UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Amendment No. 1)
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
IVES HEALTH COMPANY, INC.
(Name of small business issuer in its charter)
Oklahoma 73-1430235
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
817 North J.M. Davis Blvd.
Claremore, OK 74017
(Address, including zip code, of registrant's executive office)
(918)283-1226
(Registrant's telephone number, including area code)
(918)283-1232
(Registrant's facsimile number, including area code)
Securities to be registered pursuant to section 12(b) of the Act: None
Securities to be registered pursuant to section 12(g) of the Act:
Common Stock, $0.001
(Title of Class)
Information Required in Registration Statement
Certain Forward-Looking Information
Certain statements included in this report which are not historical facts
are forward looking statements, including the information provided with respect
to future business opportunities, expected financing sources and related
matters. These forward looking statements are based on current expectations,
estimates, assumptions and beliefs of management, and words such as "expects,"
"anticipates," "intends," "believes," "estimates," and similar expressions are
intended to identify such forward looking statements. Since this information is
based on current expectations that involve risks and uncertainties, actual
results could differ materially from those expressed in the forward-looking
statements.
<PAGE>
PART I
Item 1. Description of Business
(a) Business Development
1. Form and Year of Organization
Ives Health Company, Inc. (A Development State Company) ( the "Registrant"
or "Company" ) was formed pursuant to an agreement between Maxxon, Inc. and M.
Keith Ives, entered into and made effective December 31, 1997. IVES, (a wholly
owned subsidiary of Maxxon, Inc.) and Maxxon, Inc. agreed to separate. The
separation was accomplished by quasi-reorganization (new "IVES"), a
recapitalization and the issuance of 7,000,000 shares of new IVES common stock
to M. Keith Ives, and 1,700,000 shares of new IVES common shares to Maxxon, Inc.
The new re-organized IVES began operations January 1, 1998 and was re-
incorporated in Oklahoma on February 11, 1998.
2. Bankruptcy or Receivership
Ives has never been in bankruptcy or receivership.
3. Mergers, Reclassifications and purchases of Assets
Ives Health Company, Inc. (A Development State Company) ( the "Registrant"
or "Company" ) was formed pursuant to an agreement between Maxxon, Inc. and M.
Keith Ives, entered into and made effective December 31, 1997. IVES, (a wholly
owned subsidiary of Maxxon, Inc.) and Maxxon, Inc. agreed to separate. The
separation was accomplished by quasi-reorganization (new "IVES"), a
recapitalization and the issuance of 7,000,000 shares of new IVES common stock
to M. Keith Ives, and 1,700,000 shares of new IVES common shares to Maxxon, Inc.
The new re-organized IVES began operations January 1, 1998 and was re-
incorporated in Oklahoma on February 11, 1998.
(b) Business of Issuer
1. Principal Products and Services of Ives and Their Markets
The Company is engaged in developing and marketing innovative, safe, high
quality natural medicines and nutritional supplements, which are guaranteed for
potency and purity, include homeopathic medicines, weight loss formulas, natural
remedies, and nutritional supplements.
2. Distribution Method of Products and Services
The Company sells to wholesale pharmacy distributors, various chain
pharmacies, and independent retail pharmacies. Three of the Company's principal
distribution alliances are with Albertsons, Winn Dixie, and Dillons with over a
1000 pharmacy locations, as well as over 700 independent retail pharmacies,
distributing IHC's products in 36 states.
3. Status of Publicly Announced Products and Services
The Company uses various types of advertising to announce new products,
such as radio, television, newspaper and sales people.
4. Competitive business conditions, Competitive Position and Methods of
Competition
WEIGHT LOSS: Ultra Slim Fast, Weight Watchers, Nutra-System, Jenny Craig,
Dexatrim, Herbal Life, and Metabolyte. HOMEOPATHIC MEDICINE: Nature's Way,
Naturopath Medicines, Boyron, and Centrum are the most prevalent. NUTRITIONAL
SUPPLEMENTS: Nature's Resource, Nature's Way, and Centrum are our biggest
competitors and control approximately 35% of the market. However, most of their
distribution is targeted through health food stores, i.e. GNC, Atkins and a
variety of others.
5. Sources of Raw Materials and the Names of Principal Suppliers
The principal suppliers of Ives' raw materials are: International
Formulation and Manufacturing (IFM), Vegi Snack Foods, Inc., Summa Laboratories,
Inc.; Animal Technologies, Inc. and American Labs.
<PAGE>
6. Dependence on one of a few major customers
Ives primary distribution focus is through regional and national chain
pharmacies. We are currently distributing through Mays, Drug Warehouse, Price
Mart, Horizon, Pamida and The Medicine Shoppes (these are regional chains).
National chains currently selling our products on a regional basis are
Albertsons (2700 national locations) and Winn-Dixie (1200 plus national
locations). Wal-Mart is very close to settin us up as a vendor. Walgreens,
K-Mart, and Eckerds are our nest three targeted chains. Ives estimates that 70%
of our distribution will be through these chain stores.
7. Patents, trademarks, licenses, royalty agreements or labor contracts
IHC has an exclusive license agreement with Dr. Robert Slayton-Bedeen
relating to certain Technology developed by Dr. Bedeen. A Royalty agreement with
Dr. Bedeen reads as follows: a) Ten percent (10%) of the first $100,000 and five
percent (5%) on the excess over $100,000 of the adjusted sales revenue actually
received by Licensee (gross revenue received from sales of Licensed Products
less 28%) during the first five (5) years of the term of this agreement. b)
Three percent (3%) of the adjusted sales revenue during the second five years.
c) Two percent (2%) of the adjusted sales revenue during the remaining forty
(40) years. On November 30, 1998, the Company purchased for $10,000 and expensed
the cost of the royalty provision that was required under the License Agreement.
The purchase thereby eliminated any royalty payments to the previous owner of
the technology.
8. Need for Governmental Approval
None.
9. Effect of Existing or Probable Governmental Regulation
None.
10. Estimate of the amount spent on research and development
IHC's research and development department currently operates as follows:
internal tracking, quality control, test results, product development and other
important data are done internally in conjunction with an outside joint venture
with Albertsons, which is overseen by Dr. Ruth Miller. Through December 31,
1998, Ives has spent an estimate of $50,000, which includes R & D employees
wages.
11. Costs and effects of environmental compliance
Ives has incurred no costs associated with environmental compliance.
12. Number of total employees and number of full time employees
The Company had 14 full-time employees at the year ended December 31, 1998
and 14 full-time employees at the third quarter ending September 30, 1999.
Item 2. Management's Discussion and Analysis
(a) Plan of Operations
There is no assurance that material expenses will not be incurred that
could jeopardize the stability of the Company nor that shareholders or future
shareholders will have or make available sufficient funds to cover such material
expenses. However, it is the belief of the Company, that the following summary
of the Company should occur.
The overall goal of the management team is to develop IVES into a major
player in the arena of natural health products. Objectives leading to that goal
include being structured and professional organization of integrity, thus
maintaining strong relationships with suppliers and customers. Marketing goals
include having products in 15,000 pharmacies in the U.S. By the year 2001, where
as 30% being independent pharmacies and 70% regional and national chains, i.e.
Albertsons, Winn-Dixie, Wal-Mart, Walgreens, K-Mart, Eckerds, etc.
<PAGE>
The Company's products can generally be grouped into five categories:
Homeopathic medicines (pure medicines), Weight Management, Natural Remedies,
Nutritional food supplements, and Health and Beauty Aids. IHC will continue to
implement the same positive marketing strategy that brought the Company to this
point. It will sell the bulk of its product through wholesale distributors and
play off the success of its current wholesalers -- and generate business with
new wholesalers. Also IHC will continue to seek regional and national chain
pharmacies. Other strategies include attending more pharmacy trade shows,
getting endorsements from strategic pharmacy, physician, and health insurance
providers (by conducting our innovative validation testing), hiring more direct
sales representatives, and increasing regional advertising while expanding to a
national advertising campaign. Our greatest need is advertising dollars in order
to create more consumer awareness and demand (mass over time).
The Company's powders, capsules, tablets and liquids in bulk are produced
by International Formulation & Manufacturing, Inc. of San Diego, California,
Summa RX Laboratories, Inc. in Mineral Wells, Texas, Animal Technologies, Inc.
in Tyler, Texas, and American Labs, Inc. Of Omaha, Nebraska. All of the
preceding companies are FDA registered drug companies. All final packaging, i.e.
(shrink-wrapping, UPC coding, expiration dating, and quality control, etc.) is
performed by IHC in Claremore, Oklahoma. Future products will be handled on the
same basis. The long-term goal of IHC is to manufacture products from start to
finish.
The Company's primary distribution focus is through regional and national
chain pharmacies. We are currently distributing through Mays, Drug Warehouse,
Price Mart, Horizon, Pamida and The Medicine Shoppes (these are regional
chains). National chains currently selling our products on a regional basis are
Albertsons (2700 national locations) and Winn-Dixie (1200 national locations).
Wal-Mart , Walgreens, K-Mart, and Eckerds are our next targeted chains. IHC has
established a strong alliance with wholesale distributors who sell to
independent pharmacies and continued growth with these distributors is another
reason for IHC achieving nationwide distribution. IHC's most noted strengths
with their wholesalers are product quality, a strong in-store marketing package,
high profit margins for both the wholesaler and the retail pharmacy, product and
alternative medicine education, validation testing and the best promotional
incentives and profit margins in the industry.
(i) Cash Requirements
Management believes that to achieve its objectives , the Company will seek
additional funding of $500,000, whether it be through long-term debt or
additional sales of stock or both. The funds will be used for regional
expansion, increasing inventory, advertising, and retirement of existing debt.
(ii) Product Development and Research Plan for the Next Twelve Months
IHC's research and development department currently operates as follows:
internal tracking, quality control, test results, product development and other
important data are done internally in conjunction with an outside joint venture
with Albertsons, which is overseen by Dr. Ruth Miller. Management plans to
continue the validation testing for current products and all new products
introduced.
(iii) Expected Purchase or Sale of Plant and significant Equipment
None.
(iv) Expected Significant changes in number of employees.
None.
Item 3. Description of Property
(a) Location and Description of Property
The Company owns land and building at 817 North J.M. Davis Blvd.,
Claremore, OK 74017, and all furniture, fixtures, and equipment. The land and
building has a mortgage against it, held by Seven Brothers LLC, balance due at
December 31, 1998 was $164,574. The Company purchased the land (.565 acres) and
building (13,180 sq. ft. ) in July, 1998 for $270,000, the cost of remodeling
was $99,747. The appraised value after remodeling was $462,000. The Company
carries adequate insurance coverage on all property and equipment.
<PAGE>
Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) Beneficial Owners of More than Five Percent
The following shareholders own of record more than 5% of the 9,577,650
shares issued and outstanding as of December 31, 1998 and as of September 30,
1999 of 10,280,471:
<TABLE>
<CAPTION>
Title of Class Name and Address of Beneficial Owner Amount and Nature
Of Beneficial Owner % of Class
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common M. Keith Ives, Officer/Director 6,439,260 63.0 %
22972 Woodridge Dr., Claremore, OK 74017
Common Maxxon, Inc., Beneficial Owner 1,700,000 16.5 %
8908 S. Yale Ave, Ste 409, Tulsa, OK 74137
Common Bill Elliott, Beneficial Owner 181,241 1.8 %
Route 1, Box 156, Tahlequah, OK 74464
Common Pat Storms, Beneficial Owner 349,975 3.4 %
15849 Sheffield Rd., Siloam Springs, AR 72761
Common JoEtta Hughes, Officer/Director 336,000 3.3 %
Claremore, OK 74017
Common Perry Ives, Office/Director 129,800 1.3 %
316-A S. Choctaw, Claremore, OK 74017
Common Jim Jones, Director 2,000 N/A
6937 E 97th St. South, Tulsa, OK 74133
Common All Officers and Directors as a group (4 persons) 6,907,060 67.2 %
</TABLE>
Item 5. Directors, Executive Officers, Promoters and Control Persons
(a) Identify directors and executive officers.
(1) - (4) Names, ages, positions, offices, business experience.
A) M. Keith Ives, age 42, is President, CEO and Director at IHC. After
college Mr. Ives went to work for McKesson Drug Co. Ad a territory sales manager
where he gained expertise in sales, pharmacology, marketing, business
management, and business consulting. After seven years with McKesson Drug Co.
Mr. Ives decided to start his own pharmaceutical company for two primary reasons
( to specialize in natural preventive health products and to find products which
would help improve the quality of life for his wife who had contracted Multiple
Sclerosis). To accomplish this goal, he bought an insurance agency to gain
experience in personnel management, sales management, and knowledge about the
insurance industry and their role on the pharmaceutical industry.
Simultaneously, he became a distributor for a direct marketing company to gain
the knowledge necessary in applying direct marketing to his future
pharmaceutical business. Mr. Ives then started hi pharmaceutical company and has
been the driving force to realizing his goals.
RESPONSIBILITIES - Mr. Ives oversees the day to day operations, coordinates
closely with Fred Oberloh, National Sales Manager, on company promotions and
sales, makes direct sales calls, conducts ride-alongs with wholesale/broker
representatives to secure new business, attends local, regional and national
trade shows, promotes the company's growth and vision to the pharmaceutical
industry, via alternative medicine seminars both live & televised, and conducts
the business of securing funds for IHC's growth. Mr. Ives has been recognized by
his employers, peers, and his customers for his outstanding achievements in
sales, service, consulting and management. These achievements include: #1 in
annual multi-million dollar sales volume seven of ten years before starting IHC,
Mr. Ives and the sales people he managed were always in the top 5% of sales
producers for their respective companies.
<PAGE>
B) JoEtta Hughes, age 43, is Secretary/Treasurer, COO/CFO and Director at
IHC. Ms. Hughes has comprehensive experience in accounting, the pharmaceutical
industry, warehouse and personnel management and has worked for McKesson Drug
Co. And a division of Cooper and Lybrand accounting firm. She graduated
valedictorian from Bryan Institute in computer programming and accounting. She
is currently is Membership Chairman of Claremore Business and Professional
Woman's Organization, which reinforces her skills. Her background makes her a
valuable asset to IHC.
RESPONSIBILITIES - Ms. Hughes conducts all of the in-house financial business
for IHC and works closely with IHC's CPA, E. Carolyn Tolman. While her main
duties are financially related, she contributes a great deal to the day to day
operations, customer service, data entry, secretarial duties, and consulting
with M. Keith Ives in running the company. In order for IHC to be successful Mr.
Ives felt he must have Ms. Hughes on board to draw from her expertise in the
pharmaceutical and accounting fields. She has been instrumental in applying her
abilities in keeping the company functioning.
C) Perry Ives, age 35, is Vice President, Director of Marketing and
Advertising and Director at IHC. Mr. Ives has 13 years experience in employee
relations and day to day operations as maintenance supervisor for apartment
management firms. He has years of experience in sales, management, operations,
accounting, marketing and advertising before coming to IHC. He draws from these
experiences to develop a well-rounded approach on handling the efficient
operations of the day to day business to assist IHC's growth for the past five
years.
RESPONSIBILITIES - Director of Marketing and Advertising while overseeing the
day to day operations and product production. Mr. Ives primary function is
designing and implementing in-house sales and marketing materials, creating ad
slicks, and supporting the efforts of JoEtta Hughes in accounting and computer
work. Mr. Ives has demonstrated his diversified abilities in the daily
operations of IHC and has proven to be capable of exceeding every challenge that
the company has thrown his way. He has been instrumental in performing work the
company would have had to out source, thus assisting the company's efforts to
control costs.
D) Jim Jones, age 60, is a member of the board. Mr. Jones is IHC's
insurance agent and consultant.
(5) Other Directorships
None.
(b) Identify Significant Employees
1) Tony Fauver, age 44, is Director/Production & Quality Control at IHC. Mr
Fauver has 17 years experience in warehouse management, production, and quality
control and has been employed with IHC since May of 1997. He has been an
extremely valuable addition to our staff. RESPONSIBILITIES - Mr. Fauver oversees
production and quality control while ordering all raw materials, negotiating
contracts with pharmaceutical ingredient suppliers, packaging companies,
shipping companies and quality control laboratories.
2) Fred Oberloh, age 40, is National Sales Manager at IHC. Mr. Oberloh has
been in the pharmaceutical industry for over 20 years as a Regional Sales
Manager with Pittman Moore Drug Company. Fred has been another welcomed addition
to our management team and started with IHC in January, 1999. His strengths are
a work ethic, which is beyond reproach and his attention to detail.
RESPONSIBILITIES - Managing local, regional and national chain accounts at both
the Corporate and Pharmacy levels. Overseeing the sales and service function for
three Sales Representatives, creating, initiating and implementing sales
promotions & bonus buys while informing IHC accounts on these promotions.
3) Margaret Salmans, age 30, Director of Research and Development at IHC.
Ms. Salmans has been with IHC since April, 1999, and is an accomplished data
entry and appointment coordinator, who has assumed her position in R & D
prematurely. She has done an exemplary job in conducting our product validation
testing program while coordinating with Dr. Ruth Miller, D.O., whom we have
sub-contracted with to validate our products effectiveness and safety.
RESPONSIBILITIES Managing the R & D department and staff, conducting the product
validation testing, recording the results of product testing, and providing
those results to the proper institutions.
(c) Family Relationships.
M. Keith Ives, President, JoEtta Hughes, Secretary/Treasurer, and Perry
Ives, Vice President are siblings.
(d) Involvement in certain legal proceedings
NONE
<PAGE>
Item 6. Executive Compensation.
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
M. Keith Ives, 1998 $64,124.97 None
Pres.,CEO
- --------------------------------------------------------------------------------
JoEtta Hughes, 1998 $33,594.68 175,000 shares,
Sec/Trea, COO\CFO restricted stock
12/31/1998
- --------------------------------------------------------------------------------
Perry Ives, V.Pres, 1998 $27,408.70 100,000 shares,
Mrkt. Dir. restricted stock
12/31/1998
- --------------------------------------------------------------------------------
Item 7. Certain Relationships and Related Transactions
(a) Describe Related Party Transactions
During 1998 M. Keith Ives and JoEtta Hughes, officers of the Company loaned
the Company funds to cover certain operating expenses. The notes accrue interest
at a rate of 10% per year and are payable on demand. During 1998 payments were
made to the officer in the amount of $81,196 to reduce the note balances. As of
December 31, 1998, there remained a balance due to JoEtta Hughes of $43,387.
Item 8. Description of Securities
The following summary of certain provisions of the Common Stock does not
purport to be complete and is subject to, and qualified in its entirety by, the
provisions of applicable law and the provisions of Ives' Certificate of
Incorporation, which is included as an exhibit to this Registration Statement.
Ives is authorized to issue 50,000,000 shares of Common Stock, par value
$0.001 per share, of which 9,577,650 shares were outstanding as of December 31,
1998 and 10,280,942 were outstanding as of September 30, 1999.
Voting Rights. Holders of shares of Common Stock are entitled to one vote
per share on all matters submitted to a vote of the shareholders. Shares of
Common Stock do not have cumulative voting rights, which means that the holders
of a majority of the shareholder votes eligible to vote and voting for the
election of the Board of Directors can elect all members or the Board of
Directors. Holders of a majority of the issued and outstanding shares of Common
Stock may take action by written consent without a meeting.
Dividend Rights. Holders of record of shares of Common Stock are entitled
to receive dividends when and if declared by the Board of Directors. To date,
Ives has not paid cash dividends on its Common Stock Holders of Common Stock are
entitled to receive such dividends as may be declared and paid from time to time
by the Board of Directors out of funds legally available, therefore, Ives
intends to retain any earnings for the operation and expansion of its business
and does not anticipate paying cash dividends in the foreseeable future. Any
future determination as to the payment of cash dividends will depend upon future
earnings, results of operations, capital requirements of Ives financial
condition and such other factors as the Board of Directors may consider.
Liquidation Rights. Upon any liquidation, dissolution or winding up of
Ives, holders of shares of Common Stock are entitled to receive pro rata share
of all the assets of Ives' available for distribution to shareholders after
liabilities are paid.
<PAGE>
Preemptive Rights. Holders of Common Stock do not have any preemptive
rights to subscribe for or to purchase any stock, obligations or other
securities of Ives.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity
(a) Market information
(1) Identify the principal market or markets where common stock is
traded.
Ives' common stock is traded on the NASD's Over-The-Counter Bulletin
Board and other (Pink Sheets).
(i) The high and low prices for Ives' common stock during the calendar
quarters ended were:
Quarter ended High Low
------------- ---- ---
June 30, 1999 $ 2.00 $ 1.20
September 30, 1999 $ 1.20 $ 1.20
Quotations on the OTC Bulletin Board reflect bid and ask quotations, may
reflect inter-dealer prices, without retail markup, mark-down or commission, and
may not represent actual transactions.
(b) Holders
As of September 30, 1999, there were 126 holders of record of Ives' common
stock, this figure does not take into account those shareholders whose
certificates are held in the name of broker-dealers or other nominees. Ives
estimates there are approximately 25 owners who hold their shares in brokerage
accounts.
(c) Dividend Policy
Ives has not declared any dividends in the past and there is no intention
to declare dividends in the future.
Item 2. Legal Proceedings
None.
Item 3. Changes in and Disagreements with Accountants
None.
Item 4. Recent Sales of Unregistered Securities
(a) Securities Sold
February 11, 1998, the Company issued 7,000,000 shares of common stock to
M. Keith Ives and 1,700,000 common shares to Maxxon, Inc. in accordance with the
quasi-reorganization and separation agreement between M. Keith Ives and Maxxon,
Inc.. These sales were made at par value pursuant to Rule 504 of Regulation D
and Section 4(2) of the Securities Act of 1933.
From April 20, 1998 through December 31, 1998 the Company sold 877,650
shares of common stock to various purchasers pursuant to Rule 504 of Regulation
D and Section 4 (2) of the Securities Act of 1933. The purchase price was $0.80
per share, less commissions, fees and expenses.
From January 1, 1999 through September 30, 1999 the Company sold 702,821
shares of common stock to various purchasers pursuant to Rule 504 of Regulation
D and Section 4 (2) of the Securities Act of 1933. The purchase price was $0.70
per share, less commissions, fees and expenses.
<PAGE>
(b) Underwriters and other Purchases
There was no public offering of the shares. The shares were sold to
officers, directors and key consultants, and to purchasers in compliance with
Regulation D, Rule 504 of the Securities Exchange Act of 1933 or in compliance
with Rule 701.
(c) Consideration
The total offering price for the common stock sold for cash was $338,250.
Ives paid $13,897 in commissions and $64,112 in consulting fees in connection
with the sale of shares of Ives' common stock. The total offering price for the
common stock sold for services rendered was $ 202,173, the purchase of a future
royalty payments common stock was $ 9700, and common sold for a loan from
shareholders was $ 220,000.
In accordance with the quasi-reorganization and separation agreement with
Maxxon, Inc. the Company issued to M. Keith Ives and Maxxon, Inc. 8,700,000
shares of Common Stock of the Company at par value.
(d) Section under which exemption from registration was claimed
The issuance of the securities described above were deemed to be exempt
from registration under the Securities Act in reliance on Section 4 (2) and SEC
Regulation D, Rule 504, among other exemptions. Each recipient of securities in
each such transaction represented his or her intentions to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and, where applicable, appropriate legends were
affixed to the share certificates issued in such transactions. All recipients
had access to information about the Company.
Item 5. Indemnification of Directors and Officers
Ives' Certificate of Incorporation provides for indemnification to the full
extent permitted by Oklahoma law of all persons it has the power to indemnify
under Oklahoma law. In addition, Ives' Bylaws provide for indemnification to the
full extent permitted by Oklahoma law of all persons it has the power to
indemnify under Oklahoma law. Such indemnification is not deemed to be exclusive
of any other rights to which those indemnified may be entitled, under any bylaw,
agreement, vote of stockholders or otherwise. The provisions of Ives'
Certificate of Incorporation and Bylaws which provide indemnification may reduce
the likelihood of derivative litigation against Ives' directors and officers for
breach of their fiduciary duties, even though such action, if successful, might
otherwise benefit Ives and its stockholders.
In addition, Ives has entered into indemnification agreements with its
officers and directors, key consultants and others. These agreements provide
that Ives will indemnify each person for acts committed in their capacities and
for virtually all other claims for which a contractual indemnity might be
enforceable.
Part F/S
INDEX TO FINANCIAL STATEMENTS AND RELATED NOTES
Independent Auditor's Report 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Operation 3
Statement of Shareholders' Equity 4
Statement of Cash Flows 5
NOTES TO FINANCIAL STATEMENTS 6-12
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders of Ives Health Company, Inc.:
We have audited the balance sheet of Ives Health Company, Inc., (A Development
Stage Company), an Oklahoma Corporation, as of December 31, 1998 and the related
statement of operation, shareholders' equity and cash flows from January 1, 1998
(inception) to December 31, 1998. 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 Ives Health Company, Inc., (A
Development Stage Company), as of December 31, 1998 and the results of its
operations and its cash flows from January 1, 1998 (inception) to December 31,
1998 in conformity with generally accepted accounting principles.
HENDERSON SUTTON & CO., P.C.
/s/ HENDERSON SUTTON & CO., P.C.
- --------------------------------
Certified Public Accountants
November 4, 1999
<PAGE>
Ives Health Company, Inc.
(A Development Stage Company)
Balance Sheet
December 31, 1998
ASSETS
Current Assets
Cash $ 24,787
Accounts Receivable 8,853
Inventories 156,819
----------
190,459
----------
Property and Equipment
Property, Plant & Equipment 445,586
Less Accumulated Depreciation 21,136
----------
424,450
----------
Other Assets
Investments 34,601
Other Assets 32,131
----------
66,733
----------
Total Assets $ 681,642
----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 191,032
Accrued Expenses 14,382
Current Portion of Long Term Debt 126,155
----------
331,569
----------
Long-Term Liabilities
Notes Payable 556,904
Note Payable - Shareholder 43,387
----------
600,291
Less Current Portion of Long Term Debt 126,155
----------
Total Liabilities 805,705
----------
Shareholders' Equity
Common Stock, 50,000,000 shares authorized,
Par value $.001, 9,577,650 shares issued
and outstanding 9,578
Additional Paid in Capital 347,206
Deficit Accumulated during the development stage (480,846)
----------
(124,063)
----------
Total Liabilities and Shareholders' Equity $ 681,642
----------
(The accompanying notes are an integral part of these Financial Statements)
<PAGE>
Ives Health Company, Inc.
(A Development Stage Company)
Statement of Operations
For the Year Ended December 31, 1998
REVENUES
Sales Revenue $ 464,582
----------
Total Sales Revenue 464,582
----------
Cost of Sales
Cost of Sales 198,546
Selling Expense 239,721
----------
Total Cost of Sales 438,267
----------
Net Sales 26,314
EXPENSES
Operating Expenses
General & Admin. Expense 269,816
----------
Total Operating Expenses 269,816
----------
Other Expenses
Non-operating Expense 237,345
----------
Total Other Expenses 237,345
----------
Total Expenses 507,161
----------
NET LOSS $ (480,846)
----------
Net Loss per Share $ (0.05)
----------
(The accompanying notes are an integral part of these Financial Statements)
<PAGE>
Ives Health Company, Inc.
(A Development Stage Company)
Statement Cash Flows
For the Year ended December 31, 1998
Cash Flows From Operating Activities
Cash received from customers $ 516,284
Cash paid for operating goods (284,842)
Cash paid to employees (367,723)
Cash paid for other goods and services (188,955)
Interest paid, net of amount capitalized (25,191)
----------
Net Cash Provided (Used) by Operating Activities (350,426)
----------
Cash Flows From Investing Activities
Plant & equipment purchases (254,892)
Cash Paid for Other Investments (35,975)
Cash Paid for Marketing Design (34,601)
----------
Net Cash Provided (Used) by Investing Activities (325,468)
----------
Cash Flows From Financing Activities
Proceeds from short-term debt --
Repayment of short-term debt --
Proceeds from Issuance of Common Stock 344,959
Proceeds from long-term debt 483,543
Repayment of long-term debt (135,069)
----------
Net Cash Provided (Used) by Financing Activities 693,433
----------
NET INCREASE (DECREASE) IN CASH 17,538
----------
CASH AT BEGINNING OF YEAR 7,249
----------
CASH AT END OF YEAR $ 24,787
----------
Reconciliation of Net Income (Loss) to Net Cash
Provided (Used) by Operating Activities
Net income (loss) $ (480,846)
Adjustments to reconcile net income (loss) to net
Cash provided (used) by operating activities
Depreciation 9,568
Amortization of intangible assets 4,836
(Increase) decrease in accounts receivable 51,702
(Increase) decrease in prepaid assets 27,806
(Increase) decrease inventories (86,295)
(Increase) decrease in Other Assets 3,380
Increase (decrease) in accounts payable 115,658
Increase (decrease) in other accrued liabilities 3,765
----------
Total adjustments 130,420
----------
Net Cash Provided (Used) by Operating Activities $ (350,426)
----------
(The accompanying notes are an integral part of these Financial Statements)
<PAGE>
Ives Health Company, Inc.
(A Development Stage Company)
Statement of Changes in Shareholders' Equity
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
DEFICIT
PRICE ADDITIONAL DURING THE
PER COMMON STOCK PAID-IN DEVELOPMENT
SHARE SHARES AMOUNT CAPITAL STAGE
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1997 8,700,000 $ 8,700 $ 6,000 $ (272,050)
-------------------------------------------------------------------
Reorganization and Recapitalization of Ives (272,050) 272,050
ISSUANCE OF COMMON STOCK FOR :
- ------------------------------
Cash 0.773 877,650 878 677,368
OTHER TRANSACTIONS AFFECTING EQUITY
- -----------------------------------
Offering Costs (64,112)
Net Income at December 31, 1998 (480,846)
-------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1998 9,577,650 $ 9,578 $ 347,206 $ (480,846)
-------------------------------------------------------------------
</TABLE>
(The Accompanying notes are an integral part of these Financial Statements)
<PAGE>
Ives Health Company, Inc.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1998
NOTE 1 - SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Ives Health Company, Inc.
(the "Company") is presented to assist in understanding the Company's financial
Statements. The financial statements and notes are representations of the
Company's management who is responsible for their integrity and objectivity.
These accounting policies conform to generally accepted accounting principles
and have been consistently applied in the presentation of the financial
statements.
ORGANIZATION
Ives Health Company, Inc. ("IVES" or the "Company") was formed pursuant to an
agreement between Maxxon, Inc. and M. Keith Ives, entered into and made
effective December 31, 1997. IVES, (a wholly owned subsidiary of Maxxon, Inc.)
And Maxxon, Inc. agreed to separate. The separation was accomplished by
quasi-reorganization (new "IVES"), a recapitalization and the issuance of
7,000,000 shares of new Ives common stock to M. Keith Ives, and 1,700,000 shares
of new Ives common shares to Maxxon, Inc. The new re-organized IVES began
operations January 1, 1998 and was re-incorporated in Oklahoma on February 11,
1998. Ives Health Company, Inc. (A Development Stage Company) is engaged in
developing and marketing innovative, safe, high quality natural non-prescription
medicines and nutritional supplements. IVES products, which are guaranteed for
potency and purity, include natural medicines, herbal formulas, vitamins,
minerals and homeopathic medicines. The Company wholesales the products to local
pharmacies.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid assets with maturities of three months
or less to be cash equivalents.
INVENTORY
Inventory consists primarily of bulk product that will be packaged into
capsules, bottled, and packaged for distribution to customers. Inventory is
stated at the lower of cost or market value using the first-in, first-out
method. Obsolete products are written off in the year they are determined to be
obsolete.
FISCAL YEAR END
The Company's fiscal year ends on December 31.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. All material property and equipment
additions are capitalized and depreciated on a straight-line basis over the
estimated useful life of the asset.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
<PAGE>
INCOME TAXES
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," which requires the measurement
of deferred tax assets for deductible temporary differences and operating loss
carry-forwards, and of deferred tax liabilities for taxable temporary
differences. Measurement of current and deferred tax liabilities and assets is
based on provisions of enacted tax law. The effects of future changes in tax
laws or rates are not included in the measurement. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense is the tax payable for the period and the
change during the period in deferred tax assets and liabilities.
EARNINGS PER SHARE
Earnings per share are computed based on the weighted average number of common
shares outstanding during the periods presented, including, if dilutive, shares
issuable under the stock issuable under the stock option plans and warrants.
REVENUE RECOGNITION
Revenue is recognized monthly based upon the terms of the sale. The Company
issues credit to customers on a discount basis of 2% if paid within ten days of
the invoice or the full balance due within thirty days of the invoice.
Management uses the direct write-off method of recognizing bad debts.
NOTE 2 - PROPERTY AND EQUIPMENT
The following is a summary of the major classes of property and equipment:
ESTIMATED
USEFUL LIFE
-----------
Building 30 years $249,347
Building Improvements 30 years 100,400
Land -- 20,000
Equipment 5-7 years 65,171
Furniture 5-7 years 10,668
--------
445,586
Accumulated Depreciation 21,136
--------
Property and equipment (net) $424,450
--------
NOTE 3 - INTANGIBLES
LICENSING AGREEMENT, NET
------------------------
On August 24, 1998, the Company entered into a License Agreement to the
rights to certain technology known as (1) the T-Factor Immune System
Optimizer and (2) The Burn Treatment Therapy. The rights to the technology
were acquired for Future development of the technology for the consumer
market. The rights to the License, which included a royalty provision to
the seller and extends through August 24, 2049, were acquired for
approximately $25,000. The cost related to The license and rights were
capitalized and is being amortized over five years.
On November 30, 1998, the company purchased for $10,000 and expensed the
cost of the royalty provision that was required under the License
Agreement. The purchase thereby eliminated any royalty payments to the
previous owner of the technology.
<PAGE>
During 1998, the Company incurred $35,975 in costs related to the
development of a marketing design program. The costs are expected to
benefit the Company Over the five-year amortization period.
Technology License $ 24,601
Marketing design 35,975
--------
Total 60,576
--------
Accumulated amortization (4,744)
--------
Net capitalized $ 55,832
--------
NOTE 4 - NOTES PAYABLE-OFFICERS
During 1998 M. Keith Ives and JoEtta Hughes, officers of the Company loaned
the Company funds to cover certain operating expenses. The notes accrue
interest at a Rate of 10% per year and are payable on demand. During 1998
payments were made to the officer in the amount of $81,196 to reduce the
note balances. As of December 31, 1998, there remained a balance due JoEtta
Hughes of $43,387.
NOTE 5 - NOTES PAYABLE - BANK
NationsBank, N.A.
Note dated June 17, 1998 bearing interest @ 9%, due $ 48,611
in sixty monthly installments of $1,097, principle and
interest through June 2, 2003. Note is secured by
inventory and equipment, a security agreement with
William D. Elliott, a shareholder and by a personal
guarantee of M. Keith Ives, an officer and major
shareholder of the Company. Certain personal assets of
Mr. Ives also collateralize the note.
Seven Brothers, LLC
Interest @ 8.5%, due in one hundred twenty monthly 165,659
installments of $1,888, principle and interest, through
August 1, 2008. Note is secured by land and building.
Interest $ 45% calculated according to the actuarial
30,000 Method, principle and interest due December 20,
1998.
Dr. Bedeen - Balance due on technology purchase. 9,600
State Bank & Trust, N.A.
Interest @ Wall Street Prime plus 1.5%, currently 103,034
9.25%, due January 25, 1999. This note was
subsequently combined with the $20,000 note due
State Bank & Trust, N.A. April 25, 1999 and is now
payable in thirty-six monthly installment of $3,800,
principle and interest, through May 25, 2002. Note
is secured by personal stock and an annuity owned
by M. Keith Ives. M. Keith Ives personally
guarantees the note.
<PAGE>
Interest @ Wall Street Prime plus 1.5%, currently 20,000
9.25%, payable monthly with principle due January
25, 1999. The note was renewed January 25, 1999 and
on April 25, 1999 combined with the $103,034 note
due State Bank & Trust, N.A. and is now due based on
the terms described on the $103,034 note. M. Keith Ives
personally guarantees the note.
Local America Bank
Interest @ 9.99%, in monthly installments of 20,000
approximately $1,200 monthly through June 15, 2000,
personally guaranteed by M. Keith Ives and secured
by personal automobiles.
Dr. Craft
Interest @ 10%, renewable annually. 160,000
---------
$ 556,904
---------
Maturities of long-term debt, subsequent to the refinancing through the
report date is as follows for the next five years:
1999 $126,155
2000 191,257
2001 44,886
2002 49,418
2003 32,970
Thereafter 112,218
--------
Total $556,904
--------
NOTE 6 - INCOME TAXES
The Company has incurred net operating losses since inception and has a
loss carry-forward of approximately $480,846 at December 31, 1998, expiring
in years beginning 2013. Deferred tax assets have not been recorded for
future reduction in income taxes that may result from the net operating
loss carry-forward. The deferred tax assets and liabilities are as follows
at December 31:
Net operating loss carry-forward $ 480,846
Depreciation 8,252
Total 489,098
Less valuation allowance (489,098)
---------
Net Deferred Tax Liability $ --
---------
Deferred taxes reflect a combined federal and state tax rate of
approximately 40%. For financial reporting purposes, a valuation allowance
of $489,098 has been established in accordance with the provisions of FASB
Statement No. 109, "Accounting for Income Taxes". The Company will
continually review the adequacy of the valuation allowance and will
recognize these benefits only as assessment indicates that it is more
likely than not that the benefits will be realized.
<PAGE>
NOTE 7 - COMMITMENTS AND CONTINGENCIES
LITIGATION
The Company is defendant in lawsuits arising from normal business
activities. Management has reviewed pending litigation with legal counsel
and believes that the action is without merit or that the ultimate
liability, if any, resulting from it will not materially affect the
Company's financial position.
NOTE 8 - COMMON STOCK AND ADDITIONAL PAID-IN-CAPITAL
In February 1998, the Company issued 8,700,000 shares of common stock in
accordance with The quasi-reorganization and separation agreement as
discussed in Note 1. Maxxon, Inc. was issued 1,700,000 shares and M. Keith
Ives and founders were issued 7,000,000 shares.
During the year 1998, 877,650 shares of the Company's common shares were
issued under SEC Regulation , D., rule 504. The stock was issued for $0.80
per share.
In 1998, the Company issued Perry Ives and JoEtta Hughes, officers and
directors of the company, 275,000 shares of Ives common stock in exchange
for $270,415 of notes owed by the Company to the two officers.
NOTE 8 - CONTINUED
On April 20, 1998, the Company completed a private offering for 1,000,000
shares of common stock at $0.80 per share. As of December 31, 1998, 877,650
shares have been issued.
NOTE 9 - RELATED PARTY TRANSACTIONS
During the year ended December 31, 1998, officer loaned the Company
$125,000 to cover certain operating expenses. During 1998, the Company
repaid a total of $81,613. The remaining note payable-officer balance of
$43,387 accrues interest at a rate of 10% per year.
NOTE 10 - EARNING PER SHARE
The following table reconciles the number of common shares outstanding as
shown on the Balance Sheet with the weighted average common shares
outstanding as shown on the Statement of Operations for the year ended
December 31, 1998.
Common shares outstanding 9,577,650
Effect of using weighted average common
And Common equivalent shares outstanding 595,712
---------
Weighted average common shares outstanding 8,981,938
---------
NOTE 11 - SUBSEQUENT EVENTS
Prior to the report certain Notes Payable-bank were re-financed in
accordance with the terms as described in note five of Notes to Financial
Statements.
<PAGE>
IVES HEALTH COMPANY, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
WITH
ACCOUNTANT'S
COMPILATION REPORT
<PAGE>
IVES HEALTH COMPANY, INC.
(A DEVELOPMENT STAGE COMPANY)
SEPTEMBER 30, 1999
C O N T E N T S
Accountant's Compilation Report 1
Financial Statements
Balance Sheet 2
Statement of Operations 3
Statement of Shareholders' Equity 4
Statement of Cash Flows 5
<PAGE>
ACCOUNTANT'S COMPILATION REPORT
The Board of Directors and Shareholders
Ives Health Company, Inc.
Claremore, Oklahoma
We have compiled the balance sheet of Ives Health Company, Inc., (a development
stage company), an Oklahoma Corporation, as of September 30, 1999 and the
related statements of operations, changes in shareholders' equity and cash flows
for the nine month period ending September 30, 1999 in accordance with
Statements on standards for Accounting and review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statement
information that is the representation of the management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the Company's financial position. Accordingly, these financial
statements are not designed for those who are not informed about such matters.
December 5, 1999
HENDERSON SUTTON & CO., P.C.
Certified Public Accountants
1
<PAGE>
IVES HEALTH COMPANY, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
SEPTEMBER 30, 1999
ASSETS
Current Assets
Cash $ 20
Accts Receivable 131,813
Inventories 197,476
Prepaid Expenses 28,700
----------
Total Current Assets 358,010
----------
Property and Equipment
Property, Plant & Equipment 485,570
Less Accumulated Depreciation 36,136
----------
Net Property and Equipment 449,434
----------
Other Assets
Other Assets 38,585
Other Assets - Organization Costs --
Investments 44,601
----------
Total Other Assets 83,187
----------
Total Assets $ 890,630
==========
2
<PAGE>
IVES HEALTH COMPANY, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
SEPTEMBER 30, 1999
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 151,263
Accrued Expenses 15,774
Notes payable officer 3,254
Current portion long term debt 64,441
----------
234,732
----------
Long-Term Liabilities
Notes Payable 861,616
Less current portion 64,441
----------
797,175
----------
Total Liabilities 1,031,907
----------
Shareholders' Equity
Common Stock 10,280
Additional Paid in Capital 672,604
Treasury stock (7,585)
Retained Earnings (816,575)
----------
(141,277)
----------
Total Liabilities and Shareholders' Equity $ 890,630
==========
3
<PAGE>
IVES HEALTH COMPANY, INC.
(A DEVELOPMENT STAGE COMPANY)
INCOME STATEMENT
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999
REVENUES
Net Revenue $ 420,915
----------
EXPENSES
Cost of Sales 254,595
General & administrative expenses 339,629
Selling Expense 106,791
Depreciation & amortization 15,000
Interest expense 40,629
----------
Total expenses 756,644
----------
NET LOSS $ (335,729)
==========
NET LOSS PER SHARE .02
==========
4
<PAGE>
IVES HEALTH COMPANY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTES 1 - SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES This
summary of significant accounting policies of Ives Health Company, Inc. (the
"Company") is presented to assist in understanding the Company's financial
Statements. The financial statements and notes are representations of the
Company's management who is responsible for their integrity and objectivity.
ORGANIZATION
Ives Health Company, Inc. ("Ives", "New Ives", or the "Company") was formed
pursuant to an agreement between Maxxon, Inc. and M. Keith Ives, entered into
and made effective December 31, 1997. Ives Health Company, Inc., ("Old Ives", a
wholly owned subsidiary of Maxxon, Inc.) and Maxxon, Inc. agreed to separate.
The separation was accomplished by the creation of New Ives, and the issuance of
7,000,000 shares of new Ives common stock to Keith Ives, and 1,700,000 shares of
new Ives common shares to Maxxon, Inc. The newly formed Ives Health Company,
Inc. began operations January 1, 1998 and was incorporated in Oklahoma on
February 11, 1998. Ives Health Company, Inc. is engaged in developing and
marketing innovative, safe, high quality natural non-prescription medicines and
nutritional supplements. Ives products, which are guaranteed for potency and
purity, include natural medicines, herbal formulas, vitamins, minerals and
homeopathic medicines. The Company wholesales the products to local pharmacies.
At September 30, 1999, the Company was still in the developmental stage.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid assets with maturities of three months
or less to be cash equivalents.
INVENTORIES
Inventories consist primarily of bulk products that will be packaged into
capsules, bottled, and packaged for distribution to customers. Inventory is
stated at the lower of cost or market value. Cost is determined using the
first-in, first-out (FIFO) method. Obsolete products are written off in the year
they are determined to be obsolete.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Major renewals and
improvements are capitalized, while maintenance and repairs are expensed when
incurred. Depreciation is computed over the estimated useful lives of
depreciable assets using the straight-line method.
Useful lives for property and equipment are as follows:
Buildings and improvements 30 years
Machinery and equipment 5-7 years
Office furniture and equipment 5-7 years
5
<PAGE>
IVES HEALTH COMPANY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
The cost and accumulated depreciation for property, plant and equipment sold,
retired or otherwise disposed of are relieved from the account, and resulting
gains and losses are reflected in income.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and contingent assets and
liabilities at the date of the Financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
INCOME TAXES
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," which requires the measurement
of deferred tax assets for deductible temporary differences and operating loss
carry-forwards, and of deferred tax liabilities for taxable temporary
differences. Measurement of current and deferred tax liabilities and assets is
based on provisions of enacted tax law. The effects of future changes in tax
laws or rates are not included in the measurement. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense is the tax payable for the period and the
change during the period in deferred tax assets and liabilities.
EARNINGS PER SHARE
Earnings per share are computed based on the weighted average number of common
shares outstanding during the periods presented, including, if dilutive, shares
issuable under the stock option plans and warrants.
REVENUE RECOGNITION
Substantially all revenue is recognized monthly based upon the terms of the
sale. The Company issues credit to customers on a discount basis of 2% if paid
within ten days of the invoice or the full balance due within thirty days of the
invoice. Management uses the direct write-off method of recognizing bad debts.
6
<PAGE>
IVES HEALTH COMPANY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
The Company has incurred net operating losses since inception and has a loss
carry forward of approximately $816,000 at September 30, 1999, expiring in years
beginning in 2013. Deferred tax assets have not been recorded for future
reduction in income taxes that may result from the net operating loss carry
forward.
Deferred taxes reflect a combined federal and state tax rate of approximately
40%. For financial reporting purposes, a valuation allowance of $816,000 has
been established in accordance with the provisions of FASB Statement No. 109,
"Accounting for Income Taxes". The Company will continually review the adequacy
of the valuation allowance and will recognize these benefits only as assessment
indicates that it is more likely than not that the benefits will be realized.
7
<PAGE>
PART III
Item 1. Index to Exhibits
Exhibit No. Description
- ----------- -----------
EX-3.i Certificate of Incorporation of Ives Health Company, Inc.
EX-3.ii Amended and Restated Certificate of Incorporation of Ives Health
Company, Inc.
EX-3.iii Certificate of Incorporation of Ives Health Company, Inc.
EX-3.iv Amended and Restated Certificate of Incorporation of SEVI Health
Company, Inc.
EX-3.v Amended and Restated Certificate of Incorporation of SEVI Health
Company, Inc.
EX-3.vi Bylaws of Ives Health Company, Inc.
EX-27 Financial Data Schedule
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this Registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
IVES HEALTH COMPANY, INC.
Date: /s/ JOETTA HUGHES
---------------------------- -----------------------------------
By: JoEtta Hughes, Secretary
and Treasurer
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints JoEtta Hughes and/or M. Keith
Ives, his or her true and lawful attorneys-in-fact and agents, to sign any or
all amendments to this Report on Form 10-SB, and to file the same with all
exhibits thereto and other and documents in connection therewith, with the
Securities and Exchange Commission, granting unto the attorney-in-fact agent
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person hereby ratifying
and confirming that said attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Exchange Act of 1934, this Report on
Form 10-KSB has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Capacity Date
- --------------------------------------------------------------------------------
/s/ M. KEITH IVES President and Director November 4, 1999
- ----------------------
M. Keith Ives
/s/ PERRY IVES Vice-President and Director November 4, 1999
- ----------------------
Perry Ives
/s/ JOETTA HUGHES Secretary, Treasurer and Director November 4, 1999
- ----------------------
JoEtta Hughes
/s/ JIM JONES Director November 4, 1999
- ----------------------
Jim Jones
OFFICE OF THE SECRETARY OF STATE
STATE OF OKLAHOMA
[State Seal of Oklahoma]
CERTIFICATE OF INCORPORATION
WHEREAS, the Certificate of Incorporation of
IVES HEALTH COMPANY, INC.
has been filed in the office of Secretary of State as provided by the laws of
the State of Oklahoma.
NOW THEREFORE, I, the undersigned, Secretary of State of the State of Oklahoma,
by virtue of the powers vested in me by law, do hereby issue this certificate
evidencing such filing.
IN TESTIMONY WHEREOF, I hereunto set my hank and cause to be affixed the Great
Seal of the State of Oklahoma.
Filed in the City of Oklahoma City
this 12th day of FEBRUARY, 1998.
[State Seal
Of
Oklahoma] /s/
-----------------------------------
SECRETARY OF STATE
BY: /s/
-----------------------------------
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
IVES HEALTH COMPANY, INC.
TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA:
The undersigned, Ives Health Company, Inc. ("Corporation"), an Oklahoma
corporation, for the purpose of adopting this Amended and Restated Certificate
of Incorporation pursuant to Section 1080 of the Oklahoma General Corporation
Act (the "Act"), hereby certifies:
1. The name of the Corporation is Ives Health Company, Inc.
2. The name under which the Corporation was originally incorporated is Ives
Health Company, Inc.
3. The original Certificate of Incorporation of the Corporation was filed
with the Oklahoma Secretary of State on June 16, 1993 and amended on October 25,
1993, September 25, 1995 and September 3, 1996.
4. The amendments effected by this Amended and Restated Certificate of
Incorporation is to change the name of the corporation to Ives Health Company,
Inc.
5. This Amended and Restated Certificate of Incorporation was duly adopted
in accordance with the Act, and restates, integrates and amends the Certificate
of Incorporation.
6. The Amended and Restated Certificate of Incorporation of Ives Health
Company, Inc., as amended hereby, is restated in its entirety as follows:
CERTIFICATE OF INCORPORATION
OF
IVES HEALTH COMPANY, INC.
ARTICLE I
NAME
----
The name of the Corporation is Ives Health Company, Inc.
ARTICLE II
REGISTERED OFFICE AND AGENT
---------------------------
The registered office of the Corporation in the State of Oklahoma, is
located at 9525 E. 51st Street, Suite J, Tulsa, OK 74145. The Corporation's
registered agent at that office is M. Keith Ives.
ARTICLE III
PURPOSE
-------
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the Oklahoma General Corporation
Act.
ARTICLE IV
CAPITALIZATION
--------------
The total number of shares which this Corporation is authorized to issue is
50,000,000 shares of Common Stock, par value $.001 per share.
The Board of Directors shall have the power and authority to issue without
shareholder approval debentures or other securities convertible into, or
warrants or options to subscribe for or purchase, authorized shares of Common
Stock of the Corporation upon such terms and conditions as shall be determined
by action of the Board of Directors.
ARTICLE V
NO CUMULATIVE VOTING
--------------------
The holders of record of the Common Stock shall have one vote for each
share held of record. Cumulative voting for the election of directors or
otherwise is not permitted.
<PAGE>
ARTICLE VI
NO PREEMPTIVE RIGHTS
--------------------
No holder of record of Common Stock shall have a preemptive right or be
entitled as a matter of right to subscribe for or purchase any: (i) shares of
capital stock of the Corporation of any class whatsoever; (ii) warrants, options
or rights of the Corporation; or (iii) securities convertible into, or carrying
warrants, options or rights to subscribe for or purchase, capital stock of the
Corporation of any class whatsoever, whether now or hereafter authorized.
ARTICLE VII
INCORPORATOR
------------
The name and address of the incorporator is Frederick K. Slicker, 4444 E.
66th Street, Suite 200, Tulsa, Oklahoma 74136. The powers of the incorporator
shall terminate upon the election of initial directors effective immediately
after filing of this Certificate of Incorporation with the Secretary of State of
Oklahoma.
ARTICLE VIII
BOARD OF DIRECTORS
------------------
The initial Board of Directors shall consist of directors who shall be
elected by the incorporator effective immediately after the filing of this
Certificate of Incorporation with the Secretary of State, State of Oklahoma, and
who shall serve as directors until the first annual meeting of shareholders or
until their respective successor is duly elected and qualified. The number of
directors may be changed from time to time in accordance with the bylaws of the
Corporation then in effect. Election of directors at a meeting of shareholders
need not be by written ballot.
ARTICLE IX
AMENDMENT OF BYLAWS
-------------------
The Board of Directors of the Corporation is expressly authorized and
empowered to make, alter, amend or repeal the bylaws of the Corporation and to
adopt new bylaws.
ARTICLE X
POSSIBLE CONFLICTS OF INTEREST
------------------------------
No agreement or transaction involving the Corporation or any other
corporation, partnership, proprietorship, trust, association or other entity in
which the Corporation owns an interest or in which a director or officer of the
Corporation has a financial interest shall be void or voidable solely for this
reason or solely because any such director or officer is present at or
participates in the approval of such agreement or transaction.
2
<PAGE>
ARTICLE XI
INDEMNIFICATION
---------------
To the full extent not prohibited by the law as in effect from time to
time, the Corporation shall indemnify any person (and the heirs, executors and
representatives of such person) who is or was a director, officer, employee or
agent of the Corporation, or who, at the request of this Corporation, is or was
a director, officer, employee, agent, partner, or trustee, as the case may be,
of any other corporation, partnership, proprietorship, trust, association or
other entity in which this Corporation owns an interest, against any and all
liabilities and reasonable expenses incurred by such person in connection with
or resulting from any claim, action, suit or proceeding, whether brought by or
in the right of the Corporation or otherwise and whether civil, criminal,
administrative or investigative in nature, and in connection with an appeal
relating thereto, in which such person is a party or is threatened to be made a
party by reason of serving or having served in any such capacity.
ARTICLE XII
NO DIRECTOR LIABILITY IN CERTAIN CASES
--------------------------------------
To the maximum extent permitted by law as in effect from time to time, no
director of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages for breach of any fiduciary duty as a
director, provided that this provision shall not eliminate or limit the
liability of a director for: (i) any breach of the director's duty of loyalty to
the Corporation or its shareholders; (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii)
unlawful payment of dividends or stock redemptions; or (iv) any transaction from
which the director derived an improper personal benefit.
ARTICLE XIII
CERTAIN COMPROMISES
-------------------
Whenever a compromise or arrangement is proposed between this Corporation
and its creditors or any class of them and/or between this Corporation and its
shareholders or any class of them, any court of equitable jurisdiction within
the State of Oklahoma, on the application in a summary way of this Corporation
or of any creditor or shareholder thereof, or on the application of any receiver
or receivers appointed for this Corporation under the provisions of Section 1106
of Title 18 of the Oklahoma Statutes as in effect from time to time or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 1100 of Title 18 of the
Oklahoma Statutes as in effect from time to time, may order a meeting of the
creditors or class of creditors, and/or of the shareholders or class of
shareholders of this Corporation, as the case may be, to be summoned in such
manner as the court directs. If a majority in number representing three-fourths
(3/4ths) in value of the creditors or class of creditors, and/or of the
shareholders or class of shareholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the compromise
or arrangement and the reorganization, if sanctioned by the court to which the
application has been made, shall be binding on all the creditors or class of
creditors, and/or on all the shareholders or class of shareholders, of this
Corporation, as the case may be, and also on this Corporation.
3
<PAGE>
SIGNATURES
----------
For the purpose of forming a corporation under the Oklahoma General
Corporation Act, the undersigned incorporator affirms, declares, certifies and
acknowledges that the foregoing Certificate of Incorporation is my free and
voluntary act and deed and that the facts stated therein are true and correct to
my best knowledge and belief as of this ___ day of February, 1998.
FREDERICK K. SLICKER, Incorporator
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SEVI HEALTH COMPANY, INC.
(Formerly Ives Health Company, Inc.)
TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA:
The undersigned, SEVI Health Company, Inc. ("Corporation"), an Oklahoma
corporation, for the purpose of adopting this Amended and Restated Certificate
of Incorporation pursuant to Section 1080 of the Oklahoma General Corporation
Act (the "Act"), hereby certifies:
1. The name of the Corporation is SEVI Health Company, Inc.
2. The name under which the Corporation was originally incorporated is Ives
Health Company, Inc.
3. The original Articles of Incorporation of the Corporation were filed
with the Oklahoma Secretary of State on June 16, 1993 and amended on October 25,
1993, September 25, 1995, September 3, 1996 and August 22, 1997.
4. The amendment effected by this Amended and Restated Certificate of
Incorporation is to change the name of the Corporation to SEVI Health Company,
Inc.
5. This Amended and Restated Certificate of Incorporation was duly adopted
in accordance with the Act, and restates, integrates and amends the Certificate
of Incorporation.
6. The Amended and Restated Certificate of Incorporation of Ives Health
Company, Inc., as amended hereby, is restated in its entirety as follows:
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SEVI HEALTH COMPANY, INC.
ARTICLE I
NAME
----
The name of the Corporation is SEVI Health Company, Inc.
ARTICLE II
REGISTERED OFFICE AND AGENT
---------------------------
The registered office of the Corporation in the State of Oklahoma, is
located at 8908 South Yale, Suite 409, Tulsa, Oklahoma 74137. The Corporation's
registered agent at that office is Rhonda Vincent.
ARTICLE III
PURPOSE
-------
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the Oklahoma General Corporation
Act.
ARTICLE IV
DURATION
--------
The period of existence of the Corporation is perpetual.
ARTICLE V
CAPITALIZATION
--------------
The total number of shares which this Corporation is authorized to issue is
20,000,000 shares of Common Stock, par value $0.001 per share.
The Board of Directors shall have the power and authority to issue without
shareholder approval debentures or other securities convertible into, or
warrants or options to subscribe for or purchase, authorized shares of Common
Stock or Preferred Stock of the Corporation upon such terms and conditions as
shall be determined by action of the Board of Directors.
<PAGE>
ARTICLE VI
NO CUMULATIVE VOTING
--------------------
The holders of record of the Common Stock or Preferred Stock shall have one
vote for each share held of record. Cumulative voting for the election of
directors or otherwise is not permitted.
ARTICLE VII
NO PREEMPTIVE RIGHTS
--------------------
No holder of record of Common Stock or Preferred Stock shall have a
preemptive right or be entitled as a matter of right to subscribe for or
purchase any: (i) shares of capital stock of the Corporation of any class
whatsoever; (ii) warrants, options or rights of the Corporation; or (iii)
securities convertible into, or carrying warrants, options or rights to
subscribe for or purchase, capital stock of the Corporation of any class
whatsoever, whether now or hereafter authorized.
ARTICLE VIII
BOARD OF DIRECTORS
------------------
The Board of Directors shall consist of from one (1) to five (5) directors
who shall serve as directors until the next annual meeting of shareholders or
until their respective successor is duly elected and qualified. The number of
directors may be changed from time to time in accordance with the bylaws of the
Corporation then in effect. Election of directors at a meeting of shareholders
need not be by written ballot.
ARTICLE IX
AMENDMENT OF BYLAWS
-------------------
The Board of Directors of the Corporation is expressly authorized and
empowered to make, alter, amend or repeal the bylaws of the Corporation and to
adopt new bylaws.
ARTICLE X
POSSIBLE CONFLICTS OF INTEREST
------------------------------
No agreement or transaction involving the Corporation or any other
corporation, partnership, proprietorship, trust, association or other entity in
which the Corporation owns an interest or in which a director or officer of the
Corporation has a financial interest shall be void or voidable solely for this
reason or solely because any such director or officer is present at or
participates in the approval of such agreement or transaction.
2
<PAGE>
ARTICLE XI
INDEMNIFICATION
---------------
To the full extent not prohibited by the law as in effect from time to
time, the Corporation shall indemnify any person (and the heirs, executors and
representatives of such person) who is or was a director, officer, employee or
agent of the Corporation, or who, at the request of this Corporation, is or was
a director, officer, employee, agent, partner, or trustee, as the case may be,
of any other corporation, partnership, proprietorship, trust, association or
other entity in which this Corporation owns an interest, against any and all
liabilities and reasonable expenses incurred by such person in connection with
or resulting from any claim, action, suit or proceeding, whether brought by or
in the right of the Corporation or otherwise and whether civil, criminal,
administrative or investigative in nature, and in connection with an appeal
relating thereto, in which such person is a party or is threatened to be made a
party by reason of serving or having served in any such capacity.
ARTICLE XII
NO DIRECTOR LIABILITY IN CERTAIN CASES
--------------------------------------
To the maximum extent permitted by law as in effect from time to time, no
director of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages for breach of any fiduciary duty as a
director, provided that this provision shall not eliminate or limit the
liability of a director for: (i) any breach of the director's duty of loyalty to
the Corporation or its shareholders; (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii)
unlawful payment of dividends or stock redemptions; or (iv) any transaction from
which the director derived an improper personal benefit.
ARTICLE XIII
CERTAIN COMPROMISES
-------------------
Whenever a compromise or arrangement is proposed between this Corporation
and its creditors or any class of them and/or between this Corporation and its
shareholders or any class of them, any court of equitable jurisdiction within
the State of Oklahoma, on the application in a summary way of this Corporation
or of any creditor or shareholder thereof, or on the application of any receiver
or receivers appointed for this Corporation under the provisions of Section 1106
of Title 18 of the Oklahoma Statutes as in effect from time to time or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 1100 of Title 18 of the
Oklahoma Statutes as in effect from time to time, may order a meeting of the
creditors or class of creditors, and/or of the shareholders or class of
shareholders of this Corporation, as the case may be, to be summoned in such
manner as the court directs. If a majority in number representing three-fourths
(3/4ths) in value of the creditors or class of creditors, and/or of the
shareholders or class of shareholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the compromise
or arrangement and the reorganization, if sanctioned by the court to which the
application has been made, shall be binding on all the creditors or class of
creditors, and/or on all the shareholders or class of shareholders, of this
Corporation, as the case may be, and also on this Corporation.
3
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated
Certificate of Incorporated to be signed by its President and attested by its
Corporate Secretary this ____ of February, 1998.
ATTEST:
- ----------------------------- ------------------------------
Rhonda R. Vincent, Secretary M. Keith Ives, President
STATE OF OKLAHOMA )
) SS.
COUNTY OF TULSA )
I, a Notary Public, hereby certify that on the ___ day of February, 1998,
personally appeared before me, M. Keith Ives, who after having been duly sworn,
declared that he is President of SEVI Health Company, Inc., that he signed the
foregoing Amended and Restated Certificate of Incorporation as his free and
voluntary act and deed for and on behalf of that Corporation for the use and
purposes therein stated and that the facts therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this ____ day of
February, 1998.
--------------------------------
Notary Public
My Commission expires:
- ----------------
[seal]
4
BYLAWS
OF
IVES HEALTH COMPANY, INC.
ADOPTED EFFECTIVE
FEBRUARY 11, 1998
<PAGE>
TABLE OF CONTENTS
TO
BYLAWS
OF
IVES HEALTH COMPANY, INC.
ARTICLE I - OFFICES............................................................1
SECTION 1.01. Registered Office and Registered Agent.....................1
--------------------------------------
SECTION 1.02. Other Offices..............................................1
-------------
ARTICLE II - SHAREHOLDERS......................................................1
SECTION 2.01. Place of Meeting...........................................1
----------------
SECTION 2.02. Annual Meeting.............................................1
--------------
SECTION 2.03. Special Meetings...........................................1
----------------
SECTION 2.04. Notice of Meetings.........................................2
------------------
SECTION 2.05. Quorum and Adjourned Meetings..............................2
-----------------------------
SECTION 2.06. Conduct of Meetings........................................3
-------------------
SECTION 2.07. Voting ....................................................3
------
SECTION 2.08. Consent of Shareholders in Lieu of a Meeting...............3
--------------------------------------------
SECTION 2.09. Voting Lists...............................................3
------------
ARTICLE III - BOARD OF DIRECTORS...............................................4
SECTION 3.01. Powers ....................................................4
------
SECTION 3.02. Number, Qualifications and Term of Office..................4
-----------------------------------------
SECTION 3.03. Vacancies..................................................4
---------
SECTION 3.04. Resignations...............................................4
------------
SECTION 3.05. Organization...............................................5
------------
SECTION 3.06. Place of Meetings..........................................5
-----------------
SECTION 3.07. Organizational Meeting.....................................5
----------------------
SECTION 3.08. Regular Meetings...........................................5
----------------
SECTION 3.09. Special Meetings...........................................5
----------------
SECTION 3.10 Quorum and Adjourned Meetings..............................5
-----------------------------
SECTION 3.11. Unanimous Consent of Directors in Lieu of Meeting..........5
-------------------------------------------------
SECTION 3.12. Executive and Other Committees.............................6
------------------------------
SECTION 3.13. Compensation of Directors..................................6
-------------------------
ARTICLE IV - NOTICE OF MEETINGS................................................6
SECTION 4.01. Notice ....................................................6
------
SECTION 4.02. Waiver of Notice...........................................7
----------------
SECTION 4.03. Teleconference Meetings....................................7
-----------------------
ARTICLE V - OFFICERS...........................................................7
SECTION 5.01 Number, Qualifications and Designation.....................7
--------------------------------------
SECTION 5.02 Election, Term of Office and Resignation...................7
----------------------------------------
SECTION 5.03 Removal of Officers........................................7
-------------------
SECTION 5.04 Chairman of the Board......................................8
---------------------
SECTION 5.05 President..................................................8
---------
SECTION 5.06 Vice Presidents............................................8
---------------
SECTION 5.07 Secretary..................................................8
---------
SECTION 5.08 Treasurer..................................................9
---------
SECTION 5.09 Controller.................................................9
----------
SECTION 5.10 Assistant Officers.........................................9
------------------
SECTION 5.11 Bonds .....................................................9
-----
SECTION 5.12 Compensation of Officers...................................9
------------------------
ARTICLE VI - CERTIFICATES OF STOCK............................................10
SECTION 6.01 Issuance .................................................10
--------
SECTION 6.02 Transfer .................................................10
--------
SECTION 6.03 Stock Certificates........................................10
------------------
SECTION 6.04 Lost, Stolen, Destroyed or Mutilated Certificates.........10
-------------------------------------------------
SECTION 6.05. Record Holder of Shares...................................10
-----------------------
SECTION 6.06. Determination of Record Date..............................11
----------------------------
ARTICLE VII - INDEMNIFICATION OF DIRECTORS, OFFICERS ANDOTHER
AUTHORIZED REPRESENTATIVES......................................11
SECTION 7.01. Indemnification of Authorized Representatives in
------------------------------------------------
Third Party Proceedings...................................11
-----------------------
SECTION 7.02. Indemnification of Authorized Representatives in
------------------------------------------------
Corporate Proceedings.....................................12
---------------------
SECTION 7.03. Mandatory Indemnification of Authorized Representatives...12
-------------------------------------------------------
SECTION 7.04. Determination of Entitlement to Indemnification...........12
-----------------------------------------------
SECTION 7.05. Advancing Expenses........................................13
------------------
SECTION 7.06. Employee Benefit Plans....................................13
----------------------
SECTION 7.07. Scope ....................................................13
-----
SECTION 7.08. Reliance .................................................13
--------
SECTION 7.09. Insurance.................................................14
---------
ARTICLE VIII - GENERAL PROVISIONS.............................................14
SECTION 8.01. Dividends.................................................14
---------
SECTION 8.02. Annual Statements.........................................14
-----------------
SECTION 8.03. Contracts.................................................14
---------
SECTION 8.04. Checks ...................................................14
------
SECTION 8.05. Corporate Seal............................................14
--------------
SECTION 8.06. Deposits .................................................15
--------
SECTION 8.07. Amendment of Bylaws.......................................15
-------------------
SECTION 8.08. Fiscal Year...............................................15
-----------
SECTION 8.09. Interested Directors......................................15
--------------------
SECTION 8.10. Form of Records...........................................15
---------------
<PAGE>
B Y L A W S
OF
IVES HEALTH COMPANY, INC.
ARTICLE I
OFFICES
SECTION 1.01. REGISTERED OFFICE AND REGISTERED AGENT. The registered office
and registered agent shall be designated in duly adopted actions of the Board of
Directors. Each registered office and registered agent may be changed from time
to time by a duly adopted action of the Board of Directors, and the Corporation
shall file an appropriate statement of change of registered office or registered
agent promptly after the taking of such action in accordance with applicable
law.
SECTION 1.02. OTHER OFFICES. The Corporation may also have offices at such
other places within or without the state of incorporation of the Corporation as
the Board of Directors may from time to time determine or the business of the
Corporation requires.
ARTICLE II
SHAREHOLDERS
SECTION 2.01. PLACE OF MEETING. All meetings of the shareholders of the
Corporation shall be held at the principal executive office of the Corporation
unless otherwise determined by the Board of Directors and specified in the
notice of meeting, in which event the meeting shall be held at the place within
or without the state of incorporation as shall be designated in the notice of
such meeting.
SECTION 2.02. ANNUAL MEETING. The Board of Directors may fix the date and
time of the annual meeting of the shareholders, but if no such date and time is
fixed by the Board, the annual meeting shall be held on a third Tuesday in May,
if not a legal holiday, and if a legal holiday, then on the next succeeding
business day, at 10:00 a.m. local time. Failure to hold an annual meeting shall
not invalidate, alter or otherwise affect the validity of subsequent actions. At
the annual meeting, the shareholders then entitled to vote shall elect Directors
and shall transact such other business as may properly be brought before the
meeting.
<PAGE>
SECTION 2.03. SPECIAL MEETINGS. Special meetings of the shareholders of the
Corporation as a whole, and meetings of a particular class or series of
shareholders of the Corporation may be called for any purpose or purposes for
which meetings may lawfully be called at any time by the Chief Executive Officer
of the Corporation or by a majority of the Board of Directors, and shall be
called after the Corporation's receipt of the request in writing from
shareholders owning of record one-fourth of the amount of each class or series
of stock of the Corporation issued and outstanding and entitled to vote. Every
request for a special meeting shall state the specific purposes of the meeting.
The date of the meeting shall be held at such date and time as the Chief
Executive Officer of the Corporation shall fix, not less than 10 days nor more
than 60 days after the receipt of the request, and the Secretary shall give due
notice thereof. If the Chief Executive Officer of the Corporation shall neglect
or refuse to fix the time and date of such meeting or shall fail to cause the
Secretary to give notice thereof, the person or persons calling the meeting may
do so.
SECTION 2.04. NOTICE OF MEETINGS. Written notice of the place, date and
hour of every meeting of the shareholders, whether annual or special, shall be
given to each shareholder of record entitled to vote at the meeting not less
than 10 nor more than 60 days before the date of the meeting. Every notice of a
special meeting shall state the purposes thereof.
SECTION 2.05. QUORUM AND ADJOURNED MEETINGS. The record holders in the
aggregate of a majority of stock issued and outstanding (excluding treasury
stock) and entitled to vote at a shareholders meeting and who are present in
person or represented by proxy shall constitute a quorum for the transaction of
business, except as otherwise provided by law, by the Corporation's Certificate
of Incorporation or by these Bylaws. If the matter presented for action at any
meeting of shareholders is one which requires voting by class or series of
stock, then holders of a majority of each class or series effected who are
present in person or by proxy shall constitute a quorum for such class or
series. If a quorum of one or more classes or series of stock is present, in
person or by proxy, shareholders holding that class or series of stock may act
for that class or series, even if a quorum is not present for other classes or
series. If such quorum shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote thereat who are present in
person or represented by proxy shall have power to adjourn the meeting from time
to time, without notice other than announcement at the meeting until a quorum
shall be present or represented. At any such adjourned meeting at which a quorum
shall be present in person or by proxy, any business may be transacted which
might have been transacted at the meeting as originally called. When a quorum is
present at any meeting, the vote of the record owners holding a majority of the
stock having voting power, present in person or represented by proxy, shall
decide all questions brought before such meeting, unless the question is one
upon which, by expressed provision of applicable law, the Corporation's
Certificate of Incorporation or these Bylaws, a different vote is required, in
which case such expressed provision shall govern and control the decision of
such question. The affirmative vote or consent of the holders of a majority of a
class or series of stock, voting as a class, shall constitute action by that
class or series, unless applicable law, the Corporation's Certificate of
Incorporation or these Bylaws expressly provides a different vote, in which case
such expressed provision shall control. Once a meeting is duly organized and a
quorum is present, the shareholders who are present in person or represented by
proxy may continue to conduct business until adjournment, even after withdrawal
of enough shareholders to leave less than a quorum present.
<PAGE>
SECTION 2.06. CONDUCT OF MEETINGS. All annual and special meetings of
shareholders shall be conducted in accordance with such rules and procedures as
the Board of Directors may determine, subject to the requirements of applicable
law, and as to matters not governed by such rules and procedures, the chairman
of the meeting shall determine in good faith the procedures to be followed. The
chairman of any annual or special meeting of shareholders shall be the Chief
Executive Officer of the Corporation, unless the Board of Directors or
shareholders entitled to vote thereat select a different person to be chairman
of the meeting. The Secretary or other person designated by the chairman of the
meeting, shall act as secretary of the meeting.
SECTION 2.07. VOTING. Unless the Certificate of Incorporation provides
otherwise, each shareholder of record shall be entitled to one vote in person or
by proxy for each share of stock having voting power and held of record by such
shareholder. No cumulative voting for the election of Directors shall be
permitted unless expressly permitted by the Certificate of Incorporation. No
proxy shall be voted more than three years after its date, unless the proxy
specifically provides for a longer period and the law permits.
SECTION 2.08. CONSENT OF SHAREHOLDERS IN LIEU OF A MEETING. Any action
required or permitted to be taken at a meeting of shareholders of the
Corporation may be taken without a meeting, without prior notice and without a
vote, if a consent in writing setting forth the action so taken shall be signed
by the holders of record of stock (by class or series of stock where voting by
class or series of stock is required) having not less than the minimum number of
votes that would be necessary to authorize the taking of such action. Prompt
notice of the taking of action by the shareholders without a meeting by less
than unanimous written consent shall be given to those shareholders entitled to
vote on the action who did not consent in writing to such action.
SECTION 2.09. VOTING LISTS. At least ten (10) days before every meeting of
shareholders, the Secretary shall cause the Corporation to prepare a complete
list of the shareholders of record entitled to vote at the meeting. The list
shall be arranged in alphabetical order showing the address of each shareholder,
the number of shares registered in the name of each shareholder and the class or
series of stock held. Such list shall be open to the examination of any
shareholder of record for any lawful purpose during ordinary business hours for
a period of at least ten (10) days prior to the meeting either at the principal
executive office of the Corporation or at the place where the meeting is to be
held. The list shall also be available and open for inspection during the whole
time of the meeting and may be inspected by any shareholder of record or
authorized representative who is present.
<PAGE>
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.01. POWERS. The Board of Directors shall have full power to
manage the business and affairs of the Corporation. All powers of the
Corporation, except those specifically reserved to the shareholders by law, the
Certificate of Incorporation or these Bylaws, are hereby granted to and vested
in the Board of Directors.
SECTION 3.02. NUMBER, QUALIFICATIONS AND TERM OF OFFICE. The Board of
Directors shall consist of such number of directors as may be determined from
time to time by resolution of the Board of Directors. No director need be an
officer or shareholder of the Corporation, but each Director shall be a natural
person 21 years of age or older. Each Director shall serve until the next annual
meeting of the shareholders or until the Director's successor shall have been
duly elected and qualified, except in the event of the Director's death,
resignation or removal.
SECTION 3.03. VACANCIES. Except as provided by law or the Certificate of
Incorporation of the Corporation, any Director may be removed, either for or
without cause, at any meeting of shareholders by the affirmative vote of a
majority in number of shares of the shareholders present in person or by proxy
at such meeting and entitled to vote for the election of such director; provided
notice of the intention to act upon such matter shall have been given in the
notice calling such meeting and further provided, if a Director is elected by a
class or series of shareholders, the Director may not be removed without the
action of a majority of the shareholders of that class or series, except as
provided by law, except as provided by law or the Certificate of Incorporation
of the corporation. Vacancies and newly created directorships resulting from any
increase in the authorized number of Directors may be filled by a majority of
the Directors then in office, though less than a quorum, or by a sole remaining
Director, and any Director so chosen shall hold office until the next annual
election or until his successor is duly elected and qualified. If there are no
Directors in office, then an election of Directors may be held in the manner
provided by law. If, at the time of filling any vacancy or any newly created
directorship, the Directors then in office shall constitute less than a majority
of the whole Board (as constituted immediately prior to any such increase), a
court of competent jurisdiction may, upon application of shareholders holding of
record at least 10 percent of the total number of the shares at the time
outstanding having the right to vote for such Directors, summarily order an
election to be held to fill any such vacancies or newly created directorships or
to replace the Directors chosen by the Directors then in office.
SECTION 3.04. RESIGNATIONS. Any Director of the Corporation may resign at
any time by giving written notice to the Board of Directors, the Chief Executive
Officer or the Secretary of the Corporation. Such resignation shall take effect
upon receipt by the Corporation of such notice or at any later time specified
therein and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
<PAGE>
SECTION 3.05. ORGANIZATION. At every meeting of the Board of Directors, the
Chairman of the Board, if there be one, or, in the case of a vacancy or
incapacity in the office or absence of the Chairman of the Board, the Director
chosen by a majority of the Directors present, shall be the chairman of the
meeting and shall preside, and the person appointed by the chairman of the
meeting shall act as secretary of the meeting.
SECTION 3.06. PLACE OF MEETINGS. The Board of Directors may hold its
meetings, both regular and special, at such place or places within or without
the state of incorporation as the Board of Directors may from time to time
select, as designated in the notice calling the meeting.
SECTION 3.07. ORGANIZATIONAL MEETING. The first meeting of each newly
elected Board of Directors shall be held without notice immediately following
the annual meeting of Common shareholders, unless the shareholders shall
determine otherwise.
SECTION 3.08. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without further notice after the regular schedule of meetings has
been determined and approved at such time and place as shall be designated from
time to time by a duly adopted action of the Board of Directors.
SECTION 3.09. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held whenever called by the Chairman of the Board or by two or more of
the Directors. Notice of each special meeting shall be given to each director by
telephone, telegram, telecopy, in writing or in person at least 24 hours (in the
case of notice by telephone, in person or actual notice however received) or 48
hours (in the case of notice by telegram, or telecopy or similar wire
communication) or five (5) days (in the case of notice by mail or otherwise)
before the time at which the meeting is to be held. Each such notice shall state
the date, time and place of the meeting to be so held.
SECTION 3.10 QUORUM AND ADJOURNED MEETINGS. At all meetings of the Board, a
majority of the Directors shall constitute a quorum for the transaction of
business; and the act of a majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by law or by the Certificate of
Incorporation. Proxies of Directors shall not be counted to determine a quorum
for meetings of the Board of Directors, or for any other purpose, and a Director
may not vote by proxy at a meeting of the Board of Directors. If a quorum is not
be present at any meeting of the Board of Directors, a majority of the Directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
<PAGE>
SECTION 3.11. UNANIMOUS CONSENT OF DIRECTORS IN LIEU OF A MEETING. Unless
otherwise restricted by law, the Certificate of Incorporation or these Bylaws,
any action required or permitted to be taken at any meeting of the Board of
Directors or of any Committee thereof may be taken without a meeting, without
prior notice and without a vote if all members of the Board or such Committee,
as the case may be, consent thereto in writing either before or after the taking
of action with respect thereto. The written consent shall be filed with the
minutes of proceedings of the Board or that Committee.
SECTION 3.12. EXECUTIVE AND OTHER COMMITTEES. The Board of Directors may,
by resolution adopted by a majority of the whole Board, designate an Executive
Committee and one or more other committees. Each Committee shall consist of one
or more Directors. Only to the extent expressly provided in the resolution
establishing any Committee and only to the extent such Committee is not
otherwise restricted or limited by applicable law or the Certificate of
Incorporation or these Bylaws, any Committee of the Board shall have and may
exercise all the power and authority of the Board of Directors in the management
of the business and affairs of the Corporation, including the power or authority
to declare a dividend, to authorize the issuance of stock, to adopt a
certificate of ownership and merger and to authorize the seal of the Corporation
to be affixed to all papers which may require it; but no such Committee shall
have the power or authority to (1) amend the Certificate of Incorporation
(except that a Committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of the stock adopted by the
Board of Directors, as permitted by applicable law, fix any of the preferences
or rights of such shares relating to voting, dividends, redemption, dissolution,
any distribution of assets of the Corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the Corporation not
issued and outstanding), (2) adopt an agreement of merger or consolidation, (3)
recommend to the shareholders the sale, lease or exchange, of all or
substantially all of the Corporation's property and assets, (4) recommend to the
shareholders the dissolution of the Corporation or a revocation of a
dissolution, or (5) amend the Bylaws of the Corporation. Each Committee shall
have such name as may be determined from time to time by resolution adopted by
the Board of Directors. Each Committee shall keep regular minutes of its
meetings and file the same with the minutes of the Board of Directors.
SECTION 3.13. COMPENSATION OF DIRECTORS. Unless otherwise restricted by
law, the Certificate of Incorporation or these Bylaws, the Board of Directors
shall have the authority to fix the compensation of Directors. The Directors
shall be reimbursed their actual reasonable expenses, if any, of attendance at
any meeting of the Board of Directors and any Committee thereof and may be paid
a fixed sum for attendance at each such meeting or a fixed salary as determined
by the Board of Directors. No such payment shall preclude any Director from
serving the Corporation in any other capacity and receiving compensation
therefor.
ARTICLE IV
NOTICE OF MEETINGS
<PAGE>
SECTION 4.01. NOTICE. Whenever notice is required to be given to any
Director or shareholder, it shall not be construed to mean personal notice, but
such notice may be given in writing, by mail, addressed to such Director or
shareholder, at the person's address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to shareholders may also be given in accordance with Section 2.04 of
Article II hereof, and notice to Directors may also be given in accordance with
Section 3.09 of Article III hereof.
SECTION 4.02. WAIVER OF NOTICE. Whenever any notice is required to be
given, a waiver thereof in writing, signed by the person or persons entitled to
such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Presence in person at any meeting of
the shareholders, the Board of Directors or any Committee of the Board shall
constitute a waiver of notice of that meeting, unless the person in attendance
expressly states at the outset of the meeting that the person's presence is for
the purpose of objecting to notice. Except in the case of a special meeting of
shareholders and as otherwise required by law, neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
shareholders, Directors, or Committee of Directors need be specified in any
written waiver of notice of such meeting.
SECTION 4.03. TELECONFERENCE MEETINGS. One or more shareholders, Directors
or members of a Committee of Directors may participate in a meeting of the
shareholders, the Board, or of a Committee of the Board, by means of conference
communications or similar communications equipment; provided that all persons
participating in the meeting can hear each other and participate in discussions
thereof. Participation by conference communication equipment at a meeting shall
have the same effect as being present in person at such meeting.
ARTICLE V
OFFICERS
SECTION 5.01 NUMBER, QUALIFICATIONS AND DESIGNATION. The officers of the
Corporation shall be chosen by the Board of Directors and shall be a President,
one or more Vice Presidents, a Secretary, a Treasurer, and such other officers
as may be elected in accordance with the provisions of Section 5.02 of this
Article. Any person may hold more than one office. Officers may be, but need not
be, Directors or shareholders of the Corporation. The Board of Directors may
from time to time elect such other officers as it deems necessary or
appropriate, who shall exercise such powers and perform such duties as are
provided in these Bylaws and as the Board of Directors may from time to time
determine.
SECTION 5.02 ELECTION, TERM OF OFFICE AND RESIGNATION. The officers of the
Corporation shall be elected annually by the Board of Directors, and each such
officer shall hold office until a successor shall have been elected and
qualified, or until the officer's death, resignation, or removal. Any officer
may resign at any time upon written notice to the Corporation. Such resignation
shall take effect upon receipt by the Corporation of such notice, or such other
date as specified in such notice.
<PAGE>
SECTION 5.03 REMOVAL OF OFFICERS. Any officer or agent elected or appointed
by the Board of Directors may be removed at any time, with or without cause, by
the affirmative vote of a majority of the whole Board of Directors. If any
office becomes vacant for any reason, the vacancy may be filled by the Board of
Directors.
SECTION 5.04 CHAIRMAN OF THE BOARD. If the Board of Directors elects a
Chairman of the Board, the Chairman of the Board shall be the Chief Executive
Officer of the Corporation. The Chairman of the Board shall preside at all
meetings of the shareholders (unless the shareholders entitled to vote thereat
select a different person to so act) and the Board of Directors and shall assist
the Board of Directors in the formulation of policies to be pursued by the
executive management of the Corporation. It shall be the responsibility of the
Chairman of the Board to see that the policies established by the Board of
Directors are carried into effect. The Chairman of the Board may sign and
deliver on behalf of the Corporation any deeds, mortgages, bonds, contracts,
powers of attorney, or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
Bylaws to some other officer or agent of the Corporation; and the Chairman of
the Board shall perform all duties incident to the office of Chief Executive
Officer of the Corporation and such other duties as may be prescribed by the
Board of Directors from time to time.
SECTION 5.05 PRESIDENT. The President shall be the Chief Operating Officer
of the Corporation, shall report to the Chairman of the Board, if one is
elected, and shall have general supervisory responsibility over all operations
of the Corporation, subject to the control of the Board of Directors. If a
Chairman of the Board is not elected and in the absence or incapacity of the
Chairman of the Board, the President shall perform all the duties of the
Chairman of the Board, including all duties as Chief Executive Officer of the
Corporation. The President shall execute and deliver, in the name of the
Corporation, deeds, mortgages, bonds, contracts or other instruments, authorized
by the Board of Directors, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
Bylaws to some other officer or agent of the Corporation; and, in general,
subject to supervision by the Chairman of the Board, if one is elected, the
President shall perform all duties incident to the office of Chief Operating
Officer of the Corporation, and such other duties as from time to time may be
assigned to him by the Chairman of the Board or the Board of Directors.
SECTION 5.06 VICE PRESIDENTS. The Vice Presidents, in the order of the
designation by the Board of Directors, shall perform the duties of the President
in the President's absence or incapacity and such other duties as may from time
to time be assigned to them by the Board of Directors, the Chairman of the Board
or by the President.
<PAGE>
SECTION 5.07 SECRETARY. Unless the chairman of the meeting provides
otherwise, the Secretary shall attend all meetings of the shareholders, the
Board of Directors and Committees thereof, shall record the minutes of the
proceedings thereat and shall keep a current and complete record thereof. The
Secretary shall publish, keep and maintain records and reports of the
Corporation as required by law; shall be the custodian of the seal of the
Corporation and see that it is affixed to all documents to be executed on behalf
of the Corporation under its seal; and, in general, shall perform all duties
incident to the office of Secretary and such other duties as may from time to
time be assigned to the Secretary by the Board of Directors, the Chairman of the
Board or the President. Each Assistant Secretary shall have such powers and
perform such duties as the Board of Directors, the Chairman of the Board, or the
President may from time to time delegate to that Assistant Secretary.
SECTION 5.08 TREASURER. The Treasurer shall be the Chief Financial Officer
of the Corporation; shall have responsibility for the proper care and custody of
all corporate funds and securities; shall keep full, accurate and complete
records, receipts and disbursements of the Corporation; and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements; shall
render a report to the Board of Directors, whenever requested, of the financial
condition of the Corporation; and shall perform such other duties as the Board
of Directors may prescribe. In the absence or incapacity of a Corporate
Controller, the Treasurer shall also be responsible for the performance of all
the duties of the Controller. Each Assistant Treasurer shall have such powers
and perform such duties as the Board of Directors, the Chairman of the Board or
the President may from time to time delegate to that Assistant Treasurer.
SECTION 5.09 CONTROLLER. The Controller, if one is elected, shall be the
Chief Accounting Officer of the Corporation and shall cause to be kept full and
accurate books and accounts of all assets, liabilities and transactions of the
Corporation. The Controller shall establish and administer an adequate plan for
the control of operations, including systems and procedures required to properly
maintain internal controls on all financial transactions of the Corporation. The
Controller shall cause to be prepared statements of the financial condition of
the Corporation and proper profit and loss statements covering the operations of
the Corporation and such other and additional financial statements, if any, as
the Chairman of the Board, the President, the Treasurer or the Board of
Directors from time to time shall require. The Controller shall work under the
direct supervision of the Treasurer and also shall perform such other duties as
may be assigned to the Controller by the Board of Directors, the Chairman of the
Board or the President.
SECTION 5.10 ASSISTANT OFFICERS. The Board of Directors may appoint one or
more assistant officers. Each assistant officer shall, at the request of or in
the absence or incapacity of the officer to whom the person is an assistant,
perform the duties of such officer and shall have such other authority and
perform such other duties as the Board of Directors may prescribe.
<PAGE>
SECTION 5.11 BONDS. If required by the Board of Directors, any officer
shall give the Corporation a bond in such form, in such sum, and with such
surety or sureties as shall be satisfactory to the Board, for the faithful
performance of the duties of the officer's office and for the restoration to the
Corporation, in case of the officer's death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other property of
whatever kind in their possession or under their control belonging to the
Corporation.
SECTION 5.12 COMPENSATION OF OFFICERS. The compensation of the officers of
the Corporation shall be determined from time to time by the Board of Directors.
ARTICLE VI
CERTIFICATES OF STOCK
SECTION 6.01 ISSUANCE. Each shareholder shall be entitled to a certificate
or certificates representing shares of stock of the Corporation owned of record.
The stock certificates of the Corporation shall be numbered and registered in
the stock ledger and transfer books of the Corporation as issued. Certificates
shall be signed by the Chairman, President or a Vice President and by the
Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer, and
shall bear the corporate seal. Any or all of the signatures and the corporate
seal upon such certificate may be a facsimile, engraved or printed. In case any
officer, transfer agent or registrar who has signed, or whose facsimile
signature has been placed upon, any share certificate shall have ceased to be
such officer, transfer agent or registrar, the certificate shall be valid and of
the same force and effect as if the person continued to be such officer,
transfer agent or registrar.
SECTION 6.02 TRANSFER. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, and subject to compliance with applicable law, it shall be the duty of
the Corporation to issue a new certificate of like form to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
No transfer shall be made which would be inconsistent with applicable law.
SECTION 6.03 STOCK CERTIFICATES. Stock certificates for each class and
series of stock of the Corporation shall be in such form as provided by statute
and approved by the Board of Directors. The stock transfer books for each class
and series of stock and the blank stock certificates shall be kept by the
Secretary or by any officer or agency designated by the Board of Directors for
that purpose.
<PAGE>
SECTION 6.04 LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. The Board
of Directors may direct a new certificate or certificates to be issued in place
of any certificate or certificates theretofore issued by the Corporation alleged
to have been lost, stolen, destroyed or mutilated upon the receipt by the
Corporation of an affidavit of that fact by the record owner claiming the
certificate of stock to be lost, stolen, destroyed or mutilated. When
authorizing issuance of a replacement certificate, the Board of Directors may,
in its discretion and as a condition precedent to the issuance thereof, require
the record owner of such lost, stolen, destroyed or mutilated certificate, or
the person's legal representative to give the Corporation a bond in such sum as
it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen,
destroyed or mutilated.
SECTION 6.05. RECORD HOLDER OF SHARES. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the record
and beneficial owner of shares to receive notices, to receive dividends, to
exercise voting rights and for all other purposes; and the Corporation shall not
be bound to recognize any equitable or other claim to or interest in such shares
on the part of any other person, even if the Corporation shall have notice
thereof.
SECTION 6.06. DETERMINATION OF RECORD DATE. In order that the Corporation
may determine the shareholders entitled to notice of or to vote at any meeting
of shareholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or to receive payment of any dividend or
other distribution or allotment of any rights, or to exercise any rights in
respect of any change, conversion or exchange of stock or for any other lawful
action or purpose, the Board of Directors may fix a record date, which shall not
be more than 60 nor less than 10 days before the date of such meeting or any
other action.
If no record date is fixed:
(1) The record date for determining shareholders entitled to notice of or
to vote at a meeting of shareholders shall be at the close of business
on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding
the day on which the meeting is held; and
(2) The record date for determining shareholders entitled to express
consent to actions in writing without a meeting, when no prior action
by the Board of Directors is necessary, shall be the day on which the
first written consent is expressed; and
(3) The record date for determining shareholders for any other purpose
shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
A determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
<PAGE>
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND
OTHER AUTHORIZED REPRESENTATIVES
SECTION 7.01. INDEMNIFICATION OF AUTHORIZED REPRESENTATIVES IN THIRD PARTY
PROCEEDINGS. To the maximum extent not prohibited by law, the Corporation shall
indemnify any person who was or is an authorized representative of the
Corporation (which shall mean for purposes of this Article a Director or officer
of the Corporation or another person serving at the request of the Corporation
as a director, officer, partner or trustee of another corporation, partnership,
joint venture, trust or other business enterprise) and who was or is a party
(which shall include for purposes of this Article the giving of testimony or
similar involvement) or is threatened to be made a party to any third party
proceeding (which shall mean for purposes of this Article, any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
arbitration, administrative or investigative other than an action by or in the
right of the Corporation) by reason of the fact that such person was or is an
authorized representative of the Corporation, against expenses (which shall
include for purposes of this Article attorneys' fees and expenses), judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such third party proceeding if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Corporation and, with respect to any
criminal third party proceeding (which could or does lead to a criminal third
party proceeding) had no reasonable cause to believe such conduct was unlawful.
The termination of any third party proceeding by judgment, order, settlement,
indictment, conviction or upon a plea of nolo contendere or its equivalent shall
not of itself create a presumption that the authorized representative did not
act in good faith and in a manner which such person reasonably believed to be in
or not opposed to the best interests of the Corporation and, with respect to any
criminal third party proceeding, had reasonable cause to believe that such
conduct was unlawful.
<PAGE>
SECTION 7.02. INDEMNIFICATION OF AUTHORIZED REPRESENTATIVES IN CORPORATE
PROCEEDINGS. The Corporation shall indemnify any person who was or is an
authorized representative of the Corporation and who was or is a party or is
threatened to be made a party to any corporate proceeding (which shall mean for
purposes of this Article any threatened, pending or completed action or suit by
or in the right of the Corporation to procure a judgment in its favor or
investigative proceeding by the Corporation) by reason of the fact that such
person was or is an authorized representative of the Corporation, against
expenses actually and reasonably incurred by such person in connection with the
defense or settlement of such corporate action, if such person acted in good
faith and in a manner reasonably believed to be in or not opposed to the best
interests of the Corporation; except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation, unless and only to the extent that a
court of competent jurisdiction shall determine that, despite the adjudication
of liability but in view of all the circumstances of the case, such authorized
representative is fairly and reasonably entitled to be indemnified to the extent
such court shall order.
SECTION 7.03. MANDATORY INDEMNIFICATION OF AUTHORIZED REPRESENTATIVES. To
the extent that an authorized representative of the Corporation has been
successful on the merits or otherwise in defense of any third party proceeding
or corporate proceeding or in defense of any claim, issue or matter therein,
such person shall be indemnified against expenses actually and reasonably
incurred by such person in connection therewith.
SECTION 7.04. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. Any
indemnification under Section 7.01, 7.02 or 7.03 of this Article (unless ordered
by a court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the authorized representative
is proper in the circumstances, because such person has either met the
applicable standards of conduct set forth in Section 7.01 or 7.02 or has been
successful on the merits or otherwise as set forth in Section 7.03 and that the
amount requested has been actually and reasonably incurred. Such determination
shall be made:
(1) By the Board of Directors by a majority of a quorum consisting of
Directors who were not parties to such third party or corporate
proceeding; or
(2) If such a quorum of the Board of Directors is not obtainable, or, even
if obtainable, a majority vote of such a quorum so directs, by
independent legal counsel in a written opinion; or
(3) By the shareholders voting in the aggregate and not by class or
series.
SECTION 7.05. ADVANCING EXPENSES. Expenses actually and reasonably incurred
in defending a third party or corporate proceeding shall be paid on behalf of an
authorized representative by the Corporation in advance of the final disposition
of such third party or corporate proceeding as authorized in the manner provided
in Section 7.04 of this Article upon receipt of an undertaking by or on behalf
of the authorized representative to repay such amount unless it shall ultimately
be determined that such person is entitled to be indemnified by the Corporation
as authorized in this Article. The financial ability of such authorized
representative to make such repayment shall not be a prerequisite to the making
of an advance.
<PAGE>
SECTION 7.06. EMPLOYEE BENEFIT PLANS. For purposes of this Article, the
Corporation shall be deemed to have requested an authorized representative to
serve an employee benefit plan where the performance by such person of duties to
the Corporation also imposes duties on, or otherwise involves services by, such
person to the plan or participants or beneficiaries of the plan; excise taxes
assessed on an authorized representative with respect to an employee benefit
plan pursuant to applicable law shall be deemed fines; and action taken or
omitted by such person with respect to an employee benefit plan in the
performance of duties for a purpose reasonably believed to be in the interest of
the participants and beneficiaries of the plan shall be deemed to be for a
purpose which is not opposed to the best interests of the Corporation.
SECTION 7.07. SCOPE. The indemnification of and advancement of expenses to
authorized representatives, as authorized by this Article, shall (1) not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any statute, agreement, vote of
shareholders or disinterested Directors or otherwise, both as to action in an
official capacity and as to action in another capacity, (2) continue as to a
person who has ceased to be an authorized representative, and (3) inure to the
benefit of the heirs, executors and administrators of such a person.
SECTION 7.08. RELIANCE. Each person who shall act as an authorized
representative of the Corporation shall be deemed to be doing so in reliance
upon rights of indemnification provided by this Article.
SECTION 7.09. INSURANCE. The Corporation may but shall not be obligated to
purchase and maintain insurance at its expense on behalf of any person who is or
was an authorized representative against any liability asserted against such
person in such capacity or arising out of such person's status as such, whether
or not the Corporation would have the power to indemnify such person against
such liability.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, dividends upon the capital stock of the Corporation may be
declared by the Board of Directors at any regular or special meeting only out of
funds or property lawfully available therefor under applicable law. Dividends
may be paid in cash, in property, or in shares of the capital stock or held by
the Corporation, subject to the provisions of the Certificate of Incorporation.
Before payment of any dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Directors from time
to time, in its absolute discretion, determines to be proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other purpose as the
Board of Directors shall determine to be in the interests of the Corporation,
and the Board of Directors may modify or abolish any such reserve in the manner
and at the time the Board of Directors thereof so determines.
SECTION 8.02. ANNUAL STATEMENTS. The Board of Directors, through the
officers of the Corporation, shall present at each annual shareholders meeting,
and at any special meeting of the shareholders when called for by vote of the
shareholders, a full and clear statement of the business and condition of the
Corporation.
<PAGE>
SECTION 8.03. CONTRACTS. Except as otherwise provided in these Bylaws, the
Board of Directors may authorize any officer or officers or any agent or agents
to enter into any contract or to execute and deliver any instrument on behalf of
the Corporation, and such authority may be general or confined to specific
instances.
SECTION 8.04. CHECKS. All checks, notes, bills of exchange or other orders
in writing shall be signed by such person or persons as the Board of Directors
may from time to time designate.
SECTION 8.05. CORPORATE SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal", and the state of incorporation of the Corporation. The seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
SECTION 8.06. DEPOSITS. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies, or other depositories as the Board of Directors may approve or
designate; and all such funds may be withdrawn only upon checks or withdrawal
requests signed by such one or more officers or employees as the Board of
Directors shall from time to time determine.
SECTION 8.07. AMENDMENT OF BYLAWS. These Bylaws may be altered, amended,
restated or repealed or new bylaws may be adopted by the shareholders or by the
Board of Directors at any regular meeting of the shareholders or of the Board of
Directors or at any special meeting of the shareholders or of the Board of
Directors if notice of such alteration, amendment, repeal, restatement or
adoption of new bylaws is contained in the notice of such special meeting.
SECTION 8.08. FISCAL YEAR. The fiscal year of the Corporation shall begin
on the first day of January and end on the 31st day of December, unless
otherwise provided by resolution of the Board of Directors.
<PAGE>
SECTION 8.09. INTERESTED DIRECTORS. No contract or transaction between the
Corporation and one or more of its Directors or officers, or between the
Corporation and any other company, partnership, association or other
organization in which one or more of its Directors or officers are directors or
officers or have a financial interest, shall be void or voidable solely for this
reason, or solely because the Director or officer is present at or participates
in the meeting of the Board of Directors or Committee thereof which authorizes
the contract or transaction, or solely because the Director's or officer's vote
is counted for such purpose, if: (1) the material facts as to the relationship
or interest are disclosed to the Board or the Committee, and the Board or
Committee in good faith authorizes the contract or transaction by the
affirmative vote of a majority of the disinterested Directors, even though the
disinterested Directors be less than a quorum; or (2) the material facts as to
the relationship or interest are disclosed to the shareholders or Directors
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the shareholders or Board of Directors; or (3)
the contract or transaction is determined to be fair as to the Corporation as of
the time it is authorized, approved, adopted or ratified by the Board of
Directors or a Committee thereof or by the shareholders. Interested Directors
may be counted in determining the presence of a quorum at a meeting of the Board
or of a Committee of the Board which authorizes the contract or transaction.
SECTION 8.10. FORM OF RECORDS. Any records maintained by the Corporation in
the regular course of its business, including its stock ledger, books of account
and minute books, may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, microphotographs or any other information storage device,
provided that the records so kept can be converted into clearly legible form
within a reasonable time. The Corporation shall convert any records so kept upon
the request of any person entitled to inspect the same.
<TABLE> <S> <C>
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<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
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<SECURITIES> 66,733
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<CURRENT-ASSETS> 190,459
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0
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<SALES> 464,582
<TOTAL-REVENUES> 464,582
<CGS> 438,267
<TOTAL-COSTS> 269,816
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<CHANGES> 0
<NET-INCOME> (480,846)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
