considered at the
next annual meeting of stockholders; (b) such amendment shall thereafter be
submitted for consideration by the stockholders at such special or annual
meeting; and (c) each such proposed amendment shall be approved by the
affirmative vote of two-thirds (2/3) of the outstanding shares of each class
and series, if any, of capital stock of the Corporation entitled to vote
thereon.
ARTICLE XIII: Cumulative Voting. Cumulative voting of shares of
stock is not desired or authorized.
I, THE UNDERSIGNED, being the incorporator herein before named, for
the purpose of forming a corporation pursuant to the Colorado Business
Corporation Act, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein states are true, and
accordingly have hereunto set my hand this 31st day of July, 1997.
/s/ M. Jack Duksin
Incorporator
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CONSENT OF INITIAL REGISTERED AGENT
The undersigned person hereby consents to appointment as the initial
registered agent of the corporation named in Article I of the annexed Articles
of Incorporation.
/s/ Margaret A. Quenemoen
Margaret A. Quenemoen
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Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
JAGGED EDGE MOUNTAIN GEAR, INC.
ARTICLE I
SHAREHOLDERS
1. Annual Shareholders' Meeting. The annual shareholders'
meeting shall be held on the date and at the time and place fixed from time
to time by the board of directors.
2. Special Shareholders' Meeting. A special shareholders'
meeting for any purpose or purposes may be called by the board of directors
or the president. The Corporation shall also hold a special shareholders'
meeting in the event it receives, in the manner specified in Section 3 of
Article VII, one or more written demands for the meeting, stating the purpose
or purposes for which it is to be held, signed and dated by the holders of
shares representing not less than ten percent of all of the votes entitled to
be cast on any issue proposed to be considered at the meeting. Special
meetings shall be held at the principal office of the Corporation or at such
other place as the board of directors or the president may determine.
3. Record Date for Determination of Shareholders.
(a) In order to make a determination of shareholders
(1) entitled to notice of or to vote at any shareholders' meeting or at any
adjournment of a shareholders' meeting, (2) entitled to demand a special
shareholders' meeting, (3) entitled to take any other action, (4) entitled to
receive payment of a share dividend or a distribution or (5) for any other
purpose, the board of directors may fix a future date as the record date for
such determination of shareholders. The record date may be fixed not more
than seventy days before the date of the proposed action.
(b) Unless otherwise specified when the record date is
fixed, the time of day for determination of shareholders shall be as of the
Corporation's close of business on the record date.
(c) A determination of shareholders entitled to be
given notice of or to vote at a shareholders' meeting is effective for any
adjournment of the meeting unless the board of directors fixes a new record
date, which the board shall do if the meeting is adjourned to a date more
than one hundred twenty days after the date fixed for the original meeting.
(d) If no record date is otherwise fixed, the record
date for determining shareholders entitled to be given notice of and to vote
at an annual or special shareholders' meeting is the day before the first
notice is given to shareholders.
(e) The record date for determining shareholders
entitled to take action without a meeting pursuant to Sections 10 and 11 of
this Article is the date a writing upon which the action is taken is first
received by the Corporation.
4. Voting List.
(a) After a record date is fixed for a shareholders'
meeting, the Corporation shall prepare a list of the names of all its
shareholders who are entitled to be given notice of the meeting. The list
shall be arranged by voting groups and within each voting group by class or
series of shares, shall be alphabetical within each class or series, and
shall show the address of, and the number of shares of each such class and
series that are held by, each shareholder.
(b) The shareholders' list shall be available for
inspection by any shareholder, beginning the earlier of ten days before the
meeting for which the list was prepared or two business days after notice of
the meeting is given and continuing through the meeting, and any adjournment
thereof, at the Corporation's principal office or at a place identified in
the notice of the meeting in the city where the meeting will be held.
(c) The Corporation shall make the shareholders' list
available at the meeting, and any shareholder or agent or attorney of a
shareholder is entitled to inspect the list at any time during the meeting or
any adjournment.
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5. Notice to Shareholders.
(a) The Corporation shall give notice to shareholders
of the date, time and place of each annual and special shareholders' meeting
no fewer than ten nor more than sixty days before the date of the meeting;
except that, if the Articles of Incorporation are to be amended to increase
the number of authorized shares, at least thirty days' notice shall be given.
Except as otherwise required by the Colorado Business Corporation Act, the
Corporation shall be required to give such notice only to shareholders
entitled to vote at the meeting.
(b) Notice of an annual shareholders' meeting need not
include a description of the purpose or purposes for which the meeting is
called unless a purpose of the meeting is to consider an amendment to the
Articles of Incorporation, a restatement of the Articles of Incorporation, a
plan of merger or share exchange, disposition of substantially all of the
property of the Corporation, consent by the Corporation to the disposition of
property by another entity, or dissolution of the Corporation.
(c) Notice of a special shareholders' meeting shall
include a description of the purpose or purposes for which the meeting is
called.
(d) Notice of a shareholders' meeting shall be in
writing and shall be given
(1) by deposit in the United States mail, properly
addressed to the shareholder's address shown in the Corporation's current
record of shareholders, first class, postage prepaid, and, if so given, shall
be effective when mailed; or
(2) by telegraph, teletype, electronically
transmitted facsimile, electronic mail, mail or private carrier or by
personal delivery to the shareholder, and, if so given, shall be effective
when actually received by the shareholder.
(e) If an annual or special shareholders' meeting is
adjourned to a different date, time or place, notice need not be given of the
new date, time or place if the new date, time or place is announced at the
meeting before adjournment; provided, however, that, if a new record date for
the adjourned meeting is fixed pursuant to Section 3(c) of this Article,
notice of the adjourned meeting shall be given to persons who are
shareholders as of the new record date.
(f) If three successive notices are given by the
Corporation, whether with respect to a shareholders' meeting or otherwise, to
a shareholder and are returned as undeliverable, no further notices to such
shareholder shall be necessary until another address for the shareholder is
made known to the Corporation.
6. Quorum. Shares entitled to vote as a separate voting group
may take action on a matter at a meeting only if a quorum of those shares
exists with respect to that matter. A majority of the votes entitled to be
cast on the matter by the voting group shall constitute a quorum of that
voting group for action on the matter. If a quorum does not exist with
respect to any voting group, the president or any shareholder or proxy that
is present at the meeting, whether or not a member of that voting group, may
adjourn the meeting to a different date, time or place, notice need not be
given of the new date, time or place if the new date, time or place is
announced at the meeting before adjournment. If a new record date for the
adjourned meeting is or must be fixed pursuant to Section 3(c) of this
Article, notice of the adjourned meeting shall be given pursuant to Section 5
of this Article to persons who are shareholders as of the new record date. At
any adjourned meeting at which a quorum exists, any matter may be acted upon
that could have been acted upon at the meeting originally called; provided,
however, that if new notice is given of the adjourned meeting, then such
notice shall state the purpose or purposes of the adjourned meeting
sufficiently to permit action on such matters. Once a share is represented
for any purpose at a meeting, including the purpose of determining that a
quorum exists, it is deemed present for quorum purposes for the remainder of
the meeting and for any adjournment of that meeting unless a new record date
is or shall be set for that adjourned meeting.
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7. Voting Entitlement of Shares. Except as stated in the
Articles of Incorporation, each outstanding share, regardless of class, is
entitled to one vote and each fractional share is entitled to a corresponding
fractional vote, on each matter voted on at a shareholders' meeting.
8. Proxies; Acceptance of Votes and Consents.
(a) A shareholder may vote either in person or by
proxy.
(b) An appointment of a proxy is effective against the
Corporation when received by the Corporation. An appointment is valid for
eleven months unless a different period is expressly provided in the
appointment form.
(c) The Corporation may accept or reject any
appointment of a proxy, revocation of appointment of a proxy, vote, consent,
waiver, or other writing purportedly signed by or for a shareholder, if such
acceptance or rejection is in accordance with the provisions of Sections
7-107-203 and 7-107-205 of the Colorado Business Corporation Act.
9. Waiver of Notice.
(a) A shareholder may waive any notice required by
the Colorado Business Corporation Act, by the Articles of Incorporation or
these Bylaws, whether before or after the date or time stated in the notice
as the date or time when any action will occur or has occurred. The waiver
shall be in writing, be signed by the shareholder entitled to the notice, and
be delivered to the Corporation for inclusion in the minutes or filing with
the corporate records, but such delivery and filing shall not be conditions
of the effectiveness of the waiver.
(b) A shareholder's attendance at a meeting waives
objection to lack of notice or defective notice of the meeting, unless the
shareholder at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting because of lack of notice or defective
notice and waives objection to consideration of a particular matter at the
meeting that is not within the purpose or purposes described in the meeting
notice, unless the shareholder objects to considering the matter when it is
presented.
10. Action by Shareholders Without a Meeting. Any action
required or permitted to be taken at a shareholders' meeting may be taken
without a meeting if all of the shareholders entitled to vote thereon consent
to such action in writing. Action taken pursuant to this Section shall be
effective when the Corporation has received writings that describe and
consent to the action, signed by all of the shareholders entitled to vote
thereon. Action taken pursuant to this Section shall be effective as of the
date the last writing necessary to effect the action is received by the
Corporation, unless all of the writings necessary to effect the action
specify another date, which may be before or after the date the writings are
received by the Corporation. Such action shall have the same effect as action
taken at a meeting of shareholders and may be described as such in any
document. Any shareholder who has signed a writing describing and consenting
to action taken pursuant to this Section may revoke such consent by a writing
signed by the shareholder describing the action and stating that the
shareholder's prior consent thereto is revoked, if such writing is received
by the Corporation before the effectiveness of the action.
11. Meetings by Telecommunications. Any or all of the shareholders
may participate in an annual or special shareholders' meeting by, or the meeting
may be conducted through the use of, any means of communication by which all
persons participating in the meeting may hear each other during the meeting. A
shareholder participating in a meeting by this means is deemed to be present in
person at the meeting.
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ARTICLE II
DIRECTORS
1. Authority of the Board of Directors. The corporate powers
shall be exercised by or under the authority of, and the business and affairs of
the Corporation shall be managed under the direction of, a board of directors.
2. Number. The number of directors shall be fixed by resolution
of the board of directors from time to time and may be increased or decreased by
resolution adopted by the board of directors from time to time, but no decrease
in the number of directors shall have the effect of shortening the term of any
incumbent director.
3. Qualification. Directors shall be natural persons at least
eighteen years old but need not be residents of the State of Colorado or
shareholders of the Corporation.
4. Election. The board of directors shall be elected at the
annual meeting of the shareholders or at a special meeting called for that
purpose.
5. Term. Each director shall be elected to hold office until
the next annual meeting of shareholders and until the director's successor is
elected and qualified.
6. Resignation. A director may resign at any time by giving
written notice of his or her resignation to the Corporation. The resignation
shall be effective when it is received by the Corporation unless the notice of
resignation specifies a later effective date. Acceptance of such resignation
shall not be necessary to make it effective unless the notice so provides.
7. Removal. Any director may be removed by the shareholders
with or without cause, at a meeting called for that purpose. The notice of
the meeting shall state that the purpose, or one of the purposes, of the
meeting is removal of the director. A director may be removed only if the
number of votes cast in favor of removal exceeds the number of votes cast
against removal.
8. Vacancies.
(a) If a vacancy occurs on the board of directors,
including a vacancy resulting from an increase in the number of directors:
(1) The shareholders may fill the vacancy at
the next annual meeting or at a special meeting called for that purpose; or
(2) The board of directors may fill the
vacancy; or
(3) If the directors remaining in office
constitute fewer than a quorum of the board, they may fill the vacancy by the
affirmative vote of a majority of all the directors remaining in office.
(b) Notwithstanding Section 8(a) of this Article, if the
vacant office was held by a director elected by a voting group of shareholders,
then, if one or more of the remaining directors were elected by the same voting
group, only such directors are entitled to vote to fill the vacancy if it is
filled by directors, and they may do so by the affirmative vote of a majority of
such directors remaining in office; and only the holders of shares of that
voting group are entitled to vote to fill the vacancy if it is filled by the
shareholders.
(c) A vacancy that will occur at a specific later date,
by reason of a resignation that will become effective at a later date under
Section 6 of this Article or otherwise, may be filled before the vacancy occurs,
but the new director may not take office until the vacancy occurs.
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9. Meetings. The board of directors may provide by resolution the
date, time and place, either within or outside Colorado, for the holding of
regular meetings without other notice. Special meetings may be called by the
president or by any two directors and shall be held at any time, date and place
specified in the notice of the meeting. At any time when the board consists of a
single director, that director may act at any time, date or place without a
meeting.
10. Notice of Special Meeting. Notice of a special meeting
shall be given to every director at least two days before the time of the
meeting, stating the date, time and place of the meeting. The notice need not
describe the purpose of the meeting. Notice may be given orally to the
director, personally or by telephone or other wire or wireless communication.
Notice may also be given in writing by telegraph, teletype, electronically
transmitted facsimile, electronic mail, mail or private carrier. Notice shall
be effective at the earliest of the time it is received; five days after it
is deposited in the United States mail, properly addressed to the last
address for the director shown on the records of the Corporation, first
class, postage prepaid; or the date shown on the return receipt if mailed by
registered or certified mail, return receipt requested, postage prepaid, in
the United States mail and if the return receipt is signed by the director to
whom the notice is addressed.
11. Quorum. Except as provided in Section 8 of this Article, a
majority of the number of directors fixed in accordance with these Bylaws
shall constitute a quorum for the transaction of business at all meetings of
the board of directors. The act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of
directors, except as otherwise specifically required by law.
12. Waiver of Notice.
(a) A director may waive any notice before or after
the time and date of the meeting stated in the notice. Except as provided by
Section 12(b) of this Article, the waiver shall be in writing and shall be
signed by the director. Such waiver shall be delivered to the Corporation for
filing with the corporate records, but such delivery and filing shall not be
conditions of the effectiveness of the waiver.
(b) A director's attendance at or participation in a
meeting waives any required notice to him or her of the meeting unless, at
the beginning of the meeting or promptly upon his or her later arrival, the
director objects to holding the meeting or transacting business at the
meeting because of lack of notice or defective notice and does not thereafter
vote for or assent to action taken at the meeting.
13. Attendance by Telephone. One or more directors may participate
in a regular or special meeting by, or conduct the meeting through the use of,
any means of communication by which all directors participating may hear each
other during the meeting. A director participating in a meeting by this means is
deemed to be present in person at the meeting.
14. Deemed Assent to Action. A director who is present at a
meeting of the board of directors when corporate action is taken shall be deemed
to have assented to all action taken at the meeting unless:
(a) The director objects at the beginning of the meeting,
or promptly upon his or her arrival, to holding the meeting or transacting
business at the meeting and does not thereafter vote for or assent to any action
taken at the meeting;
(b) The director contemporaneously requests that his or
her dissent or abstention as to any specific action taken be entered in the
minutes of the meeting; or
(c) The director causes written notice of his or her
dissent or abstention as to any specific action to be received by the presiding
officer of the meeting before adjournment of the meeting or by the Corporation
promptly after adjournment of the meeting.
The right of dissent or abstention pursuant to this Section as to a specific
action is not available to a director who votes in favor of the action taken.
15. Action by Directors Without a Meeting. Any action required or
permitted by law to be taken at a board of directors' meeting may be taken
without a meeting if all members of the board consent to such action in writing.
Action shall be deemed to have been so taken by the board at the time the last
director signs a writing describing the action taken, unless, before such time,
any director has revoked his or her consent by a writing signed by the director
and received by the Corporation or any other person authorized by the Bylaws or
the board of directors to receive such a revocation. Such action shall be
effective at the time and date it is so taken unless the directors establish a
different effective date. Such action has the same effect as action taken at a
meeting of directors and may be described as such in any document.
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ARTICLE III
COMMITTEES OF THE BOARD OF DIRECTORS
1. Committees of the Board of Directors.
(a) Subject to the provisions of Section 7-109-106 of
the Colorado Business Corporation Act, the board of directors may create one
or more committees and appoint one or more members of the board of directors
to serve on them. The creation of a committee and appointment of members to
it shall require the approval of a majority of all the directors in office
when the action is taken, whether or not those directors constitute a quorum
of the board.
(b) The provisions of these Bylaws governing meetings,
action without meeting, notice, waiver of notice and quorum and voting
requirements of the board of directors apply to committees and their members
as well.
(c) To the extent specified by resolution adopted from
time to time by a majority of all the directors in office when the resolution
is adopted, whether or not those directors constitute a quorum of the board,
each committee shall exercise the authority of the board of directors with
respect to the corporate powers and the management of the business and
affairs of the Corporation; except that a committee shall not:
(1) Authorize distributions;
(2) Approve or propose to shareholders action
that the Colorado Business Corporation Act requires to be approved by
shareholders;
(3) Fill vacancies on the board of directors or
any of its committees;
(4) Amend the Articles of Incorporation
pursuant to Section 7-110-102 of the Colorado Business Corporation Act;
(5) Adopt, amend or repeal Bylaws;
(6) Approve a plan of merger not requiring
shareholder approval;
(7) Authorize or approve reacquisition of
shares, except according to a formula or method prescribed by the board of
directors; or
(8) Authorize or approve the issuance or sale
of shares, or a contract for the sale of shares, or determine the designation
and relative rights, preferences and limitations of a class or series of shares;
except that the board of directors may authorize a committee or an officer to do
so within limits specifically prescribed by the board of directors.
(d) The creation of, delegation of authority to, or
action by, a committee does not alone constitute compliance by a director with
applicable standards of conduct.
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ARTICLE IV
OFFICERS
1. General. The Corporation shall have as officers a
president, a secretary, and a treasurer, who shall be appointed by the board
of directors. The board of directors may appoint as additional officers a
chairman and other officers of the board. The board of directors, the
president, and such other subordinate officers as the board of directors may
authorize from time to time, acting singly, may appoint as additional
officers one or more vice presidents, assistant secretaries, assistant
treasurers, and such other subordinate officers as the board of directors,
the president, or such other appointing officers deem necessary or
appropriate. The officers of the Corporation shall hold their offices for
such terms and shall exercise such authority and perform such duties as shall
be determined from time to time by these Bylaws, the board of directors, or
(with respect to officers who are appointed by the president or other
appointing officers) the persons appointing them; provided, however, that the
board of directors may change the term of offices and the authority of any
officer appointed by the president or other appointing officers. Any two or
more offices may be held by the same person. The officers of the Corporation
shall be natural persons at least eighteen years old.
2. Term. Each officer shall hold office from the time of
appointment until the time of removal or resignation pursuant to Section 3 of
this Article or until the officer's death.
3. Removal and Resignation. Any officer appointed by the board
of directors may be removed at any time by the board of directors. Any
officer appointed by the president or other appointing officer may be removed
at any time by the board of directors or by the person appointing the
officer. Any officer may resign at any time by giving written notice of
resignation to any director (or to any director other than the resigning
officer if the officer is also a director), to the president, to the
secretary, or to the officer who appointed the officer. Acceptance of such
resignation shall not be necessary to make it effective, unless the notice so
provides.
4. President. The president shall preside at all meetings of
shareholders, and the president shall also preside at all meetings of the
board of directors unless the board of directors has appointed a chairman,
vice chairman, or other officer of the board and has authorized such person
to preside at meetings of the board of directors instead of the president.
Subject to the direction and control of the board of directors, the president
shall be the chief executive officer of the Corporation and as such shall
have general and active management of the business of the Corporation and
shall see that all orders and resolutions of the board of directors are
carried into effect. The president may negotiate, enter into, and execute
contracts, deeds, and other instruments on behalf of the Corporation as are
necessary and appropriate to conduct the business and affairs of the
Corporation or as are approved by the board of directors. The president shall
have such additional authority and duties as are appropriate and customary
for the office of president and chief executive officer, except as the same
may be expanded or limited by the board of directors from time to time.
5. Vice President. The vice president, if any, or, if there
are more than one, the vice presidents in the order determined by the board
of directors or the president (or, if no such determination is made, in the
order of their appointment), shall be the officer or officers next in
seniority after the president. Each vice president shall have such authority
and duties as are prescribed by the board of directors or president. Upon the
death, absence, or disability of the president, the vice president, if any
or, if there are more than one, the vice presidents in the order determined
by the board of directors or the president, shall have the authority and
duties of the president.
6. Secretary. The secretary shall be responsible for the
preparation and maintenance of minutes of the meetings of the board of
directors and of the shareholders and of the other records and information
required to be kept by the Corporation under Section 7-116-101 of the
Colorado Business Corporation Act and for authenticating records of the
Corporation. The secretary shall also give, or cause to be given, notice of
all meetings of the shareholders and special meetings of the board of
directors, keep the minutes of such meetings, have charge of the corporate
seal and have authority to affix the corporate seal to any instrument
requiring it (and, when so affixed, it may be attested by the secretary's
signature), be responsible for the maintenance of all other corporate records
and files and for the preparation and filing of reports to governmental
agencies (other than tax returns), and have such other authority and duties
as are appropriate and customary for the office of secretary, except as the
same may be expended or limited by the board of directors from time to time.
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7. Assistant Secretary. The assistant secretary, if any, or,
if there are more than one, the assistant secretaries in the order determined
by the board of directors or the secretary (or, if no such determination is
made, in the order of their appointment) shall, under the supervision of the
secretary, perform such duties and have such authority as may be prescribed
from time to time by the board of directors or the secretary. Upon the death,
absence, or disability of the secretary, the assistant secretary, if any, or,
if there are more than one, the assistant secretaries in the order designated
by the board of directors or the secretary (or, if no such determination is
made, in the order of their appointment), shall have the authority and duties
of the secretary.
8. Treasurer. The treasurer shall have control of the funds
and the care and custody of all stocks, bonds, and other securities owned by
the Corporation, and shall be responsible for the preparation and filing of
tax returns. The treasurer shall receive all moneys paid to the Corporation
and, subject to any limits imposed by the board of directors, shall have
authority to give receipts and vouchers, to sign and endorse checks and
warrants in the Corporation's name and on the Corporation's behalf, and give
full discharge for the same. The treasurer shall also have charge of
disbursement of funds of the Corporation, shall keep full and accurate
records of the receipts and disbursements, and shall deposit all moneys and
other valuable effects in the name and to the credit of the Corporation in
such depositories as shall be designated by the board of directors. The
treasurer shall have such additional authority and duties as are appropriate
and customary for the office of treasurer, except as the same may be expanded
or limited by the board of directors from time to time.
9. Assistant Treasurer. The assistant treasurer, if any, or,
if there are more than one, the assistant treasurers in the order determined
by the board of directors or the treasurer (or, if no such determination is
made, in the order of their appointment) shall, under the supervision of the
treasurer, have such authority and duties as may be prescribed from time to
time by the board of directors or the treasurer. Upon the death, absence, or
disability of the treasurer, the assistant treasurer, if any, or if there are
more than one, the assistant treasurers in the order determined by the board
of directors or the treasurer (or, if no such determination is made, in the
order of their appointment), shall have the authority and duties of the
treasurer.
10. Compensation. Officers shall receive such compensation for
their services as may be authorized or ratified by the board of directors.
Election or appointment of an officer shall not of itself create a
contractual right to compensation for services performed as such officer.
ARTICLE V
INDEMNIFICATION
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any action, suit or proceeding, whether civil
or criminal, administrative or investigative, by reason of the fact that such
person is or was a director, officer, employee or agent of the Corporation to
the fullest extent permitted by law.
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ARTICLE VI
SHARES
1. Certificates. Certificates representing shares of the capital
stock of the Corporation shall be in such form as is approved by the board of
directors and shall be signed by the chairman or vice chairman of the board of
directors, chief executive officer, president or any vice president, and by the
secretary, assistant secretary, treasurer or an assistant treasurer. If the
Corporation has only one officer, the certificates may be signed by that officer
alone. All certificates shall be consecutively numbered, and the names of the
owners, the number of shares, and the date of issue shall be entered on the
books of the Corporation. Each certificate representing shares shall state upon
its face:
(a) That the Corporation is organized under the laws of
the State of Colorado;
(b) The name of the person to whom issued;
(c) The number and class of the shares and the
designation of the series, if any, that the certificate represents;
(d) The par value, if any, of each share represented by
the certificate;
(e) A conspicuous statement, on the front or the back,
that the Corporation will furnish to the shareholder, on request in writing and
without charge, information concerning the designations, preferences,
limitations, and relative rights applicable to each class, the variations in
preferences, limitations, and rights determined for each series, and the
authority of the board of directors to determine variations for future classes
or series; and
(f) Any restrictions imposed by the Corporation upon the
transfer of the shares represented by the certificate.
2. Facsimile Signatures. Where a certificate is signed:
(a) By a transfer agent other than the Corporation or its
employee, or
(b) By a registrar other than the Corporation or its
employee, any or all of the officers' signatures on the certificate required by
Section 1 of this Article may be facsimile. If any officer, transfer agent or
registrar who has signed, or whose facsimile signature or signatures have been
placed upon, any certificate, shall cease to be such officer, transfer agent, or
registrar, whether because of death, resignation, or otherwise, before the
certificate is issued by the Corporation, it may nevertheless be issued by the
Corporation with the same effect as if he or she were such officer, transfer
agent or registrar at the date of issue.
3. Transfers of Shares. Transfers of shares shall be made on the
books of the Corporation only upon presentation of the certificate or
certificates representing such shares properly endorsed by the person or persons
appearing upon the face of such certificate to be the owner, or accompanied by a
proper transfer or assignment separate from the certificate, except as may
otherwise be expressly provided by the statutes of the State of Colorado or by
order of a court of competent jurisdiction. The officers or transfer agents of
the Corporation may, in their discretion, require a signature guaranty before
making any transfer. The Corporation shall be entitled to treat the person in
whose name any shares are registered on its books as the owner of those shares
for all purposes and shall not be bound to recognize any equitable or other
claim or interest in the shares on the part of any other person, whether or not
the Corporation shall have notice of such claim or interest.
4. Shares Held For Account of Another. The board of directors may
adopt by resolution a procedure whereby a shareholder of the Corporation may
certify in writing to the Corporation that all or a portion of the shares
registered in the name of such shareholder are held for the account of a
specified person or persons. The resolution shall set forth:
(a) The classification of shareholders who may certify;
(b) The purpose or purposes for which the certification
may be made;
(c) The form of certification and information to be
contained herein;
(d) If the certification is with respect to a record date
or closing of the stock transfer books, the time after the record date or the
closing of the stock transfer books within which the certification must be
received by the Corporation; and
(e) Such other provisions with respect to the procedure
as are deemed necessary or desirable. Upon receipt by the Corporation of a
certification complying with the procedure, the persons specified in the
certification shall be deemed, for the purpose or purposes set forth in the
certification, to be the holders of record of the number of shares specified in
place of the shareholder making the certification.
-9-
<PAGE>
ARTICLE VII
MISCELLANEOUS
1. Corporate Seal. The board of directors may adopt a seal,
circular in form and bearing the name of the Corporation and the words "SEAL"
and "COLORADO," which, when adopted, shall constitute the seal of the
Corporation. The seal may be used by causing it or a facsimile of it to be
impressed, affixed, manually reproduced, or rubber stamped with indelible ink.
2. Fiscal Year. The Corporation's current fiscal year begins on
August 1 and ends on July 31. The board of directors may, by resolution, adopt a
different fiscal year for the Corporation.
3. Receipt of Notices by the Corporation. Notices, shareholder
writings consenting to action, and other documents or writings shall be deemed
to have been received by the Corporation when they are received:
(a) At the registered office of the Corporation in the
State of Colorado;
(b) At the principal office of the Corporation (as that
office is designated a principal office) addressed to the attention of the
secretary of the Corporation;
(c) By the secretary of the Corporation wherever the
secretary may be found; or
(d) By any other person authorized from time to time by
the board of directors, the president, or the secretary to receive such
writings, whenever such person is found.
4. Amendment of Bylaws. These Bylaws may at any time and from
time to time be amended, supplemented, or repealed by the board of directors.
-10-
<PAGE>
JAGGED EDGE MOUNTAIN GEAR, INC.
STOCK PLAN
1. Purpose.
Jagged Edge Mountain Gear, Inc., a Colorado corporation (the
"Company"), hereby establishes the Jagged Edge Mountain Gear, Inc. Stock Plan
(the "Plan") as a means whereby the Company may, through awards of (i)
incentive stock options within the meaning of section 422 of the Code (as
defined below), (ii) non-qualified stock options, and (iii) restricted stock:
(a) provide employees of the Company with additional
incentive to promote the success of the Company's businesses and encourage
such employees to remain employed with the Company;
(b) provide incentive for potential employees to accept
employment with the Company; and
(c) provide directors of the Company who are not also
employees of the Company, and consultants and other independent contractors
who provide services to the Company, with additional incentive to promote the
success of the Company's business.
2. Definitions.
2.01 "Board" or "Board of Directors" means the board of directors of
the Company.
2.02 "Code" means the Internal Revenue Code of 1986, as it exists
now and as it may be amended from time to time.
2.03 "Common Stock" means the common stock of the Company, $.001 par
value per share.
2.04 "Company" means Jagged Edge Mountain Gear, Inc., a Colorado
corporation, and any successor thereto.
2.05 "Director" means a member of the Board.
2.06 "Exchange Act" means the Securities Exchange Act of 1934, as
it exists now or from time to time may hereafter be amended.
2.07 "Fair Market Value" means for the relevant day: (a) if there
is an established market for the Company's Common Stock on a stock exchange,
through Nasdaq, in the over-the-counter market or otherwise, the mean between
the highest and lowest reported sale prices on the valuation date, or (b) if
there were no such sales on the valuation date or if no such market exists,
then in accordance with Treasury Regulation Section 20.2031-2 or successor
regulations.
2.08 "ISO" means incentive stock options within the meaning of
Section 422 of the Code.
2.09 "NSO" means non-qualified stock options, which are not intended
to qualify under Section 422 of the Code.
2.10 "Option" means the right of a Participant, whether granted as
an ISO or an NSO, to purchase a specified number of shares of Common Stock,
subject to the terms and conditions of the Plan.
2.11 "Option Date" means the date upon which an Option or Restricted
Stock is awarded to a Participant under the Plan.
2.12 "Option Price" means the price per share at which an Option may
be exercised.
2.13 "Participant" means an individual to whom an Option or
Restricted Stock has been granted under the Plan.
2.14 "Plan" means the Jagged Edge Mountain Gear, Inc. Stock Plan, as
set forth herein and as amended from time to time.
2.15 "Restricted Stock" means Common Stock awarded to a Participant
pursuant to this Plan.
2.16 "Securities Act" means the Securities Act of 1933, as it exists
now or from time to time may hereinafter be amended.
<PAGE>
2.17 Rules of Construction.
(a) Governing Law. The construction and operation of this
Plan are governed by the laws of the State of Colorado.
(b) Undefined Terms. Unless the context requires another
meaning, any term not specifically defined in this Plan has the meaning given
to it by the Code.
(c) Headings. All headings in this Plan are for reference
only and are not to be utilized in construing the Plan.
(d) Gender. Unless clearly appropriate, all nouns of
whatever gender refer indifferently to persons of any gender.
(e) Singular and Plural. Unless clearly inappropriate,
singular terms refer also to the plural and vice versa.
(f) Severability. If any provision of this Plan is
determined to be illegal or invalid for any reason, the remaining provisions
shall continue in full force and effect and shall be construed and enforced
as if the illegal or invalid provision did not exist, unless the continuance
of the Plan in such circumstances is not consistent with its purposes.
(g) Termination of Employment. For all purposes of this
Plan, an employee will have terminated employment with the Company when the
employee's employment relationship with the Company is terminated.
Additionally, for all purposes of the Plan, (i) a consultant's or independent
contractor's "employment with the Company" shall be considered terminated
upon the termination of any consulting or independent contractor agreement,
or when the consultant or independent contractor no longer performs any
services for the Company, and (ii) a non-employee Director's "employment with
the Company" shall be considered terminated at the time such Director ceases
to serve on the Board.
3. Stock Subject to the Plan.
The aggregate number of shares of Common Stock that may be issued
under Options or as Restricted Stock under this Plan may not exceed 5,000,000
shares of Common Stock. Reserved shares may be either authorized but
unissued shares or treasury shares, in the Board's discretion. If any awards
hereunder shall terminate or expire, as to any number of shares, new Options,
and Restricted Stock may thereafter be awarded with respect to such shares.
No Participant may be granted awards under the Plan in any calendar year in
respect of more than 500,000 shares of Common Stock.
4. Administration.
The Plan shall be administered by the Board. In addition to any other
powers set forth in this Plan, the Board has the exclusive authority:
(a) to construe and interpret the Plan, and to remedy any
ambiguities or inconsistencies therein;
(b) to establish, amend and rescind appropriate rules and
regulations relating to the Plan;
(c) subject to the express provisions of the Plan, to
determine the individuals who will receive awards of Options or Restricted
Stock, the times when they will receive them, the number of shares to be
subject to each award and the Option Price, payment terms, payment method,
and expiration date applicable to each award;
(d) to contest on behalf of the Company or Participants, at
the expense of the Company, any ruling or decision on any matter relating to
the Plan or to any awards of ISOs, NSOs, or Restricted Stock;
(e) generally, to administer the Plan, and to take all such
steps and make all such determinations in connection with the Plan and the
awards of ISOs, NSOs, or Restricted Stock, granted thereunder as it may deem
necessary or advisable; and
(f) to determine the form in which tax withholding will be
made.
<PAGE>
5. Eligible Participants.
Subject to the provisions of the Plan, the Board shall determine from
time to time (a) those employees, officers, Directors, consultants and
independent contractors of the Company, and non-employees and non-officers to
whom the Company has extended an offer of employment, who shall be designated
as Participants, and (b) the number of Options, shares of Restricted Stock,
or any combination thereof, to be awarded to each such Participant.
6. Terms and Conditions of Incentive Stock Options.
The Board, in its discretion, may grant ISOs to any Participant under
the Plan; provided, however, that no ISOs may be granted to a Director or
other Participant who is not an employee of the Company. Each ISO shall be
evidenced by an agreement between the Company and the Participant in a form
approved by the Board. Unless the Board, in its discretion, determines
otherwise, each ISO agreement shall be subject to the following terms and
conditions and to such other terms and conditions as the Board may deem
appropriate;
(a) Option Period. Each ISO will expire as of the earliest of:
(i) the date on which it is forfeited;
(ii) 10 years from the Option Date;
(iii) three months after the Participant's termination of
employment with the Company for any reason other than death; or
(iv) six months after the Participant's death.
(b) Option Price. The Option Price per share shall be
determined by the Board at the time any ISO is granted, and shall not be less
than the Fair Market Value of the Common Stock subject to the ISO on the
Option Date.
(c) Other Option Provisions. The form of ISO authorized by
the Plan may contain such other provisions as the Board may, from time to
time, determine; provided, however, that such other provisions may not be
inconsistent with any requirements imposed on qualified stock options under
Section 422 of the Code.
(d) Limitations on Awards. The aggregate Fair Market Value,
determined as of the Option Date, of Common Stock with respect to which ISOs
are exercisable by a Participant for the first time during any calendar year
under all ISO plans of the Company shall not exceed $100,000.
(e) Awards to Certain Stockholders. Notwithstanding
Sections 6(a) and 6(b) hereof, if an ISO is granted to a Participant who owns
stock representing more than 10% of the voting power of all classes of stock
of the Company (as determined under the Code), the exercise period specified
in the ISO agreement for which the ISO thereunder is granted shall not exceed
five years from the Option Date and the Option Price shall be at least 110%
of the Fair Market Value (as of the Option Date) of the Common Stock subject
to the ISO.
7. Terms and Conditions of Non-Qualified Stock Option.
The Board, in its discretion, may grant NSOs to any Participant under the
Plan. Each NSO shall be evidenced by an agreement between the Company and the
Participant in a form approved by the Board. Unless the Board, in its
discretion, determines otherwise, each NSO agreement shall be subject to the
following terms and conditions and to such other terms and conditions as the
Board may deem appropriate:
(a) Option Period. Each NSO will expire as of the earliest of:
(i) the date on which it is forfeited;
(ii) the date three months after the Participant's
termination of employment with the Company for any reason other than death; or
(iii) the date six months after the Participant's death.
(b) Option Price. At the time when the NSO is granted, the
Board will fix the Option Price. The Option Price may be greater than, less
than, or equal to Fair Market Value on the Option Date, as determined in the
sole discretion of the Board.
(c) Other Option Provisions. The form of NSO authorized by the
Plan may contain such other provisions as the Board may from time to time
determine.
<PAGE>
8. Terms and Conditions of Restricted Stock Awards.
The Board, in its discretion, may grant Restricted Stock to any
Participant under the Plan. Each grant of Restricted Stock shall be
evidenced by an agreement between the Company and the Participant in a form
approved by the Board. Unless the Board, in its discretion, determines
otherwise, all shares of Common Stock awarded to Participants under the Plan
as Restricted Stock shall be subject to the following terms and conditions
and to such other terms and conditions as the Board may deem appropriate:
(a) Restricted Period. Shares of Restricted Stock awarded
to Participants may not be sold, transferred, pledged or otherwise encumbered
before they vest. Subject to the provisions of subparagraphs (b) and (c)
below and any other restrictions imposed by law, certificates evidencing
shares of Restricted Stock that vest will be transferred to the Participant
or, in the event of his or her death, to the beneficiary or beneficiaries
designated by writing filed by the Participant with the Board for such
purpose or, if none, to his or her estate.
(b) Forfeitures. A Participant shall forfeit all unpaid
accumulated dividends and all shares of Restricted Stock which have not
vested prior to the date that such Participant's employment with the Company
is terminated for any reason.
(c) Certificates Deposited With Company. Each certificate
issued in respect of shares of Restricted Stock awarded under the Plan shall
be registered in the name of the Participant and deposited with the Company.
Each such certificate shall bear the following (or a similar) legend:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and conditions (including
forfeiture) relating to Restricted Stock contained in the Jagged Edge
Mountain Gear, Inc. Stock Plan and an agreement entered into between the
registered owner and Jagged Edge Mountain Gear, Inc. Copies of such Plan and
agreement are on file at the principal office of Jagged Edge Mountain Gear,
Inc."
(d) Stockholder Rights. Subject to the foregoing
restrictions, each Participant shall have all the rights of a stockholder
with respect to his shares of Restricted Stock including, but not limited to,
the right to vote such shares.
(e) Dividends. On each Common Stock dividend payment date,
each Participant shall receive an amount equal to the dividend paid on that
date on a share of Common Stock, multiplied by his number of shares of
Restricted Stock.
9. Manner of Exercise of Options.
To exercise an Option in whole or in part, a Participant, any
permitted transferee of a Participant or, after a Participant's death, a
Participant's executor or administrator, must give written notice to the
Board, stating the number of shares to which he intends to exercise the
Option. The Company will issue the shares with respect to which the Option
is exercised upon payment in full of the Option Price. The Option Price may
be paid (i) in cash, (ii) in shares of Common Stock having an aggregate Fair
Market Value, as determined on the date of delivery, equal to the Option
Price, or (iii) by delivery of irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds necessary
to pay for all Common Stock acquired through such exercise and any tax
withholding obligations resulting from such exercise. The Option Price may
be paid in shares of Common Stock which were received by the Participant upon
the exercise of one or more Options. The Option Price may be paid in shares
of Common Stock which were received by the Participant as an award of
Restricted Stock under the Plan.
Vesting.
A Participant may not exercise an Option or transfer, pledge or
dispose of any Restricted Stock until it has become vested. The Board shall
specify the vesting schedule for each award granted. If it determines that
special circumstances exist, the Board, in its sole discretion, may
accelerate the time in which an award under the Plan vests, even if, under
its existing terms, such award would not then be exercisable.
11. Adjustments to Reflect Changes in Capital Structure.
If there is any change in the corporate structure or shares of the
Company, the Board of Directors may, in its discretion, make any adjustments
necessary to prevent accretion, or to protect against dilution, in the number
and kind of shares authorized by the Plan and, with respect to outstanding
Options and/or Restricted Stock in the number and kind of shares covered
thereby and in the applicable Option Price; provided, however, no adjustment
will be made for the issuance of preferred stock or the conversion of
convertible preferred stock. For the purpose of this Section, a change in
the corporate structure or shares of the Company includes, without
limitation, any change resulting from a recapitalization, stock split, stock
dividend, consolidation, rights offering, spin-off, reorganization, or
liquidation and any transaction in which shares of Common Stock are changed
into or exchanged for a different number or kind of shares of stock or other
securities of the Company or another corporation.
<PAGE>
12. Non-Transferability of Options.
The Options awarded under the Plan are not transferable, voluntarily
or involuntarily, other than by will or the laws of descent and distribution,
or to the extent permissible under Section 422 of the Code, pursuant to a
qualified domestic relations order as defined in Section 414(p) of the Code;
provided, however, that the Compensation Board, in its discretion, may permit
Options to be transferable by a Participant to members of such Participant's
immediate family or to family trusts, partnerships and other entities
comprised solely of the Participant or members of the Participant's immediate
family.
13. Rights as Stockholder.
No Common Stock may be delivered upon the exercise of any Option until
full payment of the Option Price has been made and all income tax withholding
requirements thereon have been satisfied. A Participant has no rights
whatsoever as a stockholder with respect to any shares covered by an Option
until the date of the issuance of a stock certificate for the shares.
14. Withholding Tax.
The Company shall have the right to withhold or to require a
Participant to remit to the Company, in cash or shares of Common Stock, with
respect to any payments made to Participants under the Plan, any taxes
required by law to be withheld because of such payments. Subject to the
consent of the Board with respect to (a) the exercise of an NSO, (b) the
lapse of restrictions on Restricted Stock, (c) a "disqualifying disposition"
of an ISO, as determined pursuant to the Code, or (d) the issuance of any
other stock award under the Plan, a Participant may make an irrevocable
election (an "Election") to (i) have shares of Common Stock otherwise
issuable withheld, or (ii) tender back to the Company shares of Common Stock
received pursuant to (a), (b), or (d), or (iii) deliver back to the Company
pursuant to (a), (b), or (d) previously acquired shares of Common Stock
having a Fair Market Value sufficient to satisfy all or part of the
Participant's estimated tax obligations. Such Election must be made by a
Participant prior to the date on which the relevant tax obligation arises.
The Board may disapprove of any Election, may suspend or terminate the right
to make Elections, or may provide with respect to any award under this Plan
that the right to make Elections shall not apply to such award.
15. No Right To Employment.
Participation in the Plan will not give any Participant a right to be
retained as an employee of the Company, or any right or claim to any benefit
under the Plan, unless the right or claim has specifically accrued under the
Plan.
16. Amendment of the Plan.
The Board may from time to time amend or revise the terms of this Plan
in whole or in part and may without limitation, adopt any amendment deemed
necessary. All amendments shall be in writing and consented to by a majority
of the members of the Board.
17. Conditions Upon Issuance of Shares.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Common Stock is being purchased only for investment
and without any present intention to sell or distribute such shares if, in
the opinion of counsel for the Company, such a representation is required by
law.
18. Effective Date and Termination of Plan.
(a) Effective Date. This Plan is effective as of the date of its
adoption by the Board.
(b) Termination of the Plan. The Board may terminate the Plan at
any time with respect to any shares that are not then subject to Options or
Restricted Stock. Termination of the Plan will not affect the rights and
obligations of any Participant with respect to Options or Restricted Stock
awarded before termination.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JAGGED
EDGE MOUNTAIN GEAR, INC.'S 1999 ANNUAL FORM 10SB AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> JUL-31-1999
<CASH> 42,606
<SECURITIES> 0
<RECEIVABLES> 61,992
<ALLOWANCES> 0
<INVENTORY> 866,558
<CURRENT-ASSETS> 1,071,618
<PP&E> 168,064
<DEPRECIATION> 42,446
<TOTAL-ASSETS> 1,229,660
<CURRENT-LIABILITIES> 556,763
<BONDS> 0
0
0
<COMMON> 13,307
<OTHER-SE> 497,289
<TOTAL-LIABILITY-AND-EQUITY> 122,660
<SALES> 2,206,384
<TOTAL-REVENUES> 2,206,384
<CGS> 1,406,694
<TOTAL-COSTS> 2,066,945
<OTHER-EXPENSES> (934)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,531
<INCOME-PRETAX> (488,162)
<INCOME-TAX> 0
<INCOME-CONTINUING> (488,162)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (488,162)
<EPS-BASIC> (.04)
<EPS-DILUTED> (.04)
</TABLE>
